At issue was the invalidation of trademark, namely the shape of London taxi and its revocation for non-use. According to the appellants, the shape of the taxi which was recognised as licensed London taxi was distinctive and served as an indication of the origin of goods. Over the years the appellant had made minor changes to the shape but continued to advertise the taxis as the licensed London taxi.

The respondents sought to introduce taxis (Metrocab) with some similar features and a host of distinct features. The appellant alleged that this amounted to infringement of its registered trademark, it would lead to confusion among the consumers both taxi owners and hirers of cabs and, also claimed tort of passing off.

However, the Court of Appeal upheld the judgement of the Single Judge both on count of invalidation as well as non-use. The Court held that though the shape was well-recognised as the iconic London taxi, it did not serve as indication of origin. Though the persons who purchased taxis as well as hirers did associate the shape with that of a licensed taxi, they did not necessarily associate it with the manufacturer of the Taxis. Hence, the shape did not serve as a trademark.

Moreover, the alleged infringing shape was quite different from the registered marks and there was no possibility of confusion as to origin of goods. At best, the similarity in shape indicated that the taxi was a licensed London taxi and taking into the account the intended use, the shape (with similar features) amounted to honest use.

The Court in the case The London Taxi Corporation Limited v. Frazer-Nash Research Limited thus concluded that even if the appellant could claim that its mark was valid, it would have to tolerate any injury caused by similarity in marks because the use was honest. As regards non-use, the Court held that second hand sales of the taxis after its production had been stopped would not amount to use of trademark.