UK: Trade Marks & The Law

The fundamental purpose and function of trade marks is to provide consumers with the means to distinguish the goods and services of one trader from another. It allows consumers to recognise your products or services as yours alone and thus avoid confusing it with the products or services of a competitor. Trade marks provide an exclusive way in which your goods or services can be identified as originating from you.

Trade marks also reflect certain attributes and qualities which consumers can identify with certain products and services and so be given a sense of assurance that their requirements of quality and taste will be met.

Independent of the above traditional functions and purposes of trade marks - given that businesses have invested enormous resources to develop and market not only their goods and services but also the brands which are associated with them – they also fulfil an ‘advertising function’. It is a function that needs to be protected in the same way as the function of identifying where the goods or services originate (i.e. one trader as opposed to another) and the function of assuring quality and taste.

A trade mark registration may be made in one or more of 42 classes of goods and services Trade Marks Act 1994 (‘TMA’). A single application can encompass any number of classes of goods or services. Once an application for a trade mark has been made the Registrar will cause it to be published so that oppositions to it can be filed within a window period of 3 months. Third parties are also allowed to make "observations" on whether a mark should be registered or not without making a formal "opposition".

It is important to understand that once an application is made, all documents filed in support of that application are out in the public domain. Accordingly, any confidential commercial information which is included in order to support your stand that the mark is indeed distinctive must be carefully drafted so as to protect such business-sensitive information.

Trade marks do not require any inherent originality as in the case of copyright, patents, registered design or design rights. Moreover the actual use of a trade mark prior to registration does not in anyway diminish it as would be the case in respect of patents and registered designs.

When a trade mark is registered, it distinguishes your goods or services from your rivals and thereby avoids confusion with other products or services. In other words, it protects against deceptiveness as to origin. It does not matter whether a trade mark is represented as a logo, brand, signature, name, picture, shape, slogan, jingle, colour, word, marque or otherwise, it performs the same functions. It is even possible to register smells and sounds as trade marks even though these may be difficult to represent graphically.

Section 1(1) of the TMA defines a trade mark as:

‘any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings’.

Even if a mark is not at the time of registration ‘capable of distinguishing’ the goods or services as that of the owner, nevertheless it may be registrable if it will become distinctive in use and will afford an indication of origin without interfering with the legitimate freedom of other traders. In other words, it is capable of becoming distinctive later on.

In order to avail oneself of the protection granted to trade marks under the TMA, it is necessary first of all to make sure that the trade mark is properly registered. This may be to state the obvious but there is often confusion with other intellectual property rights like passing off, copyright, confidentiality and design rights which do not require registration under UK law. Such registration grants the registered proprietor the ‘exclusive rights in the trade mark which are infringed by the use of the trade mark in the [UK] without his consent’ [section 9(1)].

Thus, registration grants a statutory monopoly to use of the mark. This means that the registered proprietor can use the registration to prevent others from using the same or similar mark on the same or similar goods or services.

Secondly, the defendant’s use of the trade mark must fall within the definition of infringement as outlined under section 10 of the TMA. A defendant can be said to have infringed a trade mark in the following circumstances:

• If he uses, in the course of trade, a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered¨ If he uses in the course of trade a sign where because it is identical with or similar to the trade mark and is used in relation to goods or services similar to or identical with those for which the trade mark is registered, ‘there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.’
• If he uses in the course of trade a sign which is identical with or similar to the trade mark, and is used in relation to goods or services which are not similar ‘where the trade mark has a reputation in the [UK] and the use of the sign without due cause, takes unfair advantage of, or is detrimental to, the distinctive character of the repute of the trade mark.’

In view of the third situation, protection is afforded to well-known marks which have a reputation in the UK, even if they are not an already registered trade marks. This means that the existence of such unregistered trade marks can now be employed to oppose the registration of a later similar mark so long as it can be shown that – given the unregistered trade mark has a reputation in the UK - to allow registration would take ‘unfair advantage of, or is detrimental to, the distinctive character of the repute of the trade mark.’ Moreover, section 5(4) specifically provides that a trade mark cannot be registered if its use in the UK is liable to be prevented by the law of passing off protecting an unregistered mark used in the course of trade.

While a registered proprietor of a registered trade mark is entitled to take all actions available to him under the TMA for infringement, he is not entitled to make ‘groundless threats of infringement proceedings’ (section 21). In other words, you must be able to ‘put up or shut up’. So unless there is ample evidence of infringement – and you must be able to prove it – threatening with infringement action is itself actionable (i.e. you can end up being sued and paying damages to the other side). This is called a "threats action".

In Prince PLC v Prince Sportswear Group Inc (1997), the plaintiffs were an UK ITSP which operated for two years a website using the domain name ‘www.prince.com’. The defendants were a New Jersey sportswear company. The defendants accused the plaintiffs of infringing their federal trade mark ‘PRINCE’ and threatened legal action unless the domain name was immediately transferred to them and no future use of the word ‘Prince’ was made. Prince PLC took out a "threats action" against the defendants in the English High Court under section 21. Neuberger J found for Prince PLC and declared that businesses should be wary about alleging infringement because if a business makes use of unjustified threats then it only has itself to blame if those proceedings initiated by the business being threatened result in relief being granted against them.

However, there is nothing wrong with informing someone that your trade mark has been registered.

Certain kinds of signs or marks cannot be registered. Some are absolutely unregistrable. These include:

• signs which cannot be graphically represented or are not ‘capable of distinguishing’;
• trade marks which are not distinctive in character;
• trade marks which exclusively indicate the kind, quality, value, geography or other such characteristics of goods or services;
• trade marks which are recognised signs which are customary in trade; and specially protected emblems.

However, even in these kinds of situations, if it can be shown that a mark has been so extensively used that it has become distinctive and has gained a reputation, then the absolute prohibition may be overcome.

Furthermore, certain kinds of marks may be relatively refused registration. These include marks which are identical or similar to earlier marks and are sought to be registered for identical or similar goods or services which are likely to confuse the public. Thus, in Foundation Trade Mark [1994] RPC 41, the court – once it found that applications software and systems software were one and the same goods – concluded that an application to register the mark ‘FOUNDATION’ for systems software ought to fail in view of the fact that there had been a previous registration in respect of applications software.

Even where there exists only a mere association with earlier marks, a refusal to register on relative grounds may result.

The life of a registered trade mark is ten (10) years from the date of registration, unless it is renewed. If properly managed and administered the duration of a registered trade mark can be "forever". However, if a trade mark owner fails to renew a trade mark on time, it may be removed from the Register. Accordingly, it is wise to engage a reputable trade mark attorney to ensure that your trade mark is carefully monitored and regularly and properly renewed.

There are a number defences available to competitors to lawfully use the registered trade marks of rivals in certain circumstances. The most significant one is the allowance given to fair use. Under section 10(6) it is lawful for a competitor to use the trade mark of a registered proprietor ‘for the purpose of identifying goods or services as those of the proprietor’ or his licensee, provided it is ‘in accordance with honest practices in industrial and commercial matters’. This provision is designed to allow competitors to use the trade mark of another for the purposes of comparative advertisement. However, the use of such trade marks must be fair.

The question of when a use of another’s trade mark is fair has been visited by the courts a number of times since the passing of the TMA in 1994. An important case in this context is Barclays Bank v RBS Advanta [1996] RPC 307 where Laddie J concluded that a plaintiff could not succeed simply by showing that the defendant was taking ‘unfair advantage’ of the trade mark. He needed to show that there was ‘material dishonesty’ before he could succeed in establishing that there had been ‘unfair’ use. Subsequent cases have given rise to the objective standard of the "reasonable reader" to ascertain whether a use is ‘material dishonesty’ and, therefore, unfair.

Traditionally, one of the problems with the trade marks registration system has been that it is territorial. This means that if you register your trade mark in the UK, protection is only afforded in the UK and nowhere else. If you wish to get protection in France as well, for example, you must also register the trade mark in France. However, it is now possible to register a trade mark on a Europe wide basis by just making one registration which will grant protection in any one of the fifteen member states. This known as the "Community Trade Mark". A Community Trade Mark provides protection by means of a single registration covering the whole of the European Union. Registration of a Community Trade Mark is granted by the Office for the Harmonisation of the Internal Market (Trade Marks and Designs) which is located in Alicante, Spain.

This Europe wide registration is not really a unified registration system but an application deposited to seek protection in a number of nominated separate territories. It avoids the preparation and filing of separate applications in each country for which protection is required. However, the trade marks laws which apply to each such countries would be different.

It is also possible to file a single application for an International Trade Mark registration under the Madrid Protocol which covers Scandinavia, UK, Germany, Cuba and China.

Trade marks being property can be assigned in the same way as other non-real property under section 24. Furthermore, under section 28 of the TMA it is possible to licence to use a registered trade mark on a general or limited basis or on an exclusive or non-exclusive basis. This means that it is possible for the trade mark owner to licence production or distribution under the mark. Any such licence, however, must be in writing.

Licensees - whether exclusive or not or even sub-licensees (in certain situations) - can sue for infringement. Moreover, a non-exclusive licensee may cause the trade mark owner to take infringement proceedings and if the latter fails to do so within 2 months, the former may proceed in his own name. However, for other interlocutory relief the owner must be joined in. An exclusive licensee, on the other hand, may proceed on his own in any infringement action as if there had been an assignment of rights. It is important in order to benefit from these rights that licences be registered under section 25.

The alternative way to protect a mark that is being used by a business, whether or not it is registered as a trade mark, is to employ the tort of "passing off". The basis of this old common law tort is that ‘nobody has any right to represent his goods as the goods of somebody else’. It is a mechanism for protecting the goodwill that has arisen between a business and its customers. It protects that aspect of the various functions of a mark which identifies the commercial origins of the goods, i.e. that the goods bearing your mark are indeed yours!

Traditionally, in order to succeed in obtaining an injunction against a rival for passing off, you need to establish the following:

• that there was a misrepresentation
• which was made by a competitor in the course of his trade
• to his potential customers
• which was calculated to injure your business and goodwill
• and which causes actual damage or is likely to do so to your business or goodwill

It is critical that it is shown that your rival is unlawfully assuming your goodwill as his own. It is not enough that customers are in a state of confusion about your goods or services and the goods or services of your competitor.

Thus there are three elements which must be established by a claimant in a passing off action:

• he must establish a goodwill or reputation attached to goods or services which he supplies in the mind of the purchasing public by association with identifying ‘get up’ as distinctive specifically of the claimant’s goods or services
• he must demonstrate a misrepresentation by the competitor to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are goods or services of the claimant
• he must demonstrate that he suffers or that he is likely to suffer damage

Hence, the essence of passing off is a misrepresentation to the public which is liable to lead them to believe that the goods or services offered by your rival are in fact yours.

However, a further aspect of this tort which has been recently resurrected arises in situations where a competitor puts or authorises someone to put an ‘instrument of deception’ into the hands of others. Even where there is no immediate placing or authorising of an ‘instrument of deception’ into the hands of others, so long as there is a likelihood of such action in the future, passing off is committed. For example, if a person registers a well-known domain name for the sole purpose of selling it to another person at a high price so that the latter could use it dishonestly, that is enough, without more, to amount to passing off; even if he has done nothing with it as yet. This certainly is the impact of the now famous ‘One in a Million’ case ([1998] FSR 265; The Times, December 2, 1997, at 8].

This means that a company’s reputation and goodwill can now be protected through passing off, even if the traditional elements are not met. This is because where trade names are well-known household names and the defendant intends to use that goodwill and threatens to sell it to another who might use it for passing off to obtain money from the true owner of that trade name, the registration of such trade names (the ‘instruments of fraud’) will amount to the commission of the tort of passing off. This is because the value to the defendant who registers such names lies in the threat that it would be used in a fraudulent way. Such fraudsters are commonly called "cybersquatters"

It is now, therefore, possible for registered trade mark owners as well as others to thwart cybersquatters from maintaining ownership over domain names on the basis that there may be future passing off. And this is because the courts are prepared to extend passing off to those who merely threaten to sell domain names to others. There has to be an element of bad faith, however, in the case of registered trade marks.