Okotoks Ld & Anor v Fine & Country Ltd & Ors

The characteristics of an action for passing off were thus described by Lord Diplock in Erven Warnink BV v Townend & Sons (Hull) Ltd [1979] AC 731, 742:

“(1)

a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.”

Thus the essence of the action is not confusion, but misrepresentation. Lord Diplock immediately added a very important warning:

“In seeking to formulate general propositions of English law, however, one must be particularly careful to beware of the logical fallacy of the undistributed middle. It does not follow that because all passing off actions can be shown to present these characteristics, all factual situations which present these characteristics give rise to a cause of action for passing off. True it is that their presence indicates what a moral code would censure as dishonest trading, based as it is upon deception of customers and consumers of a trader's wares but in an economic system which has relied on competition to keep down prices and to improve products there may be practical reasons why it should have been the policy of the common law not to run the risk of hampering competition by providing civil remedies to every one competing in the market who has suffered damage to his business or goodwill in consequence of inaccurate statements of whatever kind that may be made by rival traders about their own wares. The market in which the action for passing off originated was no place for the mealy mouthed; advertisements are not on affidavit; exaggerated claims by a trader about the quality of his wares, assertions that they are better than those of his rivals even though he knows this to be untrue, have been permitted by the common law as venial 'puffing' which gives no cause of action to a competitor even though he can show that he has suffered actual damage in his business as a result.”

As the judge found both F&CL and FCEA are dormant companies. Licences are in fact granted by GPEA; and it is that company that receives licence fees. In his written argument in support of the appeal Mr Platts-Mills QC argued that since neither F & CL nor FCEA is actively trading, neither had a business to which goodwill can attach. That being so, neither of them can maintain an action in passing off. However, this point was abandoned during the oral argument; so I say no more about it. So far as GPEA is concerned, it is not in the estate agency business. Its business is that of licensing estate agents, and Mr Platts-Mills argues that any goodwill generated by the estate agency businesses of the licensees belongs to them rather than to GPEA. Thus Mr Platts-Mills argues that GPEA is not capable of maintaining an action in passing off either. Although it has a business, it is not the business to which the relevant goodwill attaches.

GPEA carries on the business of licensing estate agents to use the Fine & Country brand, and organises nationwide advertising (and the website) for them. In substance it is a franchisor of the Fine & Country brand. As Mr Hicks rightly submits there need be no common field of activity between claimant and defendant in a passing off action. But in any event the fields of activity are sufficiently close. If the brand is damaged, GPEA’s ability to attract licence fees will also be damaged. Its ability to attract licence fees is itself goodwill. In Dawnay Day & Co Ltd v Cantor Fitzgerald International [2000] RPC 669, 701-702 Scott V-C referred to the position of a franchisor, and plainly contemplated that a franchisor would, in principle, be entitled to sue in passing off. This point is discussed by Professor Wadlow in §§ 7-110 and 7111 of his well-known work on Passing Off (4^th ed):

“The franchisees provide goods or services to the public. The franchisor provides services of a quite different nature (and sometimes also goods) to the franchisees. Can it therefore be said that the franchisor is a trader with a goodwill to protect, that it is an actionable misrepresentation for a business to hold itself out as franchised, and that the franchisor can be said to suffer damage?”

“One approach to ownership of goodwill might formerly have been to say that each individual franchised business owned a goodwill of its own, and that the goodwill of the franchisor related solely to the granting of franchises to businesses. This would be unduly restrictive. The public may or may not know that a franchising relationship exists, but they do appreciate that one person is responsible for the standards of every franchised outlet. That person is in fact the franchisor, who therefore owns the relevant goodwill quoad the public, absent agreement to the contrary. (In fact, of course, any agreement between franchisor and franchisee is more or less bound to provide that goodwill accrues to the former, as any other arrangement would be selfdefeating). It is only if the franchisor is perceived to have abandoned control of the business, or surrendered it to the franchisee(s), that the situation contemplated in Coles v Need arises and the franchised name or format may become publicii juris, or distinctive of someone other than the franchisor. This is not to say that individual franchised outlets have no goodwill of their own, but their status as franchisees does not entitle them to a share of that portion of the general goodwill which attaches to the franchised name or format. Their position is roughly equivalent to that of a tied public house, or a retail shop selling nationally advertised brands of goods.”

I agree. In my judgment GPEA is entitled to maintain an action in passing off.

In the realm of passing off the leading case on the significance of descriptive words is the decision of the House of Lords in Office Cleaning Services Ltd v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39. The plaintiff traded under the name “Office Cleaning Services”. The defendant traded under the name “Office Cleaning Association”. A claim in passing off to restrain use of the latter name failed in the Court of Appeal and the House of Lords although it had succeeded at first instance. Lord Simonds gave the leading speech. He identified many of the relevant considerations in evaluating a claim in passing off as follows:

“The nature of the words which are used in the trade name, the circumstances and peculiarities of the trade, the motives, proved or presumed, of the trader who would use the words, all those and many other factors must be considered by the judge in determining whether a Plaintiff can succeed in his claim.”

Towards the end of his speech he said:

“It comes, in the end, I think, to no more than this, that where a trader adopts words in common use for his trade name, some risk of confusion is inevitable. But that risk must be run unless the first user is allowed unfairly to monopolise the words. The Court will accept comparatively small differences as sufficient to avert confusion. A greater degree of discrimination may fairly be expected from the public where a trade name consists wholly or in part of words descriptive of the articles to be sold or the services rendered.”

As Jacob LJ pointed out in Phones4U Ltd v Phones4u.co.uk Internet Ltd [2006] EWCA Civ 244, [2007] RPC 5 at [21] this is really a case of tolerated deception or a tolerated level of deception. At bottom it is a question of public policy.

The judge found that the claimants’ business (and the use of the trading name and the marks) was started in 2001, and that the defendants started using the sign in 2009. In my judgment therefore it is appropriate to consider the commercial environment in which the parties operated at that time. The judge referred at [97] to the evidence of Mr Phillips and Mr Bowden called by the defendants. He said:

“Witness Statements were also provided by … Mr Phillips… a trainee solicitor employed by Manches, Solicitors to the Defendants, who put forward evidence of the use by estate agents of the terms “fine”, “finest” or “country” in their advertising and/or branding. Similarly, … Mr Bowden. He was not cross-examined: it is not disputed that such terms are in common use.”

Much later in his judgment he said at [222] (1) that he accepted the marks were to be evaluated in the context of “a market where combinations of words such as “fine” or “finest” and “country” are common place descriptions.” Apart from these two brief references he did not, I think, comment further on that body of evidence. Mr Phillips’ evidence was, to my mind, striking. He had conducted inquiries into trading names of estate agents up and down the country. Among the examples he put forward were: Palmer Snell Country & Fine Homes, Town & Country Property Services, Town & Country Estates of Wiltshire, Town & Country Estates of Wrexham, Town & Country Estate Agents of Plymouth, Prestige Town & Country, Bradleys Marine & Country Homes, Waterside & Country Homes, Coast & Country Estate Agents, Town & Country Estate Agents of Worksop, Fulfords Country & Waterside, River & Country Estate Agents, Fine Homes Estate Agents of Leamington Spa, Yorkshire’s Finest Estate Agents, Country Properties, Winkworth Country & Waterside, Jackson Fine Homes, Distinctive and Country Homes and others. All these had been trading for many years. Mr Bowden gave evidence of legions of advertisements describing houses for sale as “fine” homes or “fine country house”. There was also a considerable quantity of evidence showing that estate agents licensed to use the “Fine & Country” brand had themselves used the words descriptively or adjectivally to qualify such nouns as “homes” or “properties”.

At the start of the appeal Mr Platts-Mills applied for permission to adduce fresh evidence in the shape of an advertisement from the Jewish Chronicle showing how another agent had used the word “fine” as part of its branding. He accepted that this material could have been found if a more thorough search had been conducted before trial and that the evidence was no more than relevant. We decided not to admit the fresh evidence as it did not meet the conventional tests. Besides which, we had enough already.

The judge was of course well aware of the defendants’ main defence. He recorded it at [4] as follows:

“The Defendants say that the claims constitute an inappropriate attempt to monopolise a descriptive word (“fine”) which is common in ordinary language and extensively deployed in the estate agency market. They say that the claims should be dismissed; and by Part 20 claims they seek also orders invalidating and revoking the F&C Marks.”

He referred to it again at [27], and quoted from Phones4U at [80]. He also quoted from the speech of Lord Oliver in Reckitt & Colman Ltd v Borden [1990] RPC 340 which dealt with “ordinary English terms” applied to goods or services. However, in the section of his judgment that dealt with passing off, he did not, so far as I can see, confront this defence head on. At [30] and [31] he said:

“[30] Mr Hicks, Counsel for the Claimants, suggested in opening that the issue at the heart of the case (he said the pun was intentional) is one simple issue: are the Defendants causing confusion and deception by calling their business Fine?

[31] Although Mr Platts-Mills QC (Leading Counsel for the Defendants) has raised a number of other points, including as to the use of the Fine & Country mark, and has depicted the case as epitomising an inappropriate attempt to “enclose part of the great common of the English language and to exclude the general public of the present day and of the future from access to the enclosure” (quoting Sir Herbert Cozens-Hardy MR in Joseph Crosfield & Son’s Application (1909) 26 R.P.C. 837 at 854), the ultimate issue is indeed simply stated. Its answer is, inevitably, longer.”

This appears to me to accept that “the ultimate issue” was indeed as stated by Mr Hicks. When at [57] the judge set out his summary of the issues arising on the passing off claim the defendants’ defence was not among them. The only other reference to this defence to the passing off claim in the main judgment is at [223] where, having set out the defendants’ case on lack of distinctiveness in relation to the claim of trade mark infringement, he said:

“These various tests identified by the Defendants have caused me not a little hesitation (which of course fed back into my consideration of the case in passing off).”

When I first read the papers in the case, I did wonder whether the judge had made an error of principle here. But on further reflection I am satisfied that he did not. The passages on which Mr Platts-Mills relied are all directed to similarities between different words. They are not concerned with similarities in design, style or get-up. Among the relevant considerations that Lord Simonds spoke of are “the motives, proved or presumed, of the trader who would use the words.” The judge did not make any relevant findings about the motives behind the use of the word “fine”; but he did make highly relevant findings about the process that led up to the design of the eventual sign in its graphic form. As his findings demonstrate the precise form of the “FINE” sign was the closest to the registered mark of all those that the designers put forward, and the designers appreciated that its precise form was one that resembled the marks. Mr Smith overruled their concerns. I do not read the judge’s judgment on the claim in passing off as prohibiting all use of the simple word “FINE” as a brand

This, in my judgment, is exactly the sort of the application of a not altogether precise legal standard to a combination of features of varying importance with which an appeal court should not interfere. Although the judge did not put it quite so starkly, reading his judgment as a whole, it is clear to my mind that he found that there was a misrepresentation by the defendants in consequence of the detailed design of their sign. The misrepresentation was to represent themselves as successors to or part of the network licensed by “Fine & Country”.

Mr Platts-Mills argues that the judge adopted too wide a definition of the class of person who must be deceived. Since GPEA dealt with licensed estate agents, the question was whether they (rather than members of the public) would be deceived; and on the evidence they were not. If it was appropriate to cast the net wider, then the class of person might include sellers of property (who contracted with the licensees), but not buyers of property, who did not pay estate agents. I reject this argument. As Lord Diplock put it in the passage quoted, the representation must be made:

“to prospective customers of his or ultimate consumers of goods or services supplied by him”

It is obvious that sellers of property fall into this class of person as ultimate consumers of GPEA’s services, since it is they who contract with estate agents. But in addition buyers of property also fall into this category. Why, one might ask do sellers of property choose a particular estate agent? One reason would be their terms of business (i.e. how much commission do they charge?). But another, surely, is that they are capable of attracting the largest number of buyers. It is they who search for properties on the Fine & Country website, although they no doubt use other websites (e.g. Rightmove) as well. If a potential buyer of property is deflected from buying a property offered by a Fine & Country agent into buying a property marketed by Fine, then that is a potential sale lost. In my judgment the judge made no error here.

Mr Platts-Mills was very critical of the judge’s evaluation of the evidence. He said that the judge should have applied to the e-mail material the rigorous standards applicable to evidence gathered by means of surveys and so-called witness collection programmes. I discussed these forms of evidence in Marks & Spencer plc v Interflora Inc [2012] EWCA Civ 1501 [2013] 2 All ER 663 and Interflora Inc v Marks & Spencer plc [2013] EWCA Civ 319. The common feature in both these cases was that the evidence in question had been elicited in response to a carefully scripted series of questions, many of which were leading in form. The question before the court was whether at the case management stage a judge should exercise his powers of case management to exclude evidence that was otherwise admissible. In both cases, this court said that he should. Both these were cases of trade mark infringement, rather than passing off. This matters, because the legal question that must be answered is a different one: see Marks & Spencer plc v Interflora Inc at [26] to [34]. This court also made it clear that evidence of real world confusion, in the sense of spontaneous reaction to the allegedly infringing sign, could be of real value: see Marks & Spencer plc v Interflora Inc at [136] and [137 (i)] and Interflora Inc v Marks & Spencer plc at [10] and [20].

In my judgment the judge was entitled in our case to take into account the anecdotes revealed by the e-mails for what they were worth. Once this material had been admitted into evidence (apparently without objection) he was not required to reject that evidence completely. He was aware of its limitations and made it clear that (a) he was only taking it into account as background and (b) it was not enough to prove deception. In my judgment that approach cannot be faulted.

Mr Platts-Mills next criticised the judge for reliance on standardised witness statements signed by many of the witnesses. The judge recognised the limitations of that evidence too. As noted he described that body of evidence as “at best a chorus, and a rather over-orchestrated one at that”. He gave this evidence little weight, although he was not prepared to say that it was of no weight. Again in my judgment that approach cannot be faulted.

In the end what impressed the judge most was the evidence of the live witnesses and his own independent assessment. That is the classic way in which passing off cases are decided. There was clear evidence both from Mrs Riley and Dr Desmond that they had been deceived by the “FINE” sign. There is nothing wrong with the judge’s approach to the evidence; and certainly no error of principle that would entitle an appeal court to interfere.

The last complaint is that the judge was wrong to find that damage had been caused to any of the claimants or that real damage was likely in the future. In fact that judge found that no measurable damage had yet been caused: his concern was for the future.

He found, on the basis of Mr Lindley’s evidence, that Mr Lindley had a “wellfounded perception” that Fine’s activities were likely to lead to the erosion or dilution of the Fine & Country brand and was thus a real threat to his business. Mr Platts-Mills criticised this finding as mere speculation, and pointed out that although “Fine” has been operating for three years, no actual damage has yet been caused. But in a later part of his judgment ([192]) the judge recorded “evidence that FINE is beginning to attract contacts and potential licensees away from Fine & Country (a particular example being the applicant for a license in Chelsea, who apparently withdrew because of his perception, based on his experience in Surrey, of brand confusion)”. That is a finding of primary fact.

In a sense any prediction about the future is speculation, but it must of course be a reasonable prediction based on evidence. The evidence of Mr Lindley and the particular example of a loss of a licensee was, in my judgment, enough to enable the

I would dismiss the appeal so far as it relates to passing off. Trade marks

As noted, the attack on the validity of the trade marks was based on articles 3 (1) (b) and (c). As already mentioned an attack based on these provisions will not succeed if the mark has become distinctive (or has acquired distinctive character) as a result of the use made of it. There are thus two types of distinctiveness which are usually referred to as inherent distinctiveness and acquired distinctiveness. Acquired distinctiveness, in a claim for revocation, is to be tested as at the time when the claim to revoke is made. Both inherent distinctiveness and acquired distinctiveness were pleaded in response to the counterclaim for revocation.

In deciding whether a trade mark is distinctive the ultimate question is whether it is capable of distinguishing the goods or services of one undertaking from goods or services of another undertaking. That in turn must be assessed in the context of the classes for which the mark is registered and, necessarily in the context of the trading conditions in which goods and services in those classes are supplied. As with passing off, there is a public interest in enabling descriptive terms to be freely available to traders.

But whereas in the case of passing off there is sufficient flexibility in judge-made law to balance opposing interests, the registration of a trade mark confers a monopoly not only in the mark itself but in effect over signs which are confusingly similar or, in some circumstances, which merely call the registered mark to mind. Nor, in a case of trade mark infringement, is it necessary to prove deception: mere confusion will suffice. In Phones 4u Ltd v Phone4u.co.uk. Internet Ltd [2006] EWCA Civ 244 [2007] RPC 5 Jacob LJ stressed the difference between the appropriate test for passing off and the appropriate test for registration of a trade mark. He said (§ 25):

“The nature of the inquiry as to whether a mark is suitable for registration without proof of distinctiveness is different from that as to whether a plaintiff in a passing off action has established a goodwill in the name, badge or insignia relied upon. This is hardly surprising—for registration one must be reasonably sure that the mark has really become a trade mark to most relevant people—to grant a monopoly on a lesser test would be contrary to the policy behind the requirement of distinctiveness. So, for example, if it is necessary to prove distinctiveness, proof that a badge was well-known but only in a small area, would not be enough. Yet an action for passing off would lie in respect of the use of a deceptively similar badge in that small area. Cases about quasi-descriptive names of hairdressers, restaurants and so on are not uncommon. An example mentioned in argument was Stannard v Reay [1967] RPC 589 (“Mr Chippy” used for a mobile fish and chip van on the Isle of Wight for 3 weeks—held enough use to create a protectable goodwill). Similarly under our old law some marks were regarded as so non-distinctive that they could never be registered. Yet passing off cases on such marks could succeed (e.g. “Perfection” for soap refused, Crosfield's Application (1910) 27 RPC 433, passing off successful, by consent, Crosfield (Joseph) & Sons Ltd v Caton (1912) 29 RPC 47; W&G for taxis refused: W&G Du Cros Ltd's Application (1913) 30 RPC 660; [1913] A.C. 413, but the subject of a successful passing off action, W&G Du Cros Ltd v Gold (1913) 30 RPC 117).”

There is a long line of domestic cases in which judges have expressed the view that it should not be possible to monopolise the use of descriptive or laudatory words. Mr Platts-Mills started with the well-known observation of Cozens-Hardy MR in Joseph Crosfield & Son's Appn (“Perfection”) (1909) 26 R.P.C. 837:

“Wealthy traders are habitually eager to enclose part of the great common of the English language and to exclude the general public of the present day and of the future from access to the enclosure.”

As Cozens-Hardy MR went on to point out:

“Now it is apparent that no word can be registered under this sub-section unless it is “distinctive,” that is to say, is “adapted” to distinguish the goods of the proprietor from the goods of other persons. There are some words which are incapable of being so “adapted,” such as “good,” “best,” “superfine.” They cannot have a secondary meaning as indicating only the goods of the applicant. … It may be that within a particular area the applicant might succeed in a passing-off action against a trader who used the epithet without sufficiently distinguishing his goods from the goods of the applicant. But that would not justify the Court in giving the applicant a monopoly throughout the United Kingdom in the use of a laudatory epithet. Whether in any particular case the word is or is not something more than a laudatory epithet is for the tribunal to decide.”

In the same case Fletcher Moulton LJ said:

“I do not think, for instance, that any amount of evidence of user would induce a Court to permit the registration of ordinary laudatory epithets such as “best,” perfect,” &c. On the other hand, in the case of a peculiar collocation of words it might be satisfied with reasonable proof of acquired distinctiveness, even though the words taken separately might be descriptive words in common use.”

In Re Davis’s Trade Marks [1927] 2 Ch 345, 360 Sargant LJ said:

“Even so … there is a large class of word-marks which are by their very nature incapable of becoming distinctive and which ought, therefore, on a priori grounds, to be refused registration…. Such marks are mere laudatory epithets, such as “Good,” “Best,” “Excellent,” “Perfect,” and the like, and also marks merely describing in ordinary language some common characteristic of the goods in question, such as in the present case “Stickable,” “Attachable” or … “Stickon,” however spelt.”

In British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281, 302 Jacob J said:

“There is an unspoken and illogical assumption that “use equals distinctiveness”. The illogicality can be seen from an example: no matter how much use a manufacturer made of the word “Soap” as a purported trade mark for soap the word would not be distinctive of his goods. He could use fancy lettering as much as he liked, whatever he did would not turn the word into a trade mark. Again, a manufacturer may coin a new word for a new product and be able to show massive use by him and him alone of that word for the product. Nonetheless the word is apt to be the name of the product, not a trade mark. …

“A word or words to be really distinctive of a person's goods must generally speaking be incapable of application to the goods of anyone else.” [A quotation from Lord Russell in The Shredded Wheat Co Ltd v Kellogg Co of Great Britain Ltd (1940) 57 RPC 137]

It is precisely because a common laudatory word is naturally capable of application to the goods of any trader that one must be careful before concluding that merely its use, however substantial, has displaced its common meaning and has come to denote the mark of a particular trader. This is all the more so when the mark has been used in conjunction with what is obviously taken as a trade mark.”

The same theme recurs in the European cases. In Windsurfing Chiemsee Produktions- und Vertriebs GmbH v Boots- und Segelzubehör Walter Huber (Joined Cases C-108 and 109/97) [2000] Ch 523 the ECJ said:

“[25] However, article 3(1)(c) pursues an aim which is in the public interest, namely, that descriptive signs or indications relating to the categories of goods or services in respect of which registration is applied for may be freely used by all, including as collective marks or as part of complex or graphic marks. Article 3(1)(c) therefore prevents such signs and indications from being reserved to one undertaking alone because they have been registered as trade marks.”

In Koninklijke KPN Nederland NV v Benelux-Merkenbureau (C-363/99) [2004] ECR I-1619 (“POSTKANTOOR”) the ECJ said at [55]:

“That public interest requires that all signs or indications which may serve to designate characteristics of the goods or services in respect of which registration is sought remain freely available to all undertakings in order that they may use them when describing the same characteristics of their own goods. Therefore, marks consisting exclusively of such signs or indications are not eligible for registration unless article 3(3) of the Directive applies.”

As the ECJ said, this policy consideration applies “unless article 3 (3)” applies. Article 3 (3) of the directive relates to acquired distinctiveness. As Mr Hicks pointed out, this policy is not engaged if a mark has acquired distinctiveness. In Windsurfing the Commission argued:

“The Commission submits that a mark acquires distinctive character through use under article 3(3) of the Directive if consumers regard the indication in question as a trade mark before an application for registration is made, and that the need to keep it free is of relatively little consequence in this respect.”

The ECJ agreed, saying:

“The claimant and the Commission are therefore right to assert that article 3(3) does not permit any differentiation as regards distinctiveness by reference to the perceived importance of keeping the geographical name available for use by other undertakings.”

The ECJ made a number of other important points in the POSTKANTOOR case:

“[57] It is irrelevant whether there are other, more usual, signs or indications for designating the same characteristics of the goods or services referred to in the application for registration than those of which the mark concerned consists. Although article 3(1)(c) of the Directive provides that, if the ground for refusal set out there is to apply, the mark must consist exclusively of signs or indications which may serve to designate characteristics of the goods or services concerned, it does not require that those signs or indications should be the only way of designating such characteristics.

[58] Similarly, whether the number of competitors who may have an interest in using the signs or indications of which the mark consists is large or small is not decisive. Any operator at present offering, as well as any operator who might in the future offer, goods or services which compete with those in respect of which registration is sought must be able freely to use the signs or indications which may serve to describe characteristics of its goods or services.”

The court went on to consider the case of a mark composed of a combination of elements (as is the case with “Fine & Country”). It first reiterated that the prohibition on registering signs which are descriptive must be interpreted in the light of the public interest that descriptive signs or indications descriptive of the characteristics of the goods or services in respect of which registration is applied for may be freely used by all (§ 95). The court continued:

“[97] It is not necessary that the signs and indications composing the mark that are referred to in article 3(1)(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 article 7(1)(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] 1 WLR 1728, 1751-1752, para 32.

[98]

As a general rule, a mere combination of elements, each of which is descriptive of characteristics of the goods or services in respect of which registration is sought, itself remains descriptive of those characteristics for the purposes of article 3(1)(c) of the Directive. Merely bringing those elements together without introducing any unusual variations, in particular as to syntax or meaning, cannot result in anything other than a mark consisting exclusively of signs or indications which may serve, in trade, to designate characteristics of the goods or services concerned.

[99]

However, such a combination may be not descriptive within the meaning of article 3(1)(c) of the Directive, if it creates an impression which is sufficiently far removed from that produced by the simple combination of those elements. In the case of a word mark, which is intended to be heard as much as to be read, that condition must be satisfied as regards both the aural and the visual impression produced by the mark.

[100]

Thus, a mark consisting of a word composed of elements, each of which is descriptive of characteristics of the goods or services in respect of which registration is sought, is itself descriptive of those characteristics for the purposes of article 3(1)(c) of the Directive, unless there is a perceptible difference between the word and the mere sum of its parts: that assumes either that, because of the unusual nature of the combination in relation to the goods or services, the word creates an impression which is sufficiently far removed from that produced by the mere combination of meanings lent by the elements of which it is composed, with the result that the word is more than the sum of its parts, or that the word has become part of everyday language and has acquired its own meaning, with the result that it is now independent of its components. In the second case, it is necessary to ascertain whether a word which has acquired its own meaning is not itself descriptive for the purpose of the same provision. ”

Thus the ECJ refused registration of POSTKANTOOR (meaning “post office”). It has also refused registration of DOUBLEMINT (for chewing gum) (Office for Harmonisation in the Internal Market (Trade Marks and Designs) v Wm Wrigley Jr Co (Case C-191/01P) [2004] 1 WLR 1728) and BIOMILD (for yoghurt) (Campina Melkunie BV v Benelux-Merkenbureau Case C-265/00 [2004] 1 ETMR 58). The latter two cases are cases of neologisms rather than ordinary words, so the refusal to register is all the more striking. Mr Hicks pointed out that these were cases of word marks rather than devices. That is true. It is also true that where a mark consists not merely of words but also of figurative elements, it is wrong to ignore the figurative elements just because the words are dominant. On the other hand, unless the figurative elements are distinctive the mark is still devoid of distinctive character: Bioid AG v OHIM (Case T-91/01) [2003] ETMR 60.

The judge directed himself by reference to propositions described in Kerly (15^th ed § 8-06) as well-established. The fourth of these propositions was:

“… in assessing whether a trade mark has acquired a distinctive character the competent authority must make an overall assessment of the relevant evidence, which in addition to the nature of the mark may include: (i) the market share held by goods bearing the mark; (ii) how intensive, geographically widespread and long-standing the use of the mark has been; (iii) the amount invested by the proprietor in promoting the mark; (iv) the proportion of the relevant class of persons who, because of the mark, identify the goods or services as emanating from the proprietor; (v) evidence from trade and professional associations; and (vi) (where the competent authority has particular difficulty in assessing the distinctive character) an opinion poll. If the relevant class of persons, or at least a significant proportion of them, identifies goods or services as originating from a particular undertaking because of the trade mark, it has acquired a distinctive character.”

This proposition is derived from Windsurfing at [51]. It is instructive to compare this proposition with what the ECJ said in (Case C-342/97) Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV [1999] ETMR 690 at [23] by reference to the very same paragraph in Windsurfing:

“In making that assessment [i.e. whether a mark is distinctive], account should be taken, in particular, of the inherent characteristics of the mark, including the fact that it does or does not contain an element descriptive of the goods or services for which it has been registered; the market share held by the mark; how intensive, geographically widespread and longstanding use of the mark has been; the amount invested by the undertaking in promoting the mark; the proportion of the relevant section of the public which, because of the mark, identifies the goods or services as originating from a particular undertaking; and statements from chambers of commerce and industry or other trade and professional associations.” (Emphasis added)

The first of the particular factors that the court said should be taken into account (the fact that it does or does not contain an element descriptive of the goods or services for which it has been registered) has been omitted from Kerly’s formulation of the principle. In my judgment that is a significant omission.

Mr Platts-Mills relied on what Jacob J had said in the British Sugar case. He considered at length what needed to be shown in order to establish that a descriptive or laudatory word had acquired sufficient distinctiveness to enable it to be validly registered as a trade mark. He said (306):

“Is my finding that to some but not most people “Treat” has some trade mark significance enough? This depends on what is meant by a distinctive character. Neither the Directive nor Act throw any light on this. So I have to use what I at least regard as my common sense. Take a very descriptive or laudatory word. Suppose the proprietor can educate 10% of the public into recognising the word as his trade mark. Can that really be enough to say it has a distinctive character and so enough to let the proprietor lay claim to the word as a trade mark altogether? The character at this stage is part distinctive but mainly not. I do not think it would be fair to regard the character of the word as distinctive in that state of affairs. But if the matter were the other way round, so that to 90% of people it was taken as a trade mark, then I think it would be fair so to regard it. This all suggests that the question of factual distinctive character is one of degree. The proviso really means “has the mark acquired a sufficiently distinctive character that the mark has really become a trade mark.” In the case of common or apt descriptive or laudatory words compelling evidence is needed to establish this. And in particular mere evidence of extensive use is unlikely to be enough on its own. Of course the power of advertising may be able to turn almost anything (save a pure description) into a trade mark, but it must be shown in a case of this sort that the mark has really become accepted by a substantial majority of persons as a trade mark - is or is almost a household word.

The British Sugar case was, of course, decided before Windsurfing and the cases that follow it. In my judgment to some extent it has been overtaken in this respect by subsequent developments in the law. In Windsurfing the ECJ rejected the argument that acquired distinctiveness is to be measured by percentages: a significant proportion of the relevant class of person is sufficient: see Windsurfing at [53]. Moreover, in Premier Luggage and Bags Ltd v Premier Co (UK) Ltd Chadwick LJ said at [55]:

“In my view the judge applied the correct test when he directed himself that he must consider whether the evidence established that the average consumer (including both trade purchasers and members of the public) would appreciate that the PREMIER mark displayed on the products of Premier Luggage was not used in a laudatory sense but as a distinctive branding of the products.”

It is notable that in that case the word “PREMIER” (laudatory par excellence) was held to be a valid trade mark.

I will quote again the judge’s conclusion on the question of validity:

“Sometimes I look at the words separately as adjectives; sometimes as (as it were) I see them together as a household name. But on balance I have eventually concluded that the F&C Marks were on registration, and remain, sufficiently distinctive to have warranted and continue to warrant registration. Although wary of adopting yet another formulation, it seems to me that the mark has a recognisable and recognised separate existence apart from the descriptive and laudatory nature of the words themselves. The words in that context call to mind the relevant business, not their semantic meaning: in the manner and context in which they appear they serve to identify and distinguish the business. I accept therefore, the Claimants' case in this regard, and its supporting reasoning as adumbrated above.”

There are, in my judgment, deficiencies in this rolled up reasoning. The first point to make is that the judge did not consider separately inherent distinctiveness and acquired distinctiveness. This can be seen from his observation that that the “F & C marks” (plural) “were on registration, and remain, sufficiently distinctive to have warranted and continue to warrant registration.” His reference to marks (plural) must encompass the national mark. Registration of that mark more or less coincided with the start of the Fine & Country business, so there cannot have been any acquired distinctiveness to support the registration of the national mark. The CTM is treated in the same way, without overt reference to anything that had happened between the dates of the two registrations.

Second, the judge appears to me to have reached his conclusion based on the words of the registered mark alone. He did not at least at this stage in his reasoning refer to the visual representation of the words (e.g. the placing of the ampersand on top of the pillar). He also said that sometimes he looked at the words separately as adjectives. It

Third, it seems to me to be incontrovertible that the word “fine” is both laudatory and descriptive. Moreover, it is commonly used by estate agents, both as a descriptor of individual properties and also as more generic branding. Fourth, the word “country” is also descriptive. Again the evidence of Mr Phillips showed the extent of the use of that word by estate agents up and down the country. Fifth, that same evidence showed that estate agents use descriptive terms like this in combinations (usually in pairs: Town & Country, Waterside & Country, Coast & Country etc). As the ECJ said in POSTKANTOOR a mark must be refused registration if at least one of its possible meanings designates a characteristic of the goods or services concerned. As the ECJ also said in POSTKANTOOR a combination of descriptive elements will generally remain descriptive in the absence of some unusual variation in syntax or meaning. The judge identified no such unusual variation; and none has been suggested. Although the judge rather tentatively said that sometimes he looked at the words “as a household name” this point can only go to the question of acquired distinctiveness rather than inherent distinctiveness, at least as at the date of registration of the national mark; so I will come back to it shortly.

What tipped the balance for the judge was his perception that the mark (by which he must have meant the composite whole) had “a recognisable and recognised separate existence apart from the descriptive and laudatory nature of the words themselves”. Again in my judgment this reasoning combines inherent distinctiveness (“recognisable”) and acquired distinctiveness (“recognised”). So far as inherent distinctiveness is concerned, the judge did not explain what, in his view, was the “impression which is sufficiently far removed from that produced by the mere combination of meanings” resulting in the conclusion that the whole was more than the sum of its parts. Aurally the mark remains descriptive. As mentioned, at this stage in his reasoning the judge attached no importance in considering validity to the pillar or the visual presentation of the words. Nor did the judge address the policy reasons for refusing to grant monopolies over descriptive expressions which applied with full force to the position at registration. If this case had turned only on the question of inherent distinctiveness then I would have been in favour of allowing the appeal.

However, although Mr Hicks submitted that that the marks were inherently distinctive, he concentrated most of his fire on arguing that the judge found that the marks had acquired distinctiveness; at least by 2009 when the CTM was registered. Combining the statements of principle in Windsurfing and Lloyd Schuhfabrik the assessment of acquired distinctiveness would require a structured analysis of:

In setting out the judge’s findings I have inserted in square brackets cross-references to the Windsurfing factors. The judge’s primary findings of fact were:

“41.

The concept has been a considerable success. In the UK alone there are now some 79 licensees operating from about 41 stand-alone Fine & Country offices and about 156 dual branded offices; and there are also 57 offices overseas. [geographical spread] Fine & Country has won numerous awards [evidence from trade and professional associations], and it consistently ranks at or towards the top of the list of estate agents with the largest number of sales of upper quartile properties, and the largest number of such properties on its books [market share].

42.

The evidence (which was not really disputed and which I accept) is that the Fine & Country name and logo has become and remains well known to members of the public and the trade, especially those interested in the sale and purchase of domestic properties at the upper end of the market [proportion of the relevant class of person who because of the mark identify the services as emanating from the claimants].”

The judge also adopted as part of his reasoning the submissions that he recorded at

Mr Hicks showed us much of the supporting material which underlay these submissions. This material showed in addition to the factors mentioned by the judge:

Although the judge did not precisely follow the structure of the Windsurfing judgment, the factors that he mentioned (supplemented by the additional material that Mr Hicks showed us) were those that the ECJ referred to. His assessment was (as it was required to be) a qualitative rather than a quantitative assessment. He found as a fact that by 2009 the marks were highly distinctive. In my judgment no error of principle has been demonstrated such as would entitle this court to interfere with the judge’s assessment of acquired distinctiveness.

The judge went on to consider whether the marks had been infringed. He first considered infringement under article 9 (1) (b) and section 10 (2). This required the claimants to establish a likelihood of confusion “because of” the similarity between the sign and the mark.

At this stage it is perhaps appropriate to consider the similarities and differences between the mark and the sign:

The judge expressed his conclusions as follows:

“[247] First, comparing the F&C Marks and the FINE sign, I consider that:

(1)

as a matter of overall impression the mark and the sign are sufficiently similar to be likely to lead, and in my assessment have led, to confusion on the part of the average consumer;

(2)

in particular, the same font, the gold underlining, the capitalisation, and the overall impression created by the two make it all too easy to mistake the one as the other, at least when the two are not laid out together for simultaneous comparison: and the strapline reference to "Country" in the strapline increases the similarities; that was my original instinctive and then more considered assessment; it abided with me, and was reinforced by the evidence (even acknowledging and taking into accounts its flaws).

[248]

In coming to this conclusion I have considered carefully the Defendants' contention that, overall, the F & C marks and the FINE sign are quite different and readily distinguishable, and that there is a very low degree of similarity between them. The process of analysis the Defendants have encouraged has tended to erode my overall impression.

[249]

Upon analysis, and breaking the two down into their component parts, I accept that there are indeed substantial differences. As the Defendants point out the first comprises 3 words and a total of 4 syllables, and is significantly longer than the other; and visually, there are many additional elements in the F & C Marks that are not present in the FINE sign, including additional words, emphasis of the first word, the pillar device, the underlining of both words, and the positioning of "&" above the pillar. I would accept that aurally the two sound different.

[250]

But the fact to my mind remains that the two are easily confused in the mind's eye when the two are not set side by side. Of course, as in the game, it is not difficult to spot the differences when the two are closely compared: but the overall impression, for whatever reason (and an impression inherently is difficult to rationalise entirely), is similar and thus confusing.

[251]

The evidence supports this assessment. I accept in that context that much of the witness statement evidence has a formulaic feel; and the witnesses' own perception has in many instances been drowned by the words into which they have been straight-jacketed. Nevertheless, the message of confusion survives; and is amplified by the more informal body of e-mail reports of confusion put before me. As to the latter, I accept that much of it is more anecdotal than strictly probative; and that it has been elicited and collated by the Claimants and their licensees, much of it appears provoked and practically none of it seems spontaneous. But in this context too, the message of real as opposed to contrived confusion does, in my judgment, transmit.

[252]

Lastly, the fact that it seems to me clear that the Defendants and their designers did appreciate the risk of confusion, and (I consider it justified to infer) decided to take that risk and live dangerously, has further confirmed me in my conclusion…”

Given that the judge correctly directed himself in law, in my judgment this court could only interfere with his value judgment if it was plainly wrong. His principal reason is that in [247] (2) which quite correctly concentrates on the visual features of the sign when compared to the mark. It is particularly difficult, in the face of a finding of fact that the sign has in fact caused confusion, to say that the judge was wrong to find that it was likely to cause confusion. Mr Platts-Mills criticised the judge’s reliance on the principle of “imperfect recollection” on the ground that the average consumer would see the mark and the sign in close proximity to each other. If, for example, a seeker of property were to look in the property pages of a newspaper, or at

Given the judge’s findings on confusion, and in particular his findings that in some cases it was the appearance of the sign that caused the confusion, it cannot be said that his assessment was plainly wrong. I would therefore uphold the judge’s conclusion that the conditions in article 9 (1) (b) and section 10 (2) were satisfied. This means that his conclusions on article 9 (1) (c) and section 10 (3) need not be examined.

The judge dealt with this defence in his supplemental judgment. The judge gave two reasons for rejecting this defence. First he held that because the word “FINE” was being used as a brand or quasi trade mark rather than an adjective, the defence failed at the first hurdle. He said:

“[8] In my judgment, although I accept that the style “FINE” was being used by the Defendants to denote a separate part of their estate agency business specialising in “fine” properties, I consider that in all the circumstances the style “FINE” was not thereby being used in an adjectival sense, but as a brand or quasi trade mark intended to be entire in itself. Although the strap line, when deployed, explains to potential customers what the services under that style relate, the style is designed to stand, or be capable of standing, alone: it is not as such used in a descriptive way, but in a way calculated to bring to mind a particular service, with the risk or likelihood … of it being confused with the Claimants’ own trade mark.

[9] To my mind, the very fact that the word appears alone without a noun and in the particular style in which it does so, precludes any realistic reliance on its use being in substance descriptive for the purposes of section 11 (2) (b) and/or article 12 (b).”

Mr Platts-Mills argues, in my judgment correctly, that this was an error of law. The ECJ considered the scope of this defence in Gerolsteiner Brunnen GmbH & Co v Putsch GmbH (Case C-100/02) [2004] RPC 39, to which the judge was referred. A German trader owned the mark “GERRI” for mineral water, among other things. A competitor imported mineral water bottled in Ireland and labelled “KERRY Spring”. Kerry Spring was the name of the spring in Ireland from which the water came. The German court referred two questions to the ECJ:

The ECJ said:

“18 Article 6(1)(b) of Directive 89/104 provides that the proprietor of the trade mark may not prohibit a third party from using, in the course of trade, indications concerning, inter alia, the geographical origin of goods provided the third party uses them in accordance with honest practices in industrial or commercial matters.

19 It should be noted that that provision draws no distinction between the possible uses of the indications referred to in Art. 6 (1)(b) of Directive 89/104. For such an indication to fall within the scope of that article, it suffices that it is an indication concerning one of the characteristics set out therein, like geographical origin.”

Thus the answer to the first question was “no”. In my judgment it follows from the answer to that question that the judge was wrong in saying that the mere fact that “FINE” was used as a brand or quasi trade mark itself precluded reliance on this defence. As regards the second question the ECJ said:

“24 In answering that question, the only test mentioned in Art. 6(1) of Directive 89/104 is whether the indication of geographical origin is used in accordance with honest practices in industrial or commercial matters. The condition of “honest practice” constitutes in substance the expression of a duty to act fairly in relation to the legitimate interests of the trade mark owner …

25 The mere fact that there exists a likelihood of aural confusion between a word mark registered in one Member State and an indication of geographical origin from another Member State is therefore insufficient to conclude that the use of that indication in the course of trade is not in accordance with honest practices.”

Thus the answer to the second question was also “no.” The only question is whether use of the sign was in accordance with honest practices. I note that the court referred only to aural confusion.

The judge went on to consider the question whether the use of the sign was in accordance with honest practices and held that it was not. Both parties invited him to follow the approach of Arnold J in Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2008] EWHC 3032 (Ch) [2009] RPC 9 at [152]. The principles Arnold J set out were conveniently summarised by Floyd J in Hasbro Inc v 123 Nahrmittel GmbH [2011] EWHC 199 (Ch) [2011] FSR 21 as follows:

In the present case, on the basis of the judge’s findings:

It was those reasons which led the judge to his conclusion that in all the circumstances the defendants’ use of the sign did not involve “tolerable confusion”. In my judgment this was an assessment with the judge was entitled to make. In addition, the last of the formulated principles is that once a defendant is aware that his sign is deceptive, he must stop. Following the judge’s judgment, that is the position in this case.

I would therefore uphold the judge’s judgment on liability for trade mark infringement.

On the footing that the appeal against liability failed, there was no separate ground of appeal attacking the particular remedies granted by the judge. I would therefore uphold the judge’s order and dismiss the appeal.