32Red Plc (A Gibraltar Company) v WHG (International) Ltd & Ors [2011] EWHC 62 (Ch)

“Playtech would acquire Uniplay and combine its assets with William Hill’s Online offering … There was no reference to particular brands that Uniplay operated; they were not considered important. As we understood the business, part of Uniplay’s success came from its ability to move players from one casino to another, so that even if they changed where they were playing, they were still doing business with a Uniplay casino. They used a number of brands …”

“From the William Hill side the joint venture was not focused on the brands, rather it was formed to acquire leading software and expertise in online customer relationship management. The aims were to obtain leading software, reduce the cost of acquiring customers and increase their lifetime value. The joint venture offered the prospect of bringing these improvements to the “William Hill” brand. None of that depended on the identity of the websites being contributed. We did not discuss 32Red.”

“There are hundreds of online casinos so customers have a very wide choice, and each one is only a few clicks away.”

“20. Mr Ware suggests that 32Vegas has “fallen short on social responsibility issues”

“We all discussed some time ago the constant stream of complaints we are receiving from 32vegas customers about their misunderstanding of the bonus rules. Whilst I have little doubt that the rules are there to be read and are broadly consistent with many other operators’, it is apparent that a large number of WHG customers, experienced or otherwise, misunderstand the marketing and presentation of these bonuses and are frustrated by the way they are dealt with by customer services. Attached are two we received today, Nicky [Nicholas Macias, the assistant gambling supervisor at the GRA] has a running list that has “dozens” of examples. This is unprecedented and has to be stopped. Our Generic Code does have a provision that where rules are regularly misunderstood by customers they must be changed. I appreciate that steps have been taken in recent weeks to remedy this problem, but from our perspective, they are not proving sufficient and further action is needed. Can your team look at this once again and do what is necessary to draw a line under the problem on a self-regulatory basis.”

“Apologies not to have responded immediately – we have been moving offices in the last 24 hours and our [communications] have been affected. This is extremely concerning and clearly needs addressing. I think it makes sense to meet face to face and for us to brief you on the actions we are taking. If you could let me know what works for meeting we will fit in …”

“It has been suggested to me that this is not correct. I was addressing Mr Ware’s allegation about “social responsibility” and, on reading Mr Brear’s statement, I see the point he is making. I should have said that there had been no formal or official complaint to the [GRA] about 32Vegas or 21Nova about any aspect of the brand, including social responsibility … I note that no complaint at all, whether an initial/unofficial complaint or a formal/official complaint, had been made to the [GRA] about 32Vegas or 21Nova specifically in relation to social responsibility issues.”

“They are out of the Rogue Pit. They are in the probation section. I am a busy guy. I have got a lot of things going on … I had forgotten about it. I’m only human.”

“Most of these grumbles are from players who lose and this is usually a software issue, which has nothing to do with the player. I would note, however, that of the sites I have searched on looking for reviews of 32Red, there are many fewer negative reviews of 32 Red than one would expect for an online casino of that size.”

“17. Online gambling differs from the other more popular forms of gambling in a number of ways. It obviously requires access to a computer, a credit or debit card and, for it to be practical, broad band (rather than slower, dial-up) Internet. Unless the system is set up for them by someone else, on-line gamblers are likely to be computer literate and confident enough to give their card details and pay on-line. Paying on-line increases the possibility of fraud. In my opinion, this possibility tends to make each transaction a more considered transaction than the same transaction in cash. On-line gamblers tend to stake more than those using bricks and mortar betting. We estimate that the average on-line stake in sports betting is about £40 as compared with a shop stake of about £8 … 18. On-line gamblers often have a number of different accounts and it is widely thought that players may have 6 or 7 … Some players have many more. From my own experience I believe that players tend not to read in detail the terms and conditions of the websites to which they sign up. More often they will click their agreement to get going … 19. On-line gambling offers significant choice of services at a single outlet. There are more than 2,000 different sites world wide offering on-line gambling (including sports books, poker, casinos etc). It is easy to set up an account and also to stop using it. There is significant competition for customers. An operator cannot afford to upset customers because it is very easy for them to go elsewhere. 20. Since the stock market downturn at the end of 2008, when most operators saw business decrease in the financial crisis, customers have become more demanding of bonuses given by the operators ... 21. The on-line gambling business in general saw a recovery in the second half of 2009 as market confidence returned … 22. Due to the competition between sites, the pay-out to on-line players is higher than other forms of gambling. This has reduced the profit margins of casino operators. From the players’ side, this increases the time on-line for a given stake. 23. On-line players can also make their views known by commenting about their experience in chat rooms and complaining to the operators. I believe that on-line players tend to be quick to complain if they don’t like something. Chat rooms provide a forum for players to complain immediately to a large audience. Players also have the opportunity to contact the casino using email or live chat meaning that they can complain without any of the confrontation or potential embarrassment of complaining in person. On-line, the experience is much more anonymous and sterile, giving people more confidence to complain.”

“57. While rates that operators pay to affiliates vary, it would not be unusual for the affiliate to take 30% of the winnings made by the casino from any player the affiliate delivers to the casino. This makes the affiliate role very attractive. The operator pays to set up the casino and for the hardware, software, call centre and other staff, licensing and advertising. In contrast, an affiliate has, by comparison, few overheads, and affiliates can make significant returns on their work. 58 Mr Ware suggests … that casino operators need to be selective when choosing affiliate sites as affiliates can reflect badly on the site. That is only one view. Another, and I believe more widely held view, is that an operator should have as many affiliates as possible as they drive trade to the operator. So long as they abide by the operator’s terms the casino should benefit from their labours.”

“Rights conferred by a Community trade mark 1. A Community 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 Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered; (b) any sign where, because of its identity with, or similarity to, the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark; (c) any sign which is identical with, or similar to, the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trade mark.” (a) any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered; (b) any sign where, because of its identity with, or similarity to, the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark; (c) any sign which is identical with, or similar to, the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trade mark.”

“The similarities between the marks and signs at issue must be assessed on a visual, aural and conceptual level. In each case the court must take into account the distinctive and dominant components of the mark and sign, but the comparison is of the overall impression given. Furthermore the comparison is not to be undertaken as if the mark and sign in question were side by side but must take into account the imperfect memory of the observer.”

“(a) the likelihood of confusion must be appreciated globally, taking account of all relevant factors; (b) the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question; (c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details; (d) the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements; (e) nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components; (f) and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark; (g) a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa; (h) there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it; (i) mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient; (j) the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense; (k) if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion.”

“82. Next the ordinary consumer test. The ECJ actually uses the phrase “average consumer” (e.g. Lloyd paras [25] and [26]). The notion here is conceptually different from the “substantial proportion of the public” test applied in passing off (see e.g. Neutrogena Corp v Golden Ltd [1996] R.P.C. 473). The “average consumer” is a notional individual whereas the substantial proportion test involves a statistical assessment, necessarily crude. But in the end I think they come to the same thing. For if a “substantial proportion” of the relevant consumers are likely [to] be confused, so will the notional average consumer and vice versa. Whichever approach one uses, one is essentially doing the same thing – forming an overall (“global”) assessment as to whether there is likely to be significant consumer confusion. It is essentially a value judgment to be drawn from all the circumstances. Further conceptional over-elaboration is apt to obscure this and is accordingly unhelpful. It may be observed that both approaches guard against too “nanny” a view of protection – to confuse only the careless or stupid is not enough. 83. Finally, although I agree with the judge’s questioning of the Court’s proposition of fact that “there is a greater likelihood of confusion with very distinctive marks” there is some truth with the opposite proposition. The Court in Lloyd said: “23. In determining the distinctive character of a mark, and accordingly in assessing whether it is highly distinctive, the national court must make an overall assessment of the greater or lesser capacity of the mark to identify the goods or services for which it has been registered as coming from a particular undertaking, and thus to distinguish those goods from those of other undertakings. 24. In making that assessment, account should be taken, in particular, of the inherent characteristics of the mark, including the fact that it does or does not contain an element descriptive of the goods or services for which is has been registered; …” 84. The last sentence is an acknowledgement of a fact that has long been recognised: where a mark is largely descriptive “small differences may suffice” to avoid confusion … This is not a proposition of law but one of fact and is inherent in the nature of the public perception of trade marks. 85. It is worth examining why that factual proposition is so – it is because where you have something largely descriptive the average consumer will recognise that to be so, expect others to use similar descriptive marks and thus be alert for detail which would differentiate one provider from another. Thus in the cited case “Office Cleaning Association” was sufficiently different from “Office Cleaning Services” to avoid passing off. 86. The same sort of consideration applies when there is use of two common surnames, as in this case. The average consumer will be alert for differences – just in the same way as one distinguishes W H Smith from other Smiths by the initials. That is of importance here in making the global assessment.” “23. In determining the distinctive character of a mark, and accordingly in assessing whether it is highly distinctive, the national court must make an overall assessment of the greater or lesser capacity of the mark to identify the goods or services for which it has been registered as coming from a particular undertaking, and thus to distinguish those goods from those of other undertakings. 24. In making that assessment, account should be taken, in particular, of the inherent characteristics of the mark, including the fact that it does or does not contain an element descriptive of the goods or services for which is has been registered; …”

“I remember this occasion well as I was annoyed with both 32Red and 32Vegas for not paying the bonus. I do not recall exactly how much I deposited but I clearly remember being very frustrated at the time with both casinos as I felt cheated and misled. As a result, immediately thereafter, I refused to deposit any money with 32Vegas or 32Red and I subsequently closed both accounts.”

“I did not join 32Red as I assumed that 32Red and 32Vegas were part of the same group of casinos as I thought the names were so similar. I also thought there was a possibility that one was an affiliate of the other. I know that there are various casinos in existence that have similar names and are part of the same casino group such as betfred.com and betfredpoker.com. In addition, partypoker.com, partybingo.com and partycasino.com are also part of the same group.”

“I’ll sign up now. I think confusion comes from 32Vegas casino”

“The reason I associated the 32Vegas pop-up advertisements with 32Red is because of the number “32”

“76. Thirdly, as was stated in para 29 of this judgment, detriment to the distinctive character of the earlier mark is caused when that mark’s ability to identify the goods or services for which it is registered and used as coming from the proprietor of that mark is weakened, since use of the later mark leads to dispersion of the identity and hold upon the public mind of the earlier mark. 77. It follows that proof that the use of the later mark is or would be detrimental to the distinctive character of the earlier mark requires evidence of a change in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered consequent on the use of the later mark, or a serious likelihood that such a change will occur in the future. 78. It is immaterial, however, for the purposes of assessing whether the use of the later mark is or would be detrimental to the distinctive character of the earlier mark, whether or not the proprietor of the later mark draws real commercial benefit from the distinctive character of the earlier mark.”

“Article 7 Absolute grounds for refusal 1. The following shall not be registered: … (b) trade marks which are devoid of any distinctive character; (c) trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service; (d) trade marks which consist exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade; … 3. Paragraph 1(b), (c) and (d) shall not apply if the trade mark has become distinctive in relation to the goods or services for which registration is requested in consequence of the use which has been made of it. Absolute grounds for refusal … (b) trade marks which are devoid of any distinctive character; (c) trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service; (d) trade marks which consist exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade; 152. Article 51 Grounds for revocation 1. The rights of the proprietor of the Community trade markshall be declared to be revoked on application to the Office or on the basis of a counterclaim in infringement proceedings: … (c) if, in consequence of the use made of it by the proprietor of the trade mark or with his consent in respect of the goods or services for which it is registered, the trade mark is liable to mislead the public, particularly as to the nature, quality or geographical origin of those goods or services. … Article 52 Absolute grounds for invalidity 1. A Community trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings: (a) where the Community trade mark has been registered contrary to the provisions of Article 7; … 2. Where the Community trade mark has been registered in breach of the provisions of Article 7(1)(b), (c) or (d), it may nevertheless not be declared invalid if, in consequence of the use which has been made of it, it has after registration acquired a distinctive character in relation to the goods or services for which it is registered.”

“54. As the Court has already held … Article 3(1)(c) of the Directive pursues an aim which is in the public interest, namely, that such signs or indications may be freely used by all. Article 3(1)(c) therefore prevents such signs and indications from being reserved to one undertaking alone because they have been registered as trade marks. 55. That public interest requires that all signs or indications which may serve to designate characteristics of the goods or services in respect of which registration is sought remain freely available to all undertakings in order that they may use them when describing the same characteristics of their own goods. Therefore, marks consisting exclusively of such signs or indications are not eligible for registration unless Article 3(3) of the Directive [i.e. the saving for acquired distinctiveness] applies. 56. In those circumstances, the competent authority must, under Article 3(1)(c) of the Directive, determine whether a trade mark for which registration is sought currently represents, in the mind of the relevant class of persons, a description of the characteristics of the goods or services concerned or whether it is reasonable to assume that that might be the case in the future: see to that effect the Windsurfing Chiemsee case, para 31. If, at the end of that assessment, the competent authority reaches the conclusion that that is the case, it must refuse, on the basis of that provision, to register the mark. 57. It is irrelevant whether there are other, more usual, signs or indications for designating the same characteristics of the goods or services referred to in the application for registration than those of which the mark concerned consists. Although Article 3(1)(c) of the Directive provides that, if the ground for refusal set out there is to apply, the mark must consist exclusively of signs or indications which may serve to designate characteristics of the goods or services concerned, it does not require that those signs or indications should be the only way of designating such characteristics. 58. Similarly, whether the number of competitors who may have an interest in using the signs or indications of which the mark consists is large or small is not decisive. Any operator at present offering, as well as any operator who might in the future offer, goods or services which compete with those in respect of which registration is sought must be able freely to use the signs or indications which may serve to describe characteristics of its goods or services.”

“A trade mark shall not be registered if or to the extent that the application is made in bad faith.”

“(1) The registration of a trade mark may be revoked on any of the following grounds – … (c) that, in consequence of acts or inactivity of the proprietor, it has become the common name in the trade for a product or service for which it is registered; …” … (c) that, in consequence of acts or inactivity of the proprietor, it has become the common name in the trade for a product or service for which it is registered; …”

“(1) It is to be inferred that, in applying to register “32”, the Claimant intended to prevent other traders in the market place from using the number 32 and therefore from trading or from entering the market for the supply of casino and gaming services and similar. (2) Further, the Claimant could not objectively have thought that a roll on the roulette wheel had come to denote its casino and gaming services. Accordingly, it is to be inferred that the application was made without a genuine belief that the mark was properly a trade mark. (3) Further, or in the alternative, the Claimant had no genuine intention at the date of application for the mark to use [the UK mark] in respect of all goods and services for which registration was sought.”

“189. In my judgment it follows from the foregoing considerations that it does not constitute bad faith for a party to apply to register a Community trademark merely because he knows that third parties are using the same mark in relation to identical goods or services, let alone where the third parties are using similar marks and/or are using them in relation to similar goods or services. The applicant may believe that he has a superior right to registration and use of the mark. For example, it is not uncommon for prospective claimants who intend to sue a prospective defendant for passing off first to file an application for registration to strengthen their position. Even if the applicant does not believe that he has a superior right to registration and use of the mark, he may still believe that he is entitled to registration … 190. Nor in my judgment does it amount to bad faith if what the applicant seeks to register is not the actual trade mark he himself uses but merely the distinctive part of his trade mark, the other part of which is descriptive or otherwise non-distinctive, and third parties are also using the distinctive part with different non-distinctive elements. It is commonplace for applicants to apply to register the distinctive elements of their trade marks, and with good reason …”