Compass Publishing BV v Compass Logistics Ltd

In this action the claimant is Compass Publishing BV. It is part of a group of companies engaged in business consultancy worldwide (“the Compass Group”). The ultimate parent of this group is a company called Compass International BV. The Claimant owns all the registered trade marks which are used by the group companies throughout the world, including three which are in issue in these proceedings. The companies within the group which trade under the name COMPASS within the United Kingdom are called Compass Management Consulting Limited and Compass Limited.

There are three registered trade marks relevant to these proceedings. They are:

The Claimant does not carry on trade. Other members of the Compass Group use the marks under licence and have done so for some years. In this action, no point is taken as to the fact that the marks are not used by the Claimant itself but by other Group companies. References in this judgment to use by the Claimant should be read accordingly.

The Defendant is Compass Logistics Limited. It was incorporated in April 1993, under the name “Oracle Logistics International Limited”. On 15 May 1995 it changed its name to “Compass Logistics International Limited”. On 15 May 2000 it changed its name again, to the one it currently uses. It is said that, since May 1995, it has traded under or by reference to the name or mark “Compass Logistics” although occasionally that has been abbreviated to “Compass” alone. The company offers management consultancy services. As its name suggests, this involves advising clients in relation to logistics and the supply chain. It offers project management services to assist clients in the implementation of the consultancy recommendations it makes. By the time the claim form in this action had been served, it had achieved an annual turnover of just under £1M under its name.

The Claimant alleges infringement of each of its three registered trade marks. There is no claim to passing off. It is no part of the Claimant’s case that there has been confusion in the market place between the Defendant and its business on the one hand and the Claimant (or any other member of the Compass Group) and the latter’s business on the other. The Defendant asserts that there has been no confusion.

The Defendant denies infringement. It also raises a Part 20 claim for revocation and invalidity of the trade marks or the relevant parts of them. The purpose of the latter claim is to ensure that, if the Claimant has any rights in its registered trade marks, they do not extend to the type of services offered by the Defendant.

Although separate issues of infringement and validity arise in relation to each of the marks in issue, there is a considerable area of overlap. Furthermore both Mr Iain Purvis, who appears for the Claimant, and Mr Roger Wyand QC, who appears for the Defendant, agree that, save in respect of one issue, there is no need to consider separately the 1996 UK Mark. All the issues which relate to it are determined by the outcome of the issues relating to the other marks. It is convenient to consider first the issues of infringement and validity as they relate to the CTM.

Article 9 of Council Regulation 40/94 provides:

“1.

A Community trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade :

(a)

any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered;

(b)

any sign where, because of its identity with or similarity to the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood or confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark….”

The Claimant argues that, on the assumption that the CTM is valid, the Defendant infringes under both of these provisions.

As far as the claim under Article 9.1(a) is concerned, the Defendant accepts that it has used its sign in respect of identical services, that is to say on business consultancy services within Class 35. The area of dispute between the parties in relation to infringement is as to whether the Defendant uses a sign which is identical to the registered mark. The Claimant puts its case in two ways. First, it argues that the Defendant uses “COMPASS” alone. This is the mark as registered. Second, it says that the sign “COMPASS LOGISTICS” is also identical to the registered mark.

There is no doubt that, from time to time, the Defendant has referred to itself and the services it offers by reference to the sign “COMPASS” alone. Only a small number of the Defendant’s documents were disclosed for the purpose of the action. It was not made clear what the parameters for selection were. There appears to have been almost no disclosure of any of the correspondence with clients and potential clients. Nevertheless, I think Mr Purvis is prepared to accept the documents which have been produced as a reasonable snapshot of the use of the signs “COMPASS LOGISTICS” and “COMPASS” in the Defendant’s documentation. Two examples illustrate this use. The first is a proposal sent by the Defendant to Becton Dickinson in June 1966. On the cover is a logo consisting of a compass design together with the words “COMPASS LOGISTICS”. At the bottom of the page is a reference to “Compass Logistics International Ltd”. There are a number of references to “COMPASS LOGISTICS” in the body of the proposal. The report also contains the following:

“Identification of targets

1.

BD would identify targets for Europe and possibly USA.

2.

Compass would identify targets for the Far East and possibly UK.

3.

BD and Compass would then categorise into target types.

4.

Identify possible contact name and send out a mailshot in the name of Compass thus avoiding any mention of BD.

5.

Advertising is a further option. BD would identify the appropriate trade press. Compass would draft and design advertisement and agree with BD. The advertisement would be placed in the name of Compass. Responses would then be discussed and evaluated.”

“BD” in this passage is a reference to Beckton Dickinson.

It appears that the Defendant has also used the sign “COMPASS” alone in more general literature. For example when it changed its name from “ORACLE”, the Defendant sponsored after dinner liqueurs and port at the Logistics Conference 1995 held in Birmingham in June of that year. In the conference programme, the Defendant’s sponsorship is publicised. The copy refers to Compass Logistics having been renamed. The last paragraph reads as follows:

“If your need is for expertise and support of the right quality when addressing your next project or development, then Compass are ideal partners to help in the process.”

It is not disputed that this wording was almost certainly composed and supplied by the Defendant.

Mr Wyand argues that this sort of use should be disregarded as de minimis. I do not accept that submission. Mrs Bell, the wife of one of the founding members of the Defendant, gave evidence in relation to this. She said that in conversation members of the company say “COMPASS LOGISTICS” sometimes and “COMPASS” sometimes. She described it as a habit. She said that this was done verbally but that it was not normally done in written documents. What was apparent from her testimony was that there was no rule or practice within the Defendant not to use “COMPASS” alone, nor was it thought improper to use it. This is not surprising. Until this litigation commenced, the Defendant did not know of the Claimant. It had no reason to believe it was necessary to use its full name in written material. Furthermore the word “logistics” alludes to the type of work undertaken by the company. The most important part of the company’s name is the word “COMPASS”. In these circumstances it is hardly surprising that the company refers to itself, both orally and in writing, as “COMPASS”. The use of that sign by the company was deliberate, not accidental. Clients and the public were being told that this was the name by which the company could be identified.

It follows that, subject to the question of validity, the Defendant has infringed the CTM. However, it is also necessary to consider whether it has infringed by use of the sign “COMPASS LOGISTICS” because, unless it has, any injunctive relief granted under Article 9.1(a) (or s 10(2)(a) of the Trade Marks Act 1994) would be fashioned to prohibit use of “COMPASS” alone.

Mr Purvis argues that, for trade mark purposes, “COMPASS LOGISTICS” is identical to “COMPASS”. The word “logistics” adds nothing of trade mark significance to the word “compass”. The Defendant is using the whole of the Claimant’s mark with a non-distinguishing addition. He points out that the approach adopted by UK courts under the pre-1994 legislation was to say that the addition of such irrelevant matter did not prevent there being a finding of infringement. He also refers me to the decision in Decon Laboratories v Fred Baker Scientific [2001] RPC 293 in which, under the current domestic legislation which, for this purpose, is identical to the Council Regulation, it was held that “DECON-AHOL” and “DECON-PHASE” were to be treated as identical to the registered mark “DECON”. As Pumfrey J said in that case:

“… this use, as a prefix accompanied by a more descriptive suffix, seems to me to be well within the scope of the ordinary and fair use of the claimant’s mark…It seems to me that this is an example of the use of an identical sign upon goods in respect of which the claimant’s mark is registered and that there is accordingly infringement under section 10(1).” (p 299)

However, as Mr Purvis concedes, the test for identicality of marks under Article 9.1(a) has now been considered by the European Court of Justice in LTJ Diffusion SA v Sadas Vertbaudet SA (Case C-291/00) [2003] ETMR 83. In the light of that the approach adopted in Decon must be reassessed.

In LTJ the Court said:

“50

The criterion of identity of the sign and the trade mark must be interpreted strictly. The very definition of identity implies that the two elements compared should be the same in all respects. Indeed, the absolute protection in the case of a sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered, which is guaranteed by Article 5(1)(a) of the directive, cannot be extended beyond the situations for which it was envisaged, in particular, to those situations which are more specifically protected by Article 5(1)(b) of the directive.

51

There is therefore identity between the sign and the trade mark where the former reproduces, without any modification or addition, all the elements constituting the latter.

52

However, the perception of identity between the sign and the trade mark must be assessed globally with respect to an average consumer who is deemed to be reasonably well informed, reasonably observant and circumspect. The sign produces an overall impression on such a consumer. That consumer only rarely has the chance to make a direct comparison between signs and trade marks and must place his trust in the imperfect picture of them that he has kept in his mind. Moreover, his level of attention is likely to vary according to the category of goods or services in question (see, to that effect, Case C 342/97 Lloyd Schuhfabrik Meyer [1999] ECR I 3819, paragraph 26).

53

Since the perception of identity between the sign and the trade mark is not the result of a direct comparison of all the characteristics of the elements compared, insignificant differences between the sign and the trade mark may go unnoticed by an average consumer.”

54

In those circumstances, the answer to the question referred must be that Article 5(1)(a) of the directive must be interpreted as meaning that a sign is identical with the trade mark where it reproduces, without any modification or addition, all the elements constituting the trade mark or where, viewed as a whole, it contains differences so insignificant that they may go unnoticed by an average consumer.”

Mr Purvis places particular reliance on the reference to imperfect recollection in paragraph 52. He argues that “COMPASS LOGISTICS” will be recalled as “COMPASS” by many potential clients, in much the same way as members of the company refer to it themselves as “COMPASS”. The urge to shorten by leaving out the descriptive word “logistics” will be common. Furthermore members of the public could well regard the word “compass” as the trade mark and the word “logistics” as referring to the type of services offered.

After the hearing in this action, the Court of Appeal gave judgment in Reed Executive plc v Reed Business Information Ltd [2004] EWCA (Civ) 159. The Decon approach no longer represents the law. Although Jacob LJ described the LTJ judgment as opaque, he said that the ECJ did not intend to soften the edges of “strict identity” very far. He came to the conclusion that the significance of the deletion or addition to the claimant’s mark must be taken into account in considering the question of identity.

It seems to me that the advantage to the trade mark proprietor of Article 9.1(a) is that it releases him from having to address the issue of confusing similarity. That advantage is only to be secured in cases where the mark and sign are so close that one could be considered a counterfeit of the other. However identity still exists where the marks look and sound identical save to the eye or ear of an expert. Differences which ordinary members of the public will not notice, save by close side-by-side comparison or the pronunciation of a 1940’s BBC news reader, can be ignored. Where such small differences exist, in the market place the mark and sign are identical.

Applying the LTJ approach here, “COMPASS LOGISTICS” is not identical to “COMPASS”. The differences between these two is apparent and would be identified without difficulty or prior coaching by members of the public. There is nothing in LTJ or Reed to suggest that noticeable differences should be ignored because they have only limited trade mark significance. To avoid infringement, the addition must not only be more than insignificant (see LTJ paras. 53 and 54) but it must have trade mark impact. For example, were the Defendant to use in an advertisement the sentence “At Compass logistics are king” or “At Compass logistics solutions are provided”, it could be said that the only relevant sign being used is “Compass” alone (see similar examples given in Reed at paragraph 37). In these cases “logistics” is no part of the identifier of the company’s services. But that is not the case here. “COMPASS LOGISTICS” is the name of the Defendant and is used, and would be perceived, as its trade mark. It follows that the case of infringement under Article 9.1(a) by the use of “COMPASS LOGISTICS” fails and it is necessary to consider whether there is infringement under the provisions of Article 9.1(b).

It is frequently said by trade mark lawyers that when the proprietor’s mark and the defendant’s sign have been used in the market place but no confusion has been caused, then there cannot exist a likelihood of confusion under Article 9.1(b) or the equivalent provision in the Trade Marks Act 1994 (“the 1994 Act”), that is to say s. 10(2). So, no confusion in the market place means no infringement of the registered trade mark. This is, however, no more than a rule of thumb. It must be borne in mind that the provisions in the legislation relating to infringement are not simply reflective of what is happening in the market. It is possible to register a mark which is not being used. Infringement in such a case must involve considering notional use of the registered mark. In such a case there can be no confusion in practice, yet it is possible for there to be a finding of infringement. Similarly, even when the proprietor of a registered mark uses it, he may well not use it throughout the whole width of the registration or he may use it on a scale which is very small compared with the sector of trade in which the mark is registered and the alleged infringer’s use may be very limited also. In the former situation, the court must consider notional use extended to the full width of the classification of goods or services. In the latter it must consider notional use on a scale where direct competition between the proprietor and the alleged infringer could take place.

This is of significance in this case because, as noted above, there is no suggestion that there has been any confusion in the market place between the activities of the Defendant under the sign “COMPASS LOGISTICS” and the Claimant, or any other member of the Compass Group, under the mark “COMPASS”. Mr Wyand relies on this as being a good indication that there is no likelihood of confusion. But in my view Mr Purvis is right when he argues that the question of infringement has to be answered by assessing the likelihood of confusion were the Claimant to use the mark “COMPASS” in a normal way in respect of all services covered by the registration, including for business consultancy services in the field of logistics, that is to say the same specialist field the Defendant operates in.

The test for likelihood of confusion has been considered in a number of ECJ decisions, including Sabel BV v Puma AG [1998] RPC 199. The likelihood of confusion must be appreciated globally, taking account of all relevant factors. It must be judged through the eyes of the average consumer of the goods or services in question. That customer is to be taken to be reasonably well informed and reasonably circumspect and observant, but he may have to rely upon an imperfect picture or recollection of the marks. The court should factor in the recognition that the average consumer normally perceives a mark as a whole and does not analyse its various details. The visual, aural and conceptual similarities of the marks must be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components. Furthermore, if the association between the marks causes the public to wrongly believe that the respective goods come from the same or economically linked undertakings, there is a likelihood of confusion.

Applying those considerations to the facts of this case, there can be little doubt that a likelihood of confusion exists between the Defendant’s use of the sign or mark “COMPASS LOGISTICS” in relation to its business consultancy services and the notional use of the mark “COMPASS” used in relation to business consultancy services, including those in relation to which the Defendant specialises. The dominant part of the Defendant’s mark is the word “compass”. For many customers, the word “logistics” would add little of significance to it. It alludes to the type of area of consultancy in which the services are carried out. This is consistent with the way in which “COMPASS” is used alone in some of the Defendant’s written material and Mrs Bell’s evidence, referred to above. Even were one to assume that the Claimant restricted its use of the mark to non-logistics consultancy services, there would be the same outcome. It is likely that a significant section of the public would consider that “COMPASS LOGISTICS” represents the logistics branch of the “COMPASS” service.

The reason why the rule of thumb referred to above does not give a safe indication of whether there is infringement in this case is because of the nature of the parties’ respective presences in the market. They are not in competition with each other. The business consultancy field is enormous. Indeed, on the basis of the evidence before me, the logistics section of the business consultancy field is enormous. The Claimant’s core activities are not in the logistics field, the Defendant’s are. Furthermore, even within that field, the Defendant is a very small player, as will be explained below. In those circumstances it is not surprising that there has been no confusion in the market place. To date the Claimant and the Defendant trade in different parts of the market. This does not come close to imitating the notional world used for determining likelihood of confusion under Article 9.1(b).

For the above reasons, the use by the Defendant of the sign “COMPASS LOGISTICS” also infringes the CTM under Article 9(1)(b).

The starting point for the Defendant’s attack on the validity of the CTM is the combined effect of Articles 52(1)(c) and 8(4). The former provides:

“1.

A Community trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings: …

(c)

where there is an earlier right as referred to in Article 8(4) and the conditions set out in that paragraph are fulfilled.”

and the latter:

“4.

Upon opposition by the proprietor of a non-registered trade mark or of another sign used in the course of trade of more than mere local significance, the trade mark applied for shall not be registered where and to the extent that, pursuant to the law of the Member State governing that sign,

(a)

rights to that sign were acquired prior to the date of application for registration of the Community trade mark, or the date of the priority claimed for the application for registration of the Community trade mark ;

(b)

that sign confers on its proprietor the right to prohibit the use of a subsequent trade mark.”

Based on these provisions, the Defendant’s case is that by 1 April 1996 (the relevant date for the CTM) it had acquired a valuable and protectable goodwill in relation to the use of the mark “COMPASS LOGISTICS” for specialist consultancy services relating to logistics. Registration of the CTM purported to give the Claimant the right to use the mark “COMPASS” for anything falling within the wide class of services for which it was registered. This would include, as is common ground, specialist consultancy services relating to logistics. Had the Claimant wanted to use its mark for such services it could have been prevented from so doing by means of a successful passing off action brought by the Defendant. Accordingly the CTM should be declared invalid to the extent that it covers any field of business consultancy, particularly relating to logistics, where use of “COMPASS” would cause confusion with “COMPASS LOGISTICS”.

This part of the case raises four issues, three of law, one of fact. The first is as to the meaning of the words “the proprietor of a non-registered trade mark or of another sign” and “rights to that sign” in Article 8(4). The second is as to the meaning of the words “right to prohibit the use of a subsequent trade mark” in that Article. The third is as to the meaning of the words “of more than mere local significance” in the Article. The fourth is as to whether, on the facts, the claimed use by the Defendant of its name or mark “COMPASS LOGISTICS” prior to 1 April 1996 was such as to give the Defendant sufficient rights to partially invalidate the CTM.

Before tackling each of these, it is worth considering the context in which Articles 8(4) and 52 arise. Counsel tell me that there are no relevant travaux préparatoires which can be consulted to elucidate the intention behind these provisions nor, at the moment, is there any relevant jurisprudence from the ECJ. Nor do they suggest that there are any national court decisions on these provisions which could assist in analysing their purpose or effect. Such guidance as there is is to be found in the overall structure of the Council Regulation and the recitals to it.

The creation of a single market within the European Union within which goods can flow without restriction is inevitably compromised by the existence of national intellectual property rights. This is a particular problem where trade marks are concerned. No inventive or artistic skill need be involved in the creation of a trade mark. The result is that there can be a proliferation of national trade mark rights designed to safeguard markets within Member States. It will help the objective of achieving a single market within the European Union if a unitary trade mark could be made available to traders which would have effect Europe-wide in accordance with a single, Europe-wide trade mark law. This philosophy is set out in the first recital to the Council Regulation:

“Whereas it is desirable to promote throughout the Community a harmonious development of economic activities and a continuous and balanced expansion by completing an internal market which functions properly and offers conditions which are similar to those obtaining in a national market; whereas in order to create a market of this kind and make it increasingly a single market, not only must barriers to free movement of goods and services be removed and arrangement be instituted which ensure that competition is not distorted, but, in addition, legal conditions must be created which enable undertakings to adapt their activities to the scale of the Community, whether in manufacturing and distributing goods or in providing services; whereas for those purposes, trade marks enabling the products and services of undertaking to be distinguished by identical means throughout the entire Community, regardless of frontiers, should feature amongst the legal instruments which undertakings have at their disposal;”

As Mr Purvis puts it in his supplemental skeleton, the underlying message is that CTMs are a good thing because they cover the whole of the Community. On the other hand, it is recognised that it is not appropriate to do away with the rights created by national legislation. This is covered by the fifth recital:

“Whereas the Community law relating to trade marks nevertheless does not replace the laws of the Member States on trade marks; whereas it would not in fact appear to be justified to require undertakings to apply for registration of their trade marks as Community trade marks; whereas national trade marks continue to be necessary for those undertakings which do not want protection of their trade marks at Community level”.

Thus a distinction is drawn between trade mark rights acquired “at Community level” and those acquired under national legislation. The reconciliation of these potentially conflicting rights is likely to be a growing problem. There will soon be 25 members of the European Union. In each there will be trade mark rights at the Member State level. Although this will include a large number of national registered rights, it will also include a far larger number of non-registered rights, that is to say the sort of rights which, in Common law countries, are protected by passing off proceedings.

The sixth recital provides:

“Whereas the rights in a Community trade mark may not be obtained otherwise than by registration, and registration is to be refused in particular if the trade mark is not distinctive, if it is unlawful or if it conflicts with earlier rights;”

Taken at face value, this would suggest that the solution adopted by the Regulation is that CTMs will be invalidated by the existence of earlier rights, including those at the national level. However the sixth recital is not specifically directed or limited to the impact of the latter types of rights. It appears to cover earlier rights of any sort including, prior CTMs. Furthermore, as will be discussed below, the Regulation adopts a rather more complicated solution than this.

One of the objectives of the Regulation is to protect the interests of the owners of earlier rights. Those rights should not be taken away or diminished by after-acquired CTMs. Any such protection ought to cater for two different things. First is the ability of the proprietor of the earlier right to sue users of subsequent marks for infringement, including users who acquire CTMs. Second is the ability of the owner of the earlier right to use those rights without fear of being sued himself for infringement of subsequently acquired rights. The way these objectives are secured differs as between registered and unregistered earlier rights. I shall consider the former first.

In the case of a conflict between registered rights, the entitlement of the proprietor of a national registration to sue for the use of a conflicting mark which is the subject of a later CTM is preserved by Articles 106. Subject to limited exceptions such as acquiescence, the owner of a subsequent CTM does not acquire through the Regulation immunity from being sued for infringement of such earlier rights under national laws. This is quite different to the position which obtains under our 1994 Act which provides, at s. 11(1), that one registered trade mark cannot be infringed by the use of another registered trade mark.

Securing the second strand of protection for the owner of the earlier rights is more complicated. This objective could be achieved by invalidating conflicting later CTMs, by allowing both the earlier rights and the CTMs to live side by side with the former having immunity from the latter or a combination of these.

In the case of registered earlier rights, only the first course is used. It has already been noted that the Regulation contains no general equivalent to s. 11(1) of the 1994 Act. Therefore, if the use of an earlier national registration is not to infringe a later CTM, the latter must be invalidated. This is what is achieved by the combined effects of Articles 8(1) and (2). The former provides that a CTM shall not be registered if it is identical or confusingly similar to “an earlier trade mark”. The latter defines an earlier trade mark as including CTMs and:

“trade marks registered in a Member State, or, in the case of Belgium, the Netherlands or Luxembourg, at the Benelux Trade Mark Office.”

Similarly a granted CTM can be invalidated by a prior national registered mark under Article 52(1).

In the case of unregistered earlier rights once again the twin objectives of preserving the right to sue and immunity from being sued by the users or owners of subsequent CTMs are met. As far as the former is concerned, this is achieved by the provisions of Article 107(1) and (2) which are similar in effect to Article 106. The owner of the earlier right can sue users of the later CTM for infringement under national laws.

As far as the latter is concerned, a more complicated route is adopted than prevails where the earlier right is a registered mark. First, Article 107(3) provides:

“3.

The proprietor of the Community trade mark shall not be entitled to oppose the use of the right referred to in paragraph 1 (i.e. an “earlier right which only applies to a particular locality”) even though that right may no longer be invoked against the Community trade mark”.

Thus the owner need not worry about the existence of subsequent CTMs. His continued use of his national unregistered rights cannot be attacked (unless, for example, he moves into a new Member State in which he does not qualify as owner of an earlier right).

In addition to this, the provisions of Article 8(1) and (2) – providing, inter alia, that an earlier national registered right can invalidate a subsequent CTM – is mimicked, in part at least, by Article 8(4). However, it is significant that the blanket “this town is not big enough for the two of us” approach adopted in relation to conflicts between registered rights is not followed. Here it is only if the earlier national right is of more than local significance that the later CTM will be invalidated. This is of significance to the proper working of the CTM system. In a market of over 400 million people in 25 States, there are likely to be a myriad of minor unregistered rights in trade marks and signs. If all of these could invalidate later CTMs, the objective of securing Community wide trade mark rights would be frustrated in many, if not most, cases.

With these considerations in mind, I can turn to consider the arguments raised in this case.

Mr Purvis argues that, whatever the strength of the Defendant’s case in passing off at the relevant time, it cannot use Articles 8(4) and 52(1)(c) to invalidate the CTM. Those Articles only apply where there is a proprietor of a non-registered mark or sign who owns rights in the mark or sign. Whatever may be the position in other Member States, this can have no application to causes of action in passing off. There is no such thing as the proprietor of an unregistered trade mark under English law. This is consistent with s 2(2) of the 1994 Act which provides:

“No proceedings lie to prevent or recover damages for the infringement of an unregistered trade mark as such; but nothing in this Act affects the law relating to passing off.”

The distinction drawn there between unregistered trade marks and the cause of action in passing off reflects long established jurisprudence in the common law. Mr Purvis draws my attention to the well known passage in Burberrys v Cording (1909) 26 RPC 693 in which Parker J noted that there is no such thing as a monopoly in a word or name at common law. What is protected is not the name or word, but the trading reputation generated under it. He also relies on a passage to much the same effect in the judgment of Millett LJ in Harrods v Harrodian School [1996] RPC 697. Since there is no such thing as a proprietor of an unregistered trade mark in this country, the Defendant has no locus to invoke the provisions of these Articles. Mr Purvis is prepared to accept that this approach would not work if the common law mark was very famous, such as “Kodak”.

I do not accept this argument. If Mr Purvis were right there would be an anomaly under which traders with valuable prior rights, protectable by passing off proceedings in common law countries, would be unable to invalidate subsequent Community trade marks applied for by later competitors whereas, if they have similar rights in relation to the same marks on the Continent, they would. Furthermore, the same construction of proprietorship and unregistered rights would, presumably, apply to the use of the same words in Article 107. The result would be that the owner of the prior unregistered right in the United Kingdom would acquire no immunity from being sued for infringement by the subsequent CTM, no matter how extensive and valuable his rights may be. Again, this would not be the case on the Continent. No policy reasons were advanced by Mr Purvis for such an unjust result.

The fallacy is to assume that the Regulation was drafted with common law jurisprudence in mind. There is nothing to suggest it was. The Regulation must be construed purposively to have the same effect in all Member States. Article 8(4) is designed to prevent registration of marks which, as explained in the sixth recital, conflict with earlier “rights”. The important factor is the collision between the new Community trade mark and the earlier right. The fact that the latter can interfere with the former is what counts. The precise way in which the national legal system gives the objector title to interfere is of no significance. Although it may be true that in the common law system the claimant in a passing off action cannot claim to own the mark he sues on, for the purposes of the Regulation his ability to interfere with the Community mark are just as strong as if he did. Furthermore, were Mr Purvis correct, there would be no room for the Kodak exclusion. It follows that a trader who has a reputation protectable by passing off is to be treated as a proprietor of relevant rights for the purposes of Article 8(4).

Although I have treated this as a separate point, it is closely allied to the previous one. Mr Purvis points out that in a passing off action the injunction granted is normally not absolute. It frequently is qualified so as to allow the defendant to continue to use his mark if he adequately distinguishes his mark, goods or services from those of the claimant. The claimant therefore does not have a right to prohibit the use of a subsequent mark. He only has a right to prevent it being used in a particular manner, namely one which is likely to cause confusion and damage. Once again, Mr Purvis appears to accept that, in the Kodak example, an unqualified injunction might be possible. Based on this, he says that the conditions in Article 8(4)(b) cannot be met.

There is a fallacy in this argument. Article 8(4)(b) is concerned with whether a person having a relevant interest in an earlier mark is able to prohibit the deployment of the new registered (or to be registered) mark. In determining that, what has to be considered is notional fair use of the new mark. Such notional fair use includes use without disclaimers. If a case of passing off exists, such use could be prohibited.

The meaning of the words “of more than mere local significance” is the most difficult point of construction under Article 8(4). In his supplemental skeleton, Mr Wyand argues that Article 107(3) is “the counterpart” of Article 8(4). It is true that both refer to earlier rights which apply to particular localities, but it is important to have in mind that these two Articles are directed at different things. In the case of a national unregistered mark, it appears clear that the effect of Article 107(3) is to give immunity from infringement proceedings brought on the basis of a subsequent CTM. However, assume that a trader who owns, say, the unregistered French rights also owns equivalent unregistered rights to the same mark in all Member States of the Community. It is difficult to believe that in such a case the Regulation intended immunity from suit to be lost. The trader’s interests in his mark is protected by a mosaic of national laws, each of which gives protection no further than national borders, but it must be that he is just as protected from proceedings brought on the basis of subsequent CTMs as he would be if he had only acquired non-registered rights in one Member State or a part of that State. In other words, his immunity from suit must be as wide or narrow as his rights are at the time his competitor acquires, or seeks to acquire, a conflicting CTM. It seems to me that the words “an earlier right which only applies to a particular locality” in Article 107(1) means any non-Community right.

The width of this protection has an impact on the construction of Article 8(4). Because Article 107(3) gives the owner of the earlier unregistered rights as much protection as he need against being sued by the owner of a subsequently acquired CTM, there is no need to invalidate the latter registration. This is quite different to the arrangement relating to conflicting registered rights where, as explained above, the only protection against being sued is the ability to invalidate the subsequent CTM. In other words, there is no reason to believe that Article 8(4) is primarily designed to protect the owner of the earlier unregistered right. He does not need such protection. If that is right, the primary purpose of Article 8(4) is to prevent the registration of or invalidate granted CTMs when there is an unregistered mark of sufficient width that it would significantly impair the ability of the CTM to deliver the Community-wide rights which the Regulation is seeking to encourage. The point is put succinctly by Mr Purvis in his supplemental skeleton:

“The existence of the defence under Article 107(3) tends to justify the construction which we have given to Article 8(4). In the absence of the defence, it might be said that it would be unfair to require significance in the Community context, since this would leave a large number of proprietors of unregistered rights exposed to liability for trade mark infringement. However, because they have the benefit of the defence anyway, the question is simply “how significant should the mark be before it justifies refusing registration of the CTM altogether?”.

Since the Article is not primarily directed to the protection of pre-existing national rights, there is no reason for the question of whether rights are local or not to be measured against national rights or geography. The Article is concerned with the validity or otherwise of Community rights and, it seems to me, whether or not rights are locals is to be assessed from a Community perspective. No doubt from that point of view a reputation generated by a village shop will be regarded as local. But, notwithstanding Mr Wyand’s arguments, the concept is not limited to that sort of case. Any mark which is used within a part of the Community but not all of it may be called local. If this is correct, then a mark which is used in, say, France, Spain, Germany, Austria and Italy could be regarded as local.

However that is not an end to the matter. To fail to invalidate a later Community registration the earlier mark must not just be local, it must be of “mere” local significance. Mr Wyand argues that the use of the word “mere” indicates that what is intended is something of a small nature. I agree but, once again, this has to be looked at from a Community perspective. Thus, to take the example given in the previous paragraph, if the earlier trade mark had been used on a large scale in relation to, say, wine fermenting equipment, the use in those five countries would represent use in the most important part of the Community as far as that equipment is concerned. It could not be dismissed as being of mere local significance. Its use would be local but it would be of significance vis-à-vis the wine making industry of the Community. In such a case, the existence of unregistered rights in that area would significantly interfere with the ability of a conflicting CTM in relation to the same type of equipment to secure the Community-wide impact favoured by the Regulation.

In summary, it seems to me that a mark should be considered as having mere local significance within the meaning of Article 8(4) if its geographical spread is restricted to substantially less than the whole of the European Union and that, from the perspective of the Community market in the services or goods in question, the mark is of little significance. If the prior mark covers the whole or substantially the whole of the Community Market or it is significant there, its Community impact will be too large to ignore and it will invalidate a subsequent application for a conflicting Community trade mark. In such a case the later trader will either have to apply for national marks in those territories where the earlier mark is not protected or, if he has secured registration, should be made to turn his Community mark into national marks in those territories pursuant to the provisions of Article 108. On this approach, the borderline which determines whether an earlier mark is or is not too small to invalidate a subsequent Community trade mark is imprecise. However, whatever the correct construction of Article 8(4), such imprecision is inevitable.

This leads to the consideration of the factual dispute namely whether the use by the Defendant of its name or mark “COMPASS LOGISTICS” prior to 1 April 1996 was such as to give it sufficient rights to partially invalidate the CTM? Logically this splits into two questions. First, has the Defendant proved that it had sufficient reputation to bring successful passing off proceedings at the relevant date? Second, if it has, was its interest in the mark “COMPASS LOGISTICS” of more than mere local significance?

The Defendant’s case is that it built up sufficient goodwill in its mark “COMPASS LOGISTICS” between its adoption on 15 May 1995 and 1 May 1996 to bring successful passing off proceedings against use of the mark “COMPASS” in relation to its type of management consultancy by another trader. The onus lies on it to demonstrate this. A reputation generated among a very few people will not do. There must be a reputation amongst a substantial number of potential customers although not necessarily a majority (see Kark (Norman) Publications Ltd. v. Odhams Press Ltd. [1962] RPC 163 and Saville v. June Perfect [1941] RPC 147).

As Mr Purvis points out, this essential requirement of a passing off complaint is not pleaded by the Defendant. All that it pleads is that it has “used its sign”. It does not plead that it had become distinctive. Nevertheless it is clear that the Defendant’s case was and is that it had built up sufficient goodwill. It served some evidence clearly directed to addressing this issue. That said, what is noticeable is just how sparse the Defendant’s evidence is. It has produced a schedule prepared by its accountants which claims that in the year to 30 June 1996, it spent £6,535 on “advertising marketing & promotion expenditure”. How much of that occurred before 1 May is not addressed. Furthermore there is nothing to indicate what items were included in this very small expenditure. Indeed, there is nothing which shows that any part of this was used in promoting the name “COMPASS LOGISTICS”. Furthermore the documentation produced at the trial was similarly thin. Very few contemporaneous documents were produced showing any use of “COMPASS LOGISTICS” or “COMPASS” even though a search for them had apparently been undertaken. In the relevant 10 months, turnover of something less than £144,000 was achieved. This was with 8 clients. One of these, however was in Switzerland. It is not suggested that work for the latter built up any goodwill in England or, for that matter, any other part of the European Union. As noted above, the Defendant did sponsor after dinner liqueurs and port at a June 1995 conference. That is referred to in the conference programme.

Mrs Bell gave evidence on this issue. In the witness box she said that the four senior employees of the company (referred to as consultants), including her husband, were involved in promoting the company. None of them gave evidence. Mrs Bell was not involved in this activity since her role was to recruit personnel. In the result she gave no evidence as to what form promotion by the four consultants took. There was no evidence as to whether they emphasised the used of the mark “COMPASS LOGISTICS”. There was also no evidence given by clients or other third parties who could talk reliably of the Defendant’s activities in the relevant 10 months.

In addition to this paucity of direct evidence of promotion or reputation, Mr Purvis argues that the Defendant probably had little or no visible profile. He says that such material as is before the court suggests that the four consultants worked more or less autonomously. What the clients were buying was the expertise of the individuals. The company is not shown to have had any significance at the time. This submission is based on the fact that, at least during the relevant period, the overwhelming majority of the fees were not paid to the Defendant but were paid directly to the person performing the relevant consultancy work. As Mrs Bell accepted, all that went to the company were small sums to help in administration. She also said that directors’ salaries were not paid at this time because the company had insufficient funds. The impression given is of a company living hand to mouth and struggling to establish itself in the logistics corner of the business consultancy industry.

The paucity of evidence may in part be due to the fact that the relevant period was some 8 years ago and, as Mrs Bell said, some documentation had been lost or destroyed in the meantime. Taking all the above factors into account, I have come to the conclusion, but with considerable misgivings, that by 1 May 1996 the Defendant had probably built up sufficient reputation in “COMPASS LOGISTICS” to support a passing off action. It did have seven clients and, on a balance of probabilities, would have canvassed more. Had it wanted to exhibit at the next year’s conference and a competitor using the mark “COMPASS” had wanted to exhibit there as well, the Defendant would probably have been able to obtain relief. However, even if it existed, that reputation was very small. In many areas of the country, and for most of the potential clients who used logistics, the Defendant would have no reputation at all.

In relation to this issue the evidence of one of the Defendant’s witnesses, Mr Alan Waller, until recently the Chairman of the Institute of Logistics and Transport, was illuminating. He described the breadth of the logistics field. He said that logistics, and consultancy relating to it, was of importance in both the public and private sector. It applied not just to manufacturing industry but to service industries as well. For example banks have logistics issues concerning the flow of documents and money. Companies involved in the collection and transmission of data also have to take into account logistics and may need logistics consultants. He said that it is difficult to find an organisation that would not have a need for someone to study logistics, although that would not necessarily mean that they would all employ the same type of consultant. He agreed that logistics covers an enormous field and there are specialist logistics consultants who are good at one part of it and have expertise which is valuable in one part of the logistics field; and others may be useful and expert in another part of the broad logistics field.

I have come to the conclusion that the Defendant has proved, on a balance of probabilities, that in relation to England and Wales by the end of the relevant period it had built up a reputation is a small area of the logistics consultancy market among a small number of potential customers. Even in relation to this national market, the Defendant could be described as an extremely small player. The Defendant has neither alleged nor suggested that it had any reputation in the rest of the European Union. In relation to the logistics consultancy field there, its presence was microscopic.

In these circumstances, the Defendant’s passing off rights can be categorised as of mere local significance. It follows that the attack on the validity of the CTM fails and the Claimant succeeds in relation to its case of infringement of this registered trade mark. I should point out that the Defendant did not attempt to run the Article 107(3) defence. It is not necessary to speculate why.

S 10 of the 1994 Act is in all material respects the same as Article 9 of Council Regulation 40/94. Accordingly, the analysis which is set out above in relation to the CTM applies equally to the 1988 UK Mark. Once again two cases of infringement are advanced; (i) the use of an identical mark for identical services (s 10(1)) and (ii) use of a similar mark for identical or similar services (s 10(2)). As explained above, I have concluded that “COMPASS LOGISTICS” is not identical to “COMPASS” for the purpose of this legislation. On the other hand the Defendant has used “COMPASS” alone. In relation to the latter use, the question of whether or not there is type (i) infringement is dependent on the Claimant showing that the Defendant is using its mark for identical services. This is a live issue in relation to the 1988 UK Mark because, unlike the CTM, its is only registered in Class 42. The relevant services are referred to at paragraph 2 above.

Although this did not feature prominently in Mr Wyand’s oral arguments, the Defendant’s case is as follows. The 1988 UK Mark is registered for services consisting of comparative analysis and evaluation of computing, computing systems and data processing. Whilst computers may be used in logistics this specification does not include specialist consultancy services relating to logistics. The latter services come within Class 39 of the International Classification. Since the latter is the type of consultancy offered by the Defendant, it is not offering services of the type covered by the registration.

I reject this submission. It may well be that the core activities undertaken by the Defendant fall within Class 39 and any trade mark registration sought by should include that Class. However, the issue is not what is the Defendant’s core activity, but whether, among the services it offers, some at least fall within the class or services for which the 1988 UK Mark is registered. Mr Purvis addresses this in his skeleton argument. He points out that in its “company fact file” dated February 1997, the Defendant claims to provide a one-stop service for a wide range of logistical problems or projects across the breadth of the supply chain. It claims that particular focus is provided in a number of areas. Ten areas are listed including “IT Specification and Implementation”. Furthermore under “Services Offered” the document states:

“I.T.

We recognise the key part that dynamic Information Technology and Communications strategy plays in the management of an effective Supply Chain. Simulation and Modelling Software is frequently used to test change scenarios and we are experienced in the leading commercial packages such as SAP R3, BPCS, PRMS etc.”

In another summary of the Defendant’s services, produced by it for an edition of “Food Industry Development China”, dated 22 June 1998, it says as follows:

“Compass Logistics works with companies who want to improve physical storage, handling and transport of their goods as well as the administration of order processing, inventory management and invoicing.”

It goes on to explain how it does this, in particular by looking for improvements for its clients’ businesses through various activities, which are listed in 8 bullet points. The last two of these are :

This is confirmed by the entries in the Defendant’s web-site under the heading “Systems Development and Implementation”. It offers to assist in the selection of appropriate software for warehouse management systems, to co-ordinate other companies and their equipment involved in interface issues, to support the client through professional system testing.

Mr Purvis argues that, in performing its services for clients, it specialises in reviewing existing systems to assess and evaluate their efficiency and this includes evaluating existing computer and data processing systems. “Benchmarking”, that is to say making a comparative analysis of systems, is an important part of these reviews.There are a number of references to benchmarking in the Defendant’s documentation.

In my view, Mr Purvis is correct to say that the Defendant offers services falling within the classification in the 1988 UK Mark. It follows that infringement under s 10(1) is made out.

Furthermore, even if, contrary to the above finding, the services offered by the Defendant are not within the class covered by the 1988 UK Mark, they are closely allied thereto. By parity of reasoning to that set out in relation to the CTM and Article 9(1)(b), there is also infringement under s 10(2).

The Defendant seeks revocation of this mark on the ground of non-use pursuant to s 46 of the 1994 Act. It argues that all of the Claimant’s activities fall within Class 35. Since, as is agreed, Class 42 cannot cover services which fall within other classes, including Class 35, there has been no relevant use. Although Defendant’s pleading proposed that the 1988 UK Mark should be revoked in whole or in part, Mr Wyand only argues for partial revocation. He says that the class should be limited sufficiently to ensure that it does not cover the Defendant’s activities, whether under s 10(1) or 10(2). To achieve this, he suggests that the classification be rewritten as follows:

“Providing advice to non-commercial organisations in the efficiency of IT hardware systems infrastructure and software applications but not including advising on management data produced by computer systems or the operational effectiveness or use of software applications in logistics and the supply chain.”

This led to an interesting dispute between the parties as to the width of Classes 35 and 42 as at the date of the application for the 1988 UK Mark. So far as relevant, at that time Class 42 of the Nice Classification was defined as follows:

“CLASS 42

Miscellaneous:

Explanatory Note

This class contains all services which could not be placed in other classes.

Includes, in particular:

… - Services rendered by persons, individually or collectively, as a member of an organisation, requiring a high degree of mental activity and relating to theoretical or practical aspects of complex branches of human effort; the services rendered by these persons demand of them a deep and extensive university education or equivalent experience; such services rendered by representatives of professions such as engineers, chemists, physicists, etc., are included in this class;

… services of engineers engaged in valuing, estimates, research and reports; …

Does not include, in particular:

– professional services giving direct aid in the operations or functions of a commercial undertaking (Class 35) …”

The first paragraph indicates that this class does not cover services covered by other classes and this is emphasised in particular in relation to Class 35 by the express exclusion in the last paragraph. Mr Wyand argues that if all of the Claimant’s activities fall within Class 35, they cannot fall within Class 42. In so far as material, the relevant definition of the scope of Class 35 is (or was at the relevant date) as follows:

“CLASS 35

Advertising and business.

Explanatory Note

This class includes mainly services rendered by persons or organizations principally with the object of:

(1)

help in the working or management of a commercial undertaking, or

(2)

help in the management of the business affairs or commercial functions of an industrial or commercial enterprise,

as well as services rendered by advertising establishments primarily undertaking communications to the public, declarations or announcements by all means of diffusion and concerning all kinds of goods or services. …

Does not include, in particular

… - services such as evaluations and reports of engineers which do not directly refer to the working or management of affairs in a commercial or industrial enterprise …

- professional consultations and the drawing up of plans not connected with the conduct of business (Class 42)”

As both parties agree, it is also necessary to take into account Registry practice in order to determine what services fall into which class. For that reason I have been shown the relevant passages in the Trade Mark Registry Guide which was current at the time of the application for the 1988 UK Mark and taken through the list of services which are expressly covered or excluded from one or other of the classes.

It would not be profitable to set out the whole of the relevant sections in this judgement. At risk of considerable over-simplification, the Guide appears to draw a distinction between services which directly relate to the running of a business, which fall into Class 35, and services which relate to advice on how to run a business, which fall within Class 42. This is confirmed by paragraph 9.17 of the Guide which, in dealing with the scope of Class 42, provides:

“9.17

– Information and advisory services included in this Class

Note: This Class contains all professional advisory and consultancy services except those which relate directly to the running or management of a business, which would fall in Class 35” (emphasis as in the original)

Mr Wyand argues that the sort of consultancy services offered by the Claimant do “relate directly” to the running or management of a business. Mr Purvis argues to the contrary. The Claimant provides tools and advice which will allow the management of a client to decide how best to improve the way in which a business is run, but it does not assist in running or managing the business. He also argues that his view is supported by the stance adopted by the Trade Mark Registry to evidence of use which the Claimant filed for the purpose of supporting its trade mark application. He says that this shows that the Registry accepted evidence of the Claimant’s consultancy services in support of its application in Class 42. This, in turn, has led to a dispute between the parties as to what the Registry did or did not have in mind when it accepted that evidence of use.

As interesting as these disputes are, I do no think it is necessary to resolve them. Mr Purvis points out that the Nice classification set out above in respect of Class 35 refers to help in the working or management of “commercial undertakings” and help in the management of “the business affairs or commercial functions” of “an industrial or commercial enterprise”. If the services offered by the Claimant include ones which are not for commercial or industrial undertakings they cannot fall in Class 32 and must fall within Class 42. I understand Mr Wyand to accept that proposition. However he disputes that the Claimant has ever offered services other than to industrial and commercial undertakings.

On this issue evidence was given by Mr Olof Soderblom, the Chairman of Compass International BV. He produced documents to show that consultancy services had been provided to, HM Land Registry, Lancashire County Council, the Royal Borough of Kensington & Chelsea, Charities IT Group, the Environment Agency, Wolverhampton Borough Council, HM Land Registry IT Development Division, South Wales Police and the Wiltshire Constabulary. Mr Wyand argues that HM Land Registry charges fees and is obliged to conduct its affairs in a commercially prudent manner. It can be regarded as an industrial or commercial enterprise or undertaking. I do not agree, but even if I did, I do not see how other clients in this list could be so regarded.

It follows that the Claimant has demonstrated that it has used its mark for services in Class 42 and the attack of invalidity must fail accordingly.

Insofar as material, s 5(4)(a) of the 1994 Act provides:

“A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented –

(a)

by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade ..”

As explained above, I have come to the conclusion that, as at 1 April 1996 (the relevant date for the purposes of the CTM), the Defendant had acquired just sufficient reputation to maintain a passing off action against the use of the mark COMPASS in relation to business consultancy services in relation to logistics. The relevant date for considering the validity of the 1996 UK Mark is 13 September 1996. No evidence was adduced specifically directed at the growth or shrinkage of such reputation as the Defendant had between these two dates. However the Defendant’s case was that its profile and reputation has grown with the passage of time. On a balance of probabilities its ability to maintain a passing off action would have been a little greater by the September date. Had the Claimant sought to use its mark in that field at that time, on balance it could have been stopped. It must follow that the 1996 UK Mark is invalid to the extent that it covers logistics consultancy services in the United Kingdom.

In the result the Claimant succeeds on its claim and the Defendant fails, save on one small point, on its Part 20 claim.

In coming to that conclusion, one cannot but feel considerable sympathy for the Defendant. It has traded on an ever greater scale under the name “COMPASS LOGISTICS” for the best part of 8 years. During nearly all of that time it never heard of the Claimant and the Claimant never heard of it. There is no suggestion of any confusion existing in the market place. The Defendant will, no doubt, say that it will be sorely inconvenienced by any relief obtained by the Claimant whereas it has caused no, or no noticeable, damage to the Claimant. The two businesses might well have continued indefinitely without treading on each other’s toes.

Had this been a dispute solely about UK rights, it might have been possible for the Defendant to escape liability by making use of the honest concurrent use provisions. However there are no such provisions under the Regulation. As it is, the Claimant is entitled to enforce its trade mark rights even against an innocent infringer. On the other hand, if the Claimant has not suffered any damage in the last 8 years and is unlikely to suffer any in the immediate future this may be a factor relevant to the timing and scope of any equitable relief the Claimant obtains. That is a matter which is not before me now and on which it would be necessary to hear Counsel.