25 April 2002

Susan Storor

Is the use of a trade mark solely within a separate, special market in the UK, such as foreign military bases, consulates or embassies, sufficient to maintain a UK trade mark registration from attack for non-use? This question was considered in the recent decision 1 of the Vice Chancellor in Gerber Products Company - v- Gerber Foods International Ltd. Although decided under the old Trade Marks Act 1938, the reasoning would equally be applicable to the equivalent provisions of the 1994 Act.

Gerber Products Company (Products), a US company, has had two UK trade mark registrations for baby food incorporating the GERBER brand since 1968 and 1973 respectively. Substantial sales in the UK of baby food under the GERBER brand were made between 1965 and 1979 through a licensee. Subsequently, the licensee withdrew from the baby food market; as the licence was exclusive and Products was unable to terminate it, GERBER branded products could not then be sold in the UK.

In 1990, Gerber Foods International Ltd (Foods) applied to the UK Trade Marks Registry to remove Products' registrations on the grounds of non-use. 2 The registrations were blocking Foods' own applications for marks incorporating the word GERBER.

Products relied on two activities in the relevant period to oppose the applications: the first was sale of GERBER branded products in a test marketing exercise carried out in the UK in1989; the second was sales of GERBER branded products on US Air Force bases in the UK. The Hearing Officer found that neither of these activities constituted bona fide use as required by the 1938 Act and ordered that the marks be revoked. Products appealed the decision to the High Court.

The test marketing exercise involved the sale of 100 dozen jars of baby food with labels bearing Products' GERBER brand and FIRST FOODS sub-brand in six stores in the Haywards Heath area. The products were sold by Products for a little under US$300. The exercise was conducted with a view to Products re-entering the UK baby foods market, but there was no evidence of any follow-up activity consequent on the exercise. The Hearing Officer found that this use was honest and was not "fictitious or colourable" to protect the trade mark registration. Nonetheless "in view of the low level of sales taken together with the one-off nature of the trade and absence of follow-up activity", the Hearing Officer held that such use was not bona fide.

The Vice Chancellor reviewed the authorites on what constitutes bona fide use under the 1938 Act. He considered the case law of limited value as his task was to give the words their ordinary English ("anglicised") meaning. He rejected any suggestion that the cases required that "use" be real commercial use on a substantial scale. The Vice Chancellor considered that the conclusion by the Hearing Officer that the test marketing was neither "fictitious or colourable" was in fact a finding that the use was bona fide. Accordingly, the appeal was allowed in this respect.

The test for resisting non-use under the 1994 Act is whether a trade mark has been put to "genuine use" in the UK. 3 In the recent case of LABORATOIRE DE LA MER, 4 Jacob J referred the question of what constitutes "genuine use" to the ECJ. His view in that case was that, provided that there is nothing artificial about a transaction under a mark, it will be "genuine use": there is no de minimus rule. However, a spectre of doubt about this view was raised by Jacob J when presented with the equivalent words in different languages of the legislation - "serieux" in French, "efectivo" in Spanish, "reel" in Danish - which may introduce a requirement that use be significant in some way. If Jacob J's view is upheld by the ECJ, the test marketing exercise would also have saved the registrations from revocation had the case been considered under the 1994 Act.

The Vice Chancellor went on to consider the uses on the US Airforce bases in the UK, in case his decision on the test marketing exercise was incorrect. The evidence showed that Products' baby food bearing the GERBER brand was regularly sold in US Air Force bases in the UK, including during the relevant five year period. The products were available to US military personnel and their dependants. In respect of this use, there was no dispute about the fact that the sales on the bases were genuine, only whether they should count as use of the trade mark in the UK.

Foods cited two of the Budweiser cases 5 where the US company attempted to rely on sales of its beer in US military and diplomatic establishments. Reliance on those sales in the first case was for the purpose of establishing business goodwill sufficient to succeed in a passing off action. The Court of Appeal held that sales in such a closed and separate market could not serve this purpose: effectively such sales were made in an extension of the US market. Reliance on the sales in the second case was for the purpose of opposing an application by the Czech company on the ground that registration of the mark would be likely to deceive or cause confusion. 6 Using similar reasoning to the Court of Appeal, the adjudicator in that case also considered that such use did not contribute to the opponent's trade mark user in the UK sufficient to establish a likelihood of deception or confusion.

Although the Hearing Officer was influenced by them, the Vice Chancellor recognised that the Budweiser cases were concerned with a different question, namely reputation, rather than use, of a mark in the UK and were of no assistance here.

In the UK, military bases and diplomatic establishments occupied by foreign forces and officials are part of UK territory. Certain acts, however, are immune from the jurisdiction of the UK courts under the doctrine of state immunity which is governed partly by statute 7 and partly by common law. It is the common law that is relevant to activities on military bases. 8

Counsel for Foods accepted that, if sale of a trade marked product on a US Air Force base may amount to trade mark infringement of a UK trade mark registration (that is, the doctrine of state immunity does not apply), then such a sale would have to amount to use in the UK for the purposes of the non-use provisions. The Vice Chancellor proceeded to determine this point on this basis.

The common law distinguishes between acts that are jure imperii, essentially sovereign acts with which the UK law should not interfere and to which state immunity applies, and other acts that are jure gestionis. Although the Vice Chancellor acknowledged that the dividing line between the two classes of activity is not as clear cut as might be supposed, he considered that sale of baby food under a mark that would otherwise amount to trade mark infringement is not an act jure imperii and is not covered by state immunity at common law, even were the maintenance of the US armed forces dependant on the supply of baby food. On that basis, he held that the sale of baby food under Products' brand on the bases in the UK is relevant to the question of bona fide use in the UK for the purposes of the 1938 Act.

It is submitted that this reasoning would be equally relevant to determining whether there has been genuine use in the UK for the purposes of the non-use provisions of the Trade Marks Act 1994. It follows that foreign trade mark proprietors who supply their trade marked goods in the UK solely to satisfy their ex-patriot community whether in military bases or otherwise would be able to rely on such use to resist non-use attacks on any trade mark registrations that they have for those marks.

The Hearing Officer also held that, were he wrong about the sales on the US bases constituting use in the UK, he was at liberty to limit Products' registration solely to such use. The Vice Chancellor considered that the Hearing Officer did have this power under the 1938 Act, although the exercise of it was irrelevant in view of his conclusions on the test marketing exercise. The recent case of David West - v- Fuller Smith & Turner 9 made it clear that under the 1994 Act there is no power to revoke a mark for part of the UK. Accordingly, had this case been considered under the 1994 Act solely in relation to the use on US bases, it is submitted that this would have saved the mark from revocation without restriction.

Written by Susan Storor, who acted for Gerber Products Company in this appeal.
Due to be published in the May 2002 edition of WIPR.

1. 18 March 2002, unreported

2. under s26(1)(b) Trade Marks Act 1938

3. s46(1)(a) Trade Marks Act 1994

4. unreported, 19 December 2001

5. Anheuser-Busch Inc. v Budejovicky Budvar NP [1984]FSR 413, Court of Appeal and BUD Trade Mark [1988]RPC535, Hearing Officer

6. under s11 Trade Marks Act 1938

7. State Immunity Act 1978

8. State Immunity Act 1978, s16(2)

9. 25 January 2002, unreported per Mr Justice Floyd QC sitting as a Deputy High Court Judge