- This
is the judgment on the trial of a preliminary issue ordered by consent by Patten
J on 19 March 2003. The claimant, Inter Lotto (UK) Limited ("Inter Lotto"),
is engaged in the business of running lotteries on behalf of a number of charities.
The defendant is Camelot Group Plc ("Camelot"). It also runs lotteries.
In particular it manages the National Lottery under an operating licence from
the National Lottery Commission ("NLC").
- By
claim form dated 9 January of this year, Inter Lotto brought proceedings for trade
mark infringement and passing off against Camelot. For present purposes it is
only the passing off claim which is of interest. In substance Inter Lotto alleges
that continuously since 4 August 2001 it has promoted and organised the running
of lotteries throughout the country in relation to which it has used the trade
mark "HOT PICK". It claims to have built up a reputation and goodwill
in that mark. It alleges that from about 7 July 2002, Camelot launched a new lottery
game under or by reference to the trade mark "HOTPICKS". It alleges
that HOTPICKS is confusingly similar to HOT PICK and that the defendant’s activities
have resulted in confusion in the market place and constitute passing off.
- Camelot
raises a number of defences. For example it says that Inter Lotto did not use
HOT PICK as a mark for a lottery and, if it did, it did not start promoting the
mark until much later than it claims and that, for various reasons which are not
relevant to the current application, Camelot’s activities have not and will not
cause any or any significant damage to Inter Lotto. However, central to the current
application are the defences arising out of Camelot’s use of a registered trade
mark. By the terms of its operating licence, all intellectual property rights
relating to the National Lottery are owned by NLC and licensed to the operator,
Camelot. On 17 October 2001 Camelot caused NLC to apply to register the name HOTPICKS
as a trade mark under application number 2 283 392 ("the ‘392 mark").
It was advertised for opposition on 7 August 2002. Inter Lotto opposed on 7 November
2002. That opposition in the Trade Marks Registry is currently stayed pending
the outcome of the current application. A number of other trade mark applications
were made and, in some cases, opposed. They can be ignored for present purposes.
- Camelot
was exclusively licensed by NLC to use the ‘392 registered mark on 24 April 2002.
It pleads that its use of the registered trade mark gives it a number of defences.
The only ones relevant to this application are pleaded as follows:
"11. In
the premises:
(a) by
reason of the provisions of section 9 of the Trade Marks Act 1994 ("the Act")
and the NLC Licences, the Defendant has at all material times had the exclusive
rights in [the ‘392 mark] ; …
(c)
by reason of the provisions of sections 9, 10(1), 10(2) and 30 of the Act
and the provisions of the NLC Licences, upon the premises of the particulars of
claim (namely that the word HOTPICKS so resembles the words HOT PICK when used
in relation to lotteries as to give rise to confusion), the Claimant’s use of
the words HOT PICK in relation to its lottery game is and always has been unlawful
and may therefore not be relied upon by the Claimant in support of any action
for passing off against the Defendant which is the lawful user of the trade marks
the subject of [the ‘392 mark]. …
13. …
By reason of the facts and matters set out in paragraph 11 above, no goodwill
or reputation in the words "Hot Pick" can accrue to the Claimant and
the Claimant may not rely upon any use it may have made of the words "Hot
Pick" in relation to any case made against the Defendant.
- The
effect of these pleas may be summarised as follows. Because of the exclusive rights
which will exist in NLC’s trade mark, all use of Inter Lotto’s mark after the
date of registration is to be treated as unlawful. As a result, Inter Lotto can
not rely upon any reputation or goodwill generated by such unlawful use (i.e.
after 17 October, 2001) in support of its passing off case. This was the way in
which Mr Silverleaf put his client’s case:
"The
claimant’s use of its mark is unlawful and cannot found an action
If
the defendant is entitled to the benefit of a valid trade mark registration, it
has the exclusive right to use the mark. It follows that the claimant’s use of
the same mark is unlawful. On this basis alone the claim for passing off should
fail: ex turpi cause non oritur actio. There has to be a nexus between
the illegality and the claim for passing off: ICI v Berk [1981] FSR 1.
However, it is difficult to think of a closer nexus than that the use relied upon
in support of a passing off claim is an infringement of a trade mark registration.
The effect of an unlawfully acquired reputation has been raised before and it
has been held that such a reputation is incapable of supporting a claim for passing
off." (defendant’s skeleton paragraph 3.23)
- The
point is emphasised in a supplementary skeleton argument served by Mr Silverleaf
shortly before the hearing. In response to a large number of authorities cited
in the claimant’s skeleton by Mr Hobbs QC, who appears for Inter Lotto, Mr Silverleaf
expressed his client’s position as follows:
"The
defendant’s case is based upon the proposition that a valid trade mark registration
which is of such scope as to prevent the specific user relied upon by the claimant
to support its claim for passing off entitles the defendant to restrain the
claimant from infringing his registration and is therefore a bar to the passing
off claim." (paragraph 2, emphasis as in the original)
- Thus,
because Inter Lotto’s use of its mark after 17 October 2001 was unlawful, it was,
per se, incapable of giving rise to any goodwill and reputation which a court
would be prepared to protect. The date of registration of Camelot’s mark therefore
acts as a guillotine. Only rights accrued before then can be taken into account
in support of Inter Lotto’s case of passing off.
- Inter
Lotto’s case is that it can rely on all the goodwill built up by its alleged use
of the HOT PICK mark from 4 August 2001 until Camelot commenced using HOTPICKS
in July 2002. It is not disputed that, absent the special defence which is central
to this application, it is the date when the defendant started using its mark
which is relevant for determining the passing off claim. On the other hand Mr
Hobbs accepts that if Camelot’s plea is good in law, so that it can only rely
on the reputation and goodwill generated in the period prior to the date of application
to register the ‘392 mark, that is to say prior to 17 October 2001, this could
have a significant impact on his client’s passing off claim since it would need
to demonstrate the development of sufficient reputation and goodwill in a few
months at the very early stages of its use of the HOT PICK mark. Mr Hobbs argues
that defendant’s plea is bad in law. Inter Lotto can rely on the later and more
extensive use which it alleges.
- It
is against that background that the parties agreed to the making of the consent
order requiring the determination of the following preliminary issue:
"Is
the 17th October 2001 (the date on which the National Lottery Commission
applied under application number 2283392 to register the designation HOT PICKS
as a trade mark) the relevant date at which the claimant’s reputation and goodwill
for its claim in passing off falls to be assessed?"
- Before
considering the arguments advanced by the parties, it is necessary to have a clear
understanding of what is in issue. I have already referred to the relevant pleadings
in the defence and passages in Mr Silverleaf’s skeleton arguments. However the
nature of Camelot’s case changed significantly during the course of the hearing.
- It
is possible to formulate a defence to the passing off action in two ways. First,
it could be said that Inter Lotto has no enforceable goodwill and reputation.
If that is the case, the claim will fail. Inter Lotto will have no rights which
it can assert. The sword is taken from its hand. Second, it could be said that,
even if Inter Lotto does have enforceable goodwill and reputation, Camelot cannot
be restrained because it has an overriding entitlement to do the acts of
which complaint is made. In such a case Camelot would have a personal shield.
As can be seen from the pleadings and extracts from the its skeletons above, the
plea advanced on behalf of Camelot was of the first type. The numerous authorities
relied on by Mr Hobbs addressed the second type of defence. Because they did so,
Mr Silverleaf said they were irrelevant and did not deal with the point he was
raising. However, during the course of his speech he changed position. He asserted
that Camelot’s ownership of the ‘392 registered mark provided it with an entitlement
to use it. He said that his client had a "better" claim than Inter Lotto
to the marks in suit. He said that the issue was one of priority of rights and
"hierarchy". His client’s right to use its registered trade mark overrode
any common law rights Inter Lotto might have.
- Although
this second type of defence is not what is pleaded by Camelot, Mr Hobbs did not
object to Mr Silverleaf raising it. He says that both defences are bad in law.
- At
the forefront of his argument Mr Hobbs relies on s. 2(2) of the Trade Marks Act,
1994 ("the Act"):
"No
proceedings lie to prevent or recover damages for the infringement of an unregistered
trade mark as such; but nothing in this Act affects the law relating to passing
off."
- At
its simplest, Mr Hobbs argues that there are here on the assumed facts, two distinct
rights; NLC’s and Camelot’s in NLC’s mark and Inter Lotto’s in its reputation
and goodwill built up by use. Although they may, in some circumstances, overlap,
they are not the same and one is not superior to the other. There is no hierarchy.
Each has to be considered on its own merits. The existence of Camelot’s registration
does not interfere with his client’s right to sue to protect the goodwill and
reputation which it has built up by activity in the market place. Mr Silverleaf
argues that Mr Hobbs has misconstrued the section.
- This
application concerns some important but quite basic issues of intellectual property
law. Each side argues that its position is supported by or consistent with s 2(2)
of the Act when construed in its historical context. For that reason, the history
of trade mark and passing off causes of action is a convenient starting point.
The
origins and development of passing off and trade mark rights.
- An
erudite discussion of the development of the law of passing off and trade marks
is to be found in The Law of Passing Off by Wadlow (2nd Ed 1995)
at paragraph 1.05 et seq. For present purposes, the following summary is sufficient.
- Two
or more centuries ago, the cause of action in passing off was dependent upon proof
of fraud. With time, this requirement disappeared, at least in one form of the
action, and it became dependent upon proof, inter alia, of misrepresentation.
An early example of this is Millington v Fox (1838) 40 E.R. 956. As Wadlow
points out, by 1842 the term "passing off" was in use and the principles
of the cause of action were defined by Lord Langdale MR in Perry v Truefitt
(1842) 49 ER 749 in terms which are familiar to the modern practitioner:
"I
think that the principle on which both the courts of law and of equity proceed,
in granting relief and protection in cases of this sort, is very well understood.
A man is not to sell his own goods under the pretence that they are the goods
of another man; he cannot be permitted to practice such a deception, nor to use
the means which contribute to that end. He cannot therefore be allowed to use
names, marks, letters, or other indicia, by which he may induce purchasers to
believe, that the goods which he is selling are the manufacture of another person.
I own it does not seem to me that a man can acquire property in a name or mark;
but whether he has or not a property in the name or mark, I have no doubt that
another person has not the right to use that name or mark for the purposes of
deception, and in order to attract to himself the course of trade, or that custom,
which without the improper act, would have flowed to the person who first used,
or was alone in the habit of using the particular name or mark."
- Much
the same thing was said by Parker J in a well known passage in Burberry’s v
Cording [1900] 26 RPC 693, :
"The
principles of law applicable to a case of this sort are well known. On the one
hand, apart from the law as to trade marks, no one can claim monopoly rights in
the use of a word or name. On the other hand, no one is entitled by the use of
any word or name, or indeed in any other way, to represent his goods as being
the goods of another to that other’s injury. If an injunction be granted restraining
the use of a word or name, it is no doubt granted to protect property, but the
property, to protect which it is granted, is not property in the word or name,
but property in the trade or good-will which will be injured by its use."
- The
ambit of the cause of action may well have expanded but not in a way which has
any impact on the issues I have to consider. The above passages are of significance
because they are early examples of the courts highlighting one of the crucial
differences between passing off and trade mark rights. Under the former, the claimant
acquires no property in his name or mark. The cause of action is dependent on
deception of the customer. Misappropriation of the name or mark by the defendant
may be the means by which that deception has been facilitated, but that does not
mean that the claimant owns the mark.
- In
a series of case in the middle of the 19th Century, Lord Westbury held
that there was a right of property in trade marks. Wadlow describes this as follows:
"While
the common law still required fraud, equity did not confine itself to relaxing
the standard of dishonesty required before it would intervene. In a series of
cases Lord Westbury L.C. "surprised the profession" [per Fry LJ in Newman
v Pinto (1887) 4 RPC 580] by holding that there was a right of property in
trade marks which was transmissible and enforceable even against innocent infringement.
Perhaps Lord Westbury would also have recognised property in trade names, and
if so the whole of the law of passing-off as it was then understood could have
been re-interpreted in terms of infringement of property rights as opposed to
misrepresentation. That, however, was not to happen. The law of trade marks was
put on a statutory basis, the law of passing-off continued in terms of misrepresentation,
and the idea of passing-off protecting a property right was largely rejected or
forgotten until the twentieth century. In retrospect, passing-off and trade mark
infringement may be seen as separate torts which to some extent evolved out of
the same historical authorities, just as copyright and breach of confidence cannot
always be distinguished in early cases on piracy of unpublished literary works."
(p 18)
- The
statutory basis of trade mark law referred to by Wadlow started with the Trade-Marks
Registration Act 1875. As its name suggests, it was designed to put in place a
registration system for trade marks. To encourage traders to use this, it provided
at section 1:
"From
and after the first day of July one thousand eight hundred and seventy-six a person
shall not be entitled to institute any proceedings to prevent the infringement
of any trade mark as defined by this Act until and unless such trade is registered
in pursuance of this Act".
- The
provisions of the 1875 Act were amplified by The Trade Mark Registration Amendment
Act 1876. As far as I am aware, at the time no one suggested that the provisions
of these Acts had any impact on the cause of action in passing off which were
not based on a claim to a property right in the name or mark.
- Once
these Acts were passed, infringement proceedings could only be brought in respect
of new marks which were registered. However, in respect of trade marks which were
in use before the 1875 Act but in respect of which registration had been refused,
the common law action for infringement of the unregistered mark continued (see
Orr Ewing v Registrar of Trade Marks (1879) 4 App Cas 479). In the meantime,
passing off actions were unaffected. An argument to the contrary appears to have
been dismissed in Mitchell v Henry (1880) 15 Ch D 181. In any event the
provisions of section 1 of the 1875 Act were, in substance, repeated in section
42 of the Trade Marks Act 1905:
"No
person shall be entitled to institute any proceeding to prevent or recover damages
for the infringement of an unregistered trade mark unless such trade mark was
in use before the thirteenth of August one thousand eight hundred and seventy
five, and has been refused registration under this Act. The registrar may, on
request, grant a certificate that such registration has been refused."
- Furthermore,
an entirely new provision was added in section, 45:
"Nothing
in this Act contained shall be deemed to affect rights of action against any person
for passing off goods as those of another person or the remedies in respect thereof."
- One
of the leading textbooks of the day, The Law of Trade Marks and Trade Names
by Kerly (3rd Ed 1908) expressed the view that the latter section merely
stated expressly what was already the law. Other textbooks of the time said the
same thing. Kerly illustrated the point by referring to the "Stone Ales"
case, Montgomery v Thompson [1891] AC 217. Thompson had a registered Stone
Ale as a trade mark. He sued a competitor, Mr Montgomery. The mark was removed
from the register. Notwithstanding that, Thompson succeeded in an action to restrain
the Mr Montgomery from using the mark in relation to his beer. The cause of action
in passing off was independent of the trade mark rights. A very similar case was
Faulder & Co. Ltd v Rushton (1903) 20 RPC 477. Kerly discussed the
differences between a trade mark infringement action and a passing off action:
"…
when an injunction is granted to restrain the use of a mark calculated to pass
off the defendant’s goods as those of the plaintiff, by reason of its resemblance
to his unregistered mark, it should be so limited as to leave it open for the
defendant to use any part, or the whole, of the plaintiff’s unregistered mark,
if he can do so, in any manner which is not calculated to lead to deception."
(p 343)
- That
passage is as applicable today as it was in 1908. Because the action in passing
off protects the reputation and goodwill of a trader, not his names, marks or
get up per se, a rival trader can, in theory, use those names, marks or
get up as long as he does so in a way which does not lead to deception. See, for
example, Fisons v Godwin [1976] RPC 653. In this respect there is a difference
between passing off and trade mark rights as explained by Lord Greene MR in Saville
Perfumery Ltd v June Perfect Ltd (1941) 58 RPC 147, 162:
"I
now turn to the claim based on passing-off. It does not necessarily follow that
a trader who uses an infringing mark upon goods is also guilty of passing-off.
The reason is that in the matter of infringement, as I have already pointed out,
once a mark is used as indicating origin, no amount of added matter intended to
show the true origin of the goods can affect the question. In the case of passing-off,
on the other hand, the defendant may escape liability if he can show that the
added matter is sufficient to distinguish his goods from those of the plaintiff.
Such proof may be very difficult, but theoretically at any rate the result may
be as I have stated."
- Thus,
the effect of section 45 of the 1905 Act was to confirm what was already the law,
namely that the rights created by registration of a trade mark were different
to those protected by passing off proceedings and, for that reason, the legislation
relating to the former had no impact on the latter.
- In
the Trade Marks Act, 1938, section 42 and 45 were brought together and re-enacted
as section 2:
"No
person shall be entitled to institute any proceedings to prevent, or to recover
damages for, the infringement of an unregistered trade mark, but nothing in this
Act shall be deemed to affect rights of action against any person for passing-off
or the remedies thereof."
- It
is not suggested that this changed the law. The provision in the 1994 Act is,
in substance, identical. Once again, neither Mr Silverleaf nor Mr Hobbs suggested
that it changed the law.
- Consistent
with this history, section 2(2) of the Act is an unpromising start for the defendant.
Its argument is that the existence of the ‘392 trade mark registration gives rise
to a per se overriding of Inter Lotto’s ability to protect its reputation and
goodwill by means of passing off proceedings. If correct, the rights created under
trade mark legislation would "affect the law relating to passing off"
or, at the least, affect its practical application. However there is nothing to
suggest that the legislature had in mind the problem in this case, namely a clash
of competing rights. What the section and its predecessors were primarily concerned
with was whether the owner of a registered trade mark was capable of owning and
enforcing, at the same time, rights to sue in passing off. The section, consistent
with cases like Stone Ales, confirms that a trader who has built up a reputation
and goodwill in his business is entitled to protect it by passing off proceedings,
whether or not he has also acquired trade mark registrations in respect
of any names or marks used in relation to that business. As far as I can tell,
no one appears to have argued that the exclusive right given by registration overrode
passing off rights. There is no reason to believe that that type of argument was
in the mind of the legislature when s. 45 of the 1938 Act and its equivalent in
later Acts were being drafted. For this reason I think it is necessary to look
more closely at the two defences raised by Camelot.
Does
Camelot have a right to use the ‘392 mark which overrides Inter Lotto’s rights?
- Camelot’s
argument is based upon the provisions of section 9(1) of the Act:
"The
proprietor of a registered trade mark has exclusive rights in the trade mark which
are infringed by use of the trade mark in the United Kingdom without his consent.
The
acts amounting to infringement, if done without the consent of the proprietor,
are specified in section 10"
- Mr
Silverleaf says that, in the light of this provision, the owner of (or licensee
under) a registered trade mark has a statutory right to use it. This cannot be
taken away. Passing off rights are "inferior" and cannot be used to
impugn or restrict that entitlement. He says the matter is purely hierarchical.
The person with the better title succeeds. He also prays in aid sections 22 and
27 of the Act which provide that a registered trade mark is personal property
and also treat applications for trade marks in the same way. He says that if a
trade mark is a property which entitles the owner to exclude others from infringing
it, it must carry with it the right to stop others from preventing the owner from
using it himself.
- To
understand the impact of this argument, it is useful to bear in mind some of the
other differences between the right to protect reputation and goodwill by passing
off proceedings and the rights acquired under a trade mark registration. The essential
characteristic of the former is that it is built up by use. If the use stops,
the reputation and goodwill will wither and die. Once it is dead, passing off
proceedings will not avail the claimant. If there has only been a small amount
of use, the reputation and goodwill may be insufficient to justify protection
and, even if it is, if the use ceases such reputation and goodwill as was generated
is likely to dissipate quickly. On the other hand it is possible and common to
obtain registrations for marks which have never been used. Although the Act requires
the applicant for a registered trade mark to state that the mark is being used
or that he has a bona fide intention to use it the only encouragement to
keep to the latter intention is to be found in section 46. This provides that
a mark may be taken off the register if it is not used for a continuous period
of five years. It is not necessary for present purposes to determine whether removal
after such a period of non use is mandatory or, as was the case under the 1938
Act, discretionary. Another, but related, difference is that the proprietor chooses
in respect of what goods or services he wants to register his mark. Even if the
mark is used by the proprietor in relation to some goods or services, it is possible
and common to register marks in respect of a much wider group of goods and services
on which it will never be used.
- The
practical application of Mr Silverleaf’s argument can be explained by reference
to a notional example. A trader starts to use a trade mark "X". He uses
it extensively in relation to particular goods and builds up a valuable reputation
and goodwill. At the same time another trader applies to register "X"
as a trade mark which he does not use in respect of the same class of goods. At
the outset, each trader is ignorant of the existence of the other. After four
and a half years, the second trader decides to start using his registered mark.
He learns of the first trader and sues for infringement. The second trader sues
for passing off. Mr Silverleaf argues that not only does the second trader succeed
on the infringement proceedings, but the first trader cannot succeed in passing
off. The result is that the second trader is entitled to take all the goodwill
and reputation which the first trader had built up. Indeed, if Mr Silverleaf’s
argument is correct, it is difficult to see why he limited himself to saying that
the guillotine on Inter Lotto’s reputation comes down on 17 October, 2001. Even
if Inter Lotto had built up an enormous reputation and goodwill before that date,
according to this argument, Camelot is "entitled" to use its registered
trade mark.
- In
my view Mr Silverleaf’s argument is untenable. It involves a misreading of section
9(1) of the Act and a basic flaw in the appreciation of what registration achieves.
The section does not stipulate that the proprietor of the registered mark has
an "exclusive right to use" the mark. It stipulates that he has the
"exclusive rights in the trade mark which are infringed by use of the trade
mark in the United Kingdom without his consent". In other words, registered
trade marks, like all other statutory intellectual property rights do not give
a right to the proprietor to use, but give him the right to exclude others from
using. The types of activities which can be prohibited by the existence of a registered
trade mark are those which are set out in section 10 of the Act. None of this
gives rise to an entitlement to the proprietor to use.
- The
point is explained particularly clearly in Professor Cornish’s admirable book
Intellectual Property (3rd Ed 1996):
"One
characteristic shared by all types of intellectual property to date is that the
rights granted are essentially negative: they are rights to stop others doing
certain things – rights in other words to stop pirates, counterfeiters, imitators
and even in some cases third parties who have independently reached the same ideas,
from exploiting them without the licence of the rightowner. Some aspects of intellectual
property confer positive entitlements, such as the right to be granted a patent
or register a trade mark upon fulfilling the requisite conditions; but these are
essentially ancillary.
The
fact that intellectual property gives a right to control the activities of others
has a number of implications, often inadequately understood. The rightowner does
not need the right in order to exploit a market for its goods or services; a patent
is not a pre-condition to exploiting one’s own invention. By way of corollary,
the right gives no liberty to ignore the rights of other individuals (including
their intellectual property) or to override public liabilities …" (paragraph
1-04)
- This
is true across the whole field of intellectual property. The exclusive rights
given in a copyright work do not mean that the owner of that copyright is entitled
to use his work even though it infringes some prior author’s rights. Similarly
in the field of patents, it has never been the law that the owner of an improvement
patent has an entitlement to use his invention even in breach of the prior patent
in respect of which his invention is an improvement. Indeed, patent legislation
contains express provisions to allow the owner of an improvement patent, in very
limited circumstances, to obtain a compulsory licence, for which he will have
to pay, under the master patent. Furthermore, how far does this entitlement go?
Does it allow the owner of a statutory intellectual property right to over-ride
public health laws, the law of libel and so on?
- Mr
Silverleaf did not shy away from this problem. I put to him in the course of argument
a hypothetical case where the registered trade mark consists of a fancy label
or the shape of a container. In the first it involves the wholesale unlicensed
copying of someone else’s copyright drawings and in the latter it is a breach
of someone else’s registered design or unregistered design right. I asked if the
proprietor of the registered mark is entitled to override these conflicting rights.
His answer was "yes".
- In
my view Mr Silverleaf’s proposition is bad in law. His client has acquired no
entitlement to use the ‘392 mark by registration. It has only acquired the right
to prevent others infringing. A number of the cases cited by Mr Hobbs support
that view. I need only refer to one of them, Re Lyle & Kinahan Ltd’s Application
(1907) 24 RPC 249 (CA);
"The
registration of a trade mark does not confer any right at all of the description
there pointed to, but it does confer a right, and the only right is the right
to prevent anybody else from using that trade mark for their goods, but it does
not give the registered owner of the trade mark any right to use that trade mark
if the trade mark would deceive. I conceive that if at the date when application
is made to register a trade mark there is no good ground of objection upon the
footing that it will be calculated to deceive, and if subsequently by alterations
in the character of the business of the two parties respectively the use of the
trade mark will be calculated to deceive and a passing-off action were brought
by one party against the other, it would be no defence at all on the part of the
owner of the registered trade mark to say - ‘Deception or no deception I am entitled
to it because that is my registered trade mark’. That could not be advanced for
one moment. In other words, the registration of a trade mark does not confer any
right to do that which could not have been done irrespective of the trade mark,
in the sense of doing any acts which would be competition in business. The only
right which it confers is a right to restrain others from using that trade mark."
(per Buckley LJ at p 262)
- Had
the legislature intended to bestow on the owner of a registered trade mark (or
any other intellectual property right) an entitlement to override the rights of
others it could and should have done so expressly. An example of this is to be
found in the Trade Marks Act 1938 which, at section 4(4), provided that use of
a registered trade mark could not amount to an infringement of another registered
trade mark. A similar provision is to be found in the 1994 Act at section 11(1).
However even that limited and express statutory right may be open to challenge
since it is said by the Claimant to be inconsistent with the provisions of the
Trade Mark Directive. Furthermore Mr Silverleaf’s argument is difficult to reconcile
with section 48(1) which provides:
"Where
the proprietor of an earlier trade mark or other earlier right has acquiesced
for a continuous period of five years in the use of a registered trade mark in
the United Kingdom, being aware of that use, there shall cease to be any entitlement
on the basis of that earlier trade mark or other right – …
(b)
to oppose the use of the later trade mark in relation to the goods or services
in relation to which it has been so used …"
- This
proceeds on the basis that the owner of the earlier right (for example Inter Lotto
as owner of its rights to protect its goodwill) is entitled to sue the
proprietor of the later trade mark if the use of the latter has not been continuous
or has not been for 5 years or if the owner of the earlier mark was ignorant of
the later use of the registered trade mark. In other words the owner of the registered
trade mark does not have an entitlement to use his mark in the face of earlier
competing rights owned by someone else.
Is
Inter Lotto precluded from relying on reputation and goodwill built up on the
back of use of the trade mark which, in the circumstances presumed for this application,
constituted infringement of the ‘392 mark?
- Mr
Silverleaf’s argument is encapsulated in the extract from his skeleton set out
in paragraphs 5 and 6 above. Taken at face value, this would produce strange and
far-reaching results. First, if a trader cannot rely upon goodwill or reputation
built up on trade which is "unlawful" in the sense used by Mr Silverleaf,
it would follow that it should be incapable of being relied on against any competitor.
Thus it would be a defence to a passing off action to show that the claimant’s
use infringed a third party’s trade marks. Since there has been an explosion of
registration of marks, both national and Community, covering ever wider classes
of goods and services, in many cases it would be open to the defendant to run
this point. Furthermore, if infringement of a trade mark makes the use "unlawful"
and, for that reason, undeserving of protection in a court of law, why should
the unlawfulness be limited to infringement of trade mark? If the use relied on
by the claimant could be said to infringe someone else’s copyright, design rights
or be libellous why should he be any more entitled to rely on his goodwill and
reputation than if his unlawfulness consisted of infringement of a registered
trade mark?
- In
the course of argument Mr Silverleaf addressed some of these points. First he
said that this defence would only be open to the proprietor of the infringed right.
Second he said that the weakness in the claimant’s ability to rely on its reputation
and goodwill only arises once the owner of the infringed right has lodged a claim
of infringement. As far as I could tell, both of these were arguments of expediency.
There was no discernible principle which would justify cutting down the ex
turpi rule in this way. As Mr Hobbs said, if Mr Silverleaf were right, the
claimant’s goodwill and reputation would be simultaneously lawful and protectable
against third parties but unlawful and not protectable against the owner of the
registered trade mark.
- There
is nothing in this defence either. The underlying principle of ex turpi causa
is that the behaviour of the party has been so heinous that the court will not
assist it. In the case of trade marks and passing off, occasionally the courts
have held that the claimant’s rights have been built up or supported fraudulently.
In those cases the court will not support the claim. Examples include Bile
Bean Manufacturing Company v Davidson (1906) 23 RPC 725 and Leather Cloth
Co. Ltd v American Leather Cloth Co. Ltd (1865) 11 E.R 1435 (H.L.) in which
Lord Kingsdown said:
"Nobody
doubts that a trader may be guilty of such misrepresentations with regard to his
goods, as to amount to a fraud upon the public, and to disentitle him on that
ground, as against a rival trader, to the relief in a court of equity which he
might otherwise claim. What would constitute a misrepresentation of this description,
may in particular cases be a reasonable subject of doubt, and it was in the present
case the ground of the difference between the two judgments under consideration.
The
general rule seems to be that the mis-statement of any material fact calculated
to deceive the public, will be sufficient for this purpose."
- Relevant
considerations include the following. First, whether or not a party’s behaviour
has been so bad as to merit exclusion from protection by the court is an issue
of fact. Second, the wrongdoing has to be substantial and go to the heart of the
right sued on. In my view it is unarguable that trade mark infringement without
more amounts to wrongdoing of such a level of depravity as to engage the doctrine.
Calling Inter Lotto’s actions "unlawful" as Mr Silverleaf did on many
occasions, does not alter its character. There may be cases where the nature of
the infringement is so flagrant and clearly and knowingly wrongful that a court
might refuse to allow the claimant to rely on his goodwill and reputation. For
example, a trader who sells through street markets counterfeit versions of sound
recordings and DVD’s bearing a famous trade mark might not be allowed to rely
on his sales to maintain a passing off action against another counterfeiter who
has come onto the market after him. But there is nothing like that here. The only
wrongdoing alleged is the fact of infringement of the ‘392 mark (assuming, of
course, that it is infringed). As I have said, the argument is that there is a
per se disentitlement from relying on Inter Lotto’s goodwill and reputation as
and from the date on which Camelot applied to register the ‘392 mark. It should
be borne in mind that there is no suggestion of dishonesty or flagrancy here,
not least because it appears that Inter Lotto was using its mark months before
Camelot applied to register its mark and a year before Camelot started to use
it.
- Mr
Silverleaf says that it is absurd that Inter Lotto should be allowed to sue his
client for passing off. He say that Inter Lotto is trying to say that Camelot
cannot use its registered mark. First, this is a mischaracterisation of Inter
Lotto’s case. It is only saying that Camelot cannot use its mark in a way which
will lead to deception and confusion. If Camelot can avoid those problems, it
can continue to use the ‘392 mark. Second, whatever the impact of the ‘392 registration
on Inter Lotto, I can see nothing absurd or even surprising in Inter Lotto being
able to prevent its reputation and goodwill (assuming for this purpose that the
allegations made in its pleadings are borne out at the trial) being appropriated
by Camelot.
- It
follows that the preliminary issue is answered in the negative. The relevant date
for assessing Inter Lotto’s reputation and goodwill for its claim in passing off
is the date upon which Camelot started using that mark in relation to its lottery
product.
- I
should mention that both Mr Hobbs and Mr Silverleaf made reference to the provisions
of the Trade Mark Directive in the course of their submissions. Each said that
his arguments were consistent with, or not inconsistent with, that legislation.
For the reasons set out above, the answer to the preliminary question is clear
as a matter of domestic law. In those circumstances it is not necessary to consider
the Community legislation.