Morley's (Fast Foods) Limited v Thurairasa Nanthankumar & Ors [2025] EWCA Civ 186

[2025] EWCA Civ 186

Case No CA-2024-001788

IN THE COURT OF APPEAL (CIVIL DIVISION)

[2024] EWHC 1369 (IPEC)

ON APPEAL FROM THE HIGH COURT OF JUSTICE, BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES, INTELLECTUAL PROPERTY LIST (ChD), INTELLECTUAL PROPERTY ENTERPRISE COURT

Her Honour Judge Melissa Clarke

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 14 March 2025

Before

LORD JUSTICE NEWEY

LORD JUSTICE ARNOLD

LADY JUSTICE FALK

Between

MORLEY’S (FAST FOODS) LIMITEDClaimant/Respondent

(1) THURAIRASA NANTHAKUMARDefendants/ Appellants

(2) JARALD KUMARAppellant

(3) MUTHKUMARU THAYALAKULASINGHAMAppellant

(4) JEYATHARINI SIVAKUMARAppellant

(5) VAISHDHEEPAN SANMUGANATHANAppellant

(6) SRIKANESARASA NAGARATNAMAppellant

(7) KUNALINGAM KUNATHEESWARANAppellant

(8) SIVARAJAH NELANAppellant

Simon Malynicz KC and Kendal Watkinson (instructed by Brandsmiths) for Appellants

Chris Pearson (instructed by Ward Hadaway LLP) for Respondent

Hearing Hearing date : 19 February 2025

Approved Judgment

[1]This is a trade mark dispute between two chains of fast food restaurants/takeaways which offer fried chicken and other dishes. Both chains were founded by members of the Sri Lankan community in South London and operate on a franchise model. HHJ Melissa Clarke held for the reasons given in her judgment dated 7 June 2024

[2024] EWHC 1369 (IPEC)

that the Defendants had infringed one or more of the Claimant’s Trade Marks (as defined below) and that the Seventh Defendant (“KK”) had acted in breach of an agreement entered into by way of settlement of a previous claim by the Claimant (“the 2018 Agreement”). The Defendants appeal against the consequential order made by the judge on 17 July 2024 with permission granted by myself.

The parties

[2]The Claimant’s business was founded under the name Morley’s in 1985. It started off serving a simple menu mostly focused on fried chicken and chicken burgers. It has used the Trade Marks since then. In about 1988 it started to recruit franchisees. The Claimant was incorporated to take over the business in 1996. By then it had 20-25 shops, and by 2002 it had about 40 shops. It currently has over 100 outlets. Since 2017 an increasing proportion of the Claimant’s business has come from delivery services such as Deliveroo and Uber Eats. The Claimant’s managing director is Shan Selvendran (“SS”).

[3]Since a date which the judge found to be sometime after June 2015, KK has operated a small chain of restaurants focused on fried chicken under the name Metro’s. The first two were owned by KK, but more recently he has recruited a number of franchisees. The First to Sixth and Eighth Defendants are, or were, franchisees (“the Franchisee Defendants”).

The Trade Marks

[4]The Claimant is the proprietor of the following United Kingdom Registered Trade Marks (“the Trade Marks”): i) No. 2315316 for the stylised word shown below registered in respect of food and non-alcoholic beverages in Classes 29, 30 and 32, and in respect of food preparation and restaurant and takeaway services in Class 43, since 8 November 2002 (“the Morley’s Mark”). ii) No. 2533108 for the series of two words TRIPLE M, TRIPLE-Mregistered in respect of food in Class 29, and in respect of food preparation and restaurant and takeaway services in Class 43, since 30 November 2009 (“the Triple M Mark”). iii) No. 3335592 for the device shown below registered in respect of food and non-alcoholic beverages in Classes 29, 30 and 32, and in respect of food preparation and restaurant and takeaway services in Class 43, since 3 September 2018 (“the Morley’s Red and White Mark”).

The Signs

[5]The Claimant complains about the use of the following signs (“the Signs”) by the Defendants: i) The sign shown below (“Sign 1”) used by each of the Defendants on the fasciae of their respective restaurants. ii) The sign “MMM” (“Sign 2”) used by KK and the Sixth Defendant in their respective shop windows and on menus. iii) The sign “TRIPLE M/TRIPLE ‘M’” (“Sign 3”) used by KK, the Fifth Defendant and the Eighth Defendant on menus.

The Claimant’s claims

[6]The Claimant claims that use of Sign 3 infringed the Triple M Mark pursuant to section 10(1) (double identity), alternatively section 10(2)(b) (likelihood of confusion), of the Trade Marks Act 1994.

Assessment of the likelihood of confusion: basic principles

(b) Assessment of the likelihood of confusion: basic principles

[7]The manner in which the requirement of a likelihood of confusion should be assessed is set out in a standardised summary of the applicable principles, expressed in terms referable to the registration context. The current version of this summary 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 visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements; (e) nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components; (f) and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark; (g) a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa; (h) 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; (i) mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient; (j) 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; and (k) if the association between the marks creates a risk that the public might believe that the respective goods or services come from the same or economically-linked undertakings, there is a likelihood of confusion.”

[8]The same principles are applicable when considering infringement, but it is necessary for this purpose to consider the actual use of the sign complained of in the context in which the sign has been used. As Kitchin LJ put it in Specsavers International Healthcare Ltd v Asda Stores Ltd

[2012] EWCA Civ 24

[2012] FSR 19

at [87]:

“In my judgment the general position is now clear. In assessing the likelihood of confusion arising from the use of a sign the court must consider the matter from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances of that use that are likely to operate in that average consumer’s mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context.”

Summary of the judge’s principal conclusions

The judge reached the following principal conclusions:

[9]i) The Franchisee Defendants and KK had infringed the Morley’s Red and White Mark by use of Sign 1 pursuant to section 10(2)(b). ii) Both the Sixth Defendant and KK had infringed the Triple M Mark by use of Sign 2 pursuant to section 10(2)(b) TMA. iii) Both the Fifth Defendant and KK had infringed the Triple M Mark by use of Sign 3 pursuant to section 10(1). (The Eighth Defendant admitted this.) iv) KK was jointly and severally liable with the Franchisee Defendants for their infringement of the Morley’s Red and White Mark by use of Sign 1. v) KK’s use of Signs 1, 2 and 3 was in breach of the 2018 Agreement.

Grounds of appeal

[10]The Defendants appeal on eight grounds. Ground 1 is that the judge wrongly assessed the identity and attributes of the average consumer. Ground 2 is that the judge erred in the visual comparison between the Morley’s Red and White Mark and Sign 1. Ground 3 is that the judge erred in the conceptual comparison between the Morley’s Red and White Mark and Sign 1. Ground 4 is that the judge erred with respect to the context of use of Sign 1. Ground 5 is that the judge erred as to the effect of the 2018 Agreement upon likelihood of confusion so far as KK is concerned. Ground 6 is that the judge wrongly interpreted the 2018 Agreement so far as the Franchisee Defendants are concerned. Ground 7 is that the judge wrongly held that KK had acted in breach of the 2018 Agreement. Ground 8 is that the judge wrongly assessed the similarity between Sign 2 and the Triple M Mark, and therefore wrongly found a likelihood of confusion in the case of Sign 2.

[11]None of these grounds challenges the judge’s conclusion that the Fifth Defendant and KK infringed the Triple M Mark by their use of Sign 3 pursuant to section 10(1).

The test on appeal

[12]It is common ground that, in so far as the appeal challenges findings of fact made by the judge, this Court is only entitled to intervene if those findings are rationally insupportable: Volpi v Volpi

[2022] EWCA Civ 464

[2022] 4 WLR 48

at [2](v) (Lewison LJ). Equally, it is common ground that, in so far as the appeal challenges multi-factorial evaluations by the judge, this Court is only entitled to intervene if the judge erred in law or principle: compare Magmatic Ltd v PMS International Group plc

[2016] UKSC 12

, [2016] Bus LR 371 at [24] (Lord Neuberger of Abbotsbury) and Actavis Group PTC EHF v ICOS Corp

[2019] UKSC 15

, [2019] Bus LR 1318 at [78]-[81] (Lord Hodge), and see Lifestyle Equities CV v Amazon UK Services Ltd

[2024] UKSC 8

, [2024] Bus LR 532 at [46]-[50] (Lord Briggs and Lord Kitchin).

Ground 1: the average consumer

[13]There is no dispute as to the applicable principles. As

the judge directed herself at [26]:

“Likelihood of confusion must be assessed from the perspective of the ‘average consumer’ of the relevant goods and/or services, who is deemed to be ‘reasonably well informed and reasonably observant and circumspect’. The characteristics and role of the average consumer have been discussed in numerous authorities but have been summarised most recently by Arnold LJ in Lidl Great Britain Limited v Tesco Stores Limited [2024] EWCA Civ 262 at [16] - [20].”

[14]As the judge noted at [78], “the notion of an average consumer requires the court to consider any relevant class of consumer, and not to average them”: London Taxi Corporation Ltd v Frazer-Nash Research Ltd

[2017] EWCA Civ 1729

[2018] FSR 7

at [31] (Floyd LJ).

The judge’s assessment was as follows:

“79. In my judgment there are two classes of average consumer to consider in this case. One is the class made up of children, young people, students and families, who buy at lunch, at teatime and into the evening and have low disposable income. They will choose a chicken fast-food shop by convenience of location and shopfront, or from an advert on a delivery website, with a medium to low degree of attention. I do not accept the Defendants’ submission that the fact that they are low income means they will pay greater attention, as they will be selecting the shop once they have taken the decision that they can afford and will buy such a meal. There is no evidence before me that there is any significant difference in price between comparable meals from Metro’s and Morley’s or other such fast-food outlets. 80. The second class of average consumer is the late-night and early-morning revellers described by SS who are likely tired, hungry and a significant subset of which will be intoxicated. They will also choose by convenience of location, shopfront and what is open late, and in my judgment will pay a low degree of attention.”

[16]The Defendants contend that the judge made three errors of principle in this assessment. First, she wrongly focused on the Claimant’s actual consumers, which were described by SS in his evidence, as opposed to the relevant class of notional consumers. Secondly, she wrongly engaged in a process of “salami slicing” the relevant population so as to arrive at her second class. Thirdly, in her second class she wrongly focused upon consumers who were intoxicated, and therefore by definition not reasonably well informed and circumspect.

[17]I do not accept the first criticism. As I read the judgment, the judge did not make the mistake of equating the Claimant’s actual consumers with average consumers. Rather, she relied upon SS’s evidence to inform herself as to the kinds of consumers who patronised fast food outlets such as those in question. I agree with the second point. As counsel for the Defendants pointed out, the same consumer might attend one of the Defendants’ premises at different times on different days. Furthermore, a consumer who attends late at night is not necessarily more tired or more hungry than one who attends earlier in the day. It will depend on factors such as what shifts they respectively work. Thus there is a single class of consumers consisting of those who patronise such establishments. I also agree with the third point. Likelihood of confusion is not to be assessed by reference to those who are intoxicated.

[18]Although I consider that the judge fell into error in these respects, it does not follow that these errors are material. The purpose of the exercise in a case such as the present is to assess how the average consumer would select the relevant goods and services and the level of attention which would be paid by the average consumer. The two classes identified by the judge would both choose by convenience of location and shopfront and their levels of attention would overlap: medium-to-low in the case of the first and low in the case of the second. Furthermore, although the judge was wrong to take intoxicated consumers into account, this does not appear to have affected her assessment of the level of attention paid by her second class. The intoxicated consumers only formed “a significant subset” of that class, while all of the class would have a low degree of attention.

[19]Counsel for the Defendants accepted that the judge would not have been in error if she had assessed matters from the perspective of the first class she identified, and more specifically he accepted that the relevant class of consumers would pay a medium-to-low degree of attention. Counsel nevertheless submitted that the judge’s errors were material because she found a likelihood of confusion on the part of her second class. In my judgment there is no reason to think that the judge would have reached a different conclusion as to likelihood of confusion if she had assessed it from the perspective of consumers who paid a medium-to-low degree of attention rather than a low degree of attention for the reasons I will explain when I come to ground 4. In any event, if I were to re-assess likelihood of confusion from the correct perspective, I would reach the same conclusion as the judge.

Ground 2: visual comparison between Sign 1 and the Morley’s Red and White Mark

[20]As the judge recorded at [93], the Claimant contended that Sign 1 was highly similar to the Morley’s Red and White Mark in that:

“i) both use white lettering on a background in an identical or highly similar red; ii) Sign 1 uses identically the distinctive form of the letter ‘M’ as the first letter of the main word; iii) the layouts of Sign 1 and [the] Morley’s Red and White Mark are highly similar, being a main word with highly similar structure and highly similar larger font, set above a strapline beginning after the drop of the letter ‘M’; iv) the use of a similar strapline with shared elements (It, Taste, and an ellipse) and conveying a highly similar concept of good taste (‘...It’s The Real Taste’ in Sign 1 and ‘MMM... It Tastes Better’ in the Morley’s Red and White Mark). …”

[21]The judge found that the Mark and the Sign were visually quite similar, aurally dissimilar and conceptually similar, leading her to conclude at [103] that they were “similar … to a medium degree”.

The judge’s assessment of visual similarity was as follows:

“96. I agree with all of the visual similarities identified by the Claimant and set out above. The dominant element of each of Sign 1 and the Morley's Red and White Mark is the brand name, which although different do present similarly with a closely similar but not identical italic font, the almost identical large, stylised M being the most dominant part of that dominant feature in each case. I find both the font used and the large, stylised M to be distinctive. 97. The strapline of each, although not dominant, is by no means negligible. I find in each case that it is an important secondary element, which has a distinctive role independent of the dominant element. 98. The placement of the strapline in both Sign 1 and the Morley’s Red and White Mark, under the dominant element and within the space provided by the drop of the right leg of the letter ‘M’, together with the almost identical italic serif font, and the similarity in words and the ellipse, add to the visual similarity, although the use of ‘MMM’ in the Morley’s Red and White Mark is a distinctive element of the strapline which is a point of difference with Sign 1. 99. Also adding to the visual similarity in my assessment is the use of white text on a red background. I accept that those colours are not distinctive in this fast-food arena, but I accept Mr Pearson's submission for the Claimant that the similarity in font, size and layout of the elements of both signs produces a pattern of white on red which is visually very similar and adds to the distinctiveness of the whole. I do not consider that the average consumer would perceive any difference at all in the shades of red and white used in the Morley’s Red and White Mark as imperfectly held in his mind and Sign 1 as used by the Defendants. Unless compared directly side by side, I find them to be almost identical. 100. Despite the different brand names in the dominant element (the differences which are made somewhat less significant in my judgment by the almost identical dominant stylised letter ‘M’, very similar font and word length) and the missing ‘MMM’ and varied strapline in Sign 1, I find Sign 1 and the Morley’s Red and White Mark to be visually quite similar.”

[23]The Defendants challenge this on three bases. First, they contend that the judge erred in principle because she failed to recognise that words generally speak louder than figurative elements. I do not accept this. She found that the brand names (i.e. Morley’s and Metro’s) were the dominant elements of the Morley’s Red and White Mark and of Sign 1, and she recognised that they were different.

[24]Secondly, the Defendants contend that there was an inconsistency between the judge’s reference at [100] to “the almost identical dominant stylised letter ‘M’” and what she said at [87] when rejecting the Claimant’s claim to a “family” of trade marks on the grounds the common element of the letter M was “not sufficiently distinctive as an element in itself”. I disagree. Apart from anything else, the latter assessment concerned the letter M regardless of font.

[25]Thirdly, the Defendants contend that the judge’s conclusion is rationally insupportable. Again, I disagree. The judge’s assessment was well within the bounds of rationality.

Ground 3: conceptual comparison

The judge’s assessment of conceptual similarity at [102] was as follows:

“Conceptually, the brand name ‘Metro’s’ within Sign 1 is not similar to ‘Morley’s’ in the Mark. However, I find Sign 1 and the Mark to be similar conceptually overall, because of the conceptually very similar straplines centred around good taste.”

[27]The Defendants challenge this assessment on two bases. First, they contend that the judge erred in principle because she elevated the conceptual significance of the straplines to a position well above their importance within the Mark and the Sign as a whole. I do not consider that the judge’s approach involved any error of principle. She considered the Mark and the Sign as a whole as she was required to do. She recognised that the brand names were different. She found that the straplines were conceptually very similar. She then came to an overall conclusion on conceptual similarity taking those matters into account.

[28]Secondly, the Defendants contend that the judge’s finding that the straplines were conceptually similar was rationally insupportable. I disagree. The judge’s assessment was well within the bounds of rationality.

Ground 4: context of use of Sign 1

[29]As I explained in Lifestyle Equities CV v Royal County of Berkshire Polo Club Ltd

[2024] EWCA Civ 814

[2024] FSR 32

at [51]-[58], “context of use” is normally relied upon by defendants as negating a likelihood of confusion in cases where, absent whatever is relied on as constituting the relevant context, the identity or similarity of the mark and the sign and the similarity or identity of the respective goods or services would (in combination with factors such as the distinctive character of the mark) give rise to a likelihood of confusion. As I also explained, it is not clear how far this principle extends outside the special circumstances of comparative advertising.

[30]The Defendants contend that the judge’s assessment of likelihood of confusion involved treating the context of use as establishing a likelihood of confusion which would not otherwise arise, and that that was an error of law or principle. It is not necessary for present purposes to decide whether this contention is legally well-founded, a question which was not properly explored in argument, because I do not accept the premise on which it is based.

[31]As the judge recorded at [106], the Claimant submitted that the context of the Defendants’ use of Sign 1 increased the likelihood of confusion. The Claimant did not argue that the context of the Defendants’ use of Sign 1 established a likelihood of confusion if it did not otherwise exist.

[32]Turning to the judge’s reasoning, she set out her assessment at [111]:

“I do not find this a difficult decision to reach. The combination of the following factors: i) that a class of the average consumer is made up of late-night revellers a subset of whom are intoxicated and who pay a low degree of attention to their choice of fast-food shop; ii) that I have found that Sign 1 is similar to the Morley’s Red and White Mark to a medium degree; iii) that the Morley’s Red and White Mark has a higher level of distinctiveness giving rise to an increased risk of confusion; iv) that part of the context of the use of Sign 1 is that it is used in and on Metro's shops with a very similar get-up to that of Morley’s stores, some of which (the large wall posters of a woman eating a burger, the brick walls, the red and white interior tiles) is visible from the street outside the stores through the shop windows; v) that I accept SS’s evidence that the similarity between Sign 1 and the Morley’s Red and White Mark is more marked when Sign 1 is viewed on a lit-up fascia at night, such that it has confused even him into mistaking a Metro’s shop for one of his own; means that I am satisfied that there is a likelihood of confusion by a substantial part of that class of average consumer. That is sufficient.”

[33]The first point to note about this reasoning is that the judge did not regard it as a close call. Given that(i) it is common ground that the Defendants used Sign 1 in relation to goods and services identical to those for which the Morley’s Red and White Mark is registered,

(ii) it is common ground that the Morley’s Red and White Mark is both inherently distinctive and has enhanced distinctiveness through use and

(iii) the judge’s assessment of the degree of similarity between Sign 1 and the Morley’s Red and White Mark, this is not a surprising conclusion.

[34]The second point, returning to ground 1, is that, although the judge found that there was a likelihood of confusion on the part of her second class of consumers, she did not find that there was no likelihood of confusion on the part of her first class of consumers. As stated above, I see no reason to think that she would have reached a different overall conclusion if she had considered the matter from the perspective of consumers who paid a medium-to-low degree of attention rather than a low one. Although her reference to intoxicated consumers was inappropriate, her reasoning stands up if the words “a subset of whom are intoxicated and” are excised from sub-paragraph (i).

[35]The third point, coming back to ground 4, is that, although the judge took the context of use of Sign 1 into account as supporting her finding of a likelihood of confusion, she did not say that she would not have found a likelihood of confusion but for that factor. Nor is this implicit in her reasoning. On the contrary, her reasoning is consistent with her concluding that this was not a case in which the context of use negated a likelihood of confusion which would otherwise arise.

Ground 5: effect of the 2018 Agreement with respect to KK

[36]Although the Defendants appeared to be contending in their skeleton argument that the 2018 Agreement was relevant to the assessment of likelihood of confusion, in oral argument counsel for the Defendants accepted that the judge was right first to decide whether the Defendants’ use of Sign 1 gave rise to a likelihood of confusion, and then to decide whether the 2018 Agreement gave the Defendants a defence to the Claimant’s claim for infringement of the Morley’s Red and White Mark.

[37]It is common ground that the second issue divides into two questions. First, does the 2018 Agreement give KK a defence? Secondly, if it gives KK a defence, does it also give the Franchisee Defendants a defence? The judge answered both questions in the negative. The Defendants’ ground 5 challenges her conclusion on the first question.

[38]By clause 5.8 of the 2018 Agreement, KK is “permitted to use in the course of trade, The Metro’s Signs”. Clause 1 defines “Metro’s Signs” to mean “‘Metro’s Fried Chicken’ the logo a copy of which is included at Annex A and any reasonable modifications thereto”. Annex A is reproduced below.

[39]The Defendants do not dispute that the judge accurately identified the differences between Sign 1 and Annex A (which she referred to as “the Settlement Sign”) at [155]:

“… (i) the addition of the strapline; (ii) the removal of one edge of the border; (iii) the dulling of the colour of the border from electric blue to dark blue and (iv) the reduced spacing between the letters of ‘Metro’s’ … ”

It should be explained that points (ii) and (iii) refer to a border which partially surrounds Sign 1 in use.

[40]The judge held that these were not reasonable modifications since each of them increased the similarity of Sign 1 to the Morley’s Red and White Mark compared to the Settlement Sign.

[41]The Defendants contend that the judge was wrong to interpret the words “reasonable modifications” in the 2018 Agreement as preventing KK from using modifications of the Settlement Sign which made it more similar to the Morley’s Red and White Mark. Counsel for the Defendants accepted during the course of argument, however, that it could not have been intended by the parties to the 2018 Agreement that those words would permit KK to use modifications to the Settlement Sign which increased the likelihood of confusion with the Morley’s Red and White Mark. Although the judge did not expressly say so, it seems to me that, in substance, this was the test she applied. Furthermore, I consider that, having regard to her likelihood of confusion analysis, she was fully entitled to find that at least the first modification had that effect. On that basis, she was correct to conclude that the 2018 Agreement did not permit KK to use Sign 1.

Ground 6: effect of the 2018 Agreement with respect to the Franchisee Defendants

[42]Since the 2018 Agreement does not permit KK to use Sign 1, it is common ground that it does not permit the Franchisee Defendants to use Sign 1. There nevertheless remains an issue between the parties as to whether the 2018 Agreement enables KK to authorise the Franchisee Defendants to use the Metro’s Signs as defined in clause 1, and in particular the Settlement Sign, if such use would otherwise infringe one or more of the Trade Marks or constitute passing off.

[43]There is no dispute as to the applicable principles of contractual interpretation, which are very familiar and need not be set out. The same goes for the principles concerning the implication of terms. The issue concerns the application of those principles to the 2018 Agreement.

[44]Before turning to the relevant terms of the 2018 Agreement there is one contextual fact to note. The judge accepted SS’s evidence that, prior to entering into the 2018 Agreement, KK told SS that only one other person in addition to himself, namely a man called Ameen, was using the signs the Claimant was complaining about at that time ([120](iv)). It is not clear to me whether Ameen is this man’s first or last name, but I will refer to him as Mr Ameen. The judge made no finding as to the basis upon which SS was given to understand that Mr Ameen was using the signs in question, and we were not shown any evidence which cast any light on that question.

[45]Although the judge accepted SS’s evidence that he would not have signed the 2018 Agreement if he had believed that it allowed KK to franchise the Metro’s brand ([120](iv)) and rejected KK’s evidence that it was mutually understood that he would be permitted to do so ([120](v)), the 2018 Agreement must be objectively interpreted without reference to the parties’ subjective intentions.

[46]Turning to the terms of the 2018 Agreement, the first point to note is that neither Mr Ameen (who is no longer a franchisee of KK) nor any of the Franchisee Defendants is a party to it. Furthermore, clause 11 provides that the terms of the 2018 Agreement are not enforceable by any third party under the Contracts (Rights of Third Parties) Act 1999. As is common ground, it follows that the Franchisee Defendants cannot directly derive any rights from the 2018 Agreement. The Defendants nevertheless contend that the 2018 Agreement permits KK to sub-license use of the Metro’s Signs by the Franchisee Defendants either upon its true construction or by implication. The Claimant disputes this.

[47]The Claimant is referred to in the 2018 Agreement as “MFF”. Clause 1 defines “Related Parties” as meaning “a party’s parent, subsidiaries, assigns, transferees, representatives, principals, agents, officers or directors excluding for the avoidance of doubt any third party using in the course of trade the Signs”. It defines “the Signs” as meaning “the KK Trade Marks, ‘Mowley’s’ and any other sign colourably similar”.

[48]Clauses 3 and 4 provide:

“3. RELEASE 3.1 This agreement is in full and final settlement of, and each party hereby releases and forever discharges, all and/or any actions, claims, rights, demands and set-offs in the Jurisdiction that it, its Related Parties or any of them ever had against the other party or any of its Related Parties arising out of or connected with the Dispute. (Collectively the Released Claims) 3.2 For the avoidance of doubt this settlement and release does not waive, release, settle or in any other way compromise any claim MFF may have against any other third party (or release them thereof) in respect of third party’s dealings in the course of trade under and by reference to the Signs. 4. AGREEMENT NOT TO SUE Each party agrees, on behalf of itself and on behalf of its Related Parties not to sue, commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against the other party or its Related Parties any action, suit or other proceeding concerning the Released Claims, in the Jurisdiction. Each party agrees to bear their own costs in relation to the Dispute ”

Each party agrees, on behalf of itself and on behalf of its Related Parties not to sue, commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against the other party or its Related Parties any action, suit or other proceeding concerning the Released Claims, in the Jurisdiction. Each party agrees to bear their own costs in relation to the Dispute ”

[49]Clause 5.1 provides that KK undertakes as follows:

“Within 7 days of the Effective Date he will cease to use, in the course of trade of the Signs, to include use in respect of the Stock (save as provided by clause 5.7 below), signage and business stationery.”

[50]Clause 5.6 provides that KK undertakes as follows:

“He will make reasonable efforts, within 14 days of the Effective Date, to procure any third party using the Signs in the course of trade to cease such use and within a reasonable period to use in the course of trade the Metro’s Signs. If such third parties do not comply KK will provide reasonable assistance and cooperation to MFF in any legal proceedings brought by MFF against those third parties brought to enforce the MFF Trade Marks and/or prevent passing off[.]”

[51]Clause 5.8 provides:

“The Parties agree that the undertakings above will not apply to, and KK will be permitted to use in the course of trade, The Metro’s Signs to include for the avoidance of doubt the application of The Metro’s Signs to any packaging and any application for a registered trade mark in respect of the Metro’s Signs.”

[52]Clause 6.3 provides that the Claimant undertakes:

“Not to bring proceedings against KK in respect of his dealings in the course of trade under and by reference to the Metro’s Signs, unless said dealings breach any other term of this Agreement.”

[53]Clause 6.5 provides that the Claimant undertakes:

“Not to oppose, invalidate or otherwise challenge the validity of any application for, or registration of, the Metro’s Sign[s].”

[54]In considering the interpretation of the 2018 Agreement, it is convenient to begin by working through the provisions I have set out above and noting a number of points. The first is that the definition of Related Parties expressly excludes any third party using the Signs (as defined) in the course of trade.

[55]Secondly, such a third party is therefore not covered by the release in clause 3.1, and this is expressly confirmed by clause 3.2. Equally, such a third party is not covered by the covenant not to sue in clause 4.

[56]Thirdly, clause 5.1 requires KK to cease using the Signs.

[57]Fourthly, clause 5.6 requires KK to make reasonable efforts to procure that any third party using the Signs cease such use “and within a reasonable period to use in the course of trade the Metro’s Signs” i.e. instead of the Signs. I understood it to be accepted during the course of argument that, on the one hand, this clause permits KK to authorise such a third party to use the Metro’s Signs, but on the other hand, it does not permit KK to authorise any third party who was not using the Signs at the date of the 2018 Agreement to use the Metro’s Signs. On the facts known to the parties, the only third party who could benefit from this clause is Mr Ameen.

[58]Fifthly, clause 5.8 permits KK to use the Metro’s Signs in the course of trade and to apply to register them as trade marks. On its face, it does not permit KK to authorise any third party who was not using the Signs at the date of the 2018 Agreement to use the Metro’s Signs. Similarly, clause 6.3 prevents any claim by the Claimant against KK for using the Metro’s Signs, but not a claim against any third party who was not using the Signs at the date of the 2018 Agreement.

[59]Finally, clause 6.5 prevents the Claimant from opposing registration of the Metro’s Signs by KK or challenging the validity of any such registrations.

[60]The conclusion I draw from these points is that the express terms of the 2018 Agreement license KK to use the Metro’s Signs in the course of trade (assuming that such use would otherwise infringe the Trade Marks or constitute passing off), but do not permit KK to sub-license use of the Metro’s Signs by any third party who was not using the Signs at the date of the 2018 Agreement. When these points were put to counsel for the Defendants during the course of argument, his ultimate response was to argue that, either as a matter of interpretation or by implication, the words “use in the course of trade” in clause 5.8 included use by a third party with the consent of KK, particularly given that clause 5.8 also permits KK to register the Metro’s Signs as trade marks.

[61]The basis for this argument is that section 46(1)(a) and (b) of the 1994 Act equate use of a registered trade mark with the proprietor’s consent with use by the proprietor when considering whether the trade mark should be revoked for non-use. Moreover, it is usually the case that distinctiveness, reputation and goodwill generated through use of a trade mark by a licensee will accrue to the benefit of the licensor. These points apply to sub-licences as well as to licences.

[62]I do not accept this argument. It assumes what it seeks to prove, namely that the 2018 Agreement gives KK power to sub-license third parties who were not using the Signs at the date of the 2018 Agreement. If it did, then it would have those effects. There is no principle of trade mark law which dictates that a licence must include a power to sub-license, however. Whether a licence includes the power to grant sub-licences depends upon whether the parties have agreed that it should. In the case of the 2018 Agreement no such agreement is contained in the express terms. Nor is it either necessary, or so obvious that it goes without saying, that such a term should be implied.

[63]The only point that possibly provides any support for the argument is that clause 6.5 would not prevent the Claimant from applying to revoke any registration of the Metro’s Signs by KK on the ground of five years’ non-use, since revocation under section 46(1) is different to invalidation of a trade mark under 47(1) of the 1994 Act. It does not follow from this that it must have been intended that KK would be able to sub-license use of the Metro’s Signs by franchisees. The 2018 Agreement envisages that the primary user of the Metro’s Signs will be KK. Use by the proprietor of a trade mark (here KK) is sufficient to defeat an application for revocation on the ground of non-use, and in those circumstances the proprietor will have no need to rely upon use by (sub-)licensees.

[64]I therefore conclude that the judge was correct to hold that the 2018 Agreement does not empower KK to sub-license use of the Metro’s Signs by the Franchisee Defendants (assuming that such use would otherwise infringe the Trade Marks or constitute passing off).

Ground 7: breach of the 2018 Agreement by KK

[65]As is common ground, this ground stands or falls with ground 5.

Ground 8: similarity of Sign 2 to the Triple M Mark

[66]Although the point was not taken below, and not clearly articulated in either the Defendants’ grounds of appeal or their skeleton argument, during the course of argument the Defendants applied for permission to raise the contention that the judge had been wrong to accept the Claimant’s case that the Sixth Defendant and KK had used Sign 2. Rather, they contended, the sign they had used was “MMM burger” (see the illustration in the judge’s judgment at [123]). I would give the Defendants permission to raise this contention, but I do not accept it. In context “burger” is clearly a description of the product being offered, while “MMM” differentiates it from other kinds of burgers offered by the relevant Defendants. Thus the sign is “MMM”.

The judge’s assessment of similarity was as follows:

“126. The use of Sign 2 complained of is in the name of a product which must be requested orally, in store, to purchase. I accept that Sign 2 in the context of the name of a burger (as distinguished from the use of ‘MMM’ as a word within a sentence or strapline, as in the Morley's Red and White Mark), can naturally and easily be pronounced ‘Triple M’, as in, ‘I'll have a Triple M Burger please’. I am satisfied that a substantial subset of each class of average consumer would refer to it in that way, although others might use the other ways in which it can be said. To that extent, I accept the Claimant's case that Sign 2 would be perceived by both classes of average consumer as aurally and conceptually identical to the Triple M Mark, although visually dissimilar. 127. On a global assessment, then, I find Sign 2 is similar to the Triple M Mark to a medium-high degree.”

[68]The Defendants challenge this assessment on two bases. First, they contend that it is inconsistent with the judge’s assessment in the context of the family of marks issue at [89]:

“… In my judgment the ‘MMM...’ in the Morley’s Red and White Mark, found as it is in the context of a sentence forming the strapline, is likely to be seen, pronounced and conceptually understood by the average consumer as one long ‘mmm’ sound, i.e. as the familiar expression of pleasure in something tasty. … I am satisfied that few if any consumers would look at the strapline ‘MMM... It Tastes Better’ and read or pronounce that as ‘Triple M... It Tastes Better’. That seems to me to be extremely unlikely (but note that I have a different view when ‘MMM’ is used in a different context, see the discussion in relation to Issue 7 below). …”

[69]The judge did not think there was any inconsistency between these two assessments. Nor do I. As the judge pointed out, the context is different.

[70]Secondly, the Defendants contend that the judge’s finding of similarity was rationally insupportable. The Defendants do not go so far as to contend that the judge ought to have found that Sign 2 was dissimilar to the Triple M Mark, but they contend that she ought to have found that the degree of similarity was low, and therefore there was no likelihood of confusion. I disagree. The judge’s assessment of similarity was well within the bounds of rationality, and therefore her overall assessment of likelihood of confusion is unimpeachable.

Conclusion

[71]For the reasons given above I would dismiss the appeal.

Lady Justice Falk:

[72]I agree.

Lord Justice Newey:

[73]I also agree.