27 September 2002

Kerry Griffin

In the matter of Trade Mark Application No. 2,241,892 in the name of Nichols plc

A Challenge to BABY-DRY?

On 20 September 2001 the European Court of Justice gave a ruling on the meaning of “distinctive character” in the BABY-DRY case. The ECJ found, overturning the decision of the Court of First Instance, that the word combination “BABY-DRY” was distinctive and capable of registration as a trade mark. The ECJ decision related to the scope of Article 7(1) of Regulation 40/94, which corresponds to Article 3(1) of Directive 104/89 and Section 3(1) of the Trade Marks Act 1994 (the “Act”).

“3 Absolute grounds for refusal of registration

(1) The following shall not be registered:-

(a) signs which do not satisfy the requirements of section 1(1);

(b) trade marks which are devoid of distinctive character;

(c) trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering services, or other characteristics of goods or services;

(d) trade marks which consist exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade:

Provided that, a trade mark shall not be refused registration by virtue of paragraph (b), (c) or (d) above if, before the date of application for registration, it has in fact acquired a distinctive character as a result of the use made of it.

Section 3(1) Trade Marks Act 1994

Since September 2001, the BABY-DRY decision has been applied in numerous UK cases[1] and the Trade Marks Registry has issued a Practice Amendment Notice (dated 18 June 2002) specifically addressing the BABY-DRY decision. The Practice Amendment Notice cites sections of the BABY-DRY decision and indicates that the primary question which needs to be addressed when assessing section 3(1) of the Act is whether the sign in question can or cannot fulfil the function of a trade mark (that is, the function of distinguishing the goods or service of one undertaking from another). The signs referred to in Section 3(1) of the Act are only those which from the consumer’s point of view serve to designate either directly or by reference to one of their essential characteristics, goods or services such as those in respect of which registration is sought. The Practice Amendment Notice goes on to state that it is consequently necessary to apply what it refers to as the “average consumer test” when considering applications for registration.

In the Nichols case[2], Nichols Plc applied to register the word mark “Nichols” for ranges of goods (various food and drink items) in classes 29, 30 and 32. The application was not supported by any evidence that the mark had acquired distinctiveness. Nichols plc argued that there was no need for such evidence, the mark was distinctive without the need for such evidence. The appeal from the UK Trade Marks Registry decision refusing registration was heard by Mr Justice Jacob.

Jacob J. commented that the United Kingdom Registry takes the view that the registration of names should be considered carefully to ensure that unfair advantage is not given to the first applicant for such a name. The Registry has set out its views in Practice Amendment Circular PAC 6/00. Surnames are not deemed to be prima facie incapable of distinguishing the goods of an undertaking. They are not expressly listed in section 3(1)(c) of the Act. Therefore in assessing whether a particular name can be registered, the Registry will assess whether in fact the average consumer will take the mark as identifying the goods/services of one undertaking i.e. whether the mark is in fact distinctive. In assessing such the Registry will consider for example the commonness of the surname, and the number of undertakings engaged in the trade. The more common a surname the less likely it will be distinctive and vice versa. Likewise, the smaller the business area, the more likely a name will be considered distinctive in that business area. It will also depend on the context in which the name is being used. The mark should be assessed as a whole.

In drafting Circular PAC 6/00 the Registry had regard to the BABY-DRY case in the Court of First Instance which indicated that the decisive factor in assessing whether a sign is eligible for registration is its distinctiveness and that distinctiveness could only be assessed in relation to the goods or services in respect of which registration was sought.

The question that Jacob J was particularly concerned about as regards the mark “Nichols” was whether a fairly common surname should be regarded as lacking distinctive character unless and until it has acquired a distinctive character. Where the mark also included something else which granted distinctiveness, there would be no problem. For example Nichols of Watford might avoid any issue about whether Nichols alone was distinctive. Jacob J. questioned whether a surname alone, until it has acquired distinctiveness, could ever indicate that goods came from a particular undertaking. All the consumer will know is that the goods come from someone or some company called “Nichols”. This is not the same as identification of one particular undertaking.

Jacob J. next questioned whether it really mattered whether the mark indicated a particular origin. The consumer would recognise the mark as a brand despite not knowing the source or origin. He suggested that one possible answer to this was that the use of the name as a trade mark effectively foreclosed the position for other users of the same or similar name. The laws of unfair competition would in any event probably protect a name which had become established as a trade mark. However previous ECJ cases have suggested that identification of a particular source is important[3].

The applicants for the Nichols mark argued that there is nothing preventing registration of surnames. The first to apply would be able to get the mark. The scope of specification of goods or services was irrelevant. Jacob J. thought this latter point of particular importance given that certain Registries, including OHIM, permit wide specifications without any requirement for a statement of intention to use over the wide range of goods and services claimed. The fact that such a wide registration could be challenged on the basis of non-use was practically irrelevant. Challenging such registration was costly and only possible after the expiry of a five year period. Jacob J. thought that in considering trade mark issues it was important to consider how the registered trade marks system actually works in practice rather than the theoretical position. This points to a consideration of how the system operates in each country where there are differences in that operation.

Jacob J. then went on to consider the BABY-DRY case. He expressed his surprise that the ECJ had chosen to consider the defences available in trade mark infringement actions when assessing “distinctiveness” i.e. whether a mark was eligible for registration. This was a clear departure from the previous legal position in the UK and elsewhere. Before BABY-DRY, the position in England was that registrability was considered solely under section 3 of the Trade Marks Act. It was observed in AD2000 ([1997] RPC 168 at 176) by the appointed person (Geoffrey Hobbs QC) that “the first line of protection is to refuse registration of signs which are excluded from registration by the provisions of section 3.” The possibility of defences under section 11 was not relevant to assessment of eligibility for registration or assessment of distinctiveness. Geoffrey Hobbs QC referred to the decision of Robin Jacob QC in Colorcoat Trade Mark ([1990] RPC 511 at 517) where Jacob QC clearly stated that “possible defences …. should not be taken into account when considering registration” and that such a proposition was “very well settled”.

In reaching its decision in BABY-DRY the ECJ also appeared to depart from its previous decision in Windsurfing Chiemsee Productions – und Vertriebs GmbH -v- Boots – und Segelzubehör Waller Huber and Franz Attenberger ([1999] ETMR 585). In the Chiemsee case the issue was whether the word “Chiemsee” was an indication designating geographical origin and therefore not capable of protection. The Chiemsee is a lake in Bavaria. The ECJ commented that it was in the public interest for signs or indications designating geographical origin to remain available. The ECJ also stated that Article 6(1)(b) of Directive 89/104/EEC (defences) does not “have a decisive bearing on the interpretation of that provision [Article 3(1)(c)]”.

In the case of registration of names and before the decision on BABY-DRY this might have suggested that the name defence (Article 6(1)(a) of the Directive) or other defences were likewise irrelevant to the determination of eligibility for registration. This difference in approach was noted by the Advocate General in BABY-DRY ([2001] ETMR 75) who concluded that Article 7(1)(c) should be interpreted “as intended not to prevent any monopolising of ordinary descriptive terms but rather to avoid the registration of descriptive branch names for which no protection could be available”. Jacob J. also referred to two further cases in his Judgment, the Lloyds case (C-342-97 [1999] ECR-I-3819) and the Philips TM, case (C-299/99 18th June 2002) where defences had not been considered in assessing eligibility for registration.

The ECJ, however, in referring to Article 7(1) (requirement for distinctiveness) and Article 12 (defences) of the Regulation stated that “it is clear from those two provisions taken together [i.e. combining Articles on eligibility for registration and defences to infringement] that the purpose of the prohibition of registration of purely descriptive signs or indications as trade marks is, …. to prevent registration as trade marks of signs or indications which, because they are no different from the usual way of designating the relevant goods or services or their characteristics, could not fulfil the function of identifying the undertaking that markets them and are thus devoid of the distinctive character needed for that function.”

Jacob J observed that, by combining provisions on eligibility for registration and defences, Baby-Dry has shifted the balance towards trade mark owners who have the resources and foresight to use the registration system against the public in general and weaker and less organised companies.

In the Nichols case this left open the issue as to how much the “own name” defence should be taken into account when determining distinctiveness of any application to register a name. Article 6(1) of Directive 89/104/EEC (comparable to section 11(2)(a) of the Act) provides that

“The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade, (a) his own name or address…. provided he uses them in accordance with honest practices in industrial or commercial matters”.

Jacob J. set out various questions that, should the own name defence be taken into account, would arise: (a) does the defence apply to companies or is it limited to individuals[4]; (b) what does “honest practices” mean?

When considering distinctiveness in relation to names is it necessary to assess whether the use in question makes a defence of honest practices more likely. For example, where a surname is more common does that suggest a defence of “honest practices” is more likely to succeed. It seems difficult to judge such an issue theoretically before any potential infringement case has arisen.

Jacob J. begins his judgment with a statement that the case involves a difficult question of principle requiring a reference to the ECJ. His reasoning effectively invites the ECJ to revisit BABY-DRY and to clarify what is meant by its apparent combination of the defence and eligibility provisions. It will be interesting to see whether the ECJ takes this opportunity to clarify exactly what is meant by requiring analysis of defences alongside eligibility criteria. It will also be interesting to see whether the ECJ addresses the apparent shift in balance, identified by Jacob J, against the public in general and towards trade mark owners.

Also published in the October 2002 issue of WIPR.

[1] See for example, David West T/A Eastenders –v- Fuller Smith Turner Plc (Floyd QC, 25 January 2002), or in the matter of Application No. 2248161 by the Healthy Forum Limited to register a mark in classes 3, 5, 16, 29, 30, 32 and 35 and in the matter of opposition thereto under no. 52183 by Sanofi-synthelabo (BL (SRIS) 0/076/02 15 February 2002)
[2] Case No: CH 2002 App 120, Jacob J. 23 July 2002.
[3] Lloyds case C-342-97 [1999] ECR I-3819 (ECJ required assessment of the capacity of the mark to identify goods “as coming from a particular undertaking”), Philips TM case C-299/99 (18 June 2002) (ECJ referred to use of a sign sufficient that the shape was associated with “that trade and no other”).
[4] The House of Lords referred this point to the ECJ in Scandecor Development v Scandecor Marketing [2000] FSR 6. The case has since settled and therefore the issue still needs resolving.