Mind out Gap! UKIPO says trade marks filed in breach of settlement agreement can constitute bad faith

What has happened?

Transport for London mark	GAP mark

• An opposition by clothing company, GAP, to a UK trade mark application by Transport for London (TfL) for MIND THE GAP has largely been unsuccessful due to conceptual counteraction. This is the principle that the average consumer will not confuse marks where they have distinct conceptual meanings.

• A claim of indirect confusion (ie that the average consumer will wrongly believe that MIND THE GAP is a brand extension of GAP) was also unsuccessful as the marks - GAP and MIND THE GAP – do not follow the same construction. 

• The UKIPO also held that contractual rights created by a settlement agreement between the parties did not constitute an 'earlier right' of the kind required by section 5(4)(b) of the Trade Marks Act 1994. This provision is aimed at earlier rights such as copyright, not rights arising from agreements between the parties. 

• However, the decision makes clear that a trade mark application filed in breach of a settlement agreement can give rise to a finding that the application was filed in bad faith (such that it is invalid).

Want to know more?

The claim

The clothing company, GAP, opposed an application by TfL to register the mark MIND THE GAP for goods/services in class 9 (contact lenses, spectacles, eyewear) and class 18 (leather goods like belts, suitcases, briefcases, card holders and wallets).

GAP argued that TfL's application was filed in bad faith (section 3(6)) as it breached a settlement agreement between the parties. It also argued that the contractual rights arising from the settlement agreement gave it an "earlier right" within the meaning of section 5(4) (b).

GAP also relied on its earlier UK trade mark registrations for GAP for similar goods/services (including sunglasses, eyewear cases, bags and leather articles), arguing that there was a likelihood of confusion (section 5(2)), unfair advantage or detriment to reputation (section 5(3)) and passing off (section 5(4)).

Section 5(2) – likelihood of confusion

The UKIPO examined the similarity between GAP’s goods in class 25 and TfL’s goods in classes 9 and 18, holding that some were identical, some similar (being complementary in nature) and some were dissimilar. It held that the average consumer would pay an average level of attention and that ‘GAP’ has enhanced distinctiveness for clothing only. Importantly, it was of the view that MIND THE GAP serves as a warning which cannot be conveyed by ‘GAP’ alone. This warning would be well-known to a significant part of the relevant public. Considering the conceptual differences between the marks (and the obvious visual and aural differences between them), likelihood of confusion was unlikely. This is another example of the application of the principle of conceptual counteraction (or neutralisation) (more on that here).

Section 5(4) – passing off

To succeed in its section 5(4)(a) claim for passing off, GAP needed to show significant customer deception. Despite finding that GAP had substantial goodwill, it found that no substantial number of people would be deceived, echoing its ruling on likelihood of confusion. Use of MIND THE GAP did not amount to a misrepresentation, and thus no damage could follow.

Section 5(2) – unfair advantage/detriment

The UKIPO also rejected GAP's case under section 5(3). Whilst the UKIPO acknowledged GAP's reputation in its GAP registrations, given the lack of similarity between the marks and the level of attention paid by the average consumer (average degree of attention), no significant proportion of UK consumers would associate MIND THE GAP with the opponent. Even if a link was made, it would be so weak that no unfair advantage or detriment would result.

Section 5(4)(b) – other earlier rights

A dispute arose as to whether contractual rights amount to 'earlier rights' under section 5(4)(b). GAP argued that the provision allowed for more than just copyright and industrial rights. GAP cited the Kerly  textbook which lent some support to its interpretation but struggled to find any UK or EU case law to further support the position, despite the provision existing for over 30 years. It was determined that the contractual rights created by the settlement agreement did not constitute an 'earlier right' of the kind required by section 5(4)(b). 

Section 3(6) – bad faith

Finally, GAP opposed the application to the extent it covered clothing accessories on the grounds of bad faith under section 3(6) due to the existing agreement between the parties. The UKIPO held that the agreement was binding and had not been terminated despite GAP's breach in selling items with a MIND THE GAP slogan. Following TfL's complaint, GAP removed the offending items. It was found that TfL's registration attempt was inconsistent with honest practices as it filed for goods prohibited under the agreement without notifying GAP. The UKIPO determined that trade mark applications made knowing they might breach an agreement can be refused or invalidated on grounds of bad faith.

The result

Ultimately, the opposition failed except for 'clothing accessories,' which were refused on bad faith grounds. This decision highlights the importance of respecting existing agreements and the challenges that brands face in proving confusion, passing off and unfair advantage in a world where one/both marks has a distinct conceptual meaning and the marks are constructed differently. 

What does this mean for you?

• Carefully address any conceptual differences between marks when arguing about whether they are similar. Be aware that there may be a finding of no likelihood of confusion (and potentially even lack of similarity between marks) where one or both marks has a distinct conceptual meaning. This is particularly so in the EU (especially where one of the marks has a distinctive conceptual meaning because it refers to a famous person).

• Note that filing a trade mark application in clear (and knowing) breach of a settlement agreement can give rise to a finding that the application was filed in bad faith.

• Bear in mind that, where two marks have a different construction, it is often more difficult to show a likelihood of confusion or the necessary link and damage.