The London Taxi Corporation Ltd v Frazer-Nash Research Ltd and Ecotive Ltd

The Facts

The claimant, The London Taxi Corporation Limited (“LTC”) owned a number models of London taxis, in particular the Fairways, TXI, TXII and TX4 models. It owned a Community Trade Mark (“CTM”)  in class 12 (for Motor vehicles, accessories for motor vehicles; parts and fitting for the aforesaid), based on the appearance of the Fairways model, consisting of a three-dimensional mark as follows:

Click here to view the image.

LTC also owned a UK three-dimensional trade mark (“UKTM”) for taxis in class 12 (for Cars; cars, all being taxis), based on the appearance of the TXI and TII models, represented as follows:

Click here to view the image.

(The CTM and UKTM being together the “Trade Marks”).

The six views making up the UKTM were also protected by UK Registered Design, but the design was not relied upon by LTC.

LTC issued proceedings against Frazer Nash Research Limited and Ecotive Limited (the “Defendants”) for trade mark infringement and passing off, following the Defendants’ launch of the new “Metrocab”. The new Metrocab is shown below:

Click here to view the image.

LTC alleged infringement of:

  • Article 5(1)(b) of the Trade Marks Directive (2008/95/EC) (“the Directive”) and Article 9(1)(b) of the CTM Regulation, whereby, because of a sign’s identity with or similarity to the registered mark and the identity or similarity of the goods or services covered by the registered mark and the sign, there exists a likelihood of confusion on the part of the public
  • Article 5(2) of the Directive and Article 9(1)(c) of the CTM Regulation, whereby a sign is identical or similar to the registered mark and the registered mark has a reputation in the Community, and use of the sign without due cause takes or would take unfair advantage of, or be detrimental to, the distinctive character or repute of the CTM.

The Defendants counterclaimed on the basis that:

  • The Trade Marks were devoid of distinctive character contrary to Article 3(b) of the Directive and Article 7(1)(b) of the CTM Regulation
  • The Trade Marks consisted exclusively of the shape which gave value to the goods contrary to Article (3)(e)(iii) of the Directive and Article 7(1)(b)(iii) of the CTM Regulation
  • The CTM should revoked for non-use pursuant to Article 15 of the CTM Regulation.

The Decision

Arnold J found in favour of the Defendants, holding that the Trade Marks were invalid for lack of distinctive character and because they consisted exclusively of the shape which gave substantial value to the goods. Arnold J also found that the CTM should be revoked for non-use and the passing off claim was rejected. The reasoning behind the decision is outlined below.

Average Consumer

LTC had argued that the average consumer included members of the public who hired taxis.

This argument was rejected by Arnold J, who found that the relevant average consumer was the average taxi driver, since the goods at issue were taxis. Arnold J held that members of the public who hired taxis were consumers of taxi services, not taxis.

Validity of the Trade Marks

Distinctive character

Arnold J found that the fact that the shape of a product was unusual, was a necessary but not a sufficient condition for it to have inherent distinctive character. Although he found that each of the Trade Marks looked different to other cars, it was held that the average consumer would perceive both Trade Marks as merely a variation of the typical shape of a taxi. In any event, if the shape was regarded as departing significantly from the norms and customs of the sector, it would not have been perceived as identifying the origin of the goods. Therefore it was held that both Trade Marks were devoid of distinctive character.

Acquired distinctive character

Whilst he noted that he could find no authority on the point, Arnold J held that the relevant date for assessing acquired distinctiveness was the date of the counterclaim and not  the date of trial (as LTC argued), because otherwise the assessment could depend on how quickly the case was tried.

Applying the ECJ’s guidance in Société des Produits Nestlé SA v Cadbury UK Ltd [2014] EWHC 16 (Ch)[2014] ETMR 17, Arnold J found that to demonstrate that a sign has acquired distinctive character, the trade mark proprietor must prove that at the relevant date, a significant proportion of the relevant class of person perceives the relevant goods or services as originating from a particular undertaking because of the sign in question.

LTC’s case focused on the proposition that the Trade Marks had become distinctive to a significant proportion of consumers of taxi services in the UK, however as previously mentioned, Arnold J concluded that the relevant average consumer is a taxi driver not consumers of taxi services. Nevertheless, the judge assessed acquired distinctiveness from the perspective of both average taxi drivers and average consumer of taxi services.

The relevant factors in assessing acquired distinctiveness from taxi drivers’ perspective included the market share held by the goods and the investment in promoting the Trade Marks.  Even assuming that the relevant market is taxis suitable for use as licensed London taxis, at May 2014 the share of the market for new goods bearing the Trade Marks was nil, since neither the Fairway nor the TX1/TXII was still in production. None of LTC’s investment in promoting the Trade Marks was specific to the shape of the vehicles and, although journalists have referred to LTC’s taxis as ‘iconic’ or ‘icons of London’, there was no direct evidence that any taxi drivers perceived taxis embodying the Trade Marks as emanating from LTC because of their shapes. As such it was held that from the average taxi driver’s perspective, the Trade Marks had not acquired distinctive character.

In relation to average consumers of taxi services, there was no evidence to suggest that any consumers identified LTC as the source of the taxis because of their shape. LTC argued that they had a de facto monopoly of taxis having a similar appearance in London and the absence of anything other than shape which could indicate trade origin. Arnold J found that LTC had not had a monopoly since December 1986, when the old Metrocab was launched. Although production of the old Metrocab was intermittent and on a small scale from December 2000 onward and ceased in 2006, substantial numbers of old Metrocabs remained in use on the streets of London. LTC made no complaint of trade mark infringement or passing off in respect of the old Metrocab, so it followed that LTC must have accepted that the shape of the old Metrocab did not deceive the public.

Arnold J found that whilst it is true that the shape of the old Metrocab was noticeably different to that of LTC's taxis, it followed that, if and to the extent that consumers of taxi services care about the trade origin of taxis they hired, they will have learnt that licensed London taxis of a different shape to LTC's taxis had a different origin. Despite this, Arnold J held that the fundamental difficulty with LTC's case is that there is no reason why consumers of taxi services should care about the origin of the taxis driven by taxi drivers. He accepted that the evidence showed that consumers of taxi services in London have preconceptions about what a licensed London taxi looks like, which have been influenced by the presence of LTC's taxis on London's streets. However, he stated that provided a vehicle is a licensed London taxi, sufficiently conforms to those preconceptions and is sufficiently comfortable and reliable, the identity of the manufacturer is surely a matter of indifference to consumers of taxi services. As a result it was held that the Trade Marks had not acquired distinctiveness from the perspective of the average consumer of taxi services.

Substantial Value

Having reviewed the case law, in particular Hauck GmbH & Co KG v Stokke A/S C-205/13 (in which Stokke’s trade mark for the ‘Tripp Trapp’ chair was held to be invalid because the mark consisted of the shape which gave the product substantial value), Arnold J stated that it is the shape itself which must add substantial value to the goods and that goodwill derived from sales and advertising is not relevant. He also found that the relevant date for assessment is the date of application.

The shape that was the subject of the UKTM was also registered as a design. Arnold J stated that it was implicit from Hauck that this was a relevant but not a determinative consideration, since the Advocate General and ECJ held that a key purpose of Article 3(1)(e)(iii) of the Directive was to prevent trade marks from being used indefinitely to extend the time-limited protection of other intellectual property rights. Thus he held that the position is analogous to the situation where the shape has been patented, which the Court of Justice held to be relevant to an objection under Article 3(1)(e)(ii) in Lego Juris A/S v OHIM C-48/09 P (as discussed here). Arnold J also considered other factors mentioned by the Advocate General in Hauck, including consumer perception and artistic value of the shape. Arnold J found it implicit from LTC’s case that the shape would have been recognised as a London taxi and was regarded as iconic, as such he found that the shape of the TX1 did add substantial value to the goods.

With regards to the CTM, Arnold J held that although it was not protected by a registered design, it clearly could have been and therefore the position was much the same as the UKTM, and so he held that the shape did add substantial value to the goods.

Revocation of the CTM

LTC had stopped producing the Fairways some 10 to 12 years before the relevant period but relied on second hand sales and sale for scrap as evidence of use. It was held that disposals for scrap could not amount to use of the CTM at all and certainly not genuine use. Arnold J held that the sale of 264 used Fairways in the period for an average price of £585 constituted use but not genuine use. Even assuming that the sales of used vehicles constituted use of the CTM, this simply amounted to recirculation of goods which had already been put on the market under the CTM long beforehand. In addition, the average price achieved was a fraction of the price paid for a new taxi at the time (in the region of £30,000). This did not help create or maintain a share in the market for vehicles bearing the CTM and as such it was held that the CTM should be revoked for non-use.

Infringement of the Trade Marks

Arnold J approached the issue of infringement on the basis that contrary to his earlier findings, the Trade Marks were valid.

Article 9(1)(b)/Article 5(1)(b)

It was held that there was no likelihood of confusion on the part of taxi drivers between the Trade Marks and the Defendants’ new Metrocab, even LTC themselves appeared to concede this. In the instance that he was wrong about the average consumer, Arnold J also considered the likelihood of confusion on the part of consumers of taxi services. He held that whilst the low degree of attention by such consumers was a factor favouring likelihood of confusion, the low distinctive character and the low degree of similarity between the Trade Marks and the new Metrocab outweighed this and as such he held there was no likelihood of confusion and concluded that the Defendants had not infringed either of the Trade Marks under Article 9(1)(b) or Article 5(1)(b).

Article 9(1)(c)/Article 5(1)(b)

Arnold J found that the new Metrocab was sufficiently similar to the Trade Marks to remind the average consumer  of each of the Trade Marks, whilst appreciating that it differed from them. He held that there was no detriment to the Trade Marks’ distinctive character, and the nature of the association the average consumer would make would be simply that all three shapes are species of the genus London taxi. Held therefore that there was no infringement under Article 9(1)(c) or Article 5(2).

Defence

In any event Arnold J found, that if necessary, he would have held that the Defendants had a defence under Article 12(b) and Article 6(1)(b), namely that use of the sign was as an indication of the kind of goods.

Passing Off

Arnold J accepted that for the purpose of passing off, LTC could in principle claim goodwill in features of the shape which are common to all four models. However, on further analysis, LTC’s claim to goodwill was not based on specific features of shape common to the four taxi models, but upon abstractions which describe the common features of the four models. For example, a large and upright windscreen; a tapering bonnet; a prominent grille and a central ‘TAXI’ light on the roof. Assuming that a claim to goodwill can be made at this level of abstraction, it increased LTC’s difficulty of establishing that such features denote the source of its taxis.

Whilst Arnold J said there was considerable force in LTC’s submission that consumers of taxi services perceived these features as denoting that a vehicle was a licensed London taxi, he said that LTC had to go further and establish that these features denoted a particular source of London taxis. LTC relied on the same factors as it had in arguing that the Trade Marks had acquired distinctive character. For the same reasons, Arnold J rejected that these factors showed that consumers of taxis services relied upon these features as denoting the source of LTC’s taxis.

He found that there was no representation, as there was no evidence that the new Metrocab was likely to lead consumers to believe it came from the same source as LTC’s taxis and furthermore the Defendants did not intend to deceive the public. Finally he found that no damage occurred and therefore the claim for passing off failed.

Comment

This case highlights the difficulties in attempting to enforce a trade mark registration in respect of the shape of the goods. The particular difficulty in this case was Arnold J’s finding that the average consumer of the goods (whether taxi drivers or consumers of taxi services) did not consider the shape of the taxis indicated that the origin of the taxis was LTC. In line with a number of recent decisions involving shape marks, the judge found that origin was indicated by conventional word and figurative marks, and not the shape of the taxis.

Another key point from the case is Arnold J’s analysis of whether the trade marks consisted exclusively of the shape which gave substantial value to the goods. Arnold J applied Hauck and suggested that if a three-dimensional trade mark was capable of protection by other intellectual property rights (whether it was protected by such rights was irrelevant), the mark will fall foul of Article 3(1)(e)(iii) of the Directive and will be found to be invalid. Ironically in this case, Arnold J also used LTC’s own case for acquired distinctiveness, to add weight to his finding that that the shape of the marks must also add substantial value.