Case No. IP-2020-000074

may better be viewed as a consideration bound up in the analysis of infringement under s.10(2), see W3 Ltd v EasyGroup Ltd [2018] EWHC 7 (Ch), at [287], but it is convenient to consider honest concurrent use separately and I will do so below. Section 10(3) of the 1994 Act 46.The defendants alleged that the claimants’ case under s.10(3) failed to satisfy four requirements of that subsection, namely (1) that the Trade Mark has a reputation in the United Kingdom, (2) that there is a link between the Trade Mark and the sign in the mind of the average consumer, (3) that use of the sign takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Trade Mark and (4) that such taking advantage or detriment is without due cause. Reputation – the law 47.The reputation of the Trade Mark falls to be assessed at the time when use of the accused sign commenced, see Levi Strauss & Co v Casucci SpA Case (C-145/05) EU:C:2006:264 at [20].48.In Stichting BDO v BDO Unibank, Inc [2013] EWHC 418 (Ch) Arnold J said, not specifically in the context of s.10(3) or equivalent provision of EU law, but in respect of trade mark infringement generally (at [94]):“Counsel for the defendants submitted that Levi Strauss [2007] F.S.R. 8 should be read in the light of the CJEU’s subsequent decision in O2 Holdings Ltd v Hutchison 3G UK Ltd (C-533/06) [2008] E.C.R. I-4231; [2008] R.P.C. 3, which requires a contextual assessment of the use of the sign, to mean that likelihood of confusion was to be judged at the date the sign in question began to be used in the particular manner and context complained of. If the defendant used the sign in a materially different manner or context at a later date, a new global assessment had to be made as of that date. I accept that submission.”49.This passage was relied on by the claimants and it raises the question as to what constitutes a materially different manner or context of use. I am not sure which part of the CJEU’s judgment in O2 Holdings Arnold J had in mind. I will in any event discuss the possibility of a material difference below.50.The principal guidance to the concept of “reputation” comes from CJEU judgments concerned with EU trade marks, dealing of course with a reputation in the EU as opposed to the UK.51.First, the threshold of a sufficient reputation is reached when the EU trade mark is known by a significant part of the public concerned by the products or services covered by that trade mark, see Iron & Smith kft v Unilever NV (C-125/14) EU:C:2015:539, at [17]. 52.Secondly, an important starting point is the identification of the market for the goods or services covered by the trade mark. In Iron & Smith Advocate General Wahl said that this ought to assume “a paramount role in the analysis” (at [17]).53.Thus, thirdly, the relevant public may be the public at large or a more specialised public, or example traders in a specific sector, see PAGO International GmbH (C-301/07) EU:C:2009:611 at [22].54.Fourthly, all relevant facts must be taken into account in assessing reputation, in particular the market share held by the trade mark, the intensity, geographical extent and duration of its use, and the size of the investment made by the undertaking in promoting it, see PAGO at [25] and Iron & Smith at [18].55.Fifthly, reputation must accordingly be assessed according to a combination of geographical and economic criteria, see Advocate General Wahl in Iron & Smith at [17].56.Sixthly, from a geographical perspective, the requirement of a reputation must be considered to be fulfilled when the EU trade mark has a reputation in a substantial part of the EU and such a part may, in some circumstances, correspond to the territory of a single Member State, see PAGO at [27] and [29]; Iron & Smith at [19].57.Fancourt J observed 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) that the issue of reputation is likely to arise and be important in a case where the market is very broad but the trade mark has had only local exposure. Reputation – this case 58.Beginning with what Advocate General Wahl described as the paramount role in the analysis, the market for restaurant services (of every kind) covers the entirety of the UK. The relevant public includes almost every adult and child in the UK. 59.WLE started trading in November or December 2009. The reputation of the claimants’ business is to be assessed as of that time.60.The claimants relied on the turnover of their restaurant business and the number of customers served, promotional events and its social media presence. Only some of this was dated and I can consider only matters which were shown to have contributed towards a reputation by the end of 2009.61.The Park Lane restaurant opened in September 2005 and the turnover in each of the calendar years 2006 to 2009 was between 5 and 6 million pounds. The annual number of covers, i.e. customers served, in each of those years was about 70,000. Sums spent on advertising in the years 2005 to 2009 varied, the relevant figures being £25,892, £47,224, £5,304, £43,820 and £19,604. Between 2005 and 2009 the claimants provided dining vouchers worth about £17,000 to charities. The restaurant has been given press coverage and awards. By 2009 these were (i) a 2005 review in The Caterer review, an online publication, (ii) the Tatler Restaurant Award in 2006 for best room, (iii) a review in The Scotsman in 2007, reviews in (iv) the Daily Telegraph and (v) the Evening Standard in 2009 and (vi) entries in Time Out Eating and Drinking Guide and Time Out’s Hot 100 in 2009.62.I must consider this evidence from both a geographical and an economic aspect. As to the former, the claimants’ best evidence comes from its press coverage. I have no means of knowing how many people will have read any of the articles concerned or been made aware of the awards but it is likely that a spread of individuals across the UK will have done so. On the other hand, the reputation may have been patchy, depending on the economic aspect of the evidence.63.With regard to the economic aspect, I am required to consider in particular the market share held by the business conducted under the Trade Mark, the intensity and duration of the use of the Trade Mark and the size of the investment made by the undertaking in promoting it.64.Relative to the UK restaurant business as a whole, the share conducted under the Trade Mark was tiny in 2009. The business was conducted for a little over four years before WLE started trading, but it was a single restaurant. Money was spent on advertising but the evidence did not show how this was spent. In the context of the restaurant market of the UK as a whole, the sums were very small.65.The upshot is that by the end of 2009 the business conducted under the Trade Mark had a reputation which satisfied the geographical aspect of the requirement but not, I think, the economic one.66.The overall test is whether the Trade Mark was known by a significant part of the UK public concerned with restaurant services. In my view the evidence filed by the claimants does not go far enough to show that the Trade Mark’s reputation complied with that test. At the end of 2009 the Trade Mark did not have a reputation within the meaning of s.10(3).67.The claimants had a fall-back. Mr Gu’s evidence was that his menu was uploaded on to Facebook in 2015 and that in 2016 an enterprise called Big Foodie created a website for WLE and allowed WLE to use Big Foodie’s platform to offer online delivery. The claimants argued that this was use of the China Tang sign in a materially different way and so the Trade Mark’s reputation had to be reassessed as of 2015 and again as of 2016.68.I disagree. Although WLE’s use of Facebook and a website made its advertising accessible to the whole of the UK, in fact the whole world, Mr Gu’s evidence indicated that the online advertising would not have been accessed by anyone outside WLE’s local area, as one would expect. The only difference was that the locals could look at WLE’s menu online and could order online instead of making the trip to the shop. This was not a step change in the use of the sign and in my view the change was not material. Link 69.There is bound to be a link in the mind of the average consumer between a trade mark and a sign if a likelihood of confusion between the two has been established, see Intel Corp Inc v CPM United Kingdom Ltd (C-252/07) EU:C:2008:655 at [57]. The link is established. Unfair advantage of the distinctive character or repute of the Trade Mark 70.In L’Oréal SA v Bellure BV (C-487/07) EU:C:2009:378 the CJEU 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.”71.The claimants’ argument under this head went no further than an assertion that WLE’s takeaway traded off the back of the fame, exclusivity and prestige of the claimants’ restaurant. This implies that where a claimant has a business upmarket from that of the defendant, once a link is established in the mind of the average consumer, unfair advantage must inevitably follow. I do not accept that this is what the CJEU had in mind when it spoke of a “clear exploitation on the coat-tails of the mark with a reputation.” Some reason must be given by a claimant in support of the suggestion that the reputation of the trade mark is clearly being exploited. In certain circumstances this may be self-evident. In the present case it is not. In the absence of such a reason and, were it necessary, appropriate evidence to support the reason, I find that no unfair advantage has been established. Detrimental to the distinctive character or repute of the Trade Mark 72.The claimants’ argument under this head was that the customers of their restaurant would get the impression that it is operating a franchise of high street takeaways.73.The CJEU said this in Environmental Manufacturing LLP v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) (C-383/12) EU:C:2013:741, discussing art. 8(5) of Regulation No 207/2009, which concerned the same issue of detriment, albeit in the context of the registration of an EU trade mark:“[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 [Intel Corp Inc v CPM United Kingdom Ltd (C-252/07) EU:C:2008:655] 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.”…[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.’74.In the present case the claimants’ case was based on “mere suppositions”. There was no analysis, no evidence of a change in the economic behaviour of the average consumer consequent on the use of WLE’s sign or evidence of a serious likelihood that such a change will occur in the future. Without due cause 75.Since the claimants have established neither unfair advantage nor detriment, due cause does not arise.76.The case for infringement under s.10(3) does not succeed. Honest concurrent use 77.In cross-examination Mr Gu admitted that when he chose the name for his business neither he nor anyone else did a trade mark search for “China Tang” or an internet search for restaurants of that name. Mr Gu said that he liked the name because “Tang” was the name of his mentor. He thought that Big Foodie may have conducted a search when they became involved but he knew nothing of what was done.78.I think that if Big Foodie did conduct either a trade mark or internet search with any degree of rigour, they would have found the claimants’ restaurant. Either they did and ignored what they had found or no such searches were carried out.79.I discussed the law on honest concurrent use in Bentley 1962 Limited v Bentley Motors Limited [2019] EWHC 2925 (Ch). The judgment went to appeal but permission to appeal on honest concurrent use was refused, [2019] EWCA Civ 1726. I said:“[85] Although s.7 of the 1994 Act preserved the defence of honest concurrent use which had been available under the [Trade Marks Act 1938], there has been no express provision for any such defence in successive Trade Mark Directives. The basis for that defence in law therefore comes from the judgment of the CJEU in Budĕjovický Budvar, národní podnik v Anheuser-Busch Inc (C-482/09) EU:C:2011:605; [2012] RPC 11 and subsequent judgments based on it.[86] The CJEU reiterated in Budĕjovický Budvar that a trade mark will be infringed only if use of the sign in issue is liable to affect the functions of the mark. The Court ruled that if there has been honest concurrent use of the accused sign, such use would not have, nor would it be liable to have, an adverse effect on the origin function of the trade mark. Honest concurrent use therefore provides a defence to infringement.[87] Henry Carr J set out a summary of the law on honest concurrent use in Victoria Plum Ltd v Victorian Plumbing Ltd [2016] EWHC 2911 (Ch); [2017] FSR 17, based on the line of authorities stemming from Budĕjovický Budvar:‘[74] The case law to which I have referred establishes the following principles: (i) Where two separate entities have co-existed for a long period, honestly using the same or closely similar names, the inevitable confusion that arises may have to be tolerated. (ii) This will be the case where the trade mark serves to indicate the goods or services of either of those entities, as opposed to one of them alone. In those circumstances, the guarantee of origin of the claimant’s trade mark is not impaired by the defendant’s use, because the trade mark does not denote the claimant alone. (iii) However, the defendant must not take steps which exacerbate the level of confusion beyond that which is inevitable and so encroach upon the claimant’s goodwill.’[88] Henry Carr J went on to consider the meaning of honesty in this context. He drew on the principles which apply in the context of s.11(2) of the 1994 Act (defences to infringement of a trade mark which apply ‘provided the use is in accordance with honest practices in industrial or commercial matters’) and the equivalent provisions of the Trade Mark Directive or Regulation in force at the time when the relevant authorities were decided. He summarised those principles:“[79] In my judgment, the factors which have been considered in the context of honest commercial practices in respect of the own name defence need a degree of adaptation when considering whether ‘concurrent use’ is honest. In particular: (i) The defendant has a duty to act fairly in relation to the legitimate interests of the trade mark proprietor.(ii) All circumstances must be considered when ascertaining whether or not the use by the defendant is honest, including whether the defendant can be regarded as unfairly competing with the trade mark proprietor. (iii) However, the question is not simply whether use of the sign complained of gives rise to consumer deception, as such deception may have to be tolerated. Similarly, the defendant may well be aware of the existence of such confusion, having lived with it for a considerable period. (iv) The question is whether the defendant has taken steps which exacerbate the level of confusion beyond that which is inevitable and so has encroached upon the claimant’s goodwill. (v) Whether the defendant ought to be aware that such steps will exacerbate confusion is a relevant factor.’[89] In W3 Ltd v EasyGroup Ltd [2018] EWHC 7 (Ch); [2018] FSR 16 Arnold J doubted (at [287]) that honest concurrent use provides a defence to infringement under art.9(1)(b) of Council Regulation (EC) 40/94, equivalent to s.10(2) of the 1994 Act. He believed that it may be better viewed as a factor that falls into account as part of the global assessment required under art.9(1)(b), although he did not state a view as to whether this could make a material difference.…[91] Mr Cuddigan underlined that only in exceptional circumstances will honest concurrent use arise. In Budĕjovický Budvar the CJEU spelt this out:‘[76] … it should be stressed that the circumstances which gave rise to the dispute in the main proceedings are exceptional.’[92] There was a finding of honest concurrent use in IPC Media Ltd v Media 10 Ltd [2014] EWCA Civ 1439; [2015] FSR 12. The Court of Appeal followed Budĕjovický Budvar, which was described by Kitchin LJ (at [56]) as:‘… one of those rare cases in which the use of the mark complained of is indeed honest and that it has not had and will not have an adverse effect upon the essential function of the registered trade mark, and that is so because the guarantee of origin the mark provides is just the same as it has always been.’[93] Mr Cuddigan also relied on more specific factors to be applied in the assessment of honest concurrent use not mentioned in the summaries of the law in Victoria Plum. Three of them were:(i) whether the defendant knew of the existence of the trade mark or marks and if not, whether it would have been reasonable for the defendant to conduct a search;(ii) whether the defendant used the sign complained of in reliance on competent legal advice based on proper instructions; and(iii) whether the defendant knew that the trade mark owner objected to the use of the sign complained of, or at least should have appreciated that there was a likelihood that the owner would object.[94] Authority for the relevance of these three factors can be found at Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2009] EWHC 3032 (Ch); [2009] RPC 9 at [150]-[151] and [154]-[155], approved on appeal [2010] EWCA Civ 110; [2010] RPC 16 at [80]. See also Samuel Smith Old Brewery (Tadcaster) v Lee [2011] EWHC 1879 (Ch); [2012] FSR 7, at [118].”80.More needs to be said about the three factors referred to at [93] and the support for them given at [94].81.The defendants relied on the judgment of Arnold J in Walton International Ltd v Verweij Fashion BV [2018] EWHC 1608 (Ch). The claim included an allegation of trade mark infringement and there was a counterclaim for revocation and/or a declaration of invalidity of the relevant trade marks. All but one of the trade marks were revoked and the remaining trade mark was found invalid pursuant to s.5(4)(a) of the 1994 Act. Arnold J nonetheless considered the arguments on infringement. The defence aside from the counterclaim was that there had been honest concurrent use. The claimants made two points in response, of which the second was that the defendant’s use of its sign had not been honest. Arnold J said:“[213] Turning to the second point, counsel for the claimants submitted that the defendant had not discharged its duty to act fairly in relation to the legitimate interests of the trade mark proprietor. He argued that, even if the defendant had not known of UK864 until relatively recently (as I find it did not), the defendant ought to have carried out a search of the UK trade mark register before marketing its goods here.[214] I do not accept this argument for a number of reasons. First, if a mere failure to carry out a search was sufficient to deprive a defendant of an honest concurrent use defence, that would mean that it was very rarely available. Secondly, counsel for the claimants did not say what the defendant was supposed to have done if it had carried out a search and found UK864. The logic of the argument appears to be that it should have applied for revocation prior to marketing its goods. But I do not see why a defendant should be under a duty to make such an application prior to marketing. Thirdly, the argument is inconsistent with Henry Carr J.'s analysis of the law in Victoria Plum. As he held, the key question is whether the defendant has taken steps which exacerbate the level of confusion beyond that which is inevitable and so has encroached upon the claimants' goodwill.”82.In Victoria Plum Ltd v Victorian Plumbing Ltd [2016] EWHC 2911 (Ch), Henry Carr J drew on the principles which define “honest practices” in s.11(2) of the 1994 Act to draw up a similar set of principles which characterise honesty in the context of honest concurrent use at [75]. He referred to the judgment of Arnold J in Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2009] EWHC 3032 (Ch). In that case Arnold J reviewed judgments of the CJEU and the Court of Appeal on the meaning of “honest practices in industrial and commercial matters” under art.12(a) of Regulation 40/94 (equivalent to s.11(2)) and set out ten reasons why the defendant had not used the accused sign in accordance with honest practices. This was the first:“[154] First, I have found that the defendants knew of the existence of the CTM at the time that they opened the Restaurant. Furthermore, even if they had not known of it, a reasonable person in their position would have instructed their trade mark attorneys to conduct a search, and such a search would almost certainly have revealed the existence of the CTM. No evidence has been adduced that a search was conducted which failed to turn up the CTM. Despite this, the defendants made no attempt to clear CGS's use of the names Cipriani London, let alone Cipriani, with HC.”83.The judgment was upheld on appeal: Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2010] EWCA Civ 110. Lloyd LJ, with whom Jacob and Stanley Burton LJJ agreed, said:“[83] It seems to me that the judge was well entitled … to conclude, as he did, on the basis of the various cumulative factors which he enumerated, that the use by the first defendant of the sign Cipriani amounted to unfair competition with the first claimant. It could not, therefore, be justified under the proviso [to art.12(a)] …”84.In Samuel Smith Old Brewery (Tadcaster) v Lee [2011] EWCH 1879 (Ch) Arnold J had to consider the meaning of “honest practices” in the context of art.6(1)(b) of Directive 2008/95/EC, equivalent to s.11(2)(b) of the 1994 Act. He ruled that honest practices was to be taken to have the same meaning as in art.12(a) of Regulation 40/94. He referred to his judgment in Cipriani and summarised the ten material factors (at [118]):“i) whether the defendant knew of the existence of the trade mark, and if not whether it would have been reasonable to conduct a search.ii) whether the defendant used the sign complained of in reliance on competent legal advice based on proper instructions;iii) the nature of the use complained of, and in particular the extent to which it is used as a trade mark for the defendant’s goods or services;iv) whether the defendant knew that the trade mark owner objected to the use of the sign complained of, or at least should have appreciated that there was a likelihood that the owner would object;v) whether the defendant knew, or should have appreciated, that there was a likelihood of confusion;vi) whether there has been actual confusion, and if so whether the defendant knew this;vii) whether the trade mark has a reputation, and if so whether the defendant knew this and whether the defendant knew, or at least should have appreciated, that the reputation of the trade mark would be adversely affected;viii) whether the defendant’s use of the sign complained of interferes with the owner’s ability to exploit the trade mark;ix) whether the defendant has a sufficient justification for using the sign complained of; andx) the timing of the complaint from the trade mark owner.”85.Falling back on first principles, it seems to me that had the defendant been a large enterprise with a trade mark department which diversified by opening a single takeaway in Barrow and which failed to conduct a trade mark search, it would be hard not to conclude that this failure was not in accordance with honest practices absent good reasons for the failure. That would remain true even if the failure was negligent rather than deliberate. I can see no principled reason for a cut-off related to the size of the enterprise below which such a failure remains in accordance with honest practices. Setting up even the smallest business is likely to require competent legal advice on a variety of matters and that should include the trading name. A public register of other parties’ rights is there to be consulted, in part so that those rights may be respected.86.I should say something about the points made in Walton at [214]. First, it may be that if a failure to carry out a trade mark search is an important factor in depriving a defendant of an honest concurrent use defence, the defence will rarely be available – I do not say that such a failure is enough without regard to any other matter. But this is consistent with the view expressed by Kitchin LJ in IPC Media Ltd v Media 10 Ltd [2014] EWCA Civ 1439 that instances of honest concurrent use will be “rare”. Secondly, if a party discovers a conflicting trade mark on the register it can of course seek to revoke the mark or apply for a finding that it is invalid. But the most obvious way forward is to use a different sign under which to trade. That will not generally be an onerous burden. If there are special factors that make it unreasonable, they are likely to be relevant to question of honesty. Thirdly, I am not sure that giving significance to a failure to conduct a trade mark and/or internet search is inconsistent with the judgment in Victoria Plum. In that case Henry Carr J apparently agreed with the factors set out in Cipriani and said expressly that all relevant matters must be taken into account. Exacerbation or lack of it can be a key factor and was on the facts of Victoria Plum, but I do not detect an intention that this should invariably overshadow other matters.87.I bear in mind that there are more than one factors in the non-exhaustive list in Cipriani and Samuel Smith and that Arnold J’s list has been approved twice by the Court of Appeal. That numbered (vi) would count in the defendants’ favour in this case save for the matters discussed above in relation to s.10(2) infringement. Those numbered (iv), (v) and (ix) would count against the defendants. Mr Gu did not even conduct a basic internet search for “China Tang”. Had he done so, he would likely have found the claimants’ website and/or reviews and commentary about it. Honest practices would then have required Mr Gu to obtain legal advice about the intended trading name for his business.88.I have sympathy for Mr Gu. But in the modern climate of easy trade mark and internet searches, I think that if a party starts to use a trading name without appropriate advice and simple searches, such use will not have been honest concurrent use without some reason why it should be taken to have been so. There was no such reason in the present case. This is not one of the rare cases of honest concurrent use contemplated by the Court of Appeal in IPC Media.