UK: IP Bulletin - November 2011


  • Interflora, Inc & Interflora British Unit v Marks and Spencer Plc & Flowers Direct Online Limited, ECJ–Google Adwords. The European Court of Justice has given its judgment on questions referred by the High Court concerning infringement by the unauthorised use of trade marks as advertising keywords, ie AdWords, on Google's search engine.
  • Budejovický Budvar, národní podnik v Anheuser-Busch, Inc., ECJ – BUDWEISER. The European Court of Justice has given its judgment on questions referred by the Court of Appeal relating to the nature of acquiescence in the use of a later trade mark, the time periods relating to such acquiescence, and the role of honest concurrent use in situations involving acquiescence. In effect, the court recommends that the appeal in this case be upheld.
  • European Council – Directive extending copyright term. The European Council has adopted a Directive extending the term of copyright protection for performers and sound recordings.


ECJ–Google Adwords

Interflora, Inc & Interflora British Unit v Marks and Spencer Plc & Flowers Direct Online Limited, Case C 323/09, 22 September 2011

The European Court of Justice has given its judgment on questions referred by the High Court concerning infringement by the unauthorised use of trade marks as advertising keywords, ie AdWords, on Google's search engine.

Marks and Spencer bought keywords containing the mark INTERFLORA. Searching against these keywords generated a sponsored link to Marks and Spencer's online flower-delivery service.

Interflora brought proceedings alleging infringement under Article 5(1)(a) and Article 5(2) of the Trade Marks Directive. (Article 5(1)(a) concerns prevention of use of an identical sign on identical goods, and Article 5(2) concerns prevention of infringing use of a trade mark that has a reputation).

In response to questions referred by the High Court, the ECJ has ruled as follows:

Article 5(1)(a) Trade Marks Directive

Article 5(1)(a) must be interpreted as meaning that the proprietor of a trade mark is entitled to prevent a competitor from advertising (on the basis of a keyword which is identical to the trade mark and which has been selected in an internet referencing service by the competitor without the proprietor's consent) goods or services identical to those for which that mark is registered, where that use is liable to have an adverse effect on one of the functions of the trade mark.

Such use adversely affects the trade mark's function of indicating origin where the advertising displayed on the basis of that keyword does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services concerned by the advertisement originate from the proprietor of the trade mark or an undertaking economically linked to that proprietor or, on the contrary, originate from a third party,

Such use does not adversely affect the trade mark's advertising function in the context of the internet referencing service at issue in this action, as had been established in Google France. There might be repercussions for the trade mark proprietor's use of its mark in advertising: for example, it might have to pay a higher price per click in order to ensure that its advertisement appeared above that of a competitor who was also using the mark as a keyword. However, this would not mean in all cases that there was an adverse effect on the advertising function of the mark. The aim of using third-party marks as keywords was generally to offer consumers alternative goods or services. It did not deny the proprietor the opportunity of using its mark effectively to inform and win over consumers.

The Court decided that such use does adversely affect the trade mark's investment function if it substantially interferes with the proprietor's use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty.

Article 5(2) Trade Marks Directive

Article 5(2) must be interpreted as meaning that the proprietor of a trade mark with a reputation is entitled to prevent a competitor from advertising on the basis of such a keyword where the competitor takes unfair advantage of the distinctive character or repute of the trade mark (free-riding) or where the advertising is detrimental to that distinctive character (dilution) or to that repute (tarnishment).

Such advertising is dilution if, for example, it contributes to turning that trade mark into a generic term.

By contrast, the proprietor of a trade mark with a reputation is not entitled to prevent such advertising which puts forward an alternative to the goods or services of the proprietor of that mark– unless that advertising offers a mere imitation of the trade mark proprietor's goods or services, causes dilution or tarnishment, or adversely affects the functions of the trade mark with a reputation.

The conclusion is therefore mixed. Companies may buy keywords consisting of the trade marks of their competitors, but must take care with their use to avoid infringement.


Budejovický Budvar, národní podnik v Anheuser-Busch, Inc., Case C-482/09, 22 September 2011

The European Court of Justice has given its judgment on questions referred by the Court of Appeal relating to the nature of acquiescence in the use of a later trade mark, the time periods relating to such acquiescence, and the role of honest concurrent use in situations involving acquiescence.

Article 4(1)(a) of the Trades Mark Directive provides:

"A trade mark shall not be registered or, if registered, shall be liable to be declared invalid: if it is identical with an earlier trade mark, and the goods or services for which the trade mark is applied for or is registered are identical with the goods or services for which the earlier trade mark is protected."

Article 4(2(a)(ii) provides that:

"Earlier trade marks" within the meaning of paragraph 1 means trade marks registered in a Member State with a date of application for registration which is earlier than the date of application for registration of the trade mark, taking account, where appropriate, of the priorities claimed in respect of those trade marks."

Article 9(1) provides that:

"Where, in a Member State, the proprietor of an earlier trade mark as referred to in Article 4(2) has acquiesced, for a period of five successive years, in the use of a later trade mark registered in that Member State while being aware of such use, he shall no longer be entitled on the basis of the earlier trade mark either to apply for a declaration that the later trade mark is invalid or to oppose the use of the later trade mark in respect of the goods or services for which the later trade mark has been used, unless registration of the later trade mark was applied for in bad faith."

The American manufacturers, Anheuser-Busch Inc. (AB), and the Czech manufacturers, Budejovicky Budvar Narodni Podnik (BB), had both been selling "Budweiser" beer in the UK since the 1970s, In a passing off action brought by AB, the Court of Appeal held, in 1984, that both "Budweiser" brands were entitled to co-exist in the UK because a dual reputation had been established.

In 1979, AB applied to register BUDWEISER for "beer, ale and porter" which was opposed by BB. In 1989, BB applied to register BUDWEISER for "beer ale and porter; malt beverages" which was opposed by AB.

In March 2000, the Court of Appeal held that both AB and BB were entitled to register BUDWEISER as a trade mark in the UK. The decision was reached under the old (1938) UK Trade Marks Act which expressly allowed concurrent registration of the same or confusingly similar marks in circumstances where there was honest concurrent use or other special circumstances. Both AB's and BB's BUDWEISER marks were put on the register on 19 May 2000.

On 18 May 2005, four years and 364 days after the parties' BUDWEISER marks were put on the register, AB applied for a declaration that BB's BUDWEISER registration was invalid, pursuant to Article 4(1)(a) of the Directive. AB's case was that:

  • Although both side's marks were put on the register on the same day, AB's was an "earlier trade mark" by virtue of Article 4(2), as its date of application was some ten years earlier.
  • The marks and goods were identical and so, by virtue of Article 4(1)(a), BB's mark was liable to be declared invalid.
  • There was no question of acquiescence because the five-year period provided by Article 9 had not quite expired.

The timing of the application was such that, although it was issued within the five-year period, it was not served on BB until after the five-year period had expired. This denied BB the opportunity to respond with a cross-application to have AB's 1979 BUDWEISER trade mark registration declared invalid on the basis of BB's ownership of a 1976 registration of the word BUD.

The High Court upheld the decision of the IPO hearing officer granting a declaration of invalidity, on the ground that BB's mark was identical with the earlier trade mark owned by AB, and was registered in respect of identical goods.

BB appealed to the Court of Appeal which stayed the proceedings and referred questions to the ECJ concerning the nature of acquiescence under the Directive, the time periods involved in applying Article 9(1), and the relevance (if any) of honest concurrent use.

In response these referred questions, the ECJ has ruled as follows:

Acquiescence, within the meaning of Article 9(1) is a concept of European Union law. The proprietor of an earlier trade mark cannot be held to have acquiesced in the long and well-established honest use by a third party of a later trade mark which is identical with that of the proprietor, of which he has long been aware, if the proprietor was not in any position to oppose that use.

Registration of the earlier trade mark is not a prerequisite for the running of the limitation period in Article 9(1). The prerequisites are: first, registration of the later trade mark; second, the application for registration of the later trade mark being made in good faith; third, use of the later trade mark by its proprietor in the Member State where it has been registered; and, fourth, knowledge by the proprietor of the earlier trade mark that the later trade mark has been registered and used after its registration.

Article 4(1)(a) must be interpreted as meaning that the proprietor of an earlier trade mark cannot obtain the cancellation of an identical later trade mark designating identical goods: where there has been a long period of honest concurrent use of those two trade marks and where, in circumstances such as those in the main proceedings, that use neither has nor is liable to have an adverse effect on the essential function of the trade mark - which is to guarantee to consumers the origin of the goods or services.

In effect, the ECJ recommends that the appeal in this case be upheld by the Court of Appeal, which will result in the trade marks continuing to coexist.

Patents County Court – transfer to High Court

AS Watson (Health and Beauty Continental Europe) BV and others v Boots Company plc and others, [2011] EWPCC 26, HHJ Birss QC, 8 September 2011

The Patents County Court has ordered the transfer of a trade mark case to the High Court, and considered the factors governing transfer.

The three claimants ("Watson") were in a group owned by Hutchison Whampoa Ltd, and the third claimant ran the Superdrug shops in the UK. Watson brought proceedings for infringement of a Community Trade Mark against the defendants ("Alliance Boots").

Watson's CTM was for the word SOLAIT registered in class 3 in respect of "cosmetics; lotions and creams for the skin; sun screen products; cosmetic (sun) tanning preparations; after sun products". Alliance Boots have launched a sun cream product called SOLEI (or SOLEI SP). Watson alleged infringement under arts 9(1)(b) and 9(1)(c) of the CTM Regulation.

An important part of this case was its international aspect. A company in the Alliance Boots group (2nd defendant) made the product in the UK and affixed the brand here. However the product was not sold in the UK. Alliance Boots have no plans to sell it in the UK before 2013, and were prepared to undertake to the court that they would not do so.

Watson's SOLAIT was on the market at substantial levels in UK, Ireland, the Netherlands and Belgium. Alliance Boots's SOLEI product was coming on the market in other countries and 14 member states were in issue in which Alliance Boots in due course wished to sell.

Watson learned of the launch of Alliance Boot's product and issued proceedings in the Patents County Court ("PCC"). Alliance Boots then applied to transfer the case to the High Court.

The PCC had previously considered the factors governing the question of transfer of a case from PCC to High Court under the new PCC regime in Alk-Abello v. Meridian Medical Technologies. The factors are:

  • size and financial position of the parties;
  • whether the claim is an appropriate one for the PCC which involves three points - value of claim, complexity of issues and estimated length of trial; and
  • the overriding objective to deal with cases justly.

The judge held that, looking at the matter overall and bearing in mind the overriding objective, the balance was in favour of transfer to the High Court.

He said that the case was a dispute between two major organisations with a complexity which made it unsuitable to be heard in the PCC. It would take much more than 2 days to try even with all the case management powers available in the PCC. The value of this case was not a significant factor compared to the nature of the litigants and the suitability of the case to be heard in the PCC.

He added that the proper administration of justice favoured transfer of the case. The fact that the PCC diary could accommodate a trial earlier than the High Court (much earlier if it were not expedited) was not an indication that the resources of the PCC are lying idle.

The streamlined procedure in the PCC means that cases are generally resolved more quickly than in the High Court. As a result, at any given point, the available period in the future at which the PCC is able to fix a trial is likely to be earlier than in the High Court.

That is not a reason why a heavyweight trade mark trial between two large organisations should employ the resources of the PCC. Those resources exist to facilitate access to justice in intellectual property disputes in circumstances where the costs of litigating the matter in the High Court would have acted as a deterrent.

The judge concluded that, although the trial would be likely to come on in the PCC sooner than it might in the High Court even if expedited, the difference was a matter of a couple of months and the distinction made little substantive difference.

OHIM – mediation service

OHIM is introducing a mediation service in trade mark and design cases, as an alternative to proceeding with an appeal to the Boards of Appeal. The service is being offered in response to interest expressed by users.

The mediators will be specially-trained and drawn from the Office's staff. The process will not be binding on the parties.

The service will be launched at the end of October 2011. To qualify, an appeal must already have been filed (with payment of the normal appeal fee of €800). If the mediation meetings take place at OHIM's premises in Alicante, there is no further fee to pay. As an alternative, provision has been made for mediation to be offered at OHIM's Brussels office on payment of a fixed fee of €750 to contribute to the mediator's travel expenses.


European Council – Directive extending copyright term

The European Council has adopted a Directive extending the term of copyright protection for performers and sound recordings.

The Directive narrows the gap between the copyright term of protection for authors (currently life plus 70 years after the authors' death) and the term of protection for performers.

The main provisions are as follows:

  • the term of copyright for performers is extended to 70 years. Under current EU laws, recorded musical performances are protected for a maximum of 50 years after their fixation in a record;
  • record companies are to pay 20% of the revenues they earn during the extended period into a fund for session musicians;
  • rights in a recording are to revert to the performer if the record company stops marketing the recording during the extended term;
  • record producers are prevented from making deductions to the royalties they pay performers after the initial 50 years are over;
  • Member states have two years to implement the Directive.


EU General Court – design for lawnmower engine

Kwang Yang Motor Co Ltd v OHIM, Cases T-10/08 and T-11/08, 9 September 2011

The EU General Court has held that two designs for lawnmower engines were invalid under the Community Designs Regulation.

Kwang Yang Motor Co. Ltd was the proprietor of two Community registered designs for an internal combustion engine for lawnmowers.

Honda Giken Kogyo Kabushiki Kaisha filed applications with OHIM for declarations of invalidity on the grounds that the designs did not fulfil the requirements of Articles 4 to 6 of the Community Designs Regulation. It claimed that the designs were identical to those protected by earlier US designs.

Under Article 4(1), the protection of a Community design is dependent on its being new and having individual character. Under Article 4(2), a design which constitutes a component part of a complex product is only considered to be new and to have individual character if the component part, once it has been incorporated into the complex product, remains visible during normal use and to the extent that those visible features of the component part fulfil in themselves the requirements as to novelty and individual character.

Article 6(1)(b) states that the individual character must be assessed in light of the overall impression produced on an informed user, which must be different from that produced by any design made available to the public before the date of filing of the application or before the date of priority. Article 6(2) states that in assessing individual character, the degree of freedom of the designer in developing the design is to be taken into consideration.

The EU General Court rejected Kwang's appeals and upheld the OHIM Board of Appeal's decisions that the designs should be declared invalid for the following reasons:

The upper side of the engine determined the overall impression of the Kwang designs as this was what the user saw when standing behind the lawnmower.

The overall impression produced by Kwang's designs was the same as that produced by the earlier designs due to similarities of shape, position and relative size of the various components. An informed user would be guided by the basic structures alone and not by differences in the details, which would not produce different overall impressions.

The designers of the engines had a high degree of freedom in designing them. The components, such as the fuel tank and vent, could be positioned differently without altering the functionality or aesthetic considerations.

IPO –evidence on designs

The Hargreaves review recommended that the IPO conduct an evidence based assessment of the relationship between design rights and innovation, with a view to establishing a firmer basis for evaluating policy at the UK and European level.

The Government, in its response to the review, accepted this recommendation and said that it would publish its assessment of the case for simplification of the design right system.

In order to do this the IPO has issued a 'call for evidence' in relation to the design sector and launched a separate online questionnaire/survey aimed at business.

The deadline for sending evidence and/or responding to the survey is 11 November 2011.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Charles Russell's Intellectual Property Group
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