RXWORKS LIMITED v DR PAUL HUNTER (trading as Connect Computers) [2007] EWHC 3061 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

[2007] EWHC 3061 (Ch)

Case No Case No:HC07C01250

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

Between

RXWORKS LIMITEDClaimant

DR PAUL HUNTER (trading as Connect Computers)Defendant

Before

MR DANIEL ALEXANDER O.C. sitting as a Deputy High Court Judge

Between :

Mr Robert Onslow (instructed by Field Seymour Parkes) for the Claimant Mr Michael Hicks (instructed by Griffith Smith) for the Defendant

Hearing date: 30th November 2007

Date 20 December 2007

[1]DANIEL ALEXANDER QC: INTRODUCTION AND BACKGROUND Outline The issue at the heart of this dispute is whether the presence and appearance of the term "vet.local" in certain aspects of the Claimant's computer systems infringes the Defendant's registered trade mark No. 2397695 VET.LOCAL registered in classes 9, 16, 41 and 42, inter alia, for computer software, hardware and firmware.

[2]The Claimant ("RxWorks") seeks to have that issue resolved by means of an application for summary judgment on its claim for unjustified threats of trade mark infringement. That is a vehicle for attempting to obtain a judgment that the use in question is non-infringing and to stop any further allegations by the Defendant ("Dr Hunter") that the use infringes. As Mr Hicks put it in his skeleton argument for Dr Turner, the real question on this application is whether the counterclaim for infringement has real prospects of success. It is common ground that if RxWorks is to succeed, the court must be satisfied that the case for infringement has no real prospects of success. I consider below briefly how that issue should be approached under CPR 24.2 in the context of a case of this kind.

[3]More specifically, the central issue on this application is whether the uses alleged by Dr Hunter to infringe are arguably infringing, under sections 10(1) and 10(2)(a) of the Trade Marks Act 1994. RxWorks contends that it is possible for the court to determine summarily that they are not (as was done, for example, in Trebor Bassett v. Football Association

[1997] FSR 211

, Rattee J) and that relief giving effect to that determination should be granted at this stage. Dr Hunter contends that the uses are infringing or are at least arguably infringing and that, if not held to infringe, there is a need for further factual investigation at a full trial. The issue therefore resolves into two key aspects. First, what the requirements of the law are and what factual determination needs to be made, given those requirements and, secondly, whether the court is in as good a position to make that determination, as the trial judge would be and, if so, what the result of doing so is. Evidence

[4]There is evidence on this application as follows: Evidence for RxWorks(a) Two statements from Mr Philip Scanlan, a director and CEO of RxWorks. These statements explain the background to the dispute and outline the uses in question, setting out the reasons for them. There is some history to this case in that an earlier dispute over other matters was resolved by a confidential Settlement Agreement. None of the aspects of earlier dispute are alleged to be relevant to the issues on this application. Evidence for Dr Hunter

(b) (i) Statements from Mr John Hirst, a computer consultant from Cybis instructed by Dr Hunter. His first statement exhibits an expert report, based on examination of the RxWorks system explaining the uses in issue and, in particular, how users and administrators of the RxWorks system may come across them. The systems in question are specialist computer systems involving both hardware and software for the administration of veterinary practices. His second statement comments on certain screenshots exhibited to Mr Scanlan's second statement and how users (administrative and non-adminstrative) of the system may encounter the term "vet. local". (ii) A comparatively brief statement from Dr Hunter commenting on certain aspects of Mr Scanlan's statement in so far as relevant.

[5]For the purpose of this application, RxWorks accepts that the evidence served on behalf of Dr Hunter must be taken to be correct or arguably correct. That said, I was unable to detect any area of significant factual dispute as to the nature of the uses in question (which are described in more detail below and are shown in Annexes 1 to 4 of this judgment, which contain redactions of no relevance), the nature of the users of the system or the circumstances in which users of the system may come across the uses of "vet.local". Communications giving rise to the claim

[6]RxWorks relies, for its threats claim, on two written communications from Dr Hunter. The first is an e-mail, dated 2 nd March 2006, from Dr Hunter to Greg Robinson of RxWorks, entitled "Illegal Use of Registered Trade Mark" in its subject line, which said:

"Dear Greg It has come to my attention that you are illegally using and continue to use a registered trade mark of ours in your supplied computer systems. This trade mark is the word mark vet.local and the trade mark registration number is: 2397695. Please immediately cease and desist from using our trade mark in all new systems you currently have in production and any future system and remove any reference to the trade mark from any existing systems. You have until Friday 10 March 2006 before we take further action. I reserve the right to draw this email to the attention of the courts as to costs. Sincerely,"

[7]The second is an e-mail, dated 19 th February 2007, from Dr Hunter to Mr Mark Picton of the Avenue Veterinary Centre, a customer or potential customer for RxWorks' specialist systems for veterinary practices. That e-mail refers to the earlier e-mail of 2 nd March 2006. The relevant parts, so far as the claim for unjustified threats is concerned, are as follows (emphasis in original). "Misuse of Our Trade Marks We have a registered Trade Mark, which we are aware that RxWorks may allegedly be using in systems they are selling or have been selling since [REDACTION] October 2005 [REDACTION]. This is contrary to our wishes and the Trade Marks Act and we are currently investigating how widespread this usage is and the damages that flow from it. The trade mark in question is VET.LOCAL (Word Mark). I would draw to your attention to the fact that any system you may be purchasing from RxWorks may reference our Trade Mark VET.LOCAL illegally and that we will take action against anyone using our Trade Mark VET.LOCAL or any other trade mark without our express prior written permission which for the complete avoidance of doubt - we do not give. Mark, as I have expressly brought this matter to your attention, it is clearly important that you ensure that you will not be illegally using our trade marks in any new computer system you are purchasing from RxWorks. The trade mark VET.LOCAL we believe is being used in RxWorks Fileservers. You should insist on an administrative inspection of your new fileserver to ensure that the words VET.LOCAL to [sic] not appear in the system, any file within the system, including the Windows Registry or user hive. Furthermore, RxWorks should provide you with a written statement to the fact that none of our Trade Marks are being used in any part of any system they sell or in fact the one that they are supplying you. I would ask you for a copy of that written statement please that will show your due diligence. Again, for the complete avoidance of doubt, we will pursue anyone legally to prevent the illegal and unauthorized use of any of our trade marks and we will do this in a most public manner. Clearly we do not wish to be at odds with our clients past or present but we will continue to vigorously defend our property from any company attempting to misuse it whether for commercial profit, passing off or for any other reason. Thank you for your assistance in this matter Mark and I look forward to hearing from you with a copy of the written statement from RxWorks."

[8]That e-mail prompted a letter from RxWorks' solicitors, Field Seymour Parkes, to Mr Picton, dated 4 th April 2007, which, so far as material, said as follows: "" vet.local" Trade Mark We note that Dr Hunter has alleged that our client has infringed the trade mark "vet.local". Our client vehemently denies that it has infringed the "vet.local" mark or that any system that it has supplied or might in future supply infringes that mark This does not, however, amount to a representation and you may wish to obtain your own advice to confirm the position."

[9]The letter went on to deal with an issue of confidentiality concerning the Settlement Agreement, which is not of relevance to the present application. Mr Picton responded on 11 th April 2007, thanking Field Seymour Parkes for their letter which he there treated as "confirming that RxWorks do not use the trade mark "vet.local"." Procedural history

[10]These proceedings in respect of unjustified threats and related relief were issued on 11 th May 2007, i.e. after Dr Hunter's e-mail to Mr Picton. They were met by a counterclaim from Dr Hunter for infringement of trade mark under section 10(1) and 10(2) of the Act. This application was launched and directions were made by Nicholas Strauss QC including provision for inspection, under certain conditions, by Dr Hunter's independent expert of a computer loaded with RxWorks' system as it was being shipped and installed at RxWorks' veterinary practice customers premises at or around 2 nd March 2006. The purpose of that inspection was to identify fully the uses in question.

[11]The inspection went ahead, with a minor dispute which was resolved, following discussion, as to precisely what Mr Hirst was entitled to see. Mr Hirst says in his report that RxWorks was not as helpful as he believes they should have been at the inspection. However, from that report and the annexes to it, it is, in my judgment clear, that sufficient access was provided to enable Mr Hirst to form a view as to the circumstances and contexts in which the term "vet.local" was likely to appear on computer screens and to be able to form a reliable view of the nature of the use of it. Ultimately, Mr Hicks did not contend otherwise at the hearing and Mr Hirst produced, as annexes to his report, copies of printouts of the screens after performing various functions. It is common ground that these are representative of the use which Dr Hunter contends is (or, at least, may be) infringing and that this application can be decided by reference to those printouts.

[12]It is convenient to deal with the law before analyzing these uses further since the legal principles provide the correct framework for undertaking that analysis. LAW Statutory provisions and the Trade Marks Directive The Trade Marks Directive No. 89/104/EEC ("The Directive")

[13]Article 5 of the Directive provides, so far as material: "1. The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:(a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;

(b) any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trade mark.... 3. The following, inter alia, may be prohibited under paragraphs 1 and 2: (a) affixing the sign to the goods or to the packaging thereof; (b) offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;

(d) using the sign on business papers and in advertising The Trade Marks Act 1994 ("the 1994 Act")

[14]Section 9 of the 1994 Act provides that the acts amounting to infringement, if done without the consent of the proprietor, are specified in section 10. Section 10 of the 1994 Act reflects Article 5 of the Directive and it is only necessary to reproduce those parts upon which Dr Hunter relies for his infringement case: 10(1) A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered. (2) A person infringes a registered trade mark if he uses in the course of trade a sign where because-(a) the sign is identical with the trade mark and is used in relation to goods and services similar to those for which the trade mark is registered...there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark. (4) For the purposes of this section a person uses a sign if, in particular, he (a) affixes it to goods or the packaging thereof;

(b) offers or exposes goods for sale, puts them on the market or stocks them for those purposes under the sign, or offers or supplies services under the sign;

(d) uses the sign on business papers or in advertising.

[15]There is no dispute that these provisions of the 1994 Act must be interpreted in accordance with the requirements of the Directive, if it is possible to do so, in accordance with Marleasing principles. It is therefore convenient to focus primarily on the Directive and the authorities relating to it in the ECJ. The most recent of relevance to the issues arising on application is Céline upon which both sides rely and with which it is useful to begin the analysis of the law. Céline

[16]On 27 September 2007, the ECJ (Grand Chamber) handed down judgment in Céline SARL v. Céline SA, Case No. C-17/06, a decision on reference from the Cour d'appel de Nancy (France).

[17]The question referred was whether Article 5(1) of the Trade Marks Directive had to be interpreted as meaning that the adoption, by a third party without authorisation of a registered word mark, as a company, trade or shop name in connection with the marketing of identical goods, amounted to use of that mark in the course of trade which the proprietor was entitled to stop by reason of his exclusive rights. The ECJ decided, in effect, that it did not automatically do so, ruling, inter alia that: The unauthorised use by a third party of a company name, trade name or "shop name which is identical to an earlier mark in connection with the marketing of goods which are identical to those in relation to which that mark was registered constitutes use which the proprietor of that mark is entitled to prevent in accordance with Article 5(l)(a) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, where the use is in relation to goods in such a way as to affect or to be liable to affect the functions of the mark. Should that be the case, Article 6(l)(a) of Directive 89/104 can operate as a bar to such use being prevented only if the use by the third party of his company name or trade name is in accordance with honest practices in industrial or commercial matters."

[18]Céline does not break new ground in Community jurisprudence. The Court based its judgment on the earlier decisions of Adam Opel, Anheuser Busch and Arsenal. The significance of Céline lies in its explicit formulation of a four-part test for determining infringement in cases under Article 5(1) of the Directive. Although directed to Article 5(1), it is common ground that aspects of the judgment are of direct relevance to Article 5(2) of the Directive. Article 5(1) sets the highest bar in that it requires identity of mark and of goods or services but what is there said about use also applies to the case under Article 5(2).

[19]In articulating the four part test, the ECJ held as follows:

"14. The first sentence of Article 5(1) of the directive provides that a registered trade mark confers on the proprietor exclusive rights therein. By virtue of Article 5(1)(a), that exclusive right entitles the proprietor to prevent all third parties not having his consent from using in the course of trade any sign which is identical to the trade mark in relation to goods or services which are identical to those for which the trade mark is registered. Other provisions of the directive, such as Article 6, impose certain limitations on the effects of the mark. 15 In order to prevent the protection which is afforded to the proprietor varying from one Member State to another, the Court must give a uniform interpretation to Article 5(1) of the directive, in particular the term 'use' which appears there (Case C-206/01 Arsenal Football Club [2002] ECR I-10273 , paragraph 45, and Case C-48/05 Adam Opel [2007] ECR I-0000, paragraph 17). 16 As is clear from the Court's case-law (Arsenal Football Club; Case C-245/02 Anheuser-Busch [2004] ECR I-10989 ; and Adam Opel), the proprietor of a registered mark may prevent the use of a sign by a third party which is identical to his mark under Article 5(1)(a) of the directive only if the following four conditions are satisfied: - that use must be in the course of trade; - it must be without the consent of the proprietor of the mark; - it must be in respect of goods or services which are identical to those for which the mark is registered, and it must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services. 17 It is a matter of agreement in the main proceedings that the sign which is identical to the mark at issue is used in the course of a commercial activity with a view to gain and not as a private matter. The mark is therefore being used in the course of trade (see, by analogy, Arsenal Football Club, paragraph 40, and Adam Opel, paragraph 18). 18 It is also a matter of agreement that the sign has been used without the consent of the proprietor of the mark at issue in the main proceedings. 19 However, Céline SARL denies that the sign which is identical to the mark at issue is being used 'in relation to goods', within the meaning of Article 5(1)(a) of the directive. 20 It is clear from the scheme of Article 5 of the directive that the use of a sign in relation to goods or services within the meaning of Article 5(1) and (2) is use for the purpose of distinguishing the goods or services in question, whereas Article 5(5) is directed at 'the use which is made of a sign for purposes other than distinguishing the goods or services' (Case C-63/97 BMW [1999] ECR I-905 , paragraph 38). 21 The purpose of a company, trade or shop name is not, of itself, to distinguish goods or services (see, to that effect, Case C-23/01 Robelco [2002] ECR I-10913, paragraph 34, and Anheuser-Busch, paragraph 64). The purpose of a company name is to identify a company, whereas the purpose of a trade name or a shop name is to designate a business which is being carried on. accordingly, where the use of a company name, trade name or shop name is limited to identifying a company or designating a business which is being carried on, such use cannot be considered as being 'in relation to goods or services' within the meaning of Article 5(1) of the directive. 22 Conversely, there is use 'in relation to goods' within the meaning of Article 5(1) of the directive where a third party affixes the sign constituting his company name, trade name or shop name to the goods which he markets (see, to that effect, Arsenal Football Club, paragraph 41, and Adam Opel, paragraph 20). 23 In addition, even where the sign is not affixed, there is use 'in relation to goods or services' within the meaning of that provision where the third party uses that sign in such a way that a link is established between the sign which constitutes the company, trade or shop name of the third party and the goods marketed or the services provided by the third party. 24 In the main proceedings, it is for the national court to determine whether the use by Céline SARL of the Céline sign constitutes use in relation to those goods for the purposes of Article 5(1) of the directive. 25 Lastly, Céline SARL claims that there could be no confusion on the part of the public as to the origin of the goods in question. 26 As was noted at paragraph 16 of this judgment, the unauthorised use by a third party of a sign which is identical to a registered mark in relation to goods or services which are identical to those for which that mark is registered cannot be prevented under Article 5(l)(a) of the directive unless it affects or is liable to affect the functions of the mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services. 27 That is the situation where the sign is used by the third party in relation to his goods or services in such a way that consumers are liable to interpret it as designating the origin of the goods or services in question. In such a case, the use of the sign is liable to imperil the essential function of the mark, since, for the trade mark to be able to fulfil its essential role in the system of undistorted competition which the EC Treaty seeks to establish and maintain, it must offer a guarantee that all the goods or services bearing it have been manufactured or supplied under the control of a single undertaking which is responsible for their quality (see, to that effect, Arsenal Football Club, paragraph 48 and the case-law cited, and paragraphs 56 to 59). 28 In the main proceedings, it is for the national court to determine whether the use by Céline SARL of the Céline sign affects or is liable to affect the functions of the 'Céline' sign, particularly its essential function. "

[20]Both sides addressed argument concerning the meaning and application of these four conditions. It is therefore necessary to say something more about them and I will refer to them as the Céline conditions, as was done at the hearing, although that is something of a misnomer, since they reflect requirements of Article 5 of the Directive. First condition - in the course of trade Commercial cf. private use

[21]It is, in my judgment, clear from the decision of the ECJ in Céline and the cases referred to in it, that Community law does not set a high or specific threshold for the requirement that use must be "in the course of trade". Paragraph 17 of Céline distinguishes between use "in the course of a commercial activity with a view to economic advantage" and use "as a private matter". That is also reflected in the judgment of the ECJ in Arsenal Football Club plc v. Reed (

Case C-206/01

)

[2002] ECR I-10273

[2003] Ch 454

, at paragraph 40, where the court said:

"...as the national court stated, the use of the sign identical to the mark is indeed use in the course of trade, since it takes place in the context of commercial activity with a view to economic advantage and not a private matter."

It is not, in my judgment, necessary for use to be "during" trade (as opposed to after trade in the goods or services has ceased) for this condition to be satisfied, provided that the use is not a "private matter". There may of course be situations where there may be difficulty in determining precisely where the boundary lies but, in general, the approach of the ECJ as to this aspect is clear. A number of points of relevance to the present case follow from this. Marks invisible at point of sale

[22]First, there was debate at the hearing and in skeleton arguments as to whether it was necessary that a sign be visible at a point of sale in order to satisfy this condition. It follows, inter alia, from Céline that this is not required, a result which, in my view, accords with common sense. A number of marks are, in reality, unlikely to be visible at point of sale because of the nature of the goods to which they are applied or the circumstances of the trade in question. In some cases, this may be because they are likely to appear on components embedded into composite products of which the whole will not be seen before sale. In others, particularly those related to content (including electronically stored content), a mark may only appear when, for example, a file or book is opened or a CD or other medium is played. The fact that the presence of these marks may not motivate sale is not, in my judgment, the issue as regards this condition, important as it may be in other contexts.

[23]This approach finds further support from Kerly's Law of Trade Marks and Trade Names (14 th edn.), para. 14-025, which states:

"A question arises as to whether the offending sign needs to be visible at the point of sale. It is submitted that this is not a requirement, provided that when the sign does become apparent it is understood to be a sign used in the course of trade in relation to the relevant goods. "

In Kabushiki Kaisha Sony Entertainment v. Nuplayer Ltd

[2006] FSR 6

, Lawrence Collins J said, referring to that extract from Kerly's:

" I am satisfied that even if the marks are not seen by the consumer before the sale is concluded Kerly is right in submitting that there is an infringement. "

He also noted that, in Arsenal, paragraph 57 of the judgment of the ECJ interprets "use" for the purposes of Article 5(1) widely to include matters arising after the sale. Lawrence Collins J also pointed out that, were it otherwise, it would follow that every mark on products inside packaging or on components inside a product would not be an infringement. That approach is further supported by the observation of Jacob LJ in 02 Holdings Ltd v. Hutchinson 3G Limited

[2006] EWCA Civ 1656

where he said, at paragraph 30:

"...it seems obvious that trade marks have significance beyond the point of sale: think of picking up a cup to look underneath to see who made it. The potter's mark may indeed be the very first and oldest kind of trade mark,"

[24]There is, in my judgment, no basis for taking a different view here and, ultimately, Mr Onslow did not press this point with particular vigour. He realistically accepted that if, for example, the term "vet.local" appeared on a front screen, when software was loaded, that use may be open to challenge, even though it may appear only after a sale had been made.

[25]That said, there is an issue which arises under this head. One of the acts said to infringe (and in respect of which there was at least arguably a threat of proceedings) is the use by vets of the system.

[26]It is, to my mind, at the lowest arguable, that such use falls on the "private" side of the line. Such use is not one of the kinds listed in section 10(4) nor is it ejusdem generis. Section 10(4) of the 1994 Act does not contemplate that a customer who buys goods bearing a mark wrongfully used by a vendor and then uses them for his or her own business purposes is thereby an infringer, even though that use of the goods which bear the mark may be for his or her commercial gain.

[27]In this case, it is at its lowest arguable that the ultimate (vet) users of the computer systems do not "use" the signs in a meaningful sense at all. "vet.local" may be embedded in the computer systems they are using but the vets do not engage in any trade in those systems. There is, it seems to me, a real question as to whether the vets can be said to be using the marks in the course of trade at all and, had I to decide that point on the material before the court, I would hold that the vets were not doing so. There may, however, be complications that arise as a result of the particular organisation and legal personality (or lack of it) of the practices in question. It should also be observed that in Reed Executive plc v. Reed Business Information Ltd

[2004] RPC 40

, the Court of Appeal recognised that the precise boundaries of "in the course of trade" may not always be clear particularly in the case of "invisible" use in computer communications (see paragraph 142 of the judgment of Jacob LJ). Because it is not necessary to decide this point, notwithstanding reservations, I am prepared to assume it in Dr Hunter's favour. Embedded signs

[28]Second and related, it also follows from the above that the mere fact that a mark may appear on a part of other goods (such as an inaccessible part of a motor vehicle) does not automatically absolve an undertaking which trades in such goods from liability as a result of its failure to satisfy this first condition. RxWorks would not be able to escape liability merely by saying that the products it sold involved use of a sign embedded in its products. That said, although it may not be determinative of whether the use is "in the course of trade" the context in which a given sign appears, including the fact that it is inaccessible and embedded may have a bearing on whether other conditions are satisfied, because of its impact on how the sign would be perceived and its impact on the functions (including the essential function) of the registered mark.

[29]Overall, however, leaving aside the hesitation regarding the vets, I am prepared to assume for the purposes of this application that there is an arguable case as to whether this first condition is satisfied. Second condition - absence of consent

[30]It is unnecessary to say anything about consent: it is common ground that the use here is without consent. Third condition - use in relation to goods or services

[31]The third condition requires more extensive analysis, partly because both sides regarded it as of importance for their respective cases, partly because both contended that they were unanswerably right on it and partly because the decisions of the ECJ are not entirely explicit as to what this condition requires.

[32]The rival contentions make it necessary to consider what the condition that use be "in relation to the goods or services" for which the mark is registered, requires in Community law. Dr Hunter's argument

[33]Dr Hunter's argument under this head is straightforward. Mr Hicks, on his behalf, submits that it is clear that there is use in relation to goods and services for which the mark is registered and similar goods and services, inter alia, because that sign is used on those very goods: the mark is actually on, indeed embedded within, those goods (on at least one computer, as a domain name and as a folder or directory name) and is therefore used in relation to computers. It is also used as a domain name for integrated software and hardware and therefore used on identical or similar goods. Section 10(4) is satisfied and that, he submits, is the end of the matter. RxWorks' argument

[34]RxWorks, by Mr Onslow, submits that in no realistic sense can the uses be said to be "in relation to" any of the goods or services for which the mark is registered (software, for example). Mr Onslow contends that a word is used in relation to goods or services if it says something about them and that the uses in question do not. His submission therefore involves the court in analysing the meaning of the sign as used and, if it does not say anything about any goods, concluding that the use is not "in relation to" those goods.

[35]Mr Onslow's overall submission for RxWorks as to the approach to determining whether there is use in relation to given goods or services accords with what is said in Kerly's Law of Trade Marks and Trade Names (14 th edition) 2005 where paragraph 14-022 states, after considering a number of examples: "It seems likely that the important question will be how the average consumer understands the sign to be used".

[36]Mr Onslow contends that, under this head, "use is meaning", reversing the Wittgensteinian epithet. This is a neat formulation but the analysis cannot in any event end there, because, to adapt another epithet, in trade mark law it depends on what you mean by "mean". On the one hand there is the meaning that the sign is intended to have by the person deploying it. On the other, is the meaning the sign is taken to have by the person perceiving it. For the law of infringement of registered trade mark it is the latter which matters. The meaning of a sign to the perceiver may be further analysed, involving consideration of the range of things that the sign is taken to mean over the range of potential perceivers of it in the market for the goods or services in question and there are, in some contexts, other possibilities. Before delving further into the meaning(s) of meaning, it is necessary to consider whether it matters at all for deciding whether the third condition is satisfied. Does meaning matter for "in relation to "?

[37]Attractive as Mr Onslow's proposed approach to this condition is and supported, as it is by the extract from Kerly's referred to above, I have, not without hesitation, concluded that it is, at least arguably, not consistent with the requirements of the most recent Community law and that Mr Hicks' argument is, at least arguably, to be preferred, for the following reasons. The language of the Directive

[38]First, Mr Onslow's argument does not find support from the express language of the 1994 Act or of the Directive. "In relation to" must be interpreted in accordance with the Directive and the phrase is not to be given the same meaning as the same phrase as used in the 1938 Trade Marks Act (where it was also used and, by section 68 of that Act, specifically defined). Identity of language does not mean identity of concept, where the language is used in a different context and, in this case, in the context of a Community obligation. In my judgment there is nothing special about the phrase "in relation to". Other versions of Article 5(1) of the Directive in the languages of the Member States of the Community at the time the Directive was adopted in December 1988, do not appear to employ the formulation "in relation to goods" but use language which is, at least to my inexpert eye, less complex (Danish "for varer..."; Dutch:

" voor ... waren..."

French:

" pour des produits... "

German: "für Waren..."; Greek: Italian: "per prodotti..."; Portuguese: " para produtos..."; Spanish: " para productos...", emphases added).

[39]This does not suggest that any particular significance should be attributed to this requirement and that it may be right to ask simply "is the mark being used for relevant goods?" under this head. Of course that does not determine whether the court is thereby required to consider what the sign means, but the other language versions do not positively suggest that it is required. (Note that the English translation of the ECJ's judgment in Céline does not employ the English wording of Article 5(1) of the Directive "in relation to goods or services" in articulating the third condition. It uses a slightly different wording " in respect of goods or services" but this may be an artifact of translation from the French original). The jurisprudence of the ECJ

[40]Secondly, it is not easy to find support for Mr Onslow's argument in the jurisprudence of the ECJ. Section 10(4) and Article 5(3) do not, in terms, articulate what is required for such use to be "in relation to" goods or service. However, in Arsenal, the ECJ said, at paragraph 41:

"In particular, the use at issue in the main proceedings is "in relation to goods " within the meaning of article 5(1)(a) of the Directive, since it concerns the affixing to goods of a sign identical to the trade mark and the offering of goods, putting them on the market or stocking them for those purposes within the meaning of article 5(3)(a) and (b) "

(emphasis added)

[41]It might therefore be thought, on the basis of this passage, that once it had been shown that the use fell within Article 5(3)(a) and (b), it followed that the use was use "in relation to goods". More recently, in Adam Opel AG v. Autec AG

Case C-48/05

, Judgment of 25 th January 2007 [2007] ETMR 33 , the ECJ said, in similar wording, at paragraph 20 "...In that regard, it should be noted in particular that the use at issue in the main proceedings is made "in relation to goods" within the meaning of Article 5(l)(a) of the Directive since it concerns the affixing of a sign identical to the trade mark onto goods and the offering of the goods, putting them on the market or stocking them for those purposes within the meaning of Art.

(b) "

[42]A similar point may be made on the basis of paragraphs 22 and 23 of Céline above: where the sign is physically on (or in) goods, the condition is implicitly satisfied. It is only where the sign is not affixed to the goods that one needs to ask what "link" there is between the sign and the goods

[43]It is, at least, arguably implicit in all of these passages that the ECJ regarded as conclusive of the question of whether the use was "in relation to" goods for which the mark was registered, that the use satisfied the requirements of Article 5(3)(a) and (b) of the Directive. Whether the ECJ would have taken the same approach where a sign was embedded in a work which had other content or in other kinds of case is more questionable: the ECJ has (so far as I am aware) never really had to consider a case of use of a sign such as a name where it would be probable that the name would not be perceived as referring to the goods at all in the context of a reference to determine whether such use was "in relation to goods". Cases in which that issue has arisen have been decided on other bases. However, the indications from the recent cases are that, even in such a case, the ECJ would not invariably require semantic analysis of the meaning of the sign to determine whether or not it is used "in relation to" the goods on which it appears.

[44]In none of these cases did the ECJ state that the question of whether use was in relation to goods depended on how the average consumer understood the sign, where the sign was actually on the goods themselves. Instead, in recent cases in which the point has potentially arisen, the ECJ has decided the question, or said that the question should be decided, on the basis of the fourth Céline condition, rather than the third. In this area, it is possible to allow the fourth condition do the heavy lifting but whether that holds good across the board of trade mark law is more questionable. Summary on "in relation to "

[45]There is force in Mr Onslow's argument that, at least where the sign is not affixed to the goods, the court must consider whether a link between the sign and the goods or services would be made and that doing so may involve an exercise in determining what the mark would mean (at least to this extent). But Mr Hicks' argument arguably has greater support from the ECJ in that it is unnecessary to do so where the mark is affixed to the goods themselves or otherwise satisfies the provisions of section 10(4)(a) and (b) of the 1994 Act.

[46]It should be said that there are difficulties in taking too absolutist an approach to this issue. As Jacob J said in Minerva TM

[2000] FSR 734

at 737, "For example, if there is a registration for "printed matter" but the only use is on labels for, say, soap or bananas, there has not been use for printed matter".

[47]It is not necessary to consider here precisely how the ECJ would reconcile the obvious correctness of that proposition with an approach to use "in relation to" or "for" goods which would have any physical affixation which satisfied Article 5(3)(a) or (b) of the Directive count as "use in relation to" that article (if that is the effect of the passages to which I have referred). It can be done and there is more than one possible route to a sensible conclusion. That said, labels, packaging, books, CDs, software (to an extent) and other content-bearing media are a special case. They are, on the one hand themselves goods, and, on the other, vehicles for bearing signs which refer to something else, where the signs many have no content referential to the medium which bears it. The average consumer is pretty good at understanding what is going on, but providing a semiotics of sufficient richness to cover all areas of commercial activity and then knitting it together with the legal principles to form a coherent analysis of when use of sign X is "for" goods Y in a way that reflects common sense is easier said than done. An application under CPR Part 24 is not the optimal place to attempt it.

[48]For the present case, I shall put those difficulties aside and proceed in a rather cruder way, assuming the point in Dr Hunter's favour, on the basis that it is (at least arguably) sufficient for a mark to be used "in relation to goods" that the provisions of section 10(4)(a) and (b) are satisfied with respect to that use and that it is sufficient for that section to be satisfied that the sign appears embedded within goods of the kind in question (the software and the systems). I also proceed on the basis that it is (at least) arguable that all of the uses relied on are uses "in relation to" relevant goods and services in this sense. Fourth condition - use affects or is liable to affect the functions of the trade mark

[49]It is necessary to say somewhat more about the fourth condition in the light of the arguments and authorities referred to at the hearing. The importance of the fourth condition

[50]First, the fourth condition reflects an important principle of trade mark jurisprudence namely that a registered mark is not there to provide an absolute barrier to use by third parties, regardless of context. A registered trade mark is a marketing instrument, not a platform for an absolute monopoly in the use of the term in question. The fourth condition serves a similar purpose to the requirement in earlier English law that use be "trade mark use". That similarity of purpose and the desirability of building it into any system of trade mark protection may be seen by comparing Dillon LJ's words in Mothercare UK Ltd v. Penguin Books Ltd

[1988] RPC 113

at 118-119:

" ...there is ...no reason why other people should not be free to use the words in a descriptive sense, and not in any trademark sense. " with the ECJ in Arsenal (paragraph 54) "...certain uses for purely descriptive purposes are excluded from the scope of article 5(1) of the Directive because they do not affect any of the interests which that provision aims to protect and do not therefore fall within the concept of use within the meaning of that provision"

. Dillon LJ and indeed Bingham LJ in Mothercare expressed, in trenchant terms, as others have done, a sentiment expressed, less vividly but nonetheless forcefully, by the ECJ. The fourth condition as a constraint on use

[51]Secondly, it should be noted that the first three conditions of paragraph 16 reflect express requirements of Article 5(1) of the Directive ("in the course of trade", "not having consent", "in relation to goods or services"). The fourth condition is different. The Directive nowhere provides expressly that the use "must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services". That is the ECJ's interpretation of the concept of "use" in these provisions of the Directive, having regard to its purposes. In a sense, that fourth condition, although put last in Céline, suffuses the whole of Article 5(1), since it ties the language of the Directive to its purposes and determines fundamentally what kind of use is to count. Community jurisprudence and its approach

[52]Thirdly, although the purpose and result is similar, Community jurisprudence approaches the issue from a somewhat different angle to that of the earlier English law. Broadly speaking, as can be seen from the formulation of the fourth condition, Community jurisprudence looks to the ultimate impact on the proprietor's interests in the registered mark: the reason that descriptive use is excluded from protection is not because descriptive use is regarded as excluded from protection per se. It is because such use is regarded as not affecting those interests that trade mark law is there to protect. In considering this issue, Community jurisprudence focuses more on asking "what effect is the use likely to have?" than on asking "is the use descriptive use or trade mark use?" although the latter informs the answer to the former.

[53]In determining that effect, the descriptiveness or otherwise of the use is plainly a relevant consideration. It may be, but is not invariably, determinative. It is neither necessary nor, in every case, sufficient for a finding that a sign will have no impact on the functions, and, in particular, the essential function, of a mark that the sign is used descriptively by the defendant. There are cases where a sign is not used descriptively as such (for example, where the sign may be used decoratively or as a mere name for something in some other sense) but still, taking all relevant matters into account, the use could have no impact on the functions of the proprietors' mark. Although the basis of the decision was somewhat different, one example comes from the facts of Trebor Bassett, where the mark appeared on the football cards (in the sense that photographs of players wearing shirts bearing it featured on the cards). But it would be hard to discern any arguable adverse impact on the ability of that registered trade mark logo to perform its function when used as such. Conversely, there are cases where a sign is used other than as an indication of origin (and perhaps, is descriptive) where the court may nonetheless conclude that, taking all relevant matters into account, the use will have an adverse impact on the functions of the mark including its essential function. This may be illustrated by the judgment of the Court of Appeal in Arsenal Football Club plc v. Reed

[2003] EWCA Civ 696

;

[2003] RPC 39

where Aldous LJ said (at p710):

"As found by the judge, the trade marks, when applied to the goods, were purchased and worn as badges of support, loyalty and affiliation to Arsenal, but that did not mean that the use by a third party would not be liable to jeopardize the functions of the trade marks, namely their ability to guarantee origin. To the contrary, the wider and more extensive the use, the less likely the trade marks would be able to perform their function. As the ECJ pointed out, the actions of Mr Reed meant that goods not coming from Arsenal but bearing the trade marks were in circulation. That affected the ability of the trade marks to guarantee the origin of the goods. "

[54]Despite the fact that, on these findings, the marks may be sold and regarded as badges of allegiance, they could still, in the particular circumstances of that case, affect the functions of the mark, although the decision in that case was complicated by the fact that the Court of Appeal held that the sign in question was perceived as a badge of origin to a material extent. It is necessary to be wary of an over-expansionist approach to findings of likelihood of impact in cases of that kind. Ultimately, the cases in which the use is descriptive (in the sense required) but nonetheless likely to have the adverse impacts are unlikely to be very common. Moreover, there are special provisions governing the circumstances in which descriptive use will be permitted under section 11(2) of the 1994 Act (Article 6(1)) and which are subject to qualifications. This can, in some cases, complicate the application of this approach. But the presence of these provisions does not mean that the general approach to the fourth condition is thereby diluted. The fourth condition may have particular relevance to situations where the use in question is not descriptive as such but is nonetheless not such as to affect the relevant interests in the marks. The nature of "absolute" protection under Article 5(1)

[55]Fourthly, although, in one sense, Article 5(1) provides "absolute" protection in the case of use of identical marks for identical goods, this protection is only absolute with respect to the guarantee of origin. Community trade mark law does not requires that mere use of an identical sign, even for identical goods, must invariably be treated as infringing, regardless of the nature of the use. As Jacob LJ observed in L 'Oreal SA v. Bellure NV

[2007] EWCA Civ 968

, where the Court of Appeal ordered certain questions to be referred to the ECJ, "40.... the protection afforded by Art. 5(1)(a) (same goods, same mark) is described in the 9 th Recital to the Directive as being "absolute." The actual language reads: Whereas the protection afforded by the registered trade mark, the function of which is in particular to guarantee the trade mark as an indication of origin, is absolute in the case of identity between the mark and the sign and goods or services 41. If the protection is to be "absolute" then one might have thought that, subject to any specific exception (Art. 6) once you have same mark, same goods, there should be infringement. But that was not the case in Hölterhoff where there was no need to invoke the defence. Nor was it the case in Adam Opel v Autec

Case C-48/05

[2007] ETMR 500. That too was a case of same mark same goods (the Opel badge for toys). But the Court considered that there would be no infringement "unless it affects or is liable to affect the functions of that trade mark." That directly links the function of the trade mark as a guarantee of origin with the kind of absolute protection to be conferred, as indeed they are linked in the recital. In short the Court appears to be saying protection is absolute only to the extent that the guarantee of origin must be protected. " Question of fact for the national court

[56]Fifthly, although there are cases in which the ECJ has made its own factual assessment of whether the fourth condition is satisfied and has therefore answered a referred question in specific circumstances of the case (Arsenal and Hölterhoff are examples) in general, the question of whether a defendant's use is likely to have adverse effects on the functions of the proprietors' mark is as a question of fact for the national court to determine.

[57]In Anheuser-Busch v. Budejovicky Budvar Narodni Podnik,

Case C-245/02

[2004] ECR 10 , 989, the ECJ considered, among other questions, whether and if so under what conditions a trade name may be regarded as a sign for the purposes of the first sentence of Art. 16(1) of the TRIPS agreement with the result that, under that provision, the proprietor of a trade mark has an exclusive right to prevent a third party from using that trade name without his consent. The ECJ held as follows:

"59 First, with respect to Directive 89/104, it follows from the Court's case-law on the definition of use by a third party, for which provision is made in Article 5(1) of that directive, that the exclusive right conferred by a trade mark was intended to enable the trade mark proprietor to protect his specific interests as proprietor, that is, to ensure that the trade mark can fulfil its functions and that, therefore, the exercise of that right must be reserved to cases in which a third party's use of the sign affects or is liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods (see Case C-206/01 Arsenal Football Club [2002] ECR I-10273 , paragraphs 51 and 54). 60 That is the case, in particular, where the use of that sign allegedly made by the third party is such as to create the impression that there is a material link in trade between the third party's goods and the undertaking from which those goods originate. It must be established whether the consumers targeted, including those who are confronted with the goods after they have left the third party's point of sale, are likely to interpret the sign, as it is used by the third party, as designating or tending to designate the undertaking from which the third party's goods originate (see, to that effect, Arsenal Football Club, cited above, paragraphs 56 and 57). 61 The national court must establish whether that is the case in the light of the specific circumstances of the use of the sign allegedly made by the third party in the main case, namely, in the present case, the labelling used by Budvar in Finland. 62 The national court must also confirm whether the use made in the present case is one 'in the course of trade' and 'in relation to goods' within the meaning of Article 5(1) of Directive 89/104 (see, inter alia, Arsenal Football Club, paragraphs 40 and 41). 63 Where those conditions are satisfied, it follows from the case-law of the Court that, in the event of identity of the sign and the trade mark and of the goods or services, the protection conferred by Article 5(1)(a) of Directive 89/104 is absolute, whereas, in the situation provided for in Article 5(l)(b), the proprietor, in order to enjoy protection, must also prove that there is a likelihood of confusion on the part of the public because the signs and trade marks and the designated goods or services are identical or similar (see, to that effect, Case C-292/00 Davidoff [2003] ECR I-389 , paragraph 28, and Case C-291/00 LTJ Diffusion [2003] ECR I-2799 , paragraphs 48 and 49):"

[58]The question of fact may, in some cases be complex (as Lord Walker recognized in his speech in R v. Johnstone

[2003] 3 All ER 884

at 909 in the context of a discussion of trade mark use: "essentially a question of fact (of a fairly complex sort)"). It may involve taking a number of factors into account, including the nature of the sign, its meaning, the context of its use including, possibly, scale and to do so from the perspective of the average consumer.

[59]Mr Onslow invites me to approach the matter on the basis that R v. Johnstone decides that use must be "trade mark use". But that does not advance the argument, since it begs the question as to what "trade mark use" is to be treated as being. The speeches of Lord Nicholls and Lord Walker in the House of Lords cannot sensibly be read as recommending an approach different to that of the ECJ in Arsenal to which the House specifically referred and relied upon. The issue at the heart of R v. Johnstone was whether a person who had been convicted of selling bootleg CDs bearing the names of the rock groups responsible for the music should have been able to put to the jury a defence that those uses would not have been infringing (i.e. to run a contention of the same genus as arguments which, for different reasons, succeeded in Arsenal at first instance before Laddie J, in Wet Wet Wet (Bravado Merchandising Services Ltd. v. Mainstream Publishing (Edinburgh) Ltd

[1996] FSR 205

) and in the majority decision of the Federal Court of Australia in Musidor BV v. Tansing (trading as Apple Music House) (1994) 123 ALR 593). The House of Lords was not in that case concerned with the outer reaches of arguments that may be made on the impact and scope of Arsenal but whether such a point was run-able at all, under the criminal provisions of the 1994 Act. In my judgment, the language of "trade mark use" does not take the debate much further (as the Court of Appeal recognised in Arsenal) although it remains a convenient shorthand for expressing the proposition that not all use counts. The relevance of meaning

[60]Seventh, the meaning of the sign to the average consumer is relevant for determining whether the condition is satisfied. Although the court may be able to avoid considering meaning for determining whether or not the use is "in relation to" goods, it cannot avoid doing so in determining whether the fourth condition is satisfied. In some cases, perhaps the majority, where only essential function is in issue, the question may be determinative. That is clear from the judgment of the ECJ in Adam Opel where the court said at paragraphs 23 to 25:

"23 In the case in the main proceedings, which is characterised by the fact that the trade mark in question is registered both for motor vehicles and for toys, the referring court has explained that, in Germany, the average consumer of the products of the toy industry, normally informed and reasonably attentive and circumspect, is used to scale models being based on real examples and even accords great importance to absolute fidelity to the original, so that that consumer will understand that the Opel logo appearing on Autec's products indicates that this is a reduced-scale reproduction of an Opel car. 24 If, by those explanations, the referring court intended to emphasise that the relevant public does not perceive the sign identical to the Opel logo appearing on the scale models marketed by Autec as an indication that those products come from Adam Opel or an undertaking economically linked to it, it would have to conclude that the use at issue in the main proceedings does not affect the essential function of the Opel logo as a trade mark registered for toys. 25 It is for the referring court to determine, by reference to the average consumer of toys in Germany, whether the use at issue in the main proceedings affects the functions of the Opel logo as a trade mark registered for toys. Moreover, Adam Opel does not appear to have claimed that that use affects functions of that trade mark other than its essential one."

[61]That was said about determination of the essential function but I can see no reason why the meaning of the sign would not also be relevant in considering whether there was any impact on any other functions. It is therefore necessary to refine the proposition "use is meaning" in the context of the fourth condition. Distilled to essentials, even for Article 5(l)(a), syntactic identity of sign with mark is not enough; the court must still assess the impact of the defendant's use on the registered mark's ability to perform its functions and, in particular, its essential function of guaranteeing origin. In assessing the impact, the semantic content of the sign is, at least, relevant and, particularly where only the essential function is in issue, may be determinative. The effect is to be determined by reference to the average consumer

[62]Eighth, Adam Opel makes it clear that the question of effect on function must be determined by reference to the average consumer. The average consumer, like the skilled person of patent law, is a legal construct. But, like the skilled person of patent law, the average consumer is anchored in reality. The level of abstraction required to consider matters from the perspective of the average consumer does not mean that characteristics of real consumers for goods of the kind in question are ignored. They inform the objective determination. Real consumers for certain goods, such as costly technical equipment or services, take greater time and care and are more likely accurately to resolve ambiguity than are real consumers for other goods which are selected in seconds in the distractions of the high street. Due account must be taken of that.

[63]As with patents, so with trade marks, the protectiveness of the regime is inversely proportional to the assumed abilities of the notional addressee. The less possessed of common sense the person skilled in the art is assumed to be, the more will be found to be inventive. The less well informed and observant the average consumer is assumed to be, the more will be found to be confusingly similar and the more will such a person be taken to assume that a sign intended to perform one function, performs another. No trade mark proprietor ever went broke persuading the court to underestimate the public. The task of the court is to determine the question by reference to an average consumer, who, in Community law, is assumed to be reasonably well informed and reasonably observant and circumspect. The assessment must take account of the goods and services in question and, as the Court of Appeal said in L 'Oreal, albeit in another context: "A touch of reality is called for".

[64]That must particularly be borne in mind in this case, which involves computer systems which are selected and installed with care and used over a lengthy period and where maintenance is provided by system administrators. In such a context, expectations of the average consumer's ability to perceive and discriminate must not be set too low. As the Court of Appeal observed in L 'Oreal: "Consumers are not stupid" and indicated that European trade mark law should not be over-protective. In Reed too, the court warned against an unduly "nanny" approach to assessment, in the context of a likelihood of confusion. These observations accord with the approach taken by the ECJ in for example Hölterhoff v. Freisleben

Case C-2/00

[2002] ECR I-4187

, particularly in specialist contexts of trade. Presumption of use as a trade mark?

[65]Ninthly, Mr Hicks submitted that, once it was shown that a sign identical to the mark appeared on goods, the burden shifted to the person so using it to show that it was not used in relation to goods. He sought support for this proposition from the opinion of Advocate General D Ruiz-Jarabo Colomer in Arsenal (in the ECJ) who said, at paragraph 52:

"I have just observed that, in cases of identity, likelihood of confusion may be presumed. The same reason as that which justifies that presumption allows the conclusion that, where there is such identity, the use a third party makes of a trade mark is use of it as such. That presumption which is iuris tantum, may be rebutted by proof to the contrary. Accordingly, there is a possibility, however remote it may be, that in a specific case use of a sign identical with another registered as a trade mark may not be prevented by the proprietor on the basis of article 5(1)(a) of the Directive."

[66]That is not reflected in the judgment of the ECJ in Arsenal. The Directive does not, even implicitly, lay down evidential presumptions in this respect. The tenth recital provides, in the context of an assessment of the likelihood of confusion that the ways in which the likelihood of confusion may be established "and in particular the onus of proof, are a matter for national procedural rules which are not prejudiced by the Directive", telling against the point. Finally, the ECJ has not accepted the approach based on determining whether or not the use was "use as a trade mark as such". In my judgment this passage does not, when analysed and considered in the light of the judgment of the ECJ support the argument advanced on behalf of Dr Hunter. It is neither possible to conclude that there is a presumption that mere identity of sign means that use is "as a trade mark" nor is there a presumption that such use adversely affects the functions (including the essential function) of the mark. Essential function and other functions

[67]Finally, Mr Hicks invites consideration of functions other than the essential function. Such arguments need to be approached with care. It is tempting, having drawn a blank in trying to identify damage to the essential function, to invite the court to rummage around in the penumbra of "other functions" for an argument that they may be affected, imprecisely delineated as those functions are in the Directive, by ECJ jurisprudence or elsewhere. That may appear fertile territory for arguable (indeed, referable) points: see, for example L 'Oreal in the Court of Appeal. But mere assertion that one of the other functions is or may be engaged does not mean that it arguably is. It is true that determination of whether or not the fourth condition is satisfied may, in some cases, be difficult because it may be unclear what alleged functions are of relevance or what their scope is. In other cases, however, this determination may be much more straightforward. Where for example, it is clear that, if any function can be argued to be at risk, it is the essential function and its incidents, the court may be able to determine with relative ease whether any damage to it is likely. CPR Part 24

[68]It is then necessary to return to the approach to summary determination in a context of this kind.

[69]Mr Hicks' primary submission for Dr Hunter is that the uses in question are infringing and that judgment for the claimant under CPR Part 24 should not be entered for that reason. His secondary submission is that it is not possible to determine the point against his clients at this stage under CPR Part 24.

[70]The analysis above might be thought to lead to the conclusion that the court cannot or should not make a determination at a summary stage, if a proprietor asserts that evidence may show (for example) that the mark is understood to mean something other than that which was intended. But, in my judgment, that does not follow. As in other cases, the court may, at a summary stage, have sufficient information concerning the facts and circumstances of use and the likely characteristics of real consumers to make a reliable determination from the perspective of the average consumer. The court must decline to make a summary decision under CPR Part 24 where there is a real prospect that matters could appear materially different at trial (see, for an example: Doncaster Pharmaceuticals Group Ltd v. The Bolton Pharmaceutical Company 100 Ltd

[2006] EWCA Civ 661

and the warnings there given). Where that is not the case, the court should not be unduly cautious in determining the matter on the basis that evidence might turn up. That is particularly the case where, as here, allegations have been made that a trader's activities are or may be unlawful (a fortiori where those allegations have been made to customers or potential customers) and where there has been an opportunity for such evidence to arise and none has emerged.

[71]The CPR generates legitimate expectations that adjudication will be expeditious as well as just. It is, in my judgment, important that disputes of this kind should be resolved quickly, if possible. It has been repeatedly said in other contexts of intellectual property adjudication that "business needs to know where it stands". That applies just as much to contexts such as these. It is therefore the duty of the court on an application of this kind generously, but nonetheless critically, to examine a contention that more might turn up, were the case to proceed to trial. Moreover, the mere fact that evidence may be relevant and that quite detailed analysis may be necessary to explain and justify a decision, does not mean than the decision is always difficult. If the court can make a determination on summary application, so much the better.

[72]That is the approach I propose to adopt and, bearing it in mind, assess the uses relied upon to determine, first, whether it is arguable that the four conditions in Céline are all satisfied in relation to any of the uses relied upon and second, whether there is a realistic likelihood that further evidence could make a material difference to this assessment. If either is the case, this application must be refused. If not, the matter should be decided now. USE - ASSESSMENT The uses in issue

[73]When the RxWorks system is in use, the term "vet.local" appears on computer screens in the particular ways. These are summarized in the evidence of Mr Hirst and the documents referred to by him. There are other uses of similar kinds described in the evidence of Mr Hirst and Mr Scanlan but it is common ground that the case can be determined by reference to the following summary.

(i) Searches

[74]A vet user of the system, when, for example, searching for a particular computer file, may engage certain search functions and employ certain search criteria. If that is done in a particular way, a screen similar to that at Annex 1 may appear (PS2/p82). Among the various other things appearing on that screen is the term "vet.local". The term can be seen to be used in the name of an active directory folder. The term "vet.local/users" is there employed to indicate the location of certain data. (ii) Opening or saving files

[75]When saving (for example) Microsoft Word or Excel files, it is possible that a vet user of the system may come across a screen similar to that at Annex 2 (PS2/p90-91). This screen shows that the folder "vet.local" lies "inside" the folder "sysvol". The icon next to the term "vet.local" is a conventional icon designating a folder and the description under the heading "Type" states that it is a File Folder. The term "vet.local" can be seen to be name of a file folder. It should also be said that it is not by any means inevitable that a user would ever come across this file folder in opening or saving files. Computer software systems and file and folder structures are sufficiently large and complex that the contents of folders which may have utility to the working of the system as a whole and to which files may be saved may never be seen at all by a user. (iii) Computer Name window

[76]Computers running Microsoft Windows software have means whereby a user can identify characteristics of the system (both of the individual computer and of the network) including, for example, details about the hardware and software. If a person is interested in doing so, it is possible to find this information by means of the "System Properties" window. This provides a number of options including (by clicking a tab marked, "Computer Name") access to details of the information used to identify the computer on the network. The screen in question is shown in Annex 3 (PS2/p94). It can be seen than the term "vet.local" appears next to the term "Domain:

". That window explains what the use of "vet.local" is denoting. At the top of the window it is stated: "

Windows uses the following information to identify your computer on the network.". That puts beyond doubt that "vet.local" is not there used to refer to software or hardware but as a name for a local domain internal to the system which is, in turn, used to identify the computer in question. (iv) "ipconfig" diagnostic command

[77]The term "vet.local" will also appear on the screen if a user has located the command prompt and has run a diagnostic program which provides details of the Windows IP Configuration. Among other data, the screen will show that "vet.local" is the Primary Dns Suffix. This is shown in Annex 4 (PS2/p92).

[78]In the case of uses (i) and (ii) above, these appearances of the term "vet.local" might be chanced upon by a vet user but equally, a user may never encounter them at all using the system. The evidence explains that appearances (iii) and (iv) would be highly unlikely to be chanced upon by a vet user unless they were engaged in examining properties of the computer system that they would not ordinarily need to do. It is more likely that an administrator of the system would encounter them, since the information that these procedures yield may be needed for certain administrative tasks. However, system administrators are sophisticated users of the system familiar with the use of domain names (and in some cases naming conventions) for local networks and folder names. It is hard to imagine that such persons would be unaware that use of "vet.local" in these contexts was to there identify the name of a primary domain for that system. It is inconceivable, in my judgment, that such persons would believe that such a term denoted any kind of commercial origin of or connection with such a domain.

[79]This is further reinforced by the fact that " .local" domain names are recommended for use in such contexts by Microsoft in its article "The Domain Name System name recommendation for Small Business Server 2000 and Windows Small Business Server 2003." That document states:

"Three practical methods to name the DNS [Domain Name System] domain are: * Make the name a private domain name that is used for name resolution on the Internal Small Business Server network. This name is usually configured with the first-level domain of ".local"

. At the present time, the ".local" name is not registered on the Internet... "

[80]Not all those who would be administrators of the system would be familiar with the contents of this document but those who would be would have a further reason to think that a term " .local" was merely invoking a naming convention for DNS domains. There is a debate in the evidence as to whether such local domains are usually named with ".local" as a suffix. I work on the assumption that it is not usual but that it is at least one of the recommended conventions.

[81]The recommendation by Microsoft that " .local" domain names are used in contexts such as these is relevant for another reason, since it affects the approach that the court should take to assessing the level of distinctiveness of the trade mark "vet.local". It is not always of assistance to consider this matter in determining whether there is infringement but it is often necessary to do so to determine whether there is likely to be confusion. There is no reason why similar considerations should not apply when considering whether the sign in question would be seen as denoting origin and whether any given use by a third party would be likely to damage it materially.

[82]A court should, in my judgment, be cautious before concluding that a suffix of this kind, which is positively recommended for use by the manufacturers of the software environment, is likely to be of origin denoting significance. As to the prefix "vet", it would be somewhat surprising to expect of an average consumer that he or she would think that the sign "vet" appearing embedded in software designed for and used by vets had any significance other than to denote that it was something to do with vets. It is nothing like the domain name prefixes in British Telecommunications plc v. One In a Million Ltd

[1999] 1 WLR 903

, to which I was referred, which consisted of the corporate names of some of the best known undertakings in the country in a very different context. That is remote from the present case. As a result, the term "vet.local" in the context in which it is used is inherently likely to be taken for what it is namely the name of a local domain within the system and associated folders.

[83]Mr Scanlan states at paragraphs 33 to 34 of his witness statement:

"...The local network domain on v.3 installations was called "vetdomain.local", being simply a logical nams to give to a vet's local domain. . ..In v. 4, the local network domain name was called simply "vet.local". "vet.local" has therefore been the name given to the local network domain name in v.4 installations since June 2002, long before Dr Hunter filed his application for registration on 25 July 2005. I remember when it was decided to call the domain name "vet.local" and how it was arrived at. ".local" was as far as we were concerned, a standard generic Microsoft convention. We sold to veterinary clinics and wanted a simple generic name to put in front of ".local" - and so we chose "vet" to arrive at "vet.local"

. We viewed it as a technical setting that would be contained in the server configuration. We never considered it a trademark or even thought of marketing or selling servers under the trade name of "vet.local"."

[84]This evidence is not challenged and is, in my judgment, cogent. It follows that so far as RxWorks was concerned "vet.local" was not intended to mean anything other than a name for the local domain. It is a "technical setting". It was not intended to identify the trade origin or any characteristics of the software or any part of it. To use an analogy, it was intended to be of no more significance, in trade mark terms, than the name a person might give to their newly built house. I return to the significance of this below.

[85]RxWorks has changed the local network domain name for new systems since receiving Dr Hunter's first e-mail. But RxWorks says that the matter is not academic because, if Dr Hunter is right, RxWorks and/or its customers consider that they may have to change the local domain name used at least for its installed v.4 systems. Programs and other resources store the local network domain name and use it to carry out specific tasks. This is hardly surprising, since it is the identifier of the local domain. It would not be possible just to change the name of the top-level domain at the top of the directory tree. Doing so alone would, as Mr Scanlan says, throw the system into chaos. He says that, if RxWorks was forced to change the vet.local network domain name on those installations where it appears, it would be necessary in practice to re-install and reconfigure every customer's computer system from scratch which would take a considerable amount of time and would cause downtime for each veterinary practice although Dr Hunter has disputed how much effort this would require (see Scanlan 1 st statement, paragraphs 49 and 50 and Hunter statement, paragraph 20).

[86]In none of the evidence served on behalf of Dr Hunter concerning the ways in which users of the system may encounter "vet.local", is there anything to suggest that users would understand the uses as anything other than they were intended. That is not said in Dr Hunter's evidence nor is it suggested in Mr Hirst's expert report or statements. It is to my mind clear, beyond serious argument, that none of these uses of "vet.local" was ever intended to bring to mind or refer to the trade origin of the software in question, the domain in question or the folders so named and that, to the average consumer (whether taken as the user or the system administrator) would not do so. The effect alleged on the functions of the trade mark

[87]Mr Hicks' argument relies on two effects on the trade mark. First, damage to the essential function. He submits that this is a case like Arsenal in which, in essence, any use on a significant scale is liable to affect the function on the footing that the more widely RxWorks uses "vet.local" as the domain name for its systems, the less able is Dr Hunter's mark to perform its function of identifying his goods and services.

[88]In my judgment, the Court of Appeal in Arsenal did not go so far as to say that any use would affect the essential function. Nor do any of the decisions of the ECJ referred to above. To the contrary, decisions such as Adam Opel contemplate that even widespread use may not do so. The question in each case is whether the particular use relied on would be likely to have that effect. In Arsenal, the aspect of the decision on the facts relied on by Mr Hicks was explicable partly on the basis that the market in question was for consumers in which one might expect numerous traders to genericise the mark "ARSENAL", were the use permitted, and in which, as the Court of Appeal also held, consumers regarded the use of the mark as denoting origin. In Arsenal the Court of Appeal found, in effect, that use of "ARSENAL" in the manner complained of would render it harder for the club to communicate, by the use of that sign, that goods so marked were its goods alone.

[89]Those facts are far removed from the present case. Here, "vet.local" is(a) buried in the workings of the system, to such an extent that vet users are likely only to stumble upon it by chance and knowledgeable system administrators, if they see it, are likely to know to what it refers,

(b) not a sign which is inherently likely to denote trade origin or do so in the contexts in which it is used,

(c) not intended to denote trade origin but, rather, would be taken as the name of an internal domain and associated folders

(d) on a scale which, in reality, is likely only to be encountered to a significant extent by computer professionals administering the system and perhaps, occasionally, the odd vet.

[90]This is, in my judgment, precisely the kind of use which the ECJ would contemplate as not affecting any of the functions of the trade mark (as, in effect, it did in Hölterhoff).

[91]Second, Mr Hicks relies on the function of the mark as a guarantee of quality. That is (or, at least, arguably is) a relevant function, but damage to it relies on the average consumer believing that the wrongly marked lower quality goods emanate from the proprietor. It is damage consequential upon the failure of a mark to perform its essential function. If there is no likelihood that damage will be done to the essential function, there is no likelihood that damage will be done to this function either. I do not believe that this argument adds anything to the allegation of damage to the essential function and the case really turns on impact on essential function. Even if that is not correct, it seems to me that, once it has been determined that the use has the limited purposes outlined above, it becomes impossible to say that there is any real likelihood of damage to any wider functions. Further points

[92]This conclusion is re-inforced by the fact that, in Adam Opel, the ECJ said that if the court found that the relevant public did not perceive the sign in question as indicating that the products came from the proprietor or an undertaking linked to it, the court would have to conclude that the use did not affect the essential function of the mark as a trade mark registered for the goods in question (where the case was concerned with essential function). Accordingly, if the sign "vet.local" is perceived as it was intended to be perceived by RxWorks, namely otherwise than as an indication of origin, like in Adam Opel this court should conclude (given my finding that what is really in issue is the essential function) that the use was not use such as to affect that function.

[93]In my judgment, where as here,(i) a sign is intended to act as an internal name for an aspect of a complex computer system,

(ii) a credible explanation is put forward that it was intended to mean only that

(iii) no credible reason exists for why it should be regarded by likely users as denoting anything else, there is no serious basis for concluding that it would be taken to mean something different. I am un-persuaded by the submission on behalf of Dr Hunter that people encountering such uses would associate it with Dr Hunter's business or computer systems or services or that they could see it as denoting quality. The use was not intended to do that, it is not likely to do that, particularly having regard to the nature of those encountering it, and there is no evidence suggesting that, in fact, it ever has done so, despite five years use. In my judgment, on the evidence, the conclusion that uses would not be perceived as indicating that the software, hardware and systems (or any other goods or services of relevance) came from Dr Hunter is irresistible. Further evidence?

[94]There is, in my judgment, no real prospect that further evidence will emerge which could change that position. First, it is inherently unlikely to do so, given the foregoing assessment. Second, the fact that use of "vet.local" in the RxWorks systems has continued since 2002, without any problems of any kind apparently coming to light makes the probability even more remote. Third, despite contact with vets before this case (see the letter above), Dr Hunter has not adduced any evidence suggesting that any vet or administrator would actually view the sign in the manner contended for or that they would make any of the assumptions suggested or that damage would arise. The chance of material turning up which might affect the position were the matter permitted to go to trial is in, my judgment, vanishingly small. Like Rattee J in Trebor Bassett, I am satisfied that there is no room for further evidence to be investigated at a trial relating to this question.

[95]Accordingly, the fourth condition of Céline is not satisfied. This use will have no material impact on the functions of Dr Hunter's trade mark and, in particular, its essential function of guaranteeing to consumers the origin of the goods or services. It does not infringe.

[96]I should finally say that judgment says nothing about what other uses of "vet.local" in other contexts may involve and whether those would or would not satisfy the fourth condition. My judgment is strictly confined to the uses by RxWorks in issue. CONCLUSION AND RELIEF

[97]For the foregoing reasons the uses complained of do not arguably infringe Dr Hunter's trade mark and, to the extent that threats have been made of proceedings for infringement of the mark, they were not justified.

[98]One issue which has not been fully argued is whether all the relief sought on this application is appropriate. At the heart of this dispute is whether the claimant's use was or was not lawful under the Trade Marks Act 1994. I have held that it was not unlawful and will so declare. I will hear further argument if necessary on whether any other relief related to the threats claim is necessary or appropriate, should the parties wish. There is a powerful case for limiting further hostilities between these parties concerning this (now historic) matter. I did not detect that Dr Hunter had any particular enthusiasm for making allegations in respect of these systems in future nor any enthusiasm for RxWorks making any use of "vet.local". In this connection, I accept Mr Hicks' submission that there is an argument to be had, which was also not fully developed at the hearing, as to whether the second e-mail involved a threat of proceedings against the vets themselves. While I am happy to consider argument on it, it is not evident that it would profit either side to spend time and money debating it further.

[99]Finally, I pay tribute to the presentation on both sides. Regrettably, it has not been possible wholly to avoid entering what has been described as the forest of authorities. The length of this judgment results from an attempt to do justice to the points advanced on the basis of them.

Cited in 1 later judgment

Skyscape Cloud Services Ltd v Sky Plc & Ors 2016