AIPPI Event Report: Are you sitting comfortably? A soft IP storybook on the Byzantine World of Trade Marks with Benet Brandreth

Benet weaves together the tales
from the soft IP story book...

Author, actor, QC, raconteur, bon vivant, historian of Venice – there are few things to which Benet Brandreth QC (11 South Square) has not turned his hand. On Wednesday night, while the AmeriKat was attempting to catch mice, AIPPI members and guests (including a “wisdom of judges”) were entertained and educated last night on the law of unintended consequences in the realm of trade marks. 

Andrea Leonelli (Allen & Overy) was to hand to report on the proceedings.  Over to Andrea:

"Benet Brandreth QC kicked off by asking how often is it in the law that we set out to solve one problem only to find that in doing so we have created a whole raft of our own making. This happens a lot in IP law and especially in trade mark law which was recently described by Mr Justice Henry Carr as being of Byzantine complexity.

Benet commented that trade mark law is an area that rewards philosophical discussion, as it is deeply abstract and encourages policy discussion where no one can agree what exactly the policy is.

His first example of unintended consequences was the removal of the own name defence for companies in the 2015 Trade Mark Regulation. He argued that this protection may not have been there to begin with; but that both the previous Trade Mark Regulation and Directive had left a degree of ambiguity on the subject. The protection was finally given to companies in the decision of the Court of Justice as part of the Budweiser disputes.

The reform of Article 14 of the Trade Mark Directive makes it express that the protection is only available to natural persons, a change that has in itself gone on to generate litigation. In Sky v Skykick the defendant argued this removal restricted its freedom to conduct business. Mr Justice Arnold agreed, but also stated that the restriction was justified.

The example of company names is just one example of the tussles between the legislature and judiciary over the boundaries of trade mark law and its policies.

Another area where Benet sees that tussle as being clear is that of keyword advertising: registering the name of a leading brand as a keyword is taking advantage of it, but is not unfair because of the policy of enabling competition in the marketplace.

Benet moved to specifications of goods and services.

It is usual, he said, for a brands lawyer to be cornered by someone at a party asking if an app name is registrable, that app name being clearly descriptive. Having a conversation with that person, the layperson usually thinks of the trade mark as synonymous with the sign alone: but it is actually a sign in relation to the specified goods and services.

Many professionals in IP make that error on a regular basis, Benet said, tending to address those issues succinctly but in doing so sometimes something is lost. One example is the law of passing off. Even experienced lawyers will talk about goodwill in the sign where there is no such thing: there is instead goodwill in the business. On some occasions this makes a good deal of difference, for example in the case of endorsements. In Arcadia v Fenty all judges described the case as borderline, because Rihanna had no property in the image as such, her right was in the goodwill in the business of endorsement, and that goodwill was affected by the use of the image.

In trade marks the specification of goods and services used to receive only slight attention but according to Benet this has changed. Recently there have been a number of cases where the specification of goods and services has been central. The origin of this issue lies in the 2012 case of IP Translator.

Benet maintains that even the registries have not given good thought to the fact that a trade mark is a sign relating to specific goods and services. If you leave the identification of goods and services unclear, then the mark is itself unclear. So it was unsurprising, he said, that the Court of Justice required the specification to be clear and precise.

The CJEU did not give guidance on when a specification is to be deemed as sufficiently clear and precise, and Mr Justice Arnold set out to fill in some of the gaps in cases in recent judgments (such as Stichting BDO and Fidelis), with two key points arising. First, although specifications for good and services were given their ordinary and natural meaning, the specification for services which are less precise should be limited to the core of their ordinary and natural meaning. The second point is that in neither case is the interpretation so liberal as to render them unclear and imprecise.

Benet also referred to an obiter observation of Mr Justice Henry Carr in Pathway IP where the allegation was that the hearing officer had construed the specification by reference to the class number. Henry Carr J disagreed with the judgments of Mr Justice Arnold in Omega 1 and Omega 2, stating that it was legitimate to do so in certain circumstances. Henry Carr J however agreed that class numbers cannot be ignored, giving the example valves, that can be registered in classes 7 (valves for pumps), 10 (valves for hearts), 11 (valves for radiators) and 15 (valves for trumpets).

In Skykick the specification being discussed was “computer software”. The allegation of imprecision/lack of clarity was not that it was not known what the term meant but that that specification was too general and covered services too variable to indicate origin.

In Skykick it was said that there is some level of uncertainty that is unacceptable but it is not right at "that very edge", which is not very helpful. Taking computer software as a class meant that one kind of software could be completely different to another, so as a matter of policy it was deemed inappropriate to grant someone a monopoly over such a wide collection of goods. However, Benet said, it is not clear who exactly had agreed to that policy.

The observation that it would be inappropriate to grant someone a monopoly over such a varied collection of goods was made in the case Court of Appeal case Merck v Merck. The question was that of partial revocation for non-use. Merck had a registration for goods in class 5 pharmaceuticals and had in the relevant five-year period sold products in 9 out of 15 relevant categories. The question was whether in the context of that use “pharmaceutical products” was a fair specification or should it be limited to the 9 categories. The Court of Appeal stated that the limitation of sub-categories was fair while also acknowledging that the general category may be the correct description when used for all or "substantially all" of the sub-categories. However, what "substantially all" meant was not specified.

Benet’s interpretation of the judgment is that the Court of Appeal considered the argument had been put on the wrong basis. It ought to have been put by reference to sub-categories, but the parties had divided themselves between the claim to the general categories and to the specific products, which was respectively too broad and too narrow.

This, according to Benet, raised a possible distinction between house marks and specific marks. For example, with the name Ford Focus – Ford is the house mark, and Focus is the specific product. One might think a distinction like that matters, because where a company is establishing activity in a range of sub-categories where the consumer understands the involvement of the company in these different categories, this should be part of the analysis. The Court of Appeal in Merck rejected consideration of future commercial activity, but that is not the same question of whether the average consumer has understood the activity of the house mark in a range of products/services.

In Skykick, Arnold J accepted there could be a general category with disparate activities, but that would be too disparate to form a cohesive whole. Benet holds that in light of these decisions, it seems like no general category should survive more than 5 years, and arguably it could never be legitimate to register for such a category as it is not possible to suggest use across the spectrum. In Skykick, Arnold J considered that it may constitute bad faith to register a mark where there was no intention to use, but this was not acte clair (and a question was referred to the Court of Justice).

Benet concluded this part of the talk on the specification of goods and services by remarking that this whole conversation was started by the case of IP Translator, which renewed interest in specifications and lead to a raft of new questions on invalidity.

Another example considered by Benet regarding the law of intellectual property having unintended consequences is the Supreme Court’s judgement in Cartier v BT. That decision addressed where the costs of implementing each particular blocking order should sit. The answer from the Supreme Court is: with the rights holder.

The interest of this case however for Benet lies in two aspects: the basis of the answer and the ramifications of the answer. The former clarified the powers of the court to make blocking orders, and the latter may lead to many more such orders.

Focusing in particular on the judgment of the Supreme Court, Benet discussed Lord Sumption’s judgment which began by identifying the basis for the grant of the injunction, stating that the grant of a blocking injunction may be made on "ordinary principles of equity". This is a significant expansion of the remedy because: first, it grounds the order in domestic law, which is significant if and when the UK leaves the EU; second the remit is wrongdoing and not protection of IP; third it applies to all intermediaries; and fourth the grant of the order being based on domestic law does not appear confined to the threshold and discretion derived from EU law. Lord Sumption expressly rejected the relevance of EU legislation referred to by the lower courts.

If the wrongdoing for the grant of the injunction is not confined to IP rights, then Benet argued that it may, for example, be expanded to include the failure to abide by the terms of a court order. This was likely not the intention of the Supreme Court as the purpose of its judgment was not to identify a new power but to decide on costs, and costs would be decided as a matter of English law. The parties had disagreed on the precise wording of the order and the dispute was principally about what should happen next. Cartier had complained about how the ISPs had implemented the blocking injunction (manually), and that the cost was too high.

However, if the ISPs were bearing all the costs it was difficult for the rights holders to complain about implementation. Now that the Supreme Court had ruled rights holders had to bear some of the costs they had a stake in ensuring that the method was as efficient as reasonably possible. The Supreme Court decided that if the rights holders want to challenge the application to the court they can make an on notice application to the court to do so.

Benet remarked that ISPs can now claim their marginal cost of implementation, but rights holders already pay significant costs in seeking those orders, and in that context the marginal costs are not necessarily substantial.

Leaping to psychology, Benet discussed an experiment where schools charged a fine to those picking kids up late. This resulted in a huge increase in the late pick-ups when this came to be seen as a service. This suggests that once the full cost of making the applications are quantified by the rights holders, the ISPs may find that far more are made.

Benet suggested two main takeaways from the decision, part of the law of unintended consequences. First, the Supreme Court judgment confirmed there is an expanded scope in the application of these orders. Second, the Supreme Court gave a method to quantify the costs for which the rights owners are responsible, but ISPs may not claim costs unless they want an argument over who controls the process.

It should be noted that this is a factual report and, as such, it cannot do justice to Benet’s humour and the energy that he brought to the presentation."