April 3, 2015

Maier & Anor v Asos Plc & Anor

[2015] EWCA Civ 220 (01 April 2015)

Background

The claimant (“Maier”) was a manufacturer and retailer of high-end performance cycle wear, which it had sold under the brand name ASSOS since the late 1970s. The defendant (“ASOS”) was an online retailer of fashion clothing and accessories. The defendant’s business, established in 1999, initially operated under the name AS SEEN ON SCREEN, moving to the “ASOS” brand in around 2003. Initially, ASOS offered third party branded goods only but subsequently branched out into own-brand goods as well in around 2004-2005.

Maier alleged infringement of its Community trade mark for the word ASSOS registered inter alia for “clothing, footwear and headgear” in Class 25 (the “ASSOS CTM”) and passing off arising from use of the ASOS brand. ASOS denied these allegations and counterclaimed for partial revocation of the ASSOS CTM on the grounds of non-use. ASOS also argued that the ASSOS CTM was invalid on the basis of its prior unregistered rights in the ASOS sign generated before the priority date of the ASSOS CTM and that even if it was found to have been infringed, it had an own name defence.

At first instance the trial judge limited the specification of the ASSOS CTM to “specialist clothing for racing cyclists; jackets, t-shirts, polo shirts, track suit tops, track suit bottoms, casual shorts, caps” and revoked the remainder of it for non-use under Article 15(1)(a) of the Community trade mark Regulation 207/2009 (“CTMR”). Having done so, she rejected each of Maier’s claims of registered trade mark infringement under Art. 9(1)(b) CTMR (use of a confusingly similar sign in relation to identical and/or similar goods) and Art. 9(1)(c) CTMR (use of a sign which causes detriment to the distinctive character of a mark with a reputation). The judge did not find that any passing off had occurred and in the absence of a finding of trade mark infringement did not need to deal with the question of whether any own name defence applied. Finally, she rejected ASOS’ attack on the validity of the ASSOS CTM based on its earlier passing off rights.

The Court of Appeal Judgment

On appeal, Lords Justice Kitchin, Underhill and Sales examined several aspects of the first instance judgment among them:

Had the trial judge fallen into error in the way she restricted the specification of the ASSOS CTM?

Had she fallen into further error by not finding infringement under Art. 9(1)(b) and/or Art. 9(1)(c) CTMR (and, if so, did the own name defence afforded by Art. 12 CTMR apply)?

Revocation of the ASSOS CTM

The Lords Justice broadly agreed that the trial judge had been unduly harsh when narrowing the specification of the ASSOS CTM to reflect the actual use that had been made of it. However, they disagreed on the extent of that error.

Ruling in the majority, Kitchin LJ (approved by Underhill LJ) found that the limitation in respect of cycling wear to “specialist clothing for racing cyclists” did not reflect the actual use of the ASSOS mark made by Maier, which sold clothes for both professional sports people as well as amateurs. The limitation to “racing cyclists” only was therefore too narrow, and should be broadened to “cyclists”. Dissenting, Sales LJ suggested that even with this revision the specification had been cut back too far. In his view, on the basis that Maier had also demonstrated use of the ASSOS CTM in relation to jackets, t-shirts, polo shirts, track suit tops, track suit bottoms, casual shorts and caps, this justified continued protection for the broader category of “casual wear” generally.

Infringement under Art. 9(1)(b) CTMR

The Lords Justice agreed that the finding of non-infringement should be overturned.  Underlying this unanimous decision was the fact that having found an absence of compelling evidence of actual confusion, the trial judge incorrectly limited her consideration of whether a likelihood of confusion arose by reference to the average consumer of the actual goods to which the ASSOS CTM had been applied only, who she considered were likely to pay close attention to the provenance of the relevant goods. In doing so, she failed to consider whether a likelihood of confusion arose amongst the average consumer of goods falling within the full scope of protection of the mark. The Lords Justice agreed that such notional fair use extended at least to certain items of casual wear and that based on a global assessment of all of the relevant factors (including the relevant price point of goods falling within the ‘casual wear’ category) a likelihood of confusion did arise amongst members of the relevant public for those goods.

Article 9(1)(c) CTMR

The Lords Justice also unanimously overturned the first instance finding of non-infringement, again on the basis that the trial judge had failed to consider the notional fair use of the ASSOS CTM across the full scope of the specification as part of the overall assessment.

Once the trial judge had established that the ASSOS CTM enjoyed a reputation by virtue of actual use in relation to at least some of the goods falling within the specification, the next step should have been to assess whether detriment had been caused to the distinctive character of the mark across the full scope of the specification. Again, the trial judge failed to do this and instead focussed her enquiry on only those goods in relation to which the ASSOS CTM had actually been used.

In summarising why it was important to consider whether detriment to distinctive character of the ASSOS CTM had occurred across the full scope of the specification, Sales LJ noted that the effect of the trial judge’s incorrect approach would be the risk of a “swamping effect” as a result ofAsos’s use of the Asos sign in relation to other goods falling within the specification of the ASSOS CTM which would prevent Maier from enjoying the full benefit of the protection conferred by the ASSOS CTM in relation to those goods in the event it decided to branch out into them, which would mean that “a significant part of the aim of the protection to be derived from its registered CTM [would be] undermined by Asos’s activities”.

Own name defence under Art. 12 CTMR

In the light of the finding of infringement, the Lords Justice then had to consider whether or not ASOS nevertheless had an “own name” defence under Article 12 CTMR which provides:

“A Community trade mark shall not entitle the proprietor to prohibit a third party from using in the course of trade:

his own name or address

[…]

Provided he uses them in accordance with honest practices in industrial and commercial matters”

It was unanimously accepted that Asos’s use of the ASOS sign amounted to the use of its own corporate name, so the defence could apply in this case. Having assessed the circumstances of that use, Kitchin LJ and Underhill LJ accepted that several factors demonstrated that Asos had made such use in accordance with honest practices. These included that (i) the ASOS name had originally been adopted in ignorance of Maier’s ASSOS brand and, therefore, without any intention to create an association with it, (ii) there was no evidence of any actual confusion on the marketplace having occurred by virtue of Asos’s use of the ASOS brand and (iii) Asos had taken steps to minimise the risk of such confusion arising once it did become aware of the ASSOS brand such as deleting references to “cycling” from its product descriptions and withdrawing sponsored advertising bids for the search term “ASSOS” which had initially been placed to capture any misspelt searches for ASOS brand.

Sales LJ disagreed in a strong dissenting judgment. In his view, greater weight had to be given to the interests of the CTM proprietor and the relevant public in the application of the “honest practices” standard. He pointed to several factors in the CTMR and the authorities which indicated that significantly more weight ought to be given to those interests than the rights of the party asserting the own name defence, including that:

1. the Recitals of the CTMR refer to the importance of the interests of the CTM proprietor at several places, whereas there is no corresponding reference to the importance of any own name defence at all. This was particularly relevant given the “strongly purposive approach to be adopted in the interpretation of EU legislation”;
2.  there is no support in the CTMR for the proposition that the use of its own name for marketing purposes is to be accorded ‘fundamental’ weight. This is more so the case where corporate entities are concerned, who are free to choose and change their names as they see fit;

iii.  the “own name” defence is not a ground for opposition to registration of a CTM and therefore must be considered a secondary degree of protection (thus undermining the suggestion that it is a right of fundamental importance); and

1.  the rights of a CTM proprietor to expand and develop its mark across the full scope of its specification (which includes those goods falling within the notional fair use of it) must be taken into account when considering whether use amounts to an “honest practice” and, in particular, whether or not the defendant has taken sufficient steps to avoid any conflict with these rights.

From this starting point, Sales LJ pointed to several factors that suggested that Asos’s use did not satisfy the “honest practices” standard, including that (i) Asos had failed to conduct proper clearance searches prior to adopting the ASOS mark and (ii) by the time that it chose to branch out into own brand goods (at which point it was aware of the ASSOS brand) it “could and should have appreciated that it ought to use another sign which differentiated its goods from those of Assos…”.

Comment

This decision raises a number of interesting issues, which is unsurprising of a judgment that includes a strong dissenting voice.

Whilst the Lords Justice broadly agreed that the trial judge had been too strict in her limitation of the specification of the ASSOS CTM, there was a divergence in opinion as to how Maier’s use in relation to certain items falling within the umbrella category of “casual wear” should be properly categorised or, indeed, whether any greater specificity was required to determine a specification that fairly reflected Maier’s actual use of the ASSOS CTM and, thus, the protection that should be afforded by it going forward. This aspect of the diverging judgment can largely be attributed to the Lord Justices’ own application of the relevant legal principles to the specific facts of the case and is a salutary reminder to litigants that the personal views and experiences of an individual judge remains an important factor in the overall outcome on these types of issues.

Of perhaps greater interest is the differing approach to the assessment of the own name defence, which appears to derive from a fundamentally different approach to the applicable law under the CTMR. In his dissenting judgment, Sales LJ gives a compelling explanation as to why in his view the text of the CTMR requires greater weight to be given to the rights of the trade mark proprietor and the relevant public, effectively placing the full burden on the party seeking to rely on the defence to show that in all the circumstances it had taken all reasonable steps not to impinge on those rights, thus satisfying the “honest practices” standard. It is difficult to find fault with this reasoning, particularly in the light of the teleological approach that must be adopted when interpreting EU legislation. In contrast, in many ways it appears that the majority approached the issue on the basis that having established that the sign did amount to use of the defendant’s own name and that the defendant had taken some steps to mitigate the risk of conflict, it was then necessary for Maier to demonstrate why those steps did not satisfy the “honest practices” standard. Given the finding of infringement, it is difficult to imagine that this aspect of the judgment will not be the subject of further discussion in the event of any appeal to the Supreme Court. However, in the light of the clearly differing approaches of the Lords Justice in the Court of Appeal it appears the issue of the correct approach to the own name defence under Art. 12 is not acte clair and it would not be surprising to see questions referred to the Court of Justice of the European Union on this point if this case is appealed further or in the next case in which the own name defence is relied on.

Another interesting point on which the Lords Justice did agree is the clarification that the question of detriment to distinctive character under Art. 9(1)(c) extends to all of the goods and/or services covered by the specification of the mark in issue, irrespective of whether or not any use has been made and reputation acquired in relation to all of those goods and/or services. As acknowledged by Kitchin LJ in particular, at first glance this approach may seem counterintuitive on the basis that conceptually it may be difficult to accept that a mark may enjoy the broader protections afforded to mark with a reputation under Art. 9(1)(c) in respect of goods in relation to which it has not actually been used. However, as Sales LJ’s “swamping” example demonstrates, once an appropriate specification has been identified (which may, after five years from registration, be limited to a more limited selection of goods and services to fairly reflect the appropriate scope of protection based on the use made of it), there is no reason or support in the relevant statute or authorities as to why the proprietor should not be entitled to enjoy the full protection afforded by Art. 9(1)(c) across the full specification.