Coinworld hits jackpot in slot machine infringement case

In Electrocoin Automatics Limited v Coinworld Limited, the High Court of England and Wales has ruled that the defendant's use of the symbols BAR, X and O in various arrangements on its slot and fruit machines' reels and win tables did not infringe the plaintiff's marks BAR-X and OXO for the same products.

Upon discovering that Coinworld Limited (i) uses the symbols BAR, X and O on its machines' reels and win tables, and (ii) sells one of its machines under the mark BEAR-X, Electrocoin Automatics Limited filed an infringement action claiming that (i) the symbols infringed its BAR-X and OXO marks, and (ii) BEAR-X infringed its BAR-X mark.

The High Court dismissed Electrocoin's infringement claims. The decision regarding the first claim hinged on whether Coinworld's use of the symbols amounted to trademark use. Coinworld's argument was that the symbols were common and had been used in prior-art machines. Therefore, if the use amounted to trademark use, the registered marks would be likely to be invalid. If the use was not trademark use, then the symbols would not be infringing.

The court considered that although BAR-X and OXO may be seen as indications of origin when used in the machine names, use on the reels and win tables could not be seen as trademark use. Thus, Coinworld's use of the BAR, X and O symbols did not infringe the BAR-X and OXO marks pursuant to Article 6 of the Community Trademark Directive and the European Court of Justice's (ECJ) ruling in Hölterhoff v Freiesleben. In that decision, the ECJ ruled that a mark owner cannot rely on its exclusive right under Articles 5(1) and 5(2) of the directive where there can be no question that the sign at issue is not perceived as indicative of the origin of the goods or services.

The court also followed the English authorities of Arsenal Football Club plc v Reed (see Arsenal win on the replay) and Regina v Johnstone (see Crown to prove civil infringement before criminal offences), where the essence of a mark was held to be a badge of origin or indication of a trade source - that is, it makes a connection in the course of trade between the goods and the mark owner. Therefore, the exclusive rights granted to the proprietor of a registered mark are limited to use of the mark likely to be taken as an indication of trade origin. Use of this character is an essential prerequisite to an infringement. Use of a mark in a manner not indicative of trade origin of goods or services does not encroach on the proprietor's monopoly rights.

The court also held that Coinworld was entitled to rely on a fair use defence under Article 6(1)(b) of the directive. That provision states that a mark owner may not prohibit a third party from using its mark in the course of trade where the use relates to an indication concerning the kind, quality, quantity, intended purpose, value, geographical origin, type of production of goods or of rendering the service, or other characteristics of goods or services, provided that the use is in accordance with honest practices in industrial and commercial matters. The court found that in the case at hand, the symbols X, O and BAR were characteristic of the service and used in accordance with honest practices in industrial or commercial matters because they had been used as symbols on slot and fruit machines for a very long time, and there was no reason to restrict their use.

Turning to the claim that BEAR-X infringed BAR-X, the court considered the likelihood of confusion and cross pollination. It reviewed the obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights but, in light of the evidence, decided that a reasonably well-informed and circumspect person would not regard BAR-X and BEAR-X as being identical or confusingly similar.

Larry J Cohen, McDermott Will & Emery, London