TM LawyersThisBudsforyou

17 January 2002

Charlotte Forrester and Anna Duffus

Budejovicky Budvar Narodni Podnik v Anheuser-Busch Inc

[2002] EWCA Civ 1534

(L.J. Pill; Lord Walker of Gestingthorpe; and Sir Martin Nourse: 29 October 2002)

Introduction

The Court of Appeal handed down judgment on 29 October 2002 on two appeals relating to the registered trade marks, BUDWEISER BUDBRÄU and BUD. The two appeals arose from decisions of Mr Thorley Q.C. sitting as a deputy High Court Judge on appeal from the Trade Marks Registry[1]. The first appeal related to Anheuser-Busch’s (“AB”) application to revoke, on the grounds of non-use, Budejovicky Budvar Narodni Podnik’s (“BB”) mark BUDWEISER BUDBRÄU (in stylised form) registered in class 32 for “beer, ale and porter”. The second appeal related to AB’s application, also on the ground of non-use, to revoke BB’s trade mark BUD (in stylised form) also registered in class 32 for “beer, ale and porter”.

AB’s applications had been refused by the Registry. Before the judge, the appeal was successful in relation to the first application and unsuccessful in relation to the second. On further appeal, the Court of Appeal restored the decisions of the Registry hearing officers in both matters.

The two appeals were concerned with revocation on grounds of non-use under section 46(1) of the Trade Marks Act 1994. The issues turned on section 46(2) of the Act which further defines “use” as set out in 46(1) to include “… use in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered, …”.

Decision

First appeal – BUDWEISER BUDBRÄU

Both parties agreed there had been no use of the mark as registered in its stylised form. BB relied principally on use of the words BUDWEISER BUDBRÄU as printed in block capitals on the seal of beer bottle neck labels.

The judge at first instance had held that section 46(2) had been incorrectly applied by the hearing officer. The Court of Appeal noted that the judge had been satisfied that the hearing officer had made two errors of principle which entitled him to interfere with the decision. First, the judge stated that section 46(2) does not require consideration of the average consumer’s reaction to the mark. He stated, “The section requires the determination of the elements that make up the distinctive character of the mark and this is a matter which is to be viewed, in my judgment, through the eyes of the Registrar in assessing whether or not the mark should be registered.” Second, the hearing officer was wrong to consider the “central message of the mark”. “This is not the statutory test. The fact that the words Budweiser Budbräu are the most striking feature of the mark can make no difference. If Mr Salthouse were right then I anticipate that in a majority of cases use of a trade mark in ordinary letters, whether in upper or lower case, would constitute use of a stylised version of the mark. As a matter of generality that must be wrong.”

On that basis the judge carried out a fresh analysis. He had earlier identified four elements which made up the distinctive character of the mark: (1) the word Budweiser; (2) the word Budbräu; (3) the fonts used for the two words and the contrast between the two; (4) the positioning of the two words, one above the other behind the enlarged B of Budbräu. The judge had observed that the words on the bottle neck label did not comprise elements (3) and (4). A part of the distinctive character of the mark was missing and the judge concluded that use of the words Budweiser Budbräu on the neck label was “use in a form differing in elements which do alter the distinctive character of the mark in the form in which it was registered …”

The primary question for the Court of Appeal was whether, in conducting his review of the hearing officer’s decision, the judge was entitled to hold that the hearing officer had erred in principle and therefore to interfere with his decision.

On the first criticism identified by the judge the Court of Appeal accepted that the Court should view the distinctiveness of the mark through the eyes of the Registrar but observed that the Registrar’s analysis must necessarily involve considering the approach of the average consumer. On the second criticism, although it could have been better expressed, the Court of Appeal was of the opinion that the hearing officer had carried out the exercise required by section 46(2) and the original decision should stand. Although the hearing officer had used the phrase “central message of the mark”, he had in fact identified the distinctive feature of the mark as the words Budweiser Budbräu and decided that the different fonts and underlining of the word Budbräu did not detract from, or add anything to, that distinctive feature. The Court of Appeal approved the statement of Lord Justice Robert Walker in Bessant & ors T/A Reef v. South Cone Inc. (28 May 2002 unreported):

29. The appellate court should not treat a judgment or a written decision as containing an error of principle simply because of its belief that the judgment or decision could have been better expressed.”

The Court of Appeal could not therefore conclude that the hearing officer was not entitled to reach his decision. It was not a decision which no reasonable hearing officer could have taken. The Court of Appeal therefore allowed the first appeal and reinstated the original decision of the hearing officer dismissing AB’s application to revoke the BUDWEISER BUDBRÄU trade mark registration.

Second appeal - BUD

The second appeal raised a similar issue under section 46(2) as well as a secondary issue of “genuine use”.

The Court of Appeal decision focussed on two of five uses relied on before the hearing officer: (1) use of the mark on packaging; and (2) use of the mark on promotional beer mats. In relation to the promotional beer mats, the mark was represented in its stylised form as registered and the issue was whether such use amounted to “genuine use”.

In relation to packaging, substantial volumes of bottled beer had been shipped to the U.K. in boxes with the words Bud-Budvar-Budweiser appearing in dot matrix print along the top. AB accepted that use of the word Bud in dot matrix print on top of the boxes was no different from other uses of that word in block capitals. The hearing officer adopted a similar approach to the hearing officer in the first appeal and concluded that the use of the word Bud, either in block capitals or in the form of dot matrix print, was use of the registered mark within the meaning of section 46(2). He also concluded that the use amounted to BUD as a separate mark and not as part of a composite mark and that the use amounted to genuine use (the evidence indicated that 30% of BB’s beers were sold for the end consumer in such boxes). For the same reasons expressed in the first appeal, the Court of Appeal could not conclude that the hearing officer was not entitled to reach his decision on the primary issue under section 46(2). There was no suggestion that the hearing officer’s decision on the composite mark point was wrong. On the issue of “genuine use”, the Court referred to the test adopted by Jacob J. in Euromarket Designs Inc v. Peters[2] and also the test proposed recently in Ansul BV v. Ajax Brandbeveiliging BV [3]. Applying either of these tests the use on packaging amounted to “genuine use”.

Having reached this conclusion the Court of Appeal did not express any view as to whether use on promotional beer mats amounted to “genuine use” – an issue on which the hearing officer and judge had agreed, albeit for different reasons, that such use amounted to genuine use.

Accordingly, the Court of Appeal affirmed the hearing officer’s decision and dismissed the second appeal and AB’s application to revoke the BUD trade mark registration.

Conclusion

This case highlights the limited function of the High Court and Court of Appeal when reviewing decisions of the Trade Marks Registry. The role of the High Court is to review not to re-hear the proceedings and decision of the Registry. On appeal, the Court of Appeal does not review the judge’s decision as if it had been a decision at first instance. It must review the judge’s review. If the judge has interfered with the hearing officer’s decision it must decide whether the judge was entitled to do so.

The consequences of this approach are illustrated in the Judgment of Lord Walker who expressed surprise at the decision of the hearing officer that the distinctive character of the BUDWEISER BUDBRÄU mark resided in those two words and that “The different fonts and the underlining do not detract from or add anything to, the central message.” Lord Walker stated that he had found that conclusion so surprising that he had had to consider whether “it can only be an indication that the hearing officer failed to carry out the sort of comprehensive review which he should have undertaken.” Ultimately, however, he concluded that the question for the Court of Appeal was whether the judge was right to identify two errors of principle in the approach of the hearing officer and open up an opportunity for the judge to decide the matter afresh. On the basis of the written decision of the hearing officer the answer to that question was no. Lord Walker stated, however, that he found the hearing officer’s decision surprising and that if he had had a free choice between the decisions of the hearing officer and judge, he would unhesitatingly choose that of the judge. This reflected the statement of Sir Martin Nourse that if the Court of Appeal had been reviewing the judge’s decision as a decision at first instance, he had little doubt that interference by the Court of Appeal would not have been appropriate.

The substantive result – dismissal of the appeals on the basis that use of BUDWEISER BUDBRÄU in capitals amounts to “use in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered [namely stylised form]” – should therefore be treated with caution.

Written by Charlotte Forrester and Anna Duffus. First published in the January 2003 issue of WIPR.

Footnotes

[1] The three decisions, of which two were appealed, are reported at [2002] R.P.C. 38: In the matter of trade mark no. 1070309 for the mark "Bud" (stylised script) in class 32 registered in the name of Budejovicky Budvar Narodni Podnik & In the matter of an application for revocation no. 9,057 & an application for a declaration of invalidity no. 9,537 by Anheuser-Busch Inc. : In the matter of the trade mark no. 807395 for the mark "Budweiser Budbrau" (stylised word) in class 32 registered in the name of Budejovicky Budvar Narodni Podnik & In the matter of an application for revocation no. 10237 by Anheuser-Busch Inc.
[2] [2001] FSR 20.
[3] A.G. Colomer; C-40/01 2 July 2002.