[2024] EWHC 1727 (IPEC)

As set out above, the Defendants assert that, by reason of s.12 of the Trade Marks Act 1994, they have a defence to all of the trade mark infringement claims.

Section 12 is derived from art.7 of Directive 89/104/EEC relating to trade marks (Footnote: ³) and at the time when the acts complained of took place (between October 2021 and June 2022), it provided that:

The effect of art.7(1) of Directive 89/104/EEC (and therefore of s.12(1)) was summarised by the CJEU in Case C-337/95 Parfums Christian Dior SA v Evora BV at [38] (“Dior”) as follows:

This is often referred to as the exhaustion of a trade mark proprietor’s rights, meaning that the proprietor cannot object to further dealings with those goods by others using the mark. However, by reason of s.12(2), this exhaustion of rights does not apply where the proprietor has legitimate reasons for opposing such further dealings.

As set out in s.12(2) (and in art.7(2) of Directive 89/104/EEC from which s.12(2) is derived (Footnote: ⁶)), one example of a case where the proprietor might have legitimate reasons to oppose further dealings in the goods is where the condition of those goods has been changed or impaired after being put on the market by the proprietor. Other examples are where the further dealings might seriously damage the reputation of the trade mark (see Dior at [48], Case C-588/08 Portakabin Ltd v Primakabin BV at [79] and [91] and Case C-46/10 Viking Gas A/S v Kosan Gas A/S at [37]) or give the impression that there is a commercial connection between the person responsible for those dealings and the trade mark proprietor and, in particular, the impression that that person’s business is somehow affiliated to the trade mark proprietor or that there is a special relationship between them (see Case C-63/97 Bayerische Motorenwerke AG v Deenik at [51] and Portakabin at [80] and [92]).

It is important to note, however, that the test under s.12(2) is not whether the further dealings involve such a change in condition, or serious damage to reputation of the trade mark or give the false impression of a commercial connection between the defendant and the trade mark proprietor. Rather, the test is whether, on the facts taken as a whole, the proprietor has legitimate reasons to oppose the further dealings. Further, the mere fact that customers may be led to believe that there is such a connection (i.e. the likelihood of confusion) will not necessarily satisfy that test. If it did, then the s.12 exhaustion defence could never operate to exclude liability in an infringement case brought under s.10(2), as it is that very likelihood of confusion which gives rise to that liability. (Footnote: ⁷)

In my judgment, in determining whether a case falls within s.12(2) (thereby excluding the operation of the exhaustion defence), the court must strike a fair balance between protecting the trade mark proprietor’s interests in a trade mark that has been applied to goods and protecting the interests of others such as the original purchaser and others who deal with those goods in the aftermarket. (Footnote: ⁸) On this basis, the Claimant readily accepts that people are entitled to refurbish and to sell second hand AGA Cookers using the AGA name. However, it believes that the Defendants’ actions (including the fitting of the eControl System) went beyond what is acceptable as they had changed the condition of the AGA Cookers in ways that might result in serious damage to the reputation of the Claimant’s Marks and also that the way in which the eControl Cookers were marketed and sold might lead people to believe that there was a commercial connection between the Defendants and the Claimant. On this basis, it argues that it has legitimate reasons to object to the Defendants’ activities.

I have not found this an easy matter to decide. However, on balance, I have decided that the Claimant does have legitimate reasons to object to the Defendants’ activities. This is not because of the extent of the works that the Defendants did on the cookers, or because of the fitting of the eControl System to AGA Cookers, per se. Nor is it because there is a serious risk that what the Defendants had done might damage the image of the Claimant’s Marks. Rather it is because of the way in which the Defendants marketed and sold the eControl Cookers.

It is necessary, first, to determine the nature and extent of the works which were done by the Defendants in order to create the eControl Cookers.

In this respect, the Claimant relied on the evidence of Mr Carpenter. As that evidence related solely to the works that had been done to create the eControl Cooker that had been the subject of the trap purchase, the Defendants in closing questioned how it could help determine the extent of the work that had been done to the other 25 eControl Cookers. However, Mr McGinley himself had stated in his second witness statement that the trap purchase product “comprised a typical renovated AGA that had had renovation works carried out of the type which is extremely commonplace and representative of the market, with the addition of an eControl conversion kit”. Accordingly, in my judgment, the trap purchase product can be treated as being representative of the other eControl Cookers.

The nature of the work done on the trap purchase product was set out in detail in Mr Carpenter’s witness statement and was explored with him in cross examination. His evidence (which I accept) was that the only elements of the trap purchase product that were original AGA parts were those identified in the diagram below: