Judgments - Regina v. Johnstone (Respondent) (On appeal from the Court of Appeal (Criminal Division))

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    65. Section 92 must be set in its context of the general scheme of the 1994 Act. Its scheme is that Part I (sections 1-50) deals with registered trade marks. Part II (sections 51-60) deals with Community trade marks and international matters. Part III (sections 62-98) contains administrative and other supplementary provisions. Part IV (sections 99-110) contains miscellaneous and general provisions. For present purposes the most important sections in Part I are sections 1-3 and 9-12. Section 1 defines "trade mark" as "any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings". Section 2 provides that a registered trade mark is a property right which gives the proprietor rights and remedies under the Act. Section 3 lists absolute grounds for refusal of registration, including (in sub-section (1)),

    "(b) trade marks which are devoid of any distinctive character;

    (c) trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics of goods or services . . ."

    The general effect of paragraph (c) is to indicate that a proposed trade mark may not perform a purely descriptive function, and its language is echoed by that of section 11 (2)(b).

    66. Section 9 (1) provides,

    "The proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent.

    The acts amounting to infringement, if done without the consent of the proprietor, are specified in section 10".

    So what amounts to an infringement (sometimes referred to in the course of argument in the appeal as civil infringement) is to be gathered from section 10, as supplemented by sections 11 and 12. These sections are something of an intricate mosaic (no doubt reflecting the difficulties facing the draftsman in amalgamating the old law under the 1938 Act with the Directive, and in particular Articles 5 and 6 of the Directive).

    67. The text of sections 10 and 11 is set out either verbatim or in detailed summary in the speech of my noble and learned friend Lord Nicholls of Birkenhead, which I have had the advantage of reading in draft (and from which I also gratefully adopt the summary of the facts). I will merely repeat the general effect of sections 10 and 11 (section 12 deals with exhaustion of rights and is not relevant to this appeal).

    (1) Infringement occurs only if there is unauthorised use in the course of trade (defined in section 103 as including any business or profession).

    (2) If use is of the same mark for the same goods (referred to in argument as double identity) liability is (subject to the question of trademark use) automatic: section 10 (1), reflecting Article 5 (1)(a).

    (3) If the allegedly infringing use is a case of identity of mark (only) or of goods (only) with mere similarity in the other element, liability is not automatic but depends on likelihood of confusion: section 10 (2), reflecting Article 5 (1)(b).

    (4) If the mark used is the same or similar, but the goods are not similar, there is liability if the trademark has a reputation in the United Kingdom, and the alleged infringement takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark: section 10(3), reflecting the permissive provision in Article 5(2) (which has recently been given a liberal interpretation by the European Court of Justice in Davidoff & Cie SA v Gofkid Limited 9 January 2003, paras. 17-30).

    (5) Use is defined (non-exhaustively) in section 10 (4), reflecting Article 5(3); section 10 (5) extends liability to accomplices; and section 10 (6) covers comparative advertising (and similar special uses) provided that they are fair and honest.

    (6) All these provisions are subject to the specific restrictions and exceptions in sections 11 and 12. For present purposes the most important exception is in section 11 (2)—

    "A registered trade mark is not infringed by—

    (a) the use by a person of his own name or address,

    (b) the use of indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics of goods or services, or

    (c) the use of the trademark where it is necessary to indicate the intended purpose of a product or service (in particular, as accessories or spare parts),

    provided the use is in accordance with honest practices in industrial or commercial matters".

    This provision reproduces, almost word for word, Article 6(1) of the Directive.

    68. Section 92, in Part III of the 1994 Act, represents the third generation of statutory provisions creating trademark offences. From the earliest days it was an offence to falsify the register or falsely represent a trade mark as being registered (see now sections 94 and 95 of the 1994 Act) but those provisions are not now in point. Section 58A of the 1938 Act (introduced by the Copyright, Designs and Patents Act 1988) first made fraudulent application or use of a trade mark a criminal offence. Your Lordships are not concerned with the detail of section 58A but it may be noted that it had a relatively demanding test of mens rea and it proved unsatisfactory in practice.

    69. It is necessary to set out section 92 in full:

(1)

    A person commits an offence who with a view to gain for himself or another, or with intent to cause loss to another, and without the consent of the proprietor—

    (a) applies to goods or their packaging a sign identical to, or likely to be mistaken for, a registered trade mark, or

    (b) sells or lets for hire, offers or exposes for sale or hire or distributes goods which bear, or the packaging of which bears, such a sign, or

    (c) has in his possession, custody or control in the course of a business any such goods with a view to the doing of anything, by himself or another, which would be an offence under paragraph (b).

(2)

    A person commits an offence who with a view to gain for himself or another, or with intent to cause loss to another, and without the consent of the proprietor—

    (a) applies a sign identical to, or likely to be mistaken for, a registered trade mark to material intended to be used—

    (i) for labelling or packaging goods,

    (ii) as a business paper in relation to goods, or

    (iii) for advertising goods, or

    (b)  uses in the course of a business material bearing such a sign for labelling or packaging goods, as a business paper in relation to goods, or for advertising goods, or

    (c)  has in his possession, custody or control in the course of a business any such   material with a view to the doing of anything, by himself or another, which would be an offence under paragraph (b).

(3)

    A person commits an offence who with a view to gain for himself or another, or with intent to cause loss to another, and without the consent of the proprietor—

    (a) makes an article specifically designed or adapted for making copies of a sign identical to, or likely to be mistaken for, a registered trade mark, or

    (b) has such an article in his possession, custody or control in the course of a business,

    knowing or having reason to believe that it has been, or is to be, used to produce goods, or material for labelling or packaging goods, as a business paper in relation to goods, or for advertising goods.

(4)

    A person does not commit an offence under this section unless—

    (a) the goods are goods in respect of which the trade mark is registered, or

    (b) the trade mark has a reputation in the United Kingdom and the use of the sign takes or would take unfair advantage of, or is or would be detrimental to, the distinctive character or the repute of the trade mark.

(5)

    It is a defence for a person charged with an offence under this section to show that he believed on reasonable grounds that the use of the sign in the manner in which it was used, or was to be used, was not an infringement of the registered trade mark.

(6)

    A person guilty of an offence under this section is liable—

    (a) on summary conviction to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum, or both;

    (b) on conviction on indictment to a fine or imprisonment for a term not exceeding ten years, or both.

    70. There is no special definition of "infringement" in section 92 (5). Under the index in section 104 it is to be construed in accordance with sections 9(1) and (2) and 10. It was not argued that that does not necessarily include sections 11 and 12.

    71. Section 92 was enacted by Parliament in conformity with international obligations (under Article 61 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, or "TRIPS") which take effect as part of Community law. Mr Hobbs QC (for the intervener, The British Phonographic Industry) gave a detailed explanation of the background but it is not necessary to go further into it.

    72. Much of the argument before your Lordships has focused on sub-section (5) of section 92. It provides a defence if the accused shows that he believed on reasonable grounds that he was not infringing the registered trade mark. This very strongly suggests (but the section does not in terms state) that it must also be a defence if the accused was not actually infringing the registered trade mark under sections 9 to 11. The Court of Appeal found that argument conclusive. Tuckey LJ put the point strongly (para 46):

    "Put another way, it would provide a defence when a defendant has a reasonable belief that there is no civil infringement, when in fact the absence of civil infringement would be no defence. This is a nonsense".

    73. Both sides agreed that it is hard to find an example of conduct which would be a criminal offence under section 92 (1) to (4), but would not amount to a civil infringement. It was also common ground that if an exceptional case were to be found (such as a single sale of a limited number of articles, such as T-shirts, arguably not amounting to trading) it would in practice be most unlikely to attract prosecution under section 92. Mr Perry (for the appellant) identified six points of substantial difference between section 92 and what I will call the civil infringement sections, and it is useful to examine these. But it must be recognised at once that if the scope or "footprint" of section 92 is smaller than, and wholly contained within, the "footprint" of the civil infringement sections, it is at first blush surprising that the linguistic differences between them are so extensive. Their superficial disparity must be explained, I think, by Parliament's natural anxiety to frame the offence-creating provisions of the 1994 Act so as to be as self-contained and as simple a code as possible. Prosecutions under section 92 are heard either in the Magistrates' Court or in the Crown Court. It would be burdensome if lay magistrates and juries regularly had to go into the intricacies of the law of civil infringement, especially in its present state of flux following the decision of the European Court of Justice in Arsenal Football Club plc v Reed [2003] RPC 144 (to which I shall return). I respectfully agree with the view of Lord Nicholls that this House should so far as possible adhere to the language of section 92, treating it as being as self-contained as possible, and avoiding any unnecessary elaboration of trade mark law as it falls to be applied in criminal courts.

    74. As the arrangement and language of the two sets of provisions is so different it may be helpful to summarise Mr Perry's six points.

(1)

    Under section 92 the prosecution must prove the special mens rea of "with a view to gain" (including causing loss to another). There is no civil equivalent.

(2)

    The offence-creating provisions apply only in respect of goods (whereas the civil provisions cover goods or services).

(3)

    The offence-creating provisions refer to a sign "identical to, or likely to be mistaken for" the registered mark. This is a simpler and narrower formulation than that in section 10(2).

(4)

    Section 92(4) combines the functions of parts of sections 10(2) and (3) but differs in substance only if the form of words in sub-section (4) ("goods in respect of which the trade mark is registered") is narrower than that in section 10(2)(a) ("identical with or similar to").

(5)

    Section 92(5) has no civil equivalent: a defendant's belief in his innocence is irrelevant to civil liability.

(6)

    Criminal liability may arise from acts although they are not done in the course of trade (this is, as already noted, the only respect in which the scope of section 92 may be wider, and it seems to be of little practical importance).

    75. In summary, section 92 is clearly narrower on points (1), (2) and (5) above; it may be narrower (and is certainly not wider) on points (3) and (4); point (6) tends to lead to an unprofitable debate as to whether fraudulent activities should be regarded as a trade, and it is easy to see why Parliament avoided language which raised that issue. However Mr Perry's points do not include the issues which lie at the heart of this appeal, that is (i) whether "trade mark use" is a necessary ingredient of criminal liability under section 92; (ii) if so, what are its proper limits; and (iii) how it should be dealt with in practice, in terms of directions to a jury or self-direction to magistrates, in prosecutions under section 92. To those issues I now turn.

    76. "Trade mark use" is a convenient shorthand expression for use of a registered trade mark for its proper purpose (that is, identifying and guaranteeing the trade origin of the goods to which it is applied) rather than for some other purpose. It is easy to recognise those cases which fall squarely on one side or other of the line. If a counterfeiter sells a cheap imitation watch under the trade mark OMEGA, he is fraudulently engaging in trade mark use (as he is, as Mr Hobbs suggested, if he uses the mark HOMEGAS but prints the first and last letters very faintly). But if a publisher publishes a book named "Mother Care/Other Care" (a serious study of the upbringing of young children of working mothers) there is no infringement of the registered trade mark of Mothercare UK Limited, despite the fact that the trade mark is registered for many classes of goods, including books: see Mothercare UK Limited v Penguin Books Limited [1988] RPC 113.

    77. That was a decision of the Court of Appeal on a Part A registration under the 1938 Act, but the essential point holds good. Dillon LJ said at pages 118-9,

    "it stands to reason that a Trade Marks Act would only be concerned to restrict the use of a mark as a trademark or in a trademark sense, and should be construed accordingly. If descriptive words are legitimately registered in Part A of the register, there is still no reason why other people should not be free to use the words in a descriptive sense, and not in any trademark sense.

    Mr Aldous took the further point, on the trademark aspect of the case, that Mothercare suffers damage because the value and exclusivity of its mark is diminished, by any use by anyone else of the words 'mother care', but that, in my judgment, can only be so if those words are used by the offender as a trademark or in a trademark sense; if descriptive words are merely used descriptively, the mark is unaffected.

    In the present case the words 'Mother Care' in the title of the book are not, in my judgment, used as a trademark or in any trademark sense. They are merely used descriptively as describing, with the words 'Other Care' what the book is about".

Similarly Bingham LJ said at page 123 (of section 4(1)(b) of the 1938 Act),

    "To conclude otherwise would be to hold (where a trademark consists of an English word or words) that Parliament intended to grant the proprietor of the trademark what would in effect be commercial copyright in that word or those words. Had that been the intention, the drafting of the section could have been a great deal simpler".

    78. In Bravado Merchandising Services Ltd v Mainstream Publishing (Edinburgh) Ltd [1996] FSR 205, a comparable question arose under the 1994 Act. The petitioner was the proprietor of the trade mark Wet Wet Wet (the name of a popular music group). It was registered for (among other classes of goods) books. The defendant intended to publish a book about the group using "Wet Wet Wet" as part of the title. In the Court of Session Lord McCluskey found (distinguishing Mothercare) that that would be trade mark use, but that it would nevertheless be within section 11 (2)(b) (as amounting to an indication of the characteristics of the goods to which the mark was applied) and so would not amount to an infringement. So Lord McCluskey might be thought to have given with one hand and to have taken away with the other; but that depends on whether sections 10 and 11 of the 1994 Act should be seen as contingent or intersecting circles, a point on which there was a good deal of discussion in the course of argument.

    79. Your Lordships were also referred to the decision of the Federal Court of Australia in Musidor BV v Tansing (1994) 123 ALR 593. The Federal Court was divided as to whether the trade mark Rolling Stones (registered in respect of compact discs as well as other goods) was infringed by bootleg discs (using recordings made at live concerts in the 1960's) which used the words Rolling Stones on each disc and its case insert. The insert also stated that the recordings had not been authorised. The majority (Gummow and Heerey JJ) concluded that this was not trade mark use (at page 605):

    ". . . the words "The Rolling Stones" are not used for the purpose of indicating a connection in the course of trade between him and the discs or any other goods in respect of which the trade marks are registered. Rather, they are used here to identify a recording made many years ago of a live performance by those persons in the United States, which has been reproduced and embodied in the discs manufactured by the respondent".

    Davies J, dissenting, thought that there had been trade mark use, and that the disclaimer of authorisation made no difference (at page 598):

    "To exemplify the infringement, assume that 'Pierre Cardin' and 'Gucci' are registered trade marks and that the Pierre Cardin organisation or the Gucci organisation manufactured goods but declined to put them on sale being not satisfied with their quality. It would, in my opinion, be an infringement for some other person without authority to put the goods on the market with the description that they had been manufactured by Pierre Cardin or by Gucci but that the sale had not been authorised. Yet that is what the respondent seeks to do in the present case".

    Davies J also expressed the view that the respondent had not used the words 'Rolling Stones' in good faith.

    80. Comparable problems have recently been considered by the European Court of Justice in Arsenal Football Club plc v Reed [2003] RPC 144. Arsenal Football Club ("AFC") is the proprietor of four trade marks, including two word marks ("Arsenal" and "Arsenal Gunners") registered for (among other goods) clothing and sports footwear. Mr Reed had since 1970 been selling clothing (especially scarves) marked "Arsenal". He displayed prominent notices disavowing "any affiliation or relationship with the manufacturers or distributors of any other product". AFC sued him for passing off and trade mark infringement. The claim in passing off failed. The trade mark claim led to a reference to the European Court of Justice by the High Court (Laddie J) of the following questions:

    "(1)  Where a trade mark is validly registered and

    (a) a third party uses in the course of trade a sign identical with that trade mark in relation to goods which are identical with those for which the trade mark is registered; and

    (b) the third party has no defence to infringement by virtue of article 6 (1) of [the Directive]:

    does the third party have a defence to infringement on the ground that the use complained of does not indicate trade origin (i.e. a connection in the course of trade between the goods and the trade mark proprietor)?

    (2)  If so, is the fact that the use in question would be

    perceived as a badge of support, loyalty or affiliation to the trade mark proprietor a sufficient connection?"

    81. As already noted, article 6(1) (like section 11(2)) makes an exception for descriptive use, but only if it is use "in accordance with honest practices in industrial or commercial matters". It is not entirely clear whether the terms of the reference made by the High Court assumed that article 6(1) provided no defence because of the need for descriptiveness, or because of the proviso as to honest practices.

    82. In making the reference Laddie J made what he described as findings of fact which are recorded in the judgment of the European Court of Justice (paras. 21-22):

    ". . .the High Court rejected [AFC's] argument that the use by Mr Reed of the signs registered as trade marks was perceived by those to whom they were addressed as a badge of origin, so that the use was a "trade mark use".

    According to the High Court, the signs affixed to Mr Reed's goods were in fact perceived by the public as "badges of support, loyalty or affiliation".

    83. The European Court of Justice recognised (para 54) that

    ". . . uses for purely descriptive purposes are excluded from the scope of article 5(1) of the Directive because they do not affect any of the interests which that provision aims to protect, and do not therefore fall within the concept of use within the meaning of that provision (see, with respect to a use for purely descriptive purposes relating to the characteristics of the product offered, Case C-2/00 Hölterhoff [2002] ECR I-4187, para. 16)".

    The Court distinguished Hölterhoff (where a trade mark had been used to describe a method of cutting precious stones, rather than to identify their producer) as being concerned with a transaction in the course of wholesale trade. The Court stated that Mr Reed's use of the Arsenal sign took place in the context of sales to consumers and was obviously not intended for purely descriptive purposes. The use was such as to create the impression that there was a material link in the course of trade between Mr Reed's goods and AFC. AFC could therefore rely on what Mr Reed had done as trade mark use.

    84. Laddie J has since (12 December 2002, [2002] All ER(D)180) held that the European Court of Justice exceeded its jurisdiction by determining issues of fact which were for the national court to decide (and which he had, as he saw it, already decided in a manner favourable to Mr Reed). An appeal to the Court of Appeal seems likely.

    85. The law is therefore in something of a state of disarray. But even if the European Court of Justice exceeded its jurisdiction in the Arsenal case (a point on which I would express no view), its exposition of the general principles is still highly material. The Court has excluded use of a trade mark for "purely descriptive purposes" (and the word "purely" is important) because such use does not affect the interests which the trade mark proprietor is entitled to protect. But there will be infringement if the sign is used, without authority, "to create the impression that there is a material link in the course of trade between the goods concerned and the trade mark proprietor" (para 56). There may be such a link, in the view of the European Court of Justice, even though the consumer treats the mark as a badge of support for or loyalty to the trade mark proprietor. As Advocate-General Colomer put it in a footnote to his opinion (para. A66, footnote 52),

    "However much Mr Reed may announce that the goods which he sells neither come from [AFC] nor are authorised by it he is able to market them—and his customers buy them—precisely because they bear the signs which, under registered protection, identify the club".

    86. The difficulty arises, I think, because between cases which are clearly at the opposite extremes of "distinctiveness" and "descriptiveness" there is something of a no man's land of debateable cases, and the problem of analysis varies with the character of the mark and the character of the goods to which it is affixed. Disputes about books, and scarves, and compact discs, cannot easily be resolved by a single test. Most people would have an intuitive feeling that to label a compact disc with the words "Rolling Stones" is less purely descriptive than entitling a biography "Wet Wet Wet". That is no doubt because a group of musicians are in some sense the authors (or at least the performers) of what is on the disc, but are not the authors of an unauthorised book about themselves. But in that case is not their real grievance infringement of their copyright or their performing rights, rather than of their trade mark? Was not Mr Hölterhoff's real complaint infringement of his design right in two new methods of cutting precious stones (if indeed he had invented those methods) rather than of his trade mark?

    87. These are difficult questions which it is not necessary for your Lordships to determine in order to dispose of this appeal. Whatever uncertainties there are about the decision of the European Court of Justice in Arsenal, its likely effect is that the province of trade mark use has annexed a significant part of the no man's land in which elements of distinctiveness and descriptiveness overlap. But it would be idle to speculate whether the view taken by the European Court of Justice in the Arsenal case is reconcilable with the majority view in Musidor because (as Lord Nicholls has emphasised in his speech, and as I respectfully agree) trade mark use is essentially a question of fact (of a fairly complex sort). Musidor can indeed be seen as turning on whether it was right for the Federal Court to differ from the trial judge on an issue of that sort. The judgments mention some of the factors which may contribute to the eventual conclusion: the prominence and apparent purpose with which the group's name (and registered trade mark) is used on the disc and its packaging; what other brand marks (registered or unregistered) are used on the disc and its packaging; the terms and prominence of any disclaimer (although a disclaimer, by itself, cannot be conclusive); and any other matters going to the alleged infringer's good faith and honesty.

 
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