Former directors held to be liable for trademark infringement

In Tubzee Ltd v Safron Foods Ltd ([2008] EWHC B15 (Ch), October 7 2008), Tubzee Ltd has succeeded in its claim against Safron Foods Ltd for passing off and infringement of Tubzee’s UK and Community registered trademarks.

Kulfi is a popular Asian desert made with boiled milk. Tubzee and Safron are two competing manufacturers of kulfi ice cream based in Halifax. Tubzee had registered trademarks in the United Kingdom for various designs including a stylized K with a dropped tail that swept under the rest of the word. The packaging of Tubzee’s ice cream also included a Community trademark featuring two brown circular pots pouring a white fluid in a vertical stream over some ice cubes. Tubzee had been using both marks on its packaging since December 2005.

Evidence was produced to show that Tubzee had goodwill in its get-up as its design was printed on delivery vehicles, ice cream vans and display freezer cabinets, as well as the outer and inner packaging of its ice cream products. In addition, Tubzee had advertised its products using television commercials for three months in Summer 2007, running eight advertisements each evening.

In 2007, Safron changed the get-up of its packaging by incorporating a stylized K and two brown pots with white liquid pouring out of them vertically. Tubzee’s claim was that:

Safron’s new get-up was confusingly similar to Tubzee’s; and
Safron was passing off its ice cream as that of Tubzee’s and infringing its trademarks.

The second and third defendants, Tanvir Hussain and Mudassar Mahboob, were joined to the proceedings because they were responsible for the selection and use of Safron’s new branding. The defence argued that Mahboob and Hussain were not jointly and severally liable for the tortious acts of Safron because they had not been directors of Safron at the time of the potential infringement.

Company searches revealed that:

Mahboob was appointed a director of Safron on April 23 2005 and was shown as a director on the annual return that was filed on January 15 2007 and on other documentation sent to Companies House;
On January 8 2008 Mahboob‘s resignation as a director was filed with Companies House, indicating that he had resigned as a director of Safron on March 6 2006;
Hussain was also appointed as a director of Safron on April 23 2005 and was shown as a director on the annual return filed on January 15 2007; and
On January 8 2008 Mahboob‘s resignation as a director was filed with Companies House, indicating that he had resigned as a director of Safron on March 6 2006.

It was not disputed that Safron traded as a quasi-partnership between six people who were in effect equal shareholders. Each shareholder had their own tasks to perform, but management decisions were made jointly. Both Mahboob and Hussain signed cheques on behalf of Safron under the rubric of 'director'.

The Chancery Division of the High Court of England and Wales found the evidence regarding the resignations of both Mahboob and Hussain unsatisfactory, given that the notices of their resignation had been filed on the same day as the defence in this action.

The court held that:

Safron had been passing off its ice cream as Tubzee’s ice cream; and
under Section 10(2) of the Trademark Act 1994 that Safron had infringed Tubzee’s registered trademarks as, in the course of trade, Safron had used a sign that was similar to Tubzee’s trademarks in connection with identical goods.

The critical question for the court was whether there was likelihood of confusion on the part of the public. On the face of it, there were sufficient differences between the two designs for the matter to be inconclusive. However, the court referred to the case of United Biscuits (UK) Ltd v Asda Stores Ltd ([1997] RPC 513), in which the court held as follows:

“I cannot escape the conclusion that, while aiming to avoid what the law would characterize as deception, [the defendant is] taking a conscious decision to live dangerously. This is not in my judgement something that the court is bound to disregard.”

In the present case, the court held that it had to consider other relevant factors to decide whether there was a likelihood of confusion on the part of the public. The court found that the decision to use Safron’s new design had been a positive decision to “live dangerously”, as the directors could not have been anything but well aware of the similarities with their competitor’s get-up given the proximity of the two businesses.

The court unequivocally found that both Mahboob and Hussain were involved in the choice of Safron’s new get-up. Both had instructed and approved the design created for them by the designers despite being aware of the similarities with Tubzee’s get-up. In addition, both Mahboob and Hussain were involved in the decision to continue trading with Safron’s new get-up in the face of the claims being made by Tubzee and its advisers.

In the circumstances, the court found that both had remained a part of the management of Safron, whether or not they were actually directors of the company. Therefore, Mahboob and Hussain were de jure or quasi-directors who could not escape being personally liable in respect of Safron’s passing off and infringement of Tubzee’s trademarks.

Rebecca Plumbley, Hammonds LLP, London

Former directors held to be liable for trademark infringement

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