UK: Still No Luck for Camelot?

In June 2003 we reviewed the Camelot v Inter Lotto UK High Court preliminary issue hearing which looked at the relationship between registered trade mark rights and passing off. The Court of Appeal has now dismissed an appeal by Camelot against the High Court’s decision.

Mr Justice Laddie had to consider whether a registered trade mark could be used as a defence against an allegation of passing off. Inter Lotto said it had acquired goodwill from its use of "HOTPICK" for its own lotto game both before and after Camelot applied to register the mark "HOTPICKS". When Camelot began using its registered mark, Inter Lotto sued for passing off.

The Judge held that all the goodwill acquired by Inter Lotto arising from its use of HOTPICK until Camelot started to use its similar mark, should be taken into consideration at the trial of Inter Lotto’s passing off action. Section 9 (1) of the Trade Marks Act 1994 gave a proprietor of a trade mark registration the right to exclude others from using his mark. However that did not mean that he had any exclusive overriding right to actually use it himself. Furthermore although Inter Lotto’s use of HOTPICK subsequent to Camelot’s application may amount to infringing use it was not sufficiently wrongful to be disregarded for the purposes of establishing goodwill.

Camelot appealed. The question of what amounted to the cut off date for the assessment of Inter Lotto’s relevant goodwill was considered again. Inter Lotto relied upon the established principle that it should be the date of commencement of the conduct which was alleged to amount to passing off. Camelot argued that the relevant date in these circumstances must now be that of its trade mark application. Camelot explained that Mr Justice Laddie had misunderstood its argument. It had not meant to assert that it had any positive right to use its trade mark or that Inter Lotto’s infringing use of its sign was sufficiently wrongful that it should be disregarded. Instead its argument was that in the light of the Trade Marks Directive and 1994 Act the UK Court needed to reconsider the inter-relationship between statutory trade marks and common law passing off rights. In Camelot’s view this relationship had been affected by the new regime.

The Court of Appeal dismissed the appeal and held that the relevant date for assessment of goodwill in a passing off action, in such circumstances, remains the date that the conduct complained of began. It disagreed that the rights of a trade mark proprietor should now override unregistered rights even where the latter were not "earlier rights" but were obtained subsequent to the trade mark application. The provisions of the 1994 Act expressly did not affect the law of passing off. Although sometimes an uneasy relationship may exist between the two systems of law they should still be considered separately. Only if the owner of an unregistered right acquiesces for five years to the use of a registered trade mark in a confusingly similar way may rights acquired under the laws of passing of be impinged upon by the 1994 Act. Camelot’s request for a reference to the ECJ was refused.

The Court of Appeal recognised that this uneasy relationship could lead to some "[not] wholly unsatisfactory" results.

For instance, what if business X had not acquired sufficient goodwill from its use of its sign before business Y’s application for a similar mark to oppose it; but subsequently acquired further goodwill sufficient to bring a successful action for passing off against business Y when it started using its mark? It appears both X and Y could obtain injunctions against each other to prevent further use of their respective mark and sign (to prevent Y’s passing off and to prevent X’s trade mark infringement). It is difficult to believe that the drafters of the EU Directive would have been content with this situation especially where the preamble states:

"…this Directive [takes] trade marks acquired through use … into account only in regard to the relationship between them and trade marks acquired by registration."

This case illustrates once again the care that must be taken by UK businesses in selecting and actually using a trade mark to avoid it being worth little more than the paper used for its certificate of registration.

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