UK Court considers passing off and trade mark infringement in lettings market

No let up for student union letting agency

The UK Intellectual Property Enterprise Court has found that a student union letting agency's use of "SU LETS" amounted to passing off and infringement of another student letting agency's UK registered trade mark for the word "SULETS".

Background

The Claimant, Student Union Lettings Limited ("SUL"), was incorporated in July 2012. It carries on business as a student lettings agency, providing private accommodation to university students in Leicester. SUL is owned jointly by the student unions of the University of Leicester and De Montfort University.

The Defendant, Essex Student Lets Limited ("ESL"), was incorporated in 2010 and provides private accommodation to students at the University of Essex. ESL is a wholly owned subsidiary of the University of Essex Students' Union.

In March 2015, SUL registered a UK trade mark for the word "SULETS" (the "SULETS Mark") in relation to various services in Class 36 and 37, including accommodation letting agency services. SUL used the SULETS Mark both as a word mark and in the form of a logo as depicted below.

In 2010, ESL began trading under the name "Essex Student Lets". This was later abbreviated to "Student Lets". Following a subsequent rebranding exercise in October 2014, ESL started to trade under the name "SU LETS" and also adopted the logo depicted below.

SUL issued proceedings against ESL for passing off and trade mark infringement under section 10(1) and section 10(2) Trade Marks Act 1994 ("TMA"). In defence, ESL sought to rely on section 11(3) TMA, claiming that it had established goodwill in the SU LETS name in the local area at the time when the SULETS Mark was registered.

Section 10(1) infringement

It was common ground between the parties that the sole issue in contention was whether or not SU LETS is identical to SULETS. The court held that the mere space between SU and LETS in ESL's sign was not a significant difference and would go unnoticed by the average consumer; therefore the mark and the sign were both visually and conceptually identical. The court also held that the mark and the sign were aurally identical. Subject to ESL establishing a defence under s. 11(3) TMA, the court therefore found that ESL had infringed the SULETS Mark.

Section 10(2) infringement

The key issue for determination under section 10(2) was whether: (a) ESL's signs were identical or similar to the SULETS Mark; and (b) whether ESL's use of the sign resulted in a likelihood of confusion. In relation to the similarity between ESL's word sign and the SULETS Mark, as above, the court held the marks to be identical. As for the SU LETS Logo, the court held that this was also similar to the SULETS Mark.

With regard to likelihood of confusion, the court held that the fact that ESL frequently used the SU LETS signs in conjunction with references to the University of Essex did not prevent a consumer making a connection between the SULETS Mark and the services offered by SUL in Leicester. Nor did the court think this factor would prevent a consumer from confusing the SULETS Mark with the SU LET signs. Accordingly, the court found that ESL's use of highly similar (if not identical) signs in connection identical services did lead to a likelihood of confusion.

Section 11(3) defence

Section 11(3) TMA provides a defence to trade mark infringement where the defendant can establish use of a right which subsisted in a particular locality before the registration of the trade mark relied upon.

Applying Caspian Pizza Limited v Shah [2017] EWCA Civ 1874, the court held that in order to defeat such a defence, a trade mark proprietor needed to show either that it too had traded in the same locality, or that it had goodwill which extended to the same locality.

In assessing the scope of such goodwill, the court held that it is necessary to consider the facts relating to the specific business in question and to assess the degree to which persons from across England make use of or seek out a party's services. In this regard, the court found that SUL's goodwill was not solely limited to the Leicester area, noting in particular the long tradition in the UK of students going away to a university which is not located in their home town. Accordingly, the court held that SUL's goodwill also extended to Leicester students when they were at home, as well as to their parents or others who have been involved in the choice of accommodation. The court was therefore satisfied that SUL had developed the requisite national goodwill, and as such, the defendant was not entitled to rely on the section 11(3) TMA defence. SUL's claims for trade mark infringement under s. 10(1) TMA and s. 10(2) TMA therefore succeeded.

Passing off

In relation to SUL's claim for passing off, the court held that by early October 2014 (the period when ESL commenced the acts complained of), SUL had already establish national goodwill in the SULETS Mark. The court also found that there was no doubt that ESL's use of the SU LETS name and logo amounted to a misrepresentation. While the court conceded that SUL had not suffered a direct loss of sales from ESL's activities, the court found that ESL's misrepresentation had (a) the potential to cause damage to SUL through the erosion of the distinctiveness of the SULETS name; (b) potential harm could be caused by any inadequacies in ESL's services; and ( c ) harm could be caused by the potential restriction of SUL's intended expansion of its activities. The court also noted that the fact that ESL had some goodwill in SU LETS did not provide it with a defence to a claim for passing off, applying W. S. Foster & Son Limited v Brooks Brothers UK Limited [2013] EWPCC 18. SUL's claim for passing off therefore also succeeded.

Commentary

This case highlights the importance of conducting trade mark clearance searches as part of any rebranding exercise. The case also demonstrates the importance of registering a mark early – while ESL's prior use case was ultimately unsuccessful, had SUL registered their mark upon incorporation, ESL would not have been able to run this argument in the first place, and proceedings could in all likelihood have been avoided.

Case Ref: Student Union Lettings Limited v Essex Student Lets Limited [2018] EWHC 419 (IPEC)

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