The Intellectual Property Enterprise Court (“Court”), in their recent judgment for the case of The Sofa Workshop Ltd v Sofaworks Ltd, has clarified on certain criteria for a trademark to be eligible for registration under EU Regulation 207/2009 (“Regulation”). What is more important from this case is its implication on whether a trademark should be registered nationally or under the CTM regulation.
The Sofa Workshop Ltd (“Sofa Workshop”) runs a business by selling sofas and other furniture, whereas Sofaworks Ltd (“Sofaworks”) also runs a similar business. Sofa Workshop has initiated two actions against Sofaworks, namely infringement of Sofa Workshop’s two Community Trade Marks (“CTM”) and the common law tort of passing off based on the similarity of both names. Sofaworks argued that the two trademarks should be revoked on the ground of non-use contrary to article 51 of the Regulation and deemed invalid because of their descriptive nature pursuant to article 7(1)(c) of the Regulation. As a defense, Sofa Workshop admitted non-use in certain specification of both CTM, but contended that both CTM has acquired distinctiveness. It also wanted to convert both CTM to national UK trademark application.
On the allegation of Non-use
According to art. 51(a) of the Regulation, CTM will be revoked if it is not put to genuine use in the Community. As to what constitutes “genuine use in the Community”, the Court formulated its answer as follows.
The Court first examined the principles laid down by the Court of Justice of European Union (CJEU) on the geographical criterion for such genuine use in the Community, and asserted that “In respect of Community marks the geographical extent of use is, in the general run, crucial: it must extend at least beyond the boundaries of one Member State” with the exception that the market for the goods or services is confined to one Member State. Then, the Court moved on to establish that “genuine use” means “a reasonable trader would regard the use concerned as ‘in the course of trade in relation to goods’ within the Member State concerned”, or put it simply, the goods or service is at least partly targeted at consumers in that Member State.
For Sofa Workshop, despite the fact that there was advertisement circulating in Ireland, the Court deemed that its advertisement only targeted at consumers in UK because of the local phone number and invitation like “pop in” their shops. It was obvious that the use did not target at any consumers at Ireland, not to mention other Member States. The Court ruled that the CTM did not satisfy the requirement of “genuine use in the Community”.
On the allegation of validity
According to art. 7(1)(c) of the Regulation, any trademarks should not be registered if it consists “exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service”, unless acquired distinctiveness was established through the use of the CTMs. The basic idea under this article, as the Court has put, was that descriptive signs relating to one or more characteristics of the goods or services may be freely used by all traders offering such goods or services.
At first, the Court thought that the two words “sofa” and “workshop” were descriptive in nature in a sense that it described the quality of the sofa and the flexibility embodied in its manufacture. Yet, based on the evidence submitted by Sofa Workshop, the Court found that the trading name has acquired distinctiveness in the UK through consumers’ statistics. But still, both CTM failed this limb because they did not extend beyond the UK to at least one other Member State.
With Sofa Workshop failing both criteria of “genuine use of the Community” and “validity”, the Court agreed that any action of infringement intimated pursuant to the Regulation could not be substantiated. However, the Court eventually found Sofaworks liable for the common law tort of passing off since Sofa Workshop was likely to suffer damage as a result of the similar trade names.
It is clear that the gist of the case turns on whether the trademarks were used outside the UK. The CTM were found in genuine use and valid within the UK. However, since the CTM were registered under the Regulation, an additional territorial criterion of extending beyond more than one Member State was imposed. This was why Sofa Workshop failed in its action of infringement under the Regulation. This means that for businesses providing goods or services mainly or exclusively within the UK, they should register for national trademarks in order to gain legislative protection of their trademarks. The shortcoming of this would be the businesses cannot guarantee their names not being used in other Member States by an entirely separate business. The EU registration is for business running all over EU, domestic businesses should not bite off more than they can chew.
Even so, one of course can still rely on the common law tort of passing off as in the present case before us regardless of the regime it is registered under. However, it is not always straightforward and easy to prove the business enjoys goodwill or reputation in its services and goods, and that the infringing act of the other business had misled the public that its services and goods are those of the plaintiff.