The High Court ruled last week that the so-called "own-name" defence to trade mark infringement does not apply to the trading name of a company, where that name differs from the registered name. This is the case even where the trading name used is that of the sole director of the company who is jointly liable with the company for trade mark infringement.

Summary

  • The so-called "own-name" defence is of narrow application and does not apply to the trading name of a company, where that name differs from the registered name.
  • The principles applied by OHIM and by the Courts of England and Wales in analysing bad faith are now the same, and the Court held it does not constitute bad faith for a party to apply to register a Community trade mark merely because he knows he shares that mark with others.
  • The addition of the word "London" to a trade mark is a non-distinctive variation, in particular in relation to services provided in London.

Business Impact

  • Trade mark owners can take comfort from the fact that businesses cannot circumvent trade mark law by trading under a different name from their registered name and then seeking to rely on the own name defence, even where that trading name is the own name of a sole director of the company.
  • It is important to take prompt action to enforce trade mark rights at an early stage. The judge noted that this matter may not have progressed so far had the claimants taken action rapidly upon becoming aware of the defendants' proposed use of the mark, rather than waiting until use had commenced.
  • It is also critical to ensure that strict licensing or co-existence agreements are put in place wherever possible, no matter what historical links there may be between parties or what informal usage may have been permitted in practice.  

Background

The three claimants are all members of the Orient Express Hotels Group of companies and operate, respectively (i) the Hotel Cipriani in Venice, (ii) the Ristorante Villa Cipriani at the Lapa Palace Hotel, Lisbon and (iii) the Ristorante Villa Cipriani at the Reid's Palace Hotel, Madeira. The first claimant, HC, is the registered proprietor of a Community Trade Mark for CIPRIANI (the "CTM") in respect of various foods and services, including "hotels, hotel reservation, restaurants, cafeterias, public eating places, bars, catering; delivery of drinks and beverages for immediate consumption", as well as an equivalent UK Trade Mark for CIPRIANI (the "UKTM").

The first defendant, Cipriani (Grosvenor Street) Limited ("CGS"), operated a restaurant in London, Cipriani London, commonly referred to as simply as Cipriani, from April 2004. Proceedings were also brought against the sole director of CGS and the Luxembourg company that licensed CGS to use the name Cipriani.

The claimants alleged that CGS’s use of the sign CIPRIANI in relation to the restaurant infringed the CTM pursuant to Article 9(1)(a) of Council Regulation 40/94 (the "Regulation"). The defendants did not dispute that there was a prima facie case of infringement (in terms of use of an identical sign for identical services etc). However, they advanced two defences, the "own name" defence under Article 12(a) of the Regulation and a counterclaim for a declaration of invalidity of both the CTM and the UKTM under Article 51(b) of the Regulation on the basis that it had been made in bad faith.

The claimants also alleged that CGS’s use of the sign Cipriani London in relation to the Restaurant infringed the CTM pursuant to Article 9(1)(b) of the Regulation. The defendants accepted that the marks were similar, but denied that there was a likelihood of confusion. Alternatively, the defendants relied upon the same two defences as in relation to the Article 9(1)(a) claim.

The claimants also claimed that CGS’s use of the mark constituted passing off.

The importance of prompt action

The judge emphasised the importance of prompt action to enforce trade mark rights at an early stage. Reiterating Jacob LJ in Phones 4 U, he noted that "even if [trade mark] rights are not actually lost, delay is apt to turn what would be over in a few weeks by a quick application into a mini State Trial. As here.” He suggested that this matter may have not have progressed so far had the claimants taken action upon becoming aware of the impending launch of the defendants' restaurant. However, they elected not to do so, and proceedings were not issued until the restaurant had been operating for over two and a half years.

Infringement

The judge considered that, if one assumes that the CTM was being used in relation to restaurant services in London (a point not challenged by the defendants), there was a manifest likelihood of confusion in April 2004. The addition of the word "London" in the defendants' sign Cipriani London was non-distinctive, particularly for a restaurant in London. The dominant and distinctive element in the sign was CIPRIANI, as was both self-evident and confirmed by the fact that both the defendants and third parties often dropped the word "London". Thus, the dominant and distinctive elements of the mark and the sign were identical, as were the services. He therefore held that, even if the CTM did not have a reputation, the average consumer would think that the services denoted by the mark and the sign came from the same or economically-linked undertakings. The reputation of the CTM made this even more likely.

The judge therefore held that CGS’s use of the sign CIPRIANI infringed the CTM pursuant to Articles 9(1)(a) and 9 (1)(b), and the second and third defendants were jointly liable with CGS. He then went on to consider the defences put forward.

Own name defence

The defendants’ reliance on the "own-name" defence in Article 12(a) of the Regulation gave rise to three issues, namely:

  1. Does the use of the signs CIPRIANI and CIPRIANI LONDON by CGS constitute use of its own name?

The judge held that the "own-name" defence was an exception to Article 9(1) and should be narrowly interpreted. Article 12(a) protects a third party using his "own-name", not another person’s name. Accordingly, it is unlikely to have been intended to apply to a company’s trading name rather than its registered name. CGS could therefore not avail itself of this defence, since neither CIPRIANI nor CIPRIANI LONDON was its own name.

  1.  If not, can CGS rely upon the names of the second and/or third defendants?

The judge held that neither the second nor third defendant was trading or making the use of the sign that was complained of, CGS was. Article 12(a) protects a third party using "his own name", not another person’s name. It was immaterial that they were jointly liable for any infringement.

  1.  If the answer to the first or second question is yes, is such use in accordance with honest commercial practices in industrial or commercial matters such that the own name defence can apply?

The judge found that the defendants knew of the existence of the CTM at the time that they opened their restaurant. Furthermore, even if they had not known of it, a reasonable person in their position would have instructed their trade mark attorneys to conduct a search, and such a search would almost certainly have revealed the existence of the CTM. Their use was therefore not in accordance with honest commercial practices.

Accordingly, the judge held that the defendants had no defence under Article 12(a).

Bad faith

The defendants only opted to attack the validity of the CTM on the grounds that the application was made in bad faith under Article 51(b) of the Regulation.

The judge considered that there was now no difference between the principles applied by OHIM and by the Courts of England and Wales in analysing bad faith. He found that the defendants' case involved making new law and depended on the proposition that "any party who seeks to take exclusively for himself a trade name which he knows he shares with others is acting in bad faith".

The judge did not accept this contention. He held that a person is presumed to have acted in good faith unless the contrary is proved. Bad faith generally implies or involves, but is not limited to, actual or constructive fraud, or a design to mislead or deceive one another, or any other sinister motive or dishonest intention. He therefore held that it does not constitute bad faith for a party to apply to register a Community trade mark merely because he knows that third parties are using the same mark in relation to identical goods or services, let alone where the third parties are using similar marks and/or are using them in relation to similar goods or services. The applicant may believe that he has a superior right or is otherwise entitled to registration and use of the mark. Further, he may wish to secure exclusivity in the bulk of the Community while knowing that third parties have local rights in certain areas (as allowed by Article 107 of the Regulation).

Accordingly, in this case, there was no evidence that the CTM application had been made in bad faith. HC had been using the mark CIPRIANI in relation to hotel and restaurant services in Venice for many years and had acquired a substantial and valuable reputation in Italy and elsewhere in the EU. They therefore had an obvious and legitimate interest in applying to register the mark. The defendants’ counterclaims for declarations that the CTM and UKTM were invalid therefore failed.

Passing Off

The judge found that HC not only had a substantial reputation in the UK in April 2004, it also owned valuable goodwill in the CIPRIANI mark. The use of the mark by the defendants was likely to mislead a substantial number of members of the public into believing that the restaurant was run by, or connected in the course of trade with, HC. In such circumstances, it was not seriously disputed that damage followed once the claimants had established goodwill and misrepresentation. CGS was therefore liable for passing off.

Point to note

This case highlights the importance of ensuring that strict licensing or co-existence agreements are put in place wherever possible, no matter what historical links parties may have or informal usage may be permitted in practice.