MR JUSTICE ARNOLD :
- The First Claimant ("HC") owns and operates the Hotel Cipriani in Venice. The Second Claimant owns and operates the Ristorante Hotel Cipriani at the Lapa Palace Hotel in Lisbon. The Third Claimant owns and operates the Ristorante Villa Cipriani at the Reid's Palace Hotel in Madeira. All three Claimants are members of the Orient Express Hotels Group of companies ("OEHG"), which was formerly part of the Sea Containers group.
- The First Defendant ("CGS") has since April 2004 operated a restaurant the correct name of which is said by the Defendants to be Cipriani London, but which is commonly referred to simply as Cipriani ("the Restaurant"). The Second Defendant (who I shall refer to for brevity as "Giuseppe") is the sole director of CGS. The Third Defendant ("CI") is a Luxembourg corporation which has licensed CGS to use the name Cipriani. Both Giuseppe and his father Arrigo Cipriani (who I shall refer to for brevity as "Arrigo") are directors of CI, and Arrigo is the Chairman. CI in turn is licensed by Altunis Trading Gestao E Services LDA ("Altunis"), a Madeiran company.
- CGS, CI and Altunis are part of what the Defendants call the Cipriani Group of companies, although it is not clear whether this appellation had been used prior to the present dispute. The structure of the Cipriani Group is somewhat complicated. For present purposes it suffices to say that, directly or indirectly, CI wholly owns Altunis and a number of other companies, including Cipriani SpA, Cipriani Industria Srl, Cipriani International Group SA and Cipriani USA, Inc (as to each of which, see below), and owns 60% of CGS.
- The Cipriani Group is ultimately owned and controlled by Arrigo, Giuseppe and Giuseppe's two sisters. Arrigo oversees the Group's Italian businesses, while Giuseppe has prime responsibility for its businesses outside Italy and in particular in the USA. Nevertheless, Arrigo is active in the management of the business as a whole, including the Restaurant. Thus until recently he has visited London to oversee the running of the Restaurant for about a week at a time approximately once a month.
- There is a historical link between the Claimants on the one hand and the Cipriani family, and hence the Cipriani Group, on the other hand. As described in more detail below, one of the founders of HC was Arrigo's father and Giuseppe's grandfather, also called Giuseppe Cipriani (who I shall refer to as "Giuseppe Senior"). The Cipriani family has long since ceased to have any connection with HC, however.
- I have already said enough to indicate the nature of the present dispute, which concerns a clash between the respective trade mark rights, or perceived trade mark rights, of the Claimants and of the Defendants. The Claimants allege that CGS has infringed a Community trade mark owned by HC and is liable both for passing off and under section 56 of the Trade Marks Act 1994. CGS denies infringement, passing off and liability under section 56 and counterclaims for a declaration that both the Community trade mark and a United Kingdom trade mark owned by HC are invalid. It is common ground that, if CGS is liable, Giuseppe and CI are also liable as joint tortfeasors.
The name Cipriani
- As will be apparent from the foregoing, Cipriani is an Italian surname. There is no evidence before me, however, as to how common it is in Italy, let alone in the United Kingdom. Nor is there is any direct evidence as to whether, at the dates which are material to this dispute, consumers of hotel and restaurant services in the United Kingdom appreciated that Cipriani was an Italian surname. My assessment is that many consumers would have been aware of this, but far from all. (For reasons unconnected with this case, a greater proportion would be aware of this now.)
HC's Community trade marks
- HC is the registered proprietor of Community Trade Mark No. 115824 ("the CTM") for the word CIPRIANI in respect of various goods and services including the following:
"Hotels, hotel reservation, restaurants, cafeterias, public eating places, bars, catering; delivery of drinks and beverages for immediate consumption."
- The application for the CTM was filed on 1 April 1996, the first day on which the Office Harmonisation of the Internal Market (Trade Marks and Designs) ("OHIM") accepted applications. The CTM was registered on 9 July 1998. At that time the services set out above were classified in Class 42 of the 7th edition of the International Classification established under the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Trade Marks. With effect from 1 January 2002 such services were re-classified in Class 43 of the 8th edition of the Nice Classification. In the current 9th edition they continue to be classified in Class 43. The re-classification does not affect any of the issues that I have to decide. Indeed, the entry for the CTM in the OHIM database continues to show the services as being in Class 42, presumably so as to reflect the position as at the application date.
- HC is also the proprietor of Community Trade Mark No. 115857 for the words HOTEL CIPRIANI applied for and registered on the same dates and in respect of the same goods and services as the CTM. The Claimants do not allege that this registration has been infringed, nor do the Defendants attack its validity.
HC's United Kingdom trade marks
- HC is the registered proprietor of United Kingdom Trade Mark No. 2435200 ("the UKTM") for the word CIPRIANI registered as of 11 October 2006 in respect of an almost identical specification of goods and services to the CTM. The Claimants do not allege that this registration has been infringed, but as stated above the Defendants claim that it is invalid.
- HC is also the proprietor of United Kingdom Trade Mark No. 1343293 for the words HOTEL CIPRIANI registered as of 3 May 1988 in respect of "hotel reservation services included in Class 42". The Claimants do not allege that this registration has been infringed, nor do the Defendants attack its validity.
- There is quite a complicated factual background to the present dispute. Although much of this is common ground, some is disputed. I will set out my findings of fact topic by topic and approximately chronologically in relation to each topic.
- Before doing so, I must say something about the witnesses. I heard from a total of eight witnesses called by the Claimants. In addition, a statement from a ninth witness was not challenged by the Defendants. It is not necessary to list all of these witnesses, some of whom are referred to below. Counsel for the Defendants did not criticise any of them, but pointed out that there were certain differences between what some of the witnesses had said in their witness statements and the evidence they gave during cross-examination. I heard from three witnesses called by the Defendants. In addition, statements from three more witnesses were not challenged by the Claimants. Counsel for the Claimants made two submissions about the Defendants' witnesses which I must deal with.
- First, he submitted that Arrigo was a very unsatisfactory witness who had lied about at least one matter and whose evidence could not be accepted on any subject unless it was corroborated by independent evidence. I am not persuaded that Arrigo was deliberately untruthful in his evidence. Nevertheless, I consider that he was not a reliable witness. This is partly due to the general manner in which he answered questions during cross-examination: his answers tended to ramble and at a number of points were inconsistent. More specifically, I was concerned by the following points:
i) On 30 July 2007 Arrigo, Giuseppe, Cipriani Fifth Avenue, LLC, Downtown Restaurant Company, LLC and GC Alpha, LLC entered into a plea agreement with the District Attorney of the County of New York under which Arrigo, Giuseppe and the companies agreed to plead guilty to tax offences. In the case of Arrigo he agreed to plead guilty to one count of a violation of Tax Law §1805(b), False Returns or Reports; Corporate Taxes, a class E felony. In return the District Attorney agreed to recommend to the Court that he be sentenced to five years' probation and (jointly and severally with the other defendants) to pay $10 million in satisfaction of New York State and New York City tax obligations through tax year 2004 and the cost of prosecution. The agreement provided that at the time of the plea Arrigo would admit under oath the following facts:
"I am an owner and corporate officer of Cipriani International, S.A. ('Cipriani SA'), a foreign holding corporation formed under the laws of Luxembourg. Cipriani S.A. in turn wholly owns Cipriani USA, Inc. ('Cipriani USA') a Delaware corporation with its principal office at 110 East 42nd Street, New York, New York. Cipriani USA owns numerous subsidiaries which operate various restaurants, banquet halls and real estate venues in New York City such as the Rainbow Room located at Rockerfeller Plaza, Downtown by Cipriani, Harry Cipriani, 55 Wall Street and Cipriani Dolci in Grand Central Terminal. Cipriani SA also owns the rights to the Cipriani name and the other trademark property such as food recipes and distinctive décor used in the various Cipriani restaurants and banquet facilities.
I aided in knowingly filing false New York State corporate tax returns for Cipriani USA and its subsidiaries with the intent to substantially understate their corporate tax liabilities and, thereby, evade New York State and New York City corporate taxes. Specifically, in tax years 2003 and 2004, Cipriani USA illegally deducted from its gross profits certain royalty payments deducted pursuant to a licensing agreement with Cipriani SA. According to that licensing agreement USA had agreed to pay a royalty of 11.5% of sales to Cipriani SA in exchange for the right to use the Cipriani name and other trademark property in the United States. In fact, the implementation of this licensing agreement was illegal under New York State law. New York State law in these years provided that in order for the royalties to be deducted by a New York State corporation to a related foreign licensor, the royalties were required to be taxed by the country of the licensor at a rate at least equal to the tax rate imposed by New York State. In fact, I knew that the royalties were being taxed in Luxembourg at a rate that was less than the rate of tax imposed by New York State. Additionally, no royalty payments were ever actually made to Cipriani SA for the tax years 2003 and 2004. These deductions by Cipriani USA on the New York State corporate tax returns were illegal and were taken with my knowledge and my intent to substantially understate the company's New York State and New York City tax liability. For tax years 2003 and 2004, New York State and New York City taxes were evaded in the amount of approximately $10,000,000."
Prior to Arrigo's cross examination the Defendants made an application for any cross-examination about this matter to be heard in secret. This eventually led to an agreement between the parties, the details of which they agreed should be kept secret, as a result of which Arrigo was not cross-examined about the matter, but the Claimants were permitted to make submissions as to Arrigo's credibility. I accept the submission of counsel for the Claimants that this episode gives rise to serious concern over Arrigo's credibility as a witness, particularly given that Arrigo did not explain himself in oral evidence.
ii) In 2001 Arrigo was prosecuted by the Venetian tax authorities for evading some £500,000 in taxes. They alleged that he had made the profits from Harry's Bar (as to which, see below) appear about half what they really were by means of a fictitious discount which only appeared on the copy of customers' bills retained by Harry's Bar. Arrigo accepted in cross-examination that this had occurred in some cases, although he claimed not in all the cases alleged. He settled the case by agreeing to pay the taxes demanded.
iii) The Defendants originally pleaded that the Caffetteria di Palazzo Grassi (as to which, see below) had opened in 2000, whereas I am satisfied that in fact it opened in 1986. Arrigo was unable to explain how this error had occurred or why he had not corrected it prior to his second witness statement. While I accept that this was a mistake, and one which amounted to an error in the Claimants' favour, it inspires little confidence in the accuracy of Arrigo's evidence. More seriously, he stated in his third witness statement that he did not recall that this cafeteria had an official name. He went on that he could not explain why the words "Caffetteria di Palazzo Grassi Dell'Harry's Bar" were printed on the cover of the menu, saying "Someone must have been responsible for this but I cannot remember". During his oral evidence he claimed not to have been aware that this name was on the cover until he had seen it recently, but accepted that he must have been the one who gave the instructions for the cover to be printed.
iv) In his second statement, he disputed the account given by one of the Claimants' witnesses, Anthony Kavanagh, in his witness statement as to Giuseppe Senior's shareholding in HC. Mr Kavanagh's account was based on his examination of HC's statutory records including the register of shareholders. Mr Kavanagh said that Giuseppe Senior had had a 13.33% shareholding prior to selling out. In response Arrigo asserted that Giuseppe Senior had ended with a 33.33% shareholding. He gave no basis for this assertion. Mr Kavanagh's account was not challenged in cross-examination. In cross-examination Arrigo initially repeated his assertion, but eventually accepted that it was wrong.
v) During cross-examination Arrigo asserted that bills at Harry's Bar had referred to the Hotel Cipriani and Hotel Villa Cipriani at a time when the Cipriani family no longer had any connection with them. No such assertion was made in any of his three witness statements, it is unsupported by any other evidence, it was not put to any of the Claimants' witnesses and it is inherently improbable.
vi) During cross-examination Arrigo asserted that the reason why the word LONDON did not appear together with the word CIPRIANI on the doormat of the Restaurant was that there was "no space".
vii) During cross-examination Arrigo disclaimed knowledge of, and responsibility for, a number of other matters which one would expect him to know of and be responsible for.
- I have not rejected Arrigo's evidence wholesale, but for the reasons given above I have approached it with considerable caution where it is not corroborated.
- Secondly, counsel for the Claimants submitted that an inference should be drawn from the fact that neither Giuseppe nor Marco Boito, a manager at the Restaurant, both of whom had signed witness statements on behalf of the Defendants, was in the end called to give evidence. I shall deal with this point below.
Relevant dates for assessment of reputation and goodwill
- There are two main dates as at which it is important to assess reputation and goodwill. These are April 1996, when the CTM was applied for, and April 2004, when the Restaurant opened. Unless otherwise indicated, my findings of fact as to reputation and goodwill apply at both dates.
- The history starts in 1931 when Giuseppe Senior opened a bar in Venice called Harry's Bar. The idea had come from an American called Harry Pickering, who had previously borrowed some money from Giuseppe Senior. Mr Pickering later repaid the money in full, together with an additional sum by way of a thank you. He suggested that they used the money to open a bar together in Venice. They found a small warehouse to rent near the Piazza San Marco, and opened Harry's Bar on 13 May 1931. Shortly afterwards Giuseppe Senior bought out Mr Pickering's interest. Thereafter he ran Harry's Bar for many years as a sole trader. Arrigo, who was born in 1932, was named after Mr Pickering and the Bar.
- Harry's Bar was a small and modestly appointed establishment which served simple food as well as drinks. Nevertheless, it quickly became popular with both the locals and tourists alike. From the mid-1930s onwards, it was the haunt of famous names such as Ernest Hemingway, Noel Coward, Orson Welles and Lauren Bacall. It was also frequented by royalty and politicians.
- Giuseppe Senior was a very talented barman and restauranteur. In 1948 he invented the Bellini cocktail. In 1950 he invented beef Carpaccio. These inventions increased the renown of Harry's Bar. At some point he was awarded the rank of Commendatore, roughly equivalent to a knighthood, by the Italian government.
- In 1957 Arrigo took over the day-to-day management of Harry's Bar. In 1960 Giuseppe Senior and Arrigo extended the establishment, which had previously only occupied the ground floor of the building, to the first floor, which was made into a dining room. From this point, Harry's Bar became more of a restaurant and less of a bar.
- In January 1966 Giuseppe Senior and Arrigo established a "de facto company" to run both Harry's Bar and Locanda Cipriani (as to which, see below). In November 1972 Arrigo Cipriani SpA ("ACS") was established to operate Harry's Bar. In 1983 ACS changed its corporate form from SpA (Società per Azioni or joint stock company) to Srl (Società a responsibilità limitata or limited liability company). In December 1998 ACS was absorbed by merger into Cipriani SpA.
- Arrigo was himself awarded the rank of Commendatore in December 1977.
- The windows to Harry's Bar have for many years had the name HARRY'S BAR prominently printed or etched on them. Sometime around 2000 the name CIPRIANI together with the logo described below was added, but judging by the photographs in evidence not particularly prominently.
- In 2001 Harry's Bar was declared a National Landmark by the Italian Ministry of Culture.
- In the years 2000-2007 Harry's Bar served between 66,037 and 82,373 covers per year and generated turnover of between €7.76 million and €9.15 million.
- For many years Harry's Bar has been a famous Venetian institution with an international reputation, including in the United Kingdom. Furthermore, publicity about Harry's Bar often mentions the link between Harry's Bar and the Cipriani family. In January 1970, for example, ITV broadcast a programme in the series Whicker in Europe featuring Giuseppe Senior and Arrigo, which discussed Giuseppe Senior's involvement with Harry's Bar (as well as with Hotel Cipriani). The story is frequently mentioned in press articles about Harry's Bar or which mention Harry's Bar. Similarly, Harry's Bar has for many years been mentioned in most guidebooks to Venice, the region and Italy published in the United Kingdom, and the entries frequently mention Giuseppe Senior and/or Arrigo.
- In 1991 Arrigo published a book entitled The Harry's Bar Cookbook subtitled Recipes and Reminiscences from the World-Famous Venice Bar and Restaurant in the UK as well as a number of other countries. The book carried a foreword by the well-known author Jan Morris (who as James Morris wrote a well-received book about Venice) describing Harry's Bar as "one of the world's most celebrated restaurants". The book was republished in 2006 with a foreword by the film director and restaurant critic Michael Winner, who gave evidence for the Defendants before me, stating that:
"It is quite simple. The best meals in the world are to be purchased at Harry's Bar in Venice."
- It is clear that British travellers have long patronised Harry's Bar, although there is no evidence as to the numbers of such customers. There is no evidence that at either relevant date people made bookings for Harry's Bar directly from the United Kingdom.
- In 1931 Baron Gianni Rubin, a customer, created a logo for Harry's Bar which consists of a stylised line drawing of a barman pouring out three cocktails ("the Logo"). The evidence is not clear as to precisely how the Logo was used in Harry's Bar, but it seems probable that it was printed on the menu and possibly elsewhere. Since the 1980s Arrigo, Giuseppe and the companies with which they are associated have made increasingly widespread use of the Logo, including in ACS's Community trade mark applications discussed below.
- In December 1938 Giuseppe Senior bought an old inn on the island of Torcello which he re-named Locanda Cipriani, locanda being Italian for inn. After World War II, this was developed into a hotel with six rooms and a restaurant and a garden. It was run by Giuseppe's wife's sister, Gabriella. In the winter of 1949/50 the inn was kept open during the winter for Ernest Hemingway, who wrote at least part of his book Across the River and Into the Trees there. Subsequently, Locanda Cipriani became a popular destination for lunch. Like Harry's Bar, it attracted many famous visitors. These included Winston Churchill, who painted a picture there which is reproduced on the menu; Queen Elizabeth II, who dined privately there in 1960; the Italian President Romani Prodi; the French President François Mitterand; and actors such as Sir Roger Moore. While it is not as up-market as Hotel Cipriani, it probably attracts a similar kind of clientele.
- By two agreements dated 29 November 1972 Giuseppe Senior and Arrigo sold Locanda Cipriani to SFIP Società Finanziaria Investimenti e Partecipazioni Srl ("SFIP"), a company belonging to Arrigo's sister Carla and her husband Giovanni Brass, better known as the film director Tinto Brass. According to Arrigo, however, it was only in about 1980 that Carla actually started running Locanda Cipriani. It is unnecessary for present purposes for me to decide whether this is correct or not. Nowadays it is run by Carla's son Bonifacio Brass.
- For many years, Locanda Cipriani has had a significant international reputation, including in the United Kingdom. Furthermore, publicity about Locanda Cipriani often mentions the link between Locanda Cipriani and the Cipriani family. For example, it is mentioned in the Whicker in Europe programme. Locandi Cipriani is frequently mentioned in guidebooks to Venice, the region and Italy, and again the link is often referred to. It is clear, however, that its reputation is less extensive and its clientele is smaller than those of Harry's Bar and Hotel Cipriani.
- It is evident that British travellers have long patronised Locanda Cipriani, although there is no evidence as to the numbers of such customers. There is no evidence that at either relevant date people made bookings for Locanda Cipriani directly from the United Kingdom.
- There is evidence that Locanda Cipriani is sometimes referred to as "Cipriani" or "the Cipriani" in a context which makes it clear that it is the Locanda which is being referred to (for example, a reference to dining at "the Cipriani on Torcello"); but more usually it is referred to as Locanda Cipriani.
- In 1953 Giuseppe Senior bought some undeveloped land on the island of Giudecca in Venice. Some years later Giuseppe Senior told Lord Iveagh of the Guinness family, who was dining at Harry's Bar, of his plan to open a hotel there. This led to the setting up of HC (then called Hotel Cipriani SpA) on 29 May 1956. 40% of the share capital was owned by Giuseppe Senior and 60% by Pattondale Ltd, a nominee for the Guinness family. According to Arrigo, there was a gentleman's agreement between Giuseppe Senior and Lord Iveagh according to which Giuseppe Senior gave his name to the company and managed the hotel without salary in exchange for being a 50% partner in HC, an agreement which was subsequently breached. Again, it is unnecessary for me to decide whether this is so or not. It does appear to be the case, however, that Giuseppe later received a lump sum payment to compensate him for not having been remunerated for some years. Hotel Cipriani opened for business on 29 March 1958. Giuseppe Senior managed the hotel until 1959 when he became the Chairman of HC. From 1958 to 1967 Arrigo was a director of HC.
- By 1966, as a result of increases in the share capital, Giuseppe Senior's share holding in HC was 13.33%. In that year Pattondale Ltd's shareholding was transferred to Stondon, Ondale and Patmore Company Ltd ("SOP"). In April 1967 Giuseppe Senior sold his shareholding to SOP pursuant to an agreement in writing dated 21 March 1967 ("the 1967 Agreement") which I shall discuss below. It appears that Lord Iveagh died earlier that year.
- Giuseppe Senior remained Chairman of HC until October 1973. Even after that, he continued to meet and greet guests at Hotel Cipriani on a part time basis for some years. He died in 1980.
- In October 1976 all the shares in HC were purchased by Hotel Cipriani Inc, a company in what was then the Sea Containers Group run by James Sherwood. In 1977 Dr Natale Rusconi, who gave evidence before me, was appointed as Amministratore Delegato and Diretorre Generale of HC. He remained in this post for 30 years, retiring in November 2007.
- It appears from the evidence that HC had some success prior to 1976, but it is clear that it has subsequently done much better. Since its acquisition by OEHG it has benefited from substantial investment amounting to some €93 million (in today's money). This has enabled it to expand the hotel, enlarging the size of the suites and rooms and adding new restaurants, conference and banqueting facilities and gardens. In the years ending 31 March 2001 to 31 March 2007 HC spent sums ranging from €537,957 to €858,766 a year on marketing and public relations. It has also benefited from being promoted by OEHG, in particular through cross-promotion with other hotels owned by OEHG and with the Orient Express train service. This has happened both in OEHG's own publications such as Orient Express Magazine (recently re-named Sphere) and Journeys of Distinction, and through the activities of public relations managers employed by OEHG in London and elsewhere. As a result of these efforts, HC has become increasingly successful and profitable, with turnover growing steadily to €29,140,000 and profits to €7,921,000 in 2007.
- Hotel Cipriani has three restaurants. The most formal venue is the Fortuny Restaurant. In addition there is a restaurant called Il Gabbiano, which allows al fresco eating by the pool. Lastly, Cip's, which was opened in 1999, offers a more relaxed dining experience on a permanent wooden jetty, serving food such as pizza. The restaurants account for about 30% of HC's total revenue. In 2007 52% of covers were for non-residents. The restaurants are often favourably mentioned in guidebooks. In addition, the hotel regularly hosts cookery courses and demonstrations and its chefs participate in gastronomic events abroad, including in London.
- Hotel Cipriani has long been popular with visitors from the United Kingdom. In the years ending 31 March 2001 to 31 March 2007 the numbers of room nights occupied by British guests ranged from 4,819 to 5,944 per year and from 27.65% to 32.92% of total room nights. By April 2004 the hotel and its restaurants were, and had for some time been, receiving reservations made directly from the UK by telephone, email and via HC's website. It is probable that such reservations were being made by telephone prior to April 1996.
- For many years now, Hotel Cipriani has been a world famous hotel. Like Harry's Bar and Locandi Cipriani, it has been patronised by many celebrities, politicians and royalty, including President Reagan, Lady Thatcher, Clint Eastwood, George Clooney and others. Not only is it famous, it is famously luxurious and expensive. The hotel has won many awards. It has been listed as being among the top 10 hotels in the world. It has been favourably mentioned in press articles. It is mentioned by most guidebooks to Venice, the region and Italy. Importantly, the hotel is often referred to, in both written and oral use, as simply "Cipriani" or (more commonly) "the Cipriani".
- There is a significant section of consumers who have stayed or eaten at or at least heard of Hotel Cipriani, but who have not stayed or eaten at or heard of either Locanda Cipriani or Hotel Villa Cipriani (as to which, see below). Many UK consumers reading or hearing a reference to "Cipriani" or "the Cipriani" in the context of hotel or restaurant services would assume this to be a reference to the hotel unless the context indicated otherwise.
- Both HC's publicity materials and editorial coverage in the press and guidebooks frequently mention the connection with Giuseppe Senior and hence Harry's Bar. The Defendants complain that HC's exploitation of the connection is inconsistent with its claim to be concerned about confusion, but I do not accept this: the materials emanating from HC do not go beyond stating the historical facts and it is evident that, even if HC did not refer to them, others would do so. There is no reason to think that all HC's customers read such materials and good reason to think that many customers either do not read them at all or read them and then forget about them. As a result, many consumers who have patronised Hotel Cipriani will be aware of the connection between the hotel and the Cipriani family, but by no means all. The same goes for consumers who have heard of Hotel Cipriani but not patronised it.
Hotel Villa Cipriani
- After the successful opening of Hotel Cipriani, Lord Iveagh asked Giuseppe Senior to run a hotel which he owned in Asolo called Hotel Belvedere. Asolo is a small town in the mountains about an hour's drive from Venice. The hotel was redeveloped and re-opened under the name Hotel Villa Cipriani in 1962. It is a small hotel with only about 30 rooms. It does not, for example, have a swimming pool. Nevertheless it has an interesting history, since the poet Robert Browning bought it shortly before his death. It has attracted famous visitors, including the late Queen Mother, Peter O'Toole and Kim Bassinger. It is quite up-market, but not so much as Hotel Cipriani.
- In 1975 the Guinness family sold Hotel Villa Cipriani to the CIGA hotel group. Subsequently it was sold again to the Starwood hotel group, which continues to operate it as part of the Sheraton chain. It does not appear that either vendor placed any restriction on the purchaser's ability to use the name Hotel Villa Cipriani.
- For many years, Hotel Villa Cipriani has had an international reputation, including in the United Kingdom. Thus it is mentioned in many guidebooks to the region and Italy. Furthermore, publicity about the hotel often mentions the link between Hotel Villa Cipriani and the Cipriani family. It is clear, however, that both its reputation and its clientele are much smaller than those of Harry's Bar and Hotel Cipriani. Indeed, it seems probable that they are smaller than those of Locanda Cipriani since Asolo is more out-of-the-way than Torcello.
- British travellers have long patronised Hotel Villa Cipriani, but there is no evidence as to the numbers of such customers. It is probable that some direct bookings from the United Kingdom were being made by April 1996, and more so by April 2004.
- Hotel Villa Cipriani is sometimes referred to as "Villa Cipriani", but rarely as just "Cipriani" or "the Cipriani".
- In 1983 Arrigo opened another bar and restaurant called Harry's Dolci on Giudecca. It is a less expensive establishment than Harry's Bar, incorporating a patisserie and with tables outside. It now has the name CIPRIANI on its window in addition to HARRY'S DOLCI, but it is unclear for how long this had been the case. In the years 2000-2007 Harry's Dolci served between 10,054 and 18,568 covers per year and generated turnover of between €0.74 million and €1.13 million a year.
- Although it is mentioned in some guidebooks, some of which also mention its connection with the Cipriani family, it does not appear that Harry's Dolci had a significant reputation in the United Kingdom either in April 1996 or April 2004. There is no evidence of any bookings made from the United Kingdom.
- At some point between June 1984 and August 1989 Arrigo established a catering business supplying food for functions, mainly in Venice, called Cipriani Catering. There is little evidence about the activities of this business. It does not appear to have had a reputation in the United Kingdom as at either April 1996 or April 2004. Nor does it appear to have traded in the United Kingdom, although Arrigo gave unchallenged evidence that at some unspecified date it catered a lunch for Olivetti in Haslemere.
- In about 1985 Arrigo established a food production business based in Venice marketing foodstuffs under the name Cipriani. At least to begin with, Arrigo's wife was heavily involved in this business. Since 1988 the business has been operated by Cipriani Industria Srl. Its main products have always been pasta and pasta sauces, but a number of other products have been sold at various times. Currently the range includes olive oil, vinegar, jams, foccacia, panettone, grappa and Bellini mix. The products are upmarket ones which sell at a premium price.
- Cipriani pasta and pasta sauces have been distributed in the United Kingdom by Alivini Co Ltd since the early 1990s. From then until 2006 annual sales figures were in the range £100,000 – £200,000, although these figures appear to include some quantities sold in other countries. The products have been sold at various times in supermarkets including Sainsbury, Tesco and Waitrose as well as in Harrods, Selfridges and specialist delicatessens. The products have a good reputation in the United Kingdom, having been recommended by chefs and food writers, but it seems clear that this is a niche reputation. The reputation was greater in April 2004 than in April 1996, but not extensive at either date.
Caffetteria di Palazzo Grassi
- In April 1986 Arrigo opened a cafeteria in the Palazzo Grassi in Venice, which had just been renovated and turned into an exhibition centre by Gianni Agnelli, the then head of FIAT. This cafeteria operated until 2003, when Gianni Agnelli died. Subsequently, the Palazzo was acquired by the French businessman François Pinault to house his art collection and closed for some time for refurbishment. Arrigo decided not to continue operating the cafeteria after the Palazzo re-opened in 2006 as it was not very profitable.
- Surprisingly, there was a dispute as to what the cafeteria was actually called. I find that its name was the name which is printed (together with the Logo) on the front cover of a menu from the cafeteria dating from about 1993 that is in evidence, namely Caffetteria di Palazzo Grassi dell'Harry's Bar. Inside the cover is a loose paper insert which was replaced on a regular basis. This is folded in half to give four pages. The first page is headed with CIPRIANI and the Logo in a box. Arrigo's evidence, which in this respect I accept, is that the menu was displayed on a stand outside the cafeteria open at its central pages, and thus not open at the page headed CIPRIANI. The right hand of the central pages is headed "Benvenuti a Palazzo Grassi". Amongst the "piatti di oggi" listed on that page in this example is "Carpaccio alla Cipriani". Accordingly, I am prepared to accept that many customers, particularly Venetian ones, will have known or guessed that the establishment was operated by the Cipriani family. I am also prepared to accept that some customers, again particularly Venetian ones, referred to it as the Cipriani Caffetteria or something similar. Certainly, it was referred to as "the Cipriani [café] at Palazzo Grassi" on a page from an independent website that appears to date from about 2000. On the other hand, I consider that, as Arrigo accepted, it was also known simply as the Caffetteria di Palazzo Grassi.
- The cafeteria was only open when the Palazzo was open for exhibitions. It appears to have been quite a small establishment. While some of the customers at the cafeteria were tourists, it did not have an international reputation in April 1996. I doubt that many UK tourists who visited it would have subsequently remembered its connection with the Cipriani family. There is no evidence of bookings having been made from the United Kingdom, and it is very unlikely that any ever were.
Cipriani restaurants in New York
- Starting in 1985, Arrigo and Giuseppe have, through various corporate entities, operated a series of restaurants in New York. The first was Harry Cipriani on 5th Avenue which opened in 1985 and ran until 1987. It was re-opened in 1991. Bellini by Cipriani opened in 1987 and ran for about 5 years. Cipriani Downtown opened in SoHo in 1996. Cipriani 42nd Street opened in 1998. In 1998 or 2000 Arrigo and Giuseppe took over an existing restaurant called The Rainbow Room which is sometimes now called Rainbow by Cipriani. Cipriani Dolci and Cipriani Sutton both opened in 2002. Cipriani 23rd Street opened in 2004. Cipriani Wall Street opened in 2006. Cipriani Club 55 opened in August 2007.
- At least since 2000 the Cipriani restaurants in New York have been popular with international celebrities. This has led to them receiving exposure in the British media. I am therefore prepared to accept that they have acquired a reputation here. The extent of that reputation is difficult to judge, however. There is no evidence that they had been patronised by significant numbers of British tourists by April 2004, still less by April 1996. Nor is there any evidence of customers having made reservations from the UK.
Cipriani restaurants in Buenos Aires
- In 1996 Arrigo and Giuseppe opened a restaurant called Harry Cipriani in Buenos Aires. During the period to 2002 or 2003 this was followed by five restaurants called Cipriani Dolci. There is very little evidence about these six restaurants, and no evidence that they had any reputation in the United Kingdom in April 2004, let alone April 1996.
Cipriani Porto Cervo
- Cipriani Porto Cervo is a restaurant which forms part of an exclusive club called the Billionaire Club in Porto Cervo in Sardinia which is half-owned by Arrigo and Giuseppe. It opened in 2000. There is no evidence that this restaurant had any reputation in the United Kingdom in April 2004.
Cipriani Hong Kong
- Cipriani Hong Kong is a private members' club in Hong Kong. It is operated under licence from, as I understand it, Altunis or CI. It opened in 2003. There is no evidence that this club had any reputation in the United Kingdom in April 2004.
Ristorante Hotel Cipriani and Ristorante Villa Cipriani
- The Second and Third Claimants operate these restaurants under licence from HC. The licences are effective from 1 November 2002, but the evidence does not establish that either restaurant actually used these names prior to April 2004. There is also a Ristorante Hotel Cipriani in the Copacabana Palace in Rio de Janeiro, which I presume is also licensed by HC, but the Claimants do not rely upon this and there is very little evidence about it.
Stationery used by ACS and CS
- By June 1984 ACS was using headed notepaper which featured the Logo and its name and details at the top, and the names, addresses and telephone numbers of Harry's Bar and Harry's Dolci at the bottom.
- By August 1989 ACS was issuing bills to customers at Harry's Dolci printed on paper headed firstly with the Logo, then CIPRIANI in a box and then HARRY'S DOLCI followed by the name and details of ACS. This paper also bore the names and telephone numbers of Harry's Bar, Cipriani Catering and Bellini by Cipriani at the bottom. Although there is no evidence that similar paper was used for bills issued to customers at Harry's Bar at that date, this is inherently probable. Certainly, by November 1990 bills at Harry's Bar were being printed on paper headed with the Logo, the word CIPRIANI printed in white on a black box and a ribbon device on the left, and a slightly smaller version of the Logo and HARRY'S BAR on the right. This paper bore the names, addresses and telephone numbers of Bellini by Harry Cipriani, Cipriani and Harry's Dolci at the bottom. By September 1996 bills at both Harry's Bar and Harry's Dolci were being printed on a slightly revised style of this paper which bore the names, addresses and telephone numbers of the other one, Harry Cipriani (New York), Downtown and Harry Cipriani (Buenos Aires), in each case accompanied by small version of the Logo. Save for the replacement of references to ACS by references to CS and of references to Harry Cipriani (Buenos Aires) by the Rainbow Room, this style of paper was still in use as recently as December 2007.
Italian registered trade marks
- Over the years both HC on the one hand, and ACS and Arrigo on the other hand, have registered a number of trade marks which consist of or include the word CIPRIANI in Italy and elsewhere in Europe. It is not necessary for present purposes to list all of these registrations, but three Italian registrations merit mention.
- On 21 November 1964 Arrigo applied to register the word CIPRIANI as a trade mark in respect of "alcoholic beverages (except beers)" in Class 33. The application was granted under registration number 200,433. The trade mark was subsequently renewed under a different registration number, but expired in 2004.
- On 12 December 1969 HC applied to register the word CIPRIANI as a trade mark in Italy in Classes 29, 30, 32, 33 and 42. The services specified in Class 42 were "hotel, restaurant, bar, café, snack bar and catering establishment services". The application was granted under registration number 254,410 on 9 December 1971. The trade mark was subsequently renewed under a different registration number and is still subsisting.
- On 11 July 1975 ACS applied to register the word CIPRIANI as a trade mark in Italy in Classes 29, 30, 33 and 42. The services specified in Class 42 were "hotel and restaurant management services". The application was granted under registration number 292,521 (or possibly 290,521) on 16 December 1975. The trade mark was subsequently renewed under a different registration number and is still subsisting. It is now owned, like all of the Cipriani Group's other European registrations, by Altunis.
The dispute between ACS, Arrigo and SFIP
- In January 1991 ACS and Arrigo brought proceedings against SFIP in the Civil Part of the Civil and Criminal Court of Venice. ACS and Arrigo claimed a declaration that two trade marks comprising the name LOCANDA CIPRIANI and an heraldic emblem which SFIP had applied to register in respect of "bar, hotel, restaurant, pastry and gelato shop services" and various goods respectively on 11 and 25 October 1990 could not be registered, or if registered during the pendency of the proceedings were invalid, in the light inter alia of ACS's and Arrigo's earlier Italian registrations, including the two mentioned above. ACS and Arrigo also claimed an injunction prohibiting SFIP from using those trade marks "or trade marks that in any way make reference to the name 'Cipriani'" (to quote from the English translation in evidence). It appears that this was prompted by a concern that SFIP intended to start marketing food under the trade mark LOCANDA CIPRIANI. SFIP counterclaimed inter alia for a declaration that "the right to use the name Cipriani as a trade name and as a sign or designation belongs to the respondent SFIP srl because it acquired it, along with the inherent business, Locanda Cipriani, from the de facto company formed by [Giuseppe Senior and Arrigo]". SFIP also counterclaimed for an order for revocation of Arrigo's Class 33 registration for non-use.
- By a judgment dated 20 February 1992, the Venice Court declared that SFIP's trade marks were invalid and prohibited SFIP from using them, holding that "the conflict between the trade marks described is clear" since "the representative and distinguishing function of the trade marks at issue is centered in the 'heart' of the trade mark consisting of the name 'CIPRIANI'" and there was "complete coincidence" with regard to the respective goods and services. It also revoked Arrigo's Class 33 registration for non-use. Otherwise the claim and counterclaim were dismissed.
- SFIP appealed against this judgment and Arrigo cross-appealed. By a judgment dated 10 March 1998 the Court of Appeal dismissed SFIP's appeal but allowed Arrigo's cross-appeal against the order for revocation of his Class 33 registration. SFIP then appealed to the Corte Supreme di Cassazione, Italy's Supreme Court. By a judgment dated 10 February 2000 the Supreme Court dismissed the appeal.
- Although ACS was successful in its attack on SFIP's trade marks, the courts held that the effect of one of the 1972 agreements was that (i) ACS retained the right to use the name Arrigo Cipriani as a trade name and (ii) SFIP acquired the right to use the name Locanda Cipriani as a trade name. As I understand, it is on this basis that SFIP continues to trade as Locanda Cipriani.
The US litigation
- In about 1988 HC applied to register HOTEL CIPRIANI as a trade mark in the US. This revealed a prior US registration of HARRY CIPRIANI in the name of Harry Cipriani Inc ("HCI"). In March 1992 Sea Containers America Inc, a subsidiary of Sea Containers Ltd which was then the parent company of OEHG, and HC (collectively referred to as "Hotel") brought proceedings against HCI, Arrigo and two other defendants (collectively referred to as "Arrigo") in New York, as I understand it seeking to invalidate the HARRY CIPRIANI registration. It appears that the latter counterclaimed, I presume to restrain threatened infringement. These proceedings were ultimately compromised by a settlement agreement dated 4 April 1997 ("the Settlement Agreement") in the following terms:
"1. Hotel may use the name 'Hotel Cipriani' in the United States in connection with the hotel business. In addition, Hotel may operate restaurants in a hotel which it owns or manages in the United States which shall be identified as 'Hotel Cipriani Restaurant' or 'Restaurant Hotel Cipriani' or its equivalent. Hotel, may not in any such restaurant use the name 'Cipriani' alone or the names 'Harry Cipriani' or 'Bellini by Cipriani', and Hotel will not commence use of the 'Hotel Cipriani' name in a restaurant located in a city in which Arrigo is already using the 'Cipriani' name in a restaurant.
2. Arrigo may conduct any business it chooses to engage in, providing that it is designated, with or without the bartender logo, as 'Cipriani' with the identity of the product or service offered or any other descriptive terms or name except use of the word 'hotel' in connection therewith.
3. Both parties consent to registrations by the other in the United States Patent and Trademark Office consistent with the rights set forth in paragraphs one (1) and two (2) above.
4. Arrigo may continue to use the present inventory of products and packaging until the same is exhausted that currently contains only the name 'Cipriani'.
5. The parties will maintain their services and products at a high level of quality that appeals to sophisticated clientele."
- The combined effect of paragraphs 1 and 2 is that neither side may use the name Cipriani on its own. It is common ground that the Settlement Agreement only has effect in the USA.
The OHIM oppositions
- On 21 November 1997 ACS filed applications numbers 683250 and 683268 to register the following words and devices as Community trade marks in Classes 29 and 30 ('250, FOOD) and 39 and 42 ('268, SERVICE) respectively:
- The applications were published on 11 January 1999. On 9 April 1999 HC filed notices of opposition to both applications on grounds raised under Article 8(1)(a) and (b) of Council Regulation 40/94/EC, relying upon its various Community, UK, Italian and international registrations. During the pendency of the proceedings ACS was merged into CS and the applications were assigned to Cipriani International Group SA.
- On 20 March 2001 the Opposition Division of OHIM issued decision 718/2001 refusing the 268 application in its entirety. In this decision the Opposition Division dismissed the Article 8(1)(a) objection, holding that the mark applied for was not identical to any of HC's marks, but upheld the Article 8(1)(b) objection for the following reasons:
"It was concluded above that the identical word 'CIPRIANI' is the dominant and distinctive component of the marks in comparison, both visually and phonetically.
Moreover, it is the part in which the distinctiveness of the CTM application lies, as it is much stronger than the directly descriptive word 'SERVICE' and the allusive figurative element.
Considering that the respective [services] are identical, and that the differentiating features of the CTM application have only a secondary impact on its overall impression, there are sufficient grounds to suggest that the average consumer may directly mistake the one mark for the other, or at least associate the two assuming that they indicate origin from the same or connected undertakings. All the more so, since the opponent has additionally proved that the mark 'CIPRIANI' enjoys considerable international esteem and notoriety in relation to hotel services.
Hence, it is concluded that the reproduction of the earlier mark in the CTM application in its entirety generates sufficient visual and phonetic similarities between the marks to give rise to confusion on the part of the public in the territory in which the earlier mark is protected, in this case the Community."
- On 12 April 2001 the Opposition Division issued decision 968/2001 refusing application 250 for some foodstuffs but allowing registration in respect of others. Again the Article 8(1)(a) objection was dismissed, while the Article 8(1)(b) objection was upheld in part for the following reasons:
"It was concluded above that the identical word 'CIPRIANI' is the dominant and distinctive component of the marks in dispute, both visually and phonetically, as it is much stronger than the directly descriptive words 'HOTEL' and 'FOOD' and the allusive figurative element.
In addition the opponent has succeeded in proving that the mark 'CIPRIANI' enjoys considerable reputation in relation to hotel services, as the identifier of one of the most prestigious and highly esteemed hotels in Italy.
Indeed the evidence shows that the opponent's establishment has been ranked for decades among the best of the sector in specialised directories, both because of the quality of its services and its imposing site in the Venetian lagoon. It achieves significant turnovers (an average of 11.000.000 US$ per year between 1990-1994) of which a considerable amount (more than half a million US$ per year) is spent for promotional purposes, in particular by way of promotional entries in specialised magazines and directories. Moreover, the international press has published a variety of articles attesting to the fame of the 'HOTEL CIPRIANI' and many celebrities have stayed at the hotel over the years. Furthermore, the submitted materials show that the opponent's establishment includes a top level restaurant offering a variety of gourmet dishes, pasta and confectionery prepared daily in the premises and that the hotel also organises gastronomy related activities such as cookery courses and competitions.
On the other hand, some of the applicant's goods have been found to be clearly dissimilar to the opponent's services.
The Court has made clear that the similarity of goods is a conditio sine qua non for the application of Article 8(1)(b) by ruling that '... the likelihood of confusion presupposes that the goods or services covered are identical or similar ...' and that '...even if a mark is identical to another with a highly distinctive character, it is still necessary to adduce evidence of similarity between the goods or services covered ...' (Canon, paragraph 22).
It follows that for those goods of the applicant that were found dissimilar to the opponent's services, that is 'meat, fish, poultry and game; meat extracts; dried fruits and vegetables; eggs, milk; edible oils and fats, coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, honey, treacle; yeast, baking powder; salt, vinegar, spices; ice' there can be no likelihood of confusion, notwithstanding the high degree of similarity between the signs and the reputation of the opponent's marks.
It should also be noted that the opponent has not grounded his opposition on Article 8(5) CTMR which could potentially lead to the rejection of the application even for dissimilar goods. Neither has he claimed or proved that use of the application would take unfair advantage of, or be detrimental to, the distinctiveness or repute of his earlier registrations.
Therefore, the opposition is dismissed for these goods.
Nevertheless, the comparison has shown that the remaining goods, namely 'jellies, jams; preserved and cooked fruits and vegetables; fruit sauces; milk products; pastry and confectionery, ices; mustard; sauces (condiments)' are processed foodstuffs which are complementary to the opponent's services and may be prepared by hotels or restaurants or produced on their behalf.
In the opinion of the Office, if these similarities between the respective goods and services are combined with the close similarity of the signs and the high distinctiveness of the earlier marks, they may indeed justify an assumption on the part of the public that such goods either originate directly from the opponent, or that the opponent is somehow involved in their production or is ultimately responsible for their quality.
To this extent, the opposition is well founded on Article 8(1)(b) CTMR and the application may not proceed to registration as regards these goods."
- Cipriani International Group SA did not appeal against either of these decisions. Registration number 683250 was subsequently assigned to Altunis.
- The Claimants contend that, at least by virtue of the opposition proceedings, if not in any other way, the Defendants knew about the CTM prior to the opening of the Restaurant. In the end counsel for the Defendants did not dispute that the Defendants had such knowledge in at least the first two of the following three ways. First, the information was known to the Cipriani Group's agent, namely its trade mark attorneys Jacobacci & Perani SpA, and such knowledge is to be imputed to their principal. (Strictly, this was first ACS and then Cipriani International Group SA, but counsel for the Defendants took no point on that.) Secondly, Arrigo accepted in cross-examination that it would have been known to his assistant Martina Gatto. Thirdly, although Arrigo denied knowing about the CTM himself until the present action was begun, I do not accept this. By 1999-2001 the Cipriani Group had had considerable experience with trade marks and trade mark disputes, and Arrigo had himself been party to both the US litigation and the SFIP proceedings. Furthermore, Jacobacci needed instructions. Ms Gatto may well have been the conduit through which the instructions passed, but Jabobacci must have explained to her and she must have explained to Arrigo the essential parameters of the dispute in order for Arrigo to give those instructions. Moreover, Arrigo admitted that he was surprised and angry when he was told that the applications had been (largely) unsuccessful. It is not surprising if Arrigo does not remember being given such information now.
- The Restaurant is located at 25 Davies Street, Mayfair, London. As noted above, the formal name of the Restaurant is said by the Defendants to be Cipriani London, but it is commonly referred to as simply Cipriani. The sign on the windows is CIPRIANI LONDON with the word CIPRIANI above, and in noticeably larger font than, the word LONDON. The same usage appears on CGS's stationery, usually accompanied by the Logo. In a number of places the word CIPRIANI appears without the word LONDON, for example on the doormat, menu cover and wine list cover. At least until recently, the telephone was answered "Cipriani". The Restaurant is listed in at least some guidebooks as "Cipriani", for example in the 2005, 2006, 2007 and 2008 editions of the Good Food Guide. (It is not listed in the 2009 edition.) Mr Winner agreed that it was almost universally known as Cipriani.
- CGS does not advertise the Restaurant. Publicity for it frequently mentions the link with Harry's Bar and the Cipriani family. The opening sentence of the entry in the Good Food Guide 2005 is representative:
"The internationally expansionist group that owns Harry's Bar in Venice opened in London in 2004, aiming to bring a large dose of the cosmopolitan swish of the watery city to central London."
The entry goes on to state that "the signature selection of Cipriani cakes is vigorously pushed" and to identify the proprietor as Arrigo.
- The Restaurant has received somewhat mixed reviews. Adverse comment has been attracted by its expense and by its booking policy, which does not guarantee diners a table at a fixed time. Nevertheless, it seems clear that the Restaurant has been successful. It has been patronised by a number of celebrities, such as David & Victoria Beckham, Sir Elton John and Naomi Campbell. In the calendar year 2007 it served 130,411 covers and achieved a turnover of £8.3 million.
Events leading to the proceedings
- It is evident from an exchange of faxes between James Sherwood of OEHG and David Tang of Cipriani Hong Kong on 22 March 2004 that Mr Sherwood was aware of the impending launch of the Restaurant, and contemplating legal action, before it actually opened. Nevertheless, no complaint was made by OEHG until 4 October 2004, when Mr Sherwood wrote to Arrigo complaining that his opening of new restaurants with the name Cipriani on its own was causing confusion, and suggesting a meeting. This led to a meeting between Mr Sherwood and Giuseppe in New York on 21 October 2004 at which Mr Sherwood referred to the CTM and stated that OEHG could not accept the name Cipriani London. Mr Sherwood did not put this in writing until 17 January 2005, when he wrote to Giuseppe threatening proceedings unless Giuseppe made acceptable proposals within 30 days. Giuseppe replied on 9 February 2005 asserting a belief that his company was entitled to use the name Cipriani London for the Restaurant. It was not until 18 April 2006 that the Claimants' then solicitors sent a letter before action to CGS. The claim form in these proceedings was not issued until 21 November 2006. Even since then, the Claimants do not appear to have progressed the case with speed or vigour.
- I cannot forbear from commenting that if prompt action had been taken by the Claimants at an early stage the matter might not have progressed as far as it has done. As Jacob LJ said in Phones 4U Ltd v Phone4U.co.uk Internet Ltd  EWCA Civ 244,  RPC 5 at :
"It was in 1879 that James LJ observed that 'the very life of a trade mark depends on the promptitude with which it is vindicated', Johnston v Orr-Ewing (1879) 13 Ch.D 434 at p. 464. Nothing has changed. Like gardens trade mark cases always get worse with neglect – even if rights are not actually lost, delay is apt to turn what would be over in a few weeks by a quick application into a mini State Trial. As here."
The 1967 Agreement
- By section 1 of the 1967 Agreement Giuseppe Senior agreed to sell and SOP agreed to buy all Giuseppe Senior's shares in HC (referred to as "la Società, "the Company"), and Giuseppe agreed to relinquish any right to subscribe or acquire shares. Section 2 contains various provisions concerning Giuseppe's remuneration for his past and ongoing role in the management of the Company, including provision for payment of a lump sum in respect of services performed by Giuseppe Senior for the Company from its incorporation until 31 December 1966.
- Section 3 of the 1967 Agreement includes the following provisions:
"3.1 Lei conviene che la Società, potrà conservare la propria denominazione attuale e ch e l'Hotel Villa Cipriani di Asolo potrà conservare la propria insegna attuale, ed in generale che la Societa e l'Hotel Villa Cipriani avronno diritto di usare il nome 'Cipriani' in via esclusiva, anche dopo che sarà venuta a cessare ogni partecipazione Sua o della Sua famiglia al capitale della Società, ed anche nel caso in cui Lei o Suo figlio ceasino di far parte del consiglio di amministrazione della Società; Lei si impegna, inoltro, ad astenersi, ed a far si che ogni persona della Sua famiglia si astenga, per il periodo di cinque anni da oggi, dall'iniziare nuove imprese con la denominazione 'Cipriani', oppure nouve imprese con siano comunque idonee a sviare la clientela della Societa, o dell'Hotel Villa Cipriani, se non con il nostro consenso. Resta peraltro inteso che Lei ed i Suoi successori ed aventi causa potranno continuare ad usare il nome 'Cipriani' per la Locanda Cipriani di Torcello.
3.2 Noi ci impegnamo ad asternerci, per il periodo di cinque anni da oggi, dall'iniziare nuove imprese con is denominazione 'Cipriani', se non con il Suo consenso.
3.3 Noi ci impegnamo a fare del nostro meglio aifinche anche in futuro sia conservate l'attuale eccellenza qualitative dei servizii che la Società e l'Hotel Villa Cipriani offrono alle proprie rispettive clientele."
- The agreed translation of these clauses is as follows:
"3.1. You agree that the Company may retain its current name and that the Hotel Villa Cipriani di Asolo may retain its current logo and, in general, that the Company and the Hotel Villa Cipriani will have the right to use the name 'Cipriani' on an exclusive basis, even after any participation by you or your family in the capital of the Company has come to an end, and even in the event that you or your son cease to be on the Company's board of management. You also agree to refrain, and to see to it that every member of your family refrains, for a period of five years from today, from starting new businesses with the name 'Cipriani', or new businesses that are apt to divert customers from the Company or Hotel Villa Cipriani, except with our consent. It is, however, understood that you and your successors in interest may continue to use the name 'Cipriani' for the Locanda Cipriani in Torcello.
3.2 We agree to refrain, for a period of five years from today, starting new businesses with the name 'Cipriani', except with your consent.
3.3 We agree to use our best efforts to insure that in future the current outstanding quality of services offered by the Company and the Hotel Villa Cipriani to their respective clienteles is preserved."
- The interpretation of clause 3.1 is disputed. It is common ground that the Agreement is governed by Italian law. As a result, I heard expert evidence as to Italian law. Gabriel Cuonzo, who was called by the Claimants, has a law degree from the University of Bari and a masters degree from the Max Planck Institute in Munich. He has practised as an avvocato for over 20 years and specialises in intellectual property. He has written or contributed to a number of books and articles. Fabio Angelini, who was called by the Defendants, has a degree in law from Rome University and two masters degrees. He is a member of the Rome Bar. He has practised law for 20 years both in private practice and as in-house counsel and specialised in intellectual property law for 13 years. He is Vice-Chair of the Law Committee of the European Community Trade Mark Association and has published several articles on trade mark law. Both experts were thus well-qualified and I found the evidence of both to be of assistance. There was not much dispute between them as to the relevant principles of Italian law, as opposed to their application to the 1967 Agreement. I find those principles to be as follows.
- So far as the interpretation of contracts is concerned, the relevant principles are those contained in Articles 1362-1371 of the Italian Civil Code, which provide as follows (with English translations by Mr Angelini):
"Art. 1362 Intenzione dei contraenti
Nell'interpretare il contratto si deve indagare quale sia stata la comune intenzione delle parti e non limitarsi al senso letterale delle parole. Per determinare la comune intenzione delle parti, si deve valutare il loro comportamento complessivo anche posteriore alla conclusione del contratto.
Art. 1362 Intention of the contracting parties
In interpreting the contract, one has to enquire on the common intent of the parties and not limit oneself to the literal meaning of the words. For determining the common intent of the parties, one must estimate their conducts as a whole also after the execution of the contract.
Art. 1363 Interpretazione complessiva delle clausole
Le clausole del contratto si interpretano le une per mezzo delle altre, attribuendo a ciascuna il senso che risulta dal complesso dell'atto.
Art. 1363 Overall interpretation of the clauses
The clauses of the contract must be interpreted the ones by means of the others, giving to each one a meaning which derives from the whole agreement.
Art. 1364 Espressioni generali
Per quanto generali siano le espressioni usate nel contratto, questo non comprende che gli oggetti sui quali le parti si sono proposte di contrattare.
Art. 1364 General expressions
However generic the expressions used in the contract may be, this only encompasses the subject matters which the parties decided to agreed upon.
Art. 1365 Indicazioni esemplificative
Quando in un contratto si è espresso un caso al fine di spiegare un patto, non si presumono esclusi i casi non espressi, ai quali, secondo ragione, può estendersi lo stesso patto.
Art. 1365 Examples
When in a contract an example is expressly included in order to explain an obligation of the agreement, one cannot assume that all other non expressly included examples to which, rationally, the obligation may extend are excluded.
Art. 1366 Interpretazione di buona fede
Il contratto deve essere interpretato secondo buona fede.
Art. 1366 Interpretation of good faith
The contract must be interpreted in accordance with good faith.
Art. 1367 Conservazione del contratto
Nel dubbio, il contratto o le singole clausole devono interpretarsi nel senso in cui possono avere qualche effetto, anziché in quello secondo cui non ne avrebbero alcuno.
Art. 1367 Preservation of the contract
In doubt, the contract or the single clauses must be interpreted in the meaning in which that they can give somewhat result, instead of those in which they would not have any.
Art. 1368 Pratiche generali interpretative
Le clausole ambigue s'interpretano secondo ciò che si pratica generalmente nel luogo in cui il contratto è stato concluso. Nei contratti in cui una delle parti è un imprenditore, le clausole ambigue s'interpretano secondo ciò che si pratica generalmente nel luogo in cui è la sede dell'impresa.
Art. 1368 General interpretative practices
Ambiguous clauses must be interpreted in accordance with what is the general practice in the place where the agreement was concluded. In the contracts in which one of the parties is an entrepreneur, ambiguous clauses must be interpreted in accordance with what is generally practised in the place where the company is located.
Art. 1369 Espressioni con più sensi
Le espressioni che possono avere più sensi devono, nel dubbio, essere intese nel senso più conveniente alla natura e all'oggetto del contratto.
Art. 1369 Expressions with more meanings
The expressions which may have more meanings, in doubt, must be interpreted in the meaning which is most consistent with the nature and the subject matter of the contract.
Art. 1370 Interpretazione contro l'autore della clausola
Le clausole inserite nelle condizioni generali di contratto o in moduli o formulari predisposti da uno dei contraenti s'interpretano, nel dubbio, a favore dell'altro.
Art. 1370 Interpretation against the author of the clause
Clauses inserted in the general conditions of the contract or in forms or formularies pre-arranged by one of the contracting parties, in doubt, must be interpreted in favour of the other.
Art. 1371 Regole finali
Qualora, nonostante l'applicazione delle norme contenute in questo capo (1362 e seguenti), il contratto rimanga oscuro, esso deve essere inteso nel senso meno gravoso per l'obbligato, se è a titolo gratuito, e nel senso che realizzi l'equo contemperamento degli interessi delle parti, se è a titolo oneroso.
Art. 1371 Final rules
In case the contract remains obscure, notwithstanding the application of the rules included in this chapter (articles 1362 and the following), the contract must be interpreted in the less onerous way for the debtor, in case it is a contract with no consideration, and in the meaning that realizes the fair reconciliation of the parties' interests, in case it is with consideration."
- At the date of the 1967 Agreement, the Italian trade mark statute (Royal Decree n.929 of 21 June 1942) included the following provisions (with translations by Mr Angelini slightly modified by me):
La tutela del diritto alla ditta, sigla, od insegna è indipendente dalla sua inclusione nel marchio e dal brevetto per marchio stesso.
Coloro ai quali spetta il diritto ditta, sigla od insegna, hanno anche la facoltà esclusiva di farne uso come marchio, per la loro industria o il loro commercio. Il proprio nome, o la sigla corrispondente, può essere usato come marchio. Quando però questo sia costituito dallo stesso nome, ditta, sigla, od insegna usati da altri in un marchio anteriore, per prodotti o merci dello stesso genere, deve essere accompagnato da elementi idonei a differenziarlo.
The protection of the right to the trade name, acronym or sign is independent from its inclusion in a trademark and the registration of the same mark.
Those whom the right to the trade name, acronym, sign belongs to have the exclusive right to make use of it as a trade mark for their own industry or trade. One can use his own name, or the corresponding acronym, as a trade mark. When, however, it consists of the same name, trade name, acronym or sign already used by another party as a trademark for goods or wares of the same kind, it must be used together with sufficient elements of differentiation.
È vietato di usurpare il nome di un individuo, o la sigla corrispondente o la ragione sociale o denominazione di una società; è del pari vietato di appropriarsi della ditta, sigla, insegna di una impresa, nonché dell'emblema caratteristico, della denominazione o titolo di Enti o Associazioni ed apporli sopra stabilimenti, sopra opere di industria o di commercio o sopra disegni, incisioni od altre opere d'arte, anche quando la ditta, la sigla, l'insegna, o la denominazione o il titolo anzidetto non facciano parte di un marchio o trovinsi comunque brevettati in conformità di questo decreto,
It is prohibited to usurp the name of an individual, or the corresponding acronym or the name or denomination of a company; it is equally forbidden to appropriate the trade name, acronym, sign or characteristic emblem, denomination or title of Entities or Associations and place any of them over establishments, over industry or trade wares or over drawings, prints or other works of art, even when the trade name, the acronym, the sign or the emblem, denomination or title are not part of any trade mark or registrations issued in accordance with this Decree.
Il marchio non può essere trasferito se non in dipendenza del trasferimento dell'azienda o di un ramo particolare di questa, a condizione, inoltre, che il trasferimento del marchio stesso avvenga per l'uso di esso a titolo esclusivo.
In ogni caso dal trasferimento del marchio non deve derivare inganno in quei caratteri dei prodotti o merci che sono essenziali nell'apprezzamento del pubblico
A trade mark cannot be transferred unless in connection with the transfer of a business (and of its assets) or branch thereof, conditioned, furthermore, upon the fact that the transfer must take place for the use of the mark on an exclusive way.
In any case, the transfer should not give rise to any deception with regard to those elements of the goods or wares which are essential in the consumers' appreciation."
- Articles 13 and 14 use the expressions ditta and insegna which I have translated as "trade name" and "sign". A ditta is the commercial name of a business, and it is usually the name of an individual. An insegna is the sign displayed by a business, such as a shop sign. Under Italian law, use of a trade name or sign can be prevented where it is likely to cause confusion with another trade name or sign on the basis that this constitutes unfair competition; but a trade name or sign is not itself an exclusive right. The first paragraph of Article 13 provides that the protection of this legal right is independent from registered trade mark rights. The first sentence of the second paragraph of Article 13 provides that the owner of this legal right has the exclusive right to use (and hence to register) the trade name or sign as a trade mark in his industry or trade. This is subject, however, to the limitation contained in the second sentence of the second paragraph, which provides a defence in respect of trade mark use of a person's own name. That limitation is itself subject to the qualification contained in the third sentence of the second paragraph. This is that, where it consists of the same name or sign as one already used by another party as a trade mark for goods of the same kind, it must be used together with "sufficient elements of differentiation" i.e. sufficient to avoid confusion. Article 14 provides an additional form of protection for trade names and signs in cases of usurpation. Article 15 provides that a trade mark can only be transferred with a business, or a branch thereof; and must in any event not cause deception.
- It was in 1967 an established principle of Italian law that, if a founder of a company includes his own name in the name of the company, he confers the right to use this name on the company. In the absence of agreement to the contrary, the founder cannot later withdraw that right and the company can transfer that right as part of its assets e.g. in the event of liquidation: see Palmieri v A. Palmieri & C. SpA (Court of Appeal of Turin, 18 March 1949). Although that decision concerned a company incorporated at a time when the Commercial Code of 1882 was in force, it is clear from later cases that the principle it establishes continued to be recognised with regard to companies incorporated under the Civil Code of 1942.
- Finally, Articles 2257 and 2596 of the Italian Civil Code provide as follows (with translations by Mr Cuonzo):
"Art. 2557 Divieto di concorrenza
Chi aliena l'azienda deve astenersi, per il periodo di cinque anni dal trasferimento, dall'iniziare una nuova impresa che per l'oggetto, l'ubicazione, o altre circostanze sia idonea a sviare la clientela dell'azienda ceduta.
Il patto di astenersi dalla concorrenza in limiti più ampi di quelli previsti dal comma precedente è valido, purchè non impedisca ogni attività professionale dell'alienante. Esso non può eccedere la durata di cinque anni dal trasferimento.
Se nel patto è indicata una durata maggiore o la durata non è stabilita, il divieto di concorrenza vale per il periodo di cinque anni dal trasferimento.
Art. 2557 Prohibition to compete
Those who sell a business, must abstain, for a period of five years from the time of the sale, from starting a new business that, by reasons of its objects, location or other circumstances, is likely to divert customers of the sold business away.
The agreement not to compete which exceeds the limits provided for by the previous paragraph is valid provided that it not impedes any professional activity of the seller. It cannot last longer than five years from the time of the sale.
If in the agreement not to compete a longer term is indicated, or no term is provided for, the prohibition to compete is valid for the period of five years from the time of the sale.
Art. 2596 Limiti contrattuali alla concorrenza
Il patto che limita la concorrenza deve essere provato per iscritto. Esso è valido se circoscritto ad una determinata zona o a una determinata attività, e non può eccedere la durata di cinque anni.
Se la durata del patto non è determinata o è stabilita per un periodo superiore a cinque anni, il patto è valido per la durata di un quinquennio.
Art. 2596 Contractual limitations to competition
Agreements limiting competition must be evidenced in writing. They are valid if limited to a certain area or a certain activity and cannot last longer than five years.
If the agreement does not provide for a term or indicates a longer term, the agreement is valid for five years."
- Turning to clause 3.1 of the 1967 Agreement, this can broken down into three parts:
i) Giuseppe Senior agrees that the Company may retain its current name (denominazione) and that Hotel Villa Cipriani can retain its current sign (insegna), and in general that the Company and Hotel Villa Cipriani will have the right to use the name (nome) Cipriani on an exclusive basis (in via esclusiva), even after Giuseppe and his family cease to own any shares in, or be represented on the board of, the Company.
ii) Giuseppe Senior agrees to refrain (and to see that his family refrains) for 5 years from starting (a) any new business with the name Cipriani and (b) any new business (i.e. with any name) that is apt to divert customers from the Company or Hotel Villa Cipriani, except with SOP's consent.
iii) SOP agrees that Giuseppe Senior and his successors may continue to use the name (nome) Cipriani for the Locanda Cipriani.
- It is not clear to me that clause 3.1 was drafted by someone with a detailed knowledge of Italian trade mark law, since it contains no reference to trade names (ditta) or trade marks (marchi), although the draftsman may well have had some knowledge of the subject. Nevertheless, it was common ground between the experts that it is appropriate to interpret clause 3.1 against the background of Italian trade mark law as it then stood. It was also common ground between the experts that the second part of clause 3.1 reflects Articles 2557 and 2596 of the Civil Code, in that it is a non-compete provision which lasted for the maximum duration permissible under those Articles. (The same applies to clause 3.2.)
- The dispute between the parties is as to the meaning and effect of the first part of clause 3.1, and in particular the words "and in general the Company and the Hotel Villa Cipriani will have the right to use the name 'Cipriani' on an exclusive basis". The Defendants contend, in short, that these words merely mean that the Company and Hotel Villa Cipriani have the exclusive right to use the name Cipriani in relation to those hotels (i.e. as part of the names Hotel Cipriani and Hotel Villa Cipriani). The Claimants contend, in short, that they mean that the Company and Hotel Villa Cipriani will have the exclusive right to use the name Cipriani (meaning names including the word Cipriani) in relation to any hotel or restaurant business (subject to the permission to use the name Locanda Cipriani conferred on Giuseppe Senior by the third part of clause 3.1). Although the limitation to any hotel or restaurant business is not explicit, the Claimants say it is implicit.
- In my judgment the Claimants' interpretation is to be preferred. The Defendants' interpretation is inconsistent with the fact that it is the name 'Cipriani' which the Company and Hotel Villa Cipriani can use on an exclusive basis, not their respective full names. Furthermore, on the Defendants' interpretation the third part of clause 3.1 would be redundant. There is no inconsistency between this interpretation of the first part of clause 3.1 and the third part, which gives SOP additional protection during the five year period.
- Given that subsequent conduct is an admissible aid to interpretation under Article 1362 of the Civil Code, this interpretation is also supported by the fact that Giuseppe Senior and Arrigo acted in a manner consistent with it for over 30 years. They did not set up any hotels or restaurants under the name Cipriani, or a name which included the word Cipriani, in Italy (or elsewhere in Europe) until about 2000 when the Cipriani Porto Cervo was opened.
- I do not consider that any of the provisions or principles of Italian trade mark law that I have set out above require the first part of clause 3.1 to be interpreted in the manner contended for by either side, but it seems to me that interpreting it against that background lends more support to the Claimants' construction than it does to the Defendants'. I have considerable difficulty in seeing how Articles 14 and 15 support the Defendants' interpretation, as Mr Angelini opined. I find Mr Cuonzo's opinion that the disputed words were intended to stop Giuseppe Senior exercising a right which he would otherwise have had to use his own name more persuasive, although I am not convinced that this quite fits with what Article 13 actually provided.
- Although I accept the Claimants' interpretation of clause 3.1 to the extent stated above, I do not accept the next stage in the Claimants' case with regard to clause 3.1. The Claimants argue that it follows that by virtue of the 1967 Agreement HC had the exclusive right to register CIPRIANI as a trade mark in respect of hotel and restaurant services. I do not agree, for a number of reasons.
- First, it was common ground between the experts, and indeed obvious on its face, that the 1967 Agreement says nothing about trade marks.
- Secondly, it is clear from the evidence that at that time Italian law considered that the legal rights in trade names and signs were rather different in nature from trade marks.
- Thirdly, the subsequent conduct of the parties is inconsistent with this interpretation. While it is true that HC applied to register CIPRIANI as a trade mark in Italy in 1969, so too did ACS in 1975. HC did not apply for a declaration that ACS's registration was invalid or even complain about it. Nor did HC complain about the increasing use of the word Cipriani as a trade mark by ACS and Arrigo from the mid 1980s onwards, although it was clearly aware of this (for example, HC obtained the copy of the Palazzo Grassi menu dating from 1993 which is in evidence).
- I would nevertheless add that it seems to me at least possible that HC could have argued that it had the exclusive right to register CIPRIANI as a trade mark by virtue of the 1967 Agreement in combination with the second paragraph of Article 13. It is not necessary for me to express a conclusion on this point and I prefer not to do so.
The key provisions of the Regulation
- Council Regulation 40/94/EC on the Community Trade Mark of 20 December 1993 ("the Regulation") provides inter alia as follows:
"Article 9 Rights conferred by a Community trade mark
1. A Community 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:
(a) any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered;
(b) any sign where, because of its identity with or similarity to the Community trade mark and the identity or similarity of the goods or services covered by the Community 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;
(c) any sign which is identical with or similar to the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community 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 Community trade mark.
Article 12 Limitation of the effects of a Community trade mark
A community trade mark shall not entitle the proprietor to prohibit a third party from using in the course of trade:
(a) his own name or address;
Provided he uses them in accordance with honest practices in industrial or commercial matters.
Article 51 Absolute grounds for invalidity
1. A Community trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings,
(b) where the applicant was acting in bad faith when he filed the application for the trade mark."
- These provisions correspond to Articles 3(2)(d), 5(1),(2) and 6(1)(a) of First Council Directive 89/104/EC of 21 December 1988 to approximate the laws of the Member States relating to trade marks ("the Directive") and to sections 3(6), 10(1)-(3) and 11(2)(a) of the 1994 Act.
Infringement of the CTM
- Although the CTM is a Community-wide right, the Claimants only allege infringement by acts committed within the United Kingdom and only seek an injunction to restrain future infringement in the United Kingdom. Accordingly, I shall confine my attention to the position in the United Kingdom.
- The Claimants allege that CGS's use of the sign CIPRIANI in relation to the Restaurant infringes the CTM pursuant to Article 9(1)(a) of the Regulation. The Defendants do not dispute that CGS has used in the course of trade an identical sign to the CTM in relation to services identical to services for which the CTM is registered so as to affect or be liable to affect the functions of the CTM, and thus there is a prima facie case of infringement. The Defendants advance two defences to this claim, namely the own name defence under Article 12(a) of the Regulation and a counterclaim for a declaration of invalidity under Article 51(b) of the Regulation. It is common ground that infringement primarily falls to be assessed as at April 2004, when the Restaurant opened, but nevertheless it may be relevant to consider the position later in time so far as the Article 12(a) defence is concerned.
- The Claimants also allege that CGS's use of the sign CIPRIANI LONDON in relation to the Restaurant infringes the CTM pursuant to Article 9(1)(b), alternatively Article 9(1)(c), of the Regulation. The Defendants deny that there is a prima facie case of infringement under either head, and in the alternative rely upon the same two defences as in relation to the Article 9(1)(a) claim.
- The Defendants accept that CIPRIANI LONDON is a sign which is similar to the CTM and has been used in the course of trade in relation to services identical to services for which the CTM is registered. The Defendants deny, however, that there exists a likelihood of confusion on the part of the public.
- The manner in which the requirement of a likelihood of confusion in Article 9(1)(b) of the Regulation, the corresponding provisions in the Directive and the corresponding provisions concerning relative grounds of objection to registration in both the Regulation and the Directive should be interpreted and applied has been considered by the Court of Justice of the European Cases in a considerable number of decisions, and in particular the leading cases of Case C-251/95 SABEL BV v Puma AG  ECR I-6191, Case C-39/97 Canon Kabushiki Kaisha v Metro-Goldwyn-Meyer Inc  ECR I-5507, Case C-342/97 Lloyd Schuhfabrik Meyer & Co GmbH v Adidas AG  ECR I-4881 and Case C-425/98 Marca Mode CV v Adidas AG  ECR I-4881. The standard summary of the principles established by these cases which is applied in the registration context by the hearing officers in the United Kingdom Trade Marks Registry and by the Appointed Persons on appeal from them is as follows:
a) the likelihood of confusion must be appreciated globally, taking account of all relevant factors;
b) the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;
c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;
d) the appreciation of the visual, aural and conceptual similarities of the marks must therefore be based on the overall impression created by the marks bearing in mind their distinctive and dominant components;
e) there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;
f) there is an interdependence between the various relevant factors, so that a lesser degree of similarity between the goods or services may be offset by a great degree of similarity between the marks, and vice versa;
g) mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient;
h) the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense;
i) the risk that the public might wrongly believe that the respective goods or service come from the same or economically linked undertakings constitutes a likelihood of confusion.
- In Compass Publishing BV v Compass Logistics Ltd  EWHC 520 (Ch),  RPC 41 at - Laddie J stated:
"22. It is frequently said by trade mark lawyers that when the proprietor's mark and the defendant's sign have been used in the market-place but no confusion has been caused, then there cannot exist a likelihood of confusion under Art.9.1(b) or the equivalent provision in the Trade Marks Act 1994 ('the 1994 Act'), that is to say s.10(2). So, no confusion in the market-place means no infringement of the registered trade mark. This is, however, no more than a rule of thumb. It must be borne in mind that the provisions in the legislation relating to infringement are not simply reflective of what is happening in the market. It is possible to register a mark which is not being used. Infringement in such a case must involve considering notional use of the registered mark. In such a case there can be no confusion in practice, yet it is possible for there to be a finding of infringement. Similarly, even when the proprietor of a registered mark uses it, he may well not use it throughout the whole width of the registration or he may use it on a scale which is very small compared with the sector of trade in which the mark is registered and the alleged infringer's use may be very limited also. In the former situation, the court must consider notional use extended to the full width of the classification of goods or services. In the latter it must consider notional use on a scale where direct competition between the proprietor and the alleged infringer could take place.
23. This is of significance in this case because, as noted above, there is no suggestion that there has been any confusion in the market place between the activities of the defendant under the sign 'COMPASS LOGISTICS' and the claimant, or any other member of the Compass Group, under the mark 'COMPASS'. Mr Wyand relies on this as being a good indication that there is no likelihood of confusion. But in my view Mr Purvis is right when he argues that the question of infringement has to be answered by assessing the likelihood of confusion were the claimant to use the mark 'COMPASS' in a normal way in respect of all services covered by the registration, including for business consultancy services in the field of logistics, that is to say the same specialist field the defendant operates in."
- In the present case, HC has primarily used the CTM so far as hotel and restaurant services are concerned in Venice. More recently, it has also used the CTM in relation to restaurant services in Lisbon and in Madeira. Unless use of the mark for hotel and restaurant services provided to British consumers (e.g. in the context of reservations made by such consumers directly from the United Kingdom) counts as use of the CTM in the United Kingdom, HC has never used the CTM in relation to hotel and restaurant services in the United Kingdom.
- Counsel for the Claimants submitted that, applying the principle articulated by Laddie J in the Compass case, the likelihood of confusion had to be assessed on the assumption that HC was using the CTM in a normal way in respect of all goods and services covered by the registration and in all Member States. Furthermore, he submitted that normal use of the CTM would clearly extend to using it in relation to a restaurant in London called Cipriani.
- Counsel for the Defendants did not challenge the correctness of these submissions as a matter of law (even though he submitted that Article 12(a) required an analysis of the actual situation, not a notional one). I therefore accept them. Nevertheless, it is worth making three comments.
- First, a Community Trade Mark has a "unitary character" and has "equal effect throughout the Community" unless otherwise provided in the Regulation: see Article 1(2) of the Regulation. This is an important and fundamental principle of the Regulation, although as discussed below there are exceptions to it. The limits to this principle are presently uncertain in a number of respects: see von Mühlendahl, "Community Trade Mark Riddles: Territoriality and Unitary Character"  EIPR 66. One such issue is whether a Community trade mark can be revoked for five years' non-use under Article 50(a) of the Regulation if it has not been used in every Member State or whether it is sufficient to defeat an application for revocation on this ground that the Community trade mark has been used in a substantial part of the Community or even in just one Member State. In the present case the Defendants have not counterclaimed for revocation of the CTM for non-use, and thus have not tried to test the correctness of the widespread view that use in one Member States is enough. If use in one Member State is enough to preserve a Community trade mark from revocation for non-use, it inevitably follows that the proprietor of that Community trade mark can maintain and enforce a monopoly at least to the extent defined by Article 9(1)(a) and (b) in countries which may be geographically remote from the territory in which the CTM is used.
- Secondly, it is sufficient for the purposes of Article 9(1)(b) to establish the existence of a likelihood of confusion in only part of the Community: see Case C-514/06P Armacell Enterprise GmbH v OHIM  ECR I-0000 at -. If use in one Member State is enough to preserve a Community trade mark from revocation for non-use, it follows that the proprietor of that Community trade can succeed in a claim under Article 9(1)(b) based on a likelihood of confusion which exists in a different Member State even if there would be no likelihood of confusion in the State where he uses the CTM.
- Thirdly, in its recent decision in Case C-533/06 O2 Holdings Ltd v Hutchison 3G UK Ltd  ECR I-0000 at - the ECJ held that, in assessing whether the use of a sign gives rise to a likelihood of confusion, the court must "limit its analysis to the context in which the sign … was used", that is to say "the assessment must be limited to the circumstances characterising that use, without there being any need to investigate whether another use of the same sign in different circumstances would also be likely to give rise to a likelihood of confusion". Counsel for the Defendants did not argue that the assessment also involved consideration of the circumstances characterising the use of the CTM. Thus, although O2 v Hutchison brings the test for trade mark infringement under Article 9(1)(b) closer to that for passing off, there remain differences between the two.
- Turning to the present case, I find that there was a likelihood of confusion in April 2004 for the following reasons.
- First, if one assumes that the CTM is being used in relation to restaurant services in London, I consider that it is manifest that there was a likelihood of confusion. The mark is CIPRIANI and the sign is CIPRIANI LONDON. The mark CIPRIANI would have been fairly distinctive to a UK consumer at that date even if it had not acquired a reputation. The dominant and distinctive element in the Defendants' sign is CIPRIANI since the additional word LONDON is non-distinctive, particularly for a restaurant in London. This is self-evident, but confirmed by the fact that both the Defendants and third parties often drop the word LONDON. Thus the dominant and distinctive elements of the mark and the sign are identical. The services are identical. The average consumer is representative of the adult general public which patronises restaurants, and in particular the more expensive class of restaurant. While some care is taken over the selection of restaurant services, these are not specialist services or ones over which especial care is taken. Even if the CTM did not have a reputation, the average consumer would in my judgment think that the services denoted by the mark and the sign came from the same or economically-linked undertakings. The reputation of the CTM makes this even more likely. Although I have reached this conclusion independently, I am pleased to note that it is consistent with the two decisions of the OHIM Opposition Division discussed above.
- I would add that the Defendants themselves seem to accept that confusion was likely on this assumption. Thus Giuseppe stated in his first witness statement: "If the Claimants were to open a restaurant or food related business in the UK under the CIPRIANI name I believe that this would be highly confusing…" Although Giuseppe did not in the end give evidence, Arrigo said that he agreed with the contents of his statement.
- Secondly, even if one does not assume that the CTM is being used in relation to restaurant services in London, I consider that there was a likelihood of confusion for the reasons given below in relation to passing off.
- Counsel for the Defendants argued that there was no evidence of actual confusion between the Hotel Cipriani and the Restaurant other than "low level" confusion of a kind that had existed between the Hotel Cipriani (and Hotel Villa Cipriani and Locanda Cipriani) and the Cipriani family and their businesses for many years (and between Hotel Cipriani on the one hand and Hotel Villa Cipriani and Locanda Cipriani on the other hand). In my judgment, this argument is not an answer to the Article 9(1)(b) claim. If the Article 9(1)(b) claim is assessed on the notional basis so far as use of the CTM is concerned, it is simply immaterial even if it were factually well founded. Even if the Article 9(1)(b) claim is assessed on the actual basis so far as use of the CTM is concerned, for the reasons I shall explain below in relation to passing off, I am not persuaded that there is no actionable confusion.
- Although he did not abandon the claim under Article 9(1)(c), in his closing submissions counsel for the Claimants realistically accepted that, if the claim under Article 9(1)(b) failed, the Claimants could not succeed under Article 9(1)(c). Accordingly I need say no more about this claim.
Own name defence
- The Defendants' reliance upon Article 12(a) gives rise to three issues. First, does the use of the signs CIPRIANI and CIPRIANI LONDON by CGS constitute use of its own name? Secondly, if not, can CGS rely upon the names of Giuseppe and/or CI? Thirdly, if the answer to the first or second questions is yes, is such use in accordance with honest practices in industrial or commercial matters?
Own name of CGS?
- The defence under Article 12(a) is available to legal persons as well as to natural persons: Case C-245/02 Anheuser-Busch Inc v Budejovicky Budvar NP  ECR I-10989 at -, Case C-17/06 Céline Sàrl v Céline SA  ECR I-7041 at . It is common ground that, in order for a legal person to be able rely on the defence, it is not necessary for it to use elements of its name such as "Ltd, "plc", "Sàrl" or "SA" which merely indicate a particular form of legal personality: see the Opinion of Advocate General Sharpston in Céline at . Counsel for the Claimants submitted, however, that, apart from elements of that kind, Article 12(a) only applies where the sign in question corresponds to the full registered name of the defendant company i.e. Cipriani (Grosvenor Street) in the case of CGS. In support of this submission he cited two decisions of the Court of Appeal.
- In Asprey & Garrard Ltd v WRA (Guns) Ltd  EWCA Civ 1499,  FSR 31, the first defendant operated a retail business selling luxury goods including jewellery, watches and guns trading under the name of the second defendant, William R. Asprey Esq. The claimant sued for infringement of trade mark registrations for the word ASPREY in Classes 13 and 14 and passing off. Jacob J granted summary judgment. An appeal by the defendants was dismissed save that the injunction was varied. In relation to the own name defence Peter Gibson LJ (with whom Chadwick and Kay LJJ agreed) held at :
"As for section 11(2)(a), that provision can afford the first defendant no defence as it is not using its own name. William Asprey is not himself trading and so section 11(2)(a) cannot avail him."
It is also relevant to note what Peter Gibson LJ said at  in relation to the own name defence advanced by the claimants to the passing off claim:
"As the judge said, the defence has never been held to apply to names of new companies as otherwise a route to piracy would be obvious. For the same reason a trade name, other than its own name, newly adopted by a company, cannot avail it. Further, as the judge also pointed out, because a company can choose to adopt any trading name, there could be an own name defence in almost every case if Mr Bloch were right. In my judgment he is not."
- In Premier Luggage & Bags Ltd v Premier Co (UK) Ltd  EWCA Civ 387,  FSR 5 claims were made in respect of alleged infringements of the trade mark PREMIER registered for, among other things, luggage. The uses complained of ranged from the presence of the defendant's full company name on swing tags to introductory calls from sales staff who introduced themselves as "from Premier" or "From Premier Luggage or "From the Premier Luggage Company". The Court of Appeal held that the defendant could avail itself of the own name defence in respect of the swing tags but not the sales calls. Chadwick LJ, with whom Sir Anthony Evans and Sir Denis Henry agreed, said at -:
"The use of the name 'The Premier Company (UK) Ltd' and the address 'Premier House' on the swing tags is within s.11(2)(a) of the 1994 Act.
That cannot be said in relation to the self-introduction by sales staff as being from 'Premier", or from 'Premier Luggage' or 'Premier Luggage Company'. The own name defence provided by s.11(2)(a) is not available because the name used was not the name 'The Premier Company (UK) Limited'; it was an abbreviation or adaption of that name."
- Counsel for the Defendants submitted that Asprey & Garrard and Premier Luggage had been impliedly overruled by the judgment of the ECJ in Céline. In that case the claimant, Céline SA, was incorporated in Paris in 1928. It created and marketed clothing and accessories. In 1948 it registered the word CELINE as a trade mark for all goods in Classes 1 to 42, including clothes and shoes. The defendant, Céline Sàrl, was incorporated in 1992 to take over a business of retailing clothing from premises in Nancy which had been trading since 1950. Céline SA first became aware of Céline Sàrl in 2003 and brought proceedings for trade mark infringement and unfair competition complaining of its use of the sign Céline. Céline SA did not allege that Céline Sàrl had affixed that sign to any goods. The Cour d'Appel de Nancy referred the following question to the Court for a preliminary ruling:
"Must Article 5(1) of Directive 89/104/EC be interpreted as meaning that the adoption, by a third party without authorisation, of a registered word mark, as a company, trade or shop name in connection with the marketing of identical goods, amounts to use of that mark in the course of trade which the proprietor is entitled to stop by reason of his exclusive rights?"
- In answering this question, the Court held that there was use of a sign constituting a company name, trade name or shop name not merely where the defendant affixed the sign to goods but also where the defendant used the sign in such a way that a link was established between the sign and the goods marketed or services provided by the defendant. The Court went on that use of a sign only constituted an infringement under Article 5(1)(a) where it affected or was liable to affect the functions of the trade mark, and that that was the situation where the sign was used by the defendant in relation to his own goods or services in such a way that consumers were liable to interpret it as designating the origin of the goods or services in question.
- Although the question referred only concerned Article 5(1) of the Directive, the Court held it was necessary to consider:
"in the event that the national court should decide that Article 5(1)(a) of the directive entitles Céline SA to prevent the use of the 'Céline' sign by Céline SARL, and in order to enable that court to give judgment in the case before it, whether Article 6(1)(a) of the directive precludes, in circumstances such as those arising in the main proceedings, the proprietor of a mark prohibiting a third party from using a sign which is identical to his mark as a company or a trade name."
As discussed below, the Court went on to give guidance as to the interpretation of the requirement in Article 6(1)(a) that the use complained of be in accordance with honest practices. It is clear from this that the Court considered that, if the national court were to conclude that the use complained of fell within Article 5(1)(a), it could nevertheless be saved from infringement by Article 6(1)(a) provided that the national court was satisfied that the use was in accordance with honest practices.
- Counsel for the Defendants submitted that the approach of the Court in Céline was inconsistent with Asprey & Garrard and Premier Luggage, arguing that it showed that Article 6(1)(a) could protect use of a trading name of a company even if the trading name were different to the formal registered name of the company. I do not accept this submission. In Céline the defendant used the sign Céline as both as its corporate name (with the addition of Sàrl to indicate the form of its legal personality) and as its trading or shop name. There is nothing to indicate that, if the full registered name of the company had been, say, Céline (Nancy) Sàrl, the answer would have been the same.
- Accordingly, I conclude that I remain bound by Asprey & Garrard and Premier Luggage. On that basis, CGS cannot avail itself of the defence under Article 12(a) since neither CIPRIANI nor CIPRIANI LONDON is its own name.
- I would add that, even if I were not bound by Asprey & Garrard and Premier Luggage, I would reach the same conclusion. Article 12(a) is an exception to Article 9(1) and accordingly should be narrowly interpreted. I agree with counsel for the Claimants that, if Article 12(a) were to be interpreted as applying to a company's trading name as opposed to its registered name, it would constitute a substantial inroad into the rights conferred by Article 9(1), particularly where the company has only just commenced trading. It is unlikely that this can have been intended by the Community legislature for similar reasons to those given by Peter Gibson LJ in Asprey & Garrard.
- Counsel for the Defendants also argued that CGS could avail itself of Article 12(1) on the basis that the only distinctive part of its name, the "trade-marky bit" as he put it, was CIPRIANI. In my judgment this way of putting the argument is equally precluded by Asprey & Garrard and Premier. It is also open to similar objections to those outlined in the preceding paragraph.
The position of Giuseppe and CI
- So far as Giuseppe is concerned, he stands in the same position as Mr Asprey in Asprey & Garrard. He is not trading or making the use complained of, CGS is. Article 12(a) protects a third party using "his own name", not another person's name. As counsel for the Claimants pointed out, it is not even as if CGS is a "one man company": 40% of the shares are owned by shareholders who are unconnected with the Cipriani family. Moreover, the Cipriani family could sell the shares owned by CI at any time. It is immaterial that Giuseppe is conceded to be jointly liable for any infringement by CGS.
- As to CI, its position is even worse. First, it is not trading or making the use complained of. Secondly, the signs complained of are not its own name for the same reasons that they are not CGS's own name. It is immaterial both that CI has licensed the use complained of and that CI is conceded to be jointly liable for any infringement by CGS.
Use in accordance with honest practices?
- Provided that the use is "in accordance with honest practices in industrial and commercial matters", the defence under Article 12(a) is available where the defendant uses his own name in a manner falling within Article 9(1)(a) or (b): see Case C-100/02 Gerolsteiner Brunnen GmbH & Co v Putsch GmbH  ECR I-691 at -.
- The ECJ has repeatedly held that the requirement to act in accordance with honest practices in industrial or commercial matters "constitutes in substance the expression of a duty to act fairly in relation to the legitimate interests of the trade mark proprietor": see Case C-63/97 Bayerische Motorenwerke AG v Deenik  ECR I-905 at , Gerolsteiner Brunnen at , Anheuser-Busch at , Case 228/03 Gillette Co v LA-Laboratories Ltd Oy  ECR I-2337 at  and Céline at . In Anheuser-Busch the Court said that this is "essentially the same condition as that laid down by Art. 17 of the TRIPs Agreement", which provides:
"Members may provide limited exceptions to the rights conferred by a trade mark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trade mark and of third parties."
- The ECJ has also held that the court should "carry out an overall assessment of all the relevant circumstances", and in particular should assess whether the defendant "can be regarded as unfairly competing with the proprietor of the trade mark": see Gerolsteiner Brunnen at , Anheuser-Busch at  and Céline at . This makes sense, since the wording of the proviso to Article 12 appears to reflect Article 10bis(2) of the Paris Convention for the Protection of Industrial Property, which provides:
"Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition."
- An important factor is whether the use of the sign complained of either gives rise to consumer deception or takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark. If it does, it is unlikely to qualify as being in accordance with honest practices. Thus in Gillette the ECJ held at :
"Use of the trade mark will not be in accordance with honest practices in industrial and commercial matters if, for example:
– it is done in such a manner as to give the impression that there is a commercial connection between the third party and the trade mark owner;
– it affects the value of the trade mark by taking unfair advantage of its distinctive character or repute;
– it entails the discrediting or denigration of that mark;
– or where the third party presents its product as an imitation or replica of the product bearing the trade mark of which it is not the owner."
- Similarly, the ECJ held in Anheuser-Busch at  and in Céline at :
"… in assessing whether the condition of honest practice is satisfied, account must be taken first of the extent to which the use of the third party's name is understood by the relevant public, or at least a significant section of that public, as indicating a link between the third party's goods or services and the trade-mark proprietor or a person authorised to use the trade mark, and secondly of the extent to which the third party ought to have been aware of that. Another factor to be taken into account when making the assessment is whether the trade mark concerned enjoys a certain reputation in the Member State in which it is registered and its protection is sought, from which the third party might profit in marketing his goods or services."
- On the other hand, a mere likelihood of confusion will not disqualify the use from being in accordance with honest practices if there is a good reason why such a likelihood of confusion should be tolerated. Thus in Gerolsteiner Brunnen the ECJ held at :
"The mere fact that there exists a likelihood of aural confusion between a word mark registered in one Member State and an indication of geographical origin from another Member State is therefore insufficient to conclude that the use of that indication in the course of trade is not in accordance with honest practices. In a Community of 15 Member States, with great linguistic diversity, the chance that there exists some phonetic similarity between a trade mark registered in one Member State and an indication of geographical origin from another Member State is already substantial and will be even greater after the impending enlargement."
- In Reed Executive plc v Reed Business Information Ltd  EWCA Civ 159,  RPC 40 at  Jacob LJ interpreted Gerolsteiner Brunnen as follows:
"I conclude from Gerri/Kelly that a man may use his own name even if there is some actual confusion with a registered trade mark. The amount of confusion which can be tolerated is a question of degree – only if objectively what he does, in all the circumstances, amounts to unfair competition, will there also be infringement. In practice there would have to be significant actual deception – mere possibilities of confusion, especially where ameliorated by other surrounding circumstances (mere aural confusion but clearly different bottles) can be within honest practices. No doubt in some cases where a man has set out to cause confusion by using his name he will be outside the defence (cf. the English passing off cases cited above) – in others he may be within it if he has taken reasonable precautions to reduce confusion. All will turn on the overall circumstances of the case."
- As can be seen from the citation from Anheuser-Busch and Céline, whether the defendant ought to have been aware of the existence of deception is a relevant factor. Furthermore, as Jacob LJ pointed out in Reed v Reed at , once the defendant knows that his use is causing substantial deception or confusion, there can be no doubt that he must stop.
- Another factor which appears to be relevant is the defendant's knowledge of the trade mark. In her Opinion in Céline Advocate General Sharpston said:
"53. It seems clear that the question of knowledge is crucial in that context.
54. A person cannot normally be said to be acting in accordance with honest commercial practice if he adopts a name to be used in trade for purposes of distinguishing goods or services which he knows to be identical or similar to those covered by identical or similar existing trade mark.
55. Nor indeed will mere ignorance of the existence of the trade mark be sufficient to bring the adoption and use of the name within the fold of honest practice. Honest practice in the choice of a name to be used in trade must imply reasonable diligence in ascertaining that the name chosen does not conflict with, inter alia, an existing trade mark, and thus in verifying the existence of any such mark. And a search in national and Community trade mark registers is not normally particularly difficult or burdensome.
56. However, if reasonable diligence has been exercised, and no such mark has been found, then it does not seem possible to assert that the person adopting the name has in that regard acted contrary to honest practices in industrial or commercial matters. In those circumstances, it is of course only exceptionally that there will in fact be a trade mark similar or identical to the name, whose proprietor would wish to prevent use of the name. But if that were to be the case, it seems to me that the trade mark proprietor's right would be limited by Article 6(1) of the Directive, since the limitation is conditional only on the honesty of the user's conduct.
57. On the other hand, if a similar or identical trade mark were found, the extent to which the trade mark proprietor could prohibit use of the name would depend on the user's conduct thereafter. Honest practice would presumably imply at least contacting the trade mark proprietor and seeking his reaction. If he objected to use of the name on reasonable grounds (and any of the circumstances falling within Article 5 would seem, by definition, capable of providing reasonable grounds for objection), then subsequent use of the name objected to would not be in conformity with honest commercial practice."
- In its judgment in Céline, the ECJ did not say anything about the defendant's knowledge of the trade mark, but re-iterated that it was for the national court to carry out an assessment of all the relevant circumstances. The inference I draw from this is that the Court did not agree with the Advocate General that the defendant's knowledge of the trade mark was (to use her word) "crucial". On the other hand, such knowledge would seem to form part of the relevant circumstances which the national court must assess.
- Although the ECJ has not stated this in explicit terms, it is clear from its jurisprudence surveyed above that the test under the proviso to Article 12 is an objective one.
- Turning to the present case, in my judgment CGS's use of the signs CIPRIANI and CIPRIANI LONDON has not been in accordance with honest practices in industrial and commercial matters, for the following cumulative reasons.
- First, I have found that the Defendants knew of the existence of the CTM at the time that they opened the Restaurant. Furthermore, even if they had not known of it, a reasonable person in their position would have instructed their trade mark attorneys to conduct a search, and such a search would almost certainly have revealed the existence of the CTM. No evidence has been adduced that a search was conducted which failed to turn up the CTM. Despite this, the Defendants made no attempt to clear CGS's use of the names Cipriani London, let alone Cipriani, with HC.
- Secondly, if the Defendants had properly addressed their minds to the question, they would have appreciated that there was at least a risk that HC would object to their calling the Restaurant Cipriani London, and a greater risk that HC would object to it being called just Cipriani. In any event, from October 2004 the Defendants knew that HC objected to the Restaurant's use of the name Cipriani London, let alone the name Cipriani. Despite this, CGS carried on using the names complained of.
- Thirdly, Arrigo's evidence was that the choice of name Cipriani London was intended to comply with the spirit of the Settlement Agreement. Even assuming that that name does comply with the spirit of the Settlement Agreement, the name Cipriani clearly does not. Despite this, CGS has used the name Cipriani on its own and has used the name Cipriani London in a manner which invites third parties to shorten it to Cipriani. Furthermore, the Defendants must have been aware from very shortly after the Restaurant opened that reviewers and guidebooks were referring to the Restaurant as simply Cipriani, but it is evident that the Defendants made no attempt to stop this practice. On the contrary, CGS's staff encouraged it by answering the telephone "Cipriani".
- Fourthly, if the Defendants had taken competent legal advice, they would have been advised that there was at least a serious risk of infringement of the CTM. The Defendants have not disclosed any advice that was taken. Arrigo claimed in evidence that Giuseppe had consulted Marshall Bernstein of Robinson Brog Leinwand Greene Genovese & Gluck P.C., the Cipriani Group's US lawyers about the use of the company name Cipriani (Grosvenor Street) before the Restaurant opened. Giuseppe was not called to substantiate this claim. It is not clear from Arrigo's evidence that Mr Bernstein was told what the trading name of the Restaurant was intended to be, let alone that it would be called just Cipriani. So far as the evidence goes, Mr Bernstein has no expertise in European trade mark law. If he had been consulted about the trade mark position, which I doubt, he would have been bound to tell Arrigo that advice should be sought from a lawyer or attorney specialising in European trade mark law. No evidence has been adduced that the Defendants were advised by a properly qualified person with proper instructions that they would not infringe the CTM.
- Fifthly, the use in question is as the name of the Restaurant and hence as the trade mark under which CGS provides restaurant services. It is thus what Jacob LJ described in Reed v Reed as "upfront in-your-face" trade mark use. It is not a mere formal identification of the company name in the small print of the kind that was in issue, for example, in the passing off case of Anderson & Lemke Ltd v Anderson & Lemke Inc  RPC 124. In my view, the latter kind of use will more readily be protected by Article 12(a) than the former.
- Sixthly, if Arrigo and Giuseppe had properly addressed their minds to the question before the Restaurant opened, I consider that they would have been bound to appreciate that calling the Restaurant Cipriani London would be likely to cause confusion, and still more so calling it just Cipriani.
- Seventhly, as I shall discuss in relation to passing off below, CGS's use of the names Cipriani London and Cipriani has caused actual confusion. Furthermore, the Defendants have been aware that this was happening.
- Eighthly, Hotel Cipriani has a reputation in the United Kingdom. Moreover, I am confident that Arrigo and Giuseppe were aware that this was the case before the Restaurant opened. If they had properly addressed their minds to the question, I consider that they would have been bound to appreciate that there was at least a risk of the reputation of Hotel Cipriani in the United Kindgom being diluted and/or tarnished by calling the Restaurant Cipriani London, and still more so by calling it just Cipriani.
- Ninthly, the use of the name Cipriani London, and still more the name Cipriani, by the Restaurant makes it difficult, if not impossible, for HC to exploit the CTM in the United Kingdom, and particularly in London. Furthermore, this is a consequence that the Defendants would have been bound to appreciate if they had properly addressed their minds to the question.
- Finally, I do not consider that the Defendants had sufficient justification for their actions in using the name Cipriani London, and still less so the name Cipriani, given the consequences for HC and for consumers. I accept that Arrigo and Giuseppe had an eminently understandable reason for wanting to call the Restaurant by a name which included their family name. Nevertheless, this is not a strong factor in the Defendants' favour given that, with the sole rather obscure exception of Cipriani Porto Cervo from 2000, they had not called any of their European restaurants by such a name up to that point. Indeed, their Venetian restaurants were called quite different names. The fact that many customers of those restaurants knew of the Cipriani family's involvement in them does not alter this, nor does the increasing use over the years of Cipriani branding on bills and the like. Nor does the fact that some of the customers of the Restaurant may have been aware of the US restaurants. I am prepared to accept that Arrigo and Giuseppe subjectively believed that they were entitled to call the Restaurant Cipriani London, but I consider that they failed to take proper advice, failed properly to address their minds to the likelihood of confusion and the likelihood of damage to the reputation of Hotel Cipriani, failed properly to react to the evidence of actual confusion when it did emerge (for example, they did not take steps to ensure that the Restaurant was always referred to as Cipriani London and never as just Cipriani) and failed properly to consider the consequences for HC's own exploitation of the CTM. I am not convinced that even subjectively they believed that they were entitled to call the Restaurant just Cipriani.
- Overall, I consider that the Defendants' use of the signs complained of amounts to unfair competition with HC.
Validity of the CTM
- It is important to note at the outset that the only ground on which the Defendants attack the validity of the CTM is that the application was allegedly made in bad faith. The Defendants do not attack the validity of the CTM on relative grounds pursuant to Article 52 of the Regulation. It is also important to note that, although an important plank of the Defendants' case relies on the potential impact of the CTM on the use of the names Hotel Villa Cipriani and Locanda Cipriani by Starwood and SFIP respectively, there is no evidence that either (a) HC has ever attempted or threatened to enforce the CTM against either of those parties or (b) either of those parties has ever objected to the registration of the CTM.
- To date, neither the ECJ nor the Court of First Instance has had occasion to interpret Article 51(1)(b) of the Regulation or the corresponding provision in the Directive, although such an occasion may be provided by the pending reference in Case C-529/07 Chocoladenfabriken Lindt & Sprüngli AG v Franz Haüswirth GmbH. This is despite the fact that the likelihood that authoritative guidance from the ECJ on this question would be needed was recognised as long ago as the decision of Robert Walker J in Road Tech Computer Systems Ltd v Unison Software Ltd  FSR 805. In England and Wales the leading cases on bad faith applications are the decision of Lindsay J in Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd  RPC 367, in which he said that bad faith includes not only dishonesty but also "some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined", and the decision of the Court of Appeal in Harrison v Teton Valley Trading Co Ltd  1 WLR 2577. Counsel for the Claimants and counsel for the Defendants agreed that the current state of English law on this subject was represented by the following passage from my decision sitting as the Appointed Person in BRUTT Trade Marks  RPC 19:
"93. The law regarding bad faith was recently reviewed by Professor Ruth Anand sitting as the Appointed Person in AJIT WEEKLY Trade Mark  RPC 25. She held as follows:
 … Bad faith is to be judged according to the combined test of dishonesty for accessory liability to breach of trust set out by the majority of the House of Lords in Twinsectra Ltd v Yardley  2 AC 164, with Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd  RPC 367 providing the appropriate standard, namely acceptable commercial behaviour observed by reasonable and experienced persons in the particular commercial area being examined.
 … the upshot of the Privy Council decision in Barlow Clowes is: (a) to confirm the House of Lords' test for dishonesty applied in Twinsectra , i.e. the combined test [footnote omitted]; and (b) to resolve any ambiguity in the majority of their Lordships' statement of that test by making it clear that an enquiry into a defendant's views as regards normal standard of honesty is not part of the test. The subjective element of the test means that the tribunal must ascertain what the defendant knew about the transaction or other matters in question. It must then be decided whether in the light of that knowledge, the defendant's conduct is dishonest judged by ordinary standard of honest people, the defendant's own standards of honesty being irrelevant to the objective element ….
 In view of the above and in particular the further clarification of the combined test given by the Privy Council in Barlow Clowes, I reject Mr Malynicz's contention that the Hearing Officer erred in failing to consider the registered proprietor's opinions on whether its conduct in applying for the mark fell below ordinary standard of acceptable commercial behaviour.
94. There was no dispute before me as to the correctness of Professor Anand's analysis. I would add three comments. First, this analysis deals with some of the problems with the reasoning of the Court of Appeal in Harrison v Teton Valley Trading Co Ltd  EWCA Civ,  1 WLR 2577 which I identified in Robert McBride Ltd's Application  ETMR 85 at –. Secondly, I do not consider that the correctness of this analysis is called into question by the recent decision of the Court of Appeal in Abou-Rahmah v Abacha  EWCA Civ 1492. Thirdly, I consider that there is little difference between Professor Anand's exposition of the law and that given by First Cancellation Division of OHIM in DAAWAT Trade Mark (Case C000659037/1, June 28, 2004) at  and GERSON Trade Mark (Case C00066563/1, July 29, 2004) at :
 Neither the CTMR nor the IR provide any guidance on what acts constitute bad faith. The term bad faith is not defined in Community trade mark law. OHIM has published some guidance on its interpretation of bad faith in view of the EU enlargement and has stated among others than bad faith can be considered to mean 'dishonesty which would fall short of the standards of acceptable behaviour'. This definition for bad faith was used in the United Kingdom (Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd  RPC 367) (see OHIM Bad Faith Case Study 31/01/2003 …). In its case law the Cancellation Division has held that bad faith is the opposite of good faith, generally implying or involving, but not limited to, actual or constructive fraud, or a design to mislead or deceive another, or any other sinister motive. Conceptually bad faith can be understood as a 'dishonest intention'. This means that bad faith may be interpreted as unfair practices involving lack of any honest intention on the part of the applicant of the CTM at the time of filing. Bad faith can be understood either as unfair practices involving lack of good faith on the part of the applicant towards the office at the time of filing, or unfair practices based on acts infringing a third person's rights. There is bad faith not only in cases where the applicant intentionally submits wrong or misleading by insufficient information to the office, but also in circumstances where he intends, through registration, to lay his hands on the trade mark of a third party with whom he had contractual or pre-contractual relations (see the Cancellation Division's decision in BE NATURAL of 25/10/2000, C000479899/1, at Nos. 10–11).
95. The relevant date for assessing whether an application to register a trade mark was made in bad faith is the application date: HOTPICKS Trade Mark  EWHC 689 (Ch),  RPC 2."
- I would add that, although the relevant date is the application date, later evidence is relevant if it casts light backwards on the position as at the application date: cf. Case C-259/02 La Mer Technology Inc v Laboratoires Goemar SA  ECR I-1159 and Case C-192/03 Alcon Inc v OHIM  ECR I-8993.
- Counsel for the Defendants submitted that the concept of bad faith applied by the tribunals at OHIM had developed significantly in recent years from what was originally a narrow view. In the Defendants' skeleton argument, he accepted that there now appeared to be no difference between the principles applied at OHIM and those applied in England and Wales. In his closing submissions, however, he suggested that the case law at OHIM had developed a broader concept of bad faith than had been recognised in English law. In support of this submission, he relied on four recent Board of Appeal decisions and a recent Cancellation Division decision which had been quoted in the Defendants' skeleton argument. I shall take these in chronological order.
- In Slater v Prime Restaurant Holdings Inc (Case R0582/2003-4, 13 December 2004) the Fourth Board of Appeal held:
"22. Article 51(1)(b) CTMR does not protect owners of (trade mark) rights against trade mark applications which were filed independently of such (earlier) rights and it does not (predominantly) seek protection of owners of (trade mark) rights within the Community who may invoke relative grounds of refusal. Aticle 51(1)(b) is a trade mark law inbuilt unfair competition rule, according to which applications merely qualify as having been filed in bad faith, where i.a. there is reason to believe that the application is somehow the result of or influenced by earlier trade related contacts of a certain level between the parties, allowing for a conclusion of an unfair trade practice on the part of the CTM applicant. The bad faith clause has, as all unfair competition rules, a wide scope of application in as much as it covers a wide variety of different trade practices and in as much as the concept develops in time with the changeable perception of the relevant trade of what is to be considered an 'unfair practice'.
23. Whether or not an earlier relationship between the holder of a right and the CTM applicant qualifies as sufficient a relationship to suggest that filing of a CTM application constitutes unfair practice has to be decided therefore on a case by case basis. ..."
- In Traxdata France Sàrl v Ritrax Corp Ltd (Joined Cases R1337/2005-1, R1338/2005-1, R1339/2005-1 and R1340/2005-1, 23 May 2007) the First Board of Appeal held at :
"Bad faith may broadly be explained as the state of somebody who consciously does something wrong or mistaken – for example, contrary to accepted principles of ethic behaviour or honest business practices – thereby achieving an unjust advantage or causing others an unjust damage. The applicant for cancellation maintains that 'dishonest' intentions – such as deceiving another party – unfair practices, somebody's intention to lay its hands on a trade mark belonging to another party with whom it had contractual or pre-contractual relations, are also indicative of bad faith. In the Board's opinion, all this boils down to the shorter definition given at the beginning, i.e. doing something wrong, knowingly, thereby causing an unjust damage to another party. In any event there is a presumption that the party acts in good faith."
- In Johnson Pump AB v Johnson Pump (UK) Ltd (Case R255/2006-1, 31 May 2007) the First Board of Appeal held at :
"Bad faith may be defined as referring to the state of someone, who knowingly by doing something contrary to accepted principles of ethical behaviour or honest commercial and business practices, gains an unjust advantage or causes unjust damage to others."
- In Dannier Chemical Inc v A. Schulman Inc (Decision 1813C, 23 July 2007) the Cancellation Division held:
"9. Neither the CTMR nor the IR provide any guidance on what acts constitute bad faith. The term bad faith is not defined in Community trade mark law. OHIM has published some guidance on its interpretation of bad faith. In its case law the Cancellation Division held that bad faith is the opposite of good faith, generally implying or involving, but not limited to, actual or constructive fraud, or a design to mislead or deceive another, or any other sinister motive. Conceptually, bad faith can be understood as a 'dishonest intention'. This means that bad faith may be interpreted as unfair practices involving lack of any honest intention on the part of the applicant of the CTM at the time of filing. Bad faith can be understood either as unfair practices involving lack of good faith on the part of the applicant towards the Office at the time of filing, or unfair practices based on acts infringing a third person's rights. There is bad faith not only in cases where the applicant intentionally submits wrong or misleadingly insufficient information to the Office, but also in circumstances where he intends, through registration, to lay his hands on the trade mark of a third party with whom he had contractual or pre-contractual relations (see the Cancellation Division's decision in BE NATURAL of 25/10/2000, C000479899/1, at Nos. 10–11)
10. In the current case, there have been no contractual or pre-contractual relations between the parties. The preexistence of contractual or precontractual relations is typical in some identified bad faith categories for example, a case where the distributor or a person willing to distribute the products of another applies for a sign used by the manufacturer to identify its goods without its authorization. However, bad faith applications may exist, where no contractual or pre-contractual relations between the parties have existed, if from the circumstances it can be inferred that the application is contrary to good faith, i.e. falls short of the acceptable standards of commercial behavior.
11. Taking into consideration the concept of bad faith as explained above, unless the applicant of the Community trade mark can justify its action, the Office must conclude bad faith, in circumstances, where the applicant applies for a Community trade mark while knowing, as a result of contacts with a third party, that the said party is using, in good faith and in a regular manner, an identical trade mark for identical goods and services. In such circumstances, if in addition the trade mark or its distinctive element is already registered outside the European Community and evidence existed that the third party was planning to sell in the Community under said trade mark, it has to be considered that the application was applied for with the intention of pre-empting the owner of the mark from using it in the European Community. Anyone who misappropriates the trade mark of a third party in such a manner, acts in bad within the meaning of Article 51(1)(b) CTMR."
- In von Rossum v Heinrich Mack Nachf. GmbH & Co KG (Case R336/207-2, 13 November 2007) the Second Board of Appeal held:
"17. One of the general principles of trade mark law is that protection of trade marks is territorial, which means that it depends on the law of the country that grants the protection as it is recognized by Article 6(1) of the Paris Convention for the Protection of Industrial Property, according to which 'the conditions for the filing and registration of trademarks shall be determined in each country of the Union by its domestic law'.
18. The condition for such protection in the Community is registration of the trade mark. Articles 5 and 6 CTMR establish the general rule of absolute accessibility permitting that any person may acquire a Community trade mark registration. Property in a Community trade mark is therefore acquired not by prior adoption and use but just by prior registration as happens in most of the world. The Community registration system follows the traditional principle of 'fist-to-file' incorporated by Article 8(2) CTMR to resolve the potential conflicts between different owners of the same or similar trade marks protected in the Community or in any of its Member States.
19. The general rule of absolute accessibility of the Community registration system is completed with rules, one general and another specific, necessary to close the door of the registration to misuse of the system and to fraudulent misappropriations. The general rule is the provision of Article 51(1)(b) CTMR. The specific rules are the provisions of Articles 8(3), 11, 18 and 52(1)(b) CTMR, that incorporate the provision of Article 6 septies of the Paris Convention to prevent a specific but typical – so typical that its regulation by the Paris Convention was necessary – case of misappropriation that occurs when the trade mark is filed fraudulently by a disloyal agent or representative of the proprietor without his consent. In conclusion, the first applicant, provided he has acted in good faith and there are no relative grounds for refusal, becomes the owner of a Community trade mark.
20. Article 51(1)(b) CTMR contains the general clause providing for the invalidity of a Community trade mark filed in bad faith. It seems clear that the mark filed by a disloyal agent without the proprietor's consent is an example of misappropriation and the mark filed in bad faith but the agent's mark case is qualified by Article 52(1)(b) CTMR as a relative ground for invalidity unlike Article 51(1)(b) CTMR which qualifies the bad faith filing as an absolute ground for invalidity. The difference between absolute and relative grounds for invalidity are important since pursuant Article 55(1) CTMR the invalidity request based on absolute grounds may be submitted by any natural or legal person while that based on the relative ground of the agent's mark may only be filed by the proprietor. This important difference of qualification might be justified for the reason that the general clause of Article 51(1)(b) CTMR covers not only cases of misappropriations, where the qualifications as an absolute ground is not justified, resulting in opening the locus standi to unconcerned persons when only the private interest of the damaged person is concerned, but also cases of misuse of the registration system with the wrong purpose not protected by the Community trade mark law, where the open locus standi or public action is justified by the protection of public interest.
21. As the present case might only be qualified as a case of misappropriation but not at all as a case of misuse, the Board will concentrate below on the concept of bad faith filing as far as the misappropriation is concerned, without taking into account misuse.
22. It is a general principle of law that good faith is presumed until the contrary is proved. Thus the burden of proof of mala fides is thrust upon the cancellation applicant (see Decision of the First Board of Appeal of 31 May 2007 in Case R-255/2006-1 JOHNSON PUMP (FIG. MARK) at paragraph 29; and Decisions of the Second Board of Appeal of 21 August 2007 in Case R 1264/2006-2 – KRÉMOVÝ; and of 31 August 2007 Case R 1265/2006-2 – SMETANOVÝ, paragraph 31).
23. Bad faith is not defined in Community trade mark law as stated by the contested decision. According to the undisputed statement of the contested decision, it can be considered as meaning 'dishonesty which would fall short of the standards of acceptable commercial behaviour'. This notion of bad faith is not substantially different from that of 'honest practices in industrial or commercial matters' used by Article 12 CTMR, which limits the trade mark right allowing a third party the use of the mark in specific cases provided he uses it in accordance with honest practices in industrial or commercial matters. The condition requiring use of the trade mark to be made in accordance with honest practices in industrial or commercial matters must be regarded as constituting in substance the expression of a duty to act fairly in relation to the legitimate interests of the trade mark owner, as the Court of Justice stated in its judgment of 7 January 2004 in Case C-100/02 Gerolsteiner Brunnen GmbH & Co. v Putsch GmbH ('Gerri')  ECR I-691, at paragraph 24).
24. Consequently, as the contested decision stated, there is bad faith when the CTM applicant intends through registration to lay its hands on the trade mark of a third party with whom it had contractual or pre-contractual relations, or, the Board adds, any kind of relation where good faith applies and imposes on the applicant the duty of fair play in relation to the legitimate interests and expectations of the other party. In such a hypothesis, the CTM applicant would have acted in bad faith in filing a CTM application, the filing would have been done so fraudulently and would have constituted a misappropriation of the (sic) another's trade mark, which according to the ancient rule fraus omnia corrumpit would completely justify the invalidity sanction of the registration laid down by Article 51(1)(b) CTMR."
- I do not accept that any of these decisions demonstrates that the tribunals at OHIM are applying different principles to those applied in the United Kingdom as set out in BRUTT. In my judgment counsel for the Defendants was correct to say in the Defendants' skeleton argument that there is now no difference between the principles applied in the two jurisdictions. In reality, as counsel for the Defendants accepted in his oral closing submissions, the Defendants' case of bad faith involves making new law.
- The Defendants' case depends on a simple and stark proposition, namely that (to quote the Defendants' written closing submissions) "any party who seeks to take exclusively for himself a trade name which he knows he shares with others is acting in bad faith". Accordingly, the Defendants contend that HC acted in bad faith when it applied to register the word CIPRIANI as a Community trade mark on 1 April 1996 because HC knew that other parties were using trade marks in relation to hotel and restaurant services in Europe which included the word CIPRIANI, namely (i) Starwood which was using HOTEL VILLA CIPRIANI, (ii) SFIP which was using LOCANDA CIPRIANI and (iii) the Cipriani Group which, so the Defendants argue, was using CIPRIANI in conjunction with the Logo and/or other signs. Thus the Defendants argue that the word CIPRIANI did not exclusively identify hotel and restaurant services provided by HC, rather HOTEL CIPRIANI did.
- I do not accept the Defendants' proposition. Nor do I consider that HC acted in bad faith when it applied to register the CTM. My reasons are as follows.
- The starting point is that, as stated in many of the OHIM decisions and as counsel for the Defendants accepted, a person is presumed to have acted in good faith unless the contrary is proved. An allegation of bad faith is a serious allegation which must be distinctly proved. The standard of proof is on the balance of probabilities but cogent evidence is required due to the seriousness of the allegation. It is not enough to prove facts which are also consistent with good faith: see BRUTT at .
- Next, it is important to bear in mind that, as the OHIM Second Board of Appeal pointed out in the von Rossum case, the Community trade mark system operates on a first-to-file principle. That is to say, subject to two limitations discussed below, the first person (taking account of any applicable priority claims) to file an application to register a trade mark which is free from objection on absolute grounds under Article 7 of the Regulation is entitled to register it in preference to a later applicant. This point is emphasised by the decision of the ECJ in Case C-404/02 Nichols plc v Registrar of Trade Marks  ECR I-8499. In that case the applicant applied to register the name NICHOLS as a UK trade mark for vending machines and for food and drink products of the kind dispensed from vending machines. The Registrar refused the application so far as it related to food and drink products on the ground that NICHOLS was a common surname in the United Kingdom. The applicant appealed and Jacob J referred questions to the ECJ for a preliminary ruling. The Court ruled that the assessment of the distinctive character of a trade mark constituted by a surname, even a common one, must be carried out in accordance with the criteria applicable to any sign. In its judgment the Court held:
"31. The registration of a trade mark constituted by a surname cannot be refused in order to ensure that no advantage is afforded to the first applicant since Directive 89/104 contains no provision to that effect, regardless, moreover, of the category to which the trade mark whose registration is sought belongs.
32. In any event, the fact that Article 6(1)(a) of Directive 89/104 enables third parties to use their name in the course of trade has no impact on the assessment of the distinctiveness of the trade mark, which is carried out under Article 3(1)(b) of the same directive.
33. Article 6(1)(a) of Directive 89/104 limits in a general way, for the benefit of operators who have a name identical or similar to the registered mark, the right granted by the mark after its registration, that is to say after the existence of the mark's distinctive character has been established. It cannot therefore be taken into account for the purposes of the specific assessment of the distinctive character of the trade mark before the trade mark is registered."
- In this context it is also worth noting that the ECJ has held that a trade mark consisting of a personal name which has been assigned to a company will not be barred from registration by the company on absolute grounds even if the person of that name is no longer associated with the company and even if there is a risk that the consumer will believe that that person is involved in the production of goods bearing the mark sold by the company: Case C-259/04 Emanuel v Continental Shelf 128 Ltd  ECR I-3089.
- The first and most important limitation on the first-to-file principle is the entitlement of third parties to oppose the application, or to apply to the Office for a declaration of invalidity or to counterclaim for a declaration of invalidity in infringement proceedings, on relative grounds under Articles 8 and 52 of the Regulation. This mechanism protects third parties who have rights of their own which pre-date the filing date of the application. Such rights include, but are not limited to, earlier Community trade marks and national trade marks. In addition, Article 8(4) provides that the proprietor of "a non-registered trade mark or of another sign used in the course of trade of more than mere local significance" may oppose the application (or obtain a declaration of invalidity by virtue of Article 52(1)(c)):
"where and to the extent that, pursuant to the Community legislation of the Member State governing that sign:
(a) rights to that sign were acquired prior to the date of application for registration of the Community trade mark, or the date of the priority claimed for the application for registration of the Community trade mark;
(b) that sign confers on its proprietor the right to prohibit the use of a subsequent trade mark."
Furthermore, Article 52(2) provides that a Community trade mark may be declared invalid where its use may be prohibited by another earlier right protected by Community or national law, including "a right to a name".
- Three points should be noted about the system of relative grounds of objection. First, as the Second Board of Appeal pointed out in von Rossum, it is only the proprietor of the earlier right which can oppose or obtain a declaration of invalidity, whereas anyone can object to an application on absolute grounds or on the ground that the application was made in bad faith. As the Board noted, in the special case of bad faith represented by an agent or representative of the proprietor of the trade mark applying to register it in his own name without justification, the objection is reserved to the proprietor: see Article 8(3). Thus the legislation proceeds upon the basis that it is for the owners of earlier rights to protect their private interests, whereas Articles 7 and 51(1)(b) serve a wider public interest which justifies the absence of a requirement for locus standi. As the Fourth Board of Appeal noted in the Slater case, Article 51(1)(b) is not directed to the protection of persons who may rely upon relative grounds of refusal.
- Secondly, as counsel for the Claimants pointed out, the requirement that earlier rights be asserted by their proprietors pursuant to Articles 8 and 52 means that the validity and impact of such rights can be properly considered. While, say, an earlier national trade mark must be presumed to be valid and its validity cannot be challenged in proceedings before OHIM, or the courts of another Member State, if the applicant for, or proprietor of, the Community trade mark considers that the national trade mark asserted is invalid it will have the opportunity to challenge that registration.
- Thirdly, Article 8(4) only protects proprietors of signs "of more than mere local significance". By virtue of Article 106 of the Regulation such persons may also bring proceedings for infringement of their rights by use of a Community trade mark. Proprietors of rights which only apply to a particular locality cannot invoke Article 8(4), but are protected by Article 107. The scheme of Article 107 is that the proprietor of such a right can oppose the use of a Community trade mark in that territory so far as local law permits, but he loses that right if he acquiesces in the use of the Community trade mark for five years. Even then, the proprietor of the Community trade mark is not entitled to oppose the use of the sign protected by the local right. As Laddie J pointed out in Compass at , however, this protection does not apply if the proprietor of the earlier right moves into a new Member State in which he does not qualify as owner of an earlier right. (I should say that I do not necessarily agree with everything that Laddie J said about Articles 8(4) and 107 in that case, as he does not appear to have been referred to OHIM Opposition Division Decision 2149/2000 McCann-Erickson Advertising Ltd's Application  ETMR 52, but this does not matter for present purposes.)
- Articles 106 and 107 give rise to what has been described as the "Emmental cheese" characteristic of the Community trade mark system, namely the ability for earlier national rights to co-exist with a later Community trade mark, thus creating holes in its unitary character: see Annand and Norman, Blackstone's Guide to the Community Trade Mark (Blackstone Press, 1998), pp. 128-130, 189-190. As counsel for the Claimants submitted, it follows that the Regulation explicitly contemplates that Community trade marks may be applied for and registered notwithstanding the existence of earlier national rights.
- The second limitation on the first-to-file system is Article 51(1)(b). In my judgment, this is a narrow exception which is intended to prevent abuse of the Community trade mark system: see the decision of Geoffrey Hobbs QC sitting as the Appointed Person in Melly's Trade Mark Application  RPC 20 at . As the case law makes clear, there are two main classes of abuse. The first concerns abuse vis-à-vis OHIM, for example where the applicant knowingly supplies untrue or misleading information in support of his application. The second concerns abuse vis-à-vis third parties.
- It is clear that an application can be made in bad faith vis-à-vis a third party in circumstances where the third party cannot maintain a relative ground of objection to the registration of the Community trade mark under Articles 8 and 52. Generally speaking, bad faith in such a case will involve some breach of a legal or moral obligation on part of the applicant towards the third party. The classic instance of this is where the applicant has been in discussions with a foreign manufacturer about distributing the latter's goods in the Community, and then applies to register the trade mark under which the goods are marketed in the country of origin and under which the manufacturer proposes to market them in the Community. It is not necessary, however, for there to have been contractual or pre-contractual relations between the parties in order for an application to be made in bad faith. Thus bad faith may exist where the applicant has sought or obtained registration of a trade mark for use as an instrument of extortion, as in the Melly case. Nevertheless, I consider that Article 51(1)(b) has no application to situations involving a bona fide conflict between the trade mark rights, or perceived rights, of different traders.
- As counsel for the Claimants pointed out, it is also important to bear in mind that a Community trade mark is not an absolute and unqualified monopoly. On the contrary, the Regulation provides for a series of limitations upon the right. Even in the case of use of an identical sign in relation to identical goods or services, where according to the seventh recital to the Regulation the protection afforded to the trade mark is "absolute", there are a number of limitations upon the right. Without attempting to be exhaustive, these include the following. First, use of such a sign only falls within Article 5(1)(a), and hence constitutes even a prima facie infringement of the trade mark, if it affects or liable to affect the functions of a trade mark: see the line of ECJ cases that begins with Case C-2/00 Hölterhoff v Freiesleben  ECR I-4187. Secondly, even where the use is within Article 5(1)(a), the user of it may have a defence of consent. Thirdly, the user may have a defence under Article 12(a), (b) or (c). Fourthly, the proprietor's rights may be exhausted under Article 13. Fifthly, the user may have a defence of acquiescence under Article 53. Sixthly, the user may be protected by Article 107(3). In the case of uses falling outside the case of an identical sign in relation to identical goods or services, the proprietor must prove the existence of the conditions specified by Article 9(1)(b) or (c) to establish even a prima facie case of infringement, and then many of the same limitations may apply.
- Counsel for the Defendants argued that the existence of such limitations is irrelevant to the assessment of whether an application was made in bad faith. I disagree. In my judgment, the existence of such limitations is relevant, since they define the scope of the legal right that the applicant seeks to obtain by his application. Moreover, counsel for the Defendants' argument was undermined by his acceptance that it is not bad faith to apply to register a trade mark which is confusingly similar to marks which the applicant knows are being used by third parties in relation to identical goods or services. Indeed, as noted above, in the present case HC is the proprietor of a Community trade mark registration for HOTEL CIPRIANI the validity of which is not attacked by the Defendants. Counsel for the Defendants did not suggest that this application had been made in bad faith by HC, but did not dispute that Hotel Villa Cipriani was a confusingly similar sign which in April 1996 HC knew was being used by Starwood for identical services.
- In my judgment it follows from the foregoing considerations that it does not constitute bad faith for a party to apply to register a Community trade mark merely because he knows that third parties are using the same mark in relation to identical goods or services, let alone where the third parties are using similar marks and/or are using them in relation to similar goods or services. The applicant may believe that he has a superior right to registration and use of the mark. For example, it is not uncommon for prospective claimants who intend to sue a prospective defendant for passing off first to file an application for registration to strengthen their position. Even if the applicant does not believe that he has a superior right to registration and use of the mark, he may still believe that he is entitled to registration. The applicant may not intend to seek to enforce the trade mark against the third parties and/or may know or believe that the third parties would have a defence to a claim for infringement on one of the bases discussed above. In particular, the applicant may wish to secure exclusivity in the bulk of the Community while knowing that third parties have local rights in certain areas. An applicant who proceeds on the basis explicitly provided for in Article 107 can hardly be said to be abusing the Community trade mark system.
- Nor in my judgment does it amount to bad faith if what the applicant seeks to register is not the actual trade mark he himself uses but merely the distinctive part of his trade mark, the other part of which is descriptive or otherwise non-distinctive, and third parties are also using the distinctive part with different non-distinctive elements. It is commonplace for applicants to apply to register the distinctive elements of their trade marks, and with good reason. Moreover, in such a case the applicant would be unlikely to have an Article 9(1)(a) claim against the third parties, yet as noted above counsel for the Defendants accepted that the ability to make an Article 9(1)(b) claim was not enough to constitute bad faith.
- As I have said, counsel for the Defendants accepted that the Defendants were seeking to extend the law. The nearest authority he was able to cite in support of his argument was the decision of Mann J in Sir Robert McAlpine v Alfred Alpine plc  EWHC 630 (Ch),  RPC 36. In that case the claimant and the defendant construction companies, which had a common origin, had co-existed for nearly 70 years. For nearly 40 years they had traded in different regions, but thereafter had overlapped. There was also a substantial overlap in their spheres of activity. The companies distinguished themselves from each other by means of the forenames Robert (or Sir Robert) and Alfred. In 2003, however, the defendant re-branded itself as simply "McAlpine". The claimant succeeded in a claim for passing off. Mann J's reasoning can be seen from the following passages in his judgment:
"31. Against this evidential background, and assisted by the material produced during the course of the rebranding exercise, it seems to me to be clear, and I so find, that the use of the word 'McAlpines' or 'McAlpine', in the construction industry field, is capable of referring to Robert. This is so notwithstanding that it is also capable of referring to Alfred. It seems to me to be of the essence of goodwill that is jointly owned (a fact that is conceded in this case) that that should be the case.…
36. Accordingly [as a result of the re-branding] there is, and will be, a situation in which 'McAlpine' features almost exclusively in the trading persona of Alfred. Does this amount to a misrepresentation for the purposes of the law of passing off? In relation to relevant activities, it seems to me that it does. I have already found that the word is capable of referring to Robert, so using the word will inevitably amount to a misrepresentation because the business being referred to is not in fact that of Robert. I accept Mr Wyand's submission that the use of the word, in a market which understands the word to refer to Robert even if it is capable of referring to Alfred, is a statement that the user is the entity known as McAlpine, and as such is a misrepresentation. Since the use of that word lies at the heart of the present corporate presentation and image, the misrepresentation is made out….
39. I accept that most professionals in the market know that there are two McAlpine companies, and that those who are actually dealing with either of them will by and large know with whom they are dealing once they start to deal in earnest. I also accept that in some contexts, and to many people, it will be appreciated that 'McAlpine' or 'McAlpines' will be correctly understood to mean Alfred. However, none of that detracts from the fact that Alfred is seeking to use a word which is frequently associated with (and taken to denote) Robert and use it to connote itself (Alfred). I accept, as submitted by Mr Thorley (and indeed accepted by Mr Wyand) that mere confusion is not enough, but on the facts of this case there is more than confusion. There is a misrepresentation. The fact that some are not misled does not prevent there being a misrepresentation and a person who corrects himself or is corrected by others has still been misrepresented to….
49. Just as the sole owner's rights should not be reduced, blurred or diminished, nor should a joint owner's, whether at the hands of the other joint owner or a third party. Neither owner has higher rights in the name and reputation than the other. But it seems to me to follow from that that neither is entitled to start to elbow the other aside by using it to describe its own business in a way which suggests the exclusion of the other. This is not to invent the tort of misappropriation of goodwill, which I have disclaimed above. It is to recognise that the shared rights to goodwill can be damaged by the co-owner arrogating to himself the use of the name in circumstances where that amounts to a misrepresentation and a partial ouster of the claimant. Because the rights are shared, Robert has had to live with the risks flowing from the use of the name by another, but that risk was limited by the general use of 'Alfred' as a prefix. Once the prefix goes, there is scope for a greater amount of elbowing (or blurring, or diminishing, or erosion (per Peter Gibson L.J., in the passage from Tattinger, cited above)), to which Robert has not consented.
50. Is this sort of loss made out here? It seems to me that it certainly is. Before the rebranding, the co-owners of the goodwill co-existed and exploited the name, and benefited from it, in whatever manner they could. But at all times their activities in that respect were as a matter of fact constrained by the fact that an identifier was added to make it clear which party was speaking or being referred to. That identifier was available not only to the parties, but was also available to third parties such as the press and the construction industry generally. The exploitation was carried out without misrepresentation, and without either party taking steps to suggest that it was the sole owner of the name. That has now changed. Alfred has taken steps which suggest that it is the sole owner of the name, and to do that is to affect the value of the name to Robert because it starts to elbow it out—it deprives Robert of some of the value of the name to itself, and it blurs or diminishes Robert's rights. So to hold is not to let the metaphor govern the principle; it is to acknowledge the principle and to acknowledge the usefulness of the metaphor in expounding it. It is no answer to say that Robert could also call itself McAlpine (as was suggested in the trial). The fact is that Alfred has sought to do so, and it cannot escape the consequences by saying that Robert could do that as well if it wanted."
- Counsel for the Defendants submitted that passing off was a form of unfair competition, which I entirely accept. He further submitted that it followed that the defendant in that case would have been acting in bad faith if it had applied to register McALPINE as a trade mark for construction services. I consider that this is a non sequitur for the reasons I have given above. Indeed, I would go further. McAlpine was a case of shared goodwill. It is a well-established principle of the law of passing off that owners of a shared or concurrent goodwill can sue third parties even if they cannot sue each other: see Dent v Turpin (1861) 2 J & H 139, Southorn v Reynolds (1865) 12 L.T. 75, Parker & Son (Reading) Ltd v Parker  RPC 323, Sutherland v V2 Music Ltd  EWHC 14 (Ch),  EMLR 28 and Byford v Oliver  EWHC 295 (Ch),  EMLR 20. Thus if a party unconnected with either the claimant or the defendant in the McAlpine case were to start trading in the construction field under the name McAlpine, or a name which included that name, both the claimant and the defendant would be likely to have a remedy in passing off. By parity of reasoning, both the claimant and the defendant would have a legitimate interest in applying to register McALPINE as a trade mark in respect of construction services, in order to stop third parties using it. What the decision in McAlpine shows is that either party would be able to oppose such an application by the other on relative grounds. If they consented to each other's applications, however, both parties could register the mark. In such circumstances, both parties would have a defence to claims by the other of infringement through use of their full name. If the Defendants' argument were correct, however, neither party would be able to achieve registration, and thus both parties would be denied protection through registration against third parties with no right to use the mark. If the Defendants were to argue that consent made all the difference in this scenario, that would undermine their argument that the existence of potential defences to claims to enforce a registration is immaterial.
- Counsel for the Defendants also relied upon the fact that the Regulation makes no express provision for registration upon the basis of honest concurrent use, and argued that this demonstrated the need for a broad interpretation of Article 51(1)(b). I disagree. In my view the absence of an honest concurrent use provision is a legislative decision which has nothing to do with the scope of Article 51(1)(b). Furthermore, even though the Regulation contains no such provision, the effect of the provisions it does contain may be to permit registration in some circumstances corresponding to honest concurrent use. As discussed above, it certainly permits the co-existence of Community trade marks with third party national rights in certain circumstances.
- Turning to the facts of the present case, I can see no basis for saying that HC's application to register the CTM was made in bad faith. HC had been using the mark CIPRIANI in relation to hotel and restaurant services in Venice for many years, and it had acquired a substantial and valuable reputation not only in Italy but also elsewhere in the Community. Accordingly, HC had an obvious and legitimate interest in applying to register the mark. Any competent trade mark attorney would have advised it to do so. Indeed, I have considerable sympathy with the submission made by counsel for the Claimants that HC's board could have been accused of negligence had it not done so. As counsel for the Claimants pointed out, no case of bad faith has ever been established where the application was made by someone who actually using the mark and had a legitimate interest of his own in protecting it.
- Edwin Hetherington, who in 1996 was Vice President, General Counsel and Secretary of Sea Containers Ltd and Counsel and Secretary of Orient-Express Hotels Ltd, which indirectly wholly owned HC, gave evidence that he instructed OEHG's trade mark attorneys to file the application for the CTM on 14 March 1996 at the same time that he gave them instructions to apply to register a number of OEHG's other trade marks, with a view to meeting the starting date for the filing of Community trade marks. Mr Hetherington said in his witness statement that HC "believed that it had and still has exclusive right[s] in at least Europe to the CIPRIANI in respect of, inter alia, restaurant and hotel services". Not surprisingly, Mr Hetherington was cross-examined on this statement. I do not accept that HC can have believed what Mr Hetherington appeared to say that it believed, since, as Mr Hetherington readily accepted, it was well aware of the existence of both Hotel Villa Cipriani and Locanda Cipriani. Indeed, he said that HC had been advised by its trade mark attorneys that they "could be regarded exceptions to this registration", although HC declined to waive privilege in respect of any such advice. This does not mean, nor do I find, that HC did not believe that it was not entitled to apply CIPRIANI as a Community trade mark for hotel and restaurant services. Indeed, it was not put to Mr Hetherington in cross-examination that HC did not have such a belief. Nor was it actually put to Mr Hetherington in terms that HC had acted in bad faith in making the application for the CTM.
- As noted above, a key plank in the Defendants' case on bad faith is the potential impact of the CTM on Starwood's use of the sign Hotel Villa Cipriani and SFIP's use of the sign Locanda Cipriani. For the reasons I have already given, however, I do not consider that this assists the Defendants. If Starwood or SFIP wish to object to the CTM on relative grounds, it is for them to do so. There is no evidence that they have done so. The Defendants cannot raise a relative grounds objection in reliance upon any rights that Starwood or SFIP may have, nor have the Defendants tried to do so. In the absence of a relative grounds objection by either Starwood or SFIP, or indeed any evidence that either Starwood or SFIP is concerned by the existence of the CTM, I do not consider that the Defendants have any standing to complain on their behalf under the colour of Article 51(1)(b). There is no evidence that HC has ever attempted or threatened to enforce the CTM against either Starwood or SFIP, still less that it intended to do so in April 1996. I am prepared to assume for present purposes that Starwood's use of the sign Hotel Villa Cipriani and SFIP's use of the sign Locandi Cipriani constitute prima facie infringements of the CTM pursuant to Article 9(1)(b), but even on that assumption it does not follow that they are actually infringing the CTM. As counsel for the Claimants submitted, they would be likely to have a defence either of consent or of acquiescence or under Article 107(3). If, contrary to my confident expectation, they did not have a defence on one basis or another, that would be a consequence of the Regulation and Italian law as they apply to the relevant facts. That might indicate a deficiency in the Regulation, but it would not demonstrate bad faith on the part of HC in applying for the CTM in April 1996. I would add that, as counsel for the Claimants submitted, it would have been perfectly legitimate for HC to apply for the CTM with a view to ensuring that Starwood and SFIP could not extend their use of these signs into other Member States - not that there is any evidence that that was HC's intention in April 1996.
- As for the Cipriani Group's use of the sign Cipriani as at April 1996, this assists the Defendants even less. At that date the Cipriani Group was not using Cipriani as part of the name of any of its restaurants in Europe, unlike in the USA. As described above, it was using Cipriani branding on bills and the like. It was also using Cipriani as part of the corporate name of ACS. As I have already noted, the Defendants have not relied upon such use as giving rise to a relative rights objection to the validity of the CTM. Nor have the Defendants relied upon the Cipriani Group's 1975 Italian registration as founding such an objection, I infer because that they appreciate that to do so would simply provoke an application by HC to invalidate that registration relying upon HC's 1969 Italian registration. (Indeed, as counsel for the Claimants pointed out, Cipriani International Group SA did not rely upon this registration to oppose or invalidate any of the registrations relied upon by HC in the OHIM opposition proceedings, which included the CTM. A further reason for that may have been a concern over proving use of this registration during the five years prior to April 1996 as required by Article 43(3) of the Regulation.)
- Nor have the Defendants relied upon a breach of a legal or moral obligation on part of the HC towards the Cipriani Group arising out of contractual or pre-contractual relations or on some other recognisable basis. I am prepared to assume that the Cipriani Group's use of the sign Cipriani in its Venetian establishments is a prima facie infringement of the CTM, but as discussed it does not necessarily follow that there would be no defence to such a claim. There is no evidence that HC has ever attempted or threatened to enforce the CTM against such use, still less that it intended to do so in April 1996. Indeed, although it is clear that HC was aware of the use of the name Cipriani on the cover of the Caffetteria di Palazzo Grassi and HC had a copy of an invoice from Harry's Dolci dating from 1989, it is not clear that HC was aware of the other uses. Nor is there any evidence that as at April 1996 the Cipriani Group intended to open a restaurant in Europe under the name Cipriani, or a name including that name; still less that HC was aware of any such intention; still less that HC applied for the CTM with the intention to preventing such use.
- I accept that the Cipriani Group was using CIPRIANI as a trade mark for food products, and as part of the corporate name of Cipriani Industria Srl, but in my judgment this is still less relevant. Again there is no evidence that HC has ever attempted or threatened to enforce the CTM against such use, still less that it intended to do so in April 1996. While, as the OHIM Opposition Division held, there is a similarity between some food products and restaurant services which might well bring such use within Article 9(1)(b), ACS might equally well have a defence to any claim for infringement. In any event, in my judgment, the prospect of a conflict between a Community trade mark and use of the same mark in relation to different goods cannot possibly give rise to a finding of bad faith.
- Although the Defendants pleaded the 1967 Agreement as part of their case on bad faith, counsel for the Defendants did not in the end rely on it for that purpose. Counsel for the Claimants sought to rely upon it as an affirmative answer to the bad faith claim, arguing that it gave HC the exclusive right to register CIPRIANI as a trade mark in relation to hotel and restaurant services. For the reasons given above, I do not consider that the 1967 Agreement goes quite that far. Nevertheless, I consider that the 1967 Agreement is a relevant factor to be taken into account in assessing whether HC acted in bad faith in applying to register the CTM. In my judgment the 1967 Agreement lends support to the view that HC acted in good faith since it did confer a form of exclusivity on SOP which was clearly intended to benefit HC. Save to the very limited extent that it explicitly permits Giuseppe Senior and his successors to use the name Locanda Cipriani, it provides no support at all for the allegation that HC acted in bad faith.
- The Defendants also pleaded reliance upon the Settlement Agreement, but counsel for the Defendants did not in the end rely on it for that purpose. In my judgment he was right not to do so. It is common ground that it only relates to the US. Furthermore, it was made a year after the CTM was applied for. Arrigo suggested in his evidence that it was somehow underhand for HC to apply to register the CTM at a time when the parties were negotiating over a possible settlement, but I do not understand why that should be so.
- Finally, the Defendants also referred in the course of their evidence and submissions to various other acts of OEHG which the Defendants resent, and in particular the fact that an unidentified company within OEHG opened a bar called Harry's Bar in London in 1977. I am unable to see the relevance of this, particularly since the Defendants accept that there have been other Harry's Bars in other cities that are unconnected with either side in this litigation. As Mr Hobbs QC observed in DEMON ALE Trade Mark  RPC 345 at 356, an allegation of bad faith does not require applicants to submit to an open-ended ended investigation of their commercial morality. I would add, still less the commercial morality of associated companies.
Validity of the UKTM
- The Defendants attack the validity of the UKTM on two grounds. First, they allege that it was applied for in bad faith contrary to section 3(6) of the 1994 Act. In my judgment this attack fails for the same reasons as I have given in relation to the CTM. The later application date does not make any real difference to the position.
- Secondly, the Defendants contend that the UKTM is invalidly registered on relative grounds. The relative ground invoked is section 5(4)(a) of the 1994, which 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."
- In support of this ground of objection, the Defendants rely upon the goodwill generated by the Restaurant between April 2004 and October 2006. The Defendants contend that use of the UKTM in the course of trade in the United Kingdom would have constituted passing off as at the latter date.
- The Claimants' answer to this objection was that CGS could not rely upon its own trading under the names Cipriani London and Cipriani if its use of those names was itself unlawful as infringing the CTM and amounting to passing off. Counsel for the Defendants did not contest the correctness of the conclusion if the premise were established, and I therefore accept it. I would add that, as counsel for the Claimants submitted, the present case is distinguishable from the case of Inter Lotto (UK) Ltd v Camelot Group plc  EWCA Civ 1132,  RPC 9 on a number of grounds. Counsel for the Defendants did not argue to the contrary.
- Finally, I would point out that the Defendants' objection to the UKTM under section 5(4)(a) supports the Claimants' argument that the CTM has been infringed under Article 9(1)(b). As counsel for the Defendants stated in the Defendants' skeleton argument:
"The establishment by [HC] of another CIPRIANI restaurant in the UK would undoubtedly give rise to deception. The likelihood of deception would be increased if the second CIPRIANI was established in London. … The establishment by [HC] of a Hotel Cipriani, say in London, would also give rise to deception."
- The necessary elements for a claim in passing off were restated by the House of Lords in Reckitt & Colman Products Ltd v Borden Inc  RPC 341 as follows:
(1) the claimant's goods or services have acquired a goodwill in the market and are known by some distinguishing name, mark or other indicium;
(2) there is a misrepresentation by the defendant (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by the defendant are goods or services of the claimant; and
(3) the claimant has suffered or is likely to suffer damage as a result of the erroneous belief engendered by the defendant's misrepresentation.
- The relevant date as at which these matters fall to be assessed is the date when the defendant commenced the acts complained of, here April 2004.
- The Defendants accept that HC had a reputation in the United Kingdom as at April 2004, but dispute that it owned any goodwill because its business was located in Italy and not in the United Kingdom. The Claimants contend that HC did own goodwill in the United Kingdom because it had customers in the United Kingdom, and in particular customers who dealt with it directly from the United Kingdom rather than purely while visiting Venice.
- In Wadlow, The Law of Passing Off: Unfair Competition by Misrepresentation (3rd edition), the author states at paragraph 3-66:
"The problem of the foreign claimant whose goods or business may be known in a particular jurisdiction although he has no business there is one of the most intractable in the law of the passing off."
As he goes on to discuss, it is a problem upon which much judicial ink has been spilt in common law countries with somewhat divergent results. Fortunately, it is not necessary for me to attempt a complete analysis of this problem, even if that were possible. For the purposes of the present case, it is sufficient to state my understanding of the law in a number of propositions and mention some of the principal authorities which support them.
- First, the basis of a claim for passing off is the right of property in the goodwill likely to be injured by the defendant's misrepresentation: see Spalding & Bros v A.W. Gamage Ltd (1915) 32 RPC 273.
- Secondly, goodwill has no independent existence but is attached to a business: see Inland Revenue Commissioners v Muller & Co's Margarine Ltd  AC 217. (It is not necessary for present purposes to go into residual goodwill which may survive the suspension or cessation of a business for a period of time.)
- Thirdly, goodwill is local in character and divisible, so that if the business is carried on in several countries a separate goodwill attaches to it in each: see IRC v Muller and Star Industrial Co Ltd v Yap Kwee Kor  FSR 256.
- Fourthly, in order to found a passing off claim in the United Kingdom, the claimant must own goodwill in the United Kingdom. It is not enough to have a reputation here: see Anheuser-Busch Inc v Budejovicky Budvar NP  FSR 413.
- Fifthly, it is sufficient for goodwill to exist in the United Kingdom that the claimant has customers or ultimate consumers for his goods here, and for this purpose it is immaterial whether the claimant (a) has some branch here or (b) trades directly with customers here without having any physical presence in the jurisdiction (for example, by mail order) or (c) trades through intermediaries such as importers and distributors (provided that the circumstances are not such that the goodwill is owned by the intermediary): see e.g. SA des Anciens Etablissements Panhard et Levassor v Panhard Levassor Motor Co  2 Ch 513, Manus v Fullwood & Bland (1949) 66 RPC 71, Nishika Corp v Goodchild  FSR 371, and Jian Tools for Sales v Roderick Manhattan Group  FSR 924.
- Sixthly, in the case of claimants who provide services which are physically performed abroad, it is sufficient for goodwill to exist in the United Kingdom that the services are booked by customers from here: compare Sheraton Corp of America v Sheraton Motels Ltd  RPC 202 with Alain Bernardin et Cie v Pavilion Properties Ltd  RPC 581. Thus in the latter case Pennycuick J said at 587:
"In [the Sheraton] case the judge found on the facts that the plaintiff corporation effected [sic: the sense is accepted] bookings in this country for their hotels abroad. That operation might very well be held to support what the judge held prima facie on the motion, that it did support a conclusion that the plaintiff corporation had acquired a reputation and goodwill (which terms the judge treated as interchangeable) in this country.
The position in the present case is quite different because there is no suggestion (the plaintiff company has no office here nor is there any suggestion that they would effect [sic: the sense is accept] bookings) that one would make in London a booking of a table in a night club in Paris."
- There was some debate before me as to whether it made any difference that bookings were made by customers directly with the foreign service provider or via an office maintained by the provider in the United Kingdom (as in the Sheraton case) or indirectly through tour companies and/or travel agents (as also occurred in the Sheraton case). In principle I cannot see that it makes any difference, just as it makes no difference whether a foreign manufacturer of goods sells them directly to British customers or via a branch office or through a distributor.
- In Pete Waterman Ltd v CBS United Kingdom Ltd  EMLR 27 Sir Nicolas Browne-Wilkinson V-C went further and held that it was sufficient for goodwill to exist in the United Kingdom that a foreign service provider has customers here, and declined to follow Bernardin v Pavilion in so far as it was authority to the contrary. In the Pete Waterman case the evidence showed that British record companies and artists had booked, and been invoiced, directly in this country for making recordings in a New York recording studio operated by The Hit Factory Inc: see pp. 39-40. In finding that The Hit Factory Inc owned goodwill in the United Kingdom, however, the Vice-Chancellor did not rely upon the fact that British customers had booked its services directly, but simply upon the fact that it had customers here: see p. 58. On this reasoning it would not have mattered if the bookings had been made in New York.
- Counsel for the Defendants submitted that it was not sufficient to generate goodwill in the United Kingdom that a foreign service provider had customers here, and that the Vice-Chancellor's decision in Pete Waterman was wrong in this respect because it was inconsistent with Anheuser-Busch. I do not accept this. On the contrary, I agree with the Vice-Chancellor's conclusion, if not every step of his reasoning. That conclusion is supported by Dr Wadlow's analysis, in particular at paragraph 3-80:
"After all, an international hotel does not only draw guests and bookings from the city in which it is actually located, so it is unrealistic to regard more than a proportion of its total goodwill as being situated there. The same is true of businesses such as car hire which will be used mainly by visitors. The majority of the reported cases on service businesses have concerned businesses … providing services at or from fixed premises abroad, and if these cases seem to present the greatest conceptual difficulty that is at least partly the result of the obsolete tendency to associate the goodwill of a business uniquely with the place or places where the business is carried on. This has been repudiated in the case of businesses dealing in goods, and it is now suggested that a service business operating from a place or places abroad has customers and therefore goodwill in England to the extent that persons from England consciously seek out and make use of its services in preference to those available from its competitors, in England or elsewhere. So the foreign business has goodwill here if English residents are prepared to go to it (literally or figuratively) to avail themselves of its services, or if the availability of those services abroad is a material factor in their travelling to wherever the services can be acquired or experienced."
- As Dr Wadlow goes on to say at 3-81:
"it should not matter either way whether the contract for the provision of the services is made or performed inside or outside the jurisdiction".
- Although I agree with the Vice-Chancellor's conclusion in Pete Waterman, for the purposes of the present case it is not necessary to go further than the sixth proposition set out above, namely that bookings made from the United Kingdom suffice. In that regard, it should be borne in mind that since 1967 it has become much more common for the United Kingdom travellers to book (and sometimes pay for) foreign hotels and restaurants directly from here. There are a number of reasons for this. First, the massive growth in foreign travel, originally through the provision of package holidays and more recently through time shares, second home ownership and independent tourism. Secondly, the rise of English as a lingua franca both generally and specifically in the field of tourism, which makes it much easier even for monoglot English speakers to communicate with foreign service providers. Thirdly, the great increase in telecommunications, which has made it increasingly easy (and cheap) to communicate with foreign service providers by telephone and (since 1994) by email and via the internet. Fourthly, the much greater availability in the United Kingdom of information about foreign service providers though the proliferation of guidebooks, holiday brochures, media coverage and websites. Fifthly, the much wider use by travellers, and acceptance by service providers, of credit (and more recently debit) cards, thereby virtually eliminating the practical problem of how to pay foreign service providers. (Indeed, in 1967 exchange controls were still in operation.)
- On the other hand, it is obviously not the case that every foreign hotel, still less every foreign restaurant, has a goodwill in the United Kingdom even if can be shown to have some reputation here. As counsel for the Claimants submitted, this is a question of evidence. In this context I think that evidence of actual custom is more significant than entries in guidebooks; while entries in guidebooks are more significant than passing mentions in the media, for example of a particular restaurant as having been the venue for a party to celebrate the publication of a book or release of a film which was attended by one or more British celebrities.
- In the present case not only did HC have customers in the United Kingdom in April 2004, it also had customers who booked the hotel and restaurants directly as well as via tour companies and travel agents. Accordingly, I find that it not merely had a substantial reputation, but also owned a valuable goodwill. As stated above, although HC's hotel and restaurant services are formally denoted by the name Hotel Cipriani, they are frequently referred to by the names "Cipriani" and "the Cipriani".
- The issue here is whether, judged as at April 2004, the use of the names Cipriani and Cipriani London was likely to mislead a substantial number of members of the public into believing that the Restaurant was either run by, or connected in the course of trade with, HC. In my judgment such deception was likely. The natural link which is created by the commonality of the name would tend to be confirmed by the fact that both institutions target a wealthy international clientele. It is fair to say that the Restaurant is not in quite the same bracket of luxury and expense as Hotel Cipriani, but the difference between them is a long way from being sufficient to prevent deception. Nor does the suffix London in the name of the restaurant help. As noted above, it is not used all the time by CGS and most people ignore it. If anything, it tends to make confusion more likely by suggesting "this is a London branch of the famous hotel and restaurant". Nor do any of the other matters relied upon by the Defendants, such as the use of the Logo and the fact there are some similarities in style and presentation with Harry's Bar.
- Counsel for the Defendants strongly relied on the fact that, despite the passage of 4½ years since the Restaurant opened, the Claimants were only able to adduce evidence of one instance of confusion, let alone deception, as demonstrating that there was no likelihood of deception. I am not persuaded by this, for five reasons.
- First, it is well established that whether there is a misrepresentation is matter for the independent judgment of the Court. Neither the presence nor the absence of evidence of actual confusion is determinative, although it may be important in borderline cases.
- Secondly, there is no evidence that the Claimants have attempted to undertake a survey or witness gathering exercise. Indeed, the evidence showed that the Claimants had not even made any systematic attempt to find and record instances of confusion coming to the attention of their own staff. This may be thought surprising, and of course the Claimants took the risk of failing to prove their case; but it is not as if the Claimants had tried hard to find evidence and failed.
- Thirdly, I agree with counsel for the Claimants that in the circumstances of the present case it is not surprising that instances of confusion should not have come to their attention given that HC is located in Venice.
- Fourthly, in cross-examination Arrigo admitted that there was a likelihood of deception in April 2004:
"Q. So what I am putting to you is when you first opened in 2004 inevitably there would have been a lot of people in the UK, potential customers, who knew of the Hotel Cipriani who had not heard of your Cipriani restaurants and who would have assumed that there was a connection with the hotel. Correct?
A. Correct, but the style of the Cipriani restaurant in London has nothing to do with the Hotel Cipriani."
- Fifthly, the Defendants' own evidence establishes that there have been instances of actual confusion. As counsel for the Claimants submitted, an inference can be drawn from the fact that neither Giuseppe nor Mr Boito gave evidence. If no confusion had come to the Defendants' attention, it would be straightforward for the Defendants to call the Restaurant's managers to prove this, but they did not. Indeed, the point goes further. The Defendants served a witness statement from Mr Boito in which he admitted that there had been instances of confusion such as customers asking if it was possible to book a room at Hotel Cipriani. He was not in the end called to give evidence, but this is immaterial. The Claimants are still entitled to rely upon the admission.
- The Defendants also contended that the Cipriani Group owned a concurrent goodwill in the name Cipriani in the United Kingdom, and that the confusion that had been experienced since April 2004 was no more than "low level" confusion of a kind that is inevitable when there are independent businesses concurrently trading under the same or similar names. There is no dispute that in principle ownership of concurrent goodwill can in appropriate circumstances constitute a defence to a passing off claim: see in particular the Pete Waterman case. In the present case, however, this defence fails on the facts. Even by April 2004, the Cipriani Group's only European restaurant trading under the name Cipriani was Cipriani Porto Cervo, but that did not have a reputation in the United Kingdom let alone goodwill. As for the US restaurants, they had something of a reputation, but it has not been established that they had any substantial goodwill here. The Group's other ventures do not assist it either. Thus Cipriani Industria Srl owned a modest goodwill in the United Kingdom in the Cipriani name in relation to pasta and pasta sauces, but that does not entitle CGS to use it in relation to the Restaurant. Finally, the fact that some people think that the Cipriani family are still connected with Hotel Cipriani is neither here nor there.
- I would add that the Defendants did not rely upon the reputation and goodwill of Locanda Cipriani and Hotel Villa Cipriani in the United Kingdom as affording the Defendants a defence to the passing off claim if it was otherwise good. Nor did the Defendants advance an own name defence to the passing off claim.
- Counsel for the Defendants did not seriously dispute that, if the Claimants established goodwill and misrepresentation, damage followed.
- Section 56 of the 1994 Act provides as follows:
"Protection of well-known trade marks: Article 6bis
(1) References in this Act to a trade mark which is entitled to protection under the Paris Convention or the WTO agreement as a well known trade mark are to a mark which is well-known in the United Kingdom as being the mark of a person who -
(a) is a national of a Convention country, or
(b) is domiciled in, or has a real and effective industrial or commercial establishment in, a Convention Country,
whether or not that person carries on business, or has any goodwill, in the United Kingdom. References to the proprietor of such a mark shall be construed accordingly.
(2) The proprietor of a trade mark which is entitled to protection under the Paris Convention or the WTO agreement as a well known trade mark is entitled to restrain by injunction the use in the United Kingdom of at trade mark which, or the essential part of which, is identical or similar in his mark, in relation to identical or similar goods or services, where the use is likely to cause confusion. This right is subject to section 48 (effect of acquiescence by proprietor of earlier trade mark).
(3) Nothing in subsection (2) affects the continuation of any bona fide use of a trade mark begun before the commencement of this section."
- Section 56 implements in domestic law Article 6bis of the Paris Convention and Article 16 of TRIPs. It provides a remedy for foreign traders whose trade marks are well known in the United Kingdom but do not own goodwill here. There is no dispute HC is a national of a Convention country. The issues are whether the trade mark CIPRIANI is well-known in the United Kingdom, and if so whether CGS's use of the trade marks CIPRIANI and CIPRIANI LONDON is likely to cause confusion. Again these matters fall to be assessed as at April 2004.
A well-known mark?
- Counsel for the Claimants and counsel for the Defendants agreed that the approach to assessing whether a trade mark is well known was correctly stated in my decision sitting as the Appointed Person in Le Mans Autoparts Ltd's Trade Mark Application (O/012/05):
"57. In reaching conclusion (b) Mr James referred to paragraph 31 of the Opinion of Advocate General Jacobs in Case C-375/97 General Motors Corp v Yplon SA  ECR I-5421. Although it is primarily concerned with Articles 4(4)(a) and 5(2) of the Directive, I think it is worth quoting the relevant section of the Opinion in full:
30. Both in the proceedings before the Court, and in general debate on the issue, attention has focused on the relationship between 'marks with a reputation' in Article 4(4)(a) and Article 5(2) of the Directive and well-known marks in the sense used in Article 6bis of the Paris Convention for the Protection of Industrial Property. Well-known marks in that sense are referred to in Article 4(2)(d) of the Directive.
31. General Motors, the Belgian and Netherlands Governments and the Commission submit that the condition in the Directive that a mark should have a 'reputation' is a less stringent requirement than the requirement of being well known. That also appears to be the view taken in the 1995 WIPO Memorandum on well-known marks.
32. In order to understand the relationship between the two terms, it is useful to consider the terms and purpose of the protection afforded to well-known marks under the Paris Convention and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Article 6bis of the Paris Convention provides that well-known marks are to be protected against the registration or use of a 'reproduction, an imitation, or a translation, liable to create confusion' in respect of identical or similar goods. That protection is extended by Article 16(3) of TRIPs to goods or services which are not similar to those in respect of which the mark is registered, provided that use of the mark would 'indicate a connection between those goods or services and the owners of the registered trade mark and provided that the interests of the owner of the registered trade mark are likely to be damaged by such use'. The purpose of the protection afforded to well-known marks under those provisions appears to have been to provide special protection for well-known marks against exploitation in countries where they are not yet registered.
33. The protection of well-known marks under the Paris Convention and TRIPs is accordingly an exceptional type of protection afforded ever to unregistered marks. It would not be surprising therefore if the requirement of being well-known imposed a relatively high standard for a mark to benefit from such exceptional protection. There is no such consideration in the case of marks with a reputation. Indeed as I shall suggest later, there is no need to impose such a high standard to satisfy the requirements of marks with a reputation in Article 5(2) of the Directive.
34. The view is supported by at least some language versions of the Directive. In the German text, for example, the marks referred to in Article 6bis of the Paris Convention are described as 'notorisch bekannt', whereas the marks referred to in Article 4(4)(a) and Article 5(2) are described simply as 'bekannt'. The two terms in Dutch are similarly 'algemeen bekend' and 'bekend' respectively.
35. The French, Spanish, and Italian texts, however, are slightly less clear since they employ respectively the terms 'notoirement connues', 'notoriamente conocidas', and 'notoriament conoscuiti' in relation to marks referred to in Article 6bis of the Paris Convention, and the terms 'jouit d'une renommée', 'goce de renombre', and 'gode di notorietà' in Article 4(4)(a) and Article 5(2) of the Directive.
36. There is also ambiguity in the English version. The term 'well known' in Article 6bis of the Paris Convention has a quantitative connotation (the Concise Oxford Dictionary defines 'well known' as 'known to many') whereas the term 'reputation' in Article 4(4)(a) and Article 5(2) might arguably involve qualitative criteria. The Concise Oxford Dictionary defines reputation as '(1) what is generally said or believed about a person's or thing's character or standing…; (2) the state of being well thought of; distinction; respectability;…(3) credit, fame, or notoriety'. Indeed it has been suggested that there is a discrepancy between the German text compared with the English and French texts on the grounds that the 'reputation' of a trade mark is not a quantitative concept but simply the independent attractiveness of a mark which gives it an advertising value.
37. Whether a mark with a reputation is a quantitative or qualitative concept, or both, it is possible to conclude in my view that, although the concept of a well-known mark is itself not clearly defines, a mark with a 'reputation' need not be as well known as a well-known mark.
58. The Advocate General refers in one of his footnotes to Mostert [Famous and Well-Known Marks]. Mostert at 8-17 suggests the following criteria derived from a number of sources for assessing whether a mark is well-known:
(i) the degree of recognition of the mark;
(ii) the extent to which the mark is used and the duration of the use;
(iii) the extent and duration of advertising and publicity accorded to the mark;
(iv) the extent to which the mark is recognised, used, advertised, registered and enforced geographically or, if applicable, other relevant factors that may determine the mark's geographical reach locally, regionally and worldwide;
(v) the degree of inherent or acquired distinctiveness of the mark;
(vi) the degree of exclusivity of the mark and the nature and extent of use of the same or a similar mark by third parties;
(vii) the nature of the goods or services and the channels of trade for the goods or services which bear the mark;
(viii) the degree to which the reputation of the mark symbolises quality goods;
(ix) the extent of the commercial value attributed to the mark.
59. In September 1999 the Assembly of the Paris Union for the Protection of Intellectual Property and the General Assembly of the World Intellectual Property Organisation (WIPO) adopted a Joint Recommendation concerning Provision on the Protection of Well-Known Marks. Article 2 of the Joint Recommendation provides:
(1)(a) In determining whether a mark is a well-known mark, the competent authority shall take into account any circumstances from which it may be inferred that the mark is well known.
(b) In particular, the competent authority shall consider information submitted to it with respect to factors from which it may be inferred that the mark is, or I not, well known, including, but not limited to, information concerning the following:
1. the degree of knowledge or recognition of the mark in the relevant sector of the public;
2. the duration, extent and geographical area of any use of the mark;
3. the duration, extent and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs or exhibitions, of the goods and/or services to which the mark applies;
4. the duration and geographical area of any registration, and/or any applications for registration, of the mark, to the extent that they reflect use or recognition of the mark;
5. the record of successful enforcement of rights in the mark, in particular, the extent to which the mark was recognized as well known by competent authorities;
6. the value associated with the mark.
(c) The above factors, which are guidelines to assist the competent authority to determine whether the mark is a well-known mark, are not pre-conditions for reaching the determination. Rather, the determination in each case will depend upon the particular circumstances of that case. In some cases all of the factors may be relevant. In other cases some of the factors may be relevant. In still other cases none of the factors may be relevant, and the decision may be based on additional factors that are not listed in subparagraph (b), above. Such additional factors may be relevant, alone, or in combination with one or more of the factor listed in subparagraph (b), above.
(2)(a) Relevant sectors of the public shall include, but shall not necessarily be limited to:
(i) actual and/or potential consumers of the type of goods and/or services to which the mark applies;
(ii) persons involved in channels of distribution of the type of goods and/or services to which the mark applies;
(iii) business circles dealing with the type of goods and/or services to which the mark applies.
(b) Where a mark is determined to be well known in at least one relevant sector of the public in a Member State, the mark shall be considered by the Member State to be a well-known mark.
(c) Where a mark is determined to be known in at least one relevant sector of the public in a Member State, the mark may be considered by the Member State to be a well-known mark.
(d) A Member State may determine that a mark is a well-known mark, even if the mark is not well-known or, if the Member State applies subparagraph (c), known, in any relevant sector of the public of the Member State.
(3)(a) A Member State shall not require, as a condition for determining whether a mark is a well-known mark:
(i) that the mark has been in, or that the mark has been registered or that an application for registration of the mark has been filed in or in respect of, the Member State;
(ii) that the mark is well known in, or that the mark has been registered or that an application for registration of the mark has been filed in or in respect of, any jurisdiction other than the Member State; or
(iii) that the mark is well known by the public at large in the Member State.
(b) Notwithstanding subparagraph (a)(ii), a Member State may, for the purpose of applying paragraph (2)(d), require that the mark be well known in one or more jurisdictions other than the Member State.
60. Two points of interest emerge from Article 2 of the Joint Recommendation. The first is that the list of six criteria contained in Article 2(1)(b) is not inflexible, but provides as it were a basic framework for assessment. The second is that prima facie the relevant sector of the public consists of consumers of and traders in the goods or services for which the mark is said to be well known."
- The relevant sector of the United Kingdom public in the present case comprises patrons of luxury international hotels and their restaurants. Considering the six criteria in the Joint Recommendation, the position is as follows:
i) I consider that there was a high degree of recognition of the mark amongst such persons: Hotel Cipriani was famous.
ii) The mark had been used for approaching 50 years. The primary use was only in Venice, but many British consumers in the relevant sector had been exposed to it.
iii) The mark had been widely promoted by HC and publicised by third parties.
iv) The mark was registered as a Community trade mark.
v) The mark had not been enforced.
vi) The mark was a valuable one: Hotel Cipriani had a prestigious reputation.
- Accordingly, I find that the mark CIPRIANI was a well-known trade mark for hotel and restaurant services among that sector of the public.
- The Defendants' main argument to the contrary was that CIPRIANI did not exclusively refer to HC's services. I accept that, as suggested in Mr Mostert's treatise, the degree of exclusivity of the mark and the extent of use by third parties is a relevant consideration. In my judgment, the extent of third party use in the present case as at April 2004 was not such as to lead to the conclusion that CIPRIANI was not a well-known mark. The only material third party use was that of Locanda Cipriani and Hotel Villa Cipriani. These were considerably less well-known even amongst the relevant sector of the public, and they were more rarely referred to as simply "Cipriani" or "the Cipriani". Among the relevant sector of the public, a statement such as "I had a lovely time in Venice, I stayed at the Cipriani" would generally be understood as a reference to HC's hotel.
Likely to cause confusion?
- The question of likelihood of confusion is to be treated as akin to the same question in the context of a claim for passing off, the difference being that reputation is the basis rather than goodwill: see Philips Electronics NV v Remington Consumer Products  RPC 283 at 314-315.
- In my judgment, the use of the trade marks CIPRIANI and CIPRIANI LONDON was likely to cause confusion for the same reasons as I have already given in relation to passing off.
A reference to the ECJ?
- Counsel for the Defendants submitted that, unless I felt able to decide the issues of law as to the interpretation of the Regulation in favour of the Defendants, I should refer questions to the ECJ for a preliminary ruling under Article 234 of the EC Treaty. Counsel for the Claimants opposed this. I have decided that it is not appropriate for me to make a reference, since I have concluded that the Claimants succeed on their claims under domestic law, and a preliminary ruling interpreting the Regulation would not affect those conclusions.
- For the foregoing reasons, my conclusions are as follows:
i) CGS's use of the sign Cipriani infringes the CTM pursuant to Article 9(1)(a) and CGS has no defence to that claim under Article 12(a).
ii) CGS's use of the sign Cipriani London infringes the CTM pursuant to Article 9(1)(b) and CGS has no defence to that claim under Article 12(a).
iii) The Defendants' counterclaims for declarations that the CTM and the UKTM are invalidly registered both fall to be dismissed.
iv) CGS is liable for passing off.
v) HC is entitled to an injunction under section 56.
vi) Giuseppe and CI are jointly liable with CGS.