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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Podnik v Anheuser-Busch Inc [2002] EWCA Civ 1534 (29 October 2002)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1534.html
Cite as: [2002] EWCA Civ 1534, [2003] RPC 25

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Neutral Citation Number: [2002] EWCA Civ 1534
Case No: A3/2002/0048, A3/2002/0049

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
Mr Simon Thorley, QC, (sitting as a Deputy High
Court Judge)

Royal Courts of Justice
Strand, London, WC2A 2LL
29th October, 2002

B e f o r e :

LORD JUSTICE PILL
LORD WALKER OF GESTINGTHORPE
and
SIR MARTIN NOURSE

____________________

Between:
Budejovicky Budvar Narodni Podnik
Appellant in the 1st appeal/Respondent in the 2nd appeal
- and -

Anheuser-Busch Inc
Respondent in the 1st appeal/Appellant in the 2nd appeal

____________________

James Mellor (instructed by Messrs. Blair & Co. London) for Budejovicky Budvar Narodni Podnik
Michael Bloch, QC and Michael Edenborough (instructed by Messrs. Macfarlanes London) for Anheuser-Busch Inc
Hearing dates : 23/24 July, 2002

____________________

HTML VERSION OF JUDGMENT : APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)
____________________

Crown Copyright ©

    Sir Martin Nourse:

    Introduction

  1. These two appeals from decisions given on 3rd December, 2001 by Mr Simon Thorley, QC, sitting as a deputy judge of the Chancery Division, raise questions of construction on s.46 of the Trades Mark Act 1994 (Revocation of registration). Before the judge there were three appeals against decisions of hearing officers acting for the Registrar of Trade Marks, but we are not concerned with the subject matter of the third appeal and I need not further refer to it. Nor is it necessary to repeat the procedural history of the matter as related by the judge.
  2. The judge described the matter as a further round in the long running dispute between Anheuser-Busch Inc (“AB”) and Budejovicky Budvar Narodni Podnik (“BB”), who are brewers in the United States and the Czech Republic respectively. He added that the beers of both companies are sold in this country under the trademark “Budweiser”, and that the name of both beers is abbreviated by a significant number of their customers to the word “Bud”. Much of the earlier and somewhat unusual history of the dispute can be gathered from the reports of passing off proceedings between the parties before Whitford J and in this court [1984] FSR 413 and BUD Trade Mark (Walton J) [1988] RPC 535.
  3. So far as material to the present appeals, s.46 of the 1994 Act provides:
  4. “(1) The registration of a trade mark may be revoked on any of the following grounds-
    (a) that within the period of 5 years following the date of completion of the registration procedure it has not been put to genuine use in the United Kingdom, by the proprietor or with his consent, in relation to the goods or services for which it is registered, and there are no proper reasons for non-use;
    (b) that such use has been suspended for an uninterrupted period of five years, and there are no proper reasons for non-use;…..
    (2) For the purposes of sub section (1) use of a trade mark includes use in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered, …”

    Each of the two appeals is concerned with the meaning of the words “use in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered” in sub section (2). The second appeal is also concerned with the meaning of the words “genuine use” in sub section (1)(a).

    The First Appeal

  5. The first appeal relates to a trade mark registered in the name of BB under number 807395 in Class 32 of the register in respect of “beer, ale and porter”. It is in the following form:
  6. On 24th July 1998 AB applied for the revocation of the registration under s.46(1)(b) of the 1994 Act on the ground of five years non-use. The application came before Mr Salthouse acting for the Registrar who, on 11th April, 2001, dismissed it. AB’s appeal was allowed by the judge. With the permission of Lord Justice Robert Walker, BB appeals against the judge’s decision and asks for Mr Salthouse’s dismissal of the application to be reinstated.

  7. BB has accepted throughout that there has been no use of the Budweiser Budbräu mark in the stylised form in which it was registered. But it claims that there was continuous use during the relevant five year period “in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered”, within s.46(2). Two such uses were relied on by BB before Mr Salthouse. The first, clearly the more important of the two, was a label used on the neck of a bottle, which Mr Salthouse described thus:
  8. “The whole of the neck label is itself registered as a trade mark. The label consists of a central part which imitates a red wax seal. The words BUDWEISER BUDBRÄU are printed in block capitals in a circle on the seal. The words encircle a motif comprising a shield with a lion upon it, superimposed on a castle with towers. Beyond the red seal on each side is a white area banded with gold with, in the white area, a large stylised letter ‘B’ in red.”

    Later, Mr Salthouse referred to evidence filed by BB, which indicated that in the three years 1992-1995 sales of beer in bottles with the neck label on them had amounted to £20m. He added that that was not disputed by AB and that that use could scarcely be regarded as anything other than genuine in nature. AB has not questioned that conclusion.

  9. Mr Salthouse expressed his finding as to the neck label as follows:
  10. “(20) The first issue to be determined is whether the average consumer’s reaction to the words BUDWEISER BUDBRÄU in the graphical form in which it is registered, would be any different to the word in block capitals, or in any other conventional form of presentation…..
    (21) In my view what makes the mark in suit distinctive is that it is clearly recognisable as the words BUDWEISER BUDBRÄU. The different fonts and the underlining do not detract from, or add anything to, the central message. Consumers are used to different fonts being used and would see the underlining as a typical advertising flourish. I therefore find that the use of the words BUDWEISER BUDBRÄU in block capitals is use of the registered mark within the meaning of s.46(2) of the Act.”

    Later, Mr Salthouse added:

    “(23) In my view the average consumer would view the words Budweiser Budbräu as being the distinctive element of the neck label mark. Heraldic devices such as those included in the neck label are common on bottles containing alcoholic beverages. The various individual elements are relatively indistinct in themselves when compared to the words, and even when considered collectively do not overcome the basic tenet that words speak louder than devices. The words clearly indicate the origin of the goods.”
  11. Before the judge it was common ground that an appeal to the High Court in a revocation application is by way of review and not re-hearing. The judge recognised that he could only interfere in the decision below if he was satisfied that Mr Salthouse had erred in principle. He was satisfied that Mr Salthouse had made two such errors in paragraphs (20) and (21) of his decision. He said:
  12. “First, the correct approach to interpreting s.46(2) does not require a question to be asked as to what the average consumer’s reaction to a mark is. The section requires the determination of the elements that make up the distinctive character of the mark and this is a matter which is to be viewed, in my judgment, through the eyes of the Registrar in assessing whether or not the mark should be registered. The two approaches may lead to the same result but they may not.
    Secondly, I believe that Mr Salthouse was wrong in seeking to ascertain what was the central message of the mark. This is not the statutory test. The fact that the words Budweiser Budbräu are the most striking feature of the mark can make no difference. If Mr Salthouse were right then I anticipate that in a majority of cases use of a trade mark in ordinary letters, whether in upper or lower case, would constitute use of a stylised version of the mark. As a matter of generality that must be wrong.”
  13. The judge therefore proceeded to consider the question of s.46(2) afresh. Earlier, he had identified four elements that contributed to the overall distinctiveness of the mark: first, the word Budweiser; second, the word Budbräu; third, the specific fonts used for the two words and the contrast in fonts; fourth, the inter relationship of the two words, one being above the other and following behind the enlarged B of Budbräu. Having said that the use of the neck label did not embody the third and fourth of those elements, the judge continued:
  14. “To my mind these two elements each contribute a part to the distinctive character of the mark. This part is therefore missing in the use relied upon and other matter such as the device is added. I have no hesitation in holding that the use of the words Budweiser Budbräu in this context is a use in a form differing in elements which do alter the distinctive character of the mark in the form in which it was registered and that therefore s.46(2) cannot be invoked in respect of this use.”
  15. If our function on this appeal was to review the judge’s decision as if it had been a decision at first instance, I have little doubt that an interference with it would not have been appropriate. But that is not our function. What we have to decide is whether the judge, himself conducting a review, was entitled to interfere with Mr Salthouse’s decision. In other words, was the judge entitled to hold that Mr Salthouse had erred in principle? As the argument proceeded in this court, it became clear that that was the primary question for our decision on the first appeal.
  16. It will have been observed that Mr Salthouse, without discussion, assumed that the average consumer’s reaction was of paramount importance. For that he was criticised by the judge, on the ground that what is required is a determination of the elements that make up the distinctive character of the mark, being a matter which is to be viewed through the eyes of the Registrar in assessing whether or not the mark should be registered. There was a debate before us as to whether the matter should be viewed through the eyes of the Registrar or through the eyes of the average consumer. I agree with the approach of the judge so far as it goes. But it appears that he may not have given adequate weight to the consideration that the Registrar, in assessing the distinctiveness of the mark, would necessarily have to view the matter through the eyes of the average consumer. Indeed, Mr Bloch, QC, for AB, did not deny that the average consumer had a role to play. While emphasising that the Registrar is required to carry out an exercise which the average consumer does not carry out, he accepted that, in assessing the distinctive character of a mark, she has to have regard to the way in which it would be perceived by the average consumer.
  17. The judge also criticised Mr Salthouse for having sought to ascertain what was the central message of the mark. For myself, I do not think that that was what Mr Salthouse did. Paraphrasing somewhat, I understand him to have said that the distinctive feature of the mark was the words Budweiser Budbräu and that the different fonts and the underlining of the word Budbräu did not detract from, or add anything to, that distinctive feature. On that view of the matter Mr Salthouse was doing precisely what s.46(2) required him to do.
  18. Mr Bloch accepted that, in relation to a particular mark, it is possible, as Mr Salthouse put it, for the words to speak louder than the device. However, he said that it does not necessarily follow that the entire distinctive character of the mark lies in the words alone. That too is correct. But there is yet another possibility. A mark may have recognisable elements other than the words themselves which are nevertheless not significant enough to be part of its distinctive character; or, to put it the other way round, the words have a dominance which reduces to insignificance the other recognisable elements. In my judgment, on a careful reading of Mr Salthouse’s decision, it was into that category that he put the Budweiser Budbräu mark. It is true, as it often is with hindsight, that he might have expressed his view more clearly. But as Lord Justice Robert Walker said in Bessant & ors T/A Reef v South Cone Inc (28th May 2002 – unreported):
  19. “29. The appellate court should not treat a judgment or a written decision as containing an error of principle simply because of its belief that the judgment or decision could have been better expressed.”

    Moreover, I am unable to hold that Mr Salthouse was not entitled to take the view that he did. It is true that another hearing officer might, as indeed did the judge, have taken a different view. But it cannot be said that Mr Salthouse’s view was one to which no reasonable hearing officer could have come.

  20. For these reasons I am of the opinion that the judge was wrong in holding that Mr Salthouse erred in principle in relation to the first use relied on by BB. The second use relied on was the use of the words Budweiser Budbräu in upper case script as part of a frieze surrounding BB’s invoices for Budweiser beer. On any footing that was a far less significant use, and AB contended before the judge that it did not constitute “genuine use in the United Kingdom” as required by s.46(1)(a). Being of the opinion that the use of the words did not fall within s.46(2) at all, the judge did not consider that question. For my part, being of the opinion that Mr Salthouse’s decision as to the use of the neck label was correct, like him, I find it unnecessary to consider the use of the mark on the invoices.
  21. I would allow the first appeal and reinstate Mr Salthouse’s dismissal of AB’s application to revoke the registration of the Budweiser Budbräu trade mark.
  22. The Second Appeal

  23. The second appeal relates to a trade mark registered in the name of BB under number 1070309, again in Class 32 of the register in respect of “beer, ale and porter”. This trade mark is in the following form:
  24. [Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture]

    On 11th June 1996 AB applied for the revocation of the registration, again under s.46(1)(b) of the 1994 Act on the ground of five years’ non-use. The application came before Mr James acting for the Registrar who, on 13th February, 2001, dismissed it. AB’s appeal was dismissed by the judge. With the permission of Lord Justice Robert Walker, AB now brings a further appeal to this court.

  25. Mr Bloch’s argument on behalf of AB in this court was mainly directed to the secondary question of “genuine use”. But the primary question whether a use had been established, either in the form in which the mark was registered or for the purposes of s.46(2), remained in contention and, in order to understand what the second appeal is all about, it is necessary to start with a careful consideration of what was and was not decided, first, by Mr James and, secondly, by the judge.
  26. Five uses were relied on by BB before Mr James: first, use on packaging; second, use on invoices; third, use as part of product codes; fourth, oral use by customers; fifth, use on promotional beer mats. Of these the first three were relied on as uses within s.46(2) and the fifth as use of the mark in the stylised form in which it was registered. Mr James considered the uses in the order in which I have listed them.
  27. The most significant of the first three uses was the use on packaging. There the evidence established that BB had shipped a substantial volume of beers to the United Kingdom during the relevant five year period, with turnover in the year to 31st March 1995 amounting to £8.7m approximately. Although the word Bud did not appear in any form on the bottles used for this beer (which carried the mark Budweiser Budvar) all of it was shipped and distributed through United Kingdom retailers in boxes along the top of which appeared in a form of dot matrix print, the words Bud-Budvar-Budweiser. Moreover, approximately 30% of this beer was sold on to the end consumer in boxes of that description through cash and carry outlets. On the invoices and in the product codes the word Bud was shown in block capitals. It was accepted on behalf of AB that the use of the word Bud in dot matrix print on the top of the boxes of bottled beer was no different from the other uses of that word in block capitals.
  28. Mr James said that the first point to be decided was whether the use shown of the word Bud in block capitals counted as use of the registered 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”. He considered that question with great care, referring to the evidence, the submissions on each side and to the judgment of Walton J in BUD Trade Mark (supra). In deciding the question, his approach was similar to that later adopted by Mr Salthouse in the Budweiser Budbräu case. He said:
  29. “Although it is true that the registration consists of the word BUD in a particular graphical form, that form, in my view, adds little to the distinctive character of the mark…..
    In my view it is highly unlikely that BB’s customers’ reaction to the word BUD in the graphical form in which it is registered, would be any different to the word in block capitals, or in any other conventional form of presentation…..
    In my view, what makes BB’s registered mark distinctive is that it is clearly recognisable as the word BUD. I therefore find that the use of BUD in block capitals, or in the form of dot matrix print shown in the evidence, is use of the registered mark within the meaning of s.46(2) of the Act.”
  30. Mr James continued:
  31. “The next question is whether the use of the word BUD on the top of the boxes of beer in the form ‘BUD-BUDVAR-BUDWEISER’ is use of the mark BUD, or use of a composite mark. In my view, this is use of BUD, BUDVAR and BUDWEISER as separate marks presented adjacent to one another. These are all names by which BB’s beers are variously known to its customers. The appearance of these marks on the top of the packaging for its beers is clearly intended to both identify the origin of the goods and to promote the marks.”
  32. Next, Mr James considered whether the use of the word Bud on packaging, amounted to “genuine use”. Having observed that there was no evidence that BB’s use of that word was a sham or in any way colourable, he directed himself by reference to the views expressed by Jacob J in Euromarket Designs Inc v Peters [2001] FSR 20 and concluded that “genuine use” required consideration of the quantity and the nature of the use shown. He added that “genuine” was not just the opposite of “sham”, and that the real question was whether the particular use shown was (a) in relation to the goods at issue and (b) of a nature and on a scale that amounted to “genuine use” in relation to the goods for which the mark was registered. Mr James expressed his conclusion as follows:
  33. “27. If I am right in holding that the use of BUD in dot matrix print on the packaging for BB’s boxes of beer counts as use of the registered mark, the answer in this case is reasonably clear. The evidence indicates that 30% of BB’s beers are sold for the end consumer in these boxes. Having regard to the substantial size of BB’s trade in the UK, that equates to a substantial use of the mark in relation to beers. Further, in the light of the evidence that BB’s beers are sometimes ordered as ‘BUD’, and more often ordered as ‘Czech BUD’, the use of BUD by BB can scarcely be anything other than genuine in nature.”
  34. Mr James then said that that finding was sufficient for him to dispose of the case without considering BB’s further evidence of the use of the word Bud (in block capital letters) on invoices and in product codes. He added that, strictly speaking, it was also unnecessary for him to express any view as whether the oral use of Bud by BB’s customers counted as use for the purposes of s.46(1). However, since that point featured significantly at the hearing, he dealt with it briefly, concluding that if he was wrong in accepting BB’s use of the word Bud on packaging as equivalent to the use of the word in the form registered, then the oral use of the word by BB’s customers could not take its case any further forward.
  35. Finally, in case he should be found to be wrong in treating the use of the word Bud in block capitals (or the equivalent) as use of the registered mark under s.46(2), Mr James turned to the use of the beer mats, as to which his conclusion was as follows:
  36. “40. The nature of the use is more peripheral or secondary, than the use shown of BUD on the packaging for BB’s boxes of beers. Further, the extent of the use, although more than de minimis, is relatively slight. Considered in isolation, I think it is doubtful that such use would be sufficient to demonstrate a trade in beers under the word mark ‘BUD’ in the form in which it is registered. However, considered in context against the background of BB’s other uses of BUD, and the evidence that its beers are sometimes ordered as ‘BUD’ or ‘Czech BUD’, I believe that such use does constitute genuine use of the mark BUD, in the exact form registered, in relation to beers. Consequently, even if I am wrong in accepting the use of BUD on packaging as equivalent to use of the registered mark, the application would still fail as a result of the use shown on beer mats.”
  37. The judge’s view was that, since the use on the beer mats consisted of the word Bud in the form in which it was registered, that was the use which ought to be considered first. He pointed out that if that had been a sufficient use that would be an end of the matter and no resort to s.46(2) would be necessary. He thought that Mr James had been wrong in considering the use on the beer mats in conjunction with other uses of the word Bud not in the form in which it was registered. He said:
  38. “If it is possible to reach a conclusion that the use of the mark as registered is adequate to maintain the registration, then there is no need to consider alternative uses.”
  39. Having considered the use of the beer mats on its own, the judge expressed the view that Mr James had fallen into error in paragraph 40 of his decision. He said:
  40. “In the context of this case was the use of the trademark Bud, as registered on the beer mats, of a nature and scale sufficient to constitute ‘genuine use’? I have concluded that it was. Although the use was small in comparison with the amount of beer sold, it was used in the course of a genuine trade, to promote that trade and promoted it in a way which drew upon the practice of abbreviating the use of the product to Bud. This, it seems to me, falls classically within any definition of the word ‘genuine’.
    In my judgment therefore this appeal fails on the basis that there has been genuine use of the trade mark as registered without any need to consider the application of s.46(2) to the facts of this case. I shall therefore express my views on this aspect of this appeal briefly.”
  41. Having pointed out that Mr James had approached the question in the same way as Mr Salthouse, being an approach which the judge had concluded was wrong, the judge said that were it necessary for him to do so he would reject the contention that any of the written uses of the word Bud in script or dot matrix form constituted use which could be relied on pursuant to the provisions of s.46(2). As to oral use, he said that that raised complex questions of trade mark law, which did not need to be considered for the purpose of disposing of the appeal and on which he preferred not to express any view.
  42. In opening the second appeal in this court Mr Bloch said that the question was whether any use of the mark which had been established was genuine. He argued that it was not. In his response Mr Mellor, for BB, claimed that AB had changed its ground, the appeal having been based primarily on the proposition that advertising or promotional use, even if genuine, did not count. In reply Mr Bloch accepted that the emphasis of the appeal had indeed changed, in the light, particularly, of the recent opinion of Advocate-General Colomer (2nd July 2002) in Ansul BV v Ajax Brandbeveiliging BV, which is known as the Minimax case. In the event, Mr Mellor having been well able to deal with the argument as it was put, the change of emphasis did not prejudice BB in any material way.
  43. There is another important point to be made about the way in which the argument proceeded in this court. Because the judge had based his decision only on the use of the beer mats, Mr Bloch’s argument was primarily directed to the question whether that use was genuine or not. He also dealt with the question of oral use. However, Mr Mellor in accordance with BB’s respondents’ notice, twice confirmed that he continued to rely on the other uses claimed by BB, including the use of the word Bud on the top of the boxes in which BB’s beer was packed.
  44. On the question of genuine use Mr Bloch referred us to the judgments of Lloyd J in Elle Trade Mark [1997] FSR 529 and of Jacob J in Euromarket Designs Inc v Peters (supra) and Laboratories Goemar SA; Applications for revocation by La Mer Technology Inc. [2002] ETMR 34. He then referred us at some length to the opinion of the advocate-general in the Minimax case and submitted that it was in that opinion that the correct test for “genuine use” was to be found. Mr Bloch summarised the test, as applied to the present case, as follows:
  45. “It is not a question of whether or not you are genuinely in the beer trade and happen to have used the mark one or more times in the course of that trade. You have to justify maintaining your monopoly excluding others from using the mark. And the justification for that must lie not in the fact that you happen to have used it, but in the fact that you are conducting a business under that mark.”
  46. Although it is unsatisfactory to have to rely to such a great extent on an advocate-general’s opinion in a case in which the European Court of Justice has not yet delivered judgment, I am prepared to assume for present purposes that both the test formulated by Advocate-General Colomer and Mr Bloch’s summary of it are correct. Mr Bloch submitted that if that test is applied to the beer mats, the judge’s decision cannot stand. But even if that submission were correct, as to which I express no opinion, it would leave untouched Mr James’s decision in relation to the boxes in which BB’s beer was packed.
  47. I revert to paragraph 27 of Mr James’s decision, in which he says:
  48. “The evidence indicates that 30% of BB’s beers are sold to the end consumer in these boxes. Having regard to the substantial size of BB’s trade in the UK that equates to a substantial use of the mark in relation to beers. Further, in the light of the evidence that BB’s beers are sometimes ordered as ‘BUD’ and more often ordered as ‘Czech BUD’, the use BUD by BB can scarcely be anything other than genuine in nature.”

    In arriving at that conclusion, Mr James applied the test adopted by Jacob J in Euromarket Designs Inc v Peters (supra). If that was a correct test, his conclusion was entirely justified and could not have been displaced on appeal. But it is said that the correct test is that now propounded by Advocate-General Colomer. I will make the further assumption that that test is in substance different from that adopted by Jacob J. Nevertheless, it seems inevitable that if Mr James had applied the advocate-general’s test he would have reached the same conclusion. The evidence on which he relied was equally supportive of the view that BB was carrying on a business under the mark.

  49. I summarise the position as follows. In relation to the boxes Mr James decided, first, that the use of the word Bud, either in block capitals or in the form of dot matrix print, was use of the registered mark within s.46(2); second, that it was use as a separate mark and not as part of a composite mark; third, that the use amounted to genuine use. It has not been suggested that the second of those decisions was wrong, and I have now held that the third was entirely justified whatever test is applied. As to the first, I would simply repeat the views I have expressed in relation to Mr Salthouse’s decision in respect of the Budweiser Budbräu mark. There was no material distinction between the approach of Mr James and that of Mr Salthouse, and the like result follows in each case.
  50. For these reasons I would affirm Mr James’s decision in relation to the use of the word Bud on top of the boxes. That makes it unnecessary to express any view on the questions of oral use and use on the beer mats, and I do not do so. I would dismiss the second appeal.
  51. Conclusion

  52. There was some discussion during the argument as to whether it would be appropriate to make a reference to the European Court of Justice in either appeal. On the view I have taken of each appeal a reference is unnecessary. The overall result is that AB’s applications for revocation of the registrations will both stand dismissed.
  53. Lord Walker:

  54. I agree that these appeals should be disposed of in the manner and for the reasons stated in the judgment of Sir Martin Nourse, which I have had the advantage of reading in draft. I add some comments of my own, especially as to the application of section 46(2) of the Trade Marks Act 1994 in the first appeal, which turns on genuine use of the BUDWEISER BUDBRÄU mark either on neck labels or on printed invoice forms.
  55. Almost every registrable trade mark consists of
  56. a) one or more words in any script; or
    b) one or more words in a particular script (and possibly, if there are two or more words, in a particular collocation); or
    c) one or more words in a particular script and collocation together with other graphic material; or
    d) a wholly non-verbal graphic design (such as a red triangle).

    I will call these “plain words”, “stylised words”, “words and graphics” and “graphics” respectively.

  57. Examples of words and graphics, from the cases cited to us, are the lower-case ‘elle’ in a female gender sign in Elle trademarks [1997] FSR 529 and the slanted geometric design round ‘club’ (in an unusual script) in Club Soda trademarks (Trade Marks Registry 17 November 1998). The distinction between plain words and stylised words is legally significant (being reflected in rule 5(4) of the Trade Mark Rules 2000). The other categories admit of borderline cases (for instance the BUDWEISER BUDBRÄU mark consists of stylised words, but had the flourish on the final ‘u’ been much more elaborate it might have come close to words and graphics). Wholly non-verbal marks were probably more common in simpler and less literate times.
  58. A trade mark must be distinctive. Its whole purpose is to distinguish the goods or services of one trader from the goods or services of other traders; and in the case of goods, the primary use of a trade mark (reflected in Article 5.3(a) of the First Council Directive 89/104 and in section 10(4)(a) of the Act, although only for the purposes of that section) is to put the trade mark on the goods, or on their packaging. But a trade mark can also be used “in relation to” the goods for which it is registered in other ways, for instance in advertising, either at or away from the point of sale.
  59. It is not necessary to go far into the authorities on trade mark law to see that the term ‘distinctive’ is used with two different shades of meaning. Sometimes it has its normal, non-technical meaning, with a flavour of that which is unusual (or stands out in a crowd) and is therefore easy to recognise and to remember. Sometimes it is used in a more technical sense, in contrast to ‘descriptive’ (reflecting Article 3.1(c) of the Directive and section 3(1)(c) of the Act). Purely descriptive or laudatory words, however striking and memorable, cannot normally be distinctive in this sense (see the TREAT case, British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281, and the other examples set out in Kerly, Law of Trade Marks and Trade Names, 13th ed paragraphs 7-69 to 7-77). But they may in some circumstances acquire distinctiveness (see Windsurfing Chiemsee [1999] ETMR 585). Moreover descriptive words can be made distinctive through what Aldous LJ (in Philips v Remington [1999] RPC 809, 817) called a ‘capricious addition’.
  60. These points are uncontroversial, not to say pedestrian, but they do to my mind help to show what is the right approach to the language of section 46(2) of the Act, which is at the heart of the first appeal:
  61. “ ... use in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered.”

    (This language is word for word the same as the English language version of Article 10.2(a) of the Directive.)

  62. The word ‘elements’ can be used, and often is used, to refer to the basics or essentials of a matter. However it can hardly have that meaning in section 46(2), since a basic or essential difference in the form in which a trade mark is used would be very likely to alter its distinctive character. In section 46(2) ‘elements’ must have a weaker sense (of ‘features’ or even, as Mr Bloch came close to submitting, ‘details’).
  63. The deputy judge touched on this and some related points in paragraphs 18 to 22 of his judgment. He stated that the elements of a mark must be assessed separately. He also stated (or at least implied) that only some of the elements might contribute to the distinctive character of the mark. He pointed out that the inquiry was as to whether the mark’s distinctive character was altered (not substantially altered).
  64. I have no wish to be overcritical of the way in which the deputy judge expressed himself, especially since I think he was a little overcritical of the way in which the hearing officer had expressed himself. But I am inclined to think that the deputy judge made the issue rather more complicated than it is. The first part of the necessary inquiry is, what are the points of difference between the mark as used and the mark as registered? Once those differences have been identified, the second part of the inquiry is, do they alter the distinctive character of the mark as registered?
  65. The distinctive character of a trade mark (what makes it in some degree striking and memorable) is not likely to be analysed by the average consumer, but is nevertheless capable of analysis. The same is true of any striking and memorable line of poetry:
  66. “Bare ruin’d choirs, where late the sweet birds sang”

    is effective whether or not the reader is familiar with Empson’s commentary pointing out its rich associations (including early music, vault-like trees in winter, and the dissolution of the monasteries).

  67. Because distinctive character is seldom analysed by the average consumer but is capable of analysis, I do not think that the issue of ‘whose eyes? – Registrar or ordinary consumer?’ is a direct conflict. It is for the Registrar, through the hearing officer’s specialised experience and judgment, to analyse the “visual, aural and conceptual” qualities of a mark and make a “global appreciation” of its likely impact on the average consumer, who
  68. “normally perceives a mark as a whole and does not proceed to analyse its various details.”

    The quotations are from paragraph 26 of the judgment of the Court of Justice in Lloyd Schuhfabrik v Klijsen Handel [1999] ECR I – 3819; the passage is dealing with the likelihood of confusion (rather than use of a variant mark) but both sides accepted its relevance.

  69. I do not therefore entirely agree with the deputy judge’s first criticism (in paragraph 30 of his judgment) of the decision of the hearing officer (Mr G W Salthouse) in the first appeal. The reference to the ‘average consumer’s reaction’ to a mark might have been better expressed as the mark’s likely impact on the average consumer, but I do not think there can be any real doubt as to what was intended. The hearing officer uses his skill and experience to analyse and assess the likely impact of the mark on the average consumer, although the latter probably does not himself engage in any analysis of that sort.
  70. Nor do I agree with the deputy judge’s second criticism (in paragraph 31 of his judgment). It is of course correct that the ‘central message’ of a mark is not the statutory test, and it is not always helpful to paraphrase a statutory test before applying it. But as the Court of Justice observed in Lloyd Schuhfabrik, the average consumer normally perceives a mark as a whole, so that ‘central message’ may not be too bad a paraphrase, so long as it is understood as comprehending the essential ‘visual, aural and conceptual’ qualities which combine to give a mark its distinctive character.
  71. The hearing officer concluded that the distinctive character of the BUDWEISER BUDBRÄU mark resided in those two words (just as if the mark were a plain words mark) and that
  72. “The different fonts and the underlining do not detract from or add anything to, the central message.”

    I have to say that I have found that conclusion surprising, so much so that I have had to ask myself whether it can only be an indication that the hearing officer failed to carry out the sort of comprehensive review which he should have undertaken.

  73. Mr Bloch submitted that the hearing officer must have erred and that it was necessary (although without minute analysis) to condescend to details of the mark and the variant. In line with that approach the deputy judge said (in paragraph 20 of his judgment)
  74. “ ... that assessment of the distinctive character of a word per se [‘plain words’] will, in general, be different to the assessment of that same word depicted in a particular graphical form. In general the graphical form will vary from standard print such that the distinctiveness of the mark will fall to be assessed not only on the basis of the distinctiveness of the word per se but also on the distinctiveness of the stylisation in which it is sought to register the word.”
  75. Mr Bloch also supported the deputy judge in identifying as contributions (in paragraph 28) to the distinctiveness of the mark not only the two words BUDWEISER and BUDBRÄU but also the two specific fonts and the collocation of the two words. He might have added the contrast between the two fonts (one distinctly gothic and the other cursive) and the flourish attached to the last letter of the cursive BUDBRÄU.
  76. Mr Mellor criticised the deputy judge for having, on the first appeal, followed a novel and inadmissible approach to the application of section 46(2). I regard that as an exaggerated criticism, although I do think that the deputy judge’s approach was a little over-elaborate. I also think that the deputy judge was wrong in professing not to concern himself with a mark’s impact on the average consumer.
  77. Ultimately the issue on the first appeal is whether the deputy judge was right to discern two errors of principle in the hearing officer’s approach, so opening the way for the deputy judge to substitute his own view. For the reasons which I have explained, I do not think that the hearing officer did make any significant error of principle which appears from his written decision. I do find his conclusion surprising and if this court had a free choice between the hearing officer’s decision and that of the deputy judge I would unhesitatingly choose the latter.
  78. However this court does not have a free choice, as Sir Martin Nourse has explained in his judgment. As Buxton LJ said in Norowzian v Arks Ltd (No2) [2000] FSR 363, 370
  79. “ ... where it is not suggested that the judge has made an error of principle a party should not come to the Court of Appeal simply in the hope that the impression formed by the judges in this court, or at least by two of them, will be different from that of the trial judge.”

    The same principle applies to an appeal from a hearing officer to a judge of the Chancery Division. Although the hearing officer’s decision is one which I find surprising, I do not consider that it can be described as clearly wrong. Therefore I agree (although possibly with more hesitation than my lords) that the first appeal should be allowed.

  80. I agree that the second appeal should be dismissed for the reasons given by Sir Martin Nourse, to which I cannot usefully add anything.
  81. Lord Justice Pill:

  82. In the first appeal, Mr Bloch QC submitted that the hearing officer, Mr Salthouse, had made an error of principle in that he applied the wrong test. That being so, the Court was entitled to consider the application of s 46(2) afresh. I agree with Sir Martin Nourse and Lord Walker of Gestingthorpe that the hearing officer applied the correct test. I also agree that he was entitled to reach the conclusion he did and there was no basis for interfering with his decision. The appeal should be allowed. I also agree that, for the reasons given by Sir Martin Nourse, the second appeal should be dismissed.


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URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1534.html