Reported Trade Mark and Registered Design Cases for March 2005

14 April 2005

Katharine Stephens

Trade Marks

Decisions on appeal from OHIM

Ref no.T-169/03
Rossi v. OHIM
Application (and where applicable, earlier mark)SISSI ROSSI – leather goods (18)
MISS ROSSI – footwear (25) (Italy, France)
CommentUnder Art 8(1)(b), the Board of Appeal (BoA) annulled the decision of the Opposition Division and rejected the opposition. The CFI dismissed the appeal. The differences in the goods outweighed the similarities and the similarity in the marks was average. In the clothing industry, surnames were often used as marks and therefore the average female consumer would not think there was a link between all the proprietors of marks containing the very common Italian surname “Rossi”. Thus, there was no likelihood of confusion.

Ref no.T-185/03
Fusco v. OHIM
Application (and where applicable, earlier mark)ENZO FUSCO – various goods (3, 9, 18, 24, 25)
ANTONIO FUSCO – various goods (3, 9, 14, 18 , 20, 24, 25) (CTM)
CommentUnder Art 8(1)(b), the BoA in upholding the decision of the Opposition Division, rejected the application for registration. The CFI dismissed the appeal. The opposition was considered through the eyes of Italian consumers alone, since that is how the BoA and the parties had approached the issue. Further, there was no challenge to the finding that the goods were identical. The BoA had not erred in finding that there was a certain similarity between the marks and a likelihood of confusion. “Fusco” was not a common surname and was the dominant feature of these marks - Italian consumers generally attributed greater distinctiveness to a surname than a forename.

Ref no.


Cerveceria Modelo SA de CV v. OHIM (15.2.05)

Application (and where applicable, earlier mark)

NEGRA MODELO (figurative) – for clothing, beer and services related to bars, restaurants and night clubs (25, 32, 42)

MODELO (figurative) – clothing, footwear, beers, refreshing drinks and non-alcoholic beverages (25, 32) (Portugal)

CommentThe CFI upheld the decision of the BoA of Appeal which in turn upheld the decision of the Opposition Division which granted the application in respect of clothing and services related to bars, restaurants and night clubs but refused the application in respect of beer on the ground that there was likelihood of confusion. The CFI stated that when determining the dominant element of a mark composed of a number of words the court had to assess the meaning that each of the words had for the relevant consumer. In this case, the word “modelo” was the dominant component (“negra” being a descriptive word used in Portugal to designate brown beer). The figurative elements of both marks were not sufficient to dispel a likelihood of confusion. Finally, the CFI also confirmed that in opposition proceedings, elements of law and fact which were raised for the first time before the CFI were inadmissible.


Decisions of the Appointed Person: Round up of the second half of 2004 

Ref no.O-355-04
McBride v. Reckitt Benckiser
Application (and where applicable, earlier mark)Insecticides
Hexagon 2D mark (shown above) - preparations for perfuming the atmosphere, insecticides (3, 5)
CommentMr Richard Arnold QC allowed the appeal from the Hearing Officer – the opponent had not shown that the application had been made in bad faith under s 3(6). The basis for the opposition was the fact that, although the opponent had applied to register a 2D mark, he had in practice sold air freshener in a 3D container resembling the mark. The statement on Form TM3 was therefore materially false. Mr Arnold criticised but was bound by the Court of Appeal decision in Harrisonv. TetonValley(CHINAWHITE) [2004] 1 WLR 2577 and was required to apply the combined objective/subjective test. Mr Arnold accepted that it was at least arguable that sale of the product in packaging with a window allowing the 3D container to be seen would be use within s 46(2). As a consequence, what the applicant intended to do at the date of filing Form TM3 might constitute use of the 2D application. There was no evidence that the applicant knew that sale of the product would not constitute use of the application and therefore knew that a false statement was made on Form TM3.

Ref no.O-270-04
McBride v. Reckitt Benckiser
Application (and where applicable, earlier mark)As above
CommentMr Geoffrey Hobbs QC refused to allow the applicant to adduce further evidence which went to the reasons why the application was filed as a 2D and not a 3D mark. The applicant could have obtained the evidence earlier and this outweighed the other factors (DU PONT [2004] FSR 15 followed).

Ref no.O-339-04
Land Securities
Application (and where applicable, earlier mark)CARDINAL PLACE – property acquisition and sale (36)
CARDINAL (with a diamond device above the N) – financial services (36)
CommentThe Hearing Officer, in examination, objected to the application under s 5(2)(b). Mr Geoffrey Hobbs QC allowed the appeal. Having found that the visual, aural and conceptual differences were sufficient to distinguish the marks, the Hearing Officer ought to have recognised the underlying reasons for that conclusion i.e the perceptions and recollections triggered by the designation CARDINAL were essentially ecclesiastical whereas those triggered by the designation CARDINAL PLACE were essentially locational. The Hearing Officer ought to have concluded that there was no likelihood of confusion.

Ref no.O-317-04
Oska’s Ltd v. Morgan SA
Application (and where applicable, earlier mark)LORNA MORGAN – clothing, footwear, headgear (25)
MORGAN – clothing for women and children (25)
MORGAN – footwear, headgear and men’s clothing (25)
CommentMr Richard Arnold QC allowed the appeal – there was a likelihood of confusion under s 5(2)(b) between the marks. Common surnames had to be specifically addessed for distinctive character (Nichols C-404/02 followed). What was less clear was whether the ECJ disagreed with the AG’s opinion that, as part of that exercise, it was proper to take into account the extent to which surnames were used to designate commercial origin in the sector in question. Mr Arnold concluded that this factor could be taken into account. In this case, MORGAN was a common surname; it was not commonly used in relation to clothing; clothing is a field in which traders commonly use their own names; and first names are used to differentiate suppliers sharing a surname. Mr Arnold concluded that, without use, MORGAN would be devoid of distinctive character, but, through use, it had acquired a substantial reputation. The average consumer might well believe that the marks indicated that the goods came from economically linked undertakings.

Ref no.O-313-04
Chugai Seiyaku Kabushiki Kaisha v. Biopartners GmbH (13.10.04)
Application (and where applicable, earlier mark)RAVASAN –medicines for human purposes (5)
RAVANEX – pharmaceutical preparations (5)
CommentProf. Ruth Annand allowed the appeal and declared the mark RAVASAN invalid under ss 47(2)(a) and 5(2)(b). The Hearing Officer failed to conduct a global comparison of the marks and concluded wrongly that there was no conceptual similarity between them. The fact that neither word had a known meaning rendered the marks less easily distinguishable (Philips-Van Heusen v OHIM (BASS/PASH) followed Case T-292). Prof. Annand held the conditions of s 5(2)(b) obtained when the following interdependent factors were taken into account: (1) the highly distinctive character of RAVANEX; (2) the association which could be made with RAVASAN; (3) the similarity between the marks; and (4) the identity of the goods.

Ref no.O-282-04
Tvrdik Miroslav v. Fratelli Guzzinin S.P.A.
Application (and where applicable, earlier mark)GUZZANTI - coffee machines and device and other coffee utensils, irons (7, 9, 11, 21)
GUZZINI (stylised mark) – small domestic utensils and containers (21)
CommentMr. Geoffrey Hobbs QC dismissed the appeal – the invalidity action failed under ss 5(2)(a) and 5(2)(b). Although there was a linguistic similarity between the marks (both “speak Italian”), Mr Hobbs considered that the presentational differences between them, combined with the differences between the goods, were sufficient to offset the potential for confusion.

Ref no.O-281-04
Stash Ltd v. Samurai Sportswear Ltd
Application (and where applicable, earlier mark)STASH - clothing, sports clothing, footwear, gymnastic and sporting articles not included in other classes (25, 28)
CommentProf. Ruth Annand allowed the applicant’s appeal. The opponent failed to prove that at the relevant date STASH was a generic term understood by rugby players and other sportsmen to mean “kit” and therefore contravened s 3(1)(d). The survey was unreliable and the Hearing Officer should not have relied on it. Under s 3(1)(c), a few random Google hits of possible descriptive uses of STASH within University Rugby clubs or by Rugby enthusiasts was not enough to prove that the word was descriptive.

Ref no.O-269-04
Galileo Brand Architecture Ltd v. Galileo International Technology LLC (11.8.04
Application (and where applicable, earlier mark)GALILEO –advising companies on brand positioning, consumer research,
design and development of products (35, 42)
GALILEO – computer services (42)
GALILEO – a wide range of goods and services (9, 16, 35, 38, 39, 41, 42) (CTM)
CommentThe Hearing Officer allowed the opposition under s 5(1). Prof. Ruth Annand dismissed the appeal. She did not accept the applicant’s submission that the services were not the same, i.e. its services were those of a brand architecture company whereas the opponent’s were those of a travel technology company. She held that such an argument did not take account of the normal and fair use of the marks across the width of the specification. It was sufficient for s 5(1) that the specifications overlapped.

Ref no.O-268-04
Steelco Ltd v. Steelcase Inc (23.8.04)
Application (and where applicable, earlier mark)STEELCO – office furniture, school furniture (20)
STEELCASE – chairs incorporating steel structural members (20)
STEELCASE - accessories for chairs and desks, office furniture (6, 20)
CommentThe Hearing Officer dismissed the opposition made ss 47(2) and 5(2)(b). Mr David Kitchin QC dismissed the appeal. Although the goods were identical or closely similar and there were certain similarities between the marks arising from the prefix STEEL, there was no risk of confusion as STEEL was not the distinctive or dominant element in the marks. The average consumer was more likely to see it as the name of the metal than the prefix in the earlier mark. Moreover, the goods were such that the average consumer was likely to exercise reasonable care when purchasing an item, to inspect the goods and to notice the difference in the suffix of the two marks.

Ref no.O-256-04
Tesco Stores Ltd v Asda Stores Ltd (30.7.04)
Application (and where applicable, earlier mark)

TESCO WE SELL FOR LESS – goods and services (3, 16, 29, 30, 31, 32, 35)

Tesco trademarks
- all goods and services

CommentThe Hearing Officer allowed the opposition holding that the applications were made in bad faith contrary to s 3(6), as the applicant had no intention to use the marks “as trade marks”. Prof. Ruth Annand allowed the applicant’s appeal. The wide-claiming objection that the applicant had no intention to use the marks could not succeed in the circumstances. Furthermore, the very nature of the marks (a price cutting slogan) did not mean that they could not be used as trade marks. Trade marks cannot be objected on the basis that they contains promotional or other descriptive material. She dismissed the cross appeal made in relation to the word mark. The Hearing Officer was entitled to distinguish the decision in Opposition No. 50578 in relation to TESCO PEOPLE MAKE THE DIFFERENCE which was refused under s 3(6).

Ref no.O-244-04
Farmacia Chemist Ltd v. PharmaciaAB
Application (and where applicable, earlier mark)FARMACIA URBAN HEALING (+ device resembling a Swiss flag) – toilet and cosmetic preparations, herbal remedies and nutritional products, pharmacy advice (3, 5, 42)
PHARMACIA – chemical products (1)
PHARMACIA – pharmaceutical, veterinary and sanitary preparations (5)
PHARMACIA – scientific apparatus and instruments (9)
PHARMACIA – intra-ocular lenses (10)
CommentBefore the Hearing Officer the application to invalidate the mark under ss 47(2) and 5(2)(b) was successful in relation to some of the goods and services. The opponent appealed on the ground that the mark should have been cancelled in its entirety. Mr David Kitchin QC dismissed the appeal in relation to class 3 and 5 goods but allowed the appeal in relation to the class 42 services. Pharmacia had without any doubt a continuing reputation and goodwill in relation to its core pharmaceutical business at the relevant date. However, the goods were different in nature and there was no possible confusion between them such as to mislead the public. The exception was Farmacia’s class 42 application (medical clinics and surgeries), where the services were more closely related to Pharmacia’s core pharmaceutical business.

Ref no.O-243-04
Altus Solutions Inc v. Acer Incorporated (6.8.04)
Application (and where applicable, earlier mark)ALTOS – microcomputers (9)
CommentBefore the Hearing Officer the application to revoke the mark under s 46(5) was partially successful. On appeal, Acer submitted that the registration ought to be maintained in relation to computer programmes. Mr David Kitchin QC dismissed the appeal. The fact that ALTOS was being used in relation to various servers which included software components was not sufficient to establish that the mark was used in relation to software.

Ref no.O-242-04
Smith & Paul Associates Ltd v. Ann Maurice (5.8.04)
Application (and where applicable, earlier mark)HOUSE DOCTOR – interior and exterior house design, layout and decorating services (42)
CommentBefore the Hearing Officer, the registration was held invalid under 5(4)(a). Mr David Kitchin QC dismissed the appeal. The Hearing Officer was entitled to decide that the opponent had acquired goodwill and reputation under the name of HOUSE DOCTOR at the relevant date and that the use of the name in connection with the same services was likely to result in misrepresentation and damage. The applicant’s submission that the composite HOUSE DOCTOR was descriptive and therefore could not have created any reputation attaching to Ann Maurice was rejected.

Ref no.O-241-04
Land Securities Plc
Application (and where applicable, earlier mark)MAKING PROPERTY WORK – goods and services relating to property (16, 20, 35, 36, 37, 38, 39, 41, 42, 43, 44, 45)
CommentMr David Kitchin QC dismissed the appeal. The Hearing Office was correct in rejecting the application under ss 3(1)(b) and 3(1)(c). MAKING PROPERTY WORK could be used both as a description and as an advertising slogan and did not enable the relevant public to distinguish the goods or services from those of different origins. The descriptive aspect of the words was actually confirmed by the internet search carried out by the Hearing Officer.


Applied Technolgies Manufacturing v. Apple Projects (Mr Richard Arnold Q.C.; O-348-04; 11.11.04)

The Registrar ordered revocation for non-use of the mark MOVIESTAR (a series of marks in stylised form) registered in class 9 because the proprietor had not responded to the application.

The proprietor appealed, saying that it had never received the application sent by the Registry. On investigation, the Registry found that the Royal Mail had been unable to deliver the letter to the address for service, but had left a card advising the recipient that the item could be collected from the local Royal Mail sorting office. For reasons given at the hearing, the proprietor had failed to act upon the card.

Mr Arnold would have preferred to dispose of this matter but could not do so because the applicant did not appear at the hearing. He therefore ordered that the proprietor file evidence supporting what its representative had said at the hearing and evidence of use of the mark or reasons of non-use. If it did not, the Hearing Officer’s decision would be set aside, but the discretion under rule 31(3) would be exercised against the proprietor. If it did, the applicant would then be given the opportunity to consider whether it consented to the appeal and if it did, the appeal would be allowed and a timetable was set out for exchange of evidence. If not, the matter would come back before Mr Arnold.

In so ordering, Mr Arnold held that under rule 10(4), since there was no prescribed manner in which a document had to be sent, the application which was sent to the proprietor’s address for service by registered post had been “properly sent”. Further, under rule 31(2) (which provides that the registered proprietor has 3 months from “the date on which a copy of the notice is sent by the Registrar to the proprietor” in which to file a counter-statement etc.) the operative event in setting the time limit was the sending of the documents and not their receipt. Mr Arnold did not find support for this interpretation in section 7 of the Interpretation Act 1978 (and in this respect Mr Arnold differed in his reasoning from Mr Hobbs in the OIOI decision O-340-04 (see below) and he did not agree with the implicit finding that time starts to run again if the Registrar discovers that the application has not been delivered and re-sends it). Mr Arnold held that there was no burden on the Registrar to verify tha the documents had been received.

If no counter-statement is received, under rule 31(3), the Registrar has a discretion as to whether or not to treat the proprietor as not opposing the application. In this case, contrary to rule 54, the Registrar had not allowed the proprietor to be heard before a decision had been taken adverse to its interests. This was a serious irregularity. Without the safeguard of rule 54, the system would be contrary to Article 6 of the European Convention for the Protection of Human Rights. 

The proprietor should have been notified that the Registrar proposed to exercise its discretion under rule 31(3) to treat the proprietor as not opposing the application for revocation unless it requested a hearing or made written submissions. By analogy to CPR rule 13.3 (judgment in default), for the discretion to be exercised in a proprietor’s favour, it would need to establish that: (a) it had not complied with the time limit under rule 31(2) for good reason, such as not receiving the application for revocation; (b) it had a real prospect of successfully defending the application or that there was some other good reason why it should be permitted to defend; and (c) there was no other good discretionary reason why it should be denied relief.

Coggins v. Skjelland Group (Mr Geoffrey Hobbs Q.C.; O-340-04; 22.10.04)

The Registrar ordered revocation for non-use of the device mark OIOI registered in class 25 because the proprietor had not responded to the application. The proprietor appealed, saying that she had never received the application sent by the Registry because she had ceased connection with the address for service. Mr Hobbs set aside the decision and directed the Registrar to indicate to the parties how he would proceed under rule 31(3).

Initially, the application was sent by recorded delivery but returned by the Royal Mail as “undeliverable”. The Registrar then sent the application by ordinary post to the same address. Mr Hobbs held that the combination of rule 10(4) and section 7 of the Interpretation Act 1978 (which provides that where an Act requires a document to be served by post then service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of the post) meant that service was effected when the Registrar dispatched the letter the second time.

Mr Hobbs held that the Registrar was under no duty to verify the currency of the address for service, but the failure to comply the requirements of rule 54 was a serious irregularity.

Registered Designs

Oakley v. Animal (Mr Peter Prescott Q.C. sitting as a Deputy Judge; [2005] EWHC 210 (Ch); 17.02.05)

Directive 98/71/EC on the legal protection of designs provides a 12 month “grace period” in which publication of a registered design by the proprietor would not invalidate it.

The Registered Designs Regulations 2001 implement the Directive by amending the Registered Designs Act 1949. These Regulations came into force on 9 December 2001, some six weeks after the implementation date of 28 October 2001 specified by the Directive.

Under the amended Act, infringement issues for all registered designs should be considered under the new law, and the new law on validity applies to new registrations, but the old law on validity continued to apply to any existing registration, being one which had been applied for at any time up till 9 December 2001. A derogation from the immediate implementation of the new law in respect of all registrations, old or new, permitted under the Directive allowed the continued application of the old law (Article 11.8). The parties disagreed as to whether such a derogation, which involved a policy choice, could properly be implemented by the Secretary of State simply laying Regulations before Parliament, or whether primary legislation and proper Parliamentary consideration ought to have be used instead. 

Section 2(2) of the European Communities Act 1972 (“ECA”) gives a Government Minister the power to change laws using regulations “for the purpose of implementing any Community obligation” (section 2(2)(a)) or “for the purpose of dealing with matters arising out of or related to any such obligation” (section 2(2)(b)). Further, section 2(4) ECA permits the Minister to make the Regulations without necessitating approval from Parliament. Section 2(2) together with section 2(4) have been described as a “King Henry VIII clause” and should be construed narrowly with any doubt resolved against the Executive.

The deputy judge held that the UK was not under any “obligation” to use the Article 11.8 derogation so the Secretary of State could not rely on section 2(2)(a). Having reviewed the dearth of case law on the scope of the power in section 2(2)(b), and concluded that:

“[it] does not enable the Executive to make secondary legislation with the potential to amend or repeal even an Act of Parliament, and to achieve a result not required by a Community obligation, just because its purpose is in some way related to or arises out of that obligation…”

The deputy judge found that a policy choice – to derogate or not to derogate? – was not a mere matter “related to” the Directive within the preferred meaning of section 2(2)(b) ECA, and therefore the Regulations purporting to implement that choice were ultra vires.

In relation to the “blue pencil test”, Mr Prescott held that since, in passing the 1949 Act Parliament had chosen the regime in relation to validity, absent the ultra vires Regulations 12(2) and 12(3), the old law on validity should still apply as that was the intent of Parliament despite the fact that Parliament has never in fact addressed the choice set out in the Directive. In the result, Mr Prescott found in favour of Animal.

The deputy judge examined the ECJ judgment of Markopoulos (C-255/01) and whether the UKwas entitled to use the derogation in Article 11.8 of the Directive after the implementation date. The ECJ decided that a MemberState cannot exceed the ultimate time limit for derogation by a late transposition of, in that case, the Qualifications of Auditors Directive retrospectively implementing a derogation. It is not clear if this decision is specific to the facts or has general application.

As a result of the late implementation of the derogation, designs registered in the “delay window”, i.e. 28 October 2001 to 9 December 2001, are governed by old validity law when they should be governed by new law - something not permitted under EU law. The deputy judge’s ultimate solution was to “blue pencil” Regulation 12 to change the phrase “before the coming into effect of these Regulations” to the words “before 28 October 2001” to cure the defect. This does not, however, address the question of whether retention of the old law was a legitimate option at the date of the Regulations. 

Decisions of the Scottish Courts

Tayplan Ltd v. D & A Contracts* (Lord Kingarth; [2005] ScotCS CSOH 17; 28.1.05)

The importance of keeping on top of ownership of IPR was emphasised in this recent Scottish decision on title to copyright in a house design. If ownership of intellectual property rights is not properly assigned and kept track of on a formal legal basis this can lead to difficulties as and when enforcement action is required.

The pursuers/claimants, a property development company, commenced proceedings for infringement of copyright in regard to certain house type design drawings in the Court of Session in Scotland. The defenders were also a property development company who were accused of being about to develop their site in accordance with the copyright drawings. Before the pursuers could get to proof (trial) on the evidence to establish their case of infringement the defenders requested a preliminary hearing (known as a procedure roll debate) on the issue of title to copyright. This type of hearing is equivalent to a strike out hearing under English procedure. It was argued by the defender that, at the time the proceedings were raised, the pursuers did not have sufficient title to the copyright in question and that the action should be dismissed.

At the hearing before one of the Scottish IP judges, Lord Kingarth, various arguments were made regarding the chain of title. Originally the copyright had belonged to the individual designer, a Murray Watt of Classic Design Partnership. The design had been drawn on behalf of a company, Braid Homes Limited, to a planning brief supplied by them. There had been a letter exchange in May 1999 which had finished off with a letter from Braid Homes which ended with the following statement: “Once completed the copyright to all designs, drawings, perspectives, layouts and art work relating to the above development will become the sole property of Braid Homes Limited”. It was accepted by both sides that this was not sufficient to be an agreement as there was no offer and acceptance. This statement was categorised as a new contractual provision. 

The pursuers’ argument was that subsequent actions were enough to demonstrate a binding contract. In particular, there was a subsequent assignation of 10 April 2003 by Mr Watt’s partnership to Braid Homes Limited. However, Braid Homes Limited had also assigned the copyright to the drawings of Mr Watt to the pursuers – notably prior to the assignation by Mr Watt to them - on 1 March 2000. Clearly Braid Homes did not own copyright at that date and so it was accepted that this did not effectively assign the copyright in question. However, the pursuers’ argument was that it gave them a contractual right to obtain a copyright assignation from Mr Watt. Part of that argument was that the assignation of 1 March 2000 clearly assigned, in favour of the pursuers, the contractual rights, which they claimed they had by virtue of the 1999 exchange of letters, to an assignation from Mr Watt of the relevant copyright. If it did not, then the 10 April 2003 assignation simply completed title by virtue of accretion or ratification. 

The defenders argued that the pursuers must have title at the time the action was raised which was 26 February 2003. This pre-dated the April 2003 assignation. A title defect could only be cured during the action if the pursuers basically had title at the time they raised it and could complete it. A personal right to acquire a copyright was not enough. They also criticised the detail of the parties to the assignations and communications in question as they did not tie up when analysed.

The pursuers’ argument basically was that they had a personal right to acquire the copyright at the time the action was raised which was enough to be completed by the assignation of 10 April 2003 or to be capable of being completed by the time of the proof or trial. They compared this to the position in England which would be that there was an equitable right to copyright which would enable them to bring proceedings for infringement. 

Lord Kingarth, decided that there were arguments either way on whether the pursuers had sufficient right to entitle them to bring the proceedings in the first place. However, they did have a clear, unqualified personal right to demand an immediate assignation from Mr Watt of the copyright in question and there was nothing to suggest that Mr Watt, as original owner of the copyright, would at any stage have done anything other than to comply with any request for an assignation. There were no authorities which suggested that the personal right to acquire title was insufficient to enable proceedings to be raised. Furthermore, Lord Kingarth indicated that “if the pursuers could thus be said to have had a least sufficient title to raise the present proceedings, this would it seems mean that that the position in Scotland in practice at least was the same as the position in England where, in similar circumstances, a so-called equitable owner could, it appears, at least raise proceedings for infringement”. His Lordship commented “it would be unfortunate if the right to bring proceedings for infringement of copyright, the substantive law of which is common to both jurisdictions and is governed by the Copyright, Designs and Patents Act 1988, was thought to be significantly different as between them”. 

Thus His Lordship agreed that the pursuer did have a sufficient right to bring the action and could proceed to trial. His Lordship did not, however, decide that the pursuers’ rights had already been completed by the assignation of 10 April 2003. This was because it was an assignation from the partnership of Ronald W Watt, Chartered Architects rather than from Murray Watt himself. Thus further clarification was needed on this issue. The circumstances were that the pursuers were allowed to proceed to proof (trial) subject to satisfaction on this aspect in due course.

Profile Software Ltd v. Becogent Ltd* (Lord Kingarth; [2005] ScotCS CSOH 28; 16.2.05)

Lord Kingarth, adopted a commercial and practical interpretation of various IPR Agreements. The Court chose not to apply a strict literal interpretation to the Agreements to avoid an absurd situation where no party would have been able to enforce them on the basis that title to sue for breach of and the interest in enforcing compliance with a software licence vested in two separate parties.

The Pursuer/Claimants commenced proceedings for infringement of copyright alleging that the Defenders had breached the terms of a software licence by decompiling, adapting and copying licensed software. Before the issue of infringement could go to Proof/Trial the Defenders requested a preliminary hearing to challenge the Pursuer’s title to enforce the terms of the software licence. This type of hearing is known as a Preliminary Proof in Scotland and is broadly equivalent to a strike-out hearing under English procedure. It was argued by the Defender that the Pursuer had no title to enforce the terms of the licence agreement which had been granted by a liquidator and therefore the part of the action seeking return of licensed material should be dismissed.

The title to the software in question was originally owned by Coranta Corporation Limited (the Company). In July 2001 the Company went into liquidation and the liquidator was appointed to realise assets for the benefit of creditors. The parent company of the Pursuer (MGt) purchased the assets of the Company including all intellectual property in the software. The purchase was subject to existing licences to use the software granted to third parties including the Defenders. The terms of each licence were adjusted on an urgent basis in a three-party process involving the liquidator of the Company, the licensee and the Pursuers as owners of the copyright in the software. On the same date as the licences were granted, the Company transferred all intellectual property in various assets including the software to the Pursuers but expressly excluded “any asset or right not expressly sold to the Purchaser (the Pursuer)”. There was an express assignation of the copyright in the software from the Company to the Pursuer, but no such express assignation of the specific licenses. 

The Defenders argued that although copyright in the software had been assigned to the Pursuer, the actual licence and rights to enforce the terms of the licence had not been expressly referred to either in the assignation or sale agreement and therefore the Pursuer had no title to enforce the terms of the licence. 

The Pursuers’ position was that the sale and assignation agreements could and did transfer all rights in the software, including the right to enforce the software licence terms to the Pursuers. Further as a matter of general law the right to enforce a licensee’s obligations under a licence should pass with the transmission of the copyright. 

Lord Kingarth preferred the arguments of the Pursuers and held that they had sufficient title to enforce the software licence. Whilst Lord Kingarth did not consider there to be any real weight in the arguments of strict literal interpretation put forward by the Defenders, he stated that it was “not unreasonable to start from the supposition that the three party’s apparently involved in the adjustment of the terms of the Licence…..would have been disinclined to achieve the result that no-one could be said to have both title and interest to enforce the continuing obligations of the licence.” The absurdity of the Defenders argument would be that whilst the Pursuers as copyright owners had a clear interest to enforce the terms of the licence, they would have no title to do so, whereas the liquidator would have had title but no interest after realisation of the Company’s assets. 

Lord Kingarth concluded that the terms of the assignation were wide enough to cover the transfer of the Company’s rights to enforce compliance with the licence and that clearly a software licence was essentially a copyright licence. Whilst at this preliminary stage no formal concluded view was given on the Pursuer’s proposition that the right to enforce a licensee’s obligations under a licence would automatically pass with transmission of the copyright, Lord Kingarth did find this submission “entirely persuasive”. 

Reporter’s note: I am grateful to my colleagues at Bird & Bird, Cristina Garrigues, Gary Hopkins and Brigitte Gratton for their assistance with this report. I am also most grateful to Gill Grassie of Maclay Murray & Spens for her summaries of the two decisions from the Scottish Courts.

Those decisions marked with a * can be found at All CFI and ECJ decisions can be found at juris/index.htm. All decisions of the Appointed Person are available at