UK: High Court Upholds Direct Line’s Successful Opposition To Mouse On Wheels Mark

Last Updated: 4 December 2007
Article by Lucy Harrold and Paul McClenaghan

Esure Insurance Ltd v Direct Line Insurance plc [2007]
EWHC 1557 (Ch) (Lindsay J), 29 June 2007

The High Court upheld on appeal Direct Line’s successful opposition to a trade mark application for a computer mouse on wheels in relation to insurance services on the ground that the Hearing Officer committed no error of principle in holding Esure’s mark, as applied for, would be likely to take unfair advantage of or be detrimental to the repute of Direct Line’s well-known registrations for a telephone on wheels.

Legal context

In this decision, Lindsay J provides a detailed analysis of the relevant case law concerning:

  1. Article 4(1)(b) of Trade Marks Directive 89/104 regarding the circumstances where a mark shall not be registered, inter alia, because of the similarity of services and the existence of a likelihood of confusion on the part of the public with an earlier mark and
  2. Section 5(3) of the Trade Marks Act (TMA) 1994 concerning grounds for refusal of a trade mark application because its use, without due cause, would take unfair advantage of or be detrimental to the distinctive character or repute of an earlier mark.

He also reiterates the approach to be taken by appellate courts when reviewing decisions.

Facts

Direct Line provides insurance and financial services to the public, mainly via telephone and the internet. In 1990, Direct Line launched an advertising campaign using the image of a red telephone on wheels: it has continued to this day to use the device throughout its advertising, investing millions of pounds to keep it in the public’s mind. The court commented that it ‘has become a very well known mark to "consumers" of insurance’. Direct Line has UK and Community trade mark registrations in force in relation to the device.

Esure, a direct competitor of Direct Line, sells insurance both via telephone and the internet. In 2004, Esure applied to register as a device mark a representation of a computer mouse on wheels. Shortly thereafter, Esure began to use this mouse in its advertising. In January 2005, Direct Line opposed the application. Two months later the Registrar made available to the parties a preliminary opinion that the marks were not similar and there was no likelihood of confusion between them. In May 2005, Direct Line added a red computer mouse on black wheels to its advertisements, alongside the red telephone. Following a 3-day hearing in the registry, with extensive cross-examination, the Hearing Officer found for Direct Line: the Esure mark was confusingly similar and would take unfair advantage of or be detrimental to the distinctive character of Direct Line’s telephone on wheels mark, contrary to Article 4(1)(b) of the Directive and section 5(3) of the TMA.

Esure appealed to the High Court, arguing that the Hearing Officer had erred in his application of the relevant principles pertaining to Article 4(1)(b) of the Directive and section 5(3) of the TMA.

Analysis

Lindsay J began by setting out the appropriate test for the appellate court on such an appeal. Summarizing Reef Trade Mark [2003] and decisions cited in it concerning the correct approach for appellate courts, he concluded that a ‘high degree of reluctance to interfere with a Hearing Officer’s decision (in the absence of a distinct and material error of principle) is appropriate where, in the course of evaluation, he had to weigh up many factors and where his decision has required assessment of contested oral evidence’. Such an error of principle includes, he stated, the taking into account of that which should not have been within it, the omission from the account of that which should have been, and the case where it is plain that no tribunal properly instructing could, in the circumstances, have reasonably arrived at the same conclusion.

Considering Article 4(1)(b), Lindsay J held that the marks were similar. He reviewed well-established European case law and concluded that this was a low-threshold test for similarity. These marks satisfied it because, despite several differences, each indicated a means of making contact and doing business with each provider and each had black road wheels to give the appearance of a vehicle. Direct Line had conducted a full-scale public survey; the Hearing Officer held correctly in Lindsay J’s view that there were uncertainties inherent in the survey, which made it an unreliable indication of what an average consumer thought at the date of the application. The Hearing Officer, however, concluded that confusion was likely because the public would believe the mark applied for was a ‘new variant’ of Direct Line’s established mark. When considering whether there was any likelihood of confusion between the marks, Lindsay J stated that ‘likelihood’ was a lesser requirement than ‘probability’. It required no more than that there be a real prospect that the material consequence (ie confusion) should exist. Lindsay J, however, found insufficient evidence that the relevant public would consider that the mark owners were the same company or economically related and therefore held that the Hearing Officer had committed an error of principle. There was no aural similarity, the visual differences were clear and the conceptual differences were the modes of business (one by telephone and one on line). Esure, therefore, succeeded in this part of its appeal. Lindsay J also held the Hearing Officer was correct to reject the Registrar’s preliminary opinion that there was no likelihood of confusion on the part of the public between the marks.

Lindsay J could not detect any error of principle in the Hearing Officer’s application of section 5(3) of the TMA (the equivalent of Article 4(3) of the Directive, as construed by the European Court of Justice) and his conclusion that the Esure mark would be likely to take unfair advantage of or be detrimental to the repute of Direct Line’s marks. He held that the correct test was whether there was a non-hypothetical future risk that Esure’s application would take unfair advantage of or be detrimental to Direct Line’s mark. The onus of proof was on Direct Line. In addition to a causative link, he held there had to be an ‘additional link’ (one not involving confusion) made by the public between the mark and the sign arising out of certain degree of similarity between them which could be tested in the same ‘global’ way as a likelihood of confusion. In particular, evidence before the Hearing Officer indicated that Esure’s mark would take unfair advantage of the distinctive character of Direct Line’s mark so that ‘it would not be wise for Direct Line to continue to promote that mark because it could not be confident that money spent promoting the telephone on wheels mark would not also benefit Esure’. Also, there was evidence that, over time, Esure’s mark would damage and dilute the distinctiveness of Direct Line’s marks. Lindsay J said he was ‘constrained so that what would have been my decision on the evidence is completely irrelevant’, adding: ‘[there] is no necessary inconsistency between . . . my holding . . . that the public . . . would be more likely to see [Esure and Direct Line] as rivals and . . . my upholding the Hearing Officer’s decision that were the mouse on wheels to be used as a mark there would, in the public’s mind, be taken to be such a link between the two that use of the mouse would be parasitic and unfair’.

Practical significance

Lindsay J’s comments regarding the proper approach on such appeals emphasize that the court was wary of substituting its view for that of the fact-finding tribunal unless a distinct and material error of principle in the original decision can be demonstrated. Thus, the successful opposition was upheld, although there was no likelihood of confusion between the two marks, Lindsay J implying that he might have reached a different conclusion from that of the Hearing Officer on the evidence regarding unfair advantage or detriment to the repute of Direct Line’s marks. It is difficult to discern from the decision alone whether the evidence of future risk of unfair advantage or detriment was sufficient or, indeed, any more compelling than the evidence of likelihood of confusion in respect of which Lindsay J had concluded the Hearing Officer fell into error. The decision reminds trade mark proprietors and applicants alike that they should give opposition proceedings serious attention and attempt to secure the decision they want first time round because, after the initial evidential examination, each level of appeal presents a higher hurdle to jump.

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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