Bentley Clothing v Bentley Motors [2019] EWHC 2925 is a classic David v Goliath dispute. You have a small family owned business versus a multinational corporation - Bentley Motors is part of Volkswagen.
This case is a helpful reminder for large brand holders everywhere that establishing a reputation and a trade mark portfolio in relation to some goods and services does not give you an automatic right to enter into new markets where there are earlier rightsholders (no matter the respective sizes of the organisations.
The legal detail
More specifically from a legal perspective, this case raised a number of technical points regarding:
Issue estoppel from the UKIPO (i.e. the trade marks registry)
Interpretation of the sign - is a word mark used together with a logo a single sign or two signs?
Likelihood of confusion - how does this work where you have a mark which has not been used to the same degree as the infringing mark (or indeed, used at all, if it is within the 5 year period post grant)?
Transitional provisions - to what extent does use prior to the Trade Marks Act1994 (the 1994 Act) permit continued use after the 1994 Act came into force
'Honest concurrent use' - what does it mean?
Is it an [exclusive] licence? - when is a contract a licence and when is it simply a management agreement?
You can find out more about these issues both elsewhere on this blog and on RosieBurbidge.com.
Issue estoppel
The High Court case was by no means the first time the parties had come into contact with each other in a legal setting. There had previously been a succession of oppositions, revocation and invalidity actions in the UKIPO and EUIPO. In some of their evidence and submissions before UKIPO, Bentley Motors had argued that the Combination Sign was two signs, one of which was the sign BENTLEY on its own.
Whilst the judge accepted that it was fair to read the Hearing Officer's decision as stating that use of the Combination Sign was use of the word BENTLEY alone. The problem, as far as issue estoppel was concerned, was that the Hearing Officer's reasoning was in the context of passing off. Therefore whilst it was fair to say that "the Hearing Officer's finding would be likely to coincide with a finding that the average consumer would take the Combination Sign to be two signs... the Hearing Officer made no finding which created an issue estoppel relevant to these proceedings." [38]
Interpretation of the sign
Bentley Motors used the mark BENTLEY together with their "B in wings" logo on a lot of their products. There was some debate as to whether this constituted use of a single "combination" sign or of two marks "BENTLEY" and "B in wings". This is important as use of BENTLEY in relation to clothing meant that the Claimants (together Bentley Clothing) had a double identity trade mark infringement claim under S. 10(1) of the 1994 Act. If the mark was a Combination Mark then the only claim was under s.10(2) - for likelihood of confusion.
Bentley Motors' fatal flaw was repeatedly educating its consumers both via swing tags on its products and its terms and conditions that BENTLEY and the B in Wings sign were both trade marks which were owned by Bentley Motors. This was both an incorrect allegation of ownership (Bentley Motors did not own the sign BENTLEY for clothing but only the B in Wings device) and showed a clear approach of treating the mark as two signs and not one.
The Court agreed that consumers would perceive the signs as two separate signs and consequently any use of the "combination mark" was in fact use of the sign BENTLEY and use of the sign B in wings. This meant that (subject to any defences) section 10(1) infringement was found in relation to use by Bentley Motors of the sign BENTLEY in relation to clothing or headgear.
Likelihood of confusion
The key practical takeaway of this decision is a reminder that you cannot simply extend into a new product or service area where someone already has trade mark rights without either securing a licence or purchasing the mark.
The current test for likelihood of confusion comes from Skykick i.e. Sky plc v Skykick UK Ltd [2018] EWHC 155 (Ch) at [287].
Importantly, the judge noted that following Maier v ASOS Plc [2015] EWCA Civ 220, it is clear that "a trade mark proprietor need not make any use at all of [their] mark (subject to the non-use provisions of the Act and Directive and those do not have effect until 5 years after registration) and yet still establish a likelihood of confusion with a sign under s.10(2). When considering the likelihood of confusion the court must apply the factors set out in Maier assuming a notional and fair use of the registered trade mark in issue." [65]
The clear aural identity between the so-called combination mark and the BENTLEY marks coupled with the identity of the goods and the fact that the dominant element of the combination mark was the sign BENTLEY meant that a likelihood of confusion was inevitable.
Transitional provisions
When one law ends and another begins, transitional provisions govern the rights, causes of actions etc which straddle the two periods. They are technical and no one quite knows how they will work until they are tested - in the world of IP this can be many years later. Before the 1994 Act, the Trade Marks Act 1938 governed trade marks in the UK. Because some of Bentley Motors' activities predated the 1994 there was a question as to whether Bentley Motors had a defence under the 1994 Act's transitional provisions on the basis that it had simply continued activities which were lawful under the 1938 Act.
The key question of what is meant by "to continue after commencement any use which did not amount to infringement … under the old law" in paragraph 4 of Schedule 3 of the 1994 Act had not been considered by the courts.
Bentley Motors attempted to argue that their limited sale of unbranded clothing products under the advertising heading The Bentley Selection meant that they were permitted to broaden this use into a wide range of branded clothing.
The judge disagreed. As he put it "In my view the intention of Parliament was to allow parties to carry on as they were, not to permit their branching out into new uses of signs which have since become the exclusive right of a trade mark proprietor." [83]
Consequently Bentley Motors is "entitled to continue the sale of jackets, silk ties, caps and scarves, ...[only]... by means of literature bearing the BENTLEY sign, but not to use that sign on the goods themselves or on tags or other material attached to the goods." [84]
Honest current use
There was concurrent use of the sign BENTLEY for clothing by Bentley Motors for several years but was that use honest?
The judge noted that it is possible for the status of concurrent use of a trade mark to change over time.
Bentley Motors made some limited use of the sign BENTLEY in the name of part of a clothing catalogue in the late 1980s (under the heading the "Bentley Selection"). At that point in time Bentley Clothing's only trade mark was for the sign BENTLEY in a border (the so-called "lozenge device"). This mark was registered in relation to knitted clothing, shirts and waistcoats. From the 1980s to the 1990s, Bentley Motors sold clothing which did not fall within those categories.
In 1998, Bentley Motors was notified of Bentley Clothing's trade mark rights and elected not to take a licence of those rights or otherwise reach an agreement with Bentley Clothing not to infringe its rights. Following this approach, Bentley Motors was not only on full notice of Bentley Clothing's rights but it took steps to expand its range moving beyond the use on the name of a catalogue to the sale of a range of products which either used the "combination sign" of BENTLEY plus logo or simply used BENTLEY on its own.
Once again, the evidence from the terms and conditions and swing tags proved crucial. The facts that (i) Bentley Motors treated the marks as two signs and (ii) incorrectly alleged that it owned the mark BENTLEY in relation to clothing were, to put it mildly, unhelpful.
The witnesses who could have given evidence of Bentley Motors' thought processes during this period, including Andrew Armitage and Justine Pridding declined to give evidence (despite the latter being present in court during the trial).
As a result of this and related evidence, the judge found that the evidence gave "the strong impression that from around 2000 Bentley Motors engaged in a policy of 'grandmother's footsteps' in relation to Bentley Clothing – a conscious decision to develop the use of BENTLEY in relation to their range of clothing and headgear such as to increase the prominence of that sign, but only in incremental stages in the hope that no one stage would provoke a reaction from Bentley Clothing" [157].
This meant that Bentley Motors' activities did not constitute honest concurrent use. As the judge put it "I think that Bentley Motors' policy will have had the intended effect of increasingly arrogating to itself goodwill associated with BENTLEY in the clothing business. This amounted to a steady encroachment on Bentley Clothing's goodwill." [158].
Bentley Motors' activities and arguments in front of the UKIPO, together with their application for a CTM (now known as an EUTM) in 2004, supported the judge's conclusion regarding honest concurrent use.
Is it a licence?
An important ancillary point (at least as far as costs were concerned) was whether a particular contract which was entered into between the first claimant Bentley 1962 Ltd (the trade mark owner) and Brandlogic Ltd (the trading company) constituted a trade mark licence or simply a management agreement. Whilst the agreement was drafted without professional advice it clearly contemplated the trade marks being used by Brandlogic on an exclusive basis and consequently the natural interpretation which the court endorsed, was that it was an exclusive licence.
I was there!
I was very fortunate to be involved in the Bentley dispute - I was there from the first meeting in mid 2017 until I left my former firm to become a partner at Gunnercooke in October 2018. It was my pleasure to get to know Chris and Bob Lees and help put the firm foundations of this case in place.
To find out more contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - rosie.burbidge@gunnercooke.com