Door left open to 'own name' defence in relation to trading names

United Kingdom
In Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd ([2010] EWCA Civ 110, February 24 2010), the Court of Appeal has upheld a decision of the High Court on all grounds.
 
In December 2008 the High Court, in an extensive judgement, found that Cipriani (Grosvenor Street) Limited (CGS) was infringing Hotel Cipriani Srl's Community trademark (CTM) CIPRIANI by running a restaurant under the name Cipriani London. In doing so, the High Court rejected CGS's arguments that the 'own name' defence could apply to a company's trading name if it was different from its registered corporate name (for further details please see "Cipriani Venice hotel triumphs over Cipriani London restaurant").
 
The Court of Appeal confirmed the interpretation of the 'own name' defence on the facts of this case, but left the door open for others to take the benefit of the defence in relation to a company's trading name, if certain criteria are fulfilled.
 
The Court of Appeal also affirmed that Hotel Cipriani's CTM was valid, not having been applied for in bad faith under Article 51(1)(b) of the Community Trademark Regulation (40/94). The Court of Appeal confirmed that this conclusion was consistent with the decision of the European Court of Justice in Chocoladenfabriken Lindt (C-529/07), which was decided since the court's judgment at first instance (for further details please see "ECJ rules on bad-faith CTM applications in chocolate bunny case").
 
CGS accepted that it was using an identical mark (CIPRIANI) for services (restaurants) that were identical to those covered by Hotel Cipriani's CTM. Its only hope of avoiding a finding of trademark infringement was therefore to succeed either:
  • on its argument that Hotel Cipriani's CTM was invalid, as it had been registered in bad faith under Article 51(b) of the regulation; or
  • on its argument that it could take advantage of the 'own name' defence under Article 12(a).
The Court of Appeal confirmed the High Court's findings that, when Hotel Cipriani applied to register its CTM in 1996, there was no concurrent goodwill in the United Kingdom, at least as with CGS, as the latter did not open its restaurant until 2004. Following the factors specified in Lindt, the Court of Appeal said that "there was neither any use of the mark, nor any apparent right to use the mark, with which the registration was incompatible". Hotel Cipriani's registration was thus valid and infringed, save for CGS's arguments on the 'own name' defence.
 
In its appeal, CGS argued that it should be entitled to take the benefit of the 'own name' defence, despite the corporate name of the company (Cipriani (Grosvenor Street) Ltd) not being the same as its trading name (Cipriani London or Cipriani). The Court of Appeal, considering the authorities of Asprey & Garrard ([2001] EWCA Civ 1499)and Premier Luggage ([2002] EWCA Civ 387), drew a parallel with an individual's name:
 
"in principle, an individual ought to be able to use the defence in relation to an adopted name by which he or she is known for business purposes or generally, for example, an actor's stage name or a writer's nom de plume."
 
On this basis, the Court of Appeal thought that, in a similar way, a corporate entity should not be restricted only to reliance on its corporate name, if it can show that it uses a distinct name for trading purposes. However, just as individuals could not justify using a trade name which conflicted with a registered trademark, even if they changed their name by deed poll, nor could a company do so, even if it traded under a changed corporate name. The Court of Appeal stated that:
 
"the mischief of a misleading name, whether a corporate name or a trade name, is to be dealt with by reference to the proviso [that use of one's own name must be in accordance with honest practices], not by a rigid rule that a trade name cannot be an 'own name' for this purpose".
 
The Court of Appeal concluded that the 'own name' defence:
 
"may be available in respect of a trading name, as well as the corporate name of a company, but it will depend on (a) what the trading name is that has been adopted, (b) in what circumstances it has been adopted and (c) depending on the relevant circumstances, whether the use is in accordance with honest practices."
 
In this case, although the Court of Appeal accepted that CGS had adopted Cipriani London as its "own name", it could not claim that the abbreviation Cipriani was also its own name. Further, the use of Cipriani London (or Cipriani) was not in accordance with honest practices, as that use "took no account of the legitimate interests of the owner of the trademark". Where CGS's use conflicted directly with Hotel Cipriani's CTM rights and no reasonable efforts were made to avoid confusion, the Court of Appeal concluded that the "overall circumstances of the case were inconsistent with a finding of honest use".
 
The Court of Appeal went on to consider whether Hotel Cipriani had established passing off. CGS appealed the lower court's finding for Hotel Cipriani on passing off, primarily on the grounds that Hotel Cipriani had not established goodwill in the United Kingdom. The Court of Appeal examined what was needed to prove that a business based abroad which had a reputation also had goodwill in England, such that it could claim passing off. It concluded that Hotel Cipriani did indeed have goodwill in England in 2004, as it had a substantial reputation in England and a substantial body of customers from England, even though located in Italy, due to significant marketing directed towards English customers and a significant volume of business placed directly from England. The reputation therefore brought in business from England and, as such, there was goodwill.
 
In contrast, CGS could not establish a concurrent goodwill on the part of the Cipriani family members and businesses, as it could not show that there was significant business brought into their overseas ventures from England. Finally, the Court of Appeal recognized that reliance on the test of direct bookings from England to an overseas business to establish goodwill of that business in England may be ripe for review in an appropriate case. This was due to the now prevalent practice of businesses having websites which easily enabled bookings to be made directly from anywhere in the world. However, the Court of Appeal did not deem Cipriani to be the appropriate case in which to undertake that review.
 
Joel Smith and Heather Newton, Herbert Smith LLP, London

Unlock unlimited access to all WTR content