Our round up of the key trade mark related developments in 2024. Our round up of the key design developments is here.
It's harder for directors and accessories to be on the hook in the UK
In Lifestyle v Ahmed, the Supreme Court introduced a new knowledge requirement into accessory liability for trade mark infringement and other torts. Now, as well as demonstrating that an accessory has procured an infringement or joined in a common design to infringe, it will be necessary to show that they had "knowledge of the essential facts which make the act done wrongful".
In the case of trade mark infringement based on a likelihood of confusion, this would mean knowledge of the existence of the trade mark alleged to be infringed and of a likelihood of confusion. While turning a blind eye counts, it's not clear whether the knowledge requirement would be fulfilled where there is room for honest differences of opinion on whether or not there is infringement.
Either way, the decision has made it significantly harder for trade mark owners to argue that directors are personally liable for infringements committed by their companies save perhaps in clear-cut case such as counterfeiting or (as in the recent Morley's case) where previous claims have been issued and settlements entered into between the parties.
The threat of such liability has traditionally been seen as a useful source of leverage to encourage directors to engage in dispute resolution – that threat has now diminished. It may now be easier for directors of small infringing companies to liquidate the company and claim no requisite knowledge to avoid all liability.
Brand owners will want to put potential infringers and their directors on notice of their rights early and fully so as to maximise the chances of arguing that the directors had the requisite knowledge. However, even this might not be enough where infringement is not clear-cut. The unjustified threats provisions should also be kept in mind. More here.
Broad specifications and repeat filings are red flags for bad faith in the UK
In SkyKick v Sky, the Supreme Court held that a broad specification of goods/services can lead to an inference of bad faith depending on all the circumstances of the case (eg the size and nature of the trade mark owner's business relative to the specification). The risk is particularly high where there are 'red flags' in the specification such as broad categories, long lists of goods/services, and goods/services seemingly not connected to the applicant's business. Broad categories (such as 'computer software' and 'pharmaceuticals'), in particular, are at risk of being cut back for bad faith if they include distinct sub-categories for which there is no genuine intention to use the mark.
The decision follows the ruling in Lidl v Tesco, where the Court of Appeal agreed with the High Court that repeat filings by Lidl of its wordless logo had been made in bad faith (a finding which the Supreme Court endorsed in SkyKick).
The net result is that there are likely to be more counterclaims of bad faith by defendants to disputes where there are 'red flags' such as broad specifications, repeat filings or both. Some brand owners will be happy to accept that risk given that a registration is only invalidated for those goods/services for which bad faith is found - the whole registration is not necessarily lost. Others will want to avoid long and costly side claims about bad faith, with potential for key registrations to be cut back/lost and negative PR.
Those wishing to minimise the risk should carefully consider what marks to file, appropriate specifications, whether to cut back existing registrations and their general approach to enforcement. Carefully recording the rationale for filings will also be key. The UKIPO is considering whether to make any practice changes or issue any guidance following SkyKick – for most it will be prudent to wait to see what the UKIPO says before fully deciding on next steps. More here and here.
Distinctiveness can be impacted by a "crowded market" in the UK
We now have confirmation from the Court of Appeal in Lifestyle v RCBPC that an earlier mark's distinctiveness can be reduced if there are others on the relevant market using the same or similar marks/elements. This is because, "In a crowded market it is harder for one mark to stand out". The corollary is also true – where a mark is not commonplace in the market, it will have a greater degree of distinctiveness.
This is important because, the more distinctive a mark, the greater its scope of protection. In the Lifestyle case, for example, the existence of a crowded market for polo-themed brands (together with no evidence of actual confusion despite lengthy side by side trading) was sufficient for a finding of no likelihood of confusion.
While the principle won't always apply (see eg the recent Thom Browne case), brand owners should keep in mind that a mark's distinctiveness can be impacted by the extent to which others are using the same/similar marks in the market. This is an additional factor impacting overall distinctiveness on top of inherent distinctiveness and acquired distinctiveness through use.
While this principle is not new, it has arguably not come under the spotlight quite so clearly or played such a decisive role in the outcome of a case before. We can therefore expect to see more "crowded market" type arguments in disputes. This should be factored into clearance and enforcement strategies. More here.
Conceptual counteraction is popular at the EUIPO
'Conceptual counteraction' (or 'neutralisation') is the principle that the average consumer will not confuse marks (and perhaps will not even view them as similar) where they have distinct conceptual meanings.
Despite the fact that the General Court has said that conceptual counteraction should only arise in 'exceptional circumstances' (where at least one of the marks has a clear and specific meaning which can be grasped immediately by the average consumer), there have been numerous recent EUIPO and CJEU cases finding conceptual counteraction (and thus no likelihood of confusion). In some cases, it has been found even when the point has not been raised by the defendant (see eg Rodríguez Ruiz v EUIPO).
The risk of a finding of conceptual counteraction is particularly high where one or both marks consist of the name of a famous person (since such names are considered to be readily understood throughout the EU despite linguistic differences across member states).
While this trend continues, brand owners are advised to adequately address any conceptual differences between marks in disputes at the EUIPO and CJEU. While conceptual counteraction seems to feature less often in the outcome of UK disputes, it is prudent to address the point in those disputes, too. More here.
Evidence of actual confusion seems increasingly relevant in the UK
While evidence of actual confusion is not a prerequisite for a finding of a likelihood of confusion, increasingly the presence or absence of such evidence seems to be playing a part in the outcome of UK infringement actions (see eg easyGroup v Nuclei, easyGroup v Beauty Perfectionists and Shorts v Google).
The extent to which the courts might expect evidence of actual confusion will vary depending on such factors as the length of side-by-side trading of the marks, the size of the players, the extent of the searches for evidence conducted, the opportunity for confusion to occur and whether any confusion is likely to be detected. In particular, the expectation for evidence of actual confusion will usually increase as the length of side-by-side trading of the marks increases.
Given how difficult such evidence can be to find and be accepted by the court, a greater requirement for such evidence could undermine some infringement claims (although see our discussion of the recent Vetsure decision where the Court of Appeal adopted a more flexible approach to such evidence).
This is another reason for brand owners not to delay bringing infringement actions. The relevance of evidence of actual confusion should be considered at an early stage of planning and may impact the timing and best forum for a claim. Potential defendants to infringement actions should also consider the issue carefully at an early stage of planning. For example, in Shorts v Google, the fact that the defendant was unable to find any evidence of actual confusion despite conducting extensive searches and despite the fact that it would have expected to detect such evidence if it existed was powerful support for its claim of no likelihood of confusion.
Acquiescence is now easier for defendants to rely on in the UK
UK and EU trade mark law provide that a trade mark owner can – in certain circumstances – lose the right to invalidate or object to the use of a later registered trade mark. This occurs if the owner of the earlier mark/right has knowingly acquiesced to the use of the later registered mark for five continuous years.
Last year, we had confirmation for both the UK and EU that the five-year acquiescence period can only be stopped by the claimant bringing administrative or court action for infringement (more here). This year, we have had confirmation from the Court of Appeal that the owner of an earlier right need only be aware of the use of a later mark (which is, in fact, registered) for it to be deemed to be acquiescing; it need not be aware that the later mark is registered. This represented the first departure by the UK courts from retained CJEU case law (although that case law is inconsistently applied at EU level).
The decision will make it easier for defendants to infringement, passing off and invalidity claims to argue no liability due to acquiescence since they will only have to show that the claimant had knowledge of the use of their mark (not knowledge of its registration). Having said this, the knowledge requirement is high (being a requirement for actual – not constructive - knowledge) and acquiescence only applies where the later mark is registered.
To minimise the risks of acquiescence claims, brand owners should carefully track the five-year period and ensure that claims against the owners of later registered marks are not allowed to drag on eg where there are lengthy settlement or co-existence negotiations. More here.
Delay can work against brand owners… but so can being overly aggressive
A number of cases this year have highlighted the risks of delaying bringing claims. In particular, as time goes on there is greater scope for defendants to successfully rely on arguments such as honest concurrent use (more here and see also Thom Browne) and acquiescence as well as to point to the presence of a crowded market and make 'death by a thousand cuts' type arguments. As time goes on, there may also be a greater expectation for claimants to show evidence of actual confusion.
While all of this weighs in favour of not overly delaying enforcement, it is worth noting that the UK courts have commented negatively this year on what it clearly views as certain overly oppressive enforcement strategies (see eg comments here at 332 and here at 318). While a robust strategy can be merited, an overly oppressive one will not be and can sometimes work against claimants. More here.
Post-sale confusion and context is relevant (for now) in the UK
While infringement is generally assessed at the point of sale, the Court of Appeal has made clear that – in some cases - the post-sale context can also be relevant (more here). However, it will generally only be relevant where the information given to the member of the relevant public in a post-sale context is different from that given to the original purchaser at the point of sale (more here). It should also be borne in mind that, to be taken into account, the post-sale context must be realistic and representative of the normal and ordinary use of the product – largely (but not always), that would seem to rule out considering fleeting or obscured views of the product. It also seems likely (although has not been confirmed by a higher court) that the post-sale context is assessed from the view point of the average consumer who has the same level of attention as they would have had at the point of sale (since they are deemed to be an interested purchaser).
All of this is likely to mean that only in relatively rare cases will there be a finding of infringement due to the post-sale context. Two cases in which the post-sale context did have an impact this year are Iconix and Samsung (more here and here).
In Iconix, the Court of Appeal considered that the sign would be perceived differently in a post-sale context where it was realistic to assume that the average consumer would be looking down at the sign on a football boot. In this scenario, the sign was more similar to the claimant's mark and there was a likelihood of confusion. In Samsung, it was not the mark that changed in the post-sale context but the goods/services on which it was used. At the point of sale, use of the infringing sign was on an app; post-sale, it was on smart watches. This meant that there was double identity infringement (without the need to show a likelihood of confusion).
Permission to appeal the Iconix case to the Supreme Court has been granted so we await confirmation of the law in this area. Meanwhile, it is worth remembering that, although post-sale context is relevant for infringement, it should not be relevant to invalidity or opposition decisions where context of use is ignored (see eg the Chanel hand bag decision).
Evidence can (sometimes) win the day!
Numerous cases have turned on carefully crafted evidence this year. This could be evidence of a "crowded market" (more here), actual confusion (more here), no actual confusion (Shorts v Google) or equivalence (more here). Conversely, in AGA v UK Innovations, the High Court was not able to judge whether refurbished products were of inferior quality given the lack of independent expert evidence (more here). While many/most cases can be (and are) decided without any – or with only limited - evidence, carefully crafted evidence can sometimes win the day!
Appeals are unlikely to be successful in the UK
Yet again, we have seen how difficult it is to overturn decisions on appeal in the UK, perhaps best illustrated by the Court of Appeal decisions in Lidl v Tesco (more here) and Extreme Networks (more here). The original decision must contain a distinct and material error of principle or be wrong. The threshold is high with the Appointed Person and courts reluctant to interfere with first instance decisions. It means that it is vital to get evidence and arguments right first time in the UK, including in registry disputes.
This can be contrasted with the position at the EUIPO where there is much greater scope to overturn first instance decisions and to supplement evidence on appeal.
Protecting product shapes is still complex
Product shapes can be protected in numerous ways including potentially by registered trade marks, passing off, registered and unregistered designs and (in some jurisdictions) copyright.
There are some notable examples of product shapes and components being accepted for registration as trade marks this year including the Volvo headlight and Lego minifigures (more here and here). Generally, however, evidence of acquired distinctiveness is required (which can be difficult to obtain) or there will be objections based on the fact that the shape is necessary to obtain a technical result, adds substantial value or results from the nature of the goods – none of which can be overcome by such evidence.
Relying on registered designs is a cost-effective alternative and can lead to successes (see eg here) but registration only lasts for a maximum of 25 years and the design must be registered within 12-months of first disclosure.
Relying on copyright in product shapes (or any works of applied art) in the UK is more difficult (at least for now) as exemplified in the recent WaterRower v Liking decision. Conversely, there may be greater scope to rely on and enforce copyright in works of applied art in the EU given the recent Kwantum v Vitra ruling. This provides that copyright subsists and can be enforced in works of applied art in the EU provided the work meets the EU's originality requirement (even if copyright does not subsist in the country of origin of the work).
Given the patchwork of available rights, brand owners should carefully consider the appropriate form of protection for their product shapes (and packaging) at an early stage of planning.
Brands lawyers need to think broadly
Finally, we have seen several cases this year where the law has flexed to meet new scenarios. Perhaps the best example of this is Lidl V Tesco where evidence that consumers were confused into thinking that Tesco was price matching Lidl was sufficient to support Lidl's unfair advantage claim. While we are used to seeing claims of equivalence pursued under the law of passing off (see eg Yours Naturally), we are less used to seeing them under the law of trade marks. We have also seen the use of alternative fora for complaints this year including "trade mark" claims being brought as ASA complaints.
As well as thinking more broadly about the type of complaint to bring, brand owners need to be alert to increasing regulatory pressures which might affect their branding. The new Packaging and Packaging Waste Regulation, for example, will arguably limit the ability of some brand owners to use fanciful packaging in future (more here).
Please get in touch with your usual Taylor Wessing contact or the author if you wish to discuss any of the above issues or your branding needs.
