Court of Appeal overturns High Court ruling in Vetsure case: evidence of actual confusion sufficient

What has happened?

The Court of Appeal has overturned an earlier ruling by the High Court and held that there is a likelihood of confusion between the earlier VETSURE trade mark and the later PETSURE sign, both registered and used for pet insurance (earlier ruling discussed here).

The ruling covers a number of key elements of trade mark law including how evidence of actual confusion is to be treated. It is also interesting since the Court of Appeal held that almost every finding of the High Court constituted an error of principle - a very rare finding. Key elements of the Court's ruling are discussed below.

The trial judge had wrongly considered that the VETSURE mark was largely descriptive and so should be given a relatively narrow scope of protection. The judge leapt from the undisputed premise that the component parts of the VETSURE mark were descriptive to the conclusion that the combination was descriptive. That did not necessarily follow. VETSURE alluded to pet insurance, but it did not describe it. This is a good example of the well-known principle that a mark can be more than the sum of its parts, which first came to prominence in the BABYDRY line of EU cases.

The High Court was wrong to find that the VETSURE mark had no enhanced distinctive character through use despite finding that it did have a reputation. Where a mark has a reputation, it follows that it must also meet the threshold for possessing enhanced distinctive character through use such as to give it extended protection.

Overall, the Court of Appeal considered that the VETSURE mark had a moderate degree of distinctiveness – quite different to the High Court's findings.

The High Court was wrong to hold that because the words VET and PET mean different things, the marks are conceptually different. While the words "pet" and "vet" might mean different things, the words VETSURE and PETSURE do not. They both convey the concept of insurance for pets or to cover veterinary bills. In other words, the High Court should have stood back and considered what concept the marks as whole would convey in the way that the average consumer would do rather than overly dissecting the marks.

The High Court was wrong to seemingly hold that the conceptual differences between the marks indicated an absence of a likelihood of confusion (despite the marks being visually and aurally similar). It is not necessary for marks to be conceptually similar in order for there to be a likelihood of confusion. Only in "exceptional" cases where "at least one of the signs at issue has… a clear and specific meaning which can be grasped immediately by" the average consumer will conceptual dissimilarity be sufficient to counteract visual and aural similarities (so-called 'conceptual counteraction'). The claimant accepted that this requirement was not satisfied in the present case.

This is an important aspect of this ruling since there have been numerous recent cases particularly at EUIPO level where conceptual differences between marks have been held to be decisive, sometimes resulting in a finding that the marks overall are not similar and that it is not even necessary to go on to consider whether there's a likelihood of confusion (see our articles on this here and here). This decision is an important restatement of the law (that conceptual counteraction is rare) in the UK.

The trial judge's approach of dismissing the considerable evidence of alleged actual confusion (as not showing the right type of confusion or not fully indicating what the consumer was thinking) in this case was wrong. Over 40 pieces of evidence were considered by the Court, consisting of emails, transcripts of telephone calls, insurance claims forms and the like - all from customers or prospective customers. The evidence fell into two broad categories: (a) customers were emailing or calling the correct party but then using the wrong name or (b) they were calling or emailing the wrong party.

Only in one case did the High Court find evidence of confusion of the right type – where a customer had to cancel a policy with PETSURE because they had intended to insure themselves with VETSURE (ie where there was diversion of trade).

The Court of Appeal took a more pragmatic approach, considering the probable causes of the mix ups by consumers, rather than requiring incontrovertible evidence of confusion. The evidence certainly demonstrated that both the PETSURE sign and the VETSURE marks were regarded by consumers as brand names, not descriptors, and that the supposed conceptual difference between them did not avoid the potential for confusion. Evidence that consumers were mixing up the two marks showed, as a minimum, the potential for confusion. In particular, some customers were uncertain as to whether Petsure was different from Vetsure, and wanted confirmation and some clearly did not notice the difference between the PETSURE and VETSURE names.

This is a key aspect of the ruling. Had the Court of Appeal upheld the High Court's ruling on the evidence of actual confusion, the bar would have been set so high that it seems unlikely that any evidence (other than from a witness) would ever have been sufficient to indicate actual confusion. Given that the courts seem increasingly to expect evidence of actual confusion where the infringement has been occurring for a reasonable amount of time, this could have significantly undermined infringement claims. The Court of Appeal has taken a more practical approach, looking at probable causes of mix ups and the potential for confusion. The recent decision in Thom Browne on actual confusion should be contrasted with this.

Having found that "there was confusion in a small number of instances", it was inconsistent with that finding for the High Court to conclude that there was no likelihood of confusion overall - "… the parties were small players in the market for pet insurance … that should have indicated something to him, namely that the presence of any cross-infection of this kind was not simply the result of the ubiquity of either player in the market. These were two relatively small ships in a vast ocean, and yet [there was] instance after instance of them crashing into each other." Again, this is a useful application of the principle that where players are small and/or there has been little side by side trading, the evidence of actual confusion need not be significant.

Conceptual differences between marks should rarely be determinative (in the UK, at least). However, given the recent trend for cases to be decided based on conceptual differences (particularly at the EUIPO), adequate consideration should be given to the conceptual comparison in arguments.