Protecting Influential Unregistered Trademarks

1. Topics Whether to protect an unregistered trade mark that is influencial by having been used but not constituting a well-known trade mark? If protected, whether the protection scope for such unregistered trade mark is the same as that of a registered trade mark?

2. Overview Passing off is founded on the basic proposition that no person is entitled to represent their goods as those of another. There are three essential elements of the cause of action: Goodwill Misrepresentation, and Damage. It has the great benefit that being a tort which has developed as part of the common law rather than being prescribed by statute or otherwise set out in codified form, it as been flexible enough to be able to develop to meet the needs of the market, and it continues to do so. However, the scope of the tort is narrower that infringement of registered trade mark. There can be infringement without any misrepresentation whatsover but without misrepresentation, there can be no passing off.

3. Goodwill An unregistered mark which has not been used cannot be protected by an action for passing off, irrespective of how unique it might be for use in relation to any particulars goods or services. There must have been more than “de minimis” use of the mark. In other words, there must have been enough use of it for it to come to be recognized by a significant sector of the relevant trade or public in the UK as an indicator of origin. The use must be use in relation to goods and services which are actually available to the relevant UK trade and public, not merely to goods available abroad and of which those consumers might have heard. Words which are descriptive in nature do not easily become associated exclusively with the goods or services of one trader (or a particular group of traders where goodwill is owner jointly) but may become so over time. It is more difficult to establish a reputation in the shape or colours used for of a product than a word or device mark because this is not generally perceived as being their primary function Goodwill may be owned by traders jointly, in which case each of them will be entitled to protect the mark

4. Misrepresentation In the usual case, the misrepresentation is one as to the source or origin of the goods, but it could also relate to the quality of the goods, (for example, that seconds quality goods are in fact first quality goods) or even their nature (for example, that the goods are not goods falling within a particular class eg. swiss chocolate, champagne or parma ham). The precise categories of misrepresention which can found an action for passing off and the way in which such a misrepresentation can be made are not closed. The law in this area continues to develop. The consumer must be lead to an erroneous conclusion – merely having cause or winder whether the Claimant and the Defendant might be connected is not enough If the consumer has never come across the mark in which goodwill is claimed to have been generated, there is unlikely to have been any misrepresentation to that consumer.

5. The misrepresentation has to be one which operates on the mind of the consumer – i.e. one which has an effect or is likely to have a real effect on consumer behaviour. (Whether it was “really likely to be damaging to the claimant’s goodwill or to divert business from the claimant”: per Jacob LJ in Phones 4u v. Phone4u.co.uk Internet, [2007] RPC 2 (CA) Where the mark complained of is visible at or prior to point of sale, the misrepresentation must operate on the mind of the consumer at that point. If the consumer would have completed the purchase irrespective of the misrepresentation, then there was no passing off. Misrepresentation must be distinguished from confusion. Confusion may be consistent with there having been a misrepresentation, but does not of itself necessarily prove that misrepresentation has been taking place.

6. Damage Damage, although an essential element of the tort, is not in practice particularly difficult to establish if there is an appropriate misrepresentation. In most cases the damage shown will be loss of sales, but damage to the standing and/or repute of the mark (including damage by dilution of distinctiveness) will suffice in an appropriate case.

7. Relief Granted This is essentially the same as would be granted in relation to infringement of registered trade mark, ie. injunctive relief, delivery up or destruction, damages or an account of profits (at the Claimant’s option), publication of the judgment and costs. However, there may be cases in passing off where it can be established that only certain categories of consumer would not be misled and not others. In such a case the scope of any enquiry as to damages or account of profit may be appropriately limited from the outset. It is unlikely that an enquiry as to damages or an account of profits for infringement of registered trade mark would necessarily be limited in this way.

8. An Illustration: Numatic International v. Qualtex UK[2010] EWHC 1237 (28/5/10) Action started before the Defendant’s goods were actually placed on the market Claimant sold some models in non-red colourways Defendant using a design in which design protection has expired and omitting any of the Claimant’s trading name Product complained of shown at a trade show and unbranded although on a stand which was heavily marked “Qualtex”

9. No real dispute that there was a protectable goodwill in the combination of the name by which the product was known, the “bowler hat” shaped top, brightly coloured base and smiley face. Potential witnesses shown the Qualtex product and asked: (1) What can you tell me about this product? (2) Have you got one? (3) Can you tell me what it is called? (4) If you needed a new one, would you think of buying one of these vacuum cleaners?(5) Why do you say that? The responses provided evidence from which the Court was confident that the shape and bowler hat prompted strong recognition. Witnesses cross-examined – some gave evidence that they would assume from its appearance that it was one of the Claimant’s machines

10. The Decision “There is no point in having design rights with expiry dates if traders are not free to market replica products thereafter. The only qualification to this is that they must not market a product in such a way as to lead to passing off” The shape was of the Claimant’s product was not merely functional but had the appearance of a small person and as such had acquired a “secondary meaning” Not all sensible purchasers would be likely to question whether it in fact was a product of the Claimant by reason of the absence of the “smiley face”. The necessary misrepresentation had been made out and there would inevitably be lost sales (and might also be loss of sales of spare parts and damage to reputation if the Defendant’s products proved faulty).

11. Other uses Passing off has also been successfully invoked, for example, Against the placing of advertising inserts in newspapers and magazines without the consent of the publisher on grounds that the consumer would believe that this had been authorised or approved by the publisher: Mail Newspapers v. Insert Media [1987] RPC 521 Against the showing photographs of the another traders goods when seeking orders for one’s own goods, customers and potential customers believe that the goods shown were made by the person seeking orders (sometimes termed “reverse passing off”): Bristol Conservatories [1989] RPC 455 (CA) Against the registration and dealing in domain names the use of which would almost inevitably cause deception as to source or origin: B.T. v One in a Million [1999] ETMR 61

12. Pros and cons? Advantages Available to small businesses without the funding and/or knowledge base to secure any appropriate registrations Unlimited by the practical strictures imposed by a registration system. In particular, there are no potential categories of mark which are excluded from protection. Passing off was able to provide protection for both service marks and later retail service marks before they became registrable. It was also used as a means of protecting both collective marks and geographical indicators of origin before there was any specific from of registration available for these either. There is no doubt that it would also protect sounds and smells in an appropriate case. May be available to a trader in an appropriate case even in the face of a conflicting third party registration. This has the effect that the trader is less reliant upon infringement defences of potentially uncertain scope

13. Of particular value to the small businesses with a localized customer base – particularly where such a business might not be able to show sufficient distinctiveness in the market as a whole to secure registration The scope of protection is both narrower and much more uncertain than infringement of registered trade marks. It focuses on misrepresentation as to source or origin. By contrast, infringement of registered trade marks can extend to the making of statements even where there is no source or origin confusion and even to statements which are true: Arsenal v. Reed (C-206/01) (ECJ), L’Oreal v. Bellure (C-487/07) (ECJ). Concepts such as damage to the communication or advertising function of the brand are mere dilution are essentially only relevant to the characterisation and quantification of damage Not constrained by the issue as to what amounts to “well-known” There is cost to the relevant authorities arising from the setting up or maintenance of a register Particularly effective means of dealing with counterfeiters.

14. Disadvantages There being no register, it can be difficult to ascertain what third party rights might potentially impact upon the selection and adoption by a trader of new branding Narrower rights mean that there is no additional layer of protection against use of a mark without due cause which takes unfair advantage of or is detrimental to the mark unless there is source or origin confusion. Similarly, no liability in respect of the use of an identical mark for identical goods and services without source or origin type confusion. It used to be thought that a registration conferred the great benefit that the registered proprietor did not have to prove goodwill. It is, however, far from clear that this represents much of a saving of costs today. Anything else?

15. Thank you for your attention.