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Caspian case highlights importance of registering trade marks

The recent Caspian Pizza Ltd & Ors v Maskeen Shah & Anor case ([2017] EWCA Civ 1874) has, once again, highlighted the benefit of securing registered trade mark protection at the earliest opportunity. It also provides useful clarification of the interplay between registered and unregistered trade mark rights in this country.

Background

In 1991 the claimants started a pizza business in Birmingham, under the name "Caspian Pizza". In 2005 they registered the word CASPIAN ("word mark") for restaurant services, as well as the logo below ("logo mark") in 2010:

Image 1 for trade mark number UK00002559245


The defendants operate a number of pizza restaurants by the name of CASPIAN in and near to Worcester, the first of which opened in 2002. The claimants subsequently commenced action against them for registered trade mark infringement and passing off.

 

Whilst the defendants admitted they had used signs similar to the claimants' registered trade marks, they denied the allegations of infringement and passing off. They argued their first use of CASPIAN in  Worcester (2002) pre-dated the claimants' trade mark registrations (2005 and 2010), and entitled them to earlier unregistered rights under the common law of passing off. As a consequence, the defendants maintained:

  • they had a defence to infringement, as the use of an earlier right in a particular locality does not infringe a registered trade mark, in certain circumstances;

  • the claimants' registrations were, in any case, invalid, because of the defendants' earlier unregistered rights under the common law of passing off.

The IPEC decision

At first instance, His Honour Judge Hacon held that, by the time the word mark was filed, the defendants had already acquired localised goodwill (in Worcester) sufficient to support a passing off action, i.e. they would have been able to prevent third parties (such as the claimants) from operating a pizza restaurant in Worcester under the name CASPIAN. As a result, they had a defence to infringement, and the claimants' word mark was invalid.

The registration for the logo mark was not invalidated, as the judge was not satisfied the defendants owned a relevant earlier right. However, their prior activities in Worcester were considered sufficient to provide them with a defence to infringement.

The claimants appealed, and defendants cross-appealed the finding that the logo mark was valid.

The Court of Appeal's ("CoA") decision

The CoA unanimously decided in favour of the defendants, finding they had a valid defence to infringement and that the claimants' logo mark was invalid, as well as the word mark.

  • Defence to infringement: use of an earlier right in a particular locality

Section 11(3) of the UK Trade Marks Act (TMA) provides that a registered trade mark is not infringed by an earlier right used continuously in a particular locality from a date prior to the registered trade mark at issue or its first use.

The claimants argued their earlier use of CASPIAN in Birmingham meant the defendants were precluded from relying on this defence; they maintained the wording "first use" of the trade mark referred to use anywhere in the United Kingdom, and their earlier use in Birmingham trumped the defendants' later use in Worcester.

The CoA unanimously agreed with His Honour Judge Hacon that this submission was incorrect. The CoA clarified that, where a defendant has generated goodwill in a particular locality (e.g. Worcester), its activities can only be prevented if a claimant has previously used its mark in the same locality. Accordingly, the claimants could not prevent this defence from succeeding, as none of their activities had taken place in Worcester.

  • Invalidity

A registered UK trade mark is vulnerable to invalidation if, at the date the mark was filed, its use could have been prevented, for example, under the law of passing off. Both the IPEC and CoA considered the geographical extent to which the defendants would need to demonstrate earlier passing off rights, for this provision to bite.

The claimants argued the court should follow the earlier IPEC decision in Redd Solicitors LLP V Red Legal Ltd, in which small-scale use of an unregistered trade mark in a particular locality was insufficient to invalidate a subsequent trade mark registration.

The CoA judgment now clarifies that a party relying on unregistered rights can successfully invalidate a subsequent UK trade mark registration, even where that party's goodwill is confined to a particular locality. To succeed in an invalidity attack, it is not necessary for an earlier user to demonstrate its rights extend across the entire UK, or even across a significant part thereof.

Having found that the defendants had earlier user rights in the locality of Worcester, the CoA held both the claimants' registrations invalid.

Disappointingly for the claimants, the CoA refused to limit the scope of their registrations geographically (i.e. to cover areas away from the area of Worcester, even though the defendants' earlier user rights were confined to that location).  An applicant for registration of a UK trade mark may limit its scope geographically. However, the CoA made it clear that, once a mark is registered as a UK trade mark, its geographic scope cannot be limited.

Comment

This case is a useful reminder not to delay in securing registered trade mark rights - had the claimants obtained a UK trade mark registration for CASPIAN in 1991, when they started trading, the defendants would have lost. 

The decision places a heavy burden on applicants for registered UK trade marks to assess whether third parties may own localised unregistered rights, and to consider whether a geographical limitation of an application might be appropriate prior to registration, given this option is not possible post-registration. Prior to adopting a trade mark or filing a new application, it is advisable to conduct proper clearance searches for unregistered / common law rights, in addition to checking the official trade marks registers, particularly where key brands are at stake.