Ancient DIESEL held registrable in Ireland

Old Deuteronomy was still
Young Deuteronomy when Diesel's
marks were first filed

Diesel SpA v Montex Holdings Ltd is not a Trade Mark World War on the scale of the Battle of the Buds; it is however part of a family of disputes that have meandered through various European courts and trade mark registries since long before this blog was founded. Generations of Kats have come and gone in the meantime.  These bonny parties have litigated in Germany, leading to a well-known Court of Justice of the European Union ruling in Case C-281/05 -- and the Irish version of this battle is still only edging towards its endgame. On 9 September, before Dermot Doyle (acting for the Controller), the honours were divided somewhat unevenly, giving the parties the chance to plan their appeal strategies. You can read the decision in full here; it's a long one, so even the short summary below isn't exactly short. If it all seems a little strange, this is because it's a decision under the Irish Trade Marks Act of 3 April 1963 [which has since been replaced by the Trade Marks Act 1996, which implemented the First Directive on trade mark approximation]. To give readers some idea of how long ago April 1963 was, Cliff Richard's film title track Summer Holiday was topping the British charts, marginally ahead of the Beatles' single Please Please Me -- and Leyton Orient was coming to the end of its first and only season in the top division of England's football league.  On 11 January 1994, when Diesel's trade mark applications were filed, the British chart-topper was the literally unspeakable Mr Blobby song [not recommended], and Swindon Town was in the middle of its first and only season in top-flight English football.

Putting aside cultural history and sporting achievements, let's take a look at this case.  It all started back in 1994, when Montex opposed eight applications made by Diesel under the Irish Trade Marks Act 1963 to register the word mark DIESEL as well as a logo mark (left): both were aimed at Classes 16 (printed material), 18 (leathers, imitations of leather; animal skins), 24 (textiles and textile goods) and 25 (clothing, footwear, headgear).

In earlier proceedings Diesel had successfully opposed applications made by Montex in 1992 to register the trade mark DIESEL.

Relying on its unregistered rights to the mark in respect of clothing only, Montex opposed these applications on the grounds that Diesel was not the lawful proprietor of the DIESEL trade marks in Ireland for all the goods specified (sections 2 and 25 of the 1963 Act) and that the proposed use of the marks would deceive and cause confusion (section 19). Failing either of those grounds, Montex asked the Controller to exercise his discretion to reject the applications be exercised (section 25(2)).

Diesel, none too happy about this, alleged that Montex’s use of the mark lacked bona fides and challenged the admissibility of evidence taken from one of Montex's directors concerning first use of the mark on the basis that it was hearsay and an abuse of process, prohibited by the rule laid down in Henderson v Henderson (1843) 3 Hare 100 that a litigant may not re-litigate by raising an issue that could have been raised in previous proceedings.

The applications had been filed separately in the absence of provision for multi-class applications under the 1963 Act. Although this resulted in eight separate oppositions, a single hearing was held for the sake of expediency and efficiency.

Dermot Doyle, for the Controller, ruled that the marks be allowed to proceed to register, except in respect of goods in Class 25.

Admissibility under Henderson v Henderson

Evidence concerning the genesis of Montex’s DIESEL trade mark was admissible. The Henderson v Henderson rule did not apply for two reasons. In the first place the previous proceedings, concerning whether Montex was entitled to register its DIESEL mark, were completely distinct from the current proceedings, concerning whether Diesel could register its DIESEL mark. Montex was not attempting to re-litigate. Secondly, an opponent has an explicit right to respond to matters raised by the applicant under Rule 39 of the Trade Marks Rules 1963. Although Montex had not adduced evidence as to the provenance of its DIESEL mark in support of its opposition under Rule 37 of the same Rules, Diesel's criticism of the absence of an explanation under Rule 38 provided the basis on which Montex could address the matter under Rule 39. Further, the evidence led by Montex was not hearsay but went to the role and responsibilities of the director.

Comparison of goods

As there was a sufficient degree of similarity between the marks, such that consumers would be likely to believe that identical or similar goods bearing either the word or logo mark emanated from a single undertaking, or that the two marks were linked economically, the big issue was to decide whether the goods were identical or similar.

Comparison of the similarity of goods under the 1963 Act involved the threefold test as set out in Jellinek’s Application (1949) 63 RPC 59: one must compare (i) the nature and composition of the good, (ii) their respective uses and (iii) the trade channels through which the goods are bought and sold. In the present case, the appropriate trade channels were shops or the clothing department within a department store, not a department store more generally.

The oppositions based on the similarity between Classes 16, 18 and 24 and clothing must fail. On balance, the nature, composition and use of the goods covered in those classes were dissimilar to the goods in which Montex claimed an unregistered right; the production of printed matter, covered by Class 16, was of a completely different nature and composition to clothing. Leather clothing was specifically excluded from Class 18 and covered by Class 25. Although textiles included in Class 24 constituted the raw material used for a variety of goods, that didn't make textiles similar to clothing 'just as steel cannot be considered similar to motor cars or barley similar to beer' [well that's a relief, says one beer-loving member of the Kat clan ...].

Proprietorship and Bona Fides

Ownership of unregistered marks is decided on the basis of who first used the mark at the relevant date in the relevant jurisdiction. Although trade marks are territorial so that protection in one country does not automatically extend to another (ie the owner of a mark registered in a single foreign country can't rely on that mark in another jurisdiction in case it intends to expand its business), ownership may be denied to a first user in the absence of bona fides, such as where the mark has prior international reputation and is used in bad faith. It is necessary for a business that intends to adopt a trade mark to undertake a reasonable preliminary enquiry to establish whether the mark is available for use or is likely to conflict with that of a pre-existing enterprise.

Applications for registration of the word and logo marks in respect of clothing in Class 25 would be refused for lack of proprietorship under sections 2 and 25(1) of the 1963 Act. Evidence led by Montex was sufficient to show bona fides first use of the mark in 1979 and extensive and continuous use in Ireland when Diesel filed its applications in 1994. The issue of bona fides, which Montex had been advised not to address in previous proceedings, had been addressed in the current proceedings.

Evidence submitted by Diesel in support of its claim to a reputation in Ireland before Montex's use based on international reputation was unreliable. Although Diesel had applied for trade mark registration in the UK and Italy even before Montex's first use, there was substantial delay in seeking trade mark protection in other countries after that date. It was also unlikely that Diesel had, within a year of first using the mark in Italy in 1978, began trading internationally or that it had acquired an international reputation. The evidence was also insufficient. Spill-over advertising from the UK tended to show that no direct advertising was undertaken in the Irish market, the worldwide expenditure on global advertising prior to 1985 was negligible and only three invoices led in support of a reputation by way of sales in Ireland dated during the relevant period were legible.

Confusion and honest concurrent use

For the sake of completeness, Mr Doyle considered the likelihood of deception or confusion under section 19 between Diesel's two rejected applications and Montex's mark.

Section 19 should be invoked to refuse registration where the Controller is satisfied that an application would not succeed in an action against a third party on the grounds of deception, confusion or otherwise. Under that section, an application cannot be rejected on the basis of either deceptiveness caused by a trade rival's use of a similar mark nor can it be accepted on the basis of honest concurrent use. Honest concurrent use specifically concerns registered trade marks (section 20(1)). Its purpose is to afford two different proprietors of the same or similar marks the same legal protections and not to award a later mark a superior legal status over an earlier mark.

Where honest concurrent use is at issue, five factors must be taken into consideration (as identified in Alexander Pirie & Sons Ltd (1933) 50 RPC 147). First, the extent of the use of the mark, including the duration of use, quantity and geographical spread within the State. Secondly, the degree of confusion likely to arise. Thirdly, the honesty of concurrent use. Fourthly, whether any instances of confusion have been proven. Fifthly, the inconvenience caused to the proprietor of the earlier mark if the later mark is registered.

There was no doubt that if DIESEL were registered there would be, and already existed, confusion in the minds of the consumers and traders operating in the clothing business. Nor could Diesel seek registration on the basis of honest concurrent use. Even if honest concurrent use applied to unregistered marks, Diesel failed to prove that its mark warranted registration. Diesel had not reached the level of market penetration or customer awareness and an extremely high degree of confusion was likely to arise. Although there was no doubt that Diesel's use of its mark was honest, there had already been confusion in the marketplace and registration would cause significant inconvenience, including loss of business and goodwill, to Montex.

Exercise of the Controller's Discretion

The exercise of the Controller’s discretion under the 1963 Act only came into play after all sections of the Act dealing with mandatory grounds for refusal had been decided and where none of these grounds resulted in the refusal of the application. Here, though, no reasonable case was made justifying the exercise of the discretion to refuse registration of the marks in Classes 16, 18 and 24, which were found not to offend any sections cited in the opposition.

This all set this Kat's mind working: are there many trade mark applications from before the days of European harmonisation that are still trickling through the system? What's the oldest trade mark application that is still showing signs of life?

This post was prepared with the assistance of Kate Manning.