Key points
Components of composite marks may have low distinctiveness if there is significant use by multiple third parties of similar components within an industry sector.
Senior rightsholders should take particular care to enforce their marks if there is a growing trend of similar marks (or components thereof) in their sector.
Terms of coexistence agreements may be considered a useful guide as to what is likely to cause confusion in the relevant market.
Factual summary
Lifestyle Equities (Lifestyle) asserted infringement of its earlier registered mark against Royal County of Berkshire Polo Club Limited’s (Berkshire Polo’s) sign in the U.K., EU, Chile, Mexico, Panama, Peru and the UAE. During the course of the proceedings, the parties agreed that all Lifestyle’s claims across the various jurisdictions were to be assessed under U.K. and EU trade mark law, save for certain national defences. The evidence across jurisdictions varied and as a result the underlying decision of the High Court provides insight into what evidence may be sufficient and insufficient for proving the existence of a “crowded market”.
At first instance, Mellor J found no likelihood of confusion in each jurisdiction, applying s10(2) of the Trade Marks Act 1994 (TMA), with the lack of evidence of actual confusion (despite considerable side-by-side trading in some jurisdictions) appearing to play a key role in his analysis.
On appeal, it was common ground that: (i) all the requirements for infringement under s10(2) TMA were established. A were established save for likelihood of confusion; and (ii) the signs complained of had been used by Berkshire Polo in relation to identical goods to the registrations asserted by Lifestyle (principally, clothing).
There was no challenge to any of Mellor J’s findings of fact. Rather, Lifestyle argued that in concluding that there was no likelihood of confusion Mellor J had wrongly relied on the existence of a “crowded market” and coexistence terms entered into by each party with the fashion company Ralph Lauren. Finding no error of law or principle, Arnold LJ rejected Lifestyle’s arguments and dismissed the appeal (Baker and Nugee LJJ concurring).
A crowded market
The first of two key issues on appeal was whether it was right for Mellor J to factor the existence of a “crowded market” into the likelihood of confusion analysis. On the evidence before him, Mellor J had found that in South America there had been, for several years, extensive coexistence of polo-themed brands. Elsewhere, the evidence was considered too minor to have any effect on the average consumer.
Mellor J also found that, with Ralph Lauren as the exception, the average consumer could not rely on a horse and rider motif to denote trade origin, for instance because that motif was “almost de rigueur” for polo-themed goods. In short, Mellor J made a factual finding of a “crowded market”: there was significant use by multiple third parties of similar components in their composite signs within a particular sector.
Arnold LJ agreed that a factual finding of a “crowded market” was relevant to the distinctive character of the trade mark and was, therefore, relevant to the assessment of likelihood of confusion. His reasoning can be summarised as follows:
- The starting point is the well-known principle that the more distinctive the earlier mark, the greater the likelihood of confusion.
- The converse proposition is equally true: trade marks with a less distinctive character enjoy narrower protection than marks with a highly distinctive character.
- Marks can be less distinctive because they are descriptive or allusive of the goods or services in question, but they may be less distinctive for other reasons.
- The distinctiveness of a mark is also affected by the level of similarity of other marks being used by third parties. In particular, third-party use of similar signs tends to diminish the distinctiveness of a trade mark.
By way of example, Arnold LJ cited Castellani SpA v OHIM2. In Castellani, the General Court held that the average consumer focused on the suffixes of CASTELLANI and CASTELLUCA (ie -ANI and -UCA) because the word ‘castle’ (as well as its equivalents château, castel and castello) was very frequently used within the wine industry. In this sense, the common element CASTELL- had low distinctiveness, but the General Court did not suggest that ‘castle’ was descriptive of, or allusive to, alcoholic beverages such as wine.
Arnold LJ also appeared to entertain the idea of a “crowded market” being relevant context to the use of the sign in infringement proceedings, but he did not need to decide this point and declined to do so.
Coexistence agreements
The second key issue on appeal was the relevance of coexistence terms between each party and Ralph Lauren. Mellor J had held at first instance that the respective coexistence agreements were a very useful and practical insight into the market for polo-themed brands. In particular, he held that the coexistence agreements indicated that Ralph Lauren considered that the combination of differences in the appearance of the horse and rider motif and the accompanying words were sufficient to avoid consumer confusion.
Arnold LJ agreed that it may be appropriate to take coexistence terms into account as part of the global assessment of the likelihood of confusion. He explained that coexistence agreements may affect the market and – even when they do not – they may give some insight into what market participants deem to be acceptable.
Arnold LJ did not say that the coexistence agreements between Ralph Lauren and the parties should have been considered in assessing likelihood of confusion in this case. Rather, he only went as far as to say that Mellor J made no error of law or principle. Arnold LJ appeared to approve of the idea that such agreements, while not determinative, could provide a helpful gloss in the right circumstances.
The areas of law traversed by this decision were not ones on which Arnold LJ expressed a particularly equivocal view – the appeal was dismissed at the conclusion of argument with reasons to follow in writing.
Indeed, practitioners will be well acquainted with the idea that consumers do not pay attention to components of marks with low distinctiveness. For example, they do not consider cows on milk bottles to identify the trade origin of the milk. A number of recent High Court cases have applied this principle, finding no likelihood of confusion. See, for example, Oatly AB and Anor v Glebe Farm Foods Ltd.3
Practical impacts
This decision suggests that elements of composite marks with low distinctiveness are given less weight, regardless of the reason behind that low distinctiveness. As Arnold LJ explained, this can include where the component has become so widely used in the market that the average consumer does not rely on it to identify the origin of the relevant goods/services. In particular, evidence of a “crowded market” (or, for that matter, any evidence of circumstances that suggest that the mark at issue has a low level of distinctiveness) may help to show a likelihood of confusion in infringement and opposition proceedings.
The practical impact of the foregoing is that senior rightsholders should take particular care to enforce their marks if there is a growing trend of similar marks in their sector, noting that such trends may take hold quickly if they are left to their own devices. Conversely, a new entrant to a particular market may be less concerned about using marks comprising components similar to those which multiple third parties are already using as part of their marks.
This decision also highlights the need for caution should any enforcement action result in the negotiation and execution of a coexistence agreement. While the Civil Procedure Rules encourage settlement of disputes, it is unlikely that either party to these proceedings, when settling with Ralph Lauren, considered that their settlement agreements might one day be deployed in a dispute with a third party.
Parties settle proceedings for all sorts of reasons (expediency, costs, etc). Some care is therefore required years later when “interpreting” those agreements as indicating a lack of concern about certain issues from a likelihood of confusion perspective. It also does not further the aim of getting parties to settle disputes if they know their coexistence agreement might one day be used against them. These concerns, although not stated by Arnold LJ, may have been behind his approach of only going so far as to say that, provided caution is exercised, it may be appropriate to take coexistence agreements into account in the assessment of likelihood of confusion.
This article was first published in the November 2024 issue of CITMA Review, the journal of the Chartered Institute of Trade Mark Attorneys (CITMA). For more information on CITMA, please visit citma.org.uk.
Footnotes
1. [2024] EWCA Civ 814
2. T-149/06
3. [2021] EWHC 2189 (IPEC)
