Hearst Holdings Inc & Anor v A.V.E.L.A. Inc & Ors [2014] EWHC 439 (Ch)

Case No HC12D01447

[2014] EWHC 439 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

INTELLECTUAL PROPERTY

COMMUNITY TRADE MARK COURT

Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NL

Date 25/02/2014

Before

MR JUSTICE BIRSS

Between

(1) HEARST HOLDINGS INCClaimants

(2) FLEISCHER STUDIOS INCClaimant

(1) A.V.E.L.A. INCDefendants

(2) POETICGEM LIMITEDDefendant

(3) THE PARTNERSHIP (TRADING) LIMITEDDefendant

(4) U WEAR LIMITEDDefendant

(5) J FOX LIMITEDDefendant

James Mellor QC and Thomas Moody-Stuart (instructed by Field Fisher Waterhouse) for Claimants

Emma Himsworth QC (instructed by Hamlins) for Defendants

Hearing Hearing dates: 29th, 30th, 31st Jan, 2nd, 5th Feb 2014

Judgment

Introduction

[1]The claimants contend they are the successors of the originator of the cartoon character Betty Boop, first shown in 1930s America. Their case is that they are the only legitimate source of Betty Boop merchandise in the UK. The first defendant (AVELA) contends that it is also a legitimate source of Betty Boop “imagery” in the UK. The third defendant TPTL is AVELA’s UK licensing agent. The second and fifth defendants (Poeticgem and J Fox) are UK licensees of AVELA. The fourth defendant (U Wear) distributes product supplied by J Fox. Poeticgem, J Fox and U Wear sell Betty Boop merchandise to retailers. U Wear also sells online directly to the public. The claimants contend that the defendants have committed acts of trade mark infringement and passing off. The defendants deny this and contend the trade marks are invalid.

[2]The action as a whole also includes a claim for copyright infringement however that claim was separated from the trade mark and passing off claim in December 2013. This passing off and trade mark trial is also subject to certain conditions set out in the December 2013 order. The copyright claim is to be tried in January 2015. The split was the price the defendants had to pay to be permitted to make very late wholesale amendments to their case on copyright. Ideally it would have been much better to try all the issues together but the fact that the court cannot do that is the defendants’ fault. As well as the claimants’ copyright claim, one of the defendants’ trade mark invalidity attacks (bad faith) was split off since it is linked to the copyright arguments.

The claimants’ case

[3]The claimants’ trade mark rights are specific to its particular registered trade marks and CTMs. They relate to the words “BETTY BOOP” and to a particular device. Schedule 1 to this judgment sets out the complete specifications of the marks. In summary they are: i) UK registered trade mark 1487409 BETTY BOOP in classes 9, 16, 25 and 28 filed on 9th January 1992; ii) UK registered trade mark 1487518 (device) in class 28 filed on 9th January 1992; iii) UK registered trade mark 1487325 (device) in class 25 filed on 9th January 1992; iv) UK registered trade mark 2134589 (device) in class 18 filed on 3rd June 1997; v) UK registered trade mark 2460441 (device) in class 3 filed on 4th July 2007; vi) Community Trade Mark 008596348 BETTY BOOP in classes 3, 14, 16, 18, 21, 24 and 25 filed on 6th October 2009; vii) Community Trade Mark 008596546 (device) in classes 3, 14, 16, 18, 21, 24 and 25 filed on 6th October 2009; viii) Community Trade Mark 009166323 BETTY BOOP in classes 9, 12, 35 and 38 filed on 10th June 2010; ix) Community Trade Mark 009166349 (device) in classes 9, 12, 35 and 38 filed on 10th June 2010.

[4]The device the subject of the device registrations is set out below. The devices registered are all the same although some have the words BETTY BOOP in small letters at the foot. The registered device is:

[5]The claimants contend that the marks have been put to very substantial use in the United Kingdom and the Community by or with the consent of the claimants with the result that they have a reputation for the purposes of s10(3) of the Trade Marks Act 1994 and Art 9(1)(c) of the Community Trade Mark Regulation.

[6]The true nature and extent of the claimants’ use of these marks and, for passing off, their goodwill, needs to be examined with care. In outline the claimants contend that they are the owners of a substantial goodwill and reputation in the UK in the sale of goods bearing an image of Betty Boop, the words BETTY BOOP or BOOP or slogans containing those words such that the use of these indicia has come to denote to the trade and the public products which emanate from the claimants or their licensees. Further the claimants’ trade in licensing Betty Boop merchandise has led to them acquiring a substantial goodwill and reputation as the parties entitled to grant licences in respect of official Betty Boop merchandise.

[7]The acts complained of all involve what the claimants call “unauthorised Betty Boop merchandise” which means products bearing signs depicting Betty Boop which are similar to the device the subject of the trade mark registrations and/or incorporating the words BETTY BOOP or BOOP. They are unauthorised because the claimants have not licensed them. The claimants’ position is that any unauthorised product which bears an image recognisable as Betty Boop will infringe the device marks regardless of the pose of the character. The claimants’ position is also that any unauthorised product which bears an image recognisable as Betty Boop will infringe the word mark marks regardless of whether the words BETTY BOOP or BOOP (or a slogan like “Boop oop a doop”) appear.

[8]The claimants’ case is that the manufacture and/or import into the United Kingdom and the Community and subsequent sale and offer for sale of unauthorised Betty Boop merchandise will infringe the trade marks. The claimants also contend that by granting licences AVELA has infringed or is liable for the infringements of others as a joint tortfeasor. TPTL is also said to be liable on a similar basis as a result of its activities as AVELA’s licensing agent.

[9]An infringement case based on double identity (s10(1)/ Art 9(1)(a)) is relied on in relation to the word marks (UK registered trade mark 1487409 and CTM 8596348).

[10]An infringement case based on likelihood of confusion (s10(2)/Art 9(1)(b), similar signs and similar or identical goods) is relied on for all the trade marks.

[11]Infringement cases based on unfair advantage and on detriment to the distinctive character under s10(3)/Art 9(1)(c) are also relied on for all the trade marks.

[12]Two cases of passing off are advanced. The claimants contend two deceptions have been caused by the defendants. The first deception is that the Betty Boop merchandise sold under licence by AVELA is authorised by the claimants or is official Betty Boop merchandise. This deception is said to have been practised on both the trade and the public. The other is a deception practised on AVELA’s licensees, that they have been granted a licence in respect of Betty Boop by the claimants or by a party authorised by the claimants (being the official source of Betty Boop merchandise).

The defendants’ case

[13]AVELA has gone to the trouble of reconditioning old movie posters with Betty Boop in them and claims that its imagery is all derived from those old posters. AVELA has found what it contends is a source from which it or its licensees can reproduce images of Betty Boop which do not derive directly or indirectly from works in which the claimants own copyright. This is a form of copyright laundry and there is nothing wrong with it from a copyright point of view if it works.

[14]The defendants do not dispute that AVELA offers licenses of Betty Boop imagery and that the goods which are sold to the public are what the claimants call unauthorised Betty Boop merchandise. The defendants deny trade mark infringement on the basis that neither they nor their customers use Betty Boop as a trade mark at all. The Betty Boop imagery appearing on the goods is purely decorative, makes no representation about trade origin and so cannot infringe. They deny passing off on the same basis. The Betty Boop imagery on the products makes no representation about trade origin at all and therefore no misrepresentation. The defendants rely on the defences to trade mark infringement provided by s11(2)/ Art 12.

[15]As for the allegation of passing off by offering licences, the defendants contend there is no misrepresentation since AVELA has a library of images to licence to third parties. One of the sub-issues which relates to this question concerns AVELA’s claim to be licensing its own copyright in the images in AVELA’s own collection. At one stage the defendants submitted it was part of their case that AVELA owned and was licensing UK copyright in these images and invited me to decide that question but during the trial there was a change of tack and the defendants submitted that I did not need to decide that question and all the court had to recognise was that AVELA had a bona fide belief that it was licensing copyright.

[16]The defendants’ usage tries to avoid using the words “BETTY BOOP”. It is a condition of AVELA’s licences that the licensees do not use those words. They may use “BOOP” or “BETTY” alone or a slogan like “Boop oop a doop” but not “BETTY BOOP”. AVELA does this because it perceives that the words are a registered trade mark. This is odd and rather inconsistent with the defendants’ basic case. I will return to this below.

[17]In any case on a number of occasions the defendants’ customers have used the words BETTY BOOP in association with the goods purchased from the defendants.

[18]The defendants’ first validity attack on the trade marks is based on s3(1)(b)/Art 7(1)(b), the marks are all said to be devoid of distinctive character because they constitute the name or image of the very well known BETTY BOOP character. The second validity attack is based on s3(1)(c)/Art 7(1)(c), on the basis that the marks consist exclusively of indications of characteristics of the goods for which they are registered. The claimants deny these allegations and rely on the proviso to s3(1) and on Art 7(3).

[19]The defendants deny the allegations of joint tortfeasance and common design.

[20]The defendants also counterclaim for threats. This relates to letters sent by the claimants’ solicitors to Argos and More T Vicar.

The witnesses

[21]The claimants called Mark Fleischer. He is the President and CEO of the second claimant and grandson of Max Fleischer, the person the claimants contend created Betty Boop. He has been involved with Betty Boop merchandising since the 1980s. Much of his evidence related to the copyright claim and was not germane to the issues I have to decide. He explained the history of dealings relating to Betty Boop from the 1930s, the claimants’ merchandising operation relating to Betty Boop and the litigation with AVELA in the USA. His evidence focussed on the USA.

[22]The claimants also called Cathy Titus. She is Vice President of the International Licensing in the King Features division of the first claimant. She has worked at King Features since 1971 and was able to give evidence about King Features’ worldwide Betty Boop merchandising operation from that time until today. She describes Betty Boop as being well known as a sexy, sassy, iconic character and explained how the claimants have carefully controlled the way the brand has developed. Her evidence addressed how she thought the public perceived Betty Boop. Although Ms Titus’ direct experience relates to the USA, given that the claimants’ control over the development of Betty Boop worldwide has always been exercised from the USA, her evidence was relevant to, albeit at a distance from, the UK.

[23]John McInnerny was an important witness for the claimants. His company Allsorts Media is King Features’ licensing agent for the UK. His involvement with licensing King Features’ “properties” including Betty Boop, Flash Gordon and Popeye began in 1986 while he was a director of a different company, Yaffa. At that time Yaffa was King Features’ licensing agent. In 2000, when Yaffa was in financial difficulties, Mr McInnerny set up Allsorts Media and picked up where Yaffa left off. He described the merchandising business in the UK and described in detail the work which had been done by King Features and Yaffa/Allsorts Media to develop Betty Boop in the UK since 1986. Mr McInnerny also addressed AVELA and its UK operation about which the claimants complain.

[24]None of Mr Fleischer, Ms Titus nor Mr McInnerny were independent. Nevertheless they were good witnesses who gave their evidence truthfully and honestly.

[25]The claimant also relied on a witness statement from Keith McCloat of the first claimant. He also described the relationship between the first and second claimant and the first claimant’s trade mark filings. He was not cross-examined.

[26]The defendants called Leo Valencia. He is the President of AVELA. He explained how the images which AVELA licenses were produced and addressed AVELA’s licensing programme. He also dealt with other matters including the litigation in the USA and the case based on threats. He described AVELA as a full service multimedia merchandising and licensing agency which publishes artwork for licensing at all levels of the retail marketplace throughout the world. He described the mark RADIO DAYS which is the main sub-brand used by AVELA for the European market and referred to the “host” of imagery of different subjects which AVELA licences under RADIO DAYS.

[27]I am not satisfied I can rely on Mr Valencia’s evidence save where it is adverse to his interest or corroborated by documents. Moreover, in the latter case, I am not sure I can always rely on the documents in an uncritical way. The explanation Mr Valencia gave in his witness statements for the sequence of events concerning reconditioning posters, creating new images based on reconditioned posters and conducting copyright searches in the US Copyright Office was seriously at odds with the explanation he gave in his oral testimony. In paragraph 5 of his first witness statement Mr Valencia stated in clear terms that in 1998 he conducted “considerable research” to ensure there were no copyrights in posters he was planning to restore. In cross-examination he claimed that he had reconditioned the posters years beforehand, in the 1980s. The two accounts are irreconcilable.

[28]Related to this was a point about dates in his witness statement which Mr Valencia corrected as part of his evidence in chief. If all that had been involved was altering a date given as 1989 to 1985 then nothing would turn on it, but the changes also supposedly involved changing two different dates which appeared side by side (1989 for one activity and 1995 for another) into the same 1985 date without explaining how the error could have occurred or facing up to the nature of the change.

[29]A further example of Mr Valencia’s unreliability arises from the fact that AVELA requires its licensees to mark their goods with a copyright notice with a date of 1985. Even if, which I find incredible, all the restoration work was done on or even before 1985, the images in question (such as Betty Boop’s head in a poster advertising the film Breakfast at Tiffanys) were plainly created much more recently. Even if Mr Valencia or AVELA or another company associated with Mr Valencia called Sci Fi Productions Inc (doing business as X One X Movie Archive) does indeed own any copyright in the works in question, it did not date from 1985. The 1985 date is untrue and Mr Valencia knows he cannot justify it. When pressed in cross-examination Mr Valencia sought to play this down on the basis that a copyright notice was unnecessary. That will not do. In my judgment the claimants are correct in that the 1985 date is deployed to make it look as though AVELA has been licensing these images for years. It has not.

[30]The reason I am wary of relying uncritically on Mr Valencia’s documents is the following. In certain US copyright Certificates of Registration applied for and signed by Mr Valencia in May 2005 there is an assertion that certain Betty Boop related works in AVELA’s archive were created in 1998. The images include a restored version of a Betty Boop poster called TALKARTOON. The TALKARTOON poster is one of the key posters from which Mr Valencia derives a picture of Betty Boop. It is the assertion in the document that the TALKARTOON derived works were created in 1998 which is in serious doubt. The reason is the following. Mr Valencia conducted copyright searches at the US Copyright Office. There are two in evidence. The first shows the results of a search dated December 1998. The second, dated February 2005, shows Mr Valencia asking the US copyright office to conduct a search. Both searches include material relating to Betty Boop but the TALKARTOON poster is not one of the items mentioned in the December 1998 search. It is one of the items listed in the February 2005 search. The clear inference is that Mr Valencia only obtained the TALKARTOON poster (or access to it) sometime after December 1998 and before February 2005. In which case it is very hard to see how the restored TALKARTOON work attached to the 2005 US copyright Certificate of Registration could have been created in 1998 despite the assertion in the certificate.

[31]Even Mr Valencia’s reference to there being a host of imagery of different subjects available under the RADIO DAYS brand needs to be treated with care. It is true that there is a large number of images available under the RADIO DAYS brand which are nothing to do with Betty Boop but Mr Townsend of TPTL explained that what he called “the Boop range” underpinned the ranges offered and featured on 70% of the licence agreements introduced. Mr Townsend explained that the RADIO DAYS brand is far less attractive to licensees without the Boop range.

[32]Another problem was Mr Valencia’s evidence that the images in the AVELA online image library are independent of the claimants. This is demonstrably false. The claimants have developed a variant of Betty Boop called Baby Boop. Images of a Baby Boop type of character appeared in AVELA’s online image library. Just after they were spotted by the claimants they were removed. Mr Valencia claimed this removal happened because he had been monitoring the claimants’ solicitors access to the online library and saw these images for the first time when the claimants looked at them. Whether that is so or not, the images were obviously influenced by the claimants’ creation of Baby Boop. Mr Valencia’s reaction to them is consistent with that inference and shows he realised they do not support his version of events.

[33]The defendant also called Jonathan Townsend. He is a director and CEO of TPTL. TPTL is a licensing agency which specialises in developing lifestyle brands. Examples of brands which TPTL have worked with include Monsoon, Laura Ashley, Elvis Presley, Royal Doulton and the Storm modelling agency. He has many years experience of the UK licensing business. TPTL are AVELA’s sole UK licensing agent. Mr Townsend explained what happened from TPTL’s point of view, explaining his dealings with AVELA licensees in the UK.

[34]The claimants criticised Mr Townsend as a witness, describing him as argumentative and evasive. In my judgment Mr Townsend felt he was in a difficult position. A particularly unconvincing passage of testimony was when he gave answers relating to a passage in his witness statement about whether Betty Boop or her image is regarded as a trade mark. Another was when Mr Townsend sought to account for the behaviour of an employee with the suggestion that she was incompetent. I was not convinced by that explanation. Overall I thought Mr Townsend’s evidence was self serving and of little assistance save when it contained an admission.

[35]A further witness for the defendants was Elliott Matthews. He is head of licensing and an executive director of the second defendant, Poeticgem. They took a licence from AVELA and have sold Betty Boop merchandise since then. He dealt with Poeticgem’s dealings with its customers. He gave his evidence fairly. There is a point on his witness statement which I will address below.

[36]The defendants also called Ashwin Rao. The fourth and fifth defendants are owned by him. In 1990 one of Mr Rao’s companies took a licence for merchandise featuring Betty Boop from the first claimant. From 2011 they have provided Betty Boop merchandise under a licence from AVELA. Mr Rao dealt with that in his evidence. Mr Rao struck me as an intelligent witness who gave honest and full answers when he could see that the answers did not harm the case against his companies. However when Mr Rao thought the answer might harm the defendants’ case he became more cagey and less reliable as a result.

[37]Both Mr Townsend, Mr Matthews and to a lesser extent Mr Rao ended their first witness statements with similar statements about lack of confusion and their view that the name Betty Boop or her image was not a trade mark. This was obviously not a coincidence albeit I believe all three witnesses were unaware of what had happened. The point was put to Mr Townsend and Mr Matthews and each clearly thought the wording was theirs. I accept that all three witnesses gave honest evidence that they were unaware of confusion in the marketplace but I am not prepared to place weight on the views of any of them about whether the name or image of Betty Boop is considered to be a trade mark. That goes for Mr Rao too albeit he used slightly different language.

The history

[38]The way in which the claimants come to be in the position they are in today is as follows. There have been a number of US corporations called Fleischer Studios Inc over the years. In the 1930s when the Betty Boop cartoons were released, they were released by an animated film studio called Fleischer Studios Inc (FSI) which was run by Max Fleischer. The first company called FSI was a New York corporation (original FSI (NY)). Its assets were transferred to a Florida corporation called Fleischer Studios Inc in 1938 and the assets of that company (FSI (FL)) were sold to Paramount in 1941.

[39]In 1956 a new Fleischer Studios Inc was incorporated in New York (new FSI (NY)). As I understand it this was done by Max Fleischer or members of his family. There is no corporate link between this new FSI company (or its successor) and the two previous ones.

[40]The claimants’ case is that from the outset in 1929 the arrangement was that the rights to the cartoon films were separate from the rights to the Betty Boop character. Essentially the rights to the cartoon films belonged to Paramount (without delving into the details of which corporation owned what at what time) and the rights to the character belonged to the original FSI company original FSI(NY). In 1959 Max Fleischer sought to renew his copyrights relating to Betty Boop. The claimants’ case is that he was the only person able to do that under US law, and that he did so. This did not affect ownership of the cartoon films. Whether the claimants’ case set out in this paragraph is right is not a matter I have to decide. Included within the points I do not have to decide is whether Max Fleischer created Betty Boop at all. The claimants say he did but the defendants say it was a different person, Myron Grim Natwick.

[41]In 1972 King Features, a division of the first claimant, entered into an agency agreement with FSI(NY) to start merchandising Betty Boop. In 1992 that new FSI(NY) was merged into the second claimant.

[42]1972 is when the modern Betty Boop merchandising operation began. The Betty Boop merchandising operation is run by King Features. All the trade is carried on by the first claimant granting licences to allow the exploitation of images and representations of Betty Boop and the sale of materials bearing the words “BETTY BOOP” as a trade mark and/or a trade mark primarily consisting of an image of Betty Boop. All this trade is carried on under a licence from and with the permission of the second claimant.

[43]In 1984 the Betty Boop merchandising operation started in the UK and from 1986 Mr McInnerny has been closely involved with it.

[44]In the 1990s disputes arose with other companies about the rights to Betty Boop. They were settled. In 1996 the second claimant entered into a settlement with Harvey Films and Harvey Cartoons (“Harvey”). The effect of this agreement was that any rights Harvey might have acquired (as a result of a 1958 agreement with Paramount) passed to the second claimant. One of the issues in the copyright claim is whether Harvey had any rights to transfer.

[45]In 1997 the second claimant entered into a settlement with a video distributor called Republic. The effect of this agreement from the claimants’ point of view is to confirm that Republic owned the copyright in the cartoon films for distribution purposes but that it was acknowledged that the second claimant owned all the rights to the Betty Boop character. Republic exclusively licensed to the second claimant the right to use images from the films for merchandising purposes and the second claimant pays them a modest royalty in return. I should record that the defendants do not accept that Republic is the owner of the copyright in the cartoon films.

[46]By 2006 the claimants had been working for twenty years to build up sales of Betty Boop merchandise in the UK. Annual worldwide retail sales of Betty Boop merchandise in 2006, all licensed by the claimants, were worth $280 million. In that year the UK retail sales were worth $24 million, all licensed via Mr McInnerny’s company.

[47]The claimants first became aware of AVELA in 2006 in the USA. AVELA’s business is licensing brands and artwork for use on merchandise. Avenue LA is a trading name of AVELA. AVELA offers to licence artwork from its library. Within the AVELA portfolio are images of Betty Boop. AVELA offers to licence Betty Boop imagery for use on merchandise.

[48]The claimants sued for trade mark infringement and copyright infringement in the USA. AVELA won on applications for summary judgment and that US litigation finished in 2012. However although AVELA won that US litigation the parties do not agree about what the scope of the litigation was and do not agree on the significance of the result. The claimants contend that the US litigation only related to a few very specific images, i.e. actual restored movie posters, and that in any case the final result was wrong both in relation to copyright and in relation to trade marks albeit the claimants cannot now challenge either finding. What is said to be wrong about the rejection of the trade mark claims is the finding on summary judgment that the use of the images by AVELA was functional and aesthetic. I do not have to resolve what the scope and effect of the US judgments are. Although at one stage it appeared to be Mr Valencia’s view that the US judgment permitted him to licence the use of any image of Betty Boop whatsoever, I do not think that was really his opinion. He was exaggerating. Nevertheless he did regard the US judgment as a vindication of his business and as permitting him to sell a wide range of Betty Boop images in the USA as long as they are derived, however loosely, from the posters.

[49]In 2009 AVELA moved into the UK. In August of that year AVELA entered into an agreement with TPTL for it to act as AVELA’s licensing agent. The first AVELA licenses for the UK were granted afterwards.

[50]In 2010 Poeticgem entered into a licence agreement with AVELA, through TPTL acting as agent. Poeticgem supplies apparel to retailers such as Tesco, Matalan, Primark and Argos and takes licences from many brands such as Star Wars and Pepsi. Pursuant to the AVELA licence Poeticgem produced a range of apparel including t-shirts, sweat shirts and nightwear carrying images of Betty Boop. They supplied these goods to Argos and an online retailer called More T Vicar.

[51]In May 2011 OHIM rejected an opposition filed by AVELA against CTM 8596348 BETTY BOOP. The opposition had been based on Art 8(1)(a) and (b) in connection with Art 8(2)(c) and Art 8(4) of the Community Trade Mark Regulation, arguing that BETTY BOOP was an earlier well known trade mark and that the words and images of Betty Boop were earlier non-registered trade marks. The claimant submitted that AVELA’s stance in that opposition was inconsistent with their invalidity attack before me (that the mark is devoid of distinctive character). Mr Valencia asserted that the OHIM opposition was “mis-argued” on his company’s behalf.

[52]In June/July 2011 J Fox entered into a licence agreement with AVELA through TPTL. Both J Fox and U Wear are owned by Mr Rao. J Fox takes merchandising licences and supplies apparel to retailers. It also supplies the fourth defendant, U Wear, which is a distribution company which sells to third parties and through its own website. The merchandise sold by J Fox and U Wear includes nightwear, underwear, cosmetic bags and socks. Two customers of Betty Boop merchandise made pursuant to the AVELA licence were Primark (also known as Penneys) and Express Gifts. The law Trade marks – double identity infringement under s10(1)/Art9(1)(a)

The law

[53]The claimants relied on a convenient summary of the six conditions which need to be satisfied to establish infringement under s10(1)/Art9(1)(a) set out by Arnold J in Interflora v Marks & Spencer

[2013] EWHC 1291 (Ch)

at paragraph 177 as follows: The case law of the CJEU establishes that the proprietor of a trade mark can only succeed in a claim under art.5(1)(a) of the Directive or art.9(1)(a) of the Regulation if six conditions are satisfied:(i) there must be use of a sign by a third party within the relevant territory;

(ii) the use must be in the course of trade;

(iii) it must be without the consent of the proprietor of the trade mark;

(iv) it must be of a sign which is identical to the trade mark;

(v) it must be in relation to goods or services which are identical to those for which the trade mark is registered; and

(vi) it must affect or be liable to affect the functions of the trade mark: see in particular Arsenal Football Club Plc v Reed (C-206/01) [2002] E.C.R. I-10273; [2003] R.P.C. 9 at [51], Anheuser-Busch [2005] E.T.M.R. 27 at [59], Adam Opel AG v Autec AG Case (C-48/05) [2007] E.C.R. I-1017; [2007] E.T.M.R. 33 at [18]–[22], Céline SARL v Céline SA (C-17/06) [2007] E.C.R. I-7041; [2007] E.T.M.R. 80 at [16] and UDV North America Inc v Brandtraders NV (C-62/08) [2009] E.C.R. I-1279; [2010] E.T.M.R. 25 at [42].

[54]Conditions (ii) to (iv) are not in dispute. For conditions (i) and (v) it is not in dispute that the goods are identical (clothing and bags). The question is whether there is “use of a sign in relation to” the goods. Also in issue is condition (vi).

Trade marks – likelihood of confusion infringement under s10(2)/Art9(1)(b)

[55]The claimants relied on another convenient summary of six conditions which need to be satisfied to establish infringement under s10(2)/Art9(1)(b) set out by Arnold J in Interfloraat paragraph 182 as follows:

“(i) there must be use of a sign by a third party within the relevant territory; (ii) the use must be in the course of trade; (iii) it must be without the consent of the proprietor of the trade mark; (iv) it must be of a sign which is similar to the trade mark; (v) it must be in relation to goods or services which are similar to those for which the trade mark is registered; and (vi) it must give rise to a likelihood of confusion on the part of the public.”

[56]Two issues arise in this case. First whether there is use of a sign in relation to the goods at all, which is the same as the point arising under s10(1)/Art9(1)(a), and second is the question of similarity and likelihood of confusion.

[57]The approach to be adopted in assessing similarity between mark and sign and likelihood of confusion was considered by the Court of Appeal in Specsavers. There Kitchin LJ summarised the law and endorsed the summary given by the IPO. This is to be found in paragraphs 51 and 52 of Specsavers. I will not set it out here.

Infringement under s10(3)/Art9(1)(c)

[58]The claimants submitted that the general approach to be adopted in assessing infringement pursuant to s. 10(3)/Art 9(1)(c) was summarised by Kitchin LJ in Specsavers at paragraphs 118 to 124. I will not set them out.

[59]The claimants submitted that the defendants did not take a point on “due cause” and so the issues which relate solely to this aspect of the case were:(i) whether the marks relied upon have the requisite reputation;

(ii) whether there is sufficient similarity between marks and signs in each case that a link is formed in the mind of the relevant average consumers;

(iii) whether unfair advantage is taken of the distinctive character or repute of the marks by the defendants’ use of the signs and/or

(iv) whether the defendants’ use of the signs causes detriment to such distinctive character or repute.

Average consumer

[60]The trade mark questions have to be approached from the point of view of the presumed expectations of the average consumer who is reasonably well informed and reasonably circumspect. The parties were agreed that the relevant person is a legal construct and that the test is to be applied objectively by the court from the point of view of that constructed person. The words “average” denotes that the person is typical. The term “average” does not denote some form of numerical mean, mode or median.

Defence under s11(2) of the Act/ Art 12 of the Regulation

[61]The limitations of the effects of a national trade mark are set out in Article 6 of the Trade Marks Directive (s11(2) of the Act) and in Article 12 of the Regulation. In each case the registered trade mark: . . . shall not entitle the proprietor to prohibit a third party from using in the course of trade:(a) his own name or address;

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

(c) the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts, provided he uses them in accordance with honest practices in industrial or commercial matters.

[62]The defendants rely on Art 12(b) (s11(2)(b)) and refer to the CJEU in Adidas AG v. Marca Mode CV

[2008] ECR I-2439

, paragraphs 44 to 47 and to Arnold J in Samuel Smith Old Brewery (Tadcaster) v Lee

[2011] EWHC 1879 (Ch)

at paragraphs 114-117. These passages were uncontroversial and I will not set them out.

Validity of the trade marks

[63]The attack on the validity of the marks is brought under s3(1)(b)/Art 7(1)(b) and on s3(1)(c)/Art 7(1)(c). There was no dispute about the law applicable to these provisions.

Threats

[64]A counterclaim for trade mark threats has been brought. However on my findings it does not arise and there is no need to consider the law on threats. Passing off

[65]The law of passing off, as classically stated by Lord Oliver in Reckitt & Colman v Borden

[1990] RPC 341

(HL) (Jif Lemon) requires the three elements of goodwill, misrepresentation and damage. The claimants also referred to the well known statements of the law in Advocaat (Warnink v Townend

[1980] RPC 31

(HL)) by Lord Diplock and by Lord Fraser. There is no need to set any of this out.

Problems with merchandising

[66]In setting out the essential legal principles above I have not mentioned the key element of this case which cuts across almost all of them. This case is concerned with merchandising. Although put by Ms Himsworth much more elegantly than this, in many ways the defence can be summed up as follows: “Elvis lost (ELVIS PRESLEY trade marks CA

[1999] FSR 60

) and so should Betty Boop”.

[67]It is fair to note the existence of many famous losers in cases where trade marks and passing off come into contact with merchandising. They include: i) The fictional character Tarzan (TARZAN (CA)

[1970] RPC 450

); ii) The rock band Linkin Park (LINKIN PARK LLC’s Application [2006] ETMR 74 before Mr Richard Arnold QC as he then was sitting as the Appointed Person); iii) The pop group Abba (Lyngstad v Anabas

[1977] FSR 62

); iv) The TV detective series Kojak (Tavener Rutledge v Trexapalm)

[1977] RPC 275

; v) The Wombles (Wombles v Womble Skip Hire)

[1975] FSR 488

; vi) Diana Princess of Wales (Executrices of Diana Princess of Wales) [2001] ETMR 25, Mr Allan James in the UK Trade Marks Registry.

[68]On the other hand there have been some winners too, notably the Teenage Mutant Ninja Turtles in Mirage Studios v Counterfeat Clothing

[1991] FSR 14

and the motor racing driver Eddie Irvine in Irvine v Talksport

[2002] FSR 60

(Laddie J). I must also mention my own recent judgment concerning the pop star Rihanna in Fenty v Arcadia

[2013] EWHC 2310 (Ch)

[69]The essential problem in all these cases is one of fact. The question is always concerned with what the relevant sign signifies to the average consumer (or equivalent in a passing off case). When famous names or images are applied to merchandise they are not necessarily being used as indicators of origin of the goods at all. As Richard Arnold QC (as he then was) noted in LINKIN PARK, referring back to TARZAN, what better way is there to describe a poster depicting the band LINKIN PARK as a “LINKIN PARK poster”. So if one imagines a consumer asking in a shop for a LINKIN PARK poster, in that context the mark is being used descriptively and it would be difficult if not impossible for a trader to sell such a poster without calling it a LINKIN PARK poster.

[70]An important point lying behind some of these arguments is that unlike copyright, the rights to a trade mark last forever. If the claimants are right in this case then they may be able to prevent anyone (absent a licence) from selling a product like a t-shirt or bag carrying any image of Betty Boop regardless of whether that image infringes their copyright. It could create what is in effect a copyright of unlimited duration. That would be unwelcome if it was the case. I will return to that point below.

[71]Finally at this stage it is worth observing that there may well be differences in fact between different kinds of case in this field. As Laddie J discussed in Irvine v Talksport, endorsement can be different from merchandising. Another difference may be between cases concerning real persons and invented characters. For example real people can be photographed by anyone and so the public are used to seeing images of famous people in contexts far removed from endorsement or merchandising. The same may not be the case for invented characters. The facts The average consumers

The facts

[72]This dispute involves three classes of average consumer.

[73]In the first class are licensees or putative licensees. After all the claimants and AVELA are rivals in the licensing business. They each sell licences. Their customers are licensees. Poeticgem and J Fox are examples. To assist in this licensing trade, both licensors use licensing agents. In the UK the claimants use Mr McInnerny’s Allsorts Media company while AVELA uses TPTL. The licensees produce the actual products under the licences. There is an approval process whereby the licensors are sent examples of what the licensees propose to produce. This allows the licensors to control the way in which a given character appears, to enforce quality standards and to ensure the product is labelled correctly. The extent of the involvement of TPTL in AVELA’s approval process is an issue in this case.

[74]In the second class are the organisations which buy product from the licensees and sell it to the public. They are usually retailers. Examples in this case are Argos and Primark. They buy merchandise from the licensees in the first class. They are well aware of the idea of merchandising which is licensed by a single ultimate licensor being available from different licensees. That is because the licences are often product specific. One licensee may have the t-shirt licence while another has the socks licence. Both licences relate to the same character merchandise from the same licensor. The retailer may well want both and may need to obtain the goods from two different licensees.

[75]The third class are the purchasing public. Betty Boop merchandise is bought by the general public. Although the goods are aimed at younger females (12 years +) they will be bought by the public generally, if nothing else as gifts. One relevant aspect of this third class of average consumer is that they are aware of product licensing and merchandising.

[76]There is no reason on the facts of this case to draw a distinction between the average consumer for the purposes of the trade mark case and the relevant public from the point of view of the passing off case. That applies to all three classes of average consumer.

The impact of the many years of trading

[77]A critical element in the claimants’ case is to assess the impact of the trading in Betty Boop merchandising in the UK since the mid 1980s. I also need to keep in mind the evidence about France and Spain in relation to the Community Trade Mark aspects of this case.

[78]Stated simply the claimants’ case is that the trading has led the average consumers in the first two classes to be familiar with Betty Boop character merchandise and licenses relating to it as deriving from one source. These two classes believe there is an official source of Betty Boop merchandise and it is the claimants. This is the case whether or not the claimants are known by name. By the same token the claimants contend that the third class, the general public, have come to recognise Betty Boop merchandise as licensed by a single source and to see Betty Boop as a “brand”.

[79]The word “brand” in this context needs to be treated with care. It is plain on the evidence that for about 20 years in the UK the claimants have been the sole source of Betty Boop merchandise. There was no other realistic source until AVELA came along. It is also plain on the evidence, despite the defendants’ submission to the contrary, that by 2009 and today the public’s view of the Betty Boop character is not simply that she is a famous cartoon character from some 1930s black and white cartoons. It is quite obvious that to refer to her as a 1930s cartoon character is an incomplete and inadequate summary of her image. She is not famous today because she was a 1930s character. She is as famous as she is today because of the claimants. The associations which consumers associate with the Betty Boop character today are more than a mere reference back to the 1930s. Particularly to the younger females who represent the main market for Betty Boop merchandise, she has a current, up to date appeal. This is due to the claimants’ work in controlling what and how her image is presented to the public.

[80]However neither the fame itself nor the particular associations with her character are sufficient for the claimants’ case. Neither aspect has origin significance. Fame is not enough nor is the fact that Betty Boop has an image, in the sense that there are ideas associated with her in the public mind which are brought to mind when they see a reference to her. The words BETTY BOOP and a picture of the character are signs with powerful associations but that does not mean they are trade marks. It does not mean they convey origin information. To be a “brand” in the proper sense of the word the sign must be distinctive at least to some significant degree. To decide whether this has been achieved requires a closer look at the evidence.

[81]Ms Titus estimated the annual value of UK retail sales of Betty Boop merchandise since 1987. From 1987 to 2000 the annual figure fluctuates, generally in the hundreds of thousands of pounds with a peak of £1.5 million and a trough of £45,000. From 2000 annual sales grew from £1.2 million in 2000 to £7 million in 2004 to £39.6 million in 2008 and £35.6 million in 2009. After that the sales have dipped somewhat (£20 million in 2010, £28 million in 2011 and £15 million in 2012). The dip is attributed to the general economic downturn. On any view these are impressive figures but on their own they are not sufficient. One needs to know what sort of trading has been carried out in order to assess its effect.

[82]Mr McInnerny gave a detailed description of the work which goes into the Betty Boop UK merchandising operation. In recent years there have been 20-25 active licensees. I accept his characterisation of this as a significant network for a character brand. The licensees sell to major UK retailer outlets including Argos, ASDA, BHS, Debenhams, Dunnes Stores, Boots, Superdrug, Marks & Spencer, New Look, Primark, Tammys and Topshop. They also sell to smaller independent retailers and to online retailers. The claimants and Allsorts Media participate in licensing and retail trade fairs in both the UK, Europe and the USA. Mr McInnerny exhibited promotional material used to promote Betty Boop licences to the trade and examples appearing in trade publications. Amongst the promotional material he produced were examples of brochures produced by the claimants’ licensees for distribution to their potential customers, the retailers. Notably one of the things the claimants’ licensees sometimes emphasise is that they are official licensees.

[83]The claimants’ approval and quality control arrangements were described by Mr McInnerny and Ms Titus. It is a substantial operation in itself.

[84]Mr McInnerny exhibited correspondence from three licensees in which they explain why they believed they needed a licence for Betty Boop and how they approached the claimants (or Allsorts Media). The defendants questioned whether this material was representative or reliable. On its own this material would be of little weight but in the context of all the other evidence from Mr McInnerny about the merchandising operation, in my judgment it is evidence on which I can place some weight. It shows that members of the trade believed that a licence was required to sell Betty Boop merchandise and that these licensees thought that the claimants or their agent were the party to contact for such a licence.

[85]A key submission from the defendants was that despite the length and extent of the claimants’ activity, the words BETTY BOOP had not been used very much or at least not used much as an indication of origin. To consider that submission I will examine examples of Betty Boop merchandise licensed by the claimants and sold in the UK which were exhibited by Ms Titus. I accept the material as representative. There was no suggestion otherwise. I will also deal with the goods from Spain and France since they have a bearing on the CTM aspect of the case.

[86]First, clothing. One example from the UK is a white fleece hoody with a red heart inside which is the word “Betty”, a snowflake and Betty Boop’s head. It carries two swing tags, a neck label, a care label on the inside and an external label sewn into a seam. The tags and labels are: i) a fairly plain Dunnes swing tag with the words “Cream Betty Fleece Top” on the back of the label. ii) a larger red circular swing tag with the words “Betty BoopTM” in cursive script and an image of Betty Boop sitting on those words with one leg in the air looking over her shoulder. This pose is commonly used by the claimants. The reverse side of the circular swing tag shows the cursive words “Betty BoopTM” and an image of the device as registered in the various trade marks. The word TRADEMARK is written beside the device. The label carries small text “© 2011 King Features Syndicate, Inc./Fleischer Studios Inc. TM Hearst Holdings, Inc/Fleischer Studios Inc.” and “www.bettyboop.com”. iii) a red neck label with “Betty BoopTM” in cursive script, Betty Boop’s head and on the reverse “© 2011 King Features Syndicate, Inc./Fleischer Studios Inc. TM Hearst Holdings, Inc/Fleischer Studios Inc.” and “www.bettyboop.com”. iv) a care label which, in addition to the care instructions carries a very small mark consisting of the words “St Bernard” in a box beside “for DUNNES”. v) a red external label sewn into a seam with “Betty BoopTM” in cursive script on both sides.

[87]Examples of clothing from the Spanish market included an item of underwear carrying a picture of the character beside the fairly prominent words “Betty BoopTM”. The swing tag displays the device registered in the device marks and the word “OYSHO” which I take to be a Spanish retail mark of some kind. The reverse side carries the same copyright and trade mark notice as the UK garments along with a reference to the Betty Boop website (albeit very small) and also a reference to an Oysho website and another copy of the registered device. There are also care labels, one specific to OYSHO and one with a 2010 King Features © notice. Another Spanish garment (a bra) carries a prominent picture of Betty Boop’s head on the front and a sewn in label showing her head above the words “Betty BoopTM”. The back of the label has a 2011 King Features © notice as well as the registered device. Other examples from Spain (such as grey shorts) have prominent images of Betty Boop but do not carry the words “BETTY BOOP”.

[88]Examples of clothing from France include a grey hooded top aimed at 8 year old girls. At the front is a prominent picture of Betty Boop’s head and upper body with red roses. She has a heart tattoo on her shoulder. The words “I ♥ ME” appear above the character. There is a black neck label with Betty Boop’s head and “Betty BoopTM” in cursive script (different from the cursive font in the UK example) on the front. On the back of the neck label is a notice “© KFS/FS TM Hearst/FS” and with words “Sun CityTM”. There is an unbranded swing tag showing size and age (XS/8 ans) and a black silver and pink swing tag with Betty Boop’s head and the words “Betty BoopTM” in cursive script on one side with the following on the back: “Betty BoopTM” in cursive script; a © and TM notice referring to the claimants, a reference to www.bettyboop.com, and “Sun CityTM” in bold script above an address as well as www.suncity.fr.

[89]Another French example is a pair of purple socks with the character clearly depicted on the socks. The sole of the socks carries the words “Betty BoopTM” in a jaunty block script above the now familiar © and TM notices referring to the claimants, a reference to www.bettyboop.com and the words “Cartoon Club®”. The cardboard label shows the character enjoying a bubbly bath above “Betty BoopTM” in the jaunty block script. The rear of the label carries © and TM notices referring to the claimants and a reference to “Cartoon Club®” with an address in Paris.

[90]Finally in relation to clothing I should mention Baby Boop. Both the UK and French examples include clothing marked “Baby Boop”. Baby Boop is a development of the Betty Boop character which has been devised by the claimants. The image is recognisably Betty Boop in the form of a baby. The words “Baby BoopTM” are used in the same way as “Betty BoopTM” is used in the examples above. The goods are for babies and infants.

[91]There are examples of bags of various sorts (in the UK and Spanish collection): i) In the UK examples there is a black and white and pink make up bag prominently marked with the words “Betty BoopTM” and pictures of the character in a sitting pose with one leg raised. It contained soap and shampoo marked in the same way. The swing tag is also marked in the same way, carries the familiar © and TM notices, the registered device and also refers on the back to GROSVENOR with a UK address. ii) There are many bags in the Spanish examples. One will do. It is a shoulder bag with a picture of the character dressed as a rock star in leathers carrying an electric guitar beside the words “Rock Star”. There is a winged B logo on the guitar. The shoulder strap carries the words “Betty BoopTM” in cursive script. The outside of the folded swing tag shows the character in a sitting pose with one leg raised, the words “Betty BoopTM” in the jaunty block script. Inside the swing tag on one side are the © and TM notices, website and ‘348 CTM device. The other side is marked with a device for “KARACTER MANIA SL” and a statement that the product was made for Karacter Mania SL with an address in Barcelona.

[92]There are many other products in the exhibits. They include a number of products in boxes such as items of pottery (mugs and vases), clocks, lamps, body lotion and watches. They and their boxes are prominently marked “Betty BoopTM” and carry images of the character in various poses. They also carry the © and TM notices mentioned before as well as references to the website. Like the clothing and bags they also generally include references to another party. That other party is sometimes described as a licensee (e.g. a UK mug) and sometimes simply mentioned (e.g. on a French vase).

[93]A final category of products is Betty Boop figurines. The examples show the character dressed and posed in different ways. The exhibited examples all seem to be Spanish although figurines are clearly sold in the UK and elsewhere. One I picked at random from the Spanish set shows the character dressed as a baseball player. The base of the figure is marked “Betty BoopTM” and the board on which the product is sold is also prominently labelled “Betty BoopTM”. The text also includes the following “¡La colección oficial de figures de la pin-up más sexy!” in other words:

“the official collection of figures of the most sexy pin-up”

. Others do not use the word “official”.

[94]The goods also include useage of the word “Boop” alone and the phrase “Boop oop a doop”. An example of the latter is a UK pendant in a box marked “Boop oop a doopTM” and with a swing tag bearing a 2007 © notice.

[95]Mr McInnerny said “We have worked hard to develop the Betty Boop brand – a sassy, cute, stylish character and much more than a decorative feature”. His view was that as a result of the activities of his agency and the claimants, Betty Boop has become an exceptionally popular brand in the United Kingdom. He maintained that view in cross-examination. His evidence was directed to showing that both the words BETTY BOOP and the image of the character were not merely descriptive or “decorative” (as the defendants put it) but were recognised by the public as an indication of origin. He described it as a licence driven brand.

[96]The defendants relied on passages from the cross-examination of Ms Titus and Mr McInnerny which were said to support the proposition that the public were buying the merchandise simply because they wish to buy an image of the famous Betty Boop cartoon character. The references to the cross-examination were based on a selective reading of the transcript. When understood as a whole neither Ms Titus nor Mr McInnerny accepted any such thing. Their evidence, particularly that of Mr McInnerny, was to the contrary.

[97]The defendants also contended that there was no evidence to suggest that the Betty Boop imagery used by the claimants was used or perceived as anything other than origin neutral. I do not accept that. It ignores the impact of the work undertaken by the claimants since the 1980s which I have summarised above. I conclude that at the relevant time (from 2009 onwards) all three classes of average consumer regarded the words BETTY BOOP themselves as a trade mark. They also regarded images of the character in the same sense. They have been educated by the claimants and their agent to see these signs in this way.

[98]I find that considered at the point just before the events complained of in this case, those in the trade (in the first two classes of average consumer) believe there is a single source of Betty Boop licences. That source is the official source. It is the claimants. The expression “official” is an accurate one to use. It expresses the idea that there is a single source of the genuine article. That is what traders think.

[99]In relation to the public the whole case is based on inference but in my judgment it follows from the evidence as a whole. The public believes that there is a single official source of Betty Boop merchandise.

[100]The range of poses in which Betty Boop appears on swing tags and product labels is more limited than the wide range of images of the character which appears on the products themselves. The public know that trade marks and information about the source of products can be found on swing tags and labels but that does not mean they only look at swing tags and labels for information about the trade origin of a product. They do not. Origin specific information can be conveyed by the images on the products themselves. There is no evidence the average consumers distinguish between the poses adopted by Betty Boop on swing tags and the poses adopted by the character as she appears on the front of an item of clothing.

[101]The reaction of these three classes to Betty Boop as a designation of origin is not confined to particular poses of the character. It is the character Betty Boop herself who is recognised by the average consumers. It is the character who acts as a sign. The character is recognisable in different ways but she is the same character. The words BETTY BOOP have this effect as do pictures of her. The words (and related expressions) and the images of Betty Boop reinforce one another. Often she appears in one of two poses: one sitting with one leg up and the other in the form of the registered device. Nevertheless she is also recognisable in a myriad of other poses. The key visual sign is her head. It is instantly recognisable whether on its own or with a more or less visible body. Usually the name BETTY BOOP appears with at least her head and the recognition is reinforced but either alone is sufficient to convey the message. The fact that one cannot register a character or a concept as a trade mark does not mean that the public do not in fact recognise a character as having origin significance.

[102]The defendants’ argument sometimes suggests that when this promotion and sales exercise began in the 1980s the claimants’ had no better right to exploit the Betty Boop character than anyone else. I do not have to decide that one way or the other. Its relevance (if any) would be to the bad faith ground of attack on the trade mark registrations, which is not before me. Whatever may have been the position at the start, the important point is that it is the claimants who have built up the Betty Boop character as a trade mark today.

[103]Another point made by the defendants is an assertion that there is nothing to stop whoever owns the rights to the original 1930s cartoons to start selling Betty Boop merchandise. Part of this involves an argument about the rights held by Republic but I do not need to resolve it. The flaw in the defendants’ argument is on the facts. Until the defendants began the conduct complained of, there is and has been no such second source of Betty Boop merchandise. Whatever the legal rights of others may be, there has been no impact on the public mind.

[104]A characteristic of licence driven merchandising is that the Betty Boop products often appear with other trade marks on them. There may be a trade mark which identifies the retail outlet. That does not prevent the public from recognising Betty Boop merchandise for what it is. The public are aware that character merchandise can be available from numerous outlets but they are also familiar with the idea that it can be licensed from a single ultimate source.

[105]None of these conclusions necessarily follow. The appearance of a well known character (real or fictional) on a product may very well not have origin significance. Without many years of education, the public might well regard the appearance of a famous character on a t-shirt or in a poster as conveying no origin information at all. It may be very difficult for a trader to educate the public to see things in any other way but whether or not that has taken place depends on the evidence.

[106]There are some forms of merchandise for which it is clear the public do not believe that it derives from a single source. Pictures of famous people by no means necessarily denote trade origin. The evidence showed that there are many sources of pictures of Marilyn Monroe and other famous celebrities. As I said in Fenty v Arcadia (paragraph 2) there is today in England no such thing as a free standing general right by a famous person (or anyone else) to control the reproduction of their image.

[107]However Betty Boop is not a real person. There is no law which provides that invented characters have stronger rights than real people in this regard but it does seem to me that it is probably easier to educate the public to believe that goods relating to an invented character derive from a single official source than it might be for a real person, not least because copyright law may give the inventor the ability to control the reproduction of the character for a very long time.

[108]The claimants’ goods are all items of Betty Boop merchandise. In that sense the goods sold by the claimants’ licensees can fairly be called Betty Boop goods. However that is not fatal to the claimants’ case. There are many products for which the same can be said but in which the sign is obviously a trade mark. A vest with the words Calvin Klein on a neck label and the words Calvin Klein printed in large letters across the front is a Calvin Klein vest. There is no other sensible name for it. The fact it is a Calvin Klein vest does not prevent that name from being a trade mark. The illustrates that the questions posed by Salmon LJ in TARZAN and by Mr Arnold QC in LINKIN PARK (see paragraphs 46-49) can be relevant but are not conclusive.

[109]It is also true, as the defendants contend, that one needs to take care about the difference between use on neck labels and swing tags as opposed to the usage of words and images printed prominently on garments and the like. However again there is no legal principle involved here. It is a question of fact. All three classes of average consumer are aware of character merchandising and licensing and recognise it when they see it.

[110]When the average consumer who is a member of the general public sees something signifying Betty Boop on the front of a product (like a large picture of the character on a t-shirt or the words Betty Boop prominently on a bag) in my judgment the response is multi-faceted. This average consumer will see the image of Betty Boop as being attractive and in that sense aesthetic or decorative. After all, they will not want to buy a product which does not look good. They will also see it as a sign having associations related to the up to date image of the character herself which has been generated by the claimants. However in my judgment they will also see Betty Boop as a sign related to trade origin. The effect of the claimants’ trading has been to imbue the character with trade mark significance in the public mind. They do not need to look at the swing tag to make the assumption that it is official Betty Boop merchandise any more than they need to look at the swing tag on a t-shirt with Calvin Klein written in large letters across the front to assume that it is from Calvin Klein. Not all merchandising works this way but in my judgment today and at all material times, in the UK (and the rest of Europe), Betty Boop is a sign which can convey that kind of information in the context of the goods in this case.

[111]The words BETTY BOOP and her visual image are in the middle ground described by Lord Walker in R v Johnstone

[2003] UKHL 28

(paragraphs 86 and 87). Plainly these signs are not wholly distinctive but, whatever may have been the position in the early 1980s in the UK, by 2009 they were not wholly descriptive either. The signs have a substantial distinctive component.

Acts complained of

[112]AVELA offers licences to licensees such as Poeticgem and J Fox. TPTL acts as the agent in these transactions. Examples of AVELA’s licences are in evidence. The licences allow the licensees to obtain artwork from AVELA’s library and create product using that artwork. There are provisions for approval and quality control. The licensees must obtain approval from AVELA. There is clear evidence that TPTL is closely involved in the approval process. The licences include provisions requiring the products to be labelled or marked in various ways to reflect the AVELA licence. The licences prohibit use of the words BETTY and BOOP together.

[113]It is clear that the artwork which may be used by licensees on the products is not limited to that which exists in AVELA’s library at any given moment. There are examples in the evidence of retailers using examples of goods sold under the claimants’ licences as examples of the sorts of images which are required. The reaction was that even though such an image was not in the AVELA library, a similar image of some kind could be produced.

[114]In order to see how the defendants’ businesses work it is convenient to look at some specific products which have been produced. These are goods supplied by Poeticgem or J Fox/U Wear under the licence and specific product approval provided by AVELA with TPTL acting as agent. It is fair to describe the goods as the defendants’ goods.

[115]The specific goods of the defendants in evidence were t-shirts from Poeticgem and bags from U Wear.

[116]First a Poeticgem t-shirt. It is packed in a transparent plastic bag. In fact the bag has a small labelled marked “8125059 BETTY BOOP TIFFANYS LADIES T-SHIRT SIZE 10”. The bag contains the t-shirt and a cardboard insert. The t-shirt carries a large picture on the front with the title “Boop’s BREAKFAST AT TIFFANY’S”. The picture is clearly recognisable as a representation of a poster for the famous film in which the head of the character Holly Golightly (played by Audrey Hepburn) has been replaced with Betty Boop’s head. The idea is that Betty Boop is starring in the film playing the character. The public would instantly recognise this as Betty Boop from the head and the word “Boop”. The neck label has “RADIO DAYSTM” on the front in fancy script and on the back is written: © 1985 All Rights Reserved Distributed by Poeticgem Official Licensee © 1985 All Rights Reserved Distributed by Poeticgem

Official Licensee

[117]On the front of the card the same “RADIO DAYSTM” mark appears and on the back of the card is a globe device and the text: POETICGEM © 1985 All Rights Reserved Distributed by Poeticgem Official Licensee POETICGEM © 1985 All Rights Reserved Distributed by Poeticgem

Official Licensee

[118]The other Poeticgem t-shirt is the same in all material respects. It has an image of Betty Boop as a cow girl and the words Yee Haw. The © 1985 notice, licensing text and reference to “RADIO DAYSTM” and “official licensee” are printed on the inside neck region.

[119]The U Wear bags use different images of Betty Boop but they are all clearly recognisable as the character. The words BETTY BOOP do not appear. One item reads “I ♥ Boop” and another has the words “Boop oop a doop”. They all have swing tags which carry a similar message to the Poeticgem neck label. There is the mark “RADIO DAYSTM” in fancy script, the words “Officially Licensed Product”, a notice “© 1985 All rights reserved” and the words U WEAR.

Passing off

[120]The claimants have established that they own a substantial goodwill and reputation in the UK. To assess the passing off case I need to consider the reaction of the general public (i.e. the third class of average consumer) to the t-shirts and bags from the defendants. There is no difference between the various items for this purpose. The public would understand each to be an item of merchandising. That is because of the picture (and the words Boop or “Boop oop a doop” when they are present). The public know that this sort of item is Betty Boop merchandise. The presence of the character tells them as much.

[121]The only question mark in the mind of the general public is whether these goods are official merchandise or not. Until the acts complained of began the only merchandise the public have known was official merchandise. The claimants relied on this as supporting their case on misrepresentation. Whether that fact on its own is sufficient for the claimants’ purposes is irrelevant because any doubt in the mind of a purchaser about whether these products are official Betty Boop merchandise is dispelled by the clear product labelling. The defendants’ goods are all labelled “Official Licensee” or “Officially Licensed Product”. The trade origin significance of the presence of the Betty Boop character is reinforced strongly by these words. They indicate to the public that this item has been licensed by the official source of the merchandise. In the context of an item of Betty Boop merchandise that means the claimants.

[122]The defendants contended that Ms Titus accepted that in the licensing industry it was known that if a licensors’ name did not appear on the label then they were not connected with the garment. It is convenient to deal with this point now even though I am at this stage considering the general public. I reject it. It is based on a selective reference to a small part of Ms Titus’ testimony. She was not accepting that the absence of a reference to the claimants on a label would be taken by anyone (in the industry or elsewhere) as a clear statement they were not connected with a product.

[123]The defendants argued that the “RADIO DAYSTM” mark itself would dispel any confusion and that “official licensee” was intended to be and would be understood as a reference to being an official RADIO DAYS licensee. However there is no evidence the general public regard RADIO DAYS as a source of anything. There is no reason not to assume that it means that Radio Days has an official Betty Boop merchandise licence or it is a source of such licences, neither of which is true.

[124]The defendants argued that RADIO DAYS, Avenue LA, AVELA and Flashback (another AVELA brand) are known to UK retailers and licensees who attend the large trade licensing shows in the USA, since AVELA has a large stand at these shows. I accept AVELA has a presence at these shows but I am not satisfied this makes any difference. Just as the general public have no reason not to assume that the reference to RADIO DAYS and to “Official licensee” in relation to Betty Boop means that Radio Days is a source of official Betty Boop licences, neither does the trade.

[125]A telling piece of evidence was an email exchange between the Accessories Controller (Olga Metcalfe) of Penneys (part of Primark) and staff at J Fox in July/August 2013. The context was that Penneys had bought goods from J Fox branded with the defendants’ Betty Boop imagery to sell retail. I infer the products bought by Penneys were all branded in essentially the same way as the products above because all AVELA’s licensees were required to brand their products in similar ways. No doubt the products did not in fact carry the words “BETTY BOOP”.

[126]The emails started because Penneys had received a letter before action from the claimants’ solicitors. The inference I draw from these emails is that Penneys had thought they had been buying product from an entity with “the official licence for Betty Boop”. They had now realised that this was not true. They had been misled. Without calling a witness from Penneys directly one has to proceed on inference but the inference is plain. What misled Penneys was obviously the assertion by J Fox/ U Wear that they held a licence which permitted them to sell products carrying images of Betty Boop, perhaps with the word Boop, but importantly in association with labels which asserted that they were an “official licensee”. The presence of Radio Days branding did not dispel any confusion. Penneys had wrongly assumed that Radio Days and Poeticgem had the official Betty Boop licence. They did not.

[127]Mr Rao was cross-examined about the emails. He claimed that Primark/Penneys had not been operating on the assumption I have referred to but his evidence was not convincing. Moreover even if he disabused them of it afterwards, I accept the claimants’ submission that this incident is powerful evidence of a likelihood of deception. In closing the defendants also sought to argue that this confusion only arose from the fact that the relevant letter before action was couched in terms of copyright only. It is true that the letter is written that way but it does not undermine the inferences to be drawn from the emails. There are references in the emails to character design which is consistent with a copyright problem but Ms Metcalfe’s concerns were not limited to imagery. She refers to the question whether “Radio Days has the actual licence for Betty Boop as they only mention Boop”. That is a concern about how the product is branded.

[128]In a similar vein the claimants relied on the behaviour of Express Gifts. Express Gifts were a customer of one of the claimants’ licensees but had also been supplied by U Wear. In their catalogue Express Gifts had depicted some bags sourced from U Wear. Express gifts referred to them as Betty Boop bags (despite the defendants’ policy of not using the words BETTY and BOOP together). Beside the products Express Gifts had placed a Betty Boop logo. It is one of the claimants’ devices. It is the device on the Dunnes hoody (above) with the words “Betty BoopTM” in cursive script and an image of Betty Boop sitting on those words with one leg in the air looking over her shoulder.

[129]The plain inference is that Express Gifts had been misled. They believed that the goods bought from U Wear were from the same source as the other Betty Boop goods they had bought from the claimants’ licensees and saw no reason not to use a device, which is on any view a trade mark of the claimants, in association with those goods.

[130]Mr Rao suggested the labelling by Express Gifts was human error. I find that it shows that Express Gifts were misled. It also shows that the presence of the RADIO DAYS mark did not disabuse Express Gifts of the assumption they must have made that the goods were licensed from the same ultimate source as goods available from the claimants’ licensees.

[131]I should bear in mind that these two pieces of evidence, relating to Penneys and Express Gifts are the only concrete examples of actual confusion taking place and are at the level of the trade and not the public. Nevertheless they seem to me to be capable of shedding light on the manner in which the public would react.

[132]Looking at the matter overall, in my judgment the defendants’ goods are likely to lead the public into thinking that these goods originate from the same source of Betty Boop merchandise that they are familiar with. They are led to this view by the following factors. Primarily it is due to the use of images of Betty Boop and words like Boop. I doubt many would even notice that the words BETTY BOOP do not actually appear. The presence of the RADIO DAYS mark does nothing to negate that idea. The public does not regard RADIO DAYS as an alternative source of genuine Betty Boop merchandise. The words “Official Licensee” or “Officially Licensed Product” significantly enhance the assumption by a purchaser that these goods are official Betty Boop merchandise, that is to say Betty Boop merchandise from the source with which the public is familiar. The public who want the genuine article will be deceived. Such a deception would plainly be damaging to the claimants’ goodwill.

[133]I reject the defendants’ argument that this usage of a picture of Betty Boop and/or the word “Boop” are purely decorative. They are decorative but they are not purely so. By the same token I am wary of the defendants’ characterisation of these items as memorabilia. It is true that the public choosing to buy these items are doing so because they carry an image of Betty Boop, but that is not the whole story. No doubt some purchasers will be buying the goods without caring whether they are official Betty Boop merchandise or not but in my judgment a significant portion of the purchasers want Betty Boop merchandise from what they regard as the official source and will be deceived. The defendants suggested that the reason AVELA requires the swing tags to be marked with the word “official” is because that is standard in the industry. However in my judgment that is a point against the defendants. It shows that the public and the trade regard the designation “official” as important. Many purchasers want “official” goods. They understand the term to refer to the original genuine source with which they are familiar.

[134]The defendants also contended that they were only licensing “imagery” and not a brand. This was a particular theme of Mr Townsend and of Mr Valencia. To reinforce this point it was also submitted that the claimants’ witnesses had accepted in cross-examination that licensees and retailers are used to selecting imagery from a variety of different sources. This latter point must be treated with care and again involves reading some passages of cross-examination out of context. Ms Titus and Mr McInnerny accepted that there are cases in which the trade is used to obtaining imagery of certain famous persons from different sources (e.g. Marilyn Monroe) but they did not accept this applied to Betty Boop.

[135]Whatever Mr Townsend and Mr Valencia may think they are doing, I am quite sure their customers do not see the distinction these two gentlemen are seeking to draw. The problems with Penneys and Express Gifts demonstrate that.

[136]Looking at the passing off claim as a whole, in my judgment it is made out both as regards the general public and as regards retail customers of AVELA’s licensees. Both classes of person have been deceived as a direct result of the defendants’ activity. AVELA’s licensees have led their customers to believe that they have a licence from the source of Betty Boop merchandising licences, that is to say from the claimants. The licensees’ customers have been deceived. Also AVELA’s licensees have supplied goods to their retail customers, namely the t-shirts and bags referred to above, which are instruments of fraud. The supply of these goods causes and enables the retailers, unwittingly, to deceive their own customers, i.e. the general public.

[137]A separate question is whether AVELA is liable for passing off in offering of licences to the trade. The defendants pointed out that neither Mr Townsend nor Mr Matthews nor Mr Rao were in any doubt that AVELA had no connection with the claimants. In my judgment that is true. As the defendants also point out, there is no evidence put before the court by the claimants that any licensees of AVELA connected AVELA with the claimants. I have found that the customers of those licensees made that connection but that is a different matter.

[138]I think the defendants are correct about the state of the evidence but the fact that AVELA has not misled those three individuals does not mean AVELA’s method of trading avoids liability. AVELA offers to the trade a licence of images of Betty Boop to be used on products such as t-shirts or bags coupled with a term in the licence which requires the licensed products to be labelled “Officially Licensed” or words to that effect. A putative licensee will naturally assume, contrary to the fact, that they are being offered and or have acquired an official Betty Boop licence. A putative licensee will naturally assume, contrary to the fact, that they have been officially licensed to sell official Betty Boop merchandise or to authorise the manufacture import or sale of such merchandise. The licence with this requirement in it is an instrument of deception. Granting such a licence to a licensee causes or enables the licensee to commit acts of passing off.

[139]I find that the offer of these licences amounts to passing off by AVELA and by its UK licensing agent, TPTL. In any case TPTL and AVELA are jointly liable in this respect. There was a suggestion at one time that Poeticgem were also offering licences but that is not the case and the claimants did not press the point. Trade Marks Validity

Trade Marks

[140]I will now address the defendants’ attacks on the validity of the claimant’s marks under s3(1)(b)/Art 7(1)(b) and s3(1)(c)/Art 7(1)(b). The marks relate to the words BETTY BOOP and what I have called the registered device (or very minor variants of it). I have already found that the words BETTY BOOP and her visual image were distinctive by 2009. The earliest marks were filed in 1992, well after the claimants’ merchandising work began. Although the distinctive nature of the signs will have grown over the years since the claimants work began, there is no basis in the evidence to say that the signs had not acquired sufficient distinctiveness by the time the marks were registered to be valid in accordance with the proviso to s3(1) or with Art 7(3). I reject the invalidity attacks.

s10(1)/Art 9(1)(a) – double identity

(a) – double identity

[141]The claimants alleged that the defendants used the sign BETTY BOOP in two different ways, both of which infringe the relevant trade mark registrations for those words under s10(1)/Art 9(1)(a).

[142]The first way this part of the claim is put is an allegation that in some cases goods sold by Poeticgem and J Fox/ U Wear have been sold under or by reference to the words BETTY BOOP. It is clear that the retail customers of AVELA’s licensees (such as The Clothing Outlet, Argos and More T Vicar) have used the words BETTY BOOP in relation to goods. No doubt that was done because the retailers thought there was no reason not to. However I am not satisfied that this use was use by the licensees themselves.

[143]As regards Poeticgem itself, there is clear evidence of use of the words BETTY BOOP on the label on the bag for the Boop’s Breakfast at Tiffanys t-shirt which is mentioned above. Thus (subject to the defences below) I find that Poeticgem has infringed under s10(1)/Art 9(1)(a).

[144]As regards J Fox and U Wear, they did not admit that the words had been used by them. There was some evidence about a possible use in a U Wear brochure sent for approval but no evidence the brochure had been circulated. I reject the infringement case based on s10(1)/Art 9(1)(a) against J Fox and U Wear.

[145]The second way the claimants put this claim is against AVELA and TPTL. They are alleged to have used BETTY BOOP in relation to the offer of licences. This use is admitted for AVELA. It is not admitted by TPTL.

[146]Considering the evidence it is plain that BETTY BOOP was used extensively by at least one TPTL employee, Ms Threlfall, both in emails and at trade stands. Mr Townsend sought to explain this away on the basis that Ms Threfall’s usage had been “incorrect” but I reject his attempt to distance his company from this activity. I find that TPTL uses the sign BETTY BOOP in the context of its offer of licensing.

[147]Thus both AVELA and TPTL have used the sign BETTY BOOP in relation to the offer of licenses. The next question is whether this is use in relation to goods within the relevant trade mark specifications. Most of the emails from Ms Threlfall which use the words BETTY BOOP relate to a discussion about optical products or eyewear. The claimants did not put their case on the basis that optical products or eyewear were within the scope of their registrations and I have not looked into that. I will assume they are not identical goods. Nevertheless there is evidence from Mr McInnerny that Ms Therfall used the term in relation to licensing more generally.

[148]It is clear that the licences by AVELA (and TPTL as agent) which are granted to the licensee defendants in this case are licences to use artwork on products such as clothing and bags. Mr Rao explained that the “Boop Merchandising range” produced pursuant to the licence from AVELA to J Fox included nightwear, underwear, cosmetic bags and socks and I note that the licensed products referred to in the licence include apparel and bags (clause P). Mr Mathews explained that pursuant to the licence from AVELA to Poeticgem, his company produced a range of apparel which he called the “Boop apparel”. I note that apparel is mentioned in clause O of the Poeticgem licence concerning minimum pricing.

[149]The argument did not focus on this second string to the claimants’ double identity case in detail. Not without some hesitation, I accept that to use the words BETTY BOOP in relation to the offer of a merchandise licence which is concerned with goods identical to those covered by the trade marks would be contrary to s10(1)/Art 9(1)(a). The relevant goods in this case would be clothing or bags. Although there is no direct evidence that either AVELA or TPTL have used the words BETTY BOOP in relation specifically to the offer of a licence which relates to clothing or bags, I infer from the evidence and the admissions that this has taken place.

s10(2)/Art 9(1)(b) - likelihood of confusion

(a) s10(2)/Art 9(1)(b) - likelihood of confusion

[150]The issue arising under s10(2)/Art 9(1)(b) is whether there is a likelihood of confusion having regard to whatever similarities exist between the signs used on the goods and the claimants’ marks. The claimants rely on both the word marks and the device marks.

[151]I start with the reputation attaching to the claimants’ marks. Both the words BETTY BOOP and the registered device (or immaterial variants) have been used as trade marks consistently for years. They have been used together with each other. Moreover they have been used with many other depictions of Betty Boop, including the pose with the leg raised but also all the other numerous depictions either of the head alone or of the character in a myriad of styles and poses. These are all recognisably Betty Boop due I think really to her head. That is what marks out the image as one of Betty Boop.

[152]Today (and in 2009) the claimants’ trade marks are well known and enjoy a significant reputation. This enhances their distinctiveness. Moreover there is a clear and strong association between the words and the character.

[153]The defendants’ best case in relation to the claimants’ word marks is the Poeticgem t-shirt which carries an image of Betty Boop as a cow girl. It is their best case because it does not use any words referring to Betty Boop at all. The only thing the average consumer has to go on is the picture. I will consider whether it infringes the claimants’ word marks in class 25. The goods are identical and so the issues are the degree and nature of the similarity between the signs and mark and the overall likelihood of confusion.

[154]The defendants rely on the decision of Mr Geoffrey Hobbs QC as the Appointed Person in La Chemise Lacoste

[2011] RPC 4

in which he found that the similarity between the word ALLIGATOR and the well known Lacoste crocodile device was not sufficient to give rise to a likelihood of confusion. However like so many points in this case, one needs to take care to distinguish between principles of law and questions of fact. Mr Hobbs noted (paragraph 47) that a concept is not a sign capable of being protected by a registration as a trade mark, that the rights conferred by registration are centred on the registered representation of the protected mark and that they do not enable the concept(s) of a mark to be protected without regard to the distinctive character of the mark as registered. I agree. He also noted (paragraph 55) that the outcome of the comparison between a word mark and a device might be different if the word had the power to trigger perceptions and recollections of the imagery of the earlier mark with the same degree of spontaneity and specificity as (say) the images conjured up by the words MONA LISA, EIFFEL TOWER and STARS AND STRIPES. In other words it is not the law that words can never infringe an image mark nor vice versa. It is a question of fact.

[155]To assess infringement one must consider visual, aural, oral and conceptual similarities and differences.

[156]I will consider the case from the point of view of the average consumer in the third class (the general public). Such an average consumer would inevitably recognise the garment as depicting BETTY BOOP. This situation is the converse of the examples referred to by Mr Hobbs in Lacoste. Here it is the image which triggers the perception of the words. The words will be perceived spontaneously and inevitably because they are the name of the character. Both the character and her name are well known and there is a strong association between the two. As I have said before I think many consumers would not even notice that the words BETTY BOOP are absent.

[157]Although the defendants take pains to refer to this sort of merchandise as “Boop merchandise” I reject any suggestion that that is what the average consumer would see. They would not recognise the image as just “Boop” or “Betty”, they would immediately recognise it as Betty Boop.

[158]As I have also said before, I reject the idea that this image is purely decorative. It is decorative and attractive but not purely so. The average consumer would recognise it as merchandising and take the presence of Betty Boop as an indication that the product was licensed from a source of merchandising licenses associated with that character. Thus the average consumer would regard the presence of Betty Boop on the product as having origin significance. The conceptual similarity between the image and the word mark BETTY BOOP will cause the average consumer to think that the image conveys the same origin information as the words would. Accordingly they will be confused about the trade origin of the goods and so there is a likelihood of confusion in terms of s10(2)/Art 9(1)(b).

[159]Insofar as it is relevant, the neck printing with the reference to “official licensee” would enhance the origin significance of the presence of Betty Boop on the product and the reference to “RADIO DAYSTM” will not make any difference. Subject to the defences (see below) there would be infringement.

[160]I reach the same conclusion for the device marks. It is true that they depict Betty Boop in a different pose from that shown on the t-shirt but the key thing is that both are manifestly Betty Boop. That is what matters.

[161]If, as I have found, the Poeticgem Cow Girl t-shirt infringes then the same conclusion must follow for the other items of clothing and for the bags as well. The claimants’ case on those is stronger since they also carry words like “Boop”.

[162]There is no reason to reach a different conclusion as regards likelihood of confusion when considering the second class of average consumer (retailers). It does not make sense to consider the clothing or bags in relation to the first class of average consumer (licensees) since they would be the suppliers of these goods.

S10(3)/Art9(1)(c) – link

(c) – link

[163]To establish infringement under this heading it is not necessary to show that the goods complained of are within the specifications of the claimants’ marks although in this case the goods are in fact identical. Another element of this kind of infringement is that the use must be without due cause, however I do not need to address this because the defendants do not advance a case that they have due cause. It is also necessary to establish that the trade marks have acquired a reputation. The defendants emphasised that this reputation had to arise from use of the signs by the proprietor as trade marks. I find this criterion is satisfied both in relation to the word and the device as registered. They are both used as trade marks by the claimants on an extensive scale and have acquired a reputation.

[164]The real issues are whether the claimants can establish: i) a link, i.e. that there is a certain degree of similarity between the registered mark and the sign such that the average consumer makes a connection between them; and ii) whether the use takes unfair advantage of the distinctive character of the claimants’ marks; or iii) whether the use causes detriment to the distinctive character of the claimant’s marks.

[165]Again I will start with the Betty Boop cowgirl t-shirt as compared to the claimants’ word mark as the defendants’ best case.

[166]In Adidas-Salomon v Fitnessworld

Case C-408/01

the CJEU considered whether the use of a sign as embellishment was capable of falling within Art 5(2) of the Trade Marks Directive (in other words s10(30/Art 9(1)(c)). The court held (paragraphs 38 and 39) that the fact that a sign is viewed as an embellishment by the relevant section of the public is not, in itself, an obstacle to the protection conferred by Art 5(2) where the degree of similarity is none the less such that the relevant section of the public establishes a link between the sign and the mark. By contrast if the relevant section of the public viewed the sign purely as an embellishment, it necessarily does not establish any link with a registered trade mark.

[167]The idea of use as an embellishment is the same idea as the defendants’ argument that their use is decorative. The CJEU are drawing the same distinction I have drawn above. Merely because the average consumer views the use as decorative does not necessarily avoid infringement, the usage only avoids infringement if it is purely decorative or purely an embellishment.

[168]For the reasons I have already mentioned above, I accept that the average consumer (the general public) would see the use of the picture of Betty Boop on the t-shirt as decorative but I reject the defendants’ argument that it is purely decorative. It is not purely decorative, it also conveys a message concerned with the origin of the goods. Thus given that the picture is instantly recognisable as Betty Boop, I find the average consumer would establish a link.

[169]I will now consider unfair advantage. The Betty Boop range is the most successful and important part of the RADIO DAYS image bank. The only credible explanation of this is that the defendants are in effect earning a dividend from the work done and money spent by the claimants over the years in building up the Betty Boop brand. Mr McInnerny’s evidence, which I accept, was that pictures of Betty Boop were only licensable because “it is the Betty Boop brand we have built up”. It is obvious that the defendants’ customers want goods carrying Betty Boop images because they sell well as a result of the claimants’ efforts.

[170]I find that the products do take unfair advantage. They take unfair advantage of the investment the claimants have put into their trade marks.

[171]Given that I have found unfair advantage, I do not need to consider the claimants’ alternative case based on detriment.

[172]Having considered one product, I would reach the same conclusion for the other goods.

[173]I should also mention “cross branding”. Mr Valencia used the term “cross branding” for some of the images available for licensing from AVELA. The Boop’s Breakfast at Tiffany’s is an example of cross branding because it merges two “brands” (in the broadest sense) – i.e. Betty Boop and the film Breakfast at Tiffany’s. Mr McInnerny’s view was that consumers buy this cross branded merchandise because it is Betty Boop. I agree.

[174]There is no reason to reach a different conclusion as regards a link and unfair advantage when considering the second class of average consumer (retailers). As with the case under s10(2)/Art 9(1)(b), I do not see how it is meaningful to consider the clothing or bags in relation to the first class of average consumer (licensees) since they would be the suppliers of these goods.

[175]Finally, I have asked myself whether a message conveying origin information is a necessary element to establish a link. The defendants submitted that to be within s10(3)/Art 9(1)(c) the use complained of had to convey an indication of origin. Since I have found that in this case it does, I do not have to address the point. However there is a point exposed by the facts of this case which causes one to consider what it means to describe use as pure embellishment, in terms of Adidas-Salomon. To put the matter another way, the defendants’ argument takes use which is “pure embellishment” or “purely decorative” as meaning use which conveys no origin information. The question is whether for s10(3)/Art 9(1)(c) any kind of usage which conveys no origin information is always outside the section.

[176]The point arises in this case in the following way. Even if I am wrong and an average consumer would not regard the picture of Betty Boop on the cow girl t-shirt as conveying any origin information at all, I am sure that the picture will convey associations and ideas to the average consumer which have been put into that consumer’s mind by the claimants. That arises because of what it is that the sign Betty Boop signifies. The words or image of Betty Boop have no intrinsic meaning on their own, the associations which they generate only exist in a system of signs which signify other ideas. The ideas associated with the character of Betty Boop in the minds of the average consumer today are ideas caused by the claimants’ extensive efforts over the years. I have rejected the idea that all an average consumer today would see, when looking at the t-shirt, would be a 1930s cartoon character. They will see a character with modern currency. This association certainly takes advantage of the claimants’ investment in Betty Boop because many consumers will be moved to buy the t-shirt as a result of the favourable associations conjured up in their mind by Betty Boop, which associations are the creation of the claimants’ extensive work. I do not have to decide if this is sufficient to establish infringement for the purposes of s10(3)/Art 9(1)(c) or whether such a finding would be an unwarranted extension of trade marks beyond their role as designators of origin.

s11(2)/Art 12 - defences

[177]The defendants rely on defences under s11(2)/Art 12 on the basis that they are using indications concerning the kind or quality of the goods and that such usage is in accordance with honest practices in industrial or commercial matters. The defendants submitted that the use complained of was use in accordance with honest industrial or commercial matters because it was use in relation to the exercise of a “legitimate commercial liberty”. They submit it cannot be correct that the claimants are entitled to prevent any reference to the Betty Boop character whether in words or a form of graphical representation in any context whatsoever. Otherwise it would be impossible for a trader to licence Betty Boop imagery and/or produce or market Betty Boop memorabilia if the claimants were correct. The defendants contended that to find for the claimants in this would be a disproportionate restriction on their freedom of expression protected under

Art 10 of the ECHR

[178]I do not accept that this defence is made out in this case for several different reasons.

[179]First, I reject the contention that the use of a picture of Betty Boop on the products is within s11(2)(b) or Art 12(b) at all. The pictures of Betty Boop are not being used as descriptive indications. That is particularly so given the swing tags which used the words “officially licensed” or similar. This is an indication that the goods are official Betty Boop merchandise.

[180]Second, the term memorabilia has to be treated with care. A different case might arise if someone was selling what could fairly be called 1930s film memorabilia, with no real reference to the Betty Boop character as she has been built up by the claimants. I do not have to address such a case because it would not be fair or accurate to describe any of the defendants’ goods in issue in this case as being 1930s film memorabilia.

[181]Third, I am not satisfied that the defendants have made out a case based on honest commercial practices. First in my judgment the factors enumerated in the Sam Smiths case are generally against AVELA. AVELA knew of the existence of the marks. It tried and failed to oppose the registration of one of the CTMs. The nature of the use involves a requirement to include the reference to “Official Licensee” which enhances the likelihood of confusion. AVELA knew the claimants would be likely to object and knew of the claimants’ reputation. AVELA intends to take advantage of that reputation. The use on goods and AVELA’s licensing operation is in direct competition with the claimants. The claimants complained promptly but the use has continued.

[182]AVELA is entitled to rely on the fact that it won the US litigation but I do not regard this as a strong point. The US litigation was not concerned with either party’s rights in Europe.

[183]One element of the defendants’ case on honest practices was an assertion that AVELA owned UK copyright in the images being licensed and was licensing that copyright. This is relevant to the question of whether the defendants have a justification for their use of the signs complained of. However Mr Valencia’s evidence about the origin of the images was vague and unspecific. The defendants have entirely failed to prove that anyone (whether it is AVELA or another entity connected to AVELA) owns any UK or for that matter US copyright in the artwork being licensed.

[184]As a fall back it was said that Mr Valencia has a bona fide belief that he owns copyright in the licensed images. However even that submission is not straightforward. First, although taking the evidence as a whole I can see that Mr Valencia believes one of his companies may own some US copyright, the evidence did not set out to establish in any detail what the foundation for any state of mind of Mr Valencia might be vis a vis the USA nor, more importantly, the UK. Without that I do not see how I can characterise it as a bona fide belief. Second, while I accept Mr Valencia believes there is US copyright associated with the restored posters, I do not accept he has the same view about every image in the RADIO DAYS library. He cannot do so simply because he is unaware of the whole contents of that library. There was clear evidence that AVELA was prepared to create new images at the request of licensees. Moreover Mr Valencia was apparently unaware of the presence of certain images in the library until they were drawn to his attention in the context of this case a few weeks ago. These were the Baby Boop type images. I am not satisfied that Mr Valencia has any basis for a bona fide belief that he owns copyright in all the licensed images.

[185]Furthermore I agree with the claimants’ submission that the restored movie posters are a fig leaf. Many of the images featuring Betty Boop in the RADIO DAYS library have no obvious connection to the movie posters at all. One of the images in the RADIO DAYS library is a cross-branding example mixing Betty Boop with a poster for the 1950s B movie “Attack of the 50ft Woman” to make a picture called “Attack of the 50ft Boop” with Betty Boop’s head transposed onto the head of the eponymous 50ft woman. I am not in a position to make a positive finding about the origin of that or any other AVELA image. What I can say is that, insofar as derivation from restored movie posters is a part of the defendants’ case on honest commercial practices, it is has not been established.

[186]Fourth, at one stage the defendants contended that this case involved a collision of independent liberties or rights (citing the well known passage from Marengo v Daily Sketch 1946

[1992] FSR 1

). This point does not add anything to the debate in this case. Even if AVELA was in a position to licence copyright, copyright does not give the owner or their licensee the right to exploit the work at all. The only right given by copyright is to prevent others from copying the work (or doing any of the other acts restricted by copyright). To prevent the defendants from selling the goods in this case which bear images of Betty Boop would not interfere with any copyright even if it was established to exist.

[187]Fifth, I am well aware of the wide effect of the finding of infringement in this case. It could be portrayed as awarding the claimants a form of copyright which is unlimited in time (c.f. the discussion by Mr Arnold QC in Linkin Park). However I do not think that would be a fair characterisation of the result. The wide nature of the conclusion depends critically on the reputation associated with the marks which in turn derives from the wide nature of the use undertaken by the claimants and their licensees. Without that reputation being continually renewed and refreshed by the considerable efforts of the claimants and their licensees, the wide conclusion would not follow.

[188]Sixth, I do not see how a conclusion of infringement engages the right to free speech protected by

Art 10 ECHR

. The “speech” by the defendants is purely in a commercial context and involves the presentation of words and images on goods in order to sell them. If the conclusion I have reached is otherwise in accordance with the law of passing off or registered trade marks then I fail to see how it could be said to be a disproportionate restriction on freedom of expression.

[189]Accordingly I reject the defence based on s11(2)/Art 12(2) for AVELA.

[190]If the defence is not open to AVELA I can see no basis for its being open to AVELA’s agent TPTL or to the licensees Poeticgem and J Fox (or to U Wear). The second to fifth defendants were not misled by AVELA. Given that they were not misled, they cannot be in a better position than AVELA. They knew they were not obtaining a licence from the claimants yet they went ahead anyway.

Conclusion on trade mark infringement in the UK

[191]I find that the claimants’ case of trade mark infringement for the UK marks and for the CTMs is made out in relation to the United Kingdom.

The position in the rest of the EU

[192]The claimants’ evidence addressed activity outside the UK, included examples of Betty Boop merchandise in France and Spain and included sales figures for a number of EU countries. Having found trade mark infringement in the UK, I can see no reason why the same conclusion should not follow elsewhere in Europe. The defendants did not suggest that if infringement was found when considering the United Kingdom, there was any reason not to extend that conclusion Europe wide.

Joint tortfeasance

[193]An element in this case which did not receive close attention is the question of joint liability. In my judgment AVELA itself and TPTL are so closely involved in these activities from start to finish that they are jointly liable with each other and with the licensees Poeticgem and J Fox/U Wear. The involvement starts with the offer of licences by AVELA with TPTL as agent, includes the approval process in which both AVELA and TPTL are closely involved and also includes the requirement that the goods sold by the licensees must be labelled in the manner described. The entire exercise is conducted pursuant to a common design between AVELA, TPTL and the licensees to place the products on the market and is procured by AVELA and TPTL.

[194]Therefore I find that AVELA and TPTL are jointly liable for the acts of trade mark infringement and passing off committed by Poeticgem and J Fox/ U Wear. I also find that TPTL and AVELA are jointly liable for the acts of trade mark infringement and passing off committed by each other. Neither Poeticgem nor J Fox nor U Wear are liable for acts committed by AVELA or TPTL. So, for example, those licensees are not liable for AVELA’s offering of licences.

[195]Although I find that AVELA and TPTL are jointly liable with Poeticgem and with J Fox/U Wear, it is not suggested that Poeticgem should be jointly liable with J Fox/U Wear. There is no reason why they should be.

[196]Also, although J Fox and U Wear are separate companies albeit both controlled by Mr Rao, they clearly work very closely together in relation to the AVELA licence. J Fox creates the merchandise and U Wear sells it. The two companies are jointly liable with each other.

Conclusion

[197]I find that the claimants’ case is proved. The defendants have infringed the claimants’ UK and Community trade marks and have committed acts of passing off. 198. Schedule 1 Number Filed Specification Mark UK 1487409 9 Jan 1992 Class 9, 16, 25 and 28 BETTY BOOP UK 1487518 9 Jan 1992 Class 28 UK 1487325 9 Jan 1992 Class 25: UK 2134589 3 Jun 1997 Class 18: UK 2460441 4 July 2007 Class 3: CTM 008596348 6 Oct 2009 Class 3, 14, 16, 18, 21, 24, 25 BETTY BOOP CTM 008596546 6 Oct 2009 Class 3, 14, 16, 18, 21, 24, 25 CTM 009166323 10 Jun 2010 Class 9, 12, 35, 38 BETTY BOOP CTM 009166349 10 Jun 2010 Class 9, 12, 35, 38

Hearst Holdings Inc & Anor v A.V.E.L.A. Inc & Ors [2014] EWHC 439 (Ch)

Introduction

The claimants’ case

The defendants’ case

The witnesses

The history

The law

Trade marks – likelihood of confusion infringement under s10(2)/Art9(1)(b)

Infringement under s10(3)/Art9(1)(c)

Average consumer

Defence under s11(2) of the Act/ Art 12 of the Regulation

Validity of the trade marks

Threats

Problems with merchandising

The facts

The impact of the many years of trading

Acts complained of

Official Licensee

Official Licensee

Passing off

Trade Marks

s10(1)/Art 9(1)(a) – double identity

(a) – double identity

s10(2)/Art 9(1)(b) - likelihood of confusion

(a) s10(2)/Art 9(1)(b) - likelihood of confusion

S10(3)/Art9(1)(c) – link

(c) – link

s11(2)/Art 12 - defences

Conclusion on trade mark infringement in the UK

The position in the rest of the EU

Joint tortfeasance

Conclusion

Cited in 6 later judgments