More Knock Offs on the Way?

The Court of Appeal has been busy over recent months, and has dealt with a number of IP cases which appear to suggest that it is getting harder for brands and designers to enforce their rights. Press headlines have spoken about a "copycats' charter" and "permission to free-ride". But as ever, it is important to look not just at the headlines, but also at the detail and the whole picture.

First, two of the cases are Trade Mark cases in which certain aspects have been referred to the European Court of Justice, so at this stage they are still unfinished, as we wait for the decisions from the ECJ. Second, they deal with a number of particular points and depend on their own facts, and so should not be taken as unequivocal statements on anything. They are nevertheless troubling for rights owners, as they certainly demonstrate the English Court's determination not to be "over-protective", and to be careful to ensure that the monopoly rights extended by IP registrations are not allowed to be stretched too far.

For present purposes, the key issues in Intel Corporation -v- CPM UK Limited and L'Oreal -v- Bellure concern the additional protection provided to registered trade marks with a "reputation" by the European Trade Marks Directive (implemented in this country by the Trade Marks Act 1994). The Section in question provides that there is an actionable infringement at the suit of the proprietor of the registered mark with a reputation if someone else uses the same or a similar mark, without due cause, and in such a way that it "takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark".

The cases looked at two aspects in particular. First, how do you decide whether two marks are "similar"? In Intel, the Court of Appeal's view is that a mere "bringing to mind" is not enough, but that consumers must actually make some sort of economic connection between the two marks. So merely thinking that one mark reminds you of another is not enough – you have to assume that they are linked in a business sense.

Second, is it "unfair advantage" if one business piggybacks on another, even if no-one is actually confused or changes their purchasing pattern? This was what happened in the L'Oreal "smell-alike" case, which concerned very cheap products, which were sold using "smell charts" which compared their smell with well-known and much more expensive brands, and in some cases in packaging which involved a "wink" towards the bigger brand. In the opinion of the Court of Appeal, the answer is "No". And it also refused to introduce a more general form of protection, covering "unfair competition" (which is often found in continental legal systems).

In another case, the Court of Appeal has alarmed some product designers and brand owners by overturning the infringement finding made by the original Court in the registered design dispute, Procter & Gamble -v- Reckitt Benckiser. It found that the registered design for the trigger operated Febreze air freshener was not infringed by the similar looking container used by Airwick. It did so by deciding that the "overall impression" on the "informed user" (someone with a degree of knowledge/sophistication about design) of the two designs was not the same, especially when functional/inevitable elements were given less importance. The Court dealt with the argument that this result would open the floodgates for "poor quality imitations" by pointing out that in the field of designs, a "poor quality" imitation will not create the same overall impression, so it is right that it should not be prohibited by a design registration.

So overall, it seems to be bad news. But the mitigating factors are:-

The more worrying aspects of the Intel and L'Oreal decisions involve the extra protection given to marks with a "reputation" by Section 10(3) of the Trade Marks Act, which can apply where the allegedly infringing product is not the same sort of item. It should be remembered that in most real knock-off/copycat cases, the regular protection offered (ie in relation to the use of the same or a similar mark in relation to the same or similar products) should still be available.
The ECJ may not have the same view (though it seems that it is going to agree with our Court of Appeal in another important Trade Mark case which has recently been referred, the "bubbles" comparative advertising case, O2 -v- Hutchison 3G).
The precise facts and findings of fact are critical (in L'Oreal, it was found as a matter of fact that there would be no confusion which would lead to consumers changing their spending practices).
In the Fabreze case, the Court made it clear that "design" is important, and that it is able to assess the "overall impression" without masses of expert evidence, meaning that the cost of registered design litigation will be more contained.
Although it didn't help P&G on this occasion, the Court dismissed Reckitt's invalidity counterclaim.

In conclusion, though, the trend may be worrying, and the ECJ decisions will have to be closely reviewed when they are made.