The Court of Appeal has held that trade marks in the shape of a London taxi were invalid.
Signs are unacceptable for registration as a trade mark if they lack distinctive character (Article 7(1)(b), EU Trade Mark Regulation (207/2009/EC)) (EUTM Regulation) (Article 7(1)(b)).
A trade mark will not be refused registration if, before the date of application for registration, it has acquired a distinctive character as a result of use.
Only a mark that departs significantly from the norm or customs of the sector, and so fulfils its essential function of indicating origin, does not lack distinctive character for the purposes of Article 7(1)(b) (Mag Instrument v Office for Harmonisation of the Internal Market, C-136).
A sign shall not be registered as a trade mark if it consists exclusively of a shape which gives substantial value to the goods (Article 7(1)(e), EUTM Regulation; Article 3(1)(e)(iii), Trade Marks Directive (2008/95/EC)) (Article 3(1)(e)(iii)).
L owned a three-dimensional EU trade mark (EUTM), and UK trade mark, for "motor vehicles" in Class 12, which consisted of a three-dimensional mark representing the shape of a London taxi cab. L sued F for trade mark infringement and passing off in relation to F’s new model of London taxi.
The High Court held that the marks were invalid because they were devoid of distinctive character and did not have acquired distinctiveness (www.practicallaw.com/8-623-5022). It held that the average consumer did not include hirers of taxis as they were not end users of the goods but users of the services provided by the consumer of the goods. L appealed.
The court dismissed the appeal. It held that the trade marks were invalid for lack of distinctive character.
The term average consumer included any class of consumer to whom the guarantee of origin was directed and who would be likely to rely on it in making a decision to buy or use the goods. It was irrelevant whether a user was someone who took complete possession of the goods, or someone who merely hired the goods under the overall control of a third party. Here, there was no reason to exclude the hirer of a taxi from the class of consumers whose perceptions it was necessary to consider. The guarantee of origin that the mark provided was directed not only at buyers of taxis but also at members of the public such as hirers of taxis. If the taxi were to fail for reasons not associated with the taxi service, it would be on the manufacturer identified by their trade mark that the hirer would place the blame.
Three-dimensional marks must depart significantly from the norms or customs of the relevant sector, which here was the car sector including not just licensed London taxis but also private hire cars. As the shape of the London taxi was no more than a variant on the standard design features of a car, even if the average consumer included hirers of taxis, inherent distinctive character had not been established.
As there was no evidence from which it could be deduced that consumers had come to understand that there was only one manufacturer of taxis of that shape, the court had come to a correct overall conclusion on the issue of acquired distinctive character and so the marks were invalid.
The question of whether a shape mark necessarily possessed distinctive character if departed significantly from the norms and customs of the sector was not clear. It was also not clear whether, in deciding whether the marks were invalid for consisting exclusively of a shape that gave substantial value to the goods, it was relevant that consumers would recognise the shape as that of a London taxi. Had these questions been critical to the decision, the court would have referred them to the European Court of Justice.
There was no error of principle assessing infringement on the basis of likelihood of confusion. However, there was no explanation why L's taxis, assuming that they had a distinctive character, did not have a reputation. The taxis were well known, regarded with affection and identified with London, and so, if they did have a distinctive character, they would also have had a reputation. Given the reputation, this was a case where detriment followed. So, had the marks been valid, F would have infringed on the basis of dilution.
Assuming the marks had distinctive character, a reputation, and that there was a likelihood of confusion or detriment to the distinctive character of the marks, the court considered that a defence on the basis of descriptive use would have failed. There was no reason why the rights of the trade mark owner, which conveyed a clear message about origin, should be trumped because the marks also conveyed the message that the vehicle was a licensed London taxi. Other ways of conveying the second message should be used so as to avoid confusion and detriment to the distinctive character of the marks.
L faced the same difficulties in establishing the necessary goodwill for the purposes of a passing off action as it did in relation to showing acquired distinctive character for its trade marks. In addition, the design of F's new Metrocab was strikingly different to that of L's taxis.
Overall, this decision is unsurprising and reinforces the difficulties inherent in attempting to register a trade mark in the shape of goods.
Case: London Taxi Corp Ltd (t/a the London Taxi Company) v Frazer-Nash Research Ltd  EWCA Civ 1729.
First published in the December 2017 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.