Retromark Volume IV: the last six months in trade marks

It’s time for Volume IV! Darren Meale of Simmons & Simmons presents his fourth instalment [previously: here, here, here] of the Retromark trade mark litigation round up.

This time around we have eight worthy UK and EU cases for you, including some big hitters in the form of Cartier, Louboutin and – because Retromark wouldn’t be complete without one – the latest round of the Kit Kat saga.

1.     Are trade marks covering “financial services” lacking in clarity and precision?

FIL Ltd v Fidelis Underwriting [2018] EWHC 1097, High Court of England and Wales (May 2018)

The use of FIDELIS for specialty insurance and reinsurance services does not infringe FIDELITY for financial services, holds Mr Justice Arnold. FIDELITY was also descriptive of fidelity insurance, meaning the registrations for the same should be amended down to “insurance services except fidelity insurance” (I think this is sensible enough but I’m not as sure as the judge that POSTKANTOOR permits this sort of carve out. I think the EUIPO might take a different view if such an amendment were requested during the examination of an EUTM application).

Of more general significance was the judge’s view that this case presented issues very similar to SkyKick, covered in Volume III and currently pending before the CJEU. Arnold J’s view was that, like “computer software” and “telecommunications services”, it is arguable that FIL’s trade marks are invalid so far as they are registered for “financial services” on the basis that this term lacks clarity and precision. The outcome will be determined by the answers to the questions before the CJEU, although only if the CJEU chooses to provide sufficiently broad (and clear) answers that we can apply them to terms other than those in dispute in SkyKick. IPKat here.

2.     More unfair advantage, but only where the goods are “luxury” enough

Kenzo Tsujimoto v EUIPO, Joined Cases C‑85/16 P and C‑86/16 P, CJEU (May 2018)

Kenzo is a French fashion house with Japanese roots. Mr Tsujimoto founded the games company Capcom and, not content with that success, bought up a swathe of Napa Valley in 1990 to found a winery.

Mr Tsujimoto filed two IR(EU)s for KENZO ESTATE, one covering wine in class 33 and the other covering classes 29, 30 and 31 (assorted foodstuffs), 35 (retailing of food and beverage etc), 41 (education in wine) and 43 (accommodation).

KenzoKat

The fashion house opposed both relying on it its KENZO EUTM in classes 3 (cosmetics etc), 18 (leather goods) and 25 (clothing). Without any similarity in the goods and services, the claim was a reputation based one, relying upon what was held to be the “iconic image” conveyed by Kenzo’s marks. It failed at first instance but won in part at the Board of the Appeal level, with the General Court upholding the Board of Appeal’s decisions. Those decisions found unfair advantage against classes 33, 35, 41 and 43 but not 29, 30 and 31. The reason given for the distinction was that classes 29 to 31 cover goods which were “not regarded as luxury goods and that they were not invariably associated with the world of glamour or fashion” but rather they were “common mass-consumed foodstuffs that are bought in any local shop”. For those goods and services for which unfair advantage was found, the Board of Appeal held that they were linked to Kenzo’s goods as they were all (or at least may be) “part of the luxury sector”. The CJEU came to the same conclusion.

Many will have experienced the rather arbitrary way in which the EUIPO decides reputation based claims, and will have dealt with cases in which some goods and services were found to take unfair advantage while others do not, with no good reason provided for the distinction. The reasoning here is, in my view, dubious. Rather than rely on its reputation in the legal sense, Kenzo appears to have benefitted from its reputation for luxury – is that a new type of legal reputation? Further, it might be right that wine is associated with luxury and goods like olive oil (class 29) are “mass-consumed”, but I’ve just checked and Aldi’s lowest priced wine comes in at £3.69 a bottle (49p per 100ml). By contrast, Waitrose sells an olive oil for £19.99 (£2.67 per 100ml). So much for that reasoning.

3.     A one-line conclusion is all we end up with in the Louboutin red sole saga

Christian Louboutin v Van Haren Schoenen BV Case C‑163/16, CJEU (June 2018)

This case looking at the nature of Louboutin’s attempt to protect the red sole of its famous footwear has been much discussed and debated amongst trade mark lawyers in its nine-year history. Is it a colour? Is it a shape? Is it a bird? Is it a plane? After an exceptional two opinions from Advocate General Spuznar (for more see Volume III), the CJEU (sitting as a full court, in a Grand Chamber of 15 judges) managed to disappoint us all by delivering a judgment which comprises little more than this one-line conclusion:

a sign consisting of a colour applied to the sole of a high-heeled shoe…does not consist exclusively of a ‘shape’

This may actually prove a helpful conclusion for Louboutin, as had its sign proven to consist “exclusively of a shape”, it would likely have fallen foul of the prohibition on registration of shapes which give substantial value to goods. It is now up to the Dutch court to decide whether Louboutin should come out on top, keep its Benelux registration and win its infringement action against Dutch shoe shop Van Haren.

The prohibition directed at shapes has since been broadened by the new(ish) EU trade mark regulation and directive to cover other characteristics, including presumably colour. It is an open question whether, under the new law, it is an absolute ground for refusal if a sign consists of two characteristics that give substantial value (ie, shape and colour) rather than one characteristic “exclusively”.

4.     Cartier: Supreme Court shifts the costs burden towards rights holders and away from ISPs

Cartier v British Telecommunications Plc [2018] UKSC 28, UK Supreme Court (June 2018)

First looked at back in Volume I, at the Court of Appeal level, this case confirmed that blocking injunctions were available against internet service providers against websites which infringe trade marks. The sticking point was who should pay for the costs of implementing the blocks, which the Court of Appeal held by two to one was a burden to fall on ISPs.

Not so, says Lord Sumption, with which four other Law Lords concurred. The Supreme Court concluded that “who bears the costs?” was a question for domestic law, to be determined “within the broad limits set by the EU principles of effectiveness and equivalence, and the requirement that any remedy should be fair, proportionate and not unnecessarily costly”. In English law, the costs of blocking injunctions were no different in principle to the costs in cases of Norwich Pharmacal orders, freezing orders and other injunctions granted to require an innocent party to assist the claimant in the assertion of its rights against a wrongdoer, and the principle in those scenarios was that the innocent party is indemnified by the rights holder. The position might be different elsewhere (for example France), but that was down to differences in laws and procedures which were not subject to harmonisation, and no reason for English law not to go its own way.

Blocking injunctions (at least for trade marks, but surely for copyright infringement too?) are now going to be just a little more expensive for rights holders to obtain and maintain. IPKat here.

5.     To be Frank, Nike’s lost out in LDNR LNDR Londoner mix-up

Frank Industries PTY Ltd v Nike Retail BV [2018] EWHC 1893, High Court of England and Wales (July 2018)

I covered the preliminary injunction won by Frank Industries in this case in Volume III. In July, it won at trial too. FI, a relatively small premium clothing company, owned registrations for LNDR for clothing. Nike used LDNR, including as part of the phrases "Nothing beats a LDNR" and "Show you're a LDNR", in a high-profile advertising campaign (featuring social media activity, a short film, events, adverts at football matches, and so on). Nike’s sign, it said, was intended as an abbreviation of “Londoner”. FI sued for infringement.

Nike attacked the validity of the FI marks on the basis that they too were an abbreviation and descriptive. Mr Justice Arnold held that in some contexts, LNDR was capable of being understood as an abbreviation, but that there was no proof that it was descriptive in this way when applied to a swing ticket or label of clothing. Nike in fact failed to put forward a case as what characteristic it was descriptive of when used on clothing (origin perhaps?).

With the validity of the registrations upheld, the judge went on to find that the mark and sign were highly visually and aurally similar and that the goods on both sides (clothing) were identical. He also held that, although Nike clearly used its NIKE brand for the campaign, it had also used LDNR “in relation to” clothing, and there was also evidence of actual confusion. He came to conclude that “there is a likelihood of a significant number of consumers thinking that the presence of LDNR in the signs complained of indicates some form of collaboration or tie up between Frank and Nike”. Nike did not have a descriptive use defence because it had not acted in accordance with honest practices. FI’s claim for passing-off also succeeded.

Unless the case settles, the next issue is quantum. For those wondering, Nike admitted that it carried out a trade mark search and found FI’s registrations prior to its campaign. It claimed privilege in respect of the search itself and any legal advice which may have been given as a result of it. So we’ll never know quite what happened there. The IPKat post is here.

6.     Have a break… have another Kit Kat case [we’re running out of viable Kit Kat puns]

Société des produits Nestlé v Mondelez Joined Cases C-84/17 P, C-85/17 P and C-95/17 P, CJEU (July 2018)

The only case to make it into all four volumes of Retromark so far, the background to the dispute over the distinctiveness of Nestle’s four fingered friend is set out in previous volumes. This chapter is an appeal up the EU trade mark court system of the EUIPO’s rejection of Nestle’s acquired distinctiveness evidence. Nestle had lost out in the lower courts because it hadn’t put forward evidence of acquired distinctiveness covering Belgium, Ireland, Greece and Portugal, and it argued that requiring evidence dealing with every individual EU Member State (rather than taking a more unitary/appreciation of the whole approach) set the bar too high and undermined the unitary character of EUTMs. The CJEU dismissed Nestle’s appeal, managing to navigate (in a somewhat dubious manner) its own previous decisions to come up with this one.

The CJEU held that there was no need to provide evidence of acquired distinctiveness in every Member State BUT acquired distinctiveness nevertheless had to be proved throughout the EU. How does one prove “throughout” without dealing with each country? The CJEU appears to contemplate that the EU is comprised of particular markets (eg, based on linguistic proximity) and that the evidence for one such market might therefore span or deal with multiple countries, thereby avoiding the need to address each country individually. This might be helpful to brand owners, but I can’t work out exactly what it looks like in practice – for one, I don’t think it is possible to sell a Kit Kat in more than one territory at the same time, but there may be other ways of squaring this circle. The case now returns to the EUIPO to reconsider the evidence. IPKat here.

7.     It’s not unfair to make $100k from your misdirected internet users – sorry Argos!

Argos Limited v Argos Systems Inc [2018] EWCA Civ 2211, Court of Appeal of England and Wales (October 2018)

Argos (AUL) – the well-known UK High Street retailer – lost this case in the High Court as covered in Volume I. It has now lost in the Court of Appeal too. ASI is a US corporation selling construction software. It has owned argos.com since 1992, four years before AUL registered its domain, argos.co.uk. There was no overlap in business (or territory), but some UK consumers mistakenly found their way to argos.com, where automated adverts provided by Google were shown to them, including adverts for AUL itself, thereby earning ASI cash (a total of $100,000 over seven years). That’s trade mark infringement, claimed AUL. Having lost on traditional confusion-based infringement and passing-off grounds at first instance, the appeal focused on a claim that ASI’s adverts (but not its use of ARGOS for its construction software business) took unfair advantage of AUL’s reputation.

ASI’s defence was that it did not perform any infringing act in the UK. It was not “targeting” the UK. The first instance judge, Mr Richard Spearman QC, agreed, but the Court of Appeal led by Lord Justice Floyd took the opposite view. After a detailed analysis, Floyd LJ ultimately concluded that a part of ASI’s website had become an “electronic billboard” and that it had used the ARGOS mark to display ads for UK businesses which UK consumers would consider were targeted at them. He held that each of ASI, Google and the advertisers concerned were targeting the UK.

Floyd LJ also overturned the High Court’s decision on a “link” – consumers arrived at the site with AUL’s reputation in mind and were presented with ASI’s electronic billboard. That was sufficient to establish a link.

Was it then unfair advantage? No – this was where AUL’s appeal failed. Noting that the CJEU’s classic L’Oreal v Bellure judgment might imply that any advantage is unfair, Floyd LJ also cited the Court of Appeal’s Whirlpool requirement for some “added factor”. Considering the facts – including that ASI has found itself with unwanted traffic and had sought to solve the problem by making a modest amount of money while also helping redirect those looking for AUL – ASI could not be said to have acted unfairly. Appeal dismissed. This is a nice little example of the application of the unfair advantage infringement ground (and proof that some advantage taking can be ok), although the facts are a little unusual, and probably unlikely to be repeated again in quite the same way. IPKat report on the High Court here and on the Court of Appeal here.

8.     Busting the IPEC cap in TheBigWord’s giant costs award

Link Up Mitaka t/a THEBIGWORD v Language Empire and Zaman [2018] EWHC 2633, IPEC (October 2018)

We conclude with a trip to the IPEC, the UK’s Intellectual Property Enterprise Court (a court designed to assist SMEs with their IP needs, for those international readers). The claimant was a translation and interpretation services provider under the name THEBIGWORD. The defendants cybersquatted two domain names including thebigwordtranslation.co.uk, displaying a holding page from 2010 to 2014 before putting up websites indicating they were connected with the claimant. In 2017 the claimant sent a cease and desist letter. The defendants took the website down but otherwise did not respond. The claimant sued and obtained judgment (on liability) in default.

In the trial on quantum, Her Honour Judge Melissa Clarke described the second defendant’s evidence as “a tangled mass of contradictions, inconsistencies, unlikelihoods, implausibilities and untruths which obscured any truthful evidence he may have given such that I cannot identify it.” (put that on your CV, Mr Zaman!). This led the judge to disregard most of the defendants’ evidence arguing that the damage to the claimant was next to none. Instead, and doing her best with an obviously incomplete picture, the judge was able to come up with a damages award of £142,044.

On costs, many will know the IPEC applies scale costs with a cap on recovery of £50,000 in a liability claim and £25,000 on an inquiry as to damages (as part of its goal of providing access to justice for SMEs). Although not detailed in the judgment (at least not the version I’ve linked to), the claimant reportedly achieved a costs award of £98,250, four times the lower cap. This will undoubtedly be as a result of a finding of unreasonable behaviour on the part of the defendants, which would permit the judge to bust the cap. Whether the claimant ever sees any of this money is another matter.

With that, I leave you for another six months. I do hope to return with Volume V half a year from now, but we’ll be living (maybe) in post-Brexit Britain by then so it’s pretty much 50/50 whether I’ll be practising as a lawyer or practising sharpening sticks to ward off wild wolves and Brexiteers trying to forcibly evict me because my post code ends in the letters EU (no really, it does).

If I do make it, there’s some unfinished business in the form of the SkyKick and AMS Neve cases to talk about, once the CJEU rules on them, and no doubt many more besides. In the meantime, Happy Halloween, Merry Christmas and Happy New Year – see you in 2019.

Special thanks to my team mates Jon Sharples, Amy Palmer and Sian Banks for helping spot these cases as they came up.