In Short … Intellectual Property

By Charters Macdonald-Brown, Simon Chalkley and John Reddington

High Court judge Mr Justice Jacob will take up the position of appeal court judge for the patents court on 17 October 2003, following the retirement of Lord Justice Aldous.

The Patents County Court with its Judge, His Honour Judge Michael Fysh Q.C., has moved to: Field House, 15-25 Breams Buildings, London, EC4A 1DZ (Clerk: Miss Sarah Cox: Tel. 020 7073 4251).

A claim for trade mark infringement and passing off by Inter Lotto, a lottery operator, against Camelot Group plc, the operator of the National Lottery, has given rise to a controversial decision, following a hearing on a preliminary issue concerning the assessment of competing registered and unregistered trade mark rights.

Camelot Group plc offers a National Lottery game under the HOTPICKS trade mark. It applied to register the mark on 17 October 2001, and launched the game in April 2002. Inter Lotto Limited, also a lottery operator, claimed to have commenced use of the trade mark HOT PICK in August 2001, and that Camelot’s use of the HOTPICKS trade mark from April 2002 onwards constituted an act of passing off. The preliminary issue was whether Inter Lotto was entitled to rely on all use of its trade mark from August 2001 to April 2002 to establish its claim in passing off, or whether its rights should be assessed as at the date of Camelot’s application to register its mark, i.e. 17 October 2001.

It was not disputed that in general, whether or not the claimant enjoys passing off rights is a matter to be assessed as at the date when the defendant’s alleged act of passing off began. Inter Lotto claimed that this general rule applied, and that Camelot’s application to register its trade mark had no bearing on Inter Lotto’s right to sue for passing off, relying on Section 2(2) Trade Marks Act 1994 ("nothing in this Act affects the law relating to passing off") as authority for this assertion.

Camelot’s position was that unless Inter Lotto could establish that, as at the time of Camelot’s trade mark application, Inter Lotto enjoyed passing off rights in its trade mark sufficient to prevent the use of Camelot’s mark, and hence its registration, pursuant to section 5(4) Trade Marks Act, all Inter Lotto’s use after that date was infringing and could not be used to support its passing off claim.

Mr Justice Laddie described Camelot’s position as either (a) the assertion that registration of a trade mark carried a right to use the mark which could not be restrained under the law of passing off or (b) the defence that, because Inter Lotto’s use of its mark after 17 October 2001 was unlawful, it was incapable of giving rise to any goodwill and reputation. The latter was pleaded by Camelot.

It seems that the Judge’s view was that this defence must rely on the ex turpi causa principle: Inter Lotto could only be prevented from relying on its use of HOT PICK subsequent to Camelot’s application to register HOTPICKS if its behaviour had been so "heinous" that the court would refuse to assist. For example, where rights had been built up fraudulently; in the present case, that trade mark infringement without more, did not amount to "wrongdoing of such a level of depravity as to engage the doctrine". Accordingly, the judge decided that Inter Lotto’s passing off right should be assessed at the date when Camelot started using its mark.

This decision does not seem to take account of the role of the Trade Marks Harmonisation Directive and Trade Marks Act 1994 in regulating the coexistence of common law and registered rights in the EU. Passing off rights come into existence as a question of fact. Section 5(4) Trade Marks Act recognises the priority of a passing off right which predates an application to register a conflicting mark. Under this provision the owner of an earlier passing off right can oppose and prevent the registration of a conflicting mark. Post registration, section 47(2)(b) provides for the removal of the trade mark from the register on the same ground.

With opposition and invalidity proceedings, passing off rights must be assessed at the date of the application to register the conflicting mark. This is not stated so clearly in the case of an earlier passing off right (in the Act labelled an "earlier right") as in the case of "earlier trade marks" (mainly registered marks) which are defined in section 6. However, section 40(3) states that "a trade mark when registered shall be registered as of the date of filing the application for registration" and section 9(3) states that the rights of the proprietor have effect from the date of registration. It follows, therefore, that any third party use which is incapable of serving as a ground for opposition under section 5(4) or for invalidity under section 47(2) must, after the date of application, constitute infringing use, unless it is saved by the section 11(3) defence of "use in the course of trade in a particular locality of an earlier right which applies only in that locality". Interestingly, for the purpose of section 11(3), the "earlier right" defence is expressly stated to be available only to a person whose use of his unregistered right pre-dates the registration of the infringed mark, or its use by the registered proprietor, whichever is earlier.

The issue is dealt with more clearly in the Community Trade Mark Regulation (Council Regulation 40/94/EEC). Article 8(4) states that ownership of a non-registered trade mark conferring the right to prohibit the use of a later trade mark may be relied on as a ground of opposition, provided that the right was acquired before the date of application.

Camelot Group Plc has appealed against Mr Justice Laddie’s decision. If the decision stands, it will throw into doubt the "first to register" principle. In trade mark opposition cases in particular, the more lengthy the proceedings, the stronger an opponent’s rights under section 5(4) may become. In the real world, companies with deep pockets might hijack the registered trade marks of smaller competitors through high-profile use leading to strong common law rights. The issue is accordingly of fundamental importance, and the appeal hearing, if leave to appeal is granted by the House of Lords, will be eagerly awaited.

Jones Day Gouldens represents Camelot Group plc.

The litigation concerning the publication by Hello! maga-zine of unauthorised photographs of the Michael Douglas and Catherine Zeta-Jones wedding in November 2000 is probably the most important case to have considered whether there is a law of privacy in the UK in the light of the Human Rights Act 1998. In a nutshell, the Court concluded that Mr and Mrs Douglas’ rights were protected by the law of confidence, and in those circumstances the Judge, Mr Justice Lindsay, considered there was no need for him to attempt to construct a law of privacy and it would be wrong for him to attempt to do so. The Judge’s application of the law of confidence to these facts is a good guide to how the Courts will approach claims to privacy, balancing the rights between respect for private and family life and freedom of expression (Articles 8 and 10 of the European Convention on Human Rights) and the non-Convention right afforded by the law of confidence.

Before the wedding, both OK! and Hello! magazines tried to negotiate exclusive contracts with Michael Douglas and Catherine Zeta-Jones for coverage of their lavish New York wedding. OK! secured the deal. Despite complex security arrangements, a paparazzi photographer managed to attend the event and took numerous photographs surreptitiously which were then sold and ultimately ended up in the hands of Hello!. When the Douglases and OK! discovered the existence of the unauthorised photographs they obtained an interim injunction in the High Court in London to prevent distribution of the offending Hello! edition. The Court of Appeal subsequently lifted the injunction (although it later transpired that some of the evidence before the Court of Appeal was false and misleading and the defendants had failed to disclose material documents) leaving the claimants’ only option to pursue a claim in damages. The delay to the publication caused by the injunction meant that the OK! edition containing the authorised photographs went on sale on the same day as the Hello! edition containing the unauthorised pictures. The authorised photographs were thereafter syndicated by OK! and appeared in many publications worldwide. Hello! made rather belated attempts to prevent further publication of the unauthorised pictures, but copies nevertheless appeared in The Sun and The Daily Mail.

On 11 April 2003 Mr Justice Lindsay gave judgment on a myriad of claims, including breach of a duty of confidence on the basis that the wedding was private and/or on the basis that the wedding had become an event which was exploited for gain and that photographic representation was, in effect, a commercial or trade secret, and a claim by the Douglases under the laws as to privacy. There were numerous other claims but this summary deals only with the Judge’s decision on the breach of confidence and law of privacy aspects of the case.

Dealing first with the law of confidence, the Judge acknowledged that the scope of the cause of action needed to be evaluated in the light of obligations falling upon the Court following the Human Rights Act 1998. The Courts need to identify on a case by case basis the principles by which the law of confidentiality must accommodate Articles 8 and 10 of the European Convention on Human Rights, which require the Courts to give effect to the right to respect of private and family life and freedom of expression. The Judge said there is a recognition that protection is to be given against interference by the media, but if public attention has been courted by a claimant then that may lead the claimant to have fewer grounds upon which to object to intrusion. There is no "presumptive priority" given to freedom of expression on the media’s part when it is in conflict with a Convention right or with rights under the law of confidence. When considering the grant of any relief which might affect of the Convention right to freedom of expression, the Courts must take account of any relevant privacy code which, in the UK is the privacy code of the Press Complaints Commission. That code states that everyone is entitled to respect for private and family life and that a publication which intrudes into any individual’s private life without consent must be for good reason.

The trial Judge had no difficulty concluding that the wedding was private in character, despite the contract with OK! for publication of authorised photographs. No justification for the intrusion was advanced except Hello!’s wish to include as early as practicable some coverage of the event, which they were confident their readers would wish to read. The intrusion gave rise to liability for breach of confidence. The judge regarded photographic representation of the wedding reception as having the necessary quality of confidence about it, even though the subject matter could have been described by words or drawings: whilst everybody knows what Michael Douglas and Catherine Zeta-Jones look like, that did not deny the quality of commercial confidentiality to what they looked like on the exceptional occasion of their wedding. .The very fact that Hello! and OK! competed for exclusivity and were ready to pay so much for it points to the commercial confidentiality of coverage of the event.

The Judge was satisfied that the Hello! defendants’ consciences were tainted: the nature of the photographs themselves made it evident that the taker of the photographs was trying to hide himself, and whilst Hello! had not commissioned the photographs, they had indicated to paparazzi that they would pay well for photographs, even though they knew that OK! had an exclusive contract. Being in the same business, Hello! knew what sort of security arrangements would be required by the contract. Hello! was not acting in good faith nor by way of fair dealing.

Hello! raised numerous defences. It argued that the unauthorised photographs, once taken, could be sold, bought and published. The Judge said that might be true in the case of someone whose conscience was wholly untainted, but was not so on these facts. Hello! also argued that any confidence that might have existed evaporated when the Douglases contracted for the sale of authorised pictures, alternatively that by intending to make public some visual aspects of the wedding they lost the right to claim confidence in any such representations. The Judge said that did not follow, particularly in the case of commercial confidentiality: he gave as an example an inventor who might confide to a prospective manufacturer secret details of his invention which he hoped soon to make public by way of a patent application. It would be absurd if an intention to make the subject matter of the confidence public should destroy confidentiality. Hello! also argued that any right to confidence was lost when the claimants themselves made the information public. The Judge said that whilst that might in some cases be so, he did not think the argument denied relief at trial to a claimant on the grounds that he had intended to make the information public, otherwise damages could never be an adequate remedy. Hello! was held to have acted unconscionably and in breach of confidence.

Law of privacy: the Judge said that there was no law of privacy under which the Douglases were entitled to relief. He said that the case for a general tort protecting privacy depended upon the law otherwise being so inadequate as to fall short of compliance with the Convention, the Human Rights Act and the requirements of decisions of the ECHR. In this case, the law of confidence had operated to protect the Douglases and so no relevant hole existed in English law. In any case, this was a subject better left to Parliament. He felt that if Parliament did not step in, the Court would be obliged to do so, but that would only happen when a case arose in which the existing law of confidence gave no or inadequate protection. There had been no suggestion that the Claimants’ recovery under a law of privacy would be any greater than that which is open to them under the law of confidence. There was no need for the Judge to attempt to construct a law of privacy and it would therefore be wrong for him to attempt to do so.

As has been widely reported in the national press, the Court of Appeal recently overturned the decision of Mr Justice Laddie, in this case, holding that the defendant, Mr Reed, infringed Arsenal Football Club’s trade marks by selling unofficial club memorabilia, including t-shirts and sweatshirts, containing on them one or more of Arsenal’s registered trade marks. Other than involving a well known football club, this case had previously been widely reported because of Mr Justice Laddie’s refusal to follow the judgment of the European Court of Justice ("ECJ"), saying that the ECJ had overstepped its jurisdiction by making findings of fact rather than restricting itself to interpreting the law. As a result, Mr Justice Laddie applied his findings of fact to what he believed the ECJ’s interpretation of the law in this area to be. He therefore found that there was no trade mark infringement because Mr Reed was not using Arsenal’s trade marks in a trade mark sense i.e. to identify the origin of the goods being sold.

The Court of Appeal accepted that the role of the ECJ was restricted to the interpretation of law and that it was unable to make binding findings of fact; it was the national court’s role to make findings of fact. However, in this case, the ECJ had not disregarded Mr Justice Laddie’s findings of fact and any findings of fact made by the ECJ were not inconsistent with those made by Mr Justice Laddie. Furthermore, Mr Justice Laddie misinterpreted the ECJ’s explanation of the law by stating that only if Mr Reed used Arsenal’s trade mark in a trade mark sense would there be infringement.

The Court of Appeal stated that the ECJ’s interpretation of the law was whether the right given to the trade mark owner by registration is likely to be affected by the third party’s use of those marks. It went on to state that this occurs when "the use complained about is likely to jeopardise the guarantee of origin which constitutes the essential function of the trade mark right". The Court of Appeal found that the wider and more extensive the use of the trade marks by third parties, the less likely the trade marks would be able to perform their function; the actions of Mr Reed meant that goods, not coming from Arsenal but bearing their trade marks, were in circulation. That affected the ability of the trade marks to guarantee the origin of the goods. Hence Arsenal’s trade marks were being infringed by Mr Reed’s actions.

Although not strictly necessary, the Court of Appeal then went on to consider two further issues, namely, whether or not Mr Reed’s use of the trade marks were in fact "trade mark use" and the issue as to whether or not Mr Reed was passing off. On the first issue, having reviewed the evidence, the Court of Appeal concluded that Mr Reed’s goods being marked with the trade mark were identical to those from Arsenal and therefore his use of the word "Arsenal" would, without adequate explanation, infer that the goods came from Arsenal. So, use of the trade mark "Arsenal" would denote origin.

On the second issue of passing off, the Court of Appeal commented that the very strict traditional form of passing off is no longer definitive of the ambit of the cause of action. The cause of action is now much wider and should be looked at more in the sense of "fair trading" or "unlawful competition".

This decision is very important for trade mark owners and shows the pendulum swinging strongly back in their favour.

This was an appeal regarding a criminal offence under the Trade Marks Act 1994. The Respondent had been convicted of a criminal offence under section 92 of the Act, having been found in possession of quantities of CDs bearing the names of well known recording artists. The artists’ names were registered as trade marks and Johnstone was convicted under section 92(1)(c) of being in possession of goods bearing a sign identical to or likely to be mistaken for a registered trade mark with a view to selling, letting for hire, offering or exposing the goods for sale.

In the Kingston Crown Court the defendant relied on section 11(2)(b) of the 1994 Act on the ground that the use of the performer’s name on the CDs was not an indication of trade origin, but who the performer was. The defendant had submitted that before an offence under section 92 could be established, a civil infringement of the registered trade mark must be proved taking account of any defence under section 11. The judge rejected those submissions, saying that section 92 was a "stand alone" provision, a complete code so far as criminal offences were concerned, and that it was, therefore, not necessary to prove a civil infringement. "Infringement" in section 92(5) meant unauthorised use as defined in the earlier provisions of the section.

Johnstone’s appeal to the Court of Appeal (Criminal Division) was allowed, on the basis that "unless the defences available to a claim for civil infringement of a trade mark were available in criminal proceedings, section 92 would embrace behaviour which could not be the subject of a successful civil claim". However, the prosecution did not need to prove that the defendant’s conduct constituted a civil infringement unless the defence raised a defence under sections 10 to 12. Then it would be for the prosecution to disprove such a defence. In the Crown Court, the judge’s ruling had wrongly denied the defendant the opportunity to have his defence under section 11(2)(b) considered by the jury.

The question on appeal to the House of Lords was whether it is a defence to a criminal charge under section 92 Trade Marks Act 1994 that the defendant’s act did not amount to a civil infringement of the trade mark. Underlying this was the question whether use of the offending sign, as applied to bootleg CDs, must constitute trade mark use (use intended to indicate trade origin), and whether it was a valid defence to say that the offending sign had been used descriptively, to indicate the identity of the performer, rather than to indicate trade origin.

Lord Nicholls confirmed that section 92 was a self-contained provision, but concluded that the concept of infringement contained in the section had to be considered in the context of the Act as a whole, and the Trade Marks Directive. Section 92 had to be interpreted as applying only when the offending sign was used as an indication of trade origin. This was something to be proved by the prosecution, and any defence under section 11 Trade Marks Act was accordingly relevant.

Whether the use of the offending mark was trade mark use or descriptive use was a question of fact in each case. In the present case it was noted that if the compact discs were sold under the brand name "Bon Jovi", this would be an indication of trade origin, in much the same way as the marks EMI or SONY are used to indicate that the discs themselves come from a source known as "EMI" or "SONY". On the other hand, if the name of the artist or group displayed on the compact disc or its packaging is used exclusively to identify the performer whose performance is recorded on the compact disc, and is likely to be so understood, the use would be descriptive only, and should not therefore infringe.

The decision clarifies the law in that it confirms that the "civil" infringement defences under section 11 Trade Marks Act are available to a defendant in criminal proceedings, including the defence of "descriptive" use under section 11(2)(b). The court felt that this added complication should not give rise to practical difficulties for weights and measures authorities, or for magistrates or jurors. This is, perhaps, wishful thinking, as criminal infringers will seek to exploit any technical loophole in the law, especially if the loophole in question - the issue of trade mark use - is one which has in recent months given rise to controversial High Court decisions and consequent uncertainty.

The judgment also deals with the defence of belief on reasonable grounds that the use of the sign in the manner in which it was used, or was to be used, was not an infringement of the registered trade mark. The court held that the section provides a defence both where the defendant believes on reasonable grounds that his use of the sign does not infringe against a registered trade mark of whose existence he is aware, and also where he reasonably believes that no relevant trade mark is registered. The court also concluded that section 92(5) should be interpreted as imposing on the accused the burden of proving his reasonable belief, and that this "legal" or "persuasive" onus is on balance compatible with Article 6(2) of the European Convention on Human Rights.

As a general comment, the court warned that complications of this kind are likely to arise where a claimant chooses to seek to enforce trade mark rights against bootleggers, rather than the more appropriate remedy of copyright infringement.

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