UK: Are Their Prior Rights Of More Than Mere Local Significance? COMPASS CTM Case May Direct You To The Answer

Last Updated: 21 April 2004
Article by Sarah Rogers

Wragge & Co LLP recently assisted the Dutch company, Compass Publishing BV, to achieve success in the UK courts in establishing infringement of its Community Trade Mark and in seeing off a challenge to its validity.

Background

Compass Publishing BV ("the claimant") is in the business of management and performance efficiency consultancy based upon comparative analysis. This includes consultancy in the logistics field. Included amongst its trade mark portfolio are two UK trade marks and a Community Trade Mark ("the CTM") for COMPASS. The defendant provides management consultancy services, specialising in the logistics and supply chain field. It has traded under the "Compass Logistics" name since May 1995

The claimant claimed infringement on the basis that defendant’s name was identical to its marks in respect of identical services. Alternatively if the name was only similar then as a result of this similarity and the similarity of the defendant’s services there was a likelihood of confusion. The parties were not yet in direct competition in the marketplace and there was no evidence of actual confusion. However, the claimant argued that confusion would inevitably arise in the minds of the relevant public as the two businesses expanded across the management and logistics consultancy field.

The defendant counterclaimed for invalidity of the CTM on the basis of its prior rights to the name "Compass Logistics". It submitted that its rights would have been sufficient to prevent the registration of the claimant’s CTM. The defendant counterclaimed for invalidity of the first UK mark on the grounds of non-use and partial revocation of the second UK mark on the grounds of prior rights, to the extent that the claimant's specification should be limited to ensure that it excluded the defendant's activities.

Outcome

The court followed LTJ Diffusion SA v Sadas Vertbaudet SA (Case C-291/00) when considering whether the defendant’s name was identical to the COMPASS marks. Only "differences which ordinary members of the public would not notice, save by close side-by-side comparison or the pronunciation of a 1940's BBC newsreader, could be ignored" .The additional word "logistics" was of trade mark significance and therefore "Compass Logistics" was not identical with COMPASS. As the defendant’s witnesses had however admitted in cross-examination to sometimes shortening its name to "Compass" alone and as it had also accepted that its services were identical to those included within the specification, the court found that the CTM had been infringed pursuant to Article 9(1)(a).

Furthermore on a global assessment, a likelihood of confusion did exist between the defendant's sign "Compass Logistics" and the claimant's mark COMPASS when used in relation to business consultancy services including specialist logistics services. A significant section of the public would consider the defendant to be the logistics branch of the COMPASS service. Accordingly, infringement pursuant to Article 9 (1) (b) was established. On the same analysis the first UK mark for COMPASS in Class 42 was similarly found to be infringed pursuant to s 10 (1) and s 10 (2) of the UK Trade Marks Act 1994.

In support of its counterclaim for invalidity of the CTM the defendant submitted that it had generated rights in the UK pursuant to Article 8 (4) of the Community Trade Mark Regulation, being "of more than mere local significance" and therefore sufficient to invalidate the claimant’s later CTM.

When assessing the extent of the defendant’s prior rights, the UK court held that the question whether those rights were "local" should be assessed from a Community-wide perspective, given that Article 8(4) is concerned with the validity of Community rights. Furthermore, an earlier mark but must be of more than "mere" local significance. The court considered that an unregistered mark should be held as having "mere local significance" if its geographical spread was restricted to substantially less than the whole of the European Union, in the context of its Community market for goods or services. On this basis were the defendant’s unregistered rights in the name "Compass Logistics" of mere local significance?

The court held that the defendant had, on balance, built up sufficient goodwill in its mark "Compass Logistics" between the adoption of its company name on 15 May 1995 and the date of the CTM, being 1 April 1996 to support a passing off action which would have prevented the claimant from using this name in the UK. However, these passing off rights were categorised by the court as being of "mere local significance" when applying the Community-wide test. Accordingly, the defendant’s attack on the validity of the CTM failed. The defendant has been given leave to appeal this decision.

The defendant’s attack on the validity of the 1988 UK mark for non-use also failed in view of evidence provided by the claimant that it had properly used its mark in Class 42.

However the defendant’s attack on validity of the later 1996 mark partially succeeded. On the grounds that it had established passing off rights, the claimant’s 1996 UK mark was therefore held to be invalid to the extent that it covered logistics consultancy services. The claimant has been granted leave to cross-appeal on this decision

Comment

Article 8 (4) of the Community Trade Mark Regulation has not yet been considered by the European Court of Justice nor is there any guidance in the travaux preparatoires. As neither party was able to present the court with any authority from any other EU national court it appears that this judgment may well be the first judicial pronouncement on this issue.

This case is also a good illustration that the frequent assumption that an absence of evidence of actual confusion is indicative of a lack of a likelihood of confusion is unsafe where the parties are not yet in direct competition but the specification covers the goods or services which are being marketed under the offending sign.

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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