The Royal Mint Ltd v The Commonwealth Mint And Philatelic Bureau Ltd

On 29 August 2012, the appellant, The Royal Mint Limited (“RM”), applied to register the word SOVEREIGN as a trade mark for “gold commemorative coins”. Registration was, however, opposed by the respondent, The Commonwealth Mint & Philatelic Bureau Limited (“CMPB”), on the grounds that:

In a decision dated 3 March 2016 (“the Decision”), the Hearing Officer, Mr Allan James, acting for the Registrar, upheld the opposition and refused registration, taking the view that section 3(1)(c) and (d) of the Trade Marks Act 1994 (“the TMA”) applied. RM now appeals.

RM is a private limited company owned by HM Treasury. It was incorporated in 2009 and at the end of that year had transferred to it the assets and, for the most part, intellectual property of the former Royal Mint. It has been appointed by the Treasury as “the sole and exclusive manufacturer, provider and distributor of UK circulating coins and UK commemorative coins”.

“Sovereign” coins were first struck in 1489, during the reign of Henry VII. The coins ceased to be minted in 1604, but production resumed in 1817 and has continued to the present day. Until 2009, sovereign coins were minted by the Royal Mint. They have subsequently been produced by RM. It is estimated that, in total, well in excess of a billion sovereign coins have been minted by the Royal Mint (including its branch mints in the former British Empire) or RM.

When originally introduced, a sovereign coin was worth 20 shillings. Its value was increased to 22 shillings 6 pence in 1526, but then returned to 20 shillings in the 1540s. In 1551, versions of the coin had assigned to them, it seems, values of, respectively, 30 shillings and 20 shillings. Since 1817, the designated value has always been 20 shillings or, post decimalisation, 100 pence.

In practice, the market value of a sovereign coin far exceeds the figure for which it is legal tender. The gold/silver alloy content in a modern coin is worth around £190 and the coins sell for upwards of £220.

Since 2013, sovereign coins have been struck in India under licence from RM. In the past, such coins were minted by branches of the Royal Mint in various countries: Australia, Canada, India and South Africa. In more recent times, Australia has produced coins called “sovereigns” other than under the auspices of the Royal Mint or RM. There is also evidence of sovereign coins from other countries and territories that have not emanated from the Royal Mint or RM. Thus, Pobjoy Mint manufactures and sells sovereign coins that are legal tender in the Isle of Man and Tower Mint manufactures and sells sovereign coins that are legal tender in Gibraltar. There was also evidence before the Hearing Officer of sovereign coins from Andorra, Cyprus, Jersey, New Zealand and the British Overseas Territory of Tristan da Cunha that did not come from the Royal Mint or RM.

Tristan da Cunha is one of the places for which CMPB, which specialises in legal tender commemorative coins for various countries around the world, produces coins. Since 2009, the coins in question have included sovereigns and half sovereigns. More recently, it has also struck quarter sovereigns and double sovereigns for Tristan da Cunha, where the coins are legal tender.

Aside from a version produced in 1989 to celebrate the 500^th anniversary of the first such coin and an “Australian sovereign coin” issued by the Royal Mint’s Sydney branch in the nineteenth century, sovereign coins emanating from the Royal Mint or, now, RM have not borne the word “sovereign”. In contrast, sovereign coins from places other than the United Kingdom often carry the word. They also seem to feature the name of the relevant country or territory or, in the case of Tristan da Cunha, an abbreviation of that name (“TDC”).

The Coinage Act 1971 (“the 1971 Act”) imposes a prohibition on issuing sovereign (and other) coins without the authority of the Treasury. Section 9(1) of the 1971 Act states that “[n]o piece of gold, silver, copper, or bronze, or of any metal or mixed metal, of any value whatever, shall be made or issued except with the authority of the Treasury, as a coin or a token for money, or as purporting that the holder thereof is entitled to demand any value denoted thereon”.

On top of that, the Forgery and Counterfeiting Act 1981 (“the 1981 Act”) provides for offences relating to counterfeiting and imitation coins. Section 14 of the 1981 Act makes it an offence for a person “to make a counterfeit … of a protected coin, intending that he or another shall pass or tender it as genuine” or “without lawful authority or excuse”. The coins specified as “protected coins” include (by virtue of the Forgery and Counterfeiting (Protected Coins) Order 1981) “Sovereign” and “Half-sovereign”, and “a thing is a counterfeit … of a protected coin” if it is not a protected coin but “resembles a … protected coin (whether on one side only or on both) to such an extent that it is reasonably capable of passing for a … protected coin of that description” (see section 28(1) of the 1981 Act). Further, section 19 of the 1981 Act states that it is an offence for a person to make, sell or distribute any thing which resembles a coin which is legal tender in the United Kingdom in connection with a scheme intended to promote the sale of any product or the making of contracts for the supply of any service, or to have such a thing in his custody or under his control with a view to such sale or distribution, unless the Treasury has previously consented in writing to the sale or distribution.

CMPB advanced a submission to the Hearing Officer to the effect that section 9 of the 1971 Act relates only to coins made or issued as legal tender in the United Kingdom. Accepting CMPB’s submissions in this respect, the Hearing Officer concluded (in paragraph 25 of the Decision) that “[n]one of the provisions [of the 1971 Act or the 1981 Act] appear to prohibit trade in the UK in sovereigns issued outside the UK which do not resemble ‘a British coin in shape, size and the substance of which it is made’”. In the course of argument before me, Mr Michael Edenborough QC, who appeared for RM, accepted the correctness of the words I have quoted. However, I think it is common ground that, having regard in particular to section 9 of the 1971 Act, no one other than RM is, as matters stand, entitled to make or issue a sovereign as legal tender in the United Kingdom.

Section 3 of the TMA lists “Absolute grounds for refusal of registration”. So far as relevant, section 3(1) provides as follows:

The Court of Justice of the European Union (“CJEU”) said this in Agencja Wydawnicza Technopol sp z oo v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) (Case C-51/10 P) EU:C:2011:139, [2011] ETMR 34 about article 7(1)(c) of Council Regulation 40/94 of 20 December 1993 on the Community trade mark (now replaced by Council Regulation 207/2009/EC of 26 February 2009 as amended by Council Regulation 2015/2424 of 16 December 2015), to which section 3(1)(c) of the TMA corresponds:

In Telefon & Buch Verlagsgesellschaft mbH v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) (Case T-322/03) [2006] ECR II-835, the General Court said this about article 7(1)(d) of Regulation 40/94, to which section 3(1)(d) of the TMA corresponds:

With regard to acquisition of distinctive character through use (the subject of the proviso to section 3(1) of the TMA), the CJEU gave this guidance in Windsurfing Chiemsee Produktions- und Vertriebs GmbH v Boots- und Segelzubehör Walter Huber (Joined cases C-108/97 & C-109/97) EU:C:1999:230, [2000] Ch 523:

In Société Des Produits Nestlé SA v Cadbury UK Ltd (No 2) [2016] EWHC 50 (Ch), [2016] Bus LR 354, Arnold J concluded (at paragraph 60) that “it is legitimate for the competent authority, when assessing whether the applicant has proved that a significant proportion of the relevant class of persons perceives the relevant goods or services as originating from a particular undertaking because of the sign in question, to consider whether such persons would rely upon the sign as denoting the origin of the goods if it were used on its own”. After reviewing the judgment given by the CJEU on a reference, he decided (in paragraph 57) that:

It is common ground that the same principles apply to appeals from a Hearing Officer to the Court as to appeals to the Appointed Person. After an extensive review of the authorities, Mr Daniel Alexander QC (sitting as the Appointed Person) recently summarised those principles in these terms in Talk for Writing Trade Mark (O/017/17, 19 January 2017):

CMPB relied before the Hearing Officer on sections 3(1)(c) and 3(1)(d) of the TMA. The Hearing Officer held that both provisions were in point and further decided that the word “sovereign” had not acquired a distinctive character through use (so that the proviso to section 3(1) did not apply). He accordingly refused the application for registration.

With regard to section 3(1)(c) of the TMA, the Hearing Officer found (at paragraph 75) that “‘sovereign’ is a kind of gold commemorative coin” and, hence, that “the contested mark is excluded from prima facie registration by s.3(1)(c)”. He had identified the issue as being “whether SOVEREIGN designates a kind of coin (as [CMPB] says) and/or a name that distinguishes the goods of a particular undertaking (as RM contends)” (paragraph 66). After referring to matters relied on by RM, the Hearing Officer said (in paragraph 73) that he had “carefully considered whether these factors are sufficient for [him] to conclude that sovereign is not a kind of coin, but a name which distinguishes coins from a particular source”. He went on (in paragraph 74):

As for section 3(1)(d) of the TMA, the Hearing Officer said this:

Turning to acquired distinctiveness, the Hearing Officer said this (in paragraph 84):

The Hearing Officer concluded that “the word ‘sovereign’ alone had not acquired a distinctive character as a trade mark” (paragraph 91) on the basis that (as the Hearing Officer explained in paragraph 90):

RM challenged the Hearing Officer’s conclusions on the applicability of section 3(1)(c) of the TMA; on that of section 3(1)(d) of the TMA; and on acquired distinctiveness. I shall address below points that Mr Edenborough advanced on RM’s behalf.

RM relied before the Hearing Officer on evidence given by Dr Barrie Cook, the curator of medieval and early modern coinage at the British Museum, and, especially, Dr Kevin Clancy, the director of the Royal Mint Museum Limited. The Hearing Officer, however, doubted whether their views were representative of those of the average consumer. He said of Dr Clancy (in paragraph 68 of the Decision):

Having also said (in paragraph 70 of the Decision) that he was approaching evidence given by CMPB’s managing director “with a similar degree of caution”, the Hearing Officer explained in paragraph 71 of the Decision:

Mr Edenborough submitted that the Hearing Officer was simply wrong to discount the opinions of Dr Cook and Dr Clancy. The Hearing Officer took the relevant average consumers to be “traders in gold coins, such as banks and jewellers, as well as private investors and coin collectors” (paragraph 72 of the Decision). A curator of a museum such as Dr Cook or Dr Clancy is, Mr Edenborough argued, the archetypal collector. The views that Dr Cook and Dr Clancy expressed should therefore, Mr Edenborough said, plainly have been given more weight than they were.

For her part, Ms Alaina Newnes, who appeared for CMPB, maintained that the Hearing Officer was right to focus on the evidence as to how “sovereign” is used in the trade as the most reliable guide to what the word connoted to relevant average consumers. If, as RM said of Dr Clancy in its skeleton argument, “it is unlikely that there is anyone more knowledgeable about the subject than he”, Ms Newnes suggested, he cannot represent an average consumer.

To my mind, the Hearing Officer was fully entitled to adopt the approach he did to the evidence of Dr Cook and Dr Clancy. The evidence given by Dr Clancy in particular on historical matters (for example, the values attributed to sovereign coins on different dates) should doubtless be accorded the greatest respect. Where, however, it is views of average consumers that matter, the position is different. It was, as it seems to me, open to the Hearing Officer to proceed on the basis that Dr Cook and Dr Clancy were not average consumers and, hence, that their evidence could not be regarded as determinative.

The Hearing Officer said this in paragraph 37 of the Decision:

Mr Edenborough challenged this. “Sovereign” is, he submitted, the name of a coin, not a denomination. In support of his submission, Mr Edenborough relied on this evidence from Dr Clancy:

Mr Edenborough also invoked what he called a “thought experiment”. Suppose, he said, that someone buying goods is due £1 in change and there are to be found on the counter a pound coin and a sovereign coin. The purchaser could not, Mr Edenborough observed, insist on taking the sovereign coin rather than the pound coin. That illustrates, Mr Edenborough submitted, that “sovereign” is not a substitutable term for its nominal denominative value.

As, however, is apparent from paragraph 35 of the Decision, there was evidence before the Hearing Officer suggesting that “sovereign” is a denomination. Thus, schedule 1 to the 1971 Act includes, in the “GOLD” part of the list, “Sovereign” and “Half sovereign” in a column headed “Metal and Denomination”. RM can, moreover, be seen using “denomination” in relation to sovereign coins in its own promotional materials. For example, documentation relating to “The 2013 Sovereign Collection” includes “Denomination: Sovereign” in a section devoted to “Specifications” and something similar is to be found in a “Certificate of Authenticity” for a 2004 three-coin collection. Again, HM Revenue & Customs’ Notice 701/21A, which concerns the VAT status of investment gold coins, repeatedly puts “1 Sovereign” in a column for “Denomination of the coins”. The fact, moreover, that Dr Clancy does not think it “strictly accurate from a numismatic point of view” to use “denomination” in relation to sovereigns does not mean that an average consumer would see matters that way. It can also be noted, as the Hearing Officer did, that a sovereign coin is legal tender for 100 pence.

In all the circumstances, I do not consider that the Hearing Officer’s finding that “sovereign is a denomination of money” can be impugned. It had an evidential foundation and was one that could reasonably be reached.

In 1976, the Foreign and Commonwealth Office issued an ordinance to provide for the making and issuing of commemorative coins in or relating to Tristan da Cunha. The ordinance empowered the Governor to cause coins to be made and issued “[w]ith prior approval of the Secretary of State” and stated that the coins were to be such as might “from time to time be specified by the Governor with the approval of the Secretary of State by Order published in the Gazette”.

RM’s witnesses gave evidence to the effect that efforts to confirm that the Secretary of State had approved the Tristan da Cunha sovereign coins and that their details had been published in the “Gazette” had drawn a blank. That being so, RM invited the Hearing Officer to infer that the requisite approvals had not been obtained. The Hearing Officer declined to do so. He said (in paragraph 48 of the Decision):

Mr Edenborough contended that the Hearing Officer erred both when he held that the necessary approvals were “probably” granted to Tristan da Cunha to make gold commemorative coins and when he said that it was irrelevant whether or not such coins were duly authorised. Ms Newnes disputed each contention, but I need only, I think, deal with relevance. In my view, the Hearing Officer was justified in taking the view that it did not matter for his purposes whether the approval process had been correctly followed, especially given his finding (in paragraph 62 of the Decision) that “the trade in gold commemorative coins is international in nature”. Mr Edenborough suggested in the course of his submissions that the point bore on the credibility of CMPB’s witnesses, but I find it hard to see either that it did or that matters of credibility were important to the Hearing Officer’s conclusions.

Another ground of appeal is that the Hearing Officer “erred when he failed to hold that [RM] had a de jure monopoly to make and issue in the United Kingdom gold coins called SOVEREIGNS”.

RM’s position, as I understand it, is that it has the exclusive right to mint coins called simply “sovereigns” and, hence, that the word “sovereign”, used on its own, must distinguish goods of RM.

To my mind, however, there is no good reason to quarrel with the Hearing Officer’s understanding of the extent of RM’s rights to produce sovereign coins. As I see it, he approached matters on the basis that RM is the only entity authorised by the Treasury to make or issue sovereign coins as legal tender in the United Kingdom, but that there is nothing prohibiting trade in the United Kingdom in sovereign coins issued elsewhere which do not resemble “a British coin in shape, size and the substance of which it is made”. As I noted earlier (paragraph 12 above), Mr Edenborough did not dispute these propositions.

The real question must, I think, be whether the fact that no one but RM can make sovereign coins for United Kingdom purposes means that the word “sovereign” must be distinctive of its coins. I do not think it does. The Hearing Officer made unchallenged findings that “the trade in gold commemorative coins is international in nature” (paragraph 62 of the Decision), that “a small proportion of coins so-named [i.e. as ‘sovereigns’] have been produced outside of RM’s control” (paragraph 62) and that “‘sovereign’ gold commemorative coins from, at least, the Isle of Man, Jersey, Gibraltar and/or Australia are also available in the UK” (paragraph 77). In fact, while sovereign coins from jurisdictions other than the United Kingdom commonly bear the word “sovereign” (albeit, it may be said, with a word indicating the relevant country or territory), United Kingdom sovereigns hardly ever have, and RM’s promotional material usually involves “the designation ‘sovereign’ [being] used in association with the name Royal Mint” (paragraph 34 of the Decision).

One of the grounds of appeal put forward is that the Hearing Officer was “wrong to hold that the term SOVEREIGN was a kind of gold commemorative coin and so offended against … s 3(1)(c) [of the TMA]”. On the basis, however, of what I have said in paragraphs 25-41 above, I do not see how the Hearing Officer’s finding that “sovereign” is a “kind of gold commemorative coin” can be impugned.

The Hearing Officer found that the word “sovereign” was also “excluded from prima facie registration by s.3(1)(d) [of the TMA]”. I have quoted the relevant part of the Decision in paragraph 21 above.

Mr Edenborough submitted that there was no evidential support for the Hearing Officer’s view. Coins from jurisdictions other than the United Kingdom do not use the word “sovereign” on its own, without specifying the jurisdiction. There is, Mr Edenborough argued, no evidence of volumes of coins made by anyone but RM being sold by reference to the word “sovereign” by itself.

It seems to me, though, that matters such as those mentioned in paragraph 41 above provided a sufficient basis for the Hearing Officer’s findings. There was plainly evidence indicating that there are non-United Kingdom “sovereigns” which are traded in the United Kingdom as part of a trade which is “international in nature”. In the circumstances, the Hearing Officer was entitled, in my view, to conclude (as he did) that “the word sovereign alone did not guarantee the trade origin of such goods [i.e. gold commemorative coins] because it had become customary in the current language or in the bona fide and established practices of the trade” (paragraph 78 of the Decision).

As noted in paragraph 16 above, the CJEU said in the Windsurfing case that the competent authority must hold in favour of registration of a trade mark if it finds that “at least a significant proportion [of the relevant class of persons] identifies goods as originating from a particular undertaking because of the trade mark”. In Société Des Produits Nestlé SA v Cadbury UK Ltd (No 2), Arnold J held that it must be shown that “a significant proportion of the relevant class of persons perceives the relevant goods or services as originating from a particular undertaking because of the sign in question (as opposed to any other trade mark which may also be present)” (see paragraph 17 above).

Although RM did not rely on acquired distinctiveness before the Hearing Officer, it now contends that the Hearing Officer was “wrong to hold that the term SOVEREIGN alone had not acquired a distinctive character”. Mr Edenborough pointed out that the Hearing Officer spoke of “the vast majority of coins called sovereigns marketed in the UK [having] been produced by RM or one of its historical branches” (paragraph 62 of the Decision) and of “a large proportion of the relevant public [having] been familiar with the name ‘sovereign’ at the relevant date and associated that name with coins issued by the UK Government and/or RM as its traditional agent” (paragraph 84) (emphasis added in each case). “Vast majority” and “large proportion” both, Mr Edenborough submitted, exceed the “significant proportion” demanded in the Windsurfing and Cadbury cases. The Hearing Officer was therefore obliged to decide in favour of registration.

As, however, Ms Newnes stressed, what cases such as Windsurfing and Cadbury require is that a “significant proportion” of the relevant class sees the goods as originating from a particular undertaking because of the trade mark. The Hearing Officer made no finding to that effect in the present case. He stated, for example, that a “large proportion” of the relevant public “associated that name [i.e. sovereign] with coins issued by the UK Government and/or RM as its traditional agent”, but he did not find or say that the association was because of the trade mark.

This ground of appeal therefore fails.

I have not been persuaded that the Hearing Officer’s decision was wrong. To the contrary, the Hearing Officer was, in my view, entitled to arrive at the conclusions he did. I shall accordingly dismiss the appeal.