IPEC serves up a hot trade mark exhaustion decision, with a side of Cofemel, in AGA Rangemaster v UK Innovations

In a recent decision ([2024] EWHC 1727 (IPEC)) on exhaustion of trade marks, the Intellectual Property Enterprise Court (IPEC), a section of the High Court of England & Wales, held that AGA Rangemaster Group Limited (AGA) had legitimate reasons to object to the sales and marketing activities of a company which sold second-hand AGA cookers retrofitted with an electronic control system. 

Background

The Claimant, AGA manufactures and sells the well-known AGA range cookers (AGA Cookers), versions of which have been sold in the UK since 1929 and many of which are still operating after more than 50 years and are accountable for many a burnt hand of those not yet acquainted with its miraculous "always hot" properties.  

The First Defendant, UK Innovations Group Limited (UKIG), was set up in 2020 to launch a product known as the “Stone Cooker”, a range cooker with an electric control system (eControl System) developed by the Second Defendant, Mr McGinley.  That said, the eControl System can also be fitted to AGA Cookers to convert them from running on traditional fossil fuels to running on electricity. 

AGA did not object to UKIG supplying eControl Systems to be fitted to AGA Cookers in the hands of customers; however it did object to UKIG's sale of complete AGA Cookers retrofitted with the eControl System. 

UKIG admitted selling 26 AGA Cookers fitted with the eControl System (eControl Cookers), but maintained that they had all been obtained from trade suppliers or as trade-ins from customers which had subsequently been refurbished and fitted with the eControl System. The eControl Cookers sold by UKIG retained their “AGA” badges and, externally, looked the same as their AGA equivalents save that, in place of the temperature gauge fitted to the original AGA Cookers, UKIG had fitted an “eControl System” badge, as shown here:

AGA did not deny that there is a legitimate aftermarket in the refurbishment and resale of AGA Cookers; however it alleged that the extent of the changes made by UKIG meant that the cookers being sold were no longer the original AGA Cookers, and consequently the marketing and selling of these cookers using the AGA name infringed AGA's trade marks. 

AGA also alleged that the control panels fitted by UKIG to the eControl Cookers infringed the copyright in its design drawing for the control panel of its own electronically controlled AGA Cookers.

The Court's ruling

Trade mark infringement

AGA's claims for trade mark infringement were grounded in all three sub-sections 10(1), 10(2) and 10(3) of the Trade Marks Act 1994 (TMA 1994), based on the following registered marks: 

Rather than dealing with each of the requirements to be satisfied under the relevant provisions of the TMA 1994, the Court focused on UKIG's argument that it could rely on section 12 TMA 1994 as a defence in respect of all of AGA's trade mark claims, based on the exhaustion of trade mark rights. 

Section 12 is derived from Art.7 of Directive 89/104/EEC and, at the relevant time, provided that:

1. A registered trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in the United Kingdom or the European Economic Area under that trade mark by the proprietor or with his consent. 
2. Subsection (1) does not apply where there exist legitimate reasons for the proprietor to oppose further dealings in the goods (in particular, where the condition of the goods has been changed or impaired after they have been put on the market). 

The effect of this provision is that a trade mark owner cannot object to further dealings in its branded goods once they are put on the market, unless there are legitimate reasons for doing so. 

The Court observed that one example of a case where the proprietor might have legitimate reasons to oppose further dealings in the goods is where the condition of those goods has been changed or impaired after being put on the market by the proprietor. Other examples are where the further dealings might seriously damage the reputation of the trade mark (see Portakabin Ltd v Primakabin, Case C-588/08 and Viking Gas v Kosan Gas, Case C-46/10) or give the impression that there is a commercial connection between the person responsible for those dealings and the trade mark proprietor and, in particular, the impression that that person’s business is somehow affiliated to the trade mark proprietor or that there is a special relationship between them (see Bayerische Motorenwerke v Deenik, Case C-63/97).

However, the mere fact that customers may be led to believe that there is such a connection (i.e. the likelihood of confusion) will not necessarily mean that, on the facts taken as a whole, the proprietor has legitimate reasons to oppose the further dealings. 

Here the Court had to determine whether each of UKIG's activities, namely refurbishment/renovation works (works to restore the cooker to the sort of condition in which it had originally been placed on the market by the Claimant), conversion works (works which change that condition, such as the fitting of the eControl System), and sales/marketing activities, gave AGA legitimate reasons to object.  

Refurbishment works

Dealing first with the refurbishment works carried out by UKIG, these included works such as the replacement of insultation, cleaning of the ovens and plates, and replacement or repair of damaged parts with like-for-like parts. The Court considered that, although there were a substantial number of works which could be carried out by UKIG on any one cooker, these did not go so far such as to create a new and different product. 

The main parts of the cookers which made them identifiably AGA Cookers remained in place, and most of the new parts fitted were fitted to restore the appearance and/or functionality of the original AGA Cooker. In the Court's judgment, given that AGA Cookers are such long-lived products, and that there is a reasonably extensive market for second hand refurbished AGA Cookers, customers would understand that, if they buy one second hand, it is likely to contain replacement parts which may not necessarily be of the exact same quality as the original. 

Conversion works

As for the conversion works, the Court observed that converting a fossil fuel AGA Cooker into an eControl Cooker, by removing the barrel and the oil burner contained in it and fitting the eControl System, was clearly a significant change in the condition of that AGA Cooker. However, again the fact that there had been such a change is not of itself enough without legitimate reasons to object. 

Here, the Court found it to be significant that AGA did not object to the UKIG supplying customers with the eControl System to be fitted to existing AGA Cookers and, if it did not object to the supply of eControl Systems for that purpose, then it is hard to see how it could object if those converted cookers were later to come on to the second hand market as a result of being sold by their owners or traded in for new cookers. 

If those cookers can be accepted on the market, then AGA should also not be allowed to object to eControl Systems being fitted to second hand AGA Cookers acquired for that purpose, unless customers were led to believe that there was a commercial connection to AGA. Accordingly, as with the renovation works, the Court did not consider that the conversion works per se gave AGA legitimate reasons to object. 

Further, the Court considered that the evidence provided by the parties did not establish that the works done to the eControl Cookers gave rise to a risk of serious damage to the reputation of AGA's trade marks.  

 

 Kat prefers a more modern stove

Marketing and sales

In the Court's opinion, what made the present case different to other second-hand re-sale market cases was the way in which UKIG went about marketing and selling the eControl Cookers.  The Court referred specifically to certain statements made on UKIG's website, which called to consumers to "buy an eControl AGA", including pictures of AGA Cookers with the caption "Controllable AGA Cookers", which were said to be available in numerous possible "AGA Colours". 

In this regard, the Court considered that the reference to the “eControl AGA” was likely to be seen, not as descriptive but rather as part of the brand for the product being offered for sale, and as linked to the “AGA” name which has a highly distinctive character thereby increasing the risk of confusion (see Iconix v Dream Pairs [2024] EWCA Civ 29). 

Similarly, the Court found that references to the eControl System were likely to be taken as references to a system that was connected with AGA - certainly in the absence of any statement to the contrary. Accordingly, it found that AGA had legitimate reasons to object to the way in which UKIG went about marketing and selling the relevant cookers. In its judgment, the interests of AGA as a trade mark proprietor outweighed the interests of people (such as UKIG) dealing with the cookers in the aftermarket. 

Copyright

As for AGA's copyright claim, this was based on the following design drawing, which was alleged to be an artistic work in which copyright subsists: 

Having found that copyright does subsist in the above drawing, the Court would have to delve into the thorny issue of UKIG relying on section 51 of the Copyright, Designs and Patents Act 1988, which states that "it is not an infringement of any copyright in a design document or model recording or embodying a design for anything other than an artistic work or a typeface to make an article to the design or to copy an article made to the design."

This has been a matter of much debate amongst IP practitioners following the decision of the Court of Justice of the European Union in Cofemel (see IPKat posts here and here), regarding the overlap between copyright and designs, and whether section 51 is still good law. Although a judgment on this issue might have been welcomed by the IP community, unfortunately the Court found the submissions on the issue insufficient, and instead dealt with the issue simply on the basis of the wording of section 51. It therefore found that although copyright subsisted in the design drawing, UKIG's actions were permitted by section 51. 

Permission to appeal

All the above said, not all is lost as AGA was granted permission to appeal on the copyright point, so we may be getting a decision after all! 

Comment

This decision is an important one on a number of fronts. For one, it showed that the extent to which second-hand goods need to be altered in order to give rise to legitimate reasons under section 12 TMA 1944 is really quite significant. Secondly, it is worth noting the weight placed upon AGA's consent to the UKIG supplying customers with AGA Cookers retrofitted with the eControl System (no doubt because this modification likely makes AGA Cookers more palatable to a wider ranger of customers who are looking to move towards greener energy). Trade mark owners must be weary of this, if they do not want to unwittingly surrender any legitimate reasons they may have to object. 

 

Perhaps the most important part of the decision however is the permission to appeal which has been granted in respect of the copyright issue, which will no doubt be deserving of an entire post of its own in due course.