No infringement if essential function of mark is not undermined

In RxWorks Ltd v Hunter (trading as Connect Computers) ([2007] EWHC 3061 (Ch), December 20 2007), the High Court of England and Wales has held that RxWorks Ltd's use of the term 'vet.local' did not infringe on the essential function of the registered trademark VET.LOCAL. The decision was based on the grounds that the term 'vet.local' was intended only as an internal name for an aspect of a complex computer system and there was no credible reason why likely users of the system should perceive the term to denote any goods or services for which the trademark was registered.

RxWorks applied for summary judgment on its claim for unjustified threats of trademark infringement, seeking a declaration of non-infringement. Dr Paul Hunter was the owner of the trademark VET.LOCAL in Classes 9, 16, 41 and 42 of the Nice Classification for computer software, hardware and firmware. Hunter counterclaimed, alleging infringement of Sections 10(1) and 10(2) of the Trademarks Act 1994 (which reflect Article 5(1)(a) and (b) of the First Trademarks Directive (89/104/EEC)). RxWorks contended that:

• the term 'vet.local' was used as a local network domain name on its computer system; and
  
  
• in no realistic sense could such use be in relation to any of the goods or services for which the trademark had been registered.

The court focused primarily on the directive and case law of the European Court of Justice (ECJ) for interpretation of the act. Accordingly, it applied the four-part test that the ECJ explicitly formulated in Céline SARL v Céline SA (Case C-17/06). The test lists four conditions which, if satisfied, may enable the proprietor of a registered trademark to prevent use by a third party of a mark which is identical to its mark under Article 5(1)(a) of the directive (for further details please see "ECJ rules on use of trademarks as company and shop names").

With regard to the first condition, the court held that there was an arguable case that use of the sign was "in the course of trade". In respect of the second condition, it held that it was common ground that use of the sign had been "without the consent of the proprietor of the mark". In relation to the third condition ("use must be in respect of goods or services which are identical to those for which the mark is registered"), it was again at least arguable that this condition was satisfied, even though the mark was embedded within the goods, namely the software and the systems.

However, the counterclaim failed to satisfy the fourth condition. The court found that use of the term would have no material impact on the functions of the trademark. The term was buried within the workings of the system where only knowledgeable system administrators would be likely to encounter it. Furthermore, the term was not inherently likely to denote trade origin and was not intended to do so. Instead, system users likely to encounter the term would understand it to be the name of an internal domain and associated folders. Ultimately, in failing to establish that use of the term 'vet.local' undermined the essential function of the trademark VET.LOCAL in distinguishing the origin of the goods or services, Hunter's claims for infringement of the registered trademark could not be supported and were therefore unjustified.

James Tarleton, Hammonds, London