For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

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Thursday, 9 August 2012

Facts versus formalism: protecting descriptive and allusive terms

The IPKat has been giving some thought to two very recent decisions from England and Wales that address a popular debating point among consumers, businesses, lawyers -- and a regular question for law students sitting their IP paper -- which runs like this: "To what extent, if any, can a business gain control over a term which is descriptive or allusive of the goods or services which it supplies?"  The two decisions reviewed here make comforting reading for those who opt to register such terms as trade marks and use them in the course of trade, since the courts focus less on the rights or wrongs of registering a descriptive or quasi-descriptive term than on the effect of someone else coming along as a later user and confusing the consuming public (not "consuming the confusing public", as one hapless candidate wrote in a script which this Kat marked earlier this summer).

The first decision is Geolabs Ltd v Geo Laboratories and Edwards, an extempore Patents County Court (England and Wales) ruling from Judge Colin Birss QC on Monday of this week, noted on the Lawtel subscription-only service.

Geolabs, a soil-testing laboratory, owned a series of trade marks which contained the word "Geolabs". A competitor Geo, inconveniently traded under the name "Geolab". Sometimes Geo's phones were answered with the word "Geolabs", and there had been instances of actual confusion. Geolabs sued for trade mark infringement.  Sadly both for Geo and for anyone planning to sue it, the company went into liquidation and was not being pursued. Geo's managing director, an undischarged bankrupt by the name of Edwards, was not so fortunate.

The defendant is not the only
Geolab around: a Google
Image search revealed several,
such as the one above
At the trial, neither Geo nor Edwards appeared at the trial. Even so, the judge had consider (i) whether proceedings against Edwards should be stayed under the Insolvency Act 1986 s.285(2); (ii) whether Geolabs' trade mark rights were invalid since the word "Geolabs" consisted entirely of terms that described its services ("geo" meaning "earth" and "labs" meaning laboratories; (iii) whether there had been infringement and (iv) whether Edwards was personally liable for any wrongs that might have been committed by Geo.

Judge Birss QC held for Geolabs.
* There was no reason to stay proceedings under the Insolvency Act since Edwards had not actually applied for a stay and, in any event, Geolabs didn't owe him any money.

* The trade mark was valid. Geolabs' trade mark was a neologism: it was allusive to earth but not devoid of distinctive character. What's more, it had acquired distinctive character through use.

* Geolab infringed Geolabs' trade mark rights. Both Geo and Edwards had used the word "Geolab" in repect of services that were identical to those for which Geolab's mark was registered. Comparing the two marks, the similarity between "Geolab" and "Geolabs" was very close; conceptually they were same, and both alluded to the same services. The "s" on the end of the name was insufficient to distinguish them.

* The choice of a company's trading name was an important matter, something which a person in Edwards' position as managing director would have been closely involved. And even if Edwards was not the only person who made decisions on Geo's behalf , he was the only person before the court who did so -- and he had not indicated that anyone else had a similar degree of control. Since he was Geo's controlling mind and spirit, he was personally liable for its infringing activities.

The second decision, Fine & Country Ltd & others v Okotoks Ltd & another [2012] EWHC 2230 (Ch) (a decision handed down by Chancery Division (England and Wales) new boy Mr Justice Hildyard on the last day of July, is quite another matter.  While in Geolab Judge Birss QC could get on with the job of judging unhindered by the inconvenience of contested submissions, Hildyard J had to sit through 11 days of hearings before he could begin to compose a decision of positively Arnoldine proportions (122 pages, 288 paragraphs, over 47,000 words ...),

This was a deceptively large dispute between two sets of businesses in the real estate business, the claimant firm of Fine and Country ('F&C') and the defendant business, Okotoks.  F&C sought an injunction to stop  Okotoks  using the name Fine, alleging both trade mark infringement and passing off. For good measure, F&C asked for damages or an account of profits too [this Kat still doubts whether, following the implementation of IP Enforcement Directive 2004/48, claimants should be made to opt for damages or an account of the profits rather than go for both -- but that's another matter].

F&C provided services to estate agents, and licensed use of the name "Fine and Country" to independent local estate agencies, while Okotoks was part of a group of companies that traded as national estate agencies, some as "Fine", others as "Haart". Okotoks' logo for Fine which, like F&C's business, was aimed at the premium end of the house buying market, was similar, or reminiscent of the Fine & Country logo and brand.

According to F&C, Okotoks' conduct had caused substantial confusion among members of the public and people involved in the property business. Okotoks indignantly complained that F&C was attempting to monopolise a descriptive word ("fine") -- which was common in ordinary language as well as in estate agents' parlance. The registration should therefore be cancelled. Even if it weren't, any goodwill in it would accrue to the independent estate agents whom F&C licensed to use it, not to F&C itself.

Mr Justice Hildyard held for F&C.  In his view:
* F&C had clearly established the three requirements of a successful claim in passing off (goodwill, deception and damage) and therefore were entitled to protect the goodwill in their mark which they generated the course of their business. That goodwill, though actually generated by their licensees, was held on trust by those licensees for F&C; the fact that they were not its legal owners did not bar them from seeking a permanent injunction.

* As to the trade mark action, Okotoks had not established that the F&C marks were not being used by or with F&C's consent, nor had they established that the use made of the F&C marks had rendered them deceptive as to trade origin.  In fact, they had failed to show any grounds on which a declaration of invalidity or revocation of F&C's marks might be made.

* F&C, having proved its case, was entitled to injunctive relief, money, delivery up of infringing material and presumably anything else it fancied.
So far as this Kat can tell, not having been involved in either action and without personal access to the evidence, both of these decisions appear to be correct.  The courts don't have to establish, on a scale of nought to ten, how descriptive or distinctive a mark is; they have to find a four-way balance between the part-competing and part-complementary interests of (i) the first user of a sign, (ii) second and subsequent users of the same or similar sign, (iii) those who sell or supply the goods and services bearing the signs and (iv) the ultimate consumer.  This is exactly the sort of situation in which a firmly evidence-based approach will always be preferable to legal formalism.

A katpat goes to Michael Hicks (who appeared for F&C) for giving him sight of the ruling

1 comment:

Darren Smyth said...

Thanks Jeremy. I have also been wondering whether in the light of the Enforcement Directive it can still be correct that damages and account of profits should be strictly alternatives, and would be interested in a post dedicated to that topic.

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