UKIPO clarifies goodwill requirement for passing off in RECUP opposition appeal
A decision has been handed down in an appeal concerning applications for various RECUP marks. In the first instance the hearing officer upheld one party’s oppositions on the basis of unregistered rights (goodwill) acquired prior to the trademark applications. Overturning this, the appointed person found that there had not been sufficient goodwill at the time to support a claim for passing off and that the opposition should not have succeeded.
Rajinda Sharma, the director of Recup Ltd, applied to register a figurative mark for RECUP for various goods in Class 21 (principally cups) in January 2018. Sharma applied for further figurative marks (RECUP EUROPE, RECUP UK and RECUP WORLD) on 29 and 30 March 2018.
In February 2018 Smart Planet Technologies, Inc applied to register its own RECUP mark for cups and drinking cups in Class 21. Smart Planet claimed to have been selling cups throughout the United Kingdom under RECUP since October 2015 and to have acquired goodwill. It opposed Sharma’s applications, relying on Section 5(4)(a), which covers registration prevented by an earlier unregistered mark (ie, passing off)) and Section 3(6) (bad faith) of the Trade Marks Act 1994.
Sharma in turn opposed Smart Planet’s application, relying on Sections 5(4)(a) and 5(2)(b), which covers similarity to an earlier trademark and likelihood of confusion. Sharma claimed that he had been using RECUP for cups throughout the United Kingdom since December 2016. Further, he asserted that he had built up significant goodwill under the name and that, because Smart Planet’s mark was identical to his and the respective goods were similar, use of Smart Planet’s mark for the registered goods would amount to passing off.
The hearing officer’s decision
The hearing officer found that both parties had built up goodwill in the RECUP name but that Smart Planet’s goodwill pre-dated Sharma’s: the former’s goodwill was established in December 2017 whereas the latter’s was only established in March 2018, after Smart Planet’s application. The hearing officer rejected Sharma’s opposition but allowed Smart Planet’s, finding that at the date of Sharma’s first application Smart Planet owned the requisite goodwill to succeed in claim for passing off and met the additional requirements for a passing off claim. The bad-faith element of Smart Planet’s opposition did not succeed.
Sharma appealed the finding.
The appeal hearing was heard via videolink in May 2020. The appointed person, Thomas Mitcherson QC, overturned the hearing officer’s decision, finding that as at the relevant date (being the date of Sharma’s first application) Smart Planet did not own sufficient goodwill to support a passing-off claim. In determining whether Smart Planet was likely to succeed in this type of claim, the hearing officer had only considered whether Smart Planet had established any goodwill in RECUP and had not considered whether that goodwill was sufficient for the purposes of passing off.
Mitcherson QC concluded that Smart Planet had not established sufficient goodwill in the name to have succeeded in a passing-off claim as at the relevant date.
Sharma requested a complete reversal of the hearing officer’s decision and for all of its marks to be registered. However, Mitcherson QC determined that only his first application should be granted, remitting the parties’ remaining applications and oppositions for consideration in light of the appeal.
The appeal decision considers the amount of goodwill needed to support a passing-off claim in UK opposition proceedings and is significant for parties considering opposing applications on grounds that the use of the mark in the United Kingdom would be prevented by earlier unregistered rights.
Mitcherson QC rejected the notion that the possession of any, or nominal, goodwill would automatically be sufficient to allow a finding of passing off. Goodwill is not binary and the relevant test is instead whether there is significant goodwill. At the very least, a claimant party must provide evidence of sufficient goodwill to support a conclusion that the defendant party’s use of the relevant mark would cause substantial damage to it.
Smart Planet’s evidence of goodwill consisted of 10 invoices to two customers, which represented sales of 40,000 paper cups for a total price of roughly €3,200. This was found to fall well short of the evidence required to establish sufficient goodwill. This finding was fortified by the descriptive nature of the RECUP name, which meant that more trade than normal would be needed to make the name distinctive of Smart Planet’s cups.
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