Why contracts are in writing: lessons from an oral trade mark co-existence agreement
A recent decision by the Intellectual Property Enterprise Court reveals the problems that can arise when businesses that once shared name fall out and do not have a clear agreement in place.
The case covered 22 issues(!) in total, including copyright infringement, trade mark validity and infringement and passing off. Following a two-day trial in November, Deputy High Court Judge David Stone handed down his judgment on 18 January 2021.
The case was brought by Cormeton Fire Protection Limited against Cormeton Electronics Limited, and its director. The parties worked together from 1989 to 2013, when they separated and Cormeton Electronics moved to larger premises. They remained on good terms, both using the name Cormeton, until about 2015 when they had a falling out. In 2016, Cormeton Fire Protection Limited applied to register CORMETON as a trade mark. These proceedings were brought in 2019.
Unfortunately, what was actually agreed in 2003 (including regarding use of the Cormeton name) was disputed. The defendants claimed there was a written agreement, but could not produce it. The judge found that there was an oral agreement granting Cormeton Electronics a licence to continue to trade under that name, and to use the cormeton.co.uk domain name, but that the licence did not cover using the name in relation to “mechanical fire protection goods and services”.
Use of CORMETON on its own and use of the trade mark, domain name and logo in relation to “mechanical fire protection goods and services” therefore infringed the trade mark and constituted passing off. The judge rejected the attacks on the trade mark, and defences based on honest concurrent use, estoppel and acquiescence.
The claimant had also claimed it owned the copyright in the red fire logo (pictured). However, in cross-examination of the company’s director and company secretary Michel Warburton conceded that this was not correct. The claimant’s counsel said that the wrong artistic work had been included in the pleadings due to “a break-down in communication”. Attempts to remedy the situation by adopting alternative arguments during the hearing were not successful. The judge concluded that the copyright case failed: the logo was not an original artistic work created by Mr Warburton in which copyright subsisted.