Money to burn? When charities clash in court, there are no real winners

This Kat has from time to time complained that cases have reached court which should have been settled long before they got there.  Here's one such case.  And don't think that this is just the opinion of a fictitious feline: the judge said so too. The case is NOCN (Formerly National Open College Network) v Open College Network Credit4Learning [2015] EWHC 2667 (IPEC), a 25 September 2015 decision of Judge Hacon in the Intellectual Property Enterprise Court, England and Wales (the celebrated IPEC).

NOCN -- an educational coordinator and registered charity -- was the owner of UK registered trade marks for the letters OCN (which stood for "open college network") and NOCN, as well as a series of 10 figurative "swoosh" marks, of one is illustrated on the right.  The defendant, also a charity, was a breakaway from NOCN and was formed by the amalgamation of several local educational networks. Sensibly, NOCN did not object to the defendant's use of the thoroughly descriptive words "open college network"; it was no surprise, however, that NOCN objected that its UK registered trade marks were being infringed by the defendant's mark (below, left), suing also for passing off. The defendant denied trade mark infringement and counterclaimed for cancellation of NOCN's marks on the grounds that they had not been validly registered (i) since they conflicted with prior rights, (ii) they consisted of a "customary term" that was absolutely barred from registration under the Trade Marks Act 1994 s 3(1)(d) [= Trade Marks Directive 2008/95 Art. 3(1)(d)] and (iii) were registered in bad faith.

In support of its action NOCN explained that, in the period up to its incorporation in 1999 all the goodwill in the regional networks associated with the letters "OCN" was collectively held by the members of NOCN's predecessor, which an unincorporated association. The defendant countered that the member local networks were a class of entities, not an unincorporated association, and that since each member network had retained its own separate goodwill there had never been any collective ownership of the goodwill in the letters "OCN".

Judge Hacon dismissed the trade mark infringement action in respect of the word marks but upheld the claims for trade mark infringement and for passing off with regard to the "swoosh" mark,  In his view:

Where should Tibby go to study ...?

* The obvious relationship between the term "open college network" and its usual abbreviation "OCN" complicated the task of tracing the ownership of goodwill in the businesses associated with the name. Although neither side had argued for it, the conclusion had to be that both the letters "OCN" and the term "open college network" were entirely descriptive of a new type of educational body. Goodwill could not be attached to a purely descriptive term [unless of course it can, observes the Kat: it has attached to terms as purely descriptive as advocaat, vodka, Greek yoghurt and Swiss chocolate, for a start. This is what "extended passing off" is all about].

* It was significant that NOCN had not tried to restrain the defendant's use of the term "open college network", since the evidence showed that that term and the letters "OCN" were used descriptively;

* Any goodwill owned by the local networks was associated with their respective regional names, not with the letters OCN alone;

* Even if goodwill in "open college network" and "OCN" had arisen in the past, whether the affiliated networks had formed an unincorporated association or a class was irrelevant. This was because, in either event, NOCN owned no part of it;

* The counterclaim for invalidity under the Trade Marks Act 1994 s.5(4)(a) on the basis of prior rights failed, but it did succeed on the basis of a customary sign;

* Had the mark been valid, the defendant would have infringed it;

* NOCN's "swoosh" mark was not invalid for bad faith and was validly registered.

* The "swoosh" mark was infringed by the defendant's logo, and the claim for passing off succeeded.

The IPKat notes the judge's final words, at [73]:

 I now know that between them the parties, both charities, have incurred well over £400,000 on fees in this litigation. A very strong recommendation to settle at the case management conference was not taken up. The laudable cause of encouraging adult education will presumably have to endure an equivalent cut in funding solely because this dispute was not resolved at an early stage. Such an outcome is much to be regretted.

Here, of course!

This is by no means the first occasion that charities have faced each other in the courtroom in intellectual property proceedings that were unnecessary and perfectly avoidable, but if this isn't the most perfect example of a disgraceful waste of utter stupidity in branding and squandering of charitable funds for no constructive purpose this Kat has yet to see it.   While this Kat is a keen supporter of charities in general and educational charities in particular, he would be most reluctant to see so much as a penny's worth of his hard-earned cash go to any charity that adopted a logo as confusingly similar to that of another charity, whatever its alleged reason or justification.  He hopes that the Charity Commission will want an explanation.

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