Case No. IP-2020-000081

The law on s.10(3) generally 86.The necessary elements of a claim of infringement under s.10(3) of the 1994 Act were set out by Arnold J in W3 Limited v Easygroup Limited [2018] EWHC 7 (Ch).:“[290] Accordingly, in order to establish infringement under Article 9(1)(c) of the Regulation, nine conditions must be satisfied: (i) the trade mark must have a reputation in the relevant territory; (ii) there must be use of a sign by a third party within the relevant territory; (iii) the use must be in the course of trade; (iv) it must be without the consent of the proprietor of the trade mark; (v) it must be of a sign which is at least similar to the trade mark; (vi) it must be in relation to goods or services; (vii) it must give rise to a ‘link’ between the sign and the trade mark in the mind of the average consumer; (viii) it must give rise to one of three types of injury, that is to say, (a) detriment to the distinctive character of the trade mark, (b) detriment to the repute of the trade mark or (c) unfair advantage being taken of the distinctive character or repute of the trade mark; and (ix) it must be without due cause.”87.The points in dispute in the present case concerned (1) the reputation of the Trade Mark, (2) a link between UEPM’s sign and the Trade Mark, (3) unfair advantage being taken of the distinctive character of the Trade Mark, (4) detriment to the distinctive character of the Trade Mark, (5) due cause.88.No separate argument was advanced by the Claimants in relation to the repute of the trade mark. Reputation – the law 89.The law on reputation within the meaning of s.10(3) was considered by Fancourt J in Sazerac Brands, LLC v Liverpool Gin Distillery Limited [2020] EWHC 2424 (Ch) (upheld on appeal [2021] EWCA Civ 1207; the case under s.10(3) was not considered by the Court of Appeal):“[38] The question is likely to arise and be important in a case where the market is very broad but the trade mark has only had local exposure. This is exemplified by Waseem Ghias t/a GRILLER v Ikram t/a THE GRILLER ORIGINAL [2012] EWPCC 3, in which the market for fast food restaurants was huge and the turnover for the claimant's franchise in London and Essex was ‘miniscule’ in comparison (just over £1 million); and by Burgerista Operations GmbH v Burgista Bros Ltd [2018] EWHC 35 (IPEC), in which the claimant had only 6 restaurants in Austria and one in Germany at the relevant date, albeit with turnover amounting to €9,250,000 and over 865,000 individual transactions. The brand was however only known locally, not throughout Austria, and the proportion of the burger fast food business in the EU was considered to be ‘very small indeed’. Although the claimant had a reputation of some kind, it did not have a reputation within the meaning of art. 9(2)(c).[39] Where on the other hand only a small sector of the public is concerned by the goods in question and the goods are marketed and consumed nationally, rather than locally, there may more readily be seen to be a reputation in the trade mark if there has been a sufficiently long history of sales or substantial promotion of the brand. Whether a trade mark has a reputation in that sense must be assessed by close reference to the facts, having regard to the market share of the brand, the intensity, geographical extent and duration of its use and the size of the investment made by the owner in marketing it: PAGO International GmbH v Tirolmilch Registrierte Genossenschaft mbH (C-301/07) [2010] ETMR 5 at [25].”90.The reputation of a trade mark is to be assessed as of the date on which the alleged infringer first started to trade under the accused sign, see the discussion in Burgerista Operations GmbH v Burgista Bros Ltd [2018] EWHC 35 (IPEC), at [54]-[59]. In this case that is March 2018. Reputation – this case 91.The Claimants’ trading under the Trade Mark began in Manchester, then expanded to Preston, Leeds and Liverpool. Mr Howard gave unchallenged evidence that in the years 2014 to 2017 the turnover of the Claimants trading under the Trade Mark rose from £1,040,947 to £2,234,909. He cited several awards received by the Claimants in recognition of what he described was their position as a market leader in block management. About £450,000 has been spent on marketing and advertising since 2014. In cross-examination Mr Howard said that by 2017 the Claimants managed 950 homes in Liverpool.92.Mr Tumilty accepted that the Claimants were regarded as an experienced property management company.93.This is a case concerned with a small sector of the public, namely those conforming to the two categories of average consumer discussed above. The evidence did not establish a reputation of any significance outside the North West of England and West Yorkshire but I am satisfied that this was sufficient evidence of reputation within the UK. Link 94.It was common ground that a link is established if the accused sign brings to mind the trade mark in suit. Given the evidence of confusion discussed above, a link in the mind of the average consumer has been established. Unfair Advantage – the law 95.In L’Oréal SA v Bellure NV (Case C-487/07) EU:C:2009:378, the Court of Justice of the European Union said:“[41] As regards the concept of ‘taking unfair advantage of the distinctive character or the repute of the trade mark’, also referred to as ‘parasitism’ or ‘free-riding’, that concept relates not to the detriment caused to the mark but to the advantage taken by the third party as a result of the use of the identical or similar sign. It covers, in particular, cases where, by reason of a transfer of the image of the mark or of the characteristics which it projects to the goods identified by the identical or similar sign, there is clear exploitation on the coat-tails of the mark with a reputation.…[49] In that regard, where a third party attempts, through the use of a sign similar to a mark with a reputation, to ride on the coat-tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of his own in that regard, the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark, the advantage resulting from such use must be considered to be an advantage that has been unfairly taken of the distinctive character or the repute of that mark.” Unfair Advantage – this case 96.The Claimants’ argument was that when UEPM began to trade in March 2018 it was aware of the Claimants’ reputation and chose a name which included “Urban” in order to profit from the reputation. The emails from Mr Whyte and possibly that from Dr Marar indicate that there would have been no advantage to UEPM in a perceived association with the Claimants. Likewise the 25-30 phone calls received by El Paraiso. There was no evidence beyond assertion that there would have been any such advantage. The allegation of unfair advantage was not made out. Detriment to the Distinctive Character of the Mark – the law 97.In Comic Enterprises Ltd v Twentieth Century Fox Film Corp [2016] EWCA Civ 41, Kitchin LJ said:“[113] The Court of Justice explained what is meant by detriment to the distinctive character of a mark in Intel [2009] R.P.C. 15 at [29]:‘As regards, in particular, detriment to the distinctive character of the earlier mark, also referred to as “dilution”, “whittling away” or “blurring”, such detriment is caused when that mark’s ability to identify the goods or services for which it is registered and used as coming from the proprietor of that mark is weakened, since use of the later mark leads to dispersion of the identity and hold upon the public mind of the earlier mark. That is notably the case when the earlier mark, which used to arouse immediate association with the goods and services for which it is registered, is no longer capable of doing so.’[114] The Court then went on (at [72]–[76]) to explain how such injury might be established. In summary, it is not necessary for the earlier mark to be unique, although the more “unique” it appears, the greater the likelihood that a later identical or similar mark will be detrimental to its distinctive character; secondly, the use of an identical or similar mark may suffice, in some circumstances, to cause actual and present detriment to the distinctive character of the earlier mark or to give rise to a serious likelihood that such detriment will occur in the future; and thirdly, detriment to the distinctive character of the earlier mark is caused when that mark’s ability to identify the goods or services for which it is registered and used as coming from the proprietor of that mark is weakened. There followed at [77] this important explanation of what is needed by way of proof:‘[77] It follows that proof that the use of the later mark is or would be detrimental to the distinctive character of the earlier mark requires evidence of a change in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered consequent on the use of the later mark, or a serious likelihood that such a change will occur in the future.’[115] Then, at [78], the Court emphasised that it is immaterial for the purposes of assessing whether the use of the later mark is or would be detrimental to the distinctive character of the earlier mark, whether or not the proprietor of the later mark draws real commercial benefit from the distinctive character of the earlier mark.[116] The need for evidence of a change in the economic behaviour of the average consumer, or a real likelihood that such a change will occur in the future, was considered by the Court of Justice once again in Environmental Manufacturing LLP v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) (C-383/12) EU:C:2013:741, given on 14 November 2013 at [34]–[43] in considering the similar provisions in Regulation 207/2009. The Court said this:‘[34] According to the Court’s case-law, proof that the use of the later mark is, or would be, detrimental to the distinctive character of the earlier mark requires evidence of a change in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered, consequent on the use of the later mark, or a serious likelihood that such a change will occur in the future (Intel Corp , paragraphs 77 and 81, and also paragraph 6 of the operative part of the judgment).[35] Admittedly, paragraph 77 of the Intel Corp judgment, which begins with the words “[i]t follows that”, immediately follows the assessment of the weakening of the ability to identify and the dispersion of the identity of the earlier mark; it could thus be considered to be merely an explanation of the previous paragraph. However, the same wording, reproduced in paragraph 81 and in the operative part of that judgment, is autonomous. The fact that it appears in the operative part of the judgment makes its importance clear.[36] The wording of the above case-law is explicit. It follows that, without adducing evidence that the condition is met, the detriment or the risk of detriment to the distinctive character of the earlier mark provided for in Article 8(5) of Regulation No 207/2009 cannot be established.’[117] A little later, it continued:‘[42] Admittedly, Regulation No 207/2009 and the Court’s case-law do not require evidence to be adduced of actual detriment, but also admit the serious risk of such detriment, allowing the use of logical deductions.[43] None the less, such deductions must not be the result of mere suppositions but, as the General Court itself noted at paragraph 52 of the judgment under appeal, in citing an earlier judgment of the General Court, must be founded on “an analysis of the probabilities and by taking account of the normal practice in the relevant commercial sector as well as all the other circumstances of the case”.’[118] Here the Court of Justice has explained that a serious risk of detriment may be established by deduction, but any such deduction cannot be supposition and must instead be founded properly on all the circumstances of the case and the nature of the trade in issue.” Detriment to the Distinctive Character of the Mark – this case 98.There was no evidence provided by the Claimants establishing a change in the economic behaviour of the average consumer consequent upon the use of UEPM’s Urban Evolution sign, whether direct evidence or by the use of logical deductions. The Claimants pointed to five reviews of UEPM posted online which gave UEPM one star (the minimum). I take the view that this is insufficient and went no further than what the CJEU described as “mere suppositions”.99.Lacking too was evidence from the Claimants that once UEPM started to trade, such trading under the Urban Evolution sign (as opposed to other matters) caused customers to stop dealing with the Claimants or otherwise to behave economically in a manner detrimental to the Claimants. Without Due Cause 100.Since the Claimants have not shown that the use of UEPM’s sign either took unfair advantage of, or was detrimental to, the distinctive character of the Trade Mark, I need not consider whether either would have been without due cause. However, I would add that if the Defendants’ case on consent is made out, in my view that would qualify as due cause. Conclusion in respect of s.10(3) 101.The Defendants have not infringed the Trade Mark pursuant to s.10(3)