Re Gary Atkinson's Trade Mark - Owen v Atkinson

 

Jane Lambert

Trade Marks Registry (Judi Pike)  Re Atkinson's Trade Mark, Huw Richard Owen v Gary Atkinson  BL O/1202/23 20 Dec 2023

This was an application to the Registrar of Trade Marks by Huw Richard Owen ("Mr Owen") for a declaration that UK trade mark number 3687974 which Gary Atkinson ("Mr Atkinson") had registered for a range of goods in classes 1, 7, 11, 19, 21, 31 and 37 was invalid under s.47 (1) and/or (2) (b) of the Trade Marks Act 1994.  Mr Owen alleged that the mark had been registered in bad faith within the meaning of s.3 (6) and that he had an "earlier right" in relation to which the condition set out in s.5 (4) had been satisfied. 

S.5 (4) (a) provides:

"A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented—
(a)    by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade, where the condition in subsection (4A) is met."

Mr Owen claimed the right to bring an action for passing off to restrain Mr Atkinson's use of trade mark number UK3687974 on the ground that he had run a licensed pet shop on the island called "Anglesey Aquatics" or "Mon Aquatics" since January 2017.  He also claimed that Mr Atkinson's registration and use of that mark amounted to bad faith.  Mr Atkinson denied Mr Owen's allegations and requested sight of the evidence upon which Mr Owen relied.

Neither party was legally represented and the invalidity proceedings came on before Judi Pike ("Ms Pike") acting on behalf of the Registrar.  As neither side had requested a hearing, Ms Pike determined the application on written submissions and evidence.  She delivered her decision on 20 Dec 2023 (see Re Atkinson's Trade Mark, Owen v Atkinson BL O/1202/23 20 Dec 2023).

After referring to s.5 and s.47 of the Act Ms Pike cited paras [55] and [56] of Judge Melissa Clarke's judgment in Jadebay Ltd and others v Clarke-Coles Ltd (t/a Feel Good UK) [2017] EWHC 1400 (IPEC) (13 June 2017):

“[55]. The elements necessary to reach a finding of passing off are the ‘classical trinity' of that tort as described by Lord Oliver in the Jif Lemon case (Reckitt & Colman Product v Borden [1990] 1 WLR 491 HL, [1990] RPC 341, HL), namely goodwill or reputation; misrepresentation leading to deception or a likelihood of deception; and damage resulting from the misrepresentation. The burden is on the Claimants to satisfy me of all three limbs. 

[56] In relation to deception, the court must assess whether "a substantial number" of the Claimants' customers or potential customers are deceived, but it is not necessary to show that all or even most of them are deceived (per Interflora Inc v Marks and Spencer Plc [2012] EWCA Civ 1501, [2013] FSR 21).”

She also mentioned Lord MacNaghten's speech in Inland Revenue Commissioners v Muller & Co’s Margarine Ltd [1901] AC 217 at 223:  

“What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start."

As Mr Atkinson had applied for his trade mark on 31 Aug 2021, Ms Pike held at para [12] of her decision that Mr Owen must show that at that date he had sufficient goodwill in his business to bring an action for passing off.  

Mr Owen made a witness statement stating that he had traded as Anglesey Aquatics and Môn Aquatics from when he opened his business in 2017. One of the exhibits is a licence under The Animal Welfare (Licensing of Activities involving Animals (Wales) Regulations 2021 covering the period from 25 March 2022 to 24 March 2024 identifying his business as Môn/Anglesey Aquatics trading from an address on the island,.  He also exhibited a business card, screen prints of a Facebook page, a web page, a social media comment page and an address label.   A screenshot showed that Mr Owen owned the domain name <monangleseyaquatics.co.uk> but it was not clear when if at all he had ever used it.  Ms Pike observed at para [19] that mere ownership of a domain name does not prove that the name is in use or has contributed to the accrual of goodwill.

None of these exhibits were dated and the hearing officer expressed Mr Owen's first difficulty in para [20]:

"The assessment as to whether Mr Owen owned sufficient goodwill at the relevant date of 31 August 2021 is tied to goodwill accrued prior to that date. This makes it very important that exhibits are dated or, if undated, other evidence corroborates them and make it possible to place their significance as generating custom prior to the relevant date. It is also very important that the evidence which is dated shows that use which generated custom took place before the relevant date. I have already referred to the lack of dating in respect of the delivery label and the social media and website screenshots. Exhibits MA35, MA36 and MA37 are photographs of shelves stocked with aquatic goods (such as decorative rocks and fish food). They are undated and Mr Owen refers to them in the present tense: “I have a number of accounts open with a number of these [trade accounts with suppliers, distributors and wholesalers], which entitles my business to buy and sell all goods associated within the aquatic trade as in pictures Exhibit MA35, Exhibit MA36 and Exhibit MA37…”

She added at [23]:

"What Mr Owen must show in evidence is that, by 31 August 2021, he owned a protectable goodwill in the signs relied upon, sufficient to have prevented the use of the contested mark under the law of passing off. He states that he has been using Mon Aquatics/Anglesey Aquatics since January 2017, but the evidence falls a long way short of demonstrating the relevant goodwill in either or both names. I cannot tell from the evidence how much turnover was achieved prior to the relevant date as there are no such figures and no dated invoices. There are no dated website or social media screenshots. Owning an unused domain name does not show goodwill. Goodwill is the attractive force which brings in custom, but there is no evidence to show when that custom was generated, and how much custom was generated. The only dated evidence of trade dates from fourteen months after the relevant date. The pet shop licence is dated after the relevant date. Although there are screenshots of messages from customers who went to Mr Atkinson’s shop instead of Mr Owen’s premises, they are not dated. In the absence of any content which pre-dates the relevant date of 31 October 2021, it is not possible to put these in context."

Another difficulty is that Mr Owen gave no evidence of sales from which the hearing officer could assess the level of goodwill.   Referring to Thomas Mitcheson QC's judgment in Smart Planet Technologies, Inc. v Rajinda Sharma BL O/304/20, 2 June 2020, she said:

"The law protects a small goodwill but not a trivial one; i.e. sales so small that the goodwill is trivial."

Further, "Aquatics" strongly alluded to the type of goods and "Mon/Anglesey" the location of the business.  She had already noted that where a sign is descriptive or weakly distinctive, the evidence needs to be compelling.  At para [28] she quoted Lord Simonds's speech in Office Cleaning Services Limited v Westminster Window & General Cleaners Limited [1946] 63 RPC 39:

“Where a trader adopts words in common use for his trade name, some risk of confusion is inevitable. But that risk must be run unless the first user is allowed unfairly to monopolise the words. The court will accept comparatively small differences as sufficient to avert confusion. A greater degree of discrimination may fairly be expected from the public where a trade name consists wholly or in part of words descriptive of the articles to be sold or the services to be rendered.” 

She concluded at para [29] that Mr Owen's case based on s.47 (2) failed.

Turning to the question of whether Mr Atkinson's application had been made in bad faith, Ms Pike referred to para [67] of Lord Justice Floyd's judgment in Sky Ltd and others v Skykick, UK Ltd and another (Rev2) [2021] RPC 17, [2021] EWCA Civ 1121:

"The following points of relevance to this case can be gleaned from these CJEU authorities:

1. The allegation that a trade mark has been applied for in bad faith is one of the absolute grounds for invalidity of an EU trade mark which can be relied on before the EUIPO or by means of a counterclaim in infringement proceedings: Lindt at [34]. 

2. Bad faith is an autonomous concept of EU trade mark law which must be given a uniform interpretation in the EU: Malaysia Dairy Industries at [29]. 

3. The concept of bad faith presupposes the existence of a dishonest state of mind or intention, but dishonesty is to be understood in the context of trade mark law, i.e. the course of trade and having regard to the objectives of the law namely the establishment and functioning of the internal market, contributing to the system of undistorted competition in the Union, in which each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trade marks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin: Lindt at [45]; Koton Mağazacilik at [45]. 

4. The concept of bad faith, so understood, relates to a subjective motivation on the part of the trade mark applicant, namely a dishonest intention or other sinister motive. It involves conduct which departs from accepted standards of ethical behaviour or honest commercial and business practices: Hasbro at [41]. 

5. The date for assessment of bad faith is the time of filing the application: Lindt at [35]. 

6. It is for the party alleging bad faith to prove it: good faith is presumed until the contrary is proved: Pelikan at [21] and [40].

7. Where the court or tribunal finds that the objective circumstances of a particular case raise a rebuttable presumption of lack of good faith, it is for the applicant to provide a plausible explanation of the objectives and commercial logic pursued by the application: Hasbro at [42]. 

8. Whether the applicant was acting in bad faith must be the subject of an overall assessment, taking into account all the factors relevant to the particular case: Lindt at [37]. 

9. For that purpose it is necessary to examine the applicant’s intention at the time the mark was filed, which is a subjective factor which must be determined by reference to the objective circumstances of the particular case: Lindt at [41] – [42].

 10. Even where there exist objective indicia pointing towards bad faith, however, it cannot be excluded that the applicant’s objective was in pursuit of a legitimate objective, such as excluding copyists: Lindt at [49]. 

11. Bad faith can be established even in cases where no third party is specifically targeted, if the applicant’s intention was to obtain the mark for purposes other than those falling within the functions of a trade mark: Koton Mağazacilik at [46]. 

12. It is relevant to consider the extent of the reputation enjoyed by the sign at the time when the application was filed: the extent of that reputation may justify the applicant’s interest in seeking wider legal protection for its sign: Lindt at [51] to [52]. 

13. Bad faith cannot be established solely on the basis of the size of the list of goods and services in the application for registration: Psytech at [88], Pelikan at [54]”.

Citing Red Bull GmbH v Sun Mark Limited and Sea Air & Land Forwarding Limited [2012] EWHC 1929 (Ch) the hearing officer held that it was necessary to ascertain what Mr. Atkinsion knew when he applied for his trade mark.  She observed that an allegation of bad faith is a serious allegation which must be distinctly proved.  She said at [36] that the basis of the bad faith claim was that Mr Atkinson had taken Mr Owen’s Welsh business name which he has been using since 2017. As Ms Pike had found that Mr Owen had not demonstrated in his evidence that he had sufficient goodwill in the name Mon Aquatics (or Anglesey Aquatics) prior to the relevant date of 31 August 2021, the case under s,47 (1) must also fail.

As Mr Owen's application for trade mark UK3687974 to be declared invalid failed, Mr Atkinsin's trade mark remains on the register.   The hearing officer said that Mr Atkinson would have been entitled to costs had he filled in the appropriate form before the hearing.  As he did not do so, Ms Pike made no order for costs.

As I said above, neither party was represented. Time and possibly money might have been saved had either or preferably both of them taken advantage of the pro bono IP Clinic that has operated at the Menai Science  Park since 2018.   This case was just the sort of issue that the clinic was set up to resolve.  Anyone wishing to discuss this case may do so by calling me on 020 7494 5252 during office hours or sending me a message through my contact page.

The Welsh Science Parks' Agri-Tech Cluster

Author Richard Wang Licence Public Domain Source Wikimedia Commons

 

Jane Lambert

On Friday 14 June 2024, I attended "Clwstwr Agritech" a webinar promoted by M-SParc and Aberinnovation, the Menai and Aberystwyth science parks.  At a time when much of the world's food production is threatened by climate change, the development of heat, flood, drought or pest-resistant crops and other food sources has never been more important.  Aberinnovation is literally next door to IBERS, the Institute of Biological, Environmental and Rural Sciences of Aberystwyth University.  M-SParc is a spin-off of Bangor University whose Centre for Applied Marine Sciences is one of the UK's leading research institutions in aquaculture. The attendance of Pryderi ap Rhisiart, Managing Director of M-SParc, and Rhian Hayward MBE, Chief Executive of Aberinnovation, indicated the importance of the occasion.

The webinar consisted of two presentations: one from UKRI on its Mid and North Wales Lauchpad: Cluster Management and the other from Selwyn Owen on Iona Minerals Ltd.  

The Mid and North Wales Launchpad is a £150,000 fund for a project to develop and manage the agri-tech and food technology innovation cluster in those regions.  It is open to UK-based businesses or institutions that will carry out their project work in the UK and which will have an impact on the agri-tech and food technology innovation cluster in Mid and North Wales.  Full details are published on the funding competition web page,  

Iona Minerals is described "as a new and early stage start-up venture, involved in the marketing, distribution of natural minerals".  The company's minerals have a variety of uses one of which is the treatment of chicken droppings in battery farms.  One of the by-products of this process is ammonia which has a number of industrial uses including combustion as a fuel and the preparation of blue hydrogen. 

Although neither speaker discussed the legal protection of the right to exploit new plant or seed varieties in this webinar, I mentioned it in the chat because that subject could well be raised in future webinars.  The rights of breeders of new plant varieties are protected in this country under the Plant Varieties Act 1997,  Plant breeders' rights have long been regarded as a Cinderella area of intellectual property law in this country though not in countries like Australia with a large viticulture industry.  However, that is likely to change with the need to respond to the challenges of climate change that I mentioned above,   I have written an introduction to Plant Breeders' Rights with links to my other articles on the subject.

Different countries protect plant breeders' rights in different ways.   In the USA, for instance, they are protected by a special type of patent known as a "plant patent".   There is an International Convention for the Protection of New Varieties of Plants ("UPOV Convention") which can be downloaded from the website of The International Union for the Protection of New Varieties of Plants (UPOV).

Anyone wishing to discuss this article should call me on 020 7404 5252 during UK office hours or send me a message through my contact form. 

Fiduciary Duties and Trade Marks - The Appeal in Quantum Advisory Ltd. v Quantum Actuarial LLP.

UK Trade Mark 3320701

 

Jane Lambert

Court of Appeal (Lord Justices Newey and Nugee and Sir Christopher Floyd) Quantum Advisory Ltd v Quantum Actuarial LLP [2024] EWCA Civ 247 (14 March 2024)

In Quantum Advisory Ltd v Quantum Actuarial LLP [2024] EWCA Civ 247 (14 March 2024), the Court of Appeal heard appeals by both the claimant and defendant against orders made by His Honour Judge Keyser KC sitting as a judge of the High Court in Quantum Advisory Ltd v Quantum Actuarial LLP [2023] EWHC 47 (Ch). The defendant, Quantum Actuarial LLP ("LLP") appealed against His Honour's finding that it could use the QUANTUM ADVISORY brand only for so long as it had an agreement with the claimant, Quantum Advisory Ltd ("Quad"), to provide services to Quad's clients.  It also appealed against the judge's order to substitute Quad's name for LLP's as the proprietor of three QUANTUM ADVISORY trade marks under s.10B of the Trade Marks Act 1994 that LLP had registered in its own name.  Quad appealed against the judge's refusal to substitute its name as the proprietor of the stylized "Q" mark appearing above under s.10B 

The Parties

LLP was incorporated in 2007 to provide services that had previously been supplied by a company then known as Quantum Advisory Ltd. which the judge and Lord Justices called "Old Quad".  An agreement was concluded between LLP and Old Quad on 1 Nov 2007 whereby LLP would employ Quad's staff and use its offices and the QUANTUM ADVISORY branding but Old Quad would retain its clients and goodwill.  Fees for services to Quad's clients would be divided 57% to LLP and 43% to Old Quad.  LLP would be free to develop its own business using the same branding and keep the revenues from that business for itself.  This was referred to as "the Services Agreement".  Shortly after the signing of the Services Agreement Old Quad's undertaking was transferred to a company called Pascal Company Solutions Ltd. That company swapped names with Old Quad. The new Quantum Advisory Ltd is the company referred to above as "Quad".  The Services Agreement was novated from Old Quad to Quad.

The Dispute

Even though Old Quad had generated considerable goodwill in the QUANTUM ADVISORY brand and both LLP and Quad had used it in their advising and business stationery, LLP registered the following trade marks without Quad's knowledge or consent:

Filing Date	Mark	Number
27 June 2018		UK00003320701
27 June 2018		UK00003320709
27 June 2018		UK00003320706
5 Nov 2018	QUANTUM ADVISORY	UK00003350849

By letters dated 9 July and 7 Aug 2020 LLP asked Quad to stop using those marks.  It appears from para [19] of Judge Keyser's judgment that Quad issued proceedings claiming that it was entitled to the trade mark registrations in equity or, alternatively, rectification of the register under s.10B. 

Trial

A trial took place before Judge Keyser between 1 and 3 Nov 2022.  His Honour handed down judgment on 18 Jan 2023.  By para [124] of his judgment, he held that LLP was a fiduciary to Quad in respect of the conduct of Quad’s business. In the next paragraph, he held that LLP was licensed to the use of the QUANTUM ADVISORY brand only during the subsistence of the Services Agreement. Upon termination of that agreement, LLP would no longer be licensed to use the brand and would be liable to a claim for passing off if it materially misrepresented its business as being associated with Quad so long as the other requirements of the tort were met.  Between para [126] and [128] he held that Quad was entitled to substitute its name for that of LLP as proprietor of UK00003320709, UK00003320706 and UK00003350849 but not UK00003320701 pursuant to s.10B, but not to an order for rectification, assignment or transfer in respect of any of the registered trade marks in equity.

The Appeals

The appeals were heard by Lord Justices Newey and Nugee and by Sir Christopher Floyd on 6 and 7 Feb 2024.  Their lordships handed done judgment on 14 March 2024.  Lord Justice Newey and Sir Christopher Floyd delivered the lead judgment with which Lord Justice Nugee agreed.

Whether LLP was a Fiduciary

Their lordships began with LLP's appeal.  They analysed the Services Agreement by which LLP agreed to supply consulting, actuarial, administrative and investment services for the fees mentioned above.  They considered Judge Keyser's reasons for finding that LLP was in a fiduciary relationship at [29].  They referred to Lord Justice Millett's description of a fiduciary in Bristol and West Building Society v Mothew [1998] Ch 1 on page 18 as "someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence". They noted that the concept of a duty of loyalty was defined by the Privy Council in Arklow Investments Ltd v Maclean [2000] 1 WLR 594 as one:

"encaptur[ing] a situation where one person is in a relationship with another which gives rise to a legitimate expectation, which equity will recognise, that the fiduciary will not utilise his or her position in such a way which is adverse to the interests of the principal"

They recalled that  Lady Arden had quoted with apparent approval the following passage from the judgment of Mr Justice Finn  sitting in the Federal Court of Australia, in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296, at para 177 in Children's Investment Fund (UK) v Attorney General [2020] UKSC 33, [2022] AC 155, at para 47:

"a person will be in a fiduciary relationship with another when and in so far as that person has undertaken to perform such a function for, or has assumed such a responsibility to, another as would thereby reasonably entitle that other to expect that he or she will act in that other's interest to the exclusion of his or her own or a third party's interest".

However, they also noted that she had added in para [48] that "[r]easonable expectation may not be appropriate in every case". Lord Justice Newey and Sir Christopher considered the position of trustees, partners, company directors, solicitors and agents.  They also discussed writings on the topic including Paul B Miller's in Philosophical Foundations of Fiduciary Law, ed. Gold and Miller, 2014 at 69.  He defined a fiduciary relationship as "one in which one party (the fiduciary) exercises discretionary power over the significant practical interests of another (the beneficiary)."

Their lordships quoted Lady Justice Asplin's observation in Eze v Conway [2019] EWCA Civ 88 that 

"[a]lthough the relationship of principal and agent is a fiduciary one, not every person described as an 'agent' is the subject of fiduciary duties and a person described as an agent may owe fiduciary duties in relation to some of his activities and not others".

They remarked that "[i]n general at least, an 'agent' with the ability to alter the principal's legal relations with third parties will have fiduciary obligations."

After considering LLP's arguments as to why it might not be a fiduciary, they concluded at [36]:

"In the present case, the Judge was, in our view, amply justified in concluding that there is a fiduciary relationship between LLP and Quad. Under the Services Agreement, LLP was appointed to be 'solely responsible' for the provision of the 'Services' as regards legacy clients and granted 'such power and authority as is necessary or desirable for providing the Services.' Quad still had a board of directors, but it no longer had any staff and had made available to LLP the assets which it had been using for the provision of services to legacy clients."

They added in the next paragraph:

"In the circumstances, LLP is plainly, we think, an 'agent' of such a kind as to be a fiduciary. LLP can fairly be said to have 'undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence', and, as regards the legacy business, the circumstances are such as 'reasonably [to] entitle [Quad] to expect that [LLP] will act in [Quad's] interest to the exclusion of his or her own or a third party's interest' (to adapt words of Finn J). Again, the relationship between LLP and Quad is one in which LLP 'exercises discretionary power over the significant practical interests of' Quad (to echo Paul B Miller's formulation)."

That was not the end of the story because the duties that a fiduciary owes can be shaped to an extent by the particular context in which the relationship arises.  

Any modification to LLP's fiduciary relationship would have to lie in the Services Agreement.  The clause that allowed LLP to use Quad's assets stated that they had been made available to enable LLP to provide the specified services.  That same clause contained a proviso that consent to use those assets would be terminated immediately upon the termination or expiration of the Services Agreement. Moreover, as Wadlow explained in para 3-311 of The Law of Passing Off, 6th. ed. the goodwill in a business carried on using a mark under a licence is presumed to accrue to the licensor:

"If the commercial purpose of an agreement is to license the use of a distinctive name or mark in respect of which the licensor has (or is agreed to have) goodwill, to a licensee who has (or is agreed to have) no such goodwill, and in circumstances where the licensee's use would otherwise be actionable as passing-off, then in the absence of agreement to the contrary or other supervening factors, the goodwill in the business so carried on by the licensee under the licensed name or mark will accrue to the licensor rather than the licensee. The licence may be express or implied, provided always that it does not offend against the prohibition on transactions in gross. The licensee acquires no interest in the licensed name or mark and must cease using it on termination of the licence. Examples are to be found in Coles v Need [[1934] AC 82], Roberts v Davis [(1935) 53 RPC 79], Manus v Fullwood & Bland [(1949) 66 RPC 71], Bostitch [[1963] RPC 183 and [1964] RPC 173], and Dawnay Day v Cantor Fitzgerald [[2000] RPC 669]. It is irrelevant whether the goodwill in the licensed business would otherwise have accrued to the licensee, the licensor, or both. It is the parties' contractual agreement, and not some extrinsic legal fiction or equitable doctrine, which operates to vest the goodwill in the licensor, unless otherwise agreed, because no other outcome is consistent with the ordinary licensor-licensee relationship."

It followed that there was nothing in the Services Agreement that modified LLP's fiduciary duty.

Whether LLP was a Licensee

After hearing evidence from both sides, the trial judge concluded that the right to use the QUANTUM ADVISORY brand was coterminous with the Services Agreement.  Lord Justice Newey and Sir Christopher Floyd observed at [58] that there are only limited circumstances in which an appellate Court is entitled to interfere with a finding of fact made by a trial judge. They referred to para [67] of Lord Reed's judgment in Henderson v Foxworth Investments Ltd [2014] UKSC 41, [2014] 1 WLR 2600:

"in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trial judge only if it is satisfied that his decision cannot reasonably be explained or justified".

In their lordships' view, there was no question of their being entitled to interfere with the Judge's finding of fact that the express basis on which the use of the QUANTUM ADVISORY mark as agreed in 2007' was that "the licence granted to LLP to use the Mark was coterminous with the Services Agreement." The finding was rooted in the judge's assessment of the relevant evidence and was the subject of a full explanation. It also accorded with common sense, since it was very difficult to see how it could be satisfactory (or how the parties could have thought that it could be satisfactory) for LLP and Quad both to trade using the QUANTUM ADVISORY branding once the Services Agreement had come to an end.

Rectification of the Register

Reg 11 of the Trade Marks Regulations 2018 (SI 2018 No 825) inserted a new s.10B into the Trade Marks Act 1994:

"(1) Subsection (2) applies where a trade mark is registered in the name of an agent or representative of a person ('P') who is the proprietor of the trade mark, without P's consent.
(2) Unless the agent or representative justifies the action mentioned in subsection (1), P may do either or both of the following—
(a) prevent the use of the trade mark by the agent or representative (notwithstanding the rights conferred by this Act in relation to a registered trade mark);
(b) apply for the rectification of the register so as to substitute P's name as the proprietor of the registered trade mark."

This regulation implemented art 13 of Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trade marks (recast) (Text with EEA relevance) OJ L 336, 23.12.2015, p. 1–26 which itself implements art 6septies of the Paris Convention for the Protection of Industrial Property 1883.

Lord Justice Newey and Sir Christopher noted that s.10B referred to "P" as the proprietor of the mark.  It was clear that P's mark did not have to be registered or registered in the same jurisdiction.  Referring to para [91] of the Court of Justice of the European Union's judgment in Case C-809/18P EUIPO v John Mills Ltd. [2021] Bus LR 123, they observed that the equivalent article of Council Regulation (EC) No 207/2009 (the Community Trade Marks Regulation) applied to similar as well as identical marks.

They mentioned in para [68] that Judge Keyser had identified 5  requirements for a successful application under s.10B that neither the parties nor the Court of Appeal criticized:

"i. LLP must have been the agent or representative of Quad.
ii. Quad must have been the proprietor of a trade mark that (a) is identical with or similar to the registered trade mark and (b) subsisted in goods or services identical or similar to those for which the registered trade mark was registered.
iii. LLP must have applied for registration of the trade mark in its own name.
iv. LLP must have applied for registration without Quad's consent.
v. LLP fails to establish that its actions in applying for registration of the trade mark was justified."

There was no dispute that the first, third and fourth requirements had been satisfied for all the marks.  As for the second, it was agreed that all the marks except UK00003320701 met that requirement.  With regard to the fifth, LLP argued that it had an independent and concurrent right to use the marks which it had registered in respect of its own business.  The judge decided the first issue in LLP's favour:

"Accordingly, Quad's case under section 10B in respect of the Q Device Trade Mark fails. Such a case would have had to assert not that the Hero Q was similar to or associated with the Mark but that it was itself identical to a mark of which Quad was the proprietor. No such assertion was made … in the particulars of claim (cf. paragraphs 3, 6 and 16) and that is not the basis on which the case was put before me."

He decided the second in favour of Quad:

"In my judgment, that is not an adequate justification under section 10B. It still amounts to reliance on the self-interest of the agent in preference to that of the principal. Mr Hill's submission mischaracterises the position as between the parties, which I have explained at sufficient length. Quad, not LLP, was the proprietor of the Mark and had a goodwill associated with it. It remained the proprietor of the Mark and continued to use it. LLP had only a permissive right by licence to use the Mark during the subsistence of the relationship between the parties. It had its own goodwill in its own business, but it never acquired more than a licence to use the Mark. When the relationship ends, it will have to use a different trading name or risk laying itself open to an action for passing off. While the relationship subsists, although it may use the Mark for its own business, it is a fiduciary of Quad and is not permitted to prefer its own interests to those of Quad or to act in a manner that compromises Quad's interests. In seeking to register trade marks that incorporate the Mark, it has clearly done just that."

LLP challenged that finding on the basis that the Judge had been wrong to: 

• find the existence of a fiduciary relationship between Quad and LLP, and 
• reject the existence of concurrent goodwill in the QUANTUM ADVISORY mark.

Having dealt with both issues, Lord Justice Newey and Sir Christopher upheld the above finding in para [74].

Quad's Appeal

Quad argued that the Court should have regard to the use of the stylized "Q" in UK00003320701 together with the words QUANTUM ADVISORY in the overall assessment of similarity for the purposes of s.10 much in the way that the Court of Justice of the European Union had done in Case C-252/12 Specsavers International Healthcare Ltd v Asda Stores Ltd ECLI: EUC:2013:497.  The Court was not convinced,  Lord Newey and Sir Christopher said at [77]:

"We are not persuaded by this argument. Specsavers is about establishing likelihood of confusion between a mark and a sign which are similar, and the issue is whether that similarity is sufficient to cause confusion. Matter extraneous to the registered mark may assist, in certain circumstances, in that determination. In the present case the marks being compared are not similar: their only common feature being a letter of the alphabet. No one would say that the marks MCDONALDS and BMW were similar because they both include the letter M, however prominently the proprietors of the former may have stressed the initial letter in their advertising. No amount of extraneous matter can create similarity where none existed before."

If Quad was to win its appeal it would have to be on some other basis.  They said at [106]:

"The only available claim for rectification in respect of the Q Device Mark is that, despite the fact that Quad is not the proprietor of an earlier mark identical or similar to the Q Device Trade Mark, it was applied for and registered in breach of LLP's fiduciary duty to Quad."

Judge Keyser had rejected that argument on the basis that art 13 of Directive 2015/2436 was intended to be a complete code which had excluded arguments based on national law.  His Honour formed that view in reliance on Mr Justice Males's judgment in Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd [2016] EWHC 809 (Ch), [2016] Bus LR 808 who had held that where a defence of consent had been recognized and defined by the Community Trade Mark Regulation, there was no room for the application of more elaborate, home-grown principles of consent, such as acquiescence and estoppel.  A defence either fell within the defence of consent as defined by the European legislation or it did not. Lord Justice Newey and Sir Christopher considered Ball v The Eden Project [2001] ETMR 96, Ennis v Lovell (The Swinging Blue Jeans Trade Mark) [2014] RPC 32 and Case C-381/16 Salvador Benjumea Bravo de Laguna v Esteban Torras Ferrazzuolo ECLI:EU: C:2017:889.  They concluded at [96]: 

"In our judgment, a claim by a principal, based on a national law rule, that the registration by an agent or representative of a mark which is not identical or similar to any earlier mark owned by the principal was a breach of fiduciary duty, is not precluded by the Marussia principle."

They agreed with His Honour that registration of marks which are identical with or similar to the QUANTUM ADVISORY mark was an obvious breach of fiduciary duty.  It was similarly a breach of such duty for LLP to register in its own right some part of the branding under which Quad's services were marketed, even if it could not give rise to an action for passing off.  The registration of UK00003320701 in LLP's name was in LLP's interests and contrary to those of Quad.   They concluded at [117] that the registration of UK00003320701 was a breach of the fiduciary duty that LLP owed to Quad.  They decided in the next paragraph that the appropriate remedy was rectification of the register to substitute Quad for LLP as the registered proprietor of UK00003320701.

Further Information

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Practice - Welsh Ministers v Price

Statue of Dylan Thomas in Swansea

Author Ham II  Licence CC BY-SA 4.0 Deed  Source  Wikimedia Commons

Jane Lambert

Court of Appeal (Sir Terence Etherton MR, Lords Justices Longmore and Irwin) The Welsh Ministers v Price and another (Rev 1) [[2017] WLR(D) 749, [2018] BCC 93, [2017] EWCA Civ 1768, [2018] 1 All ER (Comm) 1108, [2018] 1 WLR 738, [2018] 2 All ER 860, [2018] 1 BCLC 1, [2018] WLR 738

This is not a recent case but I chose to discuss it because it was referred to by the Court of Appeal in Flitcraft Ltd and others v Price and another [2024] EWCA Civ 136 on 27 Feb 2024 and by Ms Pat Treacy sitting as a deputy judge of the High Court in Wise Payments Ltd v With Wise Ltd and others [2024] EWHC 234 (IPEC) on 9 Feb 2024.  It is about the circumstances in which it is permissible and, where permissible, appropriate to join a third party to proceedings for restoration of a dissolved company to the register of companies.  It also relates to the copyright in a photo of Dylan Thomas and Caitlin Macnamara after their wedding on 11 July 1937 by Vernon Watkins ("Mr Watkins") and an action for infringement of copyright in that photo by Pablo Star Media Ltd which I discussed in n Copyright in Photographs - Pablo Star Media Ltd v Bowen on 15 Oct 2017 in NIPC Law.

The Copyright

A copy of the photo appears between paras [2] and [3] of His Honour Judge Hacon's judgment in Pablo Star Media Ltd v Bowen [2017] EWHC 2541 (IPEC) (13 Oct 2017). Mr Watkins died in 1967 and his copyrights in that and another photo of Dylan Thomas and his bride passed to Mr Watkins's widow Gwendolyn.  Mrs Walkins sold her copyrights in those photos to Pablo Star Ltd. for £350.  On 21 May 2014 Pablo Star Lrd. purported to assign the copyrights to Pablo Star Media Ltd.

The Company

Pablo Star Ltd was incorporated on 13 Aug 2003 with objects that included "intellectual property consultancy".  Hadyn Price ("Mr Price") was its only shareholder and director.  On 4 Feb 2013, Mr Price applied for the company to be struck off the register.  His application was granted on 18 Feb 2014.  On 14 April 2024, he applied for the company to be restored so that it could sue New Directions Publishing Inc. the Welsh Ministers and Nancy Galbraith for infringing copyright in the photo.  His application was granted by Registrar Derrett on 13 June 2014 subject to certain undertakings. Registrar Derrett varied his order to enable the company to sue more defendants on 18 June 2015. Mr Price undertook to transfer all his copyrights and trade marks to Pablo Star Media Ltd which he had incorporated on 14 May 2014.

The Application

As they were about to be sued, the Welsh Ministers applied to be joined to the proceedings to restore Pablo Star Ltd to the register.  They did so in order to argue that Registrar Derrett's orders of 13 June 2014 and 18 June 2015 should be declared invalid.  Registrar Barber granted their application on 2 March 2016.   

Judge Behrens

Mr Price appealed to the judge in chambers, His appeal was heard by His Honour Judge Behrens QC sitting as a judge of the High Court on 14 Oct 2016.   In Price v The Registrar of Companies and another  [2017] WLR 299, [2016] WLR(D) 563, [2016] EWHC 2640 (Ch), [2017] 1 WLR 299 Judge Behrens allowed the appeal and set aside the registrar's order.  He was referred to the judgments of the Court of Appeal in Stanhope Pension Trust v Registrar of Companies [1994] BCC 84 and Re Blenheim Leisure (Restaurants) Ltd [2000] BCC 554 and the of Lord Glennie in Spring Salmon & Seafood Ltd v A-G of Scotland [2010] CSOH 82. 

Judge Behrens noted at para [33] of his judgment that in Stanhope Lord Justice Hoffmann (as he then was) had distinguished between a case where a third party had rights that were directly affected by an order to restore a company to the register and a case where the third party merely wanted to say that the proposed proceedings by the revived Company have no prospects of success.  He concluded that the court should allow joinder in the first case but not in the second.  In Re Blenheim, landlords who had re-entered premises that had been let to a company which had been struck off the register were entitled to join the proceedings to restore the company because they had an interest that was threatened by the company's restoration. In Spring Salmon & Seafood, Lord Glennie refused to allow officers of a company that HMRC wished to restore to the register to investigate its tax affairs to join the proceedings because the restoration would only have placed the officers in the position they would have been had the company not been struck off in the first place.

His Honour accepted that an appeal court should not normally interfere with a case management decision of the court below but he believed that the registrar had erred in principle,  He said at para [49]:

"I accept that joinder of [the Welsh Nibisters] may assist the court in determining whether the court was misled. I do not, however accept that a desire by a third party to assist the court in this way is a proper basis for joinder. It could give rise to a multitude of claims from anyone with a grudge against or who wanted to complain about the Company. It is quite clear from the authorities that the right to be joined into restoration proceedings is an exception to the ordinary practice of the Companies Court. Furthermore, as is clear from the passages from the judgments on Aldous LJ and Tucker LJ to which I have referred it is a limited exception which will not result in large numbers of proceedings being turned into major litigation."

He continued in the next paragraph that the Registrar of Companies and not concerned third parties was responsible for ensuring compliance with the restoration proceedings of the Companies Act 2006 and not third parties:

"Parliament has entrusted the policing of restoration applications to the Registrar of Companies. It is thus for the Registrar to raise with the court issues of breach of an undertaking and/or misleading witness statements if he chooses to do so. If he does not do so, it is not in my view for anyone else to raise it with the court. All that a disappointed third party can do is to challenge the decision of the Registrar in judicial review proceedings."

The Court of Appeal

The Welsh Ministers appealed to the Court of Appeal. Their appeal was heard by Sir Terence Ethertoon, Master of the Rolls and Lords Justice Longmore and Irving on 17 Oct 2017. Their lordships handed down judgment on 16 Nov 2017 in The Welsh Ministers v Price and another [2017] WLR(D) 749, [2018] BCC 93, [2017] EWCA Civ 1768, [2018] 1 All ER (Comm) 1108, [2018] 1 WLR 738, [2018] 2 All ER 860, [2018] 1 BCLC 1, [2018] WLR 738). They dismissed the appeal and upheld the decision of Judge Behrens.

Their lordships' starting point was CPR 19.2 (2):

"The court may order a person to be added as a new party if –
(a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or
(b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue."

Their lordships reasoned that CPR 19.2 confers a discretion on the court to join a party if the conditions in 19.2 (2) (a) or (b) are satisfied. Those conditions are that:
(1) the new party can assist the court to resolve all the matters in dispute in the proceedings, and
(2) it is desirable to add the new party to achieve that end.
They considered that CPR 19.2 (2) ought to be given a wide interpretation.  The words "in dispute" should be read as "in issue".  Referring to Dunwoody Sports Marketing v Prescott [2007] EWCA Civ 461 the Court opined that it can add a party even after judgment.

As the issue was whether Pablo Star should be restored to the register, the Court of Appeal thought that  Registrar Barber had been right to consider the application of the Welsh Ministers was capable of falling within CPR 19.2 (2) (a).   Their lordships did not, however, consider it desirable for the Welsh Ministers to be party to the proceedings.  The reason why the Welsh Ministers' application was capable of falling within CPR 19,2 (2) (b) was that the issue of the validity of the assignment, which they wished to challenge in connection with claims for copyright infringement against them, was connected to the making and revocation of Registrar Derrett's orders. In considering whether or not it would be desirable to add a new party pursuant to CPR 19.2 (2) the two lodestars were the policy objective of enabling parties to be heard if their rights might be affected by a decision in the case and the overriding objective in CPR Part 1.

Sir Terence Etherton, who delivered the lead judgment, said between paras [60] and [62]:

[60] ....... There are important practical considerations for strictly limiting the circumstances in which third parties are joined to applications to restore a company to the register, and they apply equally to applications to set aside an order for restoration. There may be many third parties who perceive that their interests may be indirectly affected by restoration and who may wish to advance all manner of reasons for seeking to prevent or reverse an order for restoration rather than wait to face and, where appropriate, resist actions of the company against them or others which the company perceives to be in its best interests. That is particularly true, in a case like the present, when it is sought to restore a company to the register of companies in order to resurrect an asset in the form of a cause of action against third parties.
[61] In such a case, it is well established that the court will not allow the intervention in proceedings for restoration by a third party who merely wishes to argue that the proceedings which the revived company proposes to bring against the third party have no prospect of success: Stanhope [1994] BCC 84 at 90D.
[62] By contrast, the court will allow intervention by a third party whose interests will be directly affected by the restoration and who would otherwise have no opportunity to be heard on the issue of whether, in the light of that direct effect, restoration is just: Blenheim at 574B."

The Court of Appeal agreed with Judge Behrens that the Welsh Ministers' rights were not affected by the copyright assignment in the photo of Dylan Thomas and his bride to Pablo Star Media Ltd. If they had infringed that copyright the only difference was that they would be liable to a different claimant.   They contrasted the position of the Welsh Ministers to that of the landlord in Blenheim.

Their lordships disagreed with Judge Behrens that Parliament had entrusted the policing of restoration applications to the Registrar of Companies and that it was for the Registrar alone to raise breaches of undertakings or misleading witness statements. No statutory authority had been offered to support that proposition.  The Registrar's functions are largely administrative and he or she lacks the resources to police compliance with the Companies Act 2006.  

In an appropriate case, the Registrar would favour the joinder of a third party to bring before the court a complaint that it had been misled or an undertaking had been broken and the court had power under CPR 19.2 (2) to allow such joinder in an appropriate case.   This was not an appropriate case.  In their lordships' view, this was not an appropriate case. The Welsh Ministers would have no real prospect of persuading the court that the order to restore Pabli Star Ltd. should be revoked.

The Claim against Mr Bowen

I have already referred to Pablo Star Media's action against Richard Bowen who had cropped the image of Dylan Thomas's face from Mr Watkins's photograph which had been reproduced on the Visit Wales website and inserted it onto a website to advertise holiday lets in Wales,  The Visit Wales website was operated by a department of the Welsh government for which the Ministers were responsible.  It was that website which had featured in the appeals to Judge Behrens and the Court of Appeal.  Mr Bowen admitted infringement and at a damages only hearing on the IPEC small claims track District Judge Cary awarded Panlo Star Media £250 plus £3 interest.  However, the district judge also ordered the claimant to pay Mr Bowen's travelling expenses of £164.10 leaving a balance of £88,90 to the company,  The company appealed to the Enterprise Judge but Judge Hacon declined to interfere with the district judge's order.

Comment

Although the appeal focused on the joinder of parties to proceedings to restore a company to the register it does have some lessons which is why the Court of Appeal and Ms Treacy referred to it.  First, CPR 19.2 is to be given a wide interpretation.  The court has the power to join a party to proceedings even after it has given judgment,  Two conditions have to be satisfied.  The first is that the new party can assist the court to resolve all the matters in dispute in the proceedings.  The second is that it should be desirable to add the new party to achieve that end.  In Wise Payments Ms Treacy equated that analysis as follows in para [37] of her judgment:

"(i) does the case against the party to be joined have a real, as opposed to fanciful, prospect of success. This is to be assessed by testing: (i) whether the pleaded case carries a degree of conviction; (ii) whether it is coherent and properly particularised; and (iii) whether there is evidential material which establishes a sufficiently arguable case against the party in question; and
(ii) does the likely benefit of granting the application to join another party and the inevitable related application to permit consequential amendments satisfy the IPEC costs benefit test as well as the requirements of the relevant parts of the CPR."

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