Summary and implications

The Court of Appeal has now handed down its eagerly awaited judgment in Hotel Cipriani SRL and others v Cipriani (Grosvenor Street) Ltd and others [2010] EWCA Civ 110. The Court has affirmed the High Court judge’s decision on all points, finding that the defendants’ use of the names Cipriani and Cipriani London, in relation to the now-famous restaurant, infringes the first claimant’s Community trade mark registration for the mark CIPRIANI.

The following important points came out of the judgment:

  • The ruling established that the “own name” defence to trade mark infringement can apply to a trading name, provided its use is in accordance with honest practices.
  • The Court confirmed that a foreign company may be able to prove that it has goodwill in the UK by showing that it has a substantial body of customers in the UK and a substantial number of orders are placed directly from the UK.
  • The ruling also clarifies the law in relation to aspects of bad faith registrations.

Basis of the Appeal

The claimants were part of a hotel group which owned a number of hotels bearing the Cipriani name. The first claimant, Hotel Cipriani Srl, owned and ran a famous and luxurious hotel in Venice, the Hotel Cipriani. It also held a Community trade mark and UK trade mark registrations for the word CIPRIANI.

The defendants were part of the Cipriani group of companies, which operated a number of restaurants internationally under the Cipriani name. The first defendant, Cipriani (Grosvenor Street) Limited, operated a restaurant in London under the name Cipriani London, or Cipriani for short.

In 2006, the claimants sued on the basis of infringement of their Community trade mark and under section 56 of the Trade Marks Act 1994 which provides protection for “well-known” marks, as well as on the basis of passing off. The defendants maintained that the claimants could not satisfy the requirements for passing off, or for a claim under section 56, and sought to rely on the “own name” defence as regards the infringement claim. They also sought a declaration that the Community trade mark was registered in bad faith. The judge, Arnold J, found in favour of the claimants on all points and the defendants appealed.

Relevant Background

The parties to this dispute all shared a common connection – that of Signor Giuseppe Cipriani the elder. Signor Giuseppe was the grandfather of the second defendant and co-founder of the first claimant. His grandson, the second defendant, was the sole director of the first defendant.

However, the connection stopped there. In 1976, Signor Giuseppe sold his interest in the first claimant to the Guinness family. At that time, Signor Giuseppe entered into an agreement stating that he agreed to the first claimant and the Hotel Villa Cipriani (another hotel formerly owned by the Guinness family) having the exclusive right to use the Cipriani name in relation to any hotel or restaurant business. The exception to this was that Signor Giuseppe and his successors could use the name Cipriani in relation to the Locanda Cipriani in Torcello, another hotel in Venice.

Infringement of the Community trade mark

It was accepted that the defendants had infringed the claimants’ Community trade mark. What was at issue, was whether the defendants could avoid liability by either proving that the mark was invalid for having been registered in bad faith, or by relying on the “own name” defence.

“Bad Faith”

Under the Community Trade Mark Regulation (CTMR), a Community trade mark registration may be revoked if it was registered in bad faith. The law in this area had been clarified, since the first instance judgment, by the Court of Justice of the European Union in the Lindt Bunny case. The CJEU held that in determining whether a mark was registered in bad faith, the court must take into account all the relevant factors specific to that case at the time of filing the application, in particular:

  • the fact that the applicant knows or must know that a third party is using an identical or similar sign for an identical or similar product capable of being confused with the sign for which registration is sought;
  • the applicant’s intention to prevent that third party from continuing to use such a sign; and
  • the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is sought.

The defendants’ case was that at the time of filing, the first claimant knew that the Cipriani mark had a shared reputation extending to the Cipriani family and group, the latter was entitled to some degree of legal protection and the effect of registration of the Cipriani mark would be to prevent the Cipriani family and group from exploiting their share of the reputation.

The Court of Appeal found the first claimant did not intend to prevent the Cipriani family from using the mark. Even if they did, the registration would not prevent them from using the mark in Europe since they were already refraining from using it there pursuant to the agreement signed by Signor Giuseppe. Accordingly, the Court found that there was neither any use, nor any apparent right to use, the mark with which the registration was incompatible. The Community trade mark was therefore valid.

“Own Name Defence”

The CTMR also provides that a Community trade mark does not entitle the proprietor to prohibit a third party from using his own name in the course of trade, provided that third party uses it in accordance with honest practices. The defendants argued that the use of the name Cipriani constituted the use by the first defendant of “his own name” and was therefore permitted.

It was already settled law that a legal entity could use this defence in relation to its corporate name. However, both Cipriani and Cipriani London were trading names of the first defendant. Arnold J held at first instance that a company could only rely on the defence in respect of its corporate name.

The Court of Appeal however felt that the rule that a company can only rely on its corporate name when relying on the own name defence was not absolute. It said that the mischief of a misleading name, whether it is a corporate name or a trade name, is to be dealt with by reference to the proviso for honest use, not by a rigid rule that a trade name cannot ever be an “own name”.

It held that the “own name” defence may therefore be available in respect of a trading name, but it will depend on (a) what the trading name is; (b) in what circumstances it has been adopted; and (c) whether the use is in accordance with honest practices. On this basis, it found that the use by the first defendant of the Cipriani name amounted to unfair competition and could not be justified as honest use, even if it could be regarded as the first defendant’s “own name”.

Passing Off

To succeed in an action for passing off, a claimant must prove that it has goodwill in the UK. The question in this case was whether the first claimant had sufficient goodwill in the UK in relation to the Hotel Cipriani in Venice to prove passing off.

The Court of Appeal found that it did. It said that the international reputation of Hotel Cipriani was something that brought in business from England and was an attractive force that brought in English custom. Accordingly the business had goodwill in England at the relevant time. It based this finding on the fact that the first claimants had a substantial body of customers in the UK and a significant volume of business was placed directly from orders from the UK. However, the Court went on to recognise that the test of whether direct bookings were made from the UK may be an increasingly redundant test as more and more establishments offer online booking from anywhere in the world and left it open for a Court at a later date to review whether the test should be wider.

Conclusion

This ruling provides useful clarification on the use of the “own name” defence. It confirms that a trading name can be an “own name” for the purposes of this defence, but only if used in accordance with honest practices. Despite this, it is difficult to envisage many situations where it would be possible and necessary for a company to rely on this defence in relation to the use of its trading name. If it had been trading prior to a third party registering its trading name as a trade mark, it would expect to rely on its prior rights to revoke the registration.

Foreign businesses will also be pleased to learn that they may be able to rely on a UK customer base, making direct bookings, to establish goodwill in the UK, even if they do not operate any business in the UK. It remains to be seen whether any later judge takes heed of the Court’s words and reviews the significance of online bookings in the digital world in this context.