Levi Strauss brought an action against Casucci in Belgium for infringement of its ‘mouette’ (seagull) trade mark, consisting of a double row of stitching curved in the middle and sewn into the centre of a pentagonal pocket for jeans. In 1997, Casucci began marketing jeans with pentagonal pockets, also having a double stitch, but curving slightly upwards in the middle.
The action under Article 5(1)(b) failed at both first instance and appeal. Levi Strauss further appealed to the Cour de Cassation, the highest court in Belgium, which made a reference to the ECJ for a preliminary ruling.
The ECJ held that, in order to ensure the essential function of a trade mark as a guarantee of origin, the proprietor had to be protected against competitors wishing to take unfair advantage of the trade mark by selling products bearing that mark, or a confusingly similar mark, where there was a likelihood of confusion between them. If the likelihood of confusion were assessed at a time after the sign in question began to be used, the user of that sign might take undue advantage of his own unlawful behaviour by alleging that the product had become less renowned, a matter for which he himself was at least partly responsible. As long as the proprietor’s action or inaction had not contributed to the loss of a mark’s distinctive character, the proprietor should continue to enjoy the protection conferred by Article 5.
Article 5(1) must therefore be interpreted as meaning that, in order to determine the scope of protection of a trade mark, the national court must take into account the perception of the public concerned at the time when the sign, the use of which infringes that trade mark, began to be used. Where there is infringement, it is for the national court to impose such measures as it sees fit. However, it would not be appropriate to order cessation of the use of the sign in question if it has been established that the trade mark has lost its distinctive character, in consequence of acts or inactivity of the proprietor, so that it has become a common name within the meaning of Article 12(2), and the trade mark has therefore been revoked as a result.
Samann are the proprietors and exclusive licensee of registered trade marks that consisted of a stylised fir or pine tree on a base (the “Tree Marks”). The Tree Marks have been used continuously since the early 1950s in relation to the “Magic Tree” cardboard air fresheners often seen dangling from rear view mirrors of vehicles. Tetrosyl is the manufacturer of a wide range of products for use in the car sector. In 2003 it began marketing an air freshener in the shape of a fir tree decked out with snow and with flashing lights.
Kitchin J. dismissed Samann’s claim of passing off based on the fact that there was no evidence of actual confusion and the difference in surrounding circumstances at the point of sale. Salmann’s claim for trade mark infringement however was upheld.
Under Article 5(1)(b), Kitchin J. held there to be a likelihood of confusion, emphasising the need for the court to consider likelihood of confusion arising from use of the offending sign discounting any added matter or circumstances. In other words, the marks should be compared in a vacuum.
Under Article 5(1)(c), once the Claimant had established reputation, the burden shifted to the Defendant to prove that use of his mark was not without due cause and did not take unfair advantage of, or was detrimental to, the distinctive character or the repute of the trade mark. The fact that the use complained of was ‘with due cause’ was insufficient. What had to be shown was that the taking of unfair advantage or causing detriment were not ‘without due cause’. Using this test, Tetrosyl had not shown that the need to use the Christmas tree product was such that Samann’s rights had to yield to it. There was no need for Tetrosyl to make an air freshener in the shape of a fir tree, even at Christmas.
Tetrosyl attacked the validity of the Tree Marks on the following grounds:
Article 3(1)(e) - Kitchin J. held that a mark may have a large goodwill associated with it derived from sales and advertising, but it is the shape itself which has to add substantial value relative to shapes of equivalent articles. Merely because the product was designed to have an attractive appearance did not mean that the shape added substantial value to the goods. Tetrosyl’s attack therefore failed.
Article 3(1)(c) – Kitchin J. dismissed the submission that the pine or fir tree was descriptive of either the kind (being the normal shape for air fresheners) or quality (being of a certain scent) of the goods.
Article 12(2)(a) – There was no indication that this provision could ever apply to device marks such as the Tree Marks. Even assuming that it could, the evidence failed to established that carded air fresheners in the shape or fir trees had become common in the trade as there was only one other tree-shaped product on the market. The Claimant had taken vigorous steps against other tree-shaped products and had been successful in doing so.
Competition law defences to infringement
(1) Sportswear SpA (2) Four Marketing Limited v Stonestyle Limited* (Waller L.J., Longmore L.J. and Lloyd L.J.;  EWCA Civ 380; 11.4.06)
The CoA allowed an appeal from a High Court judgment which struck out a defence to a trade mark infringement claim based on Article 81 of the EC Treaty.
Sportswear SpA manufactured garments bearing the STONE ISLAND trade marks which were sold in markets both within and outside the EEA. Four Marketing Limited, its UK distributor, had exclusivity within its territory and agreed not to sell into other territories.
Sportswear and Four Marketing (“the Claimants”) discovered that Stonestyle Limited was selling Stone Island garments which had the ‘garment code’ removed from the label and swing tag and claimed that this was trade mark infringement. The Claimants asserted that this interference with the labels and swing tags afforded them a legitimate reason to oppose further dealings in the goods under Section 12(2) of the Trade Marks Act 1994.
Stonestyle’s defence included competition law arguments, namely:
1. the object of the garment codes was to give effect to provisions of the distribution agreement between the Claimants which were contrary to Article 81(1). Therefore the Claimants’ assertions regarding the garment codes do not constitute legitimate reasons under Section 12(2);
2. the garment codes form part of an illegal anti-competitive arrangement between the Claimants; and
3. the Claimants’ attempt to prevent the importation of goods was contrary to Article 81(1).
The High Court allowed the Claimants’ application to strike out the Article 81 defence.
Following British Leyland v Armstrong ( 3 CMLR 102), for a breach of Article 81 to be relevant to the Claimants’ assertions, there must be a sufficient nexus between the Claimants’ distribution agreement and the issue of whether the Claimants have legitimate reasons under Section 12(2). Giving the leading judgment, Lloyd L.J. held that the High Court was wrong to conclude that the defence was bound to fail on the basis that there was no arguable case of an adequate nexus between the two. There are unresolved issues of Community law which may be of relevance to this case. Lloyd L.J. commented that it remained an open question whether an agreement in breach of Article 81, which is sufficiently closely related to the subject matter of the infringement proceedings, could be used as a defence without the requirement to demonstrate that the imported product would not damage the reputation of the trade mark or proprietor. Lloyd L.J. further commented that it may be possible to grant an order requiring parties not to assert trade mark rights to prevent parallel importing in proceedings brought by an undertaking affected by the anti-competitive conduct.
The CoA therefore held that it was arguable that Stonestyle’s defence would be stronger if it could establish that the distribution agreement was in breach of Article 81. Whether the nexus established at trial will be held to be sufficient is a matter for the trial judge.
O2 Ltd & Anr v Hutchison 3G(UK) Ltd* (Lewison J.;  EWHC 601(Ch); 2.3.06)
Before the trial (reported last month), Lewison J. heard an application by O2 to adduce evidence explaining how a survey had been carried out. Lewison J. refused the application as the claimant, by conducting the survey and applying to adduce the evidence, had not complied with the spirit of a previous order made by the court. Lewison J. considered that the survey was an experiment and held that, as he put it, the evidence explaining the results of the experiment was to be treated as expert evidence. Finally he held that the evidence of the eight representatives of the public who had been identified during the survey was not probative on anything he had to decide without the backing of the expert’s evidence. Therefore, he held that it should not be adduced.
Special Effects Ltd v L’Oréal SA & Anor* (The Chancellor of the High CourtMorritt J.;  EWHC 481 (Ch); 17.3.06)
The Claimant was the proprietor of the mark SPECIAL EFFECTS in the UK for goods in class 3 (conditioners and hair lotions) and services in class 44 (beauty and cosmetic therapies). L’Oréal SA unsuccessfully opposed the trade mark under Sections 3 and 5.
The Claimant issued proceedings against both L’Oréal SA and L’Oréal (UK) Ltd (the Defendants) alleging that their use of the brand SPECIAL FX infringed its mark. The Claimant also claimed that the opposition proceedings precluded the Defendants from challenging the validity of the SPECIAL EFFECTS mark on the grounds of cause of action estoppel, issue estoppel and abuse of process. The Defendants counterclaimed that the mark was invalid.
A preliminary hearing was ordered to determine various issues including whether cause of action estoppel, issue estoppel or abuse of process precluded either or both Defendants from (a) challenging the validity of the SPECIAL EFFECTS mark, and/or (b) alleging use of the marks complained of prior to the application for registration of the SPECIAL EFFECTS mark as part of the basis for a defence under Section 11(3).
The Defendants relied on the following three grounds:
(i) the practical differences between opposition proceedings and invalidity proceedings;
(ii) the unwelcome consequences if cause of action estoppel was extended to include opposition proceedings; and
(iii) the lack of finality in respect of opposition proceedings.
The Chancellor held that there was no relevant difference between the practice and procedure of opposition proceedings and invalidity proceedings; the issues in each case are whether any objection to registration can be made out under Sections 3 and 5. As orders of the Registrar are, subject to appeal, final, the fact that the orders may give rise to an estoppel binding in later proceedings in a higher court, such as the High Court, is an inevitable consequence of the proposition that decisions of lower courts may give rise to an estoppel.
Cause of action estoppel applies where a cause of action in the second action is identical to a cause of action in the first, and will preclude re-litigation of issues raised, or which might have been raised, in the first proceedings. The Chancellor rejected the Defendants’ argument that the causes of action in the current proceedings differed from that in the opposition proceedings. He held that the underlying issues in both proceedings, namely the applicability of Sections 3 and 5, were identical.
Issue estoppel can arise where a particular issue forming a necessary ingredient in a cause of action has been, or could have been, litigated and decided, and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant, one of the parties seeks to reopen that issue. The Chancellor held that the question of whether L’Oréal SA used the SPECIAL FX mark prior to the application for registration of SPECIAL EFFECTS had been raised in the opposition proceedings.
The Chancellor further held that there was sufficient identity between L’Oréal SA and L’Oréal (UK) Ltd to make the decision in the opposition proceedings binding on L’Oréal (UK) Ltd. Both Defendants were therefore estopped from challenging the validity of the SPECIAL EFFECTS mark and from asserting prior use of the SPECIAL FX mark for the purposes of the defence and counterclaim.
Michael Baigent & Richard Leigh v The Random House Group Ltd* (Peter Smith J.;  EWHC 719 (Ch); 7.4.06)
The Claimants, two of the three the authors of The Holy Blood and The Holy Grail (“HBHG”), claimed that, in writing The Davinci Code (“DVC”), Dan Brown had copied the “Central Theme” of HBHG and therefore, under Section 16(3) CDPA were guilty of copyright infringement. The judge held that there was no copyright infringement as the Central Theme was not expressed in HBHG.
Since general concepts and ideas are not protected by copyright, it was necessary to assess the level of abstraction at which copying was alleged to have taken place in order to determine if copyright subsists at that level or not. However, various changes were made to the Central Theme during the action: some fundamental points were introduced only in later versions, while others were dropped.
The Claimants spent considerable time in establishing when Dan Brown and/or his wife Blythe Brown acquired HBHG and how they deployed its contents during the writing process. Blythe Brown provided her husband with much of the research material used to cloak DVC with an air of authenticity. Smith J. was very critical of Blythe Brown’s absence from the trial. He was unconvinced by the reasons given by Dan Brown for his wife’s absence and concluded that her absence was only explicable on the basis that she would not support Dan Brown’s assertion as to what use was made of HBHG and when during the writing process that use occurred.
Smith J. accepted Dan Brown’s evidence that he did not use HBHG when he wrote the synopsis for DVC but was of the opinion that (whether or not her husband knew it) Blythe Brown was using HBHG as a source of material during that period. Smith J. also found that HBHG was the essential tool for certain lectures, given by one of DVC’s characters which were written at a later stage in the process.
Smith J. noted that it was important when a literary work was dealing with actual events to see what was alleged to be protectable and infringed. One should not be too quick to jump to the conclusion that copying has occurred where both works dealt with historical facts and events and there were common sources.
Smith J. accepted that if what was asserted to be infringed was so general that it was not certain that a particular conclusion would be reached by the ordinary reader, then this level of abstraction should not be protected. Thus, the Claimants’ inability to state clearly the Central Theme of their own book created uncertainty as to what protection was sought.
In finding that there had been no infringement of copyright, Smith J. held that the Central Theme as submitted by the Claimants was not expressed in HBHG but an artificial contrivance. There was no discernable Central Theme in HBHG. HBHG also contained much more than the Central Theme as ultimately set out by the Claimants. Additionally, Smith J. noted that Mr Baigent’s evidence supporting the Central Theme on a theme by theme basis was comprehensively destroyed under cross examination.
Furthermore, Smith J. found that those points of the Central Themes which were present in DVC did not amount to a substantial part of HBHG. He came to the conclusion that the Claimants, knowing that one in HBMG the idea was not protectable, started with DVC and worked backwards to create a Central Theme in HBHG. The claim therefore failed at the preliminary stage of identifying a level of abstraction in the work in which copyright subsisted.
Declaration of non-infringement
Point Solutions Ltd v Focus Business Solutions Ltd & Anr* (Kirkham J.;  EWHC 3096 (Ch); 16.12.05)
The judge refused Point’s application for a declaration of non-infringement of copyright in Focus’s software.
The judge set out the law as follows: absence of a statutory right to a negative declaration in the CDPA does not preclude the Court from making such a declaration if satisfied that it would be just to do so. The Court, under its inherent jurisdiction, is entitled to consider whether there has been sufficient assertion of right to trigger the exercise of the discretion provided that the question is real and not theoretical, the person raising the question has a real interest and there is a proper contradictor i.e. someone presently existing who has a true interest to oppose the declaration sought (Russian Commercial & Industrial Bank v British Band of Foreign Trade  2 AC 438). The Court also has to consider whether the order would serve any useful purpose and whether there are any other special reasons why a declaration should or should not be granted. The Court should be slow to require a party who has made no allegation of copying answer a negative case of non-copying (Wyko Group plc v Cooper Roller Bearings  FSR 126).
The judge held that this was an unusual case as she was being asked to make a declaration where she had not seen either software product, copyright had not been demonstrated in Focus’s product, and she had no expert to assist her. The absence of tested evidence brought the application close to a theoretical question. Therefore she had to proceed with caution.
Kirkham J. found that the initial letter sent by Focus to Point was sufficient to trigger the exercise of the discretion. The letter did not expressly allege infringement, but it could be inferred. Similarly, representations made by Focus to Swiss Life were sufficient, even though they too made no express statement of infringement. However, Point did not persuade the judge that they had achieved independent design of their software nor that they needed the declaration, delay being one of the big factors against utility. Greater injustice might be done to Focus if the declaration was granted because it would shut them out of making a future claim to infringement. Finally, Focus’s offer of expert determination on the question of copying could not be ignored. For all these reasons, the application failed.
Reporter’s note: I am grateful to my colleagues at Bird & Bird, Nana Chan, Rachel Fetches, Ewan Grist and, particularly, Zoe Fuller.
ECJ, AG and CFI decisions and opinions can be found at http://curia.eu.int/en/content/juris/index_form.htm and the reported cases marked * from the Court of Appeal and High Court can be found at http://www.bailii.org/databases.html#ew.