HomeInsightsHigh Court rules on honest concurrent use, invalidity, and revocation in trade mark infringement and passing off case

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Facts

Cormeton Fire Protection Ltd (CFPL) has been providing mechanical fire protection solutions, including fire extinguishers, since 1967. In 1989, to expand its business into electronic fire protection solutions such as fire alarms, CFPL teamed up with a third party and Cormeton Electronics Ltd (CEL) was created to run the new endeavour. Both entities operated out of CFPL’s premises until 2003 when CEL moved out. All went well, with both parties trading under names that included the word CORMETON and using similar logos until about 2015 when the parties fell out.

In 2016, CFPL registered the word CORMETON as a UK trade mark (the Mark). It issued proceedings against CEL in 2019 claiming, inter alia: (i) infringement of the Mark under ss 10(1), 10(2) and 10(3) of the Trade Marks Act 1994; and (ii) passing off in respect of its CORMETON brand and the following flame logo:

CFPL claimed infringement in relation to use by CEL of the following signs (the Signs): (i) CORMETON; (ii) the domain name cormeton.co.uk; (iii) the flame logo; and (iv) the following device (the Device):

CFPL also complained about CEL’s use of CORMETON ELECTRONICS, but only in relation to mechanical fire protection equipment. CFPL had no issue with CEL using it in relation to the supply and sale of electrical safety equipment.

CEL denied trade mark infringement (including on the basis of honest concurrent use) and passing off, and counterclaimed for invalidity of the Mark under s 3(3)(b) and/or revocation under section 46(1)(d) of the 1994 Act. CEL said that the parties had operated their businesses side-by-side and consensually between 1989 and 2003 and that after 2003 they had agreed that CEL could continue using the CORMETON name under licence.

Decision

Licence

Mr David Stone, sitting as a Deputy High Court Judge, found that when the two businesses separated in 2003, they entered into an oral agreement. The question was what the terms of this agreement were.

The evidence showed that between 2003 and 2016, CEL used the CORMETON name mostly in conjunction with ELECTRONICS. There were only five documents from CEL showing use of just CORMETON during this period and those documents also included use of CORMETON ELECTRONICS. It was only after 2016 that CEL’s use of CORMETON on its own increased.

Mr Stone accepted CFPL’s evidence that when the businesses separated in 2003, it was agreed that CEL would continue to use CORMETON ELECTRONICS without using CORMETON on its own. As for the domain name, CFPL had agreed that CEL could set it up in 1998 and it was aware that CEL had continued to use it after the separation in 2003. It had never objected to CEL’s use of it.

Mr Stone therefore found that the terms of the oral agreement, which was irrevocable, were:

  1. CEL could continue to trade under CORMETON ELECTRONICS and CORMETON ELECTRONICS LIMITED;
  2. CEL could continue to use the domain name;
  • CEL would not trade under CORMETON, CORMETON ELECTRONICS or CORMETON ELECTRONICS LIMITED in relation to mechanical fire protection goods and services and that it would only trade in the supply and sale of electrical safety equipment; AND
  1. CFPL would not trade under the name CORMETON in relation to the supply and sale of electrical safety equipment.

Mr Stone concluded, therefore, that the bulk of CEL’s business (i.e., the supply and sale of electrical safety equipment under CORMETON ELECTRONICS and the use of the domain name) was being carried out pursuant to the licence granted by CFPL in 2003 and there was no infringement.

Invalidity/revocation

CEL submitted that the s 3(3)(b) was engaged because of the use that had been made of the Mark by both parties since 2003. As a result, CEL alleged that there had been at least a partial separation of goodwill from the ownership of the Mark, and therefore the Mark could no longer represent a single undertaking. The Mark had therefore become misleading. CORMETON was now perceived by the public as relating to separate businesses run by each of CFPL and CEL.

Mr Stone noted that s 3(3)(b) is in the part of the 1994 Act that deals with absolute grounds of refusal, i.e. those that pertain to the mark itself, e.g. marks devoid of distinctive character, marks which denote kind or quality, certain types of shape marks, and marks contrary to public policy. Section 3(3)(b) was clearly not aimed at preventing registration of marks in which a third party might own rights.

Therefore, s 3(3)(b) was not engaged where the only “deception” was as to who was using the mark to provide goods or services. That sort of deception was remediable under the relative grounds for refusal of registration in s 5. The same was true in respect of revocation under s 46(2)(d).

In any event, CEL also failed on the facts. The bulk of CEL’s use was licensed by CFPL and therefore CFPL held the relevant goodwill. As a result, the Mark could not be misleading.

Infringement

Infringement only arose if Mr Stone were wrong about the licence and, in any event, only in relation to a minor and more recent aspect of CEL’s business: (i) use of CORMETON on its own; and (ii) use of the Signs and CORMETON ELECTRONICS in relation to mechanical fire protection goods and services.

Clearly, the CORMETON sign used by CEL and the Mark were identical. Further, in Mr Stone’s view, all the Signs and the CORMETON ELECTRONICS sign were highly similar to the Mark. Further, the goods and services provided by CEL were at least similar to those for which the Mark was registered. Some, for example “fire alarms”, were identical.

Accordingly, Mr Stone found infringement under s 10(1).

As for s 10(2), given the high level of similarities already found, Mr Stone found a likelihood of confusion such that there would be infringement under s 10(2). Given that CEL had pleaded confusion in its positive case on invalidity, it was accepted that Mr Stone did not need to examine the actual evidence of confusion.

As for s 10(3), Mr stone found that the Mark had reputation, at least in relation to fire extinguishers and related services. In Mr Stone’s view, use of the Signs and CORMETON ELECTRONICS on CEL’s goods and services would take unfair advantage of and/or be detrimental to the distinctiveness and/or repute of the Mark (subject to the licence referred to above). Further, CEL did not have due cause.

Honest concurrent use

Mr Stone agreed with CFPL’s submission that honest concurrent use had never been successfully asserted in a case where the alleged infringer was a former licensee of the trade mark proprietor. Further, it could not realistically be said that where use was made by a defendant with the claimant’s permission, it was “concurrent” use; it was use with the claimant’s consent. Mr Stone therefore rejected the claim of honest concurrent use in relation to any services licensed under the 2003 agreement.

As for the uses outside the 2003 licence, there was only a handful of examples of use of CORMETON on its own between 2003 and 2016, which was insufficient to establish honest, concurrent use. As for the uses from 2016 onwards, Mr Stone did not consider that the time between 2016 and the commencement of proceedings in 2019 was a long enough period in which the parties had honestly used the same name such that the inevitable confusion that arose had to be tolerated. The time between CEL’s first use with respect to mechanical fire protection goods and services and CFPL complaining about it was even shorter. Therefore, no honest concurrent use could arise.

Mr Stone also did not consider that the use after 2016, which included trading in mechanical fire protection goods and services, was honest: beginning to trade for the exact services provided by CFPL did not meet CEL’s duty to act fairly in relation to the legitimate interests of the trade mark proprietor. On the contrary, CEL had taken steps which exacerbate the level of confusion beyond that which is inevitable and so has encroached upon the [C]laimant’s goodwill”, (Victoria Plum v Victoria Plumbing Limited [2016] EWHC 2911 (Ch)).

Conclusion

CEL’s uses under the terms of the 2003 licence did not infringe the Mark, nor did they constitute passing off. The uses that fell outside the 2003 licence infringed under ss 10(1), 10(2) and 10(3). These uses also constituted passing off. (Cormeton Fire Protection Ltd v Cormeton Electronics Ltd [2021] EWHC 11 (IPEC) (18 January 2021) — to read the judgment in full, click here).

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