Mastercard International Incorporated v Hitachi Credit (UK) Plc [2004] EWHC 1623 (Ch)

[2004] EWHC 1623 (Ch)Case No CH2004/APP/0123
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 8 July 2004
Before
THE HONOURABLE MR JUSTICE PETER SMITH
Between
Mastercard International IncorporatedAppellantHitachi Credit (UK) PlcRespondent
Mark Engelman (instructed by Field Fisher Waterhouse) for AppellantRoger Wyand QC (instructed by W.H. Beck, Greener & Co) for RespondentHearing Hearing date: 29 th June 2004
JudgmentMr Justice Peter Smith :INTRODUCTION
[1]This is an appeal from a decision of Mr Allan James the Hearing Officer in the Trade Mark Office made on 10th March 2004, when he dismissed the Appellant’s (“Mastercard”) opposition against a Trade Mark application filed by Hitachi Credit (UK) Plc (“Hitachi”) in respect of the Trade Mark CREDIT MASTER filed for goods/services falling within classes 9, 16, 35, 36 and 42. The grounds of opposition originally claimed infringement of sections 5(2)(b), 5(3) and 5(4)(a) of the Trade Marks Act 1994 (“TMA 1994”). Mastercard relied upon a family of 91 Trade Marks it owned which incorporated the word MASTER filed and registered as United Kingdom Trade Marks and Community Trade Marks. Hitachi by its Counterstatement denied all the grounds of opposition and required Mastercard to prove its reputation and the Trade Marks cited.[2]At the hearing of the opposition proceedings, Mastercard agreed to narrow the number of Trade Marks it relied upon in its statement of grounds to five, namely the word MASTERCARD, registered in respect of classes 9, 16, 18, 25, 28, 35, 36, 38, 41 and 42.[3]The Hearing Officer refused all of Mastercard’s grounds of opposition and awarded against it costs appropriate to the scale of such hearings and also costs above the scale.[4]Mastercard seeks that the order be set aside and substituted with an order that Trade Mark Application number 22343447 CREDIT MASTER be refused and that Hitachi pay the costs of the appeal and below.[5]Mastercard has limited its appeal to section 5(3) grounds alone. There are no challenges to any of the factual findings as such of the Hearing Officer.

NATURE OF APPEAL

[6]The appeal relates to section 5(3) TMA 1994, which provides as follows:- “(3) A Trade Mark which:-(a) is identical with or similar to an earlier Trade Mark, and(b) is to be registered for goods or services which are not similar to those for which the earlier Trade Mark is protected shall not be registered if, or to the extent that, the earlier trade mark has a reputation in the United Kingdom (or, in the case of a Community Trade Mark, in the European Community) and the use of the later mark without due cause would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark”. (a) is identical with or similar to an earlier Trade Mark, and (b) is to be registered for goods or services which are not similar to those for which the earlier Trade Mark is protected shall not be registered if, or to the extent that, the earlier trade mark has a reputation in the United Kingdom (or, in the case of a Community Trade Mark, in the European Community) and the use of the later mark without due cause would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark”.[7]The Appeal from the Hearing Officer’s decision is to a Judge in the Chancery Division and is governed by CPR 52.11(1) where the appeal is limited to a review, unless it is suggested some exceptions in that sub rule apply (none is suggested in this case).[8]The powers on such an appeal to interfere are very limited in respect of factual matters. I was referred to the Court of Appeal’s decision in Bessant & Others –v- South Cone Incorporated [2002] EWCA Civ 763. In particular that judgment referred (paragraph 18) to the observations of Buxton LJ in Norowzian –v- Arks Limited (No. 2) [2000] FSR 363. At 370 he observed:- “… where it is not suggested that the judge made an error of principle a party should not come to the Court of Appeal simply in the hope that the impression formed by the judges of this court, or at least by two of them, will be different from that of the trial judge”.[9]It is important to bear that in mind in the context of the present Appeal in my judgment.[10]As that case emphasises the appeal is not a rehearing and the appeal judge should not substitute his own view unless it can be shown that the Hearing Officer, especially given his experience, has clearly made an error. This is the more so in the case of a discretionary matter (one of the grounds of appeal) where the Appellate Court should not interfere unless the Hearing Officer had exercised his discretion according to wrong principle. That (if it is necessary to cite authority) can be derived from the case of E L Du Pont De Nemours & Co. –v- S Du Pont [2003] EWCA Civ 1368. That too concerned a refusal by the Hearing Officer of an application to amend, which was reversed by the Judge on Appeal. I refer to page 12 of the Judgment of the Court of Appeal (reversing the Judge at first instance) where Aldous LJ said:- “Those experienced in cases such as these, such as the Hearing Officer, would have known that the sort of evidence normally adduced on issues of distinctiveness included evidence from editors of trade and other magazines, evidence from buyers of department stores and perhaps survey evidence. Whether such evidence would have been forthcoming in this case the Hearing Officer could not predict until enquiries were made and the cost involved had been accepted by EIDP to have been necessary. That the Hearing Officer would have had in mind when coming to the conclusion he did.”[11]I approach the appeal against the decision of the Hearing Officer to refuse the Appellant permission to amend its Grounds of Opposition in the light of that case in particular.

REFUSAL OF AMENDMENT

[12]The basis for this can be discerned from paragraphs 9 and following of the Hearing Officer’s judgment. The complaint by the Appellant is that he refused permission to amend to allow them to challenge a Trade Mark where the goods or services are similar as well as those that are dissimilar. It will be seen that section 5(3)(b) refers to goods that are not similar. The reason for this justification despite the intriguingly straightforward use of the words “not similar” in section 5(3)(b) arises out of the decision of the European Court of Justice (ECJ) in Davidoff –v- Gofkid [2003] FSR 28 and Adidas Salomon AG –v- Fitness World Trading Limited (C408/01) (see also the report of the opinion of the Advocate General Jacobs at [2004] FSR 401).[13]Those decisions considered article 4(4)(a) of the directive 89/104/EEC of 21st December 1988 (the “Directive”).[14]The Directive provides:- “(4) Any Member State may furthermore provide that a trade mark shall not be registered or, if registered, shall be liable to be declared invalid where, and to the extent that: (a) the trade mark is identical with, or similar to, an earlier national trade mark... and is to be, or has been, registered for goods or services which are not similar to those for which the earlier trade mark is registered, where the earlier trade mark has a reputation in the Member State concerned and where the use of the later trade mark without due cause would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark;”[15]The conclusion of the ECJ in Davidoff was that the words can also be read as extending to goods or services which are identical with or similar to those covered by the registered mark. The Davidoff decision was made on 9th January 2003. It was made substantially after the Grounds of Opposition, which were dated 30th June 2001.[16]A similar decision was made in the Adidas-Salomon case, see paragraphs 13 and following, which applied the Davidoff case.[1]As the Hearing Officer wryly observed in paragraph 13 of his judgment “if the ECJ is able to find that the words “not similar” in article 4(4)(a) of the Directive mean “whether or not similar” it must be possible for this tribunal to stretch the same words in section 5(3) of the Act so they have the same meaning. I therefore accept that section 5(3) of the Act may apply whether or not the goods or services in the application are similar to those for which the earlier mark has a reputation and is protected”. Mr Wyand QC who appears for the Respondents accepts that the Hearing Officer correctly considered the impact of the Davidoff and the Adidas-Salomon case on section 5(3). I am told an amendment has been made to the Statute to make the position clear, but that does not affect the primary decision that section 5(3) already has the effect expressly created by the amendment. It is plain that the Grounds of Opposition did not seek to raise an objection based on similar or identical goods or services. Mr Engelman who appears for the Appellant acknowledged that at the time of the service of the Grounds of Opposition nobody would have considered section 5(3) was available in respect of similar or identical goods or services. Equally, a respondent would not expect then to face a case based on such products. It is clear in my view when one reads paragraph 7 and 9 of the Grounds of Opposition the only issues that are put under section 5(3) TMA 1994 are those which relate to dissimilar goods or services. Mr Engelman sought to persuade me that it could be discerned from paragraph 4 where there is reference to identity or similarity of goods, that reliance was being placed on that under section 5(3), but that plainly was in respect of the opposition under section 5(2)(b). In any event I do not see how it can be said that paragraphs 7 and 9 could be read as subject to paragraph 4, because nobody settling the Grounds of Opposition in June 2001 when they were settled believed that that was capable of being argued. The Hearing Officer raised this during the hearing. He first ruled that the Grounds of Opposition as formulated un-amended did not include Grounds of Opposition in respect of section 5(3) based on identical or similar goods or services. I agree with that analysis. Mr Engelman submitted that that was an application by a national court of the wrong legal principles i.e. by refusing to allow the Appellant to adduce opposition based on similar or identical goods or services. I do not agree. All the Hearing Officer did was exclude a potential argument, which the Appellant could have raised. The hearing before him was on 3rd December 2003, over 11 months after the Davidoff case came out and 3 months after the Adidas-Salomon case was decided by the ECJ. Given the large period between those decisions and the hearing it was open to the Appellant to have addressed the amendment issue somewhat earlier than it did. As Mr Engelman said in submissions (on another point, but equally applicable to this point) the Davidoff and Adidas-Salomon decisions caused such consternation that the small number of practitioners in this specialised field would all be well aware of them. That is equally of course applicable to the Appellant. I do not see that the decision of the Hearing Officer to exclude argument based on one limb of section 5(3) is a denial by the national court of a binding decision of the ECJ. It is simply a decision made by him exercising his discretion as to what arguments are going to be allowed in respect of section 5(3). He made that decision during the course of the hearing. In paragraph 18 he rejected the application to amend giving 8 reasons. Although Mr Engelman was critical of all of the points raised by the Hearing Officer, it seems to me that there are good reasons as set out there why he might wish to exercise his discretion so as to refuse the amendment. An adjournment would have been inevitable. The procedures in the Patent Office had already lasted nearly three years. There would have been further delay and the Respondent might well have wanted to adduce further evidence. Despite Mr Engelman’s forceful submissions, I do not see that the exclusion would have had what he described as a massive effect. As the Hearing Officer correctly identified there was an alternative argument based on section 5(2) for similar or identical services. Mr Engelman’s submission was an expansion of paragraph 18 of his skeleton argument where he submitted that the disallowance of the ability to argue section 5(3) based on similar goods or services deprived the Appellant of making a case that such similarity would have made a link between the two marks and therefore a breach of section 5(3). He submitted, based on the Court of Appeal decision in Cobbold –v- London Borough of Greenwich 9th August 1999 that the amendment should have been allowed “so that the real dispute between the parties could be adjudicated”. That has to be considered in its context. A party does not have an absolute right to seek to amend its claim to bring in a new claim at any time. The court will strive to enable a party to correct its case (for whatever reason) so that it can have a fair opportunity to present its case fully on the merits at the hearing. That is a factor that the courts must bear in mind. However, the court also has to bear in mind other factors. It has to bear in mind the time when the application is made for example, the impact the amendment will have on the hearing and whether it will be adjourned (Mr Engelman conceded an adjournment would have been inevitable), the impact of the adjournment and the impact of the case on the other side. Whilst the Hearing Officer did not make any reference to any authorities, he plainly had a full grasp of the balancing exercise required as his reasoning set out in paragraph 18 shows. He plainly followed the path identified, for example, in the Du Pont De Nemours case to which I have already made reference and I do not see that the Appellant’s argument is realistically anything other than an attempt to invite the Appellate Court to revisit the exercise of a discretion made according to correct principles in the light of the matters before him. I have come to the conclusion that even though the effect might have been to deprive the Appellant of an argument (any adverse decision would have that effect on any application to amend) it cannot be said that the Hearing Officer’s reasoning was so flawed that he came to a decision that no reasonable Hearing Officer could have done in the circumstances. I conclude, therefore, that his interpretation of the Grounds of Opposition was correct and his decision to refuse the application to amend cannot be faulted. I therefore reject that ground of complaint against the Hearing Officer’s decision. SUBSTANTIVE GROUNDS[17]The major substantive ground is a contention that the Hearing Officer failed to construe section 5(3) TMA 1994 in accordance with the Davidoff and Adidas-Salomon decisions. In addition to the decision of those cases on the word “dissimilar” to which I have already referred above, they also gave indications as to how a challenge under section 5(3) could be made and upon what principles. This involves a careful consideration of those cases in the light of the wording of section 5(3). I will first set out the Hearing Officer’s Judgment in some aspects. HEARING OFFICER’S JUDGMENT[18]He reviewed the evidence and next went on to consider the claim under section 5(2). In paragraph 34 he reviewed the law under that section and in paragraph 38 he concluded that the services were similar. There is no challenge to that factual finding. In paragraph 41 he rejected the argument that the word MASTER was the dominant and distinctive element of the mark, observing:- “41. … in my judgment this approach pays too little attention to the tendency of consumers to regard trade marks as wholes. An average consumer does not analysethe individual words of a two word mark independently. He or she remembers the mark by reference to the overall impression created by the mark in his or her mind.42. In this connection, I note that the idea created by the mark CREDIT MASTER is likely to be one of mastering (as in controlling) credit. By contrast, the mark MASTERCARD conjures up the idea of a superior or all purpose card. This distinction, together with the more obvious visual and aural differences between the marks, attracts me to [the Respondent’s] submission that the overall impressions created by these marks are significantly different. The main point of similarity arises from the common use of the word MASTER. In this respect I note that, although capable of protection alone, the word MASTER does not have an inherently strong distinctive character.43. I reject [the Appellant’s] submission that the descriptive nature of the non-common words (CREDIT and CARD) creates any significant conceptual similarity between the marks. … I find that, considered as wholes, the marks have a very low level of similarity.”[19]There is no challenge to any of those factual findings. In paragraph 44 he acknowledged that the Appellant’s mark MASTERCARD was extremely well known as one of the two leading brands of credit card. He then went on to consider the global appreciation test under section 5(2). In paragraph 46 he came to the conclusion as follows:- “46. I bear in mind that the majority of the respective goods and services are identical but I find that the differences between the respective marks are such that even after I have allowed for the enhanced distinctive character of the opponent’s trade mark as a result of the use made of it, and for the possibility of an average consumer imperfectly recollecting the earlier mark, there is no likelihood of direct confusion between the marks MASTERCARD and CREDIT MASTER. In reaching this conclusion I have taken the view that the average consumer of the goods and services listed in the application is likely to pay more than a minimal degree of attention when selecting these goods/services. This is not the proverbial “bag of sweets” case.”[20]In paragraph 48 he also confirmed his view that:- “48. … MASTERCARD and CREDIT MASTER [were] insufficient [from the point of view of similarities] to result in the average consumer making an association between the respective marks. …”[21]Accordingly he concluded that the opposition under section 5(2) was not made out. There is no appeal against that part of his decision. 23. He then went on to consider section 5(3). He summarised what he saw to be the legal principles in paragraph 52. The Appellant’s attack on the Hearing Officer’s judgment is extensively based on this analysis and Mr Engelman’s submissions that it showed the Hearing Officer was applying the wrong tests. I accordingly set out the paragraph in full:- “52. The points that come out of these cases are as follows: a) ‘Reputation’ for the purposes of Section 5(3) means that the earlier trade mark is known by a significant part of the public concerned by the products or services covered by that trade mark (paragraph 26 of the ECJ’s judgment in Chevy); b) The similarity between a trade mark with a reputation and a later sign or mark does not have to be such as to give rise to a likelihood of confusion between them; the provision may be invoked where there is sufficient similarity to cause the relevant public to establish a link between the earlier mark and the later mark or sign, Addidas (sic) Salomon AG v Fitnessworld Trading Ltd; c) The link must be such as to cause actual detriment, or take unfair advantage, of the earlier mark or its repute, paragraph 88 of Pumfrey J’s judgment in the Merc case); d) The provision is not aimed at every sign whose use may stimulate the relevant public to recall a trade mark which enjoys a reputation with them (per Neuberger J. in the Typhoon case); e) The stronger the earlier mark’s distinctive character and reputation the easier it will be to accept that detriment has been caused to it (per Neuberger J. in the Typhoon case); f) Detriment can take the form of either making the earlier mark less attractive (tarnishing) or less distinctive – blurring (paragraph 88 of Pumfrey J.’s judgment in the Merc case); g) Unfair advantage can take the form of feeding on the fame of the earlier mark in order to substantially increase the marketability of the goods or services offered under the later trade mark (per G Hobbs QC in Visa at page 505, lines 10-17).” a) ‘Reputation’ for the purposes of Section 5(3) means that the earlier trade mark is known by a significant part of the public concerned by the products or services covered by that trade mark (paragraph 26 of the ECJ’s judgment in Chevy); b) The similarity between a trade mark with a reputation and a later sign or mark does not have to be such as to give rise to a likelihood of confusion between them; the provision may be invoked where there is sufficient similarity to cause the relevant public to establish a link between the earlier mark and the later mark or sign, Addidas (sic) Salomon AG v Fitnessworld Trading Ltd; c) The link must be such as to cause actual detriment, or take unfair advantage, of the earlier mark or its repute, paragraph 88 of Pumfrey J’s judgment in the Merc case); d) The provision is not aimed at every sign whose use may stimulate the relevant public to recall a trade mark which enjoys a reputation with them (per Neuberger J. in the Typhoon case); e) The stronger the earlier mark’s distinctive character and reputation the easier it will be to accept that detriment has been caused to it (per Neuberger J. in the Typhoon case); f) Detriment can take the form of either making the earlier mark less attractive (tarnishing) or less distinctive – blurring (paragraph 88 of Pumfrey J.’s judgment in the Merc case); g) Unfair advantage can take the form of feeding on the fame of the earlier mark in order to substantially increase the marketability of the goods or services offered under the later trade mark (per G Hobbs QC in Visa at page 505, lines 10-17).”[22]I will revert to the criticisms of that legal analysis further in this Judgment. In paragraph 53 he reminded himself that the Appellant’s mark had a substantial reputation. In paragraph 55, in view of his findings at 15 to 18 above (that is to say the refusal of the application to amend) it was only necessary to consider the objection in respect of those goods and services, which were dissimilar. In paragraph 56 he concluded:- “56. I find that the [Appellant’s] case fails because, considered in relation to these types of goods and services, I do not believe that the similarity of the respective marks to be sufficient for the average consumer of the products to make any link between them.”[23]In paragraph 57 he expanded on this by reference to his earlier ruling under section 5(2) where he said this:- “57. In this connection I note that, as with the case brought under Section 5(2), the opponent’s case depends, in part, on the proposition that the word MASTER is the dominant and distinctive element in its mark, and that the appearance of this word in other marks will be sufficient (at least absent distinctive distinguishing matter) to trigger a link in the public’s mind between its mark and marks such as CREDIT MASTER. However, as I have explained above in giving my reasons for rejecting the Section 5(2) ground of opposition, I believe that the suggestion attributes the average consumer with a propensity to mentally dissect two word marks such as these. I do not believe that consumers in fact pay that much attention.58. In case I am found to be wrong about that, I further find that the evidence is insufficient to show that any link that was made between the marks would result in the applicant’s mark taking unfair advantage of, or being detrimental to, the distinctive character or repute of the opponent’s mark.59. I regard the submission that the applicant’s mark will take (unfair) advantage of the repute of the opponent’s mark through a process of word association to be somewhat far fetched when considered in relation to goods/services which are dissimilar to those for which the opponent’s mark enjoys a reputation.”[24]Mr Engelman submits that this part of the judgment shows that the Hearing Officer confused the requirements of section 5(2) with those of section 5(3), with the consequence that he applied the wrong test. I do not think that is a fair analysis of the judgment. He has set out the legal principles applicable to both sections separately and he correctly reminded himself (assuming that those are the correct principles) what principles he needed to consider when he considered the application under section 5(3). In paragraph 56 in my judgment he plainly applied the link test, which is the subject matter of the major criticism by the Appellant. In paragraph 57, it is true that he made reference to in effect paragraph 41 of the earlier part of his judgment, which I have set out above. That does not mean that he was applying the same test as Mr Engelman submits, i.e. he was applying a test of a likelihood of confusion; it merely meant that having reviewed the same evidence (self evidently because there is only one set of evidence) he concluded that that evidence, in addition to failing to convince him that there would be any likelihood of confusion for section 5(2),also failed to convince him that there was a likelihood of any link between the two proposed marks as required by section 5(3). It is clear that the Hearing Officer with great experience (and I agree with him for what it is worth) understood how the class of persons affected by the marks i.e. the general public, would address these two competing marks. Finally, in this context, in paragraph 58 he determined that if he was wrong on that i.e. that there was a propensity for the two marks to be linked by the public, he found that the evidence was insufficient to show that the result would be the Respondent’s mark taking unfair advantage of, or beeing detrimental to the distinctive character or repute of the Appellant’s mark. In other words he appears to be finding a number of requirements for the purposes of the claim under section 5(3). First he required that evidence to show that a trade mark has a reputation (not seriously argued). He then considered that the evidence should then be assessed to see whether there would be a link drawn by the class of people considering the mark between the two and he rejects that. Finally, he went on to consider if he was wrong in that, i.e. that the evidence ought to have led to a conclusion that a link would be drawn, he nevertheless concluded notwithstanding that link that there was no evidence to show that there was a taking of unfair advantage of or detriment to, the distinctive character of the earlier mark. In paragraph 59 he commented that he regarded the submission that the Respondent’s mark would take unfair advantage of the repute of the Appellant’s mark through a process of word association to be somewhat far fetched when considered in relation to goods/services which are dissimilar to those for which the Appellant’s mark enjoys a reputation. 27. Finally, in paragraph 60 he expressed a view as to onus of proof and said this:- “60. The onus is on the opponent to make out its case under Section 5(3). I note that the provision refers to use which “will” be detrimental rather than simply a likelihood of risk of such damage. I therefore regard the opponent’s claim of damaging dilution of the distinctive character of its mark (or more accurately the MASTER element of it) to be somewhat optimistic in the absence of evidence that its mark is unique (or at least one of a small number of marks) in utilising the word MASTER, even within the market for financial services. It is clear from the applicant’s evidence that the opponent is far from being able to claim a de jure monopoly in such marks which would be damaged by the proposed registration.”[25]This too was attacked by Mr Engelman for the Appellant. In his written submissions, supplemented by his oral submissions, he submitted that where one was considering section 5(3) where the mark was one that had a reputation, the Hearing Officer failed to appreciate that with a mark such as that any new mark using the same identical attributes (i.e. the word MASTER) would inevitably start the process of dilution of the reputation of the mark. This led Mr Engelman to submit that for those purposes no evidence was therefore necessary and the tribunal should infer by reason of this dilution principle that there would be detriment to the mark. In so submitting he contended that the relevant authorities showed that this was the way the principle as he submitted it was developed. Mr Wyand QC did not accept that submission. His submission was that the exercise involves a consideration of fact and degree. Sometimes when the mark is very highly reputed the tribunal will be more ready to infer detriment by the use of an identical or similar mark, but where a mark has a reputation, but not necessarily as high a reputation, the court might well require evidence to show that there was detriment to its mark. The starting point for this is the opinion of Advocate General Jacobs in the case of General Motors Corporation –v- Yplon SA [C-375/97]. 29. In paragraphs 41 to 43 of his opinion the Advocate General viewed the assessment process in respect of the equivalent of section 5(3):- “41. Secondly, the courts should for a realistic assessment of reputation use a variety of criteria which might include, for example, the degree of knowledge or recognition of the mark in the relevant sectors of the public; the duration, extent and geographical area of the mark; and the scale and scope of investment in promoting the mark. (13)42. Above all, it is necessary to give full weight to the provisions of Article 5(2) as a whole. Thus the national court must be satisfied in every case that the use of the contested sign is without due cause; and that it takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the mark. These requirements, properly applied, will ensure that marks with a reputation, whether or not the reputation is substantial, will not be given unduly extensive protection.43. It is to be noted in particular that Article 5(2), in contrast to Article 5(1)(b), does not refer to a mere risk or likelihood of its conditions being fulfilled. The wording is more positive: ‘takes unfair advantage of, or is detrimental to (emphasis added). Moreover, the taking of unfair advantage or the suffering of detriment must be properly substantiated, that is to say properly established to the satisfaction of the national court: the national court must be satisfied by evidence of actual detriment, or of unfair advantage. The precise method of adducing such proof should in my view be a matter for national rules of evidence and procedure, as in the case of establishing likelihood of confusion: see the tenth recital of the preamble.”[26]The concluding sentence in paragraph 43 shows that the Advocate General links the method of proof to that of confusion under section 5(2). Read as a whole his opinion in my judgment is contrary to the submissions of Mr Engelman. It sets out how the criteria should be assessed, but leaves the national court to determine it. In particular in paragraph 43 it is quite clear that his opinion is that infringement is not established by mere risks or likelihoods, but there is a requirement that there will be detriment or unfair advantage. That stance is confirmed inferentially from paragraph 30 of the ECJ’s judgment following the opinion of the Advocate General, although no detailed analysis of it has taken place. 31. Pumfrey J. considered this in DaimlerChrysler AG –v- Alavi [2001] RPC 42. His consideration of it starts at paragraph 88 which provided as follows:- “88. In my view, the best approach is just to follow the section, remembering Jacobs A.G.’s warning that it is concerned with actual effects, not risks or likelihoods. The enquiry is as follows.(1) Does the proprietor’s mark have a reputation? If so,(2) is the defendant’s sign sufficiently similar to it that the public are either deceived into the belief that the goods are associated with the proprietor so that the use of the sign takes unfair advantage of the mark, or alternatively causes detriment in their minds to either (a) the repute or (b) the distinctive character of the mark, or(3) even if they are not confused, does the use of the sign nonetheless have this effect, and(4) is the use complained of nonetheless with due cause. Detriment can take the form either of making the mark less attractive (tarnishing, to use Neuberger J.’s word) or less distinctive (blurring). On this analysis, VISA is of course a case of tarnishing.” He then reverted to it further in paragraphs 92 to 93:- “92. The words “detriment to the distinctive character” also give difficulty. Mr Hobbs Q.C. and Neuberger J. discuss them. I find the concept to which they refer somewhat fugitive. The presence of two similar marks where there was only one before seems to me to be detrimental to the distinctive character of the first. I am satisfied that this is not what the words are talking about. Mr Hobbs Q.C. deals with the matter as arising out of deception and confusion, which is logical. But Jacobs A.G. says that Article 5(2) covers cases where there is no deception: what are they? I think, with respect, that the interpretation placed on these words inferentially by Neuberger J. when he refers to blurring and quotes the following passage from Mostert, Famous and Well-Known Marks (1997) at 58-59 is more satisfactory:
“Obviously, the more a trademark is used on a wide variety of goods becoming saturated in the process, the less the particular mark will call to mind and focus the public’s attention on the plaintiff’s particular product. If for example, the TIFFANY mark has become well-known in connection with jewellery, and it is used on a multiplicity of other goods such as chocolates, clothing, a motion picture house, and a restaurant, the likelihood that the TIFFANY mark will still exclusively call to mind the owner’s jewellery products becomes increasingly diminished.” 93. Read literally, this is simply a suggestion that once a mark acquires a reputation one can throw the specification of goods away. Any use of another mark will potentially have this effect if any member of the relevant public becomes aware of the second mark. Here, the point was not pressed, emphasis being placed on the element of detriment to the repute of the mark, and I prefer to come to no conclusion on it. It raises difficult conceptual problems ” “Obviously, the more a trademark is used on a wide variety of goods becoming saturated in the process, the less the particular mark will call to mind and focus the public’s attention on the plaintiff’s particular product. If for example, the TIFFANY mark has become well-known in connection with jewellery, and it is used on a multiplicity of other goods such as chocolates, clothing, a motion picture house, and a restaurant, the likelihood that the TIFFANY mark will still exclusively call to mind the owner’s jewellery products becomes increasingly diminished.”
[27]It is clear that Pumfrey J. does not come to any clear conclusion, but reading the passages as a whole, in my judgment, he favours a requirement of evidence, rather than one that assumes detriment or taking of advantage. Patten J. in Intel Corporation –v- Kirpal Singh Sihra [2003] EWHC 17 (Ch) was of a similar view. He read Pumfrey J.’s observations in the Chrysler case as requiring proof of real future unfair advantage or detriment and not merely risk (see paragraph 23 of his judgment). 33. In the Adidas Salomon case the opinion of Advocate General Jacobs also is said by Mr Engelman to address this issue. He referred me to paragraphs 49-51 inclusive, which provided as follows:- “49. It seems obvious that use of a sign cannot have such an effect unless the sign brings the mark in some way to the mind of the relevant public. Thus, considering in the light of the general scheme and purpose of the Directive the requirement in Article 5(2) that the trade mark have a reputation, the Court has stated that it is only where there is a sufficient degree of knowledge of the mark that the public, when confronted by the sign, may possibly make a connection between the two and that the mark may consequently be damaged. 50. However, it does not seem either necessary or helpful to seek to specify further the criteria by which the question concerning the similarity between the mark and the sign should be assessed. National courts will be able to decide, without further analysis of the concept of similarity, whether the similarity is such as to make possible the use complained of, be it in the form of dilution, degradation or free-riding. It is therefore sufficient in my view to note that Article 5(2) requires(i) that the mark and the sign be similar and(ii) that the use complained of take unfair advantage of, or be detrimental to, the distinctive character or the repute of the mark. 51. I accordingly conclude in answer to question 2(a) that (i) the notion of similarity between a mark and a sign for the purpose of Article 5(2) is to be assessed on the basis of the degree of sensory or conceptual similarity between them and (ii) the protection conferred by Article 5(2) does not require the existence of a likelihood of confusion between the mark and the sign.”[28]Mr Engelman also submits that the ECJ similarly expressed a view that possibilities rather than actualities were the requirement under section 5(3) and he referred me to paragraphs 24-31 which I set out below:- “24. By Question 2(a) the national court seeks essentially to ascertain whether the protection conferred by Article 5(2) of the Directive is conditional on a finding of a degree of similarity between the mark with a reputation and the sign such that there exists a likelihood of confusion between them on the part of the relevant section of the public. 25. Adidas submits that a finding of a likelihood of confusion is not necessary. It is sufficient for the national court to find a likelihood of association on the basis of a visual, aural or conceptual similarity between the mark with a reputation and the sign. The Commission also submits that a likelihood of association is sufficient. 26. Fitnessworld submits, by contrast, that the similarity between the mark and the sign must be such that it can create confusion on the part of the relevant section of the public, having regard to the visual, aural and conceptual similarities. 27. In that regard, it must be noted at the outset that, unlike Article 5(1)(b) of the Directive, which is designed to apply only if there exists a likelihood of confusion on the part of the public, Article 5(2) of the Directive establishes, for the benefit of trade marks with a reputation, a form of protection whose implementation does not require the existence of such a likelihood. Article 5(2) applies to situations in which the specific condition of the protection consists of a use of the sign in question without due cause which takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark (see Case C-425/98 Marca Mode [2000] ECR I-4861, paragraphs 34 and 36).28. The condition of similarity between the mark and the sign, referred to in Article 5(2) of the Directive, requires the existence, in particular, of elements of visual, aural or conceptual similarity (see, in respect of Article 5(1)(b) of the Directive, Case C-251/95 SABEL [1997] ECR I-6191, paragraph 23 in fine, and Case C-342/97 Lloyd Schuhfabrik Meyer [1999] ECR I-3819, paragraphs 25 and 27 in fine).29. The infringements referred to in Article 5(2) of the Directive, where they occur, are the consequence of a certain degree of similarity between the mark and the sign, by virtue of which the relevant section of the public makes a connection between the sign and the mark, that is to say, establishes a link between them even though it does not confuse them (see, to that effect, Case C-375/97 General Motors [1999] ECR I-5421, paragraph 23)30. The existence of such a link must, just like a likelihood of confusion in the context of Article 5(1)(b) of the Directive, be appreciated globally, taking into account all factors relevant to the circumstances of the case (see, in respect of the likelihood of confusion, SABEL, paragraph 22, and Marca Mode, paragraph 40).31. The answer to Question 2(a) must therefore be that the protection conferred by Article 5(2) of the Directive is not conditional on a finding of a degree of similarity between the mark with a reputation and the sign such that there exists a likelihood of confusion between them on the part of the relevant section of the public. It is sufficient for the degree of similarity between the mark with a reputation and the sign to have the effect that the relevant section of the public establishes a link between the sign and the mark.”[29]I do not agree that these authorities show a changing approach, as Mr Engelman suggests. It would be quite extraordinary for Advocate General Jacobs to depart from his opinion in the General Motors case in Adidas-Salomon without commenting on it. Properly understood, in my judgment, paragraphs 49 to 50 still require the infringement to be provable by real, as opposed to theoretical, evidence. Mr Wyand QC, in particular, drew to my attention the fact that in paragraph 49 the Advocate General in footnote 30 referred to paragraph 23 of the General Motors judgment. He could hardly do so without comment if he was going to depart from what is said in that judgment. This seems to me to be a logical reading of section 5(3), as the Hearing Officer said in paragraph 60 of his judgment, the section refers to use which “will” (or rather the actual word is “would”) be detrimental. That is the theme that starts with the General Motors case and in my judgment is how the later cases have similarly developed. It must be appreciated that the issue of the method of proof does not appear in my judgment to have been before the court in Adidas-Salomon. 36. I therefore reject the criticisms of paragraph 60 of the judgment of the Hearing Officer and determine that he was right to conclude that there must be real possibilities as opposed to theoretical possibilities. I therefore reject Mr Engelman’s submission that the word MASTER was capable of protection under section 5(3) once its reputation was established without further proof. There may be some difficult decisions to be made on the boundaries of the decision making process on individual cases. I have already observed that marks with substantial repute may find it easier for the courts to be willing to infer detriment or taking advantage. Mr Engelman referred to the decision of the German Courts in QUICK, a judgment of the Federal Court dated 11th November 1958, but when one reads official guideline number 2, the wording of the relevant part of the code seems to me to bear very little relationship to section 5(3) to enable any conclusions to be drawn from it. He also referred to the decision of The Office For Harmonisation In The Internal Market (Opposition Division) in Campomar SL application; opposition by Nike International Ltd. [2000] ETMR 50. He submitted that part of the judgment on page 5 suggests that where there is a possibility of dilution, damage could be inferred without actual proof. This he submits shows another decision making process leading to support for his submissions. The judgment is of course not binding upon me. It is in my view not in line with the authorities to which I have already referred to above. If it were I would decline to follow it. However, I do not read the relevant paragraph as having the impact that Mr Engelman submits, it said:- “Furthermore, as a result of the marketing of identified products through the opposed application and the association that the consumer would make with the earlier trade mark, damage could be assumed to the same if such products did not reach the normal level of quality in the products under the earlier trade marks. Therefore the earlier trade marks could suffer dilution of their prestige and reputation. In addition, it was demonstrated by the opponent that it is normal practice for proprietors of trade marks possessing reputation to increase their business activity by marketing products, particularly perfumes and cologne, under the same marks.”[30]I do not read the paragraph as saying anything other than in the case before it that tribunal was able to infer there would be damage. Given the two competing marks as shown by the different report produced by Mr Wyand QC which included them, such a similarity was so striking that I could well understand why the tribunal would come to that conclusion. I do not discern any clearly identifiable legal principle flowing from it. I accept that there are likely to be difficulties around the fringes of the decision making process, as I have said, when addressing this dilution argument. It is shown by reference to the analysis at pages 58 to 59 of Mostert, Famous and Well-Known Marks (1997), as quoted by Pumfrey J. in paragraph 92 of the Chrysler decision set out above. However, courts are regularly faced with difficult factual decisions, where the factual boundaries can become blurred when legal principles are applied. I do not see that that difficulty justifies a conclusion that the court does not require any proof at all and can infer the possibility of proof. To my mind, not only is that contrary to section 5(3) and its clear requirement of an evidential basis, it would make the section entirely redundant in effect after the reference to a trade mark which has a reputation. There is no need to go into those later requirements, because on Mr Engelman’s analysis of the section, proof of those matters is inferred, not required. One then asks the question, why are the words in, if they are intended to be disregarded? For all of those reasons, I reject Mr Engelman’s criticism of paragraph 60 of the Hearing Officer’s judgment. In my judgment he was correct in that paragraph. SIMILARITY TEST[31]Mr Engelman submitted that the Hearing Officer applied a similarity test that was applicable to section 5(2) and that that was wrong because the similarity test under section 5(3) was different. 39. He took me through the development of the similarity test, starting with the well known case of Sabel BV –v- Puma AG [1998] RPC 199 at page 224:- “… The likelihood of confusion must therefore be appreciated globally, taking into account all factors relevant to the circumstances of the case That global appreciation of the visual, aural or conceptual similarity or the marks in question, must be based on the overall impression given by the marks, bearing in mind, in particular, their distinctive and dominant components. … The average consumer normally perceives a mark as a whole and does not proceed to analyse its various details.” (A point noted by the Hearing Officer as I have said). “In that perspective, the more distinctive the earlier mark, the greater will be the likelihood of confusion. It is therefore not impossible that the conceptual similarity resulting from the fact that two marks use images with analogous semantic content may give rise to a likelihood of confusion where the earlier mark has a particularly distinctive character, either per se or because of the reputation it enjoys with the public.”[32]Mr Engelman submits that Adidas-Salomon has introduced a different test for similarity under section 5(3). Whilst I appreciate that one should bear in mind that the question of construction is not always obvious, I would be very surprised if the word “similar” in section 5(2) had a different meaning from the same word in section 5(3). Nothing is impossible, but I would need clear authority, which showed that a court has come to that conclusion. I do not accept that the Adidas-Salomon case leads to such a conclusion. First the Advocate General in his opinion (paragraph 43 to 46) clearly applies the Sabel test to the equivalent of section 5(3). He acknowledged (see paragraph 47) that there is no requirement or likelihood of confusion in section 5(3). The ECJ referred to this in paragraph 28, which I have set out above. Mr Engelman fastens upon the words “in particular” as suggesting that the court is applying a different test. I do not see how that is an argument which has any possibilities and I reject it. It is clear on that paragraph by reference to the cases that are referred to (which include Sabel itself) that the ECJ, like the Advocate General, is giving the same meaning to the word “similarity” and how similarity is determined. Mr Engelman with respect to him is reading a significance in the words “in particular” which is not justified. It is clear of course that the ECJ acknowledge (as indeed did the Advocate General) that there is no requirement of confusion. They are alive to that difference as shown in paragraph 29. That part of their judgment makes it quite clear that in the case of a breach of section 5(3) it can be established if the public make a link between the two marks, even though the public would not confuse them. That reverts back to the General Motors decision paragraph 23 to which I have already made reference. I see no difficulty about any of this and I do not believe there are the differing legal interpretations of the word “similar” in the differing sub-sections of section 5 TMA 1994. I therefore reject the criticisms of the decisions of the Hearing Officer, because he was correct to conclude that similarity under both sub-sections was proven and established in the same way. A LINK[33]I accept that Adidas-Salomon and Davidoff introduced a concept which required there to be a link between the marks, even though there is no confusion; see the parts of the judgments to which I have already made reference. I do not accept that the Hearing Officer disregarded that. To the contrary, I am firmly of the opinion that he well understood the difference and correctly considered it. In paragraph 52, as I have said above, he sets out the legal principles for section 5(3). In sub-paragraph (b) he plainly is aware of the linkage test as opposed to the confusion test, as he identifies them separately and makes it clear that under section 5(3) he is concerned with a link as opposed to a confusion. The Appellant basically makes complaint about factual findings, which are to be found in paragraphs 57 through to 59 of his judgment, which it is not permissible for it to challenge at this level. Having heard the evidence he concluded that the case was not made out when required to be proven in accordance with the requirements of section 5(3). Those requirements are that the mark must have a reputation and there must be evidence which shows that the mark and the later mark were in the eyes of the relevant section of the public linked and finally, that that linkage will cause the possibility of unfair taking advantage or detriment. All of those requirements were considered by the Hearing Officer and applied by him. The Appellants are clearly disappointed in the decision, but I do not think the criticisms of his judgment in this regard can be justified either. I do not see that the opinion of the Advocate General in Adidas-Salomon or the judgment of the ECJ in the same case actually debated a differing approach. I do not read for example paragraph 49 of the Advocate General’s opinion as suggesting that there would be anything other than an evaluation of a possible connection and that the mark might consequentially be damaged. I do not read the paragraph as saying that all of this is any way different to the tests in Sabel under section 5(2); the only difference correctly identified is that evidence of confusion is not required under section 5(3) where as it is under section 5(2). The Hearing Officer clearly identified that, as I have said above, and his decision in my view was a correct application of the law. Therefore all of the arguments against the substantive decision making process fail. COSTS[34]The Hearing Officer dismissed the Appellant’s opposition to the registration. He considered that he had a wide discretion under rule 6 of the Trade Mark Rules 2000 when it came to costs. He expressed the view (paragraph 73) that he intended to use the discretion to award costs above the usual scale. He plainly was unimpressed with the Appellant’s case. He ordered them to pay £500.00 to cover the costs of considering the notice of opposition. He ordered an award of a further £1000.00 to cover the costs of the hearing including the skeleton argument and £100.00 to cover their evidence and £750.00 limited to reviewing the evidence of the Appellant. He ordered the Appellant to pay £500.00 per ring binder as being the reasonable costs of assessing the ring binders of exhibits and a further £250.00 to cover the cost of reviewing Mr Lee’s exhibits and the cost of correspondence necessitated by the Appellant’s evidence. That amounted in total to £4600.00. He considered the behaviour of the Respondent in some aspects was unreasonable and he reduced the costs to £4000.00. The objection to the award of those costs is that costs are supposed to be an indemnity and no one should be ordered to pay more than they have paid out in their own costs. No bill had been produced at the time of the assessment, so Mr Engelman submitted it was possible that the level of costs actually payable by the Respondent could well have been less than the amount claimed. The response of the Respondent is that the complaint is not that the costs exceeded the amount to which the Respondent was liable to pay to its lawyers, but that the Hearing Officer did not know that. On instructions Mr Wyand QC told me that their costs actually exceeded the amount. He referred to the fact that it is well known that the scales under the Trade Mark Rules are not generous, (I can see that) and that it is not generally expected that costs awarded approach anything like the amount of costs incurred. That is also the case he says here, although there is no actual evidence of that before me. If the Appellant is right, then the case would have to be remitted to the Hearing Officer for a re-assessment, unless the parties allow them to be assessed on this appeal. That seems to me the best course. I accept that technically the Hearing Officer ought to have had a bill before he proceeded with the summary assessment. The submission of the Appellant is however, “right but repulsive” because I do not believe for one moment that they expect the actual costs of the Respondents to be below that figure. I will therefore invite the Appellants to concede an assessment before me, but that must be on the basis that the assessment is open, i.e. it is open to the Respondents to seek a higher sum on the basis that the reconsideration is for me again because the Hearing Officer regrettably failed to ask for a bill. He therefore ought not to have made the decision he made and the decision can be properly made by me. If there is no evidence available now, I direct that the actual costings and the bills be produced when this Judgment is handed down, when I will assess the costs. The Appellants have indicated that they do not wish me to revisit the quantum of the costs. I do not accept the decision to award costs in the way the Hearing Officer did, can be said to be so unreasonable that he could not have come to that view (see the paragraph 6 of the Amended Grounds of Appeal and paragraph 19 of Mr Engelman’s skeleton argument). I do not accept the evidence was wrongly received and if I am wrong, the overall level of costs originally ordered ought not to be revisited partially.

Cited in 2 later judgments