DataCard Corporation v Eagle Technologies Ltd: The recent interpretation by the English High Court that likelihood of confusion may occur post-sale

13 July 2012

Audrey Horton

In DataCard Corporation (DataCard) v Eagle Technologies Ltd (Eagle) [2011] (EWHC, PAT), the English High Court held that post-sale confusion can be relied upon in appropriate cases as demonstrating the existence of a likelihood of confusion under article 5(1)(a) of the EU Trade Marks Directive (2008/95/EEC). The discussion by the judge regarding the relationship between Article 5(1)(a) and Article 5(a)(b) is also of considerable interest: The judge’s view was that the difference between the “origin function test” under Article 5(1)(a) and the “likelihood of confusion test” under Article 5(1)(b) depended upon who bears the burden of proof.

DataCard, one of the biggest suppliers in the world of card printers and ribbons alleged that Eagle had infringed two of its patents and two of its registered trade marks. This article deals only with the trade mark aspects of the case.

DataCard marketed its card printers and related products and services under a number of trade marks including the word mark, DATACARD, which was registered in the UK for parts for manual and electric imprinters all included in Class 7 and slip printers, roll printers, continuous feed printers and parts therefore all included in Class 9. Eagle was a small company which sold card printers manufactured by a number of manufacturers including DataCard, as well as printer ribbons and other related products under the trade mark PLUS-RIBBON. Eagle marketed the printers, ribbons and other products primarily though resellers who purchased products to sell on to end-users.

DataCard alleged that Eagle had infringed its trade marks by using the sign Datacard on the website which Eagle managed for its resellers, (where certain products were described as ‘DATACARD PLUS-RIBBON TM,and the DataCard logo was used in the click-through ordering procedure), in emails to customers (where products were described as ‘Data card Plus-Ribbon TM), and on packaging labels containing the words ‘Datacard card printers’ or ‘Brand: Datacard’.

According to Article 5(1)(a) an owner of a registered trade mark can prevent third parties not having his consent from using, in the course of trade, an identical sign in relation to goods or services which are identical to those for which the mark is registered. Trade mark infringement also occurs where a registered trade mark is used without the proprietor’s consent, when the sign used by the infringer is identical or similar to the owner’s mark in respect of goods which are identical or similar to those for which the mark is registered, where there exists a likelihood of confusion on the part of the public (Article 5(1)(b).

Identical sign/identical goods: Article 5(1)(a)

In the DataCard case, the claim under Article 5(1)(a)  failed because the goods in issue could not be said to be identical. Despite this, the judge (Arnold J) made various comments on the conditions that must be satisfied to succeed under Article 5(1)(a), notably that the use must be in relation to goods or services identical to those for which the trade mark was registered and that the use must affect or be liable to affect the functions of the trade mark. 

With regard to the question of whether damage to functions other than the origin function can be relied upon to support a claim under Article 5(1)(a), the Court of Justice’s cases used to provide a clear positive answer (Celine SARL v Celine SA [2007] and L’Oreal v Bellure NV [2009]. However Arnold J highlighted that in Joined Cases C-236/08 to C-238/08 Google France SARL v Louis Vuitton Malletier SA [2010], the CJ’s approach appeared to have shifted in that it introduced a new test of likelihood of confusion but with a reversed onus of proof. The new test is that the origin function of the trade mark is adversely affected if the use of the sign considered in context does not enable average consumers, or enables them only with difficulty to ascertain whether the goods or services referred to under the sign originate from the proprietor of the trade mark or an undertaking economically connected to it or from a third party.  Arnold J accepted that in taking this view he had generalized the test from the specific form stated in Google France, which was only applicable to keyword advertising on the internet.

The judge went on to discuss another recent case Die BergSpechte Outdoor Reisen und Alpinschule Edi Koblmüller GmbH v Guni [2010], which concerned article 5(1)(b) and the likelihood of confusion test. Thus, as said by Arnold J, the “combined effect of the judgments in Google France and BergSpechte is to narrow the distinction between Article 5(1)(a) and Article 5(1)(b) even if they do not eliminate it”. Indeed, the only distinction identified by Arnold J between the tests set out in Google and BergSpechte is one of onus: in Article 5(1)(b) the onus lies upon the trade mark proprietor to establish the likelihood of confusion, while in Article 5(1)(b) the alleged infringer must establish that there is no risk of confusion.

According to the CJ Cases L’Oreal and Copad SA v Christian Dior Couture SA (Case C-59/08) damage to the advertising, communication and investment functions of the trade mark can also be relied upon to support a claim under Article 5(1)(a). While the issue of the functions of the trade mark under Article 5(1)(a) did not arise in the DataCard case because the goods could not be said to be identical, Arnold J controversially stated that the uses were not liable to affect the advertising function of the trade marks because the trade marks did not convey a prestigious or luxury image, so that Eagle’s uses of the signs complained of did not take unfair advantage of the reputation of the trade marks or adversely affect it by associating it with down-market goods, marketing methods or advertising. This concept of enhanced protection given to luxury goods has been the subject of debate by commentators, particularly taking into account the fact that the protection of marks with a reputation is optional for Member States under Article 5(2).

Post-sale confusion and likelihood of confusion: Article 5(1)(b)

Turning to the subject of liability under Article 5(1)(b), the judge made clear that it is not only confusion at the time of the transaction that is relevant. In appropriate circumstances, post-sale confusion may be relied upon as demonstrating the existence of a likelihood of confusion under this article.

According to the judge, Court of Justice case law appears to acknowledge the relevance of post-sale confusion, that is confusion on the part of the public as to the trade origin of goods or services in relation to which the impugned sign had been used which only arose after the goods or services had been purchased: (Case C-206/01 Arsenal Football plc v Reed [2002]; Case C-17/06 Celine SARL v Celine SA [2007]; Case C-361/04 Ruiz-Picasso v OHIM [2006. The judge held that on balance and in appropriate circumstances such case law supports the proposition that post-sale confusion can be relied upon in support of a claim under Article 5 (1) (b).

The judge also relied upon other factors.  Firstly, a judgment by the Supreme Court of the Netherlands, Benetton v G-Star (2006), which held that post-sale confusion could be relied upon under Article 5(1) (b). Secondly, he reasoned that, as a matter of principle, post-sale confusion is surely capable of being damaging to the trade mark proprietor and thus should be taken into consideration.  The example given by the judge was where a consumer orders goods from a website and at the time is not confused but later when the goods arrive the goods are labelled in a manner which wrongly leads the consumer to believe the goods emanate from the trade mark proprietor.  This may cause the consumer to obtain the same goods from the same website the next time he orders those goods under the same mistaken belief.

Applying this to the facts, Arnold J found that the uses complained of gave rise to a likelihood of confusion under Article 5(1)(b) on the part of end users. At the time of the transaction, article 5(1)(b) had been infringed through the uses of the mark on the website and in email, since average end-user consumers would be confused by the description ‘DATACARD PLUS-RIBBON’ into thinking that Plus-Ribbon was a subsidiary brand of DataCard’s or that there was some other trade connection between the Plus-Ribbon products and DataCard. The absence of actual confusion did not preclude this finding. Accordingly, DataCard’s claim under Article 5(1)(b) succeeded subject to Eagle’s Article 6(1)(c) defence[1].  However, according to the judge, the likelihood of confusion was most evident in the case of the use of the DATACARD sign on the packaging labels between November 2009 and February 2010, even if this confusion only arose after purchase.

It is interesting to note that this ruling comes soon after the decision in Och Ziff Management Europe Ltd v OCH Capital Ltd [2010] EWHC 2599 (Ch) in which Arnold J made a similar finding in respect of pre-sale confusion.  We reported this decision in Brands Update 2011.

[1] As to whether Eagle had a defence under Article 6(1)(c), the Judge held that although it was necessary for Eagle to use signs identical to the marks to indicate the intended purpose of its ribbons, namely that they were compatible with DataCard’s printers, Eagle’s use was not in accordance with honest practices in industrial and commercial matters because the manner of the use gave the impression that there was a commercial connection between the supplier of the Plus-Ribbon products (Eagle) and DataCard. However, since the evidence did not establish that Eagle’s Plus-Ribbons were of inferior quality to DataCard’s ribbons, Eagle had not made false representations as to the quality of the goods in question and had thus acted in accordance with honest practices in that regard.

 

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