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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> The London Taxi Corporation Ltd (t/a the London Taxi Company) v Frazer-Nash Research Ltd & Anor  EWCA Civ 1729 (01 November 2017)
Cite as:  EWCA Civ 1729,  ETMR 7
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
MR JUSTICE ARNOLD
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE FLOYD
| THE LONDON TAXI CORPORATION LIMITED
trading as THE LONDON TAXI COMPANY
|- and -
|FRAZER-NASH RESEARCH LIMITED
(2) ECOTIVE LIMITED
Mark Platts-Mills QC and Maxwell Keay (instructed by Berwin Leighton Paisner LLP) for the Respondents
Hearing dates: 18th-20th July 2017
Crown Copyright ©
Lord Justice Floyd:
The trade marks in issue
LTC's other trade marks
"I am aware that those involved in the trade, our competitors, passengers and Transport for London alike all have certain perceptions as to how a licensed London cab 'should look' …. there is, effectively, a barrier to entry in the market for licensed cabs which are not recognisable as such – i.e. if a vehicle does not look like a licensed cab, passengers are less likely to hail it. … FNR wanted to avoid producing a taxi which may struggle to generate business if it was not recognised by Londoners as a licensed London cab. … As a result - in very broad terms - I directed the design of a cab which was recognisable as a licensed London cab at a generic level, drawing on the entire history of the sector and the British heritage of automotive designs, but that is distinctive and which clearly differentiates itself from LTC's cabs."
"The all-new Range Extended Electric Metrocab has been in development since the mid-2000s with several prototypes built and over a million kilometres of testing. Instantly recognisable as an iconic London Hackney Cab with a panoramic glass roof for views of the City, our new all-British London cab offers, for no price premium, completely new levels of economy, emissions and passenger comfort and is ready to enter service this year, benefitting [sic] the passenger, driver, city and environment alike." (emphasis supplied).
The regulation of London taxis
The legislative provisions
Grounds for refusal or invalidity
1. The following shall not be registered or, if registered, shall be liable to be declared invalid:
(b) trade marks which are devoid of any distinctive character;
(e) signs which consist exclusively of:
(iii) the shape which gives substantial value to the goods;
3. A trade mark shall not be refused registration or be declared invalid in accordance with paragraph 1(b), (c) or (d) if, before the date of application for registration and following the use which has been made of it, it has acquired a distinctive character. Any Member State may in addition provide that this provision shall also apply where the distinctive character was acquired after the date of application for registration or after the date of registration.
Rights conferred by a trade mark
1. The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
(b) any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark.
2. Any Member State may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.
5. Paragraphs 1 to 4 shall not affect provisions in any Member State relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services, where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.
Limitation of the effects of a trade mark
1. The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade:
(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services;
provided he uses them in accordance with honest practices in industrial or commercial matters."
Use of Community trade marks
1. If, within a period of five years following registration, the proprietor has not put the Community trade mark to genuine use in the Community in connection with the goods or services in respect of which it is registered, or if such use has been suspended during an uninterrupted period of five years, the Community trade mark shall be subject to the sanctions provided for in this Regulation, unless there are proper reasons for non-use.
The following shall also constitute use within the meaning of the first subparagraph:
(a) use of the Community trade mark in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered;
Grounds for revocation
1. The rights of the proprietor of the Community trade mark shall be declared to be revoked on application to the Office or on the basis of a counterclaim in infringement proceedings:
(a) if, within a continuous period of five years, the trade mark has not been put to genuine use in the Community in connection with the goods or services in respect of which it is registered, and there are no proper reasons for non-use; however, no person may claim that the proprietor's rights in a Community trade mark should be revoked where, during the interval between expiry of the five-year period and filing of the application or counterclaim, genuine use of the trade mark has been started or resumed; the commencement or resumption of use within a period of three months preceding the filing of the application or counterclaim which began at the earliest on expiry of the continuous period of five years of non-use shall, however, be disregarded where preparations for the commencement or resumption occur only after the proprietor becomes aware that the application or counterclaim may be filed;
2. Where the grounds for revocation of rights exist in respect of only some of the goods or services for which the Community trade mark is registered, the rights of the proprietor shall be declared to be revoked in respect of those goods or services only."
i) Is the average consumer in the present case (a) the taxi driver who purchases the cab or (b) the taxi driver who purchases the car together with members of the public who hire taxis?
ii) Are the trade marks invalid because they are each devoid of distinctive character? This gives rise to two sub-issues: (a) inherent distinctive character and (b) acquired distinctive character.
iii) Are the trade marks invalid because they each consist of a shape which gives substantial value to the goods?
iv) Should the CTM be revoked because of non-use between 30 April 2009 and 1 May 2014?
v) Were the trade marks infringed by the new Metrocab under Articles 9(1)(b)/5(1)(b)?
vi) Were the trade marks infringed by the new Metrocab under Articles 9(1)(c)/5(2)?
vii) Did the respondents have a defence under Article 12(b)/Article 6(1)(b)?
viii) Was the judge correct to dismiss the claim in passing off?
Discussion of the issues
Issue (i): the average consumer
"They [i.e. members of the public] are not end users of the goods, they are users of the service provided by the consumer of the goods".
"24. In general, the perception of consumers or end users will play a decisive role. The whole aim of the commercialisation process is the purchase of the product by those persons and the role of the intermediary consists as much in detecting and anticipating the demand for that product as in increasing or directing it.
25. Accordingly, the relevant circles comprise principally consumers and end users. However, depending on the features of the product market concerned, the influence of intermediaries on decisions to purchase, and thus their perception of the trade mark, must also be taken into consideration."
"… The test requires the court to identify the relevant perception of consumers within any relevant class who are neither deficient in the requisite characteristics of being well-informed, observant and circumspect, nor top performers in the demonstration of those characteristics. That is in substance what "average" means."
"I have described how the IBC performs a useful function to the end-user in facilitating the convenient storage and dispensing of its contents, rather than merely being a means whereby the filler transports the contents to its end-user customer's factory gate. The end-user is therefore a person to whom the trade mark, as a badge of origin or authenticity of the IBC as a product, may well have significance. For as long as an IBC performs its functions effectively, that role of the trade marks may be of little consequence to the end-user. But if the IBC were to fail, then it is to the proprietor of the trade mark displayed on it that the end-user is likely to attribute blame for the failure, even if the end-user has no legal recourse against the manufacturer, and has to pursue a complaint through its (filler) supplier. In my judgment end-users of IBCs are consumers in the relevant sense, for that reason."
Issue (ii)(a): Inherent distinctive character
"42. According to settled case-law, for a trade mark to possess distinctive character for the purposes of Article 7(1)(b) of Regulation No 40/94 it must serve to identify the goods in respect of which registration is sought as originating from a particular undertaking, and thus to distinguish those goods from those of other undertakings (see, in particular, Joined Cases C-456/01 P and C-457/01 P Henkel v OHIM  ECR I-5089, paragraph 34; Case C-136/02 P Mag Instrument v OHIM  ECR I-9165, paragraph 29, and Case C-238/06 P Develey v OHIM  ECR I-9375, paragraph 79).
43. That distinctive character must be assessed, first, by reference to the goods or services in respect of which registration is sought and, second, by reference to the perception of the relevant public (see, in particular, Henkel v OHIM, paragraph 35; Case C-25/05 P Storck v OHIM  ECR I-5719, paragraph 25, and Develey v OHIM, paragraph 79).
45. It is also settled case-law that, the criteria for assessing the distinctive character of three-dimensional trade marks consisting of the appearance of the product itself are no different from those applicable to other categories of trade mark (see, in particular, Mag Instrument v OHIM, paragraph 30; Case C-173/04 P Deutsche SiSi-Werke v OHIM  ECR I-551, paragraph 27; Storck v OHIM, paragraph 26, and Case C-144/06 P Henkel v OHIM  ECR I-8109, paragraph 36).
46. However, when those criteria are applied, account must be taken of the fact that the perception of the average consumer is not necessarily the same in relation to a three-dimensional mark consisting of the appearance of the product itself as it is in relation to a word or figurative mark consisting of a sign which is independent of the appearance of the products it designates. Average consumers are not in the habit of making assumptions about the origin of products on the basis of their shape or the shape of their packaging in the absence of any graphic or word element, and it could therefore prove more difficult to establish distinctive character in relation to such a three-dimensional mark than in relation to a word or figurative mark (see, in particular, Mag Instrument v OHIM, paragraph 30; Deutsche SiSi-Werke v OHIM, paragraph 28, and Storck v OHIM, paragraph 27).
47. In those circumstances, only a mark which departs significantly from the norm or customs of the sector and thereby fulfils its essential function of indicating origin is not devoid of any distinctive character for the purposes of Article 7(1)(b) of Regulation No 40/94 (see, in particular, Mag Instrument v OHIM, paragraph 31; Deutsche SiSi-Werke v OHIM, paragraph 31, and Storck v OHIM, paragraph 28)." (emphasis supplied)
"25. In the present case, the Board of Appeal correctly observed … that the sign applied for depicts an apparatus for locomotion by land and not an apparatus for locomotion by air or water. It must, therefore, be regarded as departing significantly from the norm and customs of the sector for apparatus for locomotion by air and water and, consequently, as not being devoid of any distinctive character for the purposes of Article 7(1)(b) of Regulation No 207/2009. The Board of Appeal was therefore correct in annulling the examiner's decision as regards 'apparatus for locomotion by air or water' in Class 12 and allowing the application for registration in respect of those goods.
26. However, it must be stated that the same reasoning ought to have led the Board of Appeal also to annul the examiner's decision as regards 'vehicles for locomotion by air and water' in Class 12 and allow the application for registration in respect of those goods. The sign applied for depicts an apparatus for locomotion by land and not 'vehicles for locomotion by air and water'. It must, therefore, be regarded as departing significantly from the norm and customs of the sector for vehicles for locomotion by air and water and, consequently, as not being devoid of any distinctive character for the purposes of Article 7(1)(b) of Regulation No 207/2009. It follows that the contested decision must be annulled in so far as it refused registration of the mark applied for as regards 'vehicles for locomotion by air and water' in Class 12." (emphasis supplied)
"As a matter of principle I do not accept that just because a shape is unusual for the kind of goods concerned, the public will automatically take it as denoting trade origin, as being the badge of the maker."
i) the large size and relatively upright slope of the windscreen;
ii) the triangle of the bonnet tapering towards the front grille;
iii) the impression conveyed of a deep/high bonnet;
iv) the extended prominent front grille;
v) the "TAXI" light in the centre above the windscreen;
vi) the round headlamps, and the alignment thereof with the top of the grille;
vii) the smaller round parking lights, and the alignment thereof with the bottom of the grille;
viii) the overall front, side, and rear views of the vehicle.
Issue 2(b): acquired distinctive character
"… in order to demonstrate that a sign has acquired distinctive character, the … trade mark proprietor must prove that, a significant proportion of the relevant class of persons perceives the relevant goods or services as originating from a particular undertaking because of the sign in question (as opposed to any other trade mark which may also be present)." (original emphasis)
"The applicant must prove that, as a result of the use he has made of the mark, a significant proportion of the relevant class of persons perceives the goods designated by that mark, as opposed to any other mark which might also be present, as originating from a particular undertaking. Put another way, the mark must have come to identify the relevant goods as originating from a particular undertaking and so to distinguish those goods from those of other undertakings."
i) the fact that LTI and LTC had had a de facto monopoly of taxis having a similar appearance in London for decades;
ii) the absence of anything other than shape which could indicate trade origin;
iii) the fact that LTI and LTC have had a policy to preserve the distinctive appearance of their taxis through successive models;
iv) the steps taken by LTI and LTC to educate the public.
"… if and to the extent that consumers of taxi services care about the trade origin of taxis they hired, they will have learnt that licensed London taxis of a different shape to LTC's taxis had a different origin."
i) the first pair did not display the shape of the taxi. The left-hand advertisement asked "Who's behind this cab?", whilst the right-hand advertisement, said "Manganese Bronze Holdings plc [a predecessor of LTC] is the fast-growing engineering group behind one of the world's most famous symbols – the black cab. Following a tradition that spanned some 110 years, the taxi you are riding in right now sets a new standard in black cab design and comfort".
ii) There followed a pair of advertisements used between January and September 2005 where one advertisement features a front view of the TXII and has the headline "The World's Most Famous Taxi" and bullet points including "purpose-built and distinctive" and "a great British Icon", whilst the other showed the body shape of a TXII and chassis separated to emphasise various safety features.
iii) The next pair of advertisements was introduced around July 2009. The first in this pair asks "Did you know this taxi… is built by British company called LTI [another predecessor of LTC] and has unique features?" Above and below a picture of the TX 4 it says "is instantly recognised… as a British Icon". The second asks "Did you also know… This taxi is sold all over the world?" Beneath it are pictures of the TX4 in what looks like Paris, the Gulf and Las Vegas, with the lines "is recognised the world over", "is part of the best taxi service in the world" and "is also available in left-hand drive."
iv) The last of pair of seat advertisements has the headline "Choose an Iconic Black Cab". It continues with bullet points including "It's a recognisable taxi and you can trust the quality".
Issue (iii): Substantial value
"I would like to point out at the outset that the third indent of Article 3(1)(e) of the directive is not worded clearly. That is demonstrated by the large variance in the interpretation of it."
"Consumer perception: by 1 December 2006 the TX1 had been on sale for over nine years. As I have said above, any goodwill generated by such sales must be disregarded. It does not follow that the UKTM must be treated as if it were an unused mark. It is implicit in LTC's own case that, as at that date, the average consumer in the UK would recognise the shape as that of a London taxi. The shape is thus one which consumers placed a value on."
"Taking all of the factors into consideration, the conclusion I draw is that the shape of the TX1 did add substantial value to the goods. Furthermore, I consider that upholding this objection to the validity of the UKTM would be consistent with the purpose of Article 3(1)(e)(iii) as explained by the Advocate General and the Court of Justice in Hauck, since it would prevent LTC obtaining a permanent monopoly in respect of the shape of the TX1, rather than a 25-year monopoly by virtue of the registered design."
Issue (iv): revocation of the CTM for non-use
i) during the period in question LTC and its predecessor sold 264 used (i.e. second-hand) Fairways at an average price of £585. These were vehicles which LTC and its predecessor had acquired by way of part exchange for new taxis which they were selling, and which they then re-sold. With the sole exception of one sale to a customer in Italy in December 2009 for a price of £2,000, all of these sales were in the UK.
ii) In addition, LTC and its predecessor disposed of 314 Fairways for scrap, the majority of which were given away for free, but nearly 70 of which were sold at prices ranging from £50 to £150, making an average sale price of £26.
Issue (v): infringement under Article 9(1)(b)/Article 5(1)(b)
Issue (vi): infringement under Article 9(1)(c)/Article 5(2)
"Assos was required to show that the mark ASSOS had a reputation; that the use of the sign ASOS had given or would give rise to a link with the mark in the mind of the average consumer; and that the use of the sign without due cause had taken or would take advantage of, or had been or would be detrimental to, the distinctive character or repute of the mark."
"There is evidence from which it may be inferred that taxi drivers would be more likely, all other things being equal, to purchase a new taxi if it was readily recognisable as a licensed London taxi…".
Issue (vii): defence under Article 12(b)/Article 6(1)(b)
"In considering whether a defendant is acting fairly in relation to the legitimate interests of the trade mark proprietor it will be relevant to consider, among other things, whether there exists a likelihood of confusion; whether the trade mark has a reputation; whether the use of the sign complained of takes advantage of or is detrimental to the distinctive character or repute of the trade mark; and whether the possibility of conflict was something which the defendant was thought to have been aware. The national court must carry out an overall assessment of all the circumstances in determine whether the defendant is competing unfairly."
"Overall, I do not consider that the Defendants' use of sign amounts to unfair competition with LTC. On the contrary, even if it is assumed that there is a likelihood of confusion and/or detriment to the distinctive character of the Trade Marks, I consider that the injury is one that the law should require LTC to tolerate having regard to the nature of the use complained of and the justification for it. Accordingly, the use is in accordance with honest practices. If necessary, therefore, I would hold that the Defendants have a defence under Article 12(b)/Article 6(1)(b)."
Issue (viii): passing off
Application to rely on documents not in Court of Appeal bundles
Lord Justice Kitchin: