Court of Appeal at odds on own name defence and non-use revocation

United Kingdom

In Maier v ASOS plc ([2015] EWCA Civ 220), the Court of Appeal has found that the use of the brand ASOS by the defendants created a likelihood of confusion and damaged the distinctive character of the claimants' registered Community trademark (CTM) ASSOS. Nevertheless, by a majority decision, the defendants were held to be able to rely on the 'own name' defence against trademark infringement.

The appeals were brought before the court by the claimants, who are a well-known manufacturer of cycling clothing (together Assos), in relation to a long-standing opposition against the registration of the mark ASOS by the defendants, who are a well-known online retailer of fashion clothing and other products (together Asos, and originally called 'As seen on screen'). 

After a long-running saga in the domestic and European courts, the High Court not only rejected Assos' claims for trademark infringement under Articles 9(1)(b) and 9(1)(c) of the Community Trademark Regulation (207/2009) but, as a result of the defendants' counter-claim, also revoked and restricted the specification of Assos' trademark in respect of various classes, including Class 25 for clothing.

The Court of Appeal identified the following issues for appeal:

  • whether the High Court was in error by restricting the specification of the CTM in respect of Class 25 goods for non-use under Article 51 of the regulation (the revocations in respect of the other classes were not appealed);
  • whether the High Court was wrong to reject the claims for infringement under Articles 9(1)(b) and 9(1)(c) of the regulation; these articles respectively give trademark owners the exclusive rights to prevent others from using a sign identical or similar with a registered trademark in relation to goods or services which are identical or similar to those for which it is registered where there is a likelihood of confusion and, also, in relation to dissimilar goods or services where the mark has a reputation in the Community and where the use without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of the mark;
  • whether the 'own name' defence under Article 1(a) of the regulation was available to the defendants; this defence is subject to use by the defendant in accordance with "…honest practices in…commercial matters…"; and
  • whether the High Court should have made a declaration of invalidity in respect of the defendants' UK trademark.

The CTM ASSOS had been registered in respect of clothing, footwear and headgear in Class 25. Asos sought the revocation of the CTM for non-use except in respect of specialist cycling clothing and accessories. 

In the majority judgment, Kitchin LJ held that the High Court had correctly applied the law under Article 51 of the regulation relating to revocation for non-use - the task of the court is to arrive at a fair specification, which requires ascertaining how the average consumer would describe the goods or services in connection with which the mark has been used, and keeping in mind the purpose and intended use of those goods and services. This requires the court to make a value judgment and thus, whilst protection must not be cut down to only the exact goods or services in relation to which the mark has been used, if the average consumer believes that the mark has been used for coherent of sub-categories, then the registration can reflect this.

Therefore, the specification should be restricted to specialist clothing for cyclists as well as tracksuits, t-shirts, polo shirts, shorts, caps and jackets (being specific items of casual clothing).

In a minority decision, Sales LJ found that the specification adopted by the majority was too narrow, and should not have been restricted to the specific items of casual clothing for which use had been proven, but to all items of casual clothing, which was appropriate as it was the smallest category of goods including the ones for which use had been proven.

With regard to Article 9(1)(b), the Court of Appeal agreed that there was a clear similarity between the mark ASSOS and the sign ASOS. The marks were found to be visually and aurally similar, satisfying the initial threshold requirement for infringement.

The next element of the test is to determine whether the use of the marks gives rise to a likelihood of confusion between the two marks. The Court of Appeal, following Specsavers International Healthcare Ltd v Asda Stores Ltd ([2012] EWCA Civ 24) confirmed that the likelihood of confusion must be appreciated globally, taking account of all relevant factors, and that it must be considered though the eyes of the average consumer of the goods and services in question, taking into account all the circumstances relating to the use of the marks (including notional and fair use), and the levels of distinctiveness that they have acquired.

Kitchin LJ believed a likelihood of confusion on the part of the public did exist. He concluded that no distinction could be drawn in light of how the defendant conducted its business, provided its services and supplied its goods and that there would be a real likelihood of the public believing that casual wear marked ASOS came from a source which was the same as, or connected with, the source of ASSOS casual wear. He went on to say that, if the public believed this, then that belief was likely to extend to the notional use on other Class 25 goods (as sold by Asos), and thus the High Court was wrong in rejecting the claim for infringement under Article 9(1)(b).

With regard to Article 9(1)(c), the High Court found that the ASSOS mark did have a significant reputation amongst cyclists, but because this was not among the general public, Assos' argument did not succeed.  However, Kitchin LJ believed that normal and fair use of the ASSOS mark could reasonably include expanding its business model in terms of the sale of its casual wear, and because of the use of the ASOS mark, there had been detriment to the distinctive character of the ASSOS mark and to Assos' ability to adopt such notional and fair use under the restricted specification. Thus, he concluded that Assos had established infringement under Article 9(1)(c).

Therefore, the Court of Appeal held that the ASSOS CTM had been infringed under Articles 9(1)(b) and (c), but the defendants had a defence under Article 12(a) of the regulation.

The majority held that the defendants had adopted the ASOS mark for their retail services and, before the time in which the claimants' business came to their attention, they had already generated a substantial goodwill and reputation. They also held on balance that the defendants had fulfilled their duty to act fairly in relation to the claimants' legitimate interests and had not conducted their business so as to unfairly compete with the claimants. The activities complained of (such as Asos buying 'assos' as a keyword and selling cycling clothing after they became aware of the CTM ) were nevertheless in accordance with honest practices in industrial and commercial matters and they had established a defence to the infringement claim under Article 12(a).

Sales LJ, in his dissenting opinion, rejected the own name defence in particular because of the defendants' failure to conduct reasonable trademark checks which would have revealed that Assos had registered the ASSOS CTM which they were using in the relevant market. Consequently, as a matter of ordinary "honest practices" to avoid interfering with the claimants' existing interest and to avoid creating the likelihood of confusion of the public, the defendants should have adopted a different sign to use in selling their own-brand goods.

On the issue of the invalidity of Asos' UK trademark, Kitchin LJ stated that the High Court ought to have considered the use of each of the marks ASOS and ASSOS in a similar way and in circumstances where they could compete with each other - for example, on the high street or on the internet. If so, it would have been bound to find that there was a likelihood of confusion as the marks are visually and aurally similar and when used in relation to the same or similar articles of clothing in a competitive setting, there was a real likelihood of the average consumer mistaking one for the other, or believing them to be connected in the course of trade with each other.

He concluded that the UK registration of Asos' mark would have to be limited to exclude all the goods within Class 25 and all services in Class 35 relating to clothing within Class 25, as well as those other goods in Class 3 excluded by the High Court's order.

The most significant aspect of the decision, perhaps, was the court's acknowledgment of the importance of notional and fair use of a mark when assessing infringement and invalidity. Thus, even if a mark is primarily used for some specific goods or services, its reasonably potential use for other goods or services cannot be ignored, and can play a large role in deciding whether there is infringement and/or invalidity or not.

The case is also of importance in relation to the use of the own name defence. Courts have traditionally construed this defence narrowly; the effect of the majority judgment may encourage greater use of this defence, subject to the likely appeal on this point to the Supreme Court. 

In the light of established practice, as well as Sales LJ's dissenting opinion, it should be noted that it remains advisable for all companies seeking to register a mark to conduct detailed trademark searches at the outset so as to avoid any interference with pre-existing marks that may preclude the application of the own name defence for want of 'honest practices'.

A further point to be noted is that Assos could have been more precise in framing its specification for its CTM.  While it is important to retain some flexibility in the specification, if a company producing a specific type of goods or services uses a specification that is too broad, it runs the risk of this coming back to haunt it in future disputes, as Assos found in this case.

Mark Lubbock and Vakasha Sachdev, Ashurst LLP, London

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