The burden of proof in "double identity" trade mark disputes: rising to the Supreme challenge

Earlier today this Kat posted this note on Supreme Petfoods Ltd v Henry Bell & Co (Grantham) Ltd [2015] EWHC 256 (Ch), the latest in a line of important trade mark rulings from Mr Justice Arnold in the Chancery Division, England and Wales.  That note sought to cover the decision as a whole; the following analysis from guest contributor Tim Behean (Sipara, Oxford) focuses on just one aspect of this multifaceted ruling: burden of proof in so-called "double identity" actions in which the mark used by the defendant is identical to that of the claimant and the goods or services of the respective parties are exactly the same too.  This is Tim's take on this topic:

Supreme Petfoods v Henry Bell & Co: why the Court of Appeal was wrong in Interflora on the burden of proof in "double identity" cases

Supreme Petfoods is remarkable for Arnold J’s tour de force analysis of the CJEU’s case-law on the double identity rule (Article 5(1)(a) of Directive 2008/95 and Article 9(1)(a) of Community Trade Mark Regulation 207/2009), and for his conclusion, disagreeing with the Court of Appeal in  Interflora Inc v Marks and Spencer plc [2014] EWCA Civ 1403, that the burden of proving that any of the trade mark functions is prejudiced falls on the trade mark owner.

The double identity rule has many important implications. One is the challenge for businesses to find and clear new trade marks over the vast quantity of marks now registered, and the practice of some trade mark owners to file broadly, covering many if not all goods and services within classes of potential interest. In this way they can secure protection for their marks, most directly by oppositions, for wide ranges of goods and services for which they will never be used, despite the potential for other uses of the same mark which will cause no confusion in the marketplace.

No relation ...

The facts of the case in brief are that the claimant owns a UK registration for SUPREME as a word mark, and various other UK and CTM registrations for SUPREME with design elements. It had used these marks for petfoods since 1990, and due to the long use, the mark acquired a “slender degree” of distinctive character for small animal foods – though it was descriptive and declared invalid for other goods. The defendant and its predecessors had used SUPREME on its packaging for some 20 years, with no evidence of confusion. Accordingly, Arnold J was able to find no infringement under Article 5(1)(b), or under Article 5(2); that the defendant had a good defence of descriptive use under Art 6(1)(b) and there was no passing off.

As for Article 5(1)(a), this was a case of honest concurrent use within the Court of Justice of the European Union (CJEU) ruling in Budejovicky Budvar NP v Anheuser-Busch Inc. However, as there are important uncertainties and contradictions in the CJEU’s case-law, Arnold J reviewed it to discover in particular what it reveals about the burden of proof on the requirement for prejudice to trade mark functions. The analysis is from paras 83 to 164; a mere summary would not do it justice. What emerges is that the CJEU has developed seemingly different approaches for different types of case, and no express decision on burden of proof in any of them, only suggestions from the way the court expresses its rulings.

(1) The “normal case”. This is where the defendant uses the same mark in relation to the same goods, unconnected with the trade mark owner. In such a case, it is inherently likely that there will be confusion, and this is an important protection for trade mark owners, especially in counterfeit cases. Arsenal v Reed is an example, and contains the first statement that the double identity provisions are to be interpreted as requiring in addition a prejudice to the trade mark functions. Here emphasis is placed on the origin function, and this “normal case” is most consistent with TRIPS Art 16(1), that there is a presumption of confusion, but which can be rebutted by the defendant. However the TRIPS presumption deals only with confusion (the origin function). What about the other functions (quality, communication, investment and advertising)? There does not seem to be any reason why they should be presumed, Art 5(1)(a) does not require a trade mark with a reputation. They might be for the trade mark owner to prove. But on the other hand it would be more consistent to treat them as presumed in the same way as confusion.

(2) Exhaustion of rights. Parallel import cases where the trade mark owner’s goods are imported from outside the European Economic Area (EEA) and are first put on sale in the EEA without the trade mark owner’s consent. In the CJEU cases starting with Silhouette, it is established that this amounts to infringement under Art 5(1)(a). But the cases make no reference to this use being prejudicial to any of the trade mark functions, or even whether this is a requirement (similarly for the re-packaging cases where the defendant does not comply with the CJEU’s guidelines). These cases could be reconciled, however, on the basis that the trade mark functions we are concerned with are the right to decide which goods to sell under the trade mark in the EEA and how they should be marketed.

(3) Honest concurrent use. In these cases there is no adverse effect on the origin function, as consumers have become used to the position and there is little if any confusion. The burden of proof seems to be on the defendant. The other trade mark functions although mentioned in the decision, do not feature in the court’s answer to the question asked, but presumably they ae not affected by the concurrent use either.

(4) Keyword advertising cases. For these cases Arnold J refers principally to Kitchin LJ’s decision in Interflora, that the burden of proof is on the trade mark owner thereby overturning Arnold J at first instance. Arnold J responds that if this was intended to apply to cases other than keyword advertising, it is obiter, and criticises it for failing to take account of the CJEU case-law, a wrong interpretation of Class International v Colgate-Palmolive (on exhaustion of rights), and as with the CJEU cases on keywords, failing to consider TRIPS Art 16.

Arnold J’s conclusion (paras 163-4) is that the position is unclear. But for this case it does not need to be referred to the CJEU and instead he adopts what he considers is the better view, more consistent with the case-law and TRIPS, that to establish infringement under Articles 5(1)(a)/9(1)(a), the trade mark owner need only prove the first five conditions [see ADDENDUM below]. If satisfied, the burden shifts to the defendant to show that his use does not prejudice any of the trade mark functions. An alternative might be that only a presumption of confusion is made, and then if the defendant shows there is none it is for the trade mark owner to show if he can that other trade mark functions are prejudiced. However, there would likely be no practical difference in many cases. It is hard to avoid concluding also that he is saying that the Court of Appeal has made a mistake and reached a wrong conclusion. Is Arnold J’s conclusion only obiter because the case is really about honest concurrent use? Or the grand unifying theory of double identity?

Thanks so much, Tim, for your analysis -- it's much appreciated.

ADDENDUM: a reader has written in to ask what the conditions are. For the sake of clarification, here's para 83 of Arnold J's judgment:

"The six conditions. The case law of the CJEU establishes that the proprietor of a trade mark can only succeed in a claim under Article 5(1)(a) of the Directive or Article 9(1)(a) of the Regulation if six conditions are satisfied: (i) there must be use of a sign by a third party within the relevant territory; (ii) the use must be in the course of trade; (iii) it must be without the consent of the proprietor of the trade mark; (iv) it must be of a sign which is identical to the trade mark; (v) it must be in relation to goods or services which are identical to those for which the trade mark is registered; and (vi) it must affect, or be liable to affect, one of the functions of the trade mark [citations omitted]"