WHG (International) Ltd & Ors v 32 Red Plc

This is an appeal from an order of Mr Justice Henderson dated 7 March 2011 in a trade mark dispute between online gaming and casino operators.

The respondent, 32Red plc (which the Judge called “32Red”), sued the first and second defendants (“William Hill Online”) for infringement of three registered trade marks: a UK mark for the number 32 (“the 32 number mark”), a Community mark for the word “32Red” (“the 32Red mark”) and a Community mark for a 32Red device consisting of a stylisation of 32Red in a roulette ball (“the 32Red device mark”). All of the respondent’s trade marks are registered in respect of, among other things, online casino services (which include roulette).

The alleged infringements were the use of the sign “32Vegas” and various device marks (“the Vegas signs”) for an online casino that actively operated from 31 December 2008 to 3 August 2009. The Judge held that the use of the Vegas signs was an infringement of the respondent’s Community trade marks (“the Community marks”). He dismissed the respondent’s claim that “32Vegas” was an infringement of the 32 number mark. He also dismissed William Hill Online’s counterclaim that the respondent’s trade marks were invalidly registered.

William Hill Online appeals from the Judge’s findings that (1) the 32 number mark was valid, (2) the 32Red mark was valid, and (3) the Community marks were infringed.

The respondent cross-appeals from the finding that the 32 number mark was not infringed.

I have gratefully taken the following brief factual summary from the Judge’s account in his judgment.

The online casino industry began in the mid-1990s and developed rapidly. The respondent and William Hill Online both trade in online gaming services, principally online casino gaming. The respondent is a Gibraltar-registered company which first started to operate an online casino under the 32Red brand in 2002. It has always traded under the same brand name, and has sought to establish a distinctive reputation in that brand coupled with a reputation for excellent customer service. In comparison with the largest operators in the field, the business of the respondent, although substantial, is of no more than medium size. In 2009 it had approximately 25,000 active casino players who placed over 130 million bets with a value of around £170 million, generating gross revenue for the respondent of some £11 million. About 74 per cent of that income was derived from players based in the UK.

On 6 May 2004 the respondent was registered as the owner of the 32Red mark. On 3 January 2006 the respondent was registered as the owner of the 32Red device mark. Each registration was made for a range of goods and services in Classes 9, 16 and 41 of the Nice Classification, including (in Class 9) "Computer software relating to games, gaming and gambling", and (in Class 41) "Casino services; … gaming services; gambling services; … casino, betting, gaming, gambling and bookmaking services provided by means of electronic media, the internet …".

In December 2005 the domain name "32vegas.com" was registered by an Antiguan company called Crown Solutions Gaming Limited ("Crown Solutions"). In 2006 an online casino began to operate under the name "32Vegas". That casino had no connection with the respondent, and its ultimate ownership is unknown. It was regulated first in Antigua and then in the Canadian Mohawk Territory of Kahnawake. It was prohibited from advertising in the UK by the regulatory regime set up under the Gambling Act 2005.

On 24 May 2006 a "cease and desist" letter was sent to Crown Solutions by the respondent’s lawyers in Gibraltar. The respondent took no steps to implement or follow up its threat, and the matter was allowed to rest.

In October 2008 the William Hill Group entered into a joint venture with Playtech, one of the two leading providers of gaming software. The joint venture involved the purchase of an established online gaming business run by an entity called Uniplay, whose assets included the unregistered mark "32Vegas" as well as several other brands owned by Crown Solutions. From the point of view of the William Hill Group, the acquisition by the joint venture of the 32Vegas mark and the online casino business carried on under it was a small and relatively insignificant part of a much larger operation which was designed to expand and re-launch William Hill Group's presence in the online gaming sector. When the joint venture was announced on 20 October 2008 the business of Crown Solutions was described as having "multiple low-key brands", one of which was 32Vegas.

Pursuant to the joint venture a licence to use the domain name "32vegas.com" together with associated marks (whether registered or unregistered) was granted to William Hill Online, which comprises two Gibraltar-registered companies. William Hill Online carries on all aspects of the William Hill business that involve online gaming. That business is known as "William Hill Online".

Under the joint venture William Hill Online is owned as to 71 per cent by William Hill Organisation Limited, the main trading company within the William Hill Group. William Hill Organisation Limited is a wholly-owned subsidiary of the third defendant, William Hill Plc, which is registered in England and Wales and is listed on the London Stock Exchange.

The practical result of the joint venture is that the 32Vegas online casino, instead of being a shadowy Antiguan-owned and Canadian-regulated business which could not advertise its services in the UK, on pain of committing a criminal offence, became a Gibraltar-owned and regulated business which formed part of William Hill Online and was free to compete with the respondent on equal terms in its home market.

On 19 January 2009, less than 3 weeks after William Hill Online had begun trading, the respondent’s solicitors sent it a "cease and desist" letter.

On 27 February 2009 the respondent filed an application with the Intellectual Property Office for the registration of the 32 number mark. The application was successful, and the registration was made on 5 June 2009. The registration was for use in connection with the following services in Class 41: "Casino services; betting services; gambling services; bookmaking services; casino, betting, gaming, gambling and bookmaking services provided by means of electronic media, the internet, telecommunications, telephone, wireless or offshore telephone, or television."

Following William Hill Online’s refusal to back down in response to the “cease and desist” letter, the claim form in these proceedings was issued. It was served with the particulars of claim on 3 July 2009.

The infringing Vegas signs consist of three text signs and three devices. Each of them has been used by William Hill Online in the course of trade, although not before 31 December 2008, in relation to casino, gaming and gambling services provided by means of the internet.

The three text signs are "32vegas.com", "32vegas" and "32v".

The largest of the three devices displays the 32Vegas sign running obliquely across a black and white bordered rhomboid or lozenge shape. The "32" is written in large bold characters with a gold star between the teeth of the figure 3. "VEGAS" is written in smaller white capital letters, with the “V” interlocking with the "2". The interior of the lozenge is coloured bright red on the left, where it sets off the 32; the shading then becomes progressively darker, and is almost black at the right hand end. The Judge detailed the general impression as evoking a neon sign of the type one might expect to see on the Strip in Las Vegas.

The other two devices are smaller in size and display the gold 32 and interlocking white "V" from the larger device, including the gold star. In one of the devices the "32V" is placed diagonally across a thin white square and slightly overlaps it. The interior of the square is shaded red at the bottom verging into purple at the top. In the other device the "32V" is placed obliquely across a thin gold circle, and again slightly overlaps it. The interior of the circle is coloured a uniform black. The strong visual impression created by both of these signs is of the gold 32 set against, respectively, a red/purple and a black background. The interlocking white V, although clearly visible, is smaller in size (as it is in the larger device) and much less prominent.

The relevant provisions of the Community and UK legislation are set out in the Appendix to this judgment.

The particulars of claim alleged infringement by William Hill Online of the Community marks and the 32 number mark under (respectively) Articles 9(1)(b) and (c) of the Community Trade Mark Regulation (Council Regulation (EC) No. 207/2009 of 26 February 2009 on the Community trade mark) (“the CTMR”) and sections 10(2) and (3) of the Trade Marks Act 1994 (“the 1994 Act”). There were also claims of joint tortfeasance against all three defendants. By order of Mr Justice Mann dated 16 July 2010 all further proceedings against the third defendant were stayed. Accordingly, the third defendant has played no further part in these proceedings.

In its amended defence and counterclaim served on 11 August 2009 William Hill Online denied that the respondent had a reputation in any of the marks and denied the allegations of infringement. It also averred that the 32vegas.com website had ceased to operate on 3 August 2009, when it had been replaced by the website 21nova.com. Accordingly, the time during which William Hill Online actively operated an online casino under the 32Vegas brand ran only from 31 December 2008 to 3 August 2009, a period of barely seven months. Apart from the denial of infringement, William Hill Online also raised pleas that the respondent had implicitly consented to the use of signs containing the number "32" by other traders, and/or that it would be unconscionable for the respondent to seek to prevent the use of the Vegas signs anywhere in the Community.

In its counterclaim William Hill Online sought a declaration that each of the Community marks and the 32 number mark had been invalidly registered.

The trial before the Judge took place between 13 and 20 October 2010. He handed down his reserved judgment on 21 January 2011.

The Judge’s judgment is comprehensive, detailed and careful.

Having reviewed the evidence of the witnesses of fact for the respondent and the appellants and the expert evidence, the Judge turned to consider whether the use by William Hill Online of the Vegas signs infringed the respondent’s two Community marks, on the assumption that they are valid.

The Judge found that they did. He first addressed the case under Article 9(1)(b). His careful and detailed analysis was as follows:

“93.

The goods and services covered by the Vegas signs are identical, or at any rate virtually identical, to those covered by the Community marks: in each case, the goods and services are those provided by an online casino, and the signs or marks are used to brand the casino. This is an important initial point, because in such circumstances a lesser degree of similarity between the marks may suffice to establish a likelihood of confusion (proposition (g) in the Trade Marks Registry summary).

94.

That the Vegas signs are similar to the Community marks is in my judgment undeniable. In both their written and their graphic forms, there is an initial figure 32 followed by a single word (or in the case of the 32v signs, followed by a single letter which in its context plainly alludes to the word "vegas"). The figure 32 does not of itself denote anything to do with online gaming: it is just a number, and not even a number with obviously lucky (or unlucky) connotations, such as 7 or 13. Furthermore, the single word "vegas", like the colour "red", is agreed to have a gaming association. Thus the use by William Hill Online in 2009 of the inherently specific number 32 in conjunction with the single word "vegas", to identify and brand an online casino, clearly satisfied the test of similarity. The critical question, therefore, is whether the similarity was such as to give rise, in all the circumstances, to a likelihood of confusion on the part of the public, including a likelihood of association in the sense of engendering the mistaken belief that the two casinos were operated by the same or economically-linked entities.

95.

In answering this question I must look at the matter through the eyes of the average consumer of online gaming services, whom it is convenient to call an "online gambler" for short, while remembering that for many customers the activity is essentially a recreational one, and not all customers play for real money. I must also make due allowance for the fact that the average online gambler will rarely have had the opportunity to make direct comparison between the Community marks and the Vegas signs, and will have had to rely on the imperfect picture of them retained in his mind. It is material to note in this context that the online gambling market is a crowded and volatile one, with a large number of brands competing for customers' attention, and generally very low levels of customer loyalty and retention.

96.

I think it is also relevant to have in mind the difference between the marketing models of 32Red and 32Vegas. By January 2009 32Red was a strong brand with an excellent reputation, and from its inception in 2002 it had been promoted alone, not as part of a family of brands in common ownership. By contrast, 32Vegas had always been marketed on the "carousel" model, and as Mr Cole-Johnson frankly acknowledged the reputation of individual casinos was never of any particular importance to William Hill Online, any more (I infer) than it had previously been to Crown Solutions. In these circumstances it seems to me reasonable to conclude that the Community marks are likely to have made a rather stronger and more positive impression on members of the online gambling community than the Vegas signs.

97.

The next point I would make is that the Community marks are, and were in 2009, highly distinctive in character. The distinctiveness lay in the combination of the specific number 32 (which in itself has no obvious gambling connotation) with the word or the colour red, which is agreed to have a general gambling connotation. Some, but by no means all, online gamblers will also have picked up the specific allusion to roulette, and will have recognised the marks as making a verbal or visual reference to the result that a croupier would be likely to call out when the ball lands in the 32 slot. This allusion, I would stress, is not directly descriptive of the game of roulette, or of any particular feature of the game; but, for those who recognise it, the allusion gives a much stronger and more specific gaming flavour to the Community marks than the mere use of the word or colour red could do by itself. In a similar way, the red colouring of the script and of the circle in the graphic Community mark reinforces the effect of the word "red", but those who recognise the allusion to roulette may also see the circle as a stylised representation of a roulette ball.

98.

I now turn to the Vegas signs. The three text signs all begin, like 32Red, with the figure 32. In two cases this is then followed by the word "vegas" which, because of the obvious allusion to Las Vegas, has a strong (but still general) gambling connotation. In the third case, the single letter "v" will, as I have already said, naturally be read as an abbreviation of "vegas". There is no allusion to roulette or to any other specific game offered by an online casino, and the number 32 has no connection of any kind with Las Vegas. Read or recalled as a whole, the text signs are in my view devoid of any descriptive character beyond the generalised reference to gambling inherent in the word "vegas". The main visual sign is reminiscent of a neon casino sign, and the gaming message is reinforced by the red and gold colouring and the star. The two smaller visual signs focus on the gold 32 and star with the interlocking white "V", and in one case the red background is also similar to that of the main sign; in the other case the background is black, another colour with a generalised gaming connotation (for example the suits of playing cards are either black or red).

99.

As a matter of overall impression, the dominant feature of all the Vegas signs is in my view the figure 32. It comes first, whether one is examining the verbal, visual or aural impact of the signs, and in the graphic signs the 32 is notably larger and more brightly coloured than the white "Vegas" or "V". An online gambler would naturally gain the impression, perhaps at a subliminal level, that the "Vegas" component of the signs is in some way subordinate in impact and importance to the "32", although he would also recognise that the "Vegas" is connected with and part of the "32" (a connection visually reinforced by the interlocking of the "2" and the "V").

100.

Was there, then, a likelihood of confusion on the part of the average online gambler in 2009 between the Vegas signs and the Community marks? In my judgment there was. It is simplest to begin with the online gambler who did not pick up any allusion to roulette in the Community marks. For such a person, the overall impression created by the Community marks and the Vegas signs would have been very similar: in each case the name of the casino consists of the same number (32) in the dominant position (verbally, visually and aurally), followed by a single word with a general gaming flavour. A natural conclusion to draw would have been that the two casinos were under common ownership or economic control. In addition, the likelihood of an association between the two casinos might well have been reinforced, consciously or unconsciously, by the red background to two of the three graphic Vegas signs, including the main sign where the figure 32 is prominently displayed in gold against a bright red background. The combination of the figure 32 and the colour red could hardly be more striking, and in view of the established reputation of 32Red in 2009 the link to 32Red would have been an obvious and easy one for many online gamblers to make. In a world where stables of thematically-linked online casinos were familiar, there would have been nothing surprising in a burgeoning family of "32" casinos. What would have been surprising, given the highly specific nature of the number 32 and its lack of any intrinsic gambling association, is for two unconnected casino operators to have hit on two such similar names independently.

101.

I must now consider those online gamblers, perhaps the majority, who would have picked up an allusion to roulette in the Community marks. For them, the 32Red name and brand will have had a special extra significance, and they may have agreed in substance with Mr Bailey's perception that the name "seemed a clever play on words … it was a breath of fresh air" (paragraph 138 of his report), even if they would not have expressed themselves in quite such enthusiastic terms. But, to return to a point which I have already made, the allusion does not turn the marks into purely, or even partly, descriptive ones. It just gives an added layer of reference, and increases the distinctiveness and memorability of the marks, for those who pick it up. It does not alter the basic form and structure of the marks in any way, nor in my view does it detract significantly from the features discussed above which give rise to a likelihood of confusion with the Vegas signs. The position is, rather, that online gamblers who were alive to the allusion might also have supposed there to be an association between 32Red and another casino which called itself (say) 8Black or 28Even.

102.

For these reasons I have come to the conclusion that 32Red's infringement claim under Article 9(1)(b) succeeds in relation to the Community marks, and does so in relation to all of the Vegas signs. ..”

The Judge observed that he had reached his conclusion without needing to rely on any evidence of actual confusion, even though a certain amount had been tendered by the respondent. He observed that the test laid down by Article 9(1)(b) does not require evidence of actual confusion, and that, if such evidence was available, it was likely to be of a confirmatory nature rather than an essential ingredient of the value judgment that the court has to draw from all the circumstances. He also added (at [103]) that in the present case he would not necessarily expect much evidence of actual confusion to be forthcoming. Nevertheless, he considered (at [107]) that the documentary evidence, taken as a whole, did support his conclusion on the likelihood of confusion and could not be dismissed as insignificant. The Judge reviewed the evidence of four witnesses, only two of whom gave oral evidence and were cross-examined, of their actual confusion. Overall, the Judge did not derive much assistance from them.

The Judge then turned to infringement under Article 9(1)(c). He stated (at [127] and [128]) that he would deal with that claim “in fairly short order” bearing in mind that, having decided in favour of the respondent on infringement under Article 9(1)(b), the respondent’s secondary case based on Article 9(1)(c) became relatively unimportant. He found in favour of the respondent under Article 9(1)(c) for the following reasons:

“128.

… Given the findings which I have already made, the requirements of similarity between the marks, and the existence of a link between them in the mind of the relevant public, are clearly satisfied: see in particular Case C-252/07 Intel Corporation Inc v CPMUnited Kingdom Limited [2009] Bus LR 1079, [2009] R.P.C. 15, at paragraph 57 of the judgment of the Court. It is equally clear that the Community marks had an established reputation in (at least) the UK. The critical question is therefore whether use by William Hill Online of the Vegas signs took unfair advantage of, or was detrimental to, the distinctive character or the repute of the Community marks. Article 9(1)(c) also includes the words "without due cause", but the onus of establishing any due cause would lie on William Hill Online and it has not attempted to do so.

“129.

The decision of the ECJ in Intel was concerned with equivalently worded provisions relating to the registration and invalidity of trademarks in Article 4(4)(a) of Council Directive 89/104/EEC. Both sides accept, and I see no reason to doubt, that the reasoning of the Court is equally applicable to the issue of infringement of Article 9(1)(c) of the CTMR. In paragraph 27 of the judgment, the Court divided the types of injury against which protection is provided into three categories: first, detriment to the distinctive character of the earlier mark; secondly, detriment to the repute of that mark; and, thirdly, unfair advantage taken of the distinctive character or the repute of that mark. It seems to me that the third of those categories could just as well have been expressed as two further categories, making four in all, because unfair advantage may be taken of either the distinctive character or the repute of the earlier mark. The Court then said, in paragraph 28, that any one of the three types of injury is enough for the provision to apply. Indeed, this would seem to follow from the disjunctive manner in which the provision is worded, and again this was common ground between the parties.

130.

In paragraph 68 the Court held that the likelihood of one of the types of injury "must be assessed globally, taking into account all factors relevant to the circumstances of the case", including the criteria listed in paragraph 42 of the judgment. Those criteria are:

(a)

the degree of similarity between the conflicting marks;

(b)

the nature of the goods or services for which the conflicting marks were registered, including the degree of closeness or dissimilarity between those goods or services, and the relevant section of the public;

(c)

the strength of the earlier mark's reputation:

(d)

the degree of the earlier mark's distinctive character, whether inherent or acquired through use; and

(e)

the existence of the likelihood of confusion on the part of the public.

131.

The Court also had this to say about the first type of injury, namely detriment to the distinctive character of the earlier mark:

"76.

Thirdly, as was stated in para 29 of this judgment, detriment to the distinctive character of the earlier mark is caused when that mark's ability to identify the goods or services for which it is registered and used as coming from the proprietor of that mark is weakened, since use of the later mark leads to dispersion of the identity and hold upon the public mind of the earlier mark.

77.

It follows that proof that the use of the later mark is or would be detrimental to the distinctive character of the earlier mark requires evidence of a change in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered consequent on the use of the later mark, or a serious likelihood that such a change will occur in the future.

78.

It is immaterial, however, for the purposes of assessing whether the use of the later mark is or would be detrimental to the distinctive character of the earlier mark, whether or not the proprietor of the later mark draws real commercial benefit from the distinctive character of the earlier mark."

It will be seen, therefore, that evidence of a change in economic behaviour is needed in order to establish injury of the first type.

132.

Leaving aside the requirement of a change in economic behaviour, it seems to me clear, on a global assessment, that the introduction and use of the Vegas signs was detrimental to the distinctive character of the Community marks, and that the detriment was still continuing during the period of alleged infringement in 2009. The 32Red brand was highly distinctive, and it enjoyed a strong reputation in the online gambling community. The goods and services covered by the Vegas signs were identical, and the degree of similarity between the signs and the Community marks was high, including in particular the initial 32. There was, as I have already found, a likelihood of confusion on the part of the public, and there is some evidence of actual confusion as well. Other uses by third parties of marks including the number 32 were commercially insignificant and not of such a character as to dilute the 32Red brand. The detriment to the distinctive character of the Community marks lay in the risk of a false association with 32Vegas, a brand with an inferior reputation which operated in the same market place.

133.

Is there evidence of a change in economic behaviour brought about by the use of the Vegas signs? In the nature of things, direct evidence of such a change is likely to be hard to find in cases of the present type, although Mrs F provides a suggestive example of a customer who was nearly persuaded to change her allegiance as a result of a perceived connection between 32Red and 32Vegas. However, I see no reason why I should not have regard to the inherent probabilities of the situation, and in particular to the contrast between the marketing models of the two casinos. The similarity of their names, and the fact that 32Vegas was always operated as one of a number of linked casinos on the carousel model, lead me to conclude that an average online gambler would have been far readier to switch his allegiance from 32Red to 32Vegas, or to play with 32Vegas in the first place, than he would have been in the absence of such similarity. These are changes in economic behaviour, and I am satisfied on the balance of probabilities that such changes are likely to have occurred to a significant extent.

134.

For these short reasons I consider that injury of the first type under Article 9(1)(c) is established, and that 32Red's secondary claim of infringement therefore succeeds. Similar considerations, coupled with the evidence of Mr Brear concerning the unprecedented level of complaints about 32Vegas received by the GRA in 2009, lead me to the same conclusion in relation to injury of the second type, namely detriment to the repute of the Community marks. In these circumstances it is unnecessary for me to consider whether injury of the third type, often referred to as "tarnishing", is also made out, and I prefer to leave the question open.”

The Judge then turned to the question of the validity of the Community marks. Invalidity was alleged on the basis of Article 7(1)(a)(c) and (d), Article 51 and Article 52.

The Judge first addressed the ground of invalidity in Article 7(1)(c) since he sensed that was the one on which William Hill Online placed most reliance. Having quoted the guidance given by the ECJ in Koninklijke KPN Nederland NV v Merkenbureau (“Postkantoor”) (C-363/99), [2006] Ch, at [54] to 58] and in OHIM v Wm Wrigley Jr Co (“Doublemint”) (C-191/01 P) at [29 to [32] he said as follows:

“139.

Applying these principles, it seems clear to me that neither of the Community marks infringed Article 7(1)(c) at the dates when the applications for their registration were made in 2002. The combination "32Red" does not describe or designate any feature or characteristic of the goods or services supplied by an online casino. There is an allusion to a possible result in roulette, but in my judgment that allusion did no more than to create an association with roulette, which was itself no more than one of the games offered by the 32Red casino. Furthermore, the evidence shows that the association is far from obvious and was not picked up by many members of the relevant public. In short, I agree with and accept the submission for 32Red that a mark which can be read as describing a particular result in roulette does not designate a characteristic of the game of roulette, let alone a characteristic of the whole range of goods or services provided by an online casino. Nor, looking at the matter more broadly, can I find any indication of the kind of detriment to the public interest which underpins the absolute grounds in Article 7. It seems to me that the combination "32Red" is inherently distinctive, precisely because it does not describe or designate any part or feature of the business of an online casino. The allusion to roulette gives the mark a gaming flavour, and no doubt helps to make it memorable for that reason; but that is a very different matter from saying that it infringes Article 7(1)(c).”

The Judge then turned to William Hill Online’s challenge under Article 7(1)(b) on the ground that the Community marks were in 2002 “devoid of any distinctive character”, and rejected it for the following reasons:

“140.

… The test under this heading is separate from the test under Article 7(1)(c), because although a mark that is descriptive will necessarily also lack distinctive character, the converse is not true: a mark may not be descriptive, but may nevertheless fall foul of Article 7(1)(b) (see the Postkantoor case at paragraph 86). In the present case, however, the considerations which have led me to conclude that there was no breach of Article 7(1)(c) are in my judgment equally applicable to Article 7(1)(b). As the ECJ said in Joined Cases C-53/01 to C-55/01 Linde AG v Deutsches Patent-und Markenamt [2003] R.P.C. 45 at paragraph 40 of the judgment, for a mark to possess distinctive character within the meaning of this provision "it must serve to identify the product in respect of which registration is applied for as originating from a particular undertaking, and thus to distinguish that product from products of other undertakings". The Court went on to say that the question of distinctiveness must be assessed by reference to the goods or services for which registration is sought, and the perception of consumers of the relevant goods or services. Applying these criteria, I am entirely satisfied that the two Community marks have at all material times functioned as a badge of origin in the online gaming community, and that the combination of "32" and "Red" had from the beginning a clear distinctive character.”

The Judge then turned to the challenge under Article 7(1)(d). He rejected it as “equally hopeless”. His reasoning was as follows:

“141.

… As the ECJ explained in Case C-517/99 Merz & Krell GmbH & Co [2002] E.T.M.R. 231 at paragraphs 32 to 41 of the judgment, the focus of the equivalent provision in Article 3(1)(d) of Council Directive 89/104 is on current usage in trade sectors covering trade in the goods or services for which the marks are sought to be registered, and it is for the national court to determine in each case whether the signs or indications which comprise the mark have become customary in the current language or in the bona fide and established practices of the trade to designate the relevant goods or services. It is immaterial, for this purpose, whether the signs or indications are of a descriptive nature. The evidence in the present case comes nowhere near establishing the existence of any such customary usage for either "32" or "Red" in isolation in 2002, let alone for the two of them in combination. The most that can be said is that the colour red, like black or gold, had a gaming connotation; but the word "Red" is not used in isolation in either of the Community marks, and in any event the evidence does not establish that it was used to designate online casino services. The most it could do, in combination with another sign or indication, was to impart a generalised gambling flavour.”

The Judge said that, in view of the conclusions he had reached, the question of acquired distinctiveness did not arise. He said (at [142]) that, if necessary, he would have held “without hesitation” that by 2009 the use by the respondent of the Community marks had been sufficiently extensive for the necessary degree of distinctiveness to be acquired, even if it was originally absent.

The Judge then turned to the alternative ground for revocation under Article 51(1)(c).

The thrust of William Hill Online's pleaded case under this head is that the respondent has created confusion in the minds of the public by the use of other signs incorporating the figure 32, including 32Vegas, 32royal and Spin32, as Google adwords connected to the respondent’s own website. The way in which Google adwords work is that any internet user who types the relevant adword into the Google search engine will immediately be presented with a sponsored link to the 32red.com website. Having bid for an adword, the respondent pays a fee to Google based on the number of times when a user clicks on the 32Red advertisement. William Hill Online says that, by its own conduct, the respondent has created a trade connection in the minds of the average consumer between 32red.com and the adwords and has thereby caused the Community marks to become deceptive.

The Judge considered that there was some superficial attraction in that submission, but he rejected it for the following reasons:

“145.

Adwords are a familiar feature of life on the internet, and the reaction of the average consumer, when the sponsored link to 32red.com came up on his screen, would I think be one of indifference or irritation, but not of confusion. If the consumer then clicked on the 32Red site, its clear branding could have left no room for reasonable doubt about the identity of the casino whose services were on offer. If the consumer did not click on the site, he will presumably have continued with the search which he originally intended, and is most unlikely to have supposed that there was any business connection between 32Red and the site which he originally sought to access. In a very few cases, the customer may have been grateful for the reminder that there was another online casino called 32Red, but in such cases confirmation or clarification would have been the result, not confusion. I am therefore wholly unpersuaded that the effect of 32Red's adword campaign was to mislead the public.

146.

Even if that is wrong, the evidence indicates that the campaign has been too insignificant in extent to generate any significant degree of confusion. Mr Ware's evidence is that bidding on 32royal as an adword has not resulted in a single user clicking on the 32Red advertisement. Bidding on Spin32 has resulted in only 8 users clicking on the 32Red advertisement, yielding a fee to Google of £13.70. None of those users subsequently signed up as a member. Bidding on 32Vegas as an adword resulted in a total of 251 users clicking on the 32Red advertisement, at a cost to 32Red of £884.04. Of those users, 20 signed up as members of the 32Red site, and 10 of them played for real money, generating a "gross win" of £1,795.44. Furthermore, the total number of "impressions" generated by the campaign, that is to say the number of occasions when the 32Red advertisement was published alongside the search results for the adword, has been very modest. Over a period of some 20 months the total number of impressions for adwords including "32Vegas" in various combinations was about 22,500. Not only is this a relatively small number, but it can also be seen that only a tiny proportion of the customers to whom the 32Red advertisement was displayed in this way actually then chose to click on it.”

Having concluded that all the challenges to the validity of the Community marks failed, and that the respondent’s case on infringement therefore succeeded, the Judge turned to the validity of the 32 number mark. As I have said, that mark consists of the figure 32 alone. Its validity was challenged by William Hill Online on six separate grounds: the same four grounds as those relied upon in relation to the Community marks, plus two others.

The Judge first addressed William Hill Online’s main points in its case under section 3(1)(b) of the 1994 Act based on lack of distinctiveness. In rejecting that case he said as follows:

“(a)

The number 32 is a possible bet or result in roulette. That is true, but it does not deprive the number of distinctive character. The number 32 is not descriptive of any characteristic of casino gaming, and I agree with the submission for 32Red that the proposition can be tested by asking whether there is any question to which the answer "a 32 casino", "a 32 game" or "a 32 kind of service" would have any meaning in respect of the casino, gaming or gambling services for which the UK mark is registered.

(b)

32 is a gamblers' lucky number. There is no evidence to support this. …

(c)

The number 32 was commonly used as part of the name for gaming services prior to the application date in February 2009. However, there is no evidence that the number 32 was ever used alone to designate such services, and Mr Cole-Johnson accepted in cross-examination that the list of domain names found for him by William Hill Online's solicitors and set out in his written evidence were all for one reason or another commercially insignificant, in the sense that Mr Cole-Johnson would not recognise them as competitors.

(d)

The use of the sign 32Vegas by William Hill Online. There is no evidence of use by William Hill Online of the sign 32 alone, and the use of the infringing sign 32Vegas up to February 2009, although admittedly extensive, was in my view insufficient in itself to render the mark 32 devoid of distinctive character. The problem was that this use suggested a connection between 32Vegas and 32Red, not that it somehow made the figure 32 alone common currency in the world of online gambling.

On point (b), the judge referred back to [71] of his judgment, which was as follows:

“71.

Apart from the connection with roulette, the colour red, like black and gold, is commonly used for online casino brands. Numbers are also popular, but 32 has no special gambling connotation. In an interview with Casinomeister in October 2002 Mr Ware told Mr Bailey that "32Red is one of the most popular numbers in a brick and mortar casino (if 32Red has come up several times during the evening, the manager knows they will have less money to count than usual!)." Since that date, this statement has featured prominently on Casinomeister's website; but Mr Ware explained in his oral evidence that he never intended it to be taken seriously, and he had no grounds for saying that 32 is a lucky number in roulette. There is no evidence before me that 32 has any reputation as a lucky number, in roulette or any other game, and I am satisfied that Mr Ware's statement to Mr Bailey was indeed no more than a promotional ploy.”

In relation to the attack on validity under section 3(1)(c) and (d) of the 1994 Act, the Judge said in [156] of his judgment that the considerations which led him to reject those grounds in relation to the Community marks applied with even greater force to the 32 number mark.

The first additional ground for attacking the validity of the 32 number mark was that it was applied for in bad faith, contrary to section 3(6) of the 1994 Act. The particulars pleaded in support of that ground were as follows:

"(1)

It is to be inferred that, in applying to register "32", the Claimant intended to prevent other traders in the market place from using the number 32 and therefore from trading or from entering the market for the supply of casino and gaming services and similar.

(2)

Further, the Claimant could not objectively have thought that a roll on the roulette wheel had come to denote its casino and gaming services. Accordingly, it is to be inferred that the application was made without a genuine belief that the mark was properly a trade mark.

(3)

Further, or in the alternative, the Claimant had no genuine intention at the date of application for the mark to use [the UK mark] in respect of all goods and services for which registration was sought."

The Judge referred in [158] of his judgment to the detailed guidance on the interpretation and application of the equivalent provision in Article 52(1)(b) of the CTMR by Arnold J in Cipriani SRL v Cipriani (Grosvenor Street) Ltd [2009] EWHC 3032 (Ch), [2009] R.P.C. 9 at [165] to [190] and by the ECJ in the Lindt case (Case C-529/07 Chocoladefabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH [2010] Bus LR 443) at [37] to [53] of the ECJ’s judgment. He also recorded that it was common ground that the reasoning in those judgments applies with equal force to section 3(6) of the 1994 Act, and that the discussion by Arnold J in the Cipriani case must be read subject to the guidance subsequently given by the ECJ in Lindt. The Judge then gave the following reasons for rejecting this ground of attack on validity:

“159.

Looking at the matter in the round, I do not consider that 32Red's application to register the UK mark was made in bad faith. I have little doubt that the application was made with a view to strengthening 32Red's position in the forthcoming litigation against William Hill Online, and with a view to obtaining a monopoly for online casinos and related services under the 32 mark. But considerations of this nature are not necessarily indicative of bad faith, as the ECJ was at pains to stress in Lindt (see in particular paragraphs 47 to 49) and as Arnold J recognised at the conclusion of his discussion in Cipriani:

“189.

In my judgment it follows from the foregoing considerations that it does not constitute bad faith for a party to apply to register a Community trademark merely because he knows that third parties are using the same mark in relation to identical goods or services, let alone where the third parties are using similar marks and/or are using them in relation to similar goods or services. The applicant may believe that he has a superior right to registration and use of the mark. For example, it is not uncommon for prospective claimants who intend to sue a prospective defendant for passing off first to file an application for registration to strengthen their position. Even if the applicant does not believe that he has a superior right to registration and use of the mark, he may still believe that he is entitled to registration …

190.

Nor in my judgment does it amount to bad faith if what the applicant seeks to register is not the actual trade mark he himself uses but merely the distinctive part of his trade mark, the other part of which is descriptive or otherwise non-distinctive, and third parties are also using the distinctive part with different non-distinctive elements. It is commonplace for applicants to apply to register the distinctive elements of their trade marks, and with good reason …"

In my view the application for registration of the UK mark was made for good tactical reasons of this nature, in a context where 32Red believed (with justice, as I have held) that the use by William Hill Online of the Vegas signs infringed the Community marks, and where no commercially significant use had been made by anybody else of marks incorporating the figure 32, let alone the figure 32 in isolation, in the field of online gambling.

160.

What I have said so far is mainly directed at the first of the pleaded particulars of bad faith. The second of the particulars is based on the fallacy that the figure 32 denotes "a roll on the roulette wheel", and therefore cannot be properly registered as a trade mark. This contention adds nothing to the case under section 3(1)(b) to (d), which I have already rejected. That leaves the third of the particulars, namely lack of any genuine intention to use the UK mark. It is clear, I think, that 32Red had not by February 2009 made any use of the figure 32 in isolation to designate its online casino, and that promotional offers of, for example, 32 free chips for new players were always accompanied by the name 32Red. Moreover, the use of the figure 32 in a broken circle as a sort of bullet point would naturally be understood by users as an abbreviation or part of the 32Red graphic sign; and the same goes, in my view, for the use of a similar sign as a computer-screen icon. In each case the user will make an immediate, and probably subconscious, connection in his mind with 32Red. Nevertheless, I see no reason to doubt that such uses of the figure 32 may in due course provide a springboard for increasing use of the figure 32 alone, and having heard Mr Ware give evidence I am not prepared to find that 32Red had no genuine intention to use the UK mark. As he said in response to a question in cross-examination.

“It is more that people refer to us as 32, I have to say, but we see that very much as part and parcel of our identity."

I also bear in mind that an allegation of bad faith is a serious one which must be distinctly proved, and that a person is presumed to have acted in good faith unless the contrary is established (see Cipriani at paragraph 177).”

The second additional ground for attacking the validity of the 32 number mark was that, in consequence of the acts or inactivity of the respondent, that mark has become the common name in the trade for online gambling services, and so should be revoked pursuant to section 46(1)(c) of the 1994 Act. The Judge said in [161] of his judgment that that was a hopeless contention. He amplified his reasoning briefly as follows:

“161.

… As counsel for William Hill Online made clear in their written submissions, the "act" relied on is the adword campaign, and the "inactivity" relied on is the alleged failure by 32Red to take steps to prevent others from using "32" signs in relation to casino services. I have already explained why the adword campaign did not in my view create confusion or turn the 32 sign into common currency. I am equally satisfied that the figure 32 has never become the common name in the trade for online casino services, whether or not 32Red could have tried harder than it did to stamp out instances of apparent infringement.”

The Judge rejected (in [162]) the attack on invalidity of the 32 number mark based on section 46(1)(d) of the 1994 Act for essentially the same reasons as those which had already led him to reject the equivalent challenge to the Community marks under Article 51(1)(c).

For all those reasons, the Judge concluded (in [163]) that the 32 number mark was validly registered and that the application to revoke the registration failed. He then turned to the issue whether the UK mark had been infringed. In rejecting the allegation of infringement, he dealt with the matter very shortly as follows:

“165.

The critical distinction from the position with the Community marks is that 32Red had not by the end of July 2009 (and so far as I am aware still has not) made any, or any significant, use of the 32 mark in isolation. Such uses as it did make of the figure 32 would in my view all have been naturally understood in their context as alluding to, or as truncated versions of, one or other of the Community marks. In these circumstances, I am satisfied that 32Red had not yet acquired any separate reputation in the 32 mark, so for that reason alone the claim for infringement under section 10(3) must fail. For the same reason, it also seems to me that there cannot have been any likelihood of confusion under section 10(2), because in the absence of any separate use of the 32 mark to distinguish the services offered by 32Red and act as a badge of their origin there can have been no factual basis for the alleged confusion. I can well understand that there was a possibility of confusion in the future, if and when 32Red made significant independent use of the 32 mark; but focussing, as I must, on the position in June and July 2009, I am not satisfied that the claim for infringement under section 10(2) is made out.”

The appeal is a full-scale, wide-ranging attack on the Judge’s analysis and conclusions on virtually every aspect of his judgment. It is said that the Judge has not only made errors of principle, but, even where he has correctly stated the law, he has misapplied it to the facts, and even some of his findings of fact were perverse.

Mr Henry Carr QC, for the appellants, presented his oral submissions on the appeal in the following order. First, he addressed the issue of the validity of the 32 number mark. He said that the Judge had wrongly concluded that the mark does not fall within section 3(1)(b) and (c) of the 1994 Act, and, in reaching that conclusion, the Judge had both made errors of principle, particularly in relation to section 3 (1)(c), and had failed properly to take into account the factual evidence, particularly the oral evidence of Mr Ware, one of the witnesses for the respondent.

He then said that the Judge had wrongly rejected William Hill Online’s attack on the registration of the 32 number mark as having been made in bad faith. The appellants’ case is that the Judge’s decision on the point was so inconsistent with the evidence as to be a perverse finding.

Mr Carr then attacked the decision of the Judge that the Vegas marks were an infringement of the 32Red mark He criticised, as a matter of principle, the way that the Judge had approached this issue, including the way that the Judge had de-constructed the mark into different elements (32 and the colour red), the extensive monopoly that the appellants say the Judge accorded to the mark, and the Judge’s failure to take sufficiently into account the evidence (or rather lack of it) about actual confusion.

Mr Carr then attacked the Judge’s finding that there had been infringement of the 32Red device mark, relying on many of the same points as the appellants make in relation to the finding of infringement in respect of the 32Red mark.

Mr Carr then addressed the Judge’s finding that the 32Vegas sign fell within Article 9(1)(c), primarily on the grounds that such a finding was inconsistent with the evidence.

Finally, Mr Carr attacked the Judge’s rejection of the appellant’s case that the Community marks were not properly registered, essentially on grounds of non-distinctiveness within Article 7(1)(b) and that, on the facts, they were not capable of serving as a designation of origin for the respondent.

In addition to Mr Carr’s oral submissions, the appellants’ case was articulated in a 44 page “skeleton” argument of 174 paragraphs. The length of that skeleton argument reflects not only the wide scope of the appellants’ attack on so many aspects of the judgment, but also the desire of the appellants to re-visit the oral and documentary evidence (whether or not summarised in the judgment) for the purpose of a fresh evaluation by this Court. It would take many pages in this judgment to reproduce in detail the appellants’ submissions. I shall summarise them, so far as necessary to assess them, in the section of this judgment headed “Discussion”.

The respondent has cross-appealed the Judge’s dismissal of the claim for infringement of the 32 number mark. It has also issued a respondent’s notice to uphold the Judge’s finding of infringement of the two Community marks on the further ground of taking “unfair advantage” within Article 9(1)(c).

Rather than setting out here the respondent’s submissions on those matters, I shall address them in the next section of my judgment headed “Discussion”.

It is convenient to begin with the appellants’ attack on the Judge’s finding that the 32 number mark was validly registered. Apart from the appellants’ case under section 3(6) of the 1994 Act on registration in bad faith, Mr Carr made his submissions by reference to Article 7. If a sign falls within Article 7(1)(c), it will also necessarily be devoid of any distinctive character for the purposes of Article 7(1)(b): Postkantoor at [85] and [86]. For that reason, Mr Carr began with the argument that the Judge ought to have found that the 32 number mark falls within Article 7(1)(c) since it serves to designate a characteristic of the services provided by the respondent. He said that, as every gambler knows, 32 is a bet or the result of a bet in roulette; and so it is characteristic of roulette. Roulette is one of the services being offered by the respondent. He described a characteristic of a service as any property of the service that the public will recognise as such, even if is not the usual way of designating that property, and he submitted that would certainly include a readily recognisable bet or result in roulette. He submitted that the Judge had gone wrong in asking the question posed in [155(a)] of the judgment: the Judge should have asked, but did not, whether 32 was a characteristic of the service. He further emphasised that, if the Judge was right and the respondent was entitled to monopolise the number 32, then any trader could monopolise a number as part of their names, such as numbers on a roulette wheel, and other traders would be precluded from using the same number as part of their names. That, he said, would be contrary to the public interest.

In support of his argument Mr Carr referred to the decisions of the Court of Justice of the European Communities (now the Court of Justice of the European Union) (together “the ECJ”) in Postkantoor and in Ajencja Wydawnicza Technopol sp. z.o.o. v OHIM (“Technopol”) (C-51/10P) [2011] ETMIR 21. In Postkantoor the ECJ said at [97]:

“97.

It is not necessary that the signs and indications composing the mark that are referred to in article 3(I)(c) of the Directive actually be in use at the time of the application for registration in a way that is descriptive of goods or services such as those in relation to which the application is filed, or of characteristics of those goods or services. It is sufficient, as the wording of that provision itself indicates, that those signs and indications could be used for such purposes. A word must therefore be refused registration under that provision if at least one of its possible meanings designates a characteristic of the goods or services concerned: see to that effect, in relation to the identical provisions of artic 7(I)(c) of Council Regulation (EC) No. 40/94 of 20 December 1993 on the Community trade mark, Office for Harmonisation in the Internal Market (Trade Marks and Designs) v Wm Wrigley Jr Co (Case C-191/01P) [2004] I WLR 1728, 1751 -1752, para 32.”

The ECJ’s judgment in Technopol was delivered after the Judge’s judgment in the present case. In Technopol the applicant applied to register the mark “1000” for “brochures, periodicals including periodicals containing crossword puzzles and rebus puzzles, newspapers”. The examiner refused registration on the grounds in Article 7(b) and (c). The OHIM Board of Appeal upheld that decision on the grounds that that 1000 could be used to designate the content of the applicant’s publications, and in any event the sign was not distinctive of origin. The General Court (formerly the Court of First Instance) dismissed the applicant’s appeal. So far as relevant to the present appeal, the core of its reasoning appears from the following passages in its judgment.

“25.

It is therefore necessary to determine whether the average consumer, who is reasonably well informed and reasonably observant and circumspect, will, without any additional information, perceive in the sign “1000” a description of one of the characteristics of the goods covered by the applications for registration.

26.

In that regard, it should be noted that, as is apparent from paragraphs 18 and 19 of the contested decision, there is from the point of view of the relevant public a direct and specific link between the sign “1000” and some of the characteristics of the goods concerned. The sign “1000” alludes to a quantity and will immediately be perceived by the relevant public, without further thought, as a description of the characteristics of the goods in question, in particular the number of pages and works, amount of data, or the number of puzzles in a collection, or the ranking of items referred to in them. That conclusion cannot be invalidated by the fact that the mark applied for is composed only of figures, since… the missing information may be readily identified by the relevant public, the association between the figure and those characteristics of the goods in question being immediate.

27.

In particular, as the Board of Appeal stated in paragraphs 18 and 19 of the contested decision, brochures, periodicals and magazines frequently publish ranking lists and collections, with the preference then being for round numbers in order to indicate content, the Board of Appeal referring in particular in that regard to the example of the publication “1000 Fragen und Antworten” (“1000 Questions and Answers”). This strengthens the descriptive relationship that exists from the point of view of the average consumer between the goods in question and [sign “1000”]

.….

30.

Since it has been established that the [sign “1000”] is descriptive of the goods covered by the application for registration, it is necessary to examine whether the mark applied for consists exclusively to descriptive signs and whether it contains other elements which may negate the finding that it is descriptive … In the present case, the word sign 1000 does not contain any element distinguishing it from the usual way of indicating a quantity that would be capable of negating its descriptive character.

31.

It follows from all of the foregoing that the word sign “1000” designates characteristics of the goods concerned, in particular the number of pages and works, amount of data, and the number of puzzles in a collection, or their ranking, which the target public is liable to take into account when choosing and which are therefore essential characteristics of the goods….”

The ECJ dismissed the appeal from the General Court for essentially the same reasons. The ECJ pointed out (paras. 29 to 32) that the fact that a sign is composed exclusively of numerals, without any graphic modifications, is not enough of itself to prevent the sign being registered as a trade mark. Such registration is, however, subject to the condition that it is capable of distinguishing the goods and services of one undertaking from those of other undertakings. The ECJ pointed out (para. 37) that the general purpose underlying Article 7(1)(c) is to ensure that descriptive signs relating to one or more characteristics of the goods or services might be freely used by all traders offering such goods or services. The ECJ reiterated (para. 38) that it is therefore not necessary that the sign is in use by other traders at the time of the application for registration in a way that is descriptive, but merely that it could be used for such purposes. The ECJ also reiterated (para. 39) that the application of Article 7(1)(c) does not depend on there being a real, current or serious need to leave the sign free, and it is irrelevant how many others have an interest or might have an interest in using the sign. It is equally irrelevant (paras 39 and 40) that there are other, more usual, signs for designating the characteristics of the goods or services in question. The Court further pointed out (para. 49) that the list in Article 7(1)(c) is not exhaustive: any other characteristics of goods or services can be taken into account.

The ECJ in substance approved the approach and analysis of the General Court, and elaborated as follows:

“50.

The fact that the legislature chose to use the word ‘characteristic’ highlights the fact that the signs referred to in Article 7(1)(c) of Regulation No 40/94 are merely those which serve designate a property, easily recognisable by the relevant class of persons, of the goods or the services in respect of which registration is sought. As the Court has pointed out, a sign can be refused registration on the basis of Article 7(1)(c) of Regulation No 40/94 only if it is reasonable to believe that it will actually be recognised by the relevant class of persons as a description of one of those characteristics (see, by analogy, as regards the identical provision laid down in Article 3 of Directive 89/104, Windsurfing Chiemsee, paragraph 31, and Koninklijke KPN Nederland, paragraph 56).

51.

Those specific points are of particular relevance as regards signs which are composed exclusively of numerals.

52.

Given that such signs are generally equated with numbers, one of the things that they can do, in trade, is to designate a quantity. Nevertheless, in order for a sign which is composed exclusively of numerals to be refused registration on the basis of Article 7(1)(c) of Regulation No 40/94 on the ground that is designates a quantity, it must be reasonable to believe that, in the mind of the relevant class of persons, the quantity indicated by those numerals characterises the goods or services in respect of which registration is sought.

53.

As is apparent from paragraph 26 et seq. of the judgment under appeal the General Court based its decision on the fact that the sign 1000 can indicate the number of pages in the goods covered by the application for registration and on the fact that ranking lists and collections of data and puzzles – in respect of which there is a preference for the content to be indicated by one or more words coupled with round numbers – are frequently published in those goods.

54.

Without it being necessary to determine whether each of those factors supported the inference that the number 1000 characterises the goods referred to in the application for registration, the fact remains that, at the very least, the finding made by the General Court, to the effect that the sign ‘1000’ is descriptive in relation to the collections of puzzles contained in those goods, is not incompatible with the specific points made above regarding the scope of Article 7(1) (c) of Regulation No 40/94.

55.

As is apparent from paragraphs 26 and 27 of the judgment under appeal and from the extracts from the contested decision to which those paragraphs refer, the Fourth Board of Appeal of OHIM and the General Court found that Technopol had applied for the sign ‘1000’ to be registered, inter alia, in respect of ‘periodicals, including periodicals containing crossword puzzles’. They also found that there are many goods of that kind on the market and that the number of points of information contained in those goods can generally be expressed in round numbers. According to the find which the Board of Appeal made in paragraph 19 of the contested decision and to which the General Court essential referred in paragraphs 26 and 27 of the judgment under appeal, the sign ‘1000’ on a publication of that kind will be perceived as an indication that it contains 1000 crossword puzzles.”

I do not consider that either Postkantoor or Technopol supports the appeal against the Judge’s rejection of the challenge to the validity of registration of the 32 number mark under Article 7(1)(c). I agree with Mr Michael Silverleaf QC, for the respondent, that what those cases illustrate is the policy, underlying Article 7(1)(b)(c) and (d), of prohibiting the registration of signs which other traders may reasonably wish to use to identify their goods and services. Article 7(1)(c) is referring to a characteristic which other traders may wish to use to designate or identify a specific feature of their goods or services so as to communicate to customers or potential customers what those goods and services are. The policy is that terms which traders may wish to use to characterise their goods and services, so as to inform customers or potential customers what will be supplied to them, should be freely available for use by all traders. At the end of the day, the point is a very short one. In Technopol 1000 was capable of describing a feature of the goods in respect of which registration was sought, such as the number of pages or works or the number of crossword puzzles in periodicals. The bare number 32 is not descriptive of any characteristic of the services provided by the respondent. It is merely an allusion to an aspect of the game which the punter will play if he or she uses the respondent’s services. The number does not in any way characterise the respondent’s services in the sense of describing what will be supplied. In my judgment, the Judge stated the correct test, formulated the correct question, and answered it correctly in [155a] of his judgment.

Turning to Article 7(1)(b) and the appellants’ case on the lack of distinctiveness of the 32 number mark, Mr Carr said that the Judge’s reasoning in [154] and [155] of his judgment was deficient. He submitted that the Judge’s approach seems to have been to rely on the published guidance of the UK Trade Marks Registry that a two digit number is capable of being sufficiently distinctive to act as a badge of origin for certain goods and services and to have regarded that as conclusive of the distinctiveness of the 32 number mark. Mr Carr pointed out that the Trade Marks Registry’s guidance does not have the force of law. He emphasised, moreover, that the guidance indicates that, the more random and typical the number, the more likely it is that the sign will have the necessary distinctive character; and, by contrast, the more a number resembles signs commonly used in the relevant trade for non-trade mark purposes, the less likely it is to be distinctive. In the present case, Mr Carr observed, the distinctiveness of 32 has to be judged in a gaming context, where 32 is one of many numbers used in a non-trade mark sense to refer to bets.

Mr Carr reinforced that argument by referring to the evidence of Mr Ware in cross-examination, in the course of which Mr Ware accepted that the respondent had never used the bare unstylised number 32 as a brand and that, if it had been put on a taxi, the general public would not know to which site it was referring.

I do not accept those criticisms of the Judge’s reasoning and conclusion on the distinctiveness of the 32 number mark. It is clear that a number can have sufficient distinctiveness to qualify for registration as a trade mark, irrespective of actual use. That was confirmed by the ECJ in Technopol, and section 1(1) of the 1994 Act expressly so provides. The Judge’s correct starting point was that there is nothing inherently unlikely or impossible about 32 being distinctive in a trade mark sense. That was borne out by his finding in [93] to [100] of the judgment that verbally, visually and aurally the number 32 dominates the Vegas signs and the Community marks.

The Judge found expressly (in [97] and [155](a)) that, although 32 is a possible bet or result in roulette, it has no obvious gambling connotation. He rejected (at [155(b)]) the suggestion that 32 is a gamblers’ lucky number. Furthermore, Mr Ware’s evidence in cross-examination is not fairly characterised as a concession that the number 32 is inherently incapable of being a sufficiently distinctive badge of origin. Mr Ware explained that it had not been used because 32Red is the respondent’s brand and so they use the 32Red mark at every opportunity. Moreover, Mr Ware asserted that, if the respondent used 32 on its own with online casino players, most of them would believe that it was the respondent.

Mr Carr raised other arguments on lack of distinctiveness. He said that the 32 number mark was incapable of being a designation of origin because, at the date of registration, as found by the Judge, it was being used extensively by others. He referred, in particular, to the fact that, before the application for registration in February 2009, Crown Solutions had made extensive use of the mark 32Vegas. Accordingly, Mr Carr submitted, if the respondent had used the 32 number mark at the date of registration, the mark would not have been capable of guaranteeing to the relevant part of the public that the service was offered by the respondent rather than, for example, 32Vegas. By way of reinforcement of that argument, Mr Carr referred to the view expressed by the Judge in [99] of his judgment that the figure 32 is, as a matter of overall impression, the dominant feature of all the Vegas signs. Further, Mr Carr said, the use of 32Vegas was much more extensive than the respondent’s use of the 32Red mark.

Much the same argument was rejected by the Judge in [155(c) and (d)] of the judgment. He was both entitled and right to do so. First, as was pointed out by Mr Silverleaf, the factual basis for the criticism is not supported by the Judge’s findings of fact. In [43] of his judgment the Judge referred to the evidence of Mr Cole-Johnson, on behalf of William Hill Online, that an online search by their solicitors produced more than 50 examples of casinos and affiliate sites with numbers in their names. Apart from the respondent, however, there were only five online betting sites and two affiliate sites with 32 in their names. The Judge records (in [43]) that, in cross-examination, Mr Cole-Johnson readily accepted that he had no personal knowledge of any of those sites before the present litigation started, and [in 155(c)] that they were commercially insignificant. So far as concerns use of the sign 32Vegas, the Judge recorded in ([155(d)] that, although there was extensive use of the sign up to February 2009, it was insufficient in itself to render the 32 number mark devoid of distinctive character: it had not made the number 32 on its own common currency in the world of online gambling. Mr Carr made various criticisms of the Judge’s comments in [155(d)], but they do not undermine those findings of facts that I have mentioned. They were findings of fact which the Judge was entitled to reach.

Secondly, as Lord Justice Kitchin pointed out in the course of Mr Carr’s oral submissions, there is an obvious difficulty in an argument that, merely because someone else has used a mark, it is devoid of a distinctive character. There is particular force in that point where the use is of a mark, 32Vegas, which, as the Judge found and I consider he was entitled to find, was an infringing mark.

It is convenient to mention at this point the argument advanced by the appellants on what has been described as the respondent’s adword campaign. I have described this in [38] above. The Judge roundly rejected William Hill Online’s argument in [145] and [146] of his judgment. His rejection was based on findings of fact which he was plainly entitled to reach. He considered the issue primarily in the context of the challenge to the validity of the Community marks and William Hill Online’s alternative ground for revocation under Article 51(1)(c), but he also said in [155(d)] of his judgment that, for the same reasons, he did not consider that the respondent’s adword campaign can possibly have caused the number 32 to lose its distinctive character. That conclusion of fact is equally unchallengeable on appeal.

Finally, it is important to note that the Judge’s conclusion that the 32 number mark was not invalid as falling within Article 7(1)(b) and (c) was an evaluative judgment based on numerous factors. It is well established that an appeal court should be slow to overturn such a judgment of the trial judge. It certainly cannot do so where, as in the present case, the Judge made no error of principle and based his evaluation on findings of fact which he was entitled to reach, whether or not others would have made the same findings.

I turn next to the claim of William Hill Online that the application for registration of the 32 number mark was made in bad faith, and by virtue of section 3(6) of the 1994 Act should not have been registered for that reason. Mr Carr submitted that, if an application is made for registration of a mark without a bona fide intention to use it, that constitutes bad faith in this context. That proposition was not challenged by Mr Silverleaf. Mr Carr submitted that the chronology concerning the application for the 32 number mark shows that the application was made merely to stop William Hill Online from using the number 32, and that the respondent had never had any intention to use the mark. Mr Carr said that was supported by the evidence of Mr Ware.

The Judge rejected the challenge based on bad faith for the reasons in [160] of his judgment, which I have quoted earlier. Mr Carr recognised that the appellants can only succeed on this ground of appeal by establishing that the Judge’s findings of fact that the respondent did have a genuine intention to use the mark and did not register the mark in bad faith were perverse. I have no hesitation in rejecting that submission. I do not accept that Mr Ware’s evidence was that the respondent has no intention ever to use the 32 number mark in the future. The point was squarely put to him in cross-examination, but he never answered it. His answer to the question was that the respondent offered 32 chips for new players, and that in such a case, as in other promotional activity, the name 32Red was used because they took every opportunity to use the full brand. That was not an admission that the respondent would never use the number 32 alone as a mark of origin. The point was not pressed further. Moreover, Mr Ware’s earlier answers in cross-examination, to which I have already referred above, were consistent with the possible future use of the number 32 alone: for example, his answer that, if the respondent used 32 on its own with online casino players, most of them would believe that to be the respondent, and that people refer to the respondent as 32, and that the respondent sees that very much as part and parcel of its identity. The Judge was, therefore, fully entitled to reach the conclusion that William Hill Online had failed to prove its case on the absence of good faith.

It is convenient to turn next to the issue of the validity of the Community marks. In view of my rejection of the appeal against the Judge’s finding that the 32 number mark was validly registered, the attack on the validity of the Community marks is plainly difficult to sustain. So far as concerns William Hill Online’s case on Article 51(1)(c) based on the respondent’s adword campaign, I have already referred to the Judge’s reasons for dismissing that case. His dismissal was based on findings of fact about the absence of confusion, which he was entitled to reach.

There is no merit in the appellants’ attack on the Judge’s rejection of their case on invalidity for infringement of Article 7(1)(c) and for lack of distinctiveness within Article 7(1)(b). Mr Carr submitted that, because 32Red is and has always been a way of describing a result in roulette, it was plainly wrong for the Judge to conclude in [139] of his judgment that it was inherently distinctive and registrable without any evidence of use. That submission is impossible to sustain in the light of what I have said about Article 7(1)(c) and (d) in respect of the 32 number mark. The case for the inherent distinctiveness of the Community marks as a badge of origin is more, not less, strong than for the 32 number mark.

Furthermore, the Judge concluded in [142] of his judgment that he would, in any event, have held that by 2009 the use by the respondent of the Community marks had been sufficiently extensive for the necessary degree of distinctiveness to be acquired (within Article 7(3)), even if it was originally absent. In that connection, the Judge referred to the evidence in cross-examination of both Mr Cole-Johnson and Mr Bartlett, William Hill Online’s expert witness, that “32Red” is generally known and understood by the online gaming community to refer to the respondent’s casino. Mr Carr criticised that conclusion on the ground that the evidence fell far short of establishing that 32Red, as a description of a result in roulette, had acquired a distinctive character among the majority of the relevant public as indicative only of the respondent. He submitted, furthermore, that the Judge’s conclusion on the point was inconsistent with the Judge’s comments in [70] of his judgment where he referred to the evidence of Mr Ware and Mr Bartlett and said that it remains the case that many people do not make the connection between the name 32Red and roulette. Once again, the appellants can only succeed on this ground of appeal if they can establish that the Judge’s finding of fact was perverse. In view of the evidence of Mr Cole-Johnson and Mr Bartlett, to which the Judge referred in [142] of his judgment, and, I would add, those parts of Mr Ware’s evidence to which I have already referred as being contrary to the appellants’ case, that is plainly impossible. I do not consider that the Judge’s comments in [70] of his judgment were so inconsistent with his finding in [142] as to make it perverse. Indeed, I do not regard them as at all inconsistent.

I turn next to the appellants’ attack on the Judge’s finding of infringement of the 32Red mark under Article 9(1)(b). The Judge stated at [90] of his judgment that the principles applicable in relation to Article 9(1)(b) were those summarised as follows in the decision of Geoffrey Hobbs QC sitting as the Appointed Person in La Chemise Lacoste SA v Baker Street Clothing Ltd (O/330/10), which was cited with approval by Arnold J in Och-Ziff Management Europe Limited v OCH Capital LLP [2010] EWHC 2599 (Ch), at [73]:

"(a)

the likelihood of confusion must be appreciated globally, taking account of all relevant factors;

(b)

the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;

(c)

the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;

(d)

the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;

(e)

nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;

(f)

and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;

(g)

a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa;

(h)

there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;

(i)

mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient;

(j)

the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense;

(k)

if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion."

Mr Carr made no criticism of that summary and the Judge’s reliance on it, but he submitted that the Judge’s approach was wrong in six fundamental respects. His starting point was that the 32Red mark is a composite mark, in which the combination of the number and the colour describes a particular result in roulette, and that is the allusion intended and emphasised by the respondent (for example by the graphics on its home page).

Mr Carr’s first point of criticism was that the Judge failed to have regard to the different meanings indicated by the composite marks 32Red and 32Vegas. Both in [70] and in [97] of his judgment the Judge emphasised that the distinctiveness of the Community marks lies in the combination of the number 32 with the word or the colour red and that combination has a particular meaning. The Judge, Mr Carr said, failed to give due weight to the visual and aural difference between 32Red and 32Vegas.

Mr Carr’s second point of criticism was that the Judge wrongly approached the issue of confusion by dividing up the marks into constituent parts and approaching the comparison at far too high a level of generality. Mr Carr referred to the Judge’s reasoning in [100] of his judgment, where the Judge said that, in the case of an online gambler who did not pick up any allusion to roulette in the Community marks, the overall impression created by the Community marks and the Vegas signs would have been very similar. The reason given by the Judge was that in each case the name of the casino consists of the same number (32) in the dominant position, followed by a single word with a general gaming flavour. Mr Carr said that such a description, at such a high level of generality, turned totally dissimilar parts of the marks into something similar. Mr Carr submitted that this approach of the Judge was wrong in principle. Whereas the Judge’s reasoning was that, because both marks have the number 32 and a gambling allusion, they are confusingly similar, the reality is that 32Red means a bet or result but 32Vegas is a reference to Las Vegas.

Mr Carr’s third point of criticism was the Judge’s statement (in [101]) that “online gamblers who were alive to the allusion [to roulette in the Community marks] might also have supposed there to be an association between 32Red and another casino which called itself (say) 8Black or 28Even.” Mr Carr submitted that it is clear from that statement that the Judge incorrectly assessed the scope of the monopoly created by the registration of the Community marks. Mr Carr reinforced that point by referring to the following way the Judge described in [94] of his judgment the question that had to be answered:

“The critical question, therefore, is whether the similarity was such as to give rise, in all the circumstances, to a likelihood of confusion on the part of the public, including a likelihood of association in the sense of engendering the mistaken belief that the two casinos were operated by the same or economically-linked entities.”

Mr Carr submitted that there is no similarity between 32Red and 8Black or 32Red and 28Even, and the fact that the Judge thought otherwise illustrates his error in principle in adopting far too wide a view of the monopoly created by the registration of the 32Red mark.

Mr Carr’s fourth point of criticism is that the Judge was wrong to hold that the figure 32 was the dominant and distinctive feature of both the Vegas signs and the Community marks. Mr Carr submitted that, in view of the Judge’s finding that it is the composite nature of the Community marks which gave them their particular meaning, which was different from the meaning of their individual parts, it was wrong in principle to separate out one particular feature as distinctive and dominant.

Mr Carr’s fifth point of criticism is that the Judge was wrong to say in [97] of his judgment that the Community marks were highly distinctive in character. Mr Carr submitted that they had not acquired any distinctive character. He further submitted that the Judge’s own findings led to the conclusion that, even if they have a distinctive character, it is a weak one. In that regard, Mr Carr referred to the findings of the Judge that the 32Red mark is an obvious reference to a roulette bet or result ([70]); it is one of many examples of the use in the names of online casinos of numbers and colours including numbers and colours on a roulette wheel ([71]); the respondent itself used the mark in a descriptive manner as indicating the relevant bet on the roulette wheel ([70]); during the period of use when the respondent claims to have acquired a distinctive character, many other online casinos have used and continue to use the number 32 as part of their domain names ([155]) (c) - (d)). Mr Carr submitted, in light of all those matters, that any distinctiveness in the 32Red mark lay in its composite form and was weak, and the average consumer would expect online casinos to use numbers and colours and so would be alert to the detail which would differentiate one provider from another.

Mr Carr’s sixth point of criticism was that Judge reached his conclusion on confusion before considering the evidence of actual confusion that had been adduced. Mr Carr submitted that the respondent found remarkably little evidence of confusion. He laid particular emphasis on the fact that, as the Judge found in [38] of his judgment, players are attracted by bonuses, and so, if there had been confusion, that might have been expected to emerge when a player tried to claim from 32Vegas a bonus offered by the respondent or vice versa. He said that, not only were there remarkably few alleged instances, but at the end of the day there was only one witness who gave oral evidence and who appeared to have suffered in that way; but, on closer examination, her confusion had simply resulted from her careless mistake. There was one other witness on whose evidence of confusion the Judge relied, but she did not appear at the trial for cross-examination. Mr Carr submitted that the Judge should have tested his conclusion on confusion against the reality of the absence of any significant and credible evidence of actual confusion.

Finally, on the issue of confusion and infringement of the 32Red mark, Mr Carr said there was an inconsistency between the Judge’s conclusion in [145] of the judgment (rejecting the attack based on Article 51(1)(c)) - that the average consumer would not be confused when he or she was linked to the 32red.com website when they typed the relevant adwords – and the Judge’s conclusion on the likelihood of confusion in [103] of the judgment.

Once again, the Judge’s conclusion on infringement was the result of a multi-factorial evaluation, with which this Court will be slow to interfere. In the absence of an error of principle on the part of the Judge, or perversity in his factual findings, I cannot see any scope for a fresh evaluation by this Court on the issue of confusion, bearing in mind the Judge’s assessment of the considerable oral and other evidence. That included evidence about the market, consumers and their behaviour. I can identify no error of principle on the part of the Judge in carrying out that exercise. Mr Carr’s first, second and fourth points seek in different ways to make essentially the same point and to characterise as an error of principle the Judge’s identification of the number 32 as being the dominant feature, and his assessment of the overall impression created by the similarity of that number being followed by something else with a gaming flavour. I do not agree that approach involves an error of principle, or that it is in some way irreconcilable with the Judge’s conclusion that the 32Red mark is a composite mark which has a particular meaning and distinctiveness. The point is not capable of any great elaboration. I consider that the Judge was entitled, as part of his evaluation of the visual and aural impact of the 32Red mark and the Vegas signs, to appraise them in the way he did.

As to Mr Carr’s third point, I agree with him that, if read in isolation, the last sentence in [101] of the judgment is rather perplexing. It has to be placed, however, in the context of the judgment as a whole. In that context, having regard, for example, to the references in [97] [98] and [101] of the judgment to the “allusion to roulette”, it becomes clear that the Judge was not suggesting the impression of an economic association between the different casinos mentioned in the final sentence of [101] of the judgment. He was merely suggesting that the same allusion to roulette applied to each of them. Mr Carr has a forensic point that a subsequent reference in [103] of the judgment to confusion “in the mistaken association between the two casinos [viz. 32Vegas and the respondent]” is a reference to some kind of economic or similar link, but I do not consider that is sufficient to undermine what I have said the Judge meant in the last sentence of [101].

I cannot see that any point of principle is involved in Mr Carr’s fifth point once it is accepted that the Community marks were sufficiently distinctive to have been validly registered. In the absence of any error of principle, the Judge was perfectly entitled to form the view which he did that the Community marks had a high degree of distinctiveness, even if other judges might have attributed less distinctiveness to them.

There is no merit in Mr Carr’s sixth point. The Judge did analyse the oral and documentary evidence of actual confusion in [104] to [106] of the judgment. So far as concerns the documentary evidence, the Judge concluded in [107] that, despite William Hill Online’s criticism of such evidence, it did provide some support for the conclusion he had already reached on likelihood of confusion and could not be dismissed as insignificant. That conclusion involved no error of principle and, despite some criticism by the appellants, was not perverse. The Judge examined in close detail evidence of the respondent’s witnesses on confusion. It is clear that the Judge attributed very little weight to it, but the Judge was entitled to take the view that its lack of substance did not undermine his conclusion on confusion, bearing also in mind the documentary evidence.

Mr Carr’s final point involves a clear misreading or misunderstanding of [103] of the judgment. It is in fact entirely consistent with what the Judge said in [145] of his judgment, in relation to the respondent’s adword campaign. The Judge makes the point in [103] (consistently with what he said in [145]) that only a very careless online gambler would have supposed that he was playing with the respondent when he was playing with 32Vegas or vice versa. The Judge went on to identify the likely confusion as being that there was some association between the two casinos, and for that reason may have decided to play with 32Vegas because of a supposed association with the respondent or may have become disenchanted with the respondent because of a bad experience with 32Vegas.

Mr Carr addressed only very briefly the Judge’s finding of infringement of the Community marks under Article 9(1)(c). The substance of his attack was that, if the appellants are right that the Judge ought not to have found infringement under Article 9(1)(b), then his conclusion on infringement under Article 9(1)(c) also cannot stand. It follows that, if I am right that the appeal against the Judge’s conclusion in respect of Article 9(1)(c) fails, then the appeal against the Judge’s conclusion of infringement under Article 9(1)(b) also fails. In any event, I agree with the respondent’s notice that a further ground for upholding the Judge’s conclusion that there was an infringement under Article 9(1)(b) is that the 32Vegas sign took unfair advantage of the Community marks. That follows from the Judge’s finding in [132] that “[t]he detriment to the distinctive character of the Community marks lay in the risk of a false association with 32Vegas, a brand with an inferior reputation which operated in the same market place”, and his finding in [133] that an average online gambler would have been far readier to switch his allegiance from 32Red to 32Vegas, or to play with 32Vegas in the first place, than he would have been in the absence of the similarity of their names.

Mr Carr did not advance any attack on the Judge’s finding of infringement of the 32 device mark separate from his arguments criticising the Judge’s finding of infringement in relation to the 32Red mark.

That leaves, as the final issue, the respondent’s cross-appeal against the Judge’s conclusion in [165] of his judgment that there was no infringement of the 32 number mark. The Judge’s explanation for that conclusion was that, firstly, he was satisfied that the respondent had not yet acquired any separate reputation in the 32 number mark, and so for that reason alone the claim for infringement under section 10(3) of the 1994 Act must fail. He said that, secondly, for the same reason there cannot have been any likelihood of confusion under section 10(2) because, in the absence of any separate use of the 32 number mark to distinguish the services offered by the respondent and act as a badge of their origin, there cannot have been any factual basis for the alleged confusion.

Mr Carr sought to support the Judge’s conclusion and reasoning on this point by contending that the Judge must have thought that, in the absence of use, the 32 number mark did not have a sufficiently wide monopoly for infringement to be established.

In my judgment, the cross-appeal succeeds. The Judge appears to have assumed that it was not legally possible for there to be an infringement of the 32 number mark under section 10(2) in the absence of separate reputation established by use. That was incorrect. Having found inherent confusion and infringement of the 32Red mark by use of 32Vegas, and that the number 32 was the dominant feature of the Community marks and 32Vegas, he had no proper basis for saying there was no infringement of the 32 number mark under section 10(2).

For those reasons I would dismiss the appeal and allow the cross-appeal.