Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd & Anor [2016] EWHC 809 (Ch)

[2016] EWHC 809 (Ch)Case No HC-2015-000957
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 13/04/2016
Before
MR JUSTICE MALES
Between
MARUSSIA COMMUNICATIONS IRELAND LIMITEDClaimantMANOR GRAND PRIX RACING LIMITEDDefendants(2) STEPHEN JAMES FITZPATRICKDefendantANDREW JONATHAN WEBBThird Party
Mr Roger Wyand QC and Mr Philip Roberts (instructed by Mishcon de Reya LLP) for ClaimantMr Hugo Cuddigan QC and Mr Tom Alkin (instructed by Kempner & Partners LLP) for DefendantsHearing Hearing dates: 14-15 March 2016
JudgmentMr Justice Males :Introduction
[1]This is an application for summary judgment in a claim for trade mark infringement. The claim is based on six propositions, none of which is disputed:(1) the claimant is the proprietor of a registered trade mark for the “Marussia” name and logo;(2) the trade mark is valid;(3) the claimant (or its predecessor in title) licensed the trade mark to the defendant to use as its Formula One team and chassis name;(4) that licence came to an end on 31 December 2014;(5) the defendant nonetheless continued to use “Marussia” as the name of its Formula One team and chassis for the 2015 racing season; and(6) it chose to do so in order to be able to race in Formula One and in particular to collect about US $90 million of prize money which had been earned based on the results from the 2014 season but which would only be payable if the team continued to race.[2]The defendant resists the claim on five grounds, namely that:(1) the claimant impliedly consented to the use of the trade mark;(2) the claimant is estopped from asserting its rights as owner of the trade mark;(3) the defendant’s use of the trade mark did not give rise to any “likelihood of confusion” on the part of the relevant public for the purpose of Article 9.1(b) of the Community Trade Mark Regulation;(4) the trade mark did not have “a reputation in the Community” for the purpose of Article 9.1(c) of the Regulation;(5) the defendant’s use of the trade mark constituted use of its own name “in accordance with honest practices” for the purpose of Article 12 of the Regulation.[3]The claimant also brings a claim in passing off but that is not the subject of this application. There are also additional claims and counterclaims involving Mr Stephen Fitzpatrick as second defendant and Mr Andrew Webb as a third party, but those claims do not arise on this application either. In this judgment, therefore, I refer to Marussia Communications Ireland Ltd (the trade mark owner) as the claimant and Manor Grand Prix Racing Ltd (the alleged infringer) as the defendant.

The test for summary judgment

[4]Summary judgment may be given where a defendant has no real prospect of successfully defending the claim. That test has been elucidated and summarised in a number of recent cases, including Barclays Bank Plc v Landgraf [2014] EWHC 503 (Comm), [2015] 1 All ER (Comm) 720. The principles are not in dispute. I need not repeat them, but bear in mind in particular that the court must hesitate before making a final decision where reasonable grounds exist for believing that a fuller investigation at trial would add to or alter the evidence available or would show the existing evidence in a new light.[5]The claimant seeks in the alternative a conditional order for the provision of security for its claim pursuant to CPR 3.1(3), as contemplated by CPR 24.6 and paragraphs 4 and 5 of CPR 24PD, on the basis that even if one or more of the defences listed above may succeed, it is improbable that they will do so. The Rules and accompanying Practice Direction give the court power to order the provision of security where it appears “improbable” that a defence will succeed. It is not necessary to show that a defence is “shadowy” or “dubious in its bona fides” (expressions which were sometimes used in considering whether to give conditional leave to defend under the pre-CPR regime), although if a defence is shadowy or of doubtful good faith that will no doubt be a relevant consideration in exercising the power to make a conditional order and deciding the amount of any security which should be ordered.[6]It follows that there is a category of case where the defendant may have a real prospect of success, but where success is nevertheless improbable and a conditional order for the provision of security may be made.[7]For example, in Bank Leumi (UK) Ltd v Akrill [2014] EWCA Civ 907, although the defence was held to have a real prospect of success, the Court of Appeal regarded the fact that the defence was improbable as a sufficient reason to make a conditional order for security. It remitted the case to this court in order to determine what conditions to impose. It did so because of the principle that a condition should not be imposed with which a defendant is unable to comply, a matter about which it had no evidence, and appears to have contemplated that the remitted hearing would be confined to that issue although in the event it seems to have ranged more widely: see the judgments of Kitchin LJ at [56] and [57] and of HHJ Dight on the remission [2014] EWHC 4341 (Ch).

The facts

[8]Except where indicated, the following account is not controversial. It is taken principally from the defendant’s skeleton argument.

The claimant

[9]The claimant is part of a group of companies sharing the name “Marussia” which is owned and controlled by a wealthy Russian, Andrey Cheglakov. I shall use the term “Marussia” to refer to the group as a whole or when it is unnecessary to distinguish between individual companies in the group. Mr Cheglakov is represented by Mr Andrew Webb in the conduct of day to day business.[10]Between about 2007 and April 2014 Marussia designed, manufactured and marketed high performance motor cars under the Marussia brand, although only 35 of these were ever sold of which six were sold into the European Union. It exhibited and promoted the cars at showrooms in Moscow and Monaco and participated in the 2011 Goodwood Festival of Speed. Marussia cars have been included, under licence, in popular computer racing games which are widely available in this country. In April 2014, however, Marussia ceased designing and producing road cars although it continued to display cars at its showroom in Monaco.

The trade mark

[11]The claimant is the current registered proprietor of Community trade mark no. 1011193. The trade mark consists of the “Marussia” name and logo and is registered in class 12 for “vehicles; apparatus for locomotion by land, air or water”.

Formula One – the background

[12]The Formula One World Championship is contested in a series of Grand Prix races over the course of the season, which runs from March until November. According to the regulations laid down by a body called the Féderation Internationale de l’Automobile (“FIA”), the teams (or “constructors”) are required to build their own cars to comply with complex technical regulations which change every season. The commercial rights to Formula One are held by a company called Formula One World Championship Limited (“FOWC”) which is controlled in practice by Mr Bernie Ecclestone.[13]Formula One teams are funded primarily by a combination of prize money generated by FOWC’s commercial exploitation of the sport (e.g. from the sale of TV rights and merchandising rights), private investment, sponsorship and, among the less well resourced teams, drivers who pay to race. Participation in Formula One is an expensive business. Among other things, a team will typically need to spend millions of pounds developing a new car for each season in order to be competitive, as well as to comply with changing regulations.[14]The defendant was incorporated in 2008 to take advantage of the planned expansion of Formula One from 10 teams to 13. In order to participate (and to be eligible to earn prize money) it had to sign up to a contract concluded between all the Formula One teams, the FIA and FOWC. That agreement was known as the “Concorde Agreement”.[15]Having signed up to the Concorde Agreement, the defendant entered as one of the three new teams in 2010 under the name ‘VIRGIN RACING’ i.e. with Virgin as its title sponsor.

Marussia’s sponsorship of the defendant

[16]During the team’s first season, Marussia offered to replace Virgin as the team’s title sponsor for the 2011 season. This led to Marussia acquiring a majority stake in the defendant’s parent company, Manor Holdco Ltd (“Holdco”). Mr Cheglakov and Mr Webb became directors of Holdco. Marussia also provided loan finance to the defendant secured against its shares. In September 2011 Mr Webb was appointed as a director of the defendant.[17]As part of these arrangements a Team Partner Agreement (“TPA”) was concluded by which Marussia obtained Sponsorship Rights for the defendant’s participation in Formula One and granted a royalty free non-exclusive licence to the defendant to use its trade mark for that purpose. The TPA, and thus the trade mark licence, was effective from 1 January 2011 and was to remain in force (unless terminated earlier, which did not happen) until 31 December 2014 when it expired.[18]The effect of this package of agreements, for present purposes, was that Marussia was participating in Formula One racing, through its subsidiary company. The subsidiary needed, and was granted, a licence to use the Marussia trade mark, but as it was Marussia which was funding the defendant’s participation, it retained control over the use which the defendant made of its trade mark and indeed of all aspects of the defendant’s participation in the sport.[19]The Sponsorship Rights which Marussia obtained included a right to have “Marussia” included in the team name (provided that approval for the change could be obtained from the FIA, as it was) and were regarded as extremely valuable. Involvement in Formula One generates huge worldwide publicity. In exchange for these rights, Marussia agreed to make substantial payments, rising from £5.5 million for the 2011 season to £8 million for each of the 2012 to 2014 seasons. It appears that in the event even greater sums were paid, £32.75 million for the 2013 season and £9 million for 2014.[20]During the 2010 to 2014 seasons the Marussia team generally finished towards the rear. This was not surprising. It was regarded as one of the “minnows” on the circuit when compared with the larger and more established teams. Its final team positions for the constructors’ championship in each season were as follows: 2010: 12th of 12 teams 2011: 12th of 12 teams 2012: 11th of 12 teams 2013: 10th of 11 teams 2014: 9th of 11 teams[21]The 2014 season was the first season in which the team won any points. It was the first of the “minnows” (one of which had already dropped out) to score any points at all. This performance entitled it to prize money of about US $90 million which would be payable in future seasons, but only if the team continued to race.

The Bilateral Agreement

[22]The 2009 Concorde Agreement expired at the end of the 2012 season. It was replaced by a series of bilateral agreements between FOWC and each individual Formula One team. Clause 4.3 of the defendant’s Bilateral Agreement provided that if it changed its chassis name from “Marussia” without the prior written consent of FOWC, it would lose its entitlement to prize money based on results achieved in previous seasons, as well as various commercial and corporate rights, voting rights and passes for the team to access parts of each Formula One circuit not open to the public. Without these rights it would in practice be impossible for a team to race in Formula One.[23]There had been a similar term in the Concorde Agreement requiring the consent of the FIA for any change of chassis name, but once the Bilateral Agreement was in force the consent needed was that of FOWC. In practice, this meant that Mr Ecclestone would have to agree to any change.[24]The significance of the chassis name is that under the Regulations laid down by the FIA, a team’s name must include the team’s chassis name. (The “chassis name” is, in practical terms, the name of a team’s car, of which two are built each season: the word “chassis” is used because the external components of the car change constantly throughout a season as a result of repair and aerodynamic adjustment; only the chassis persists from the beginning of the season to the end).[25]It is the defendant’s case (which I accept for the purpose of this application) that clause 4.3 of the Bilateral Agreement reflects the fact that FOWC believes that the sport would be damaged if it was seen to be contested by a constantly changing cast of competitors as sponsors come and go, and that to discourage this FOWC (in practice Mr Ecclestone) deprives teams of critical rights if they change their chassis name (and hence public team name) without FOWC’s consent.[26]It follows from all this that unless the defendant could persuade Mr Ecclestone to consent to a change of chassis name, it could only continue to participate in Formula One under the Marussia name which would necessarily mean continuing use of the claimant’s trade mark.[27]The Bilateral Agreement also provided, as the Concorde Agreement had done before it, that insolvency within the meaning of section 123(1) of the Insolvency Act 1986 would constitute a “Cessation Event” whereupon the team’s right to participate in Formula One would cease immediately.

The defendant goes into administration

[28]By October 2014 Marussia had decided that it was no longer prepared to fund the defendant’s participation in Formula One and it withdrew its financial backing. This included declining to pay some £520,000 for Sponsorship Rights which was due to the defendant under the TPA. (There is a pending application by the defendant to amend its pleadings to counterclaim for this amount). By this stage the defendant was heavily indebted, owing some £13.5 million to Marussia and a similar amount to Lloyds Development Capital (“LDC”) which had also provided a loan secured on the defendant’s shares. As a result the defendant entered administration on 27 October 2014. FOWC confirmed that this was not considered to be a Cessation Event.

The 2015 entry

[29]At that point the team was working on its new car for the 2015 season. In order to keep alive its prospects of racing in 2015 if a new backer could be found, the defendant filed its entry for the 2015 Formula One Championship on 30 October 2014, two days before the deadline. The form indicated the team name as “Manor F1 Team” and the chassis name as “MNR”, although this was said to be “Subject to confirmation of chassis name change from ‘Marussia’.” As Mr Graeme Lowdon, the defendant’s then Sporting Director, explains in his witness statement, it seemed likely that any new backer would not want to use the “Marussia” name if it could get consent to a change.[30]On 7 November 2014, however, the team was forced to cease work on its 2015 car for lack of funding.

Mr Fitzpatrick expresses interest

[31]On 9 November 2014 Mr Stephen Fitzpatrick, the businessman behind Ovo Energy and a motor racing enthusiast, contacted the defendant’s administrator to enquire about the possibility of acquiring the team. For the most part, the only way to enter Formula One is to take over a company with an existing entitlement to compete. The administration of the defendant represented an opportunity for Mr Fitzpatrick to fulfill a long held ambition to get into Formula One. During November he and Vincent Casey (Ovo’s Chief Finance Director) began to investigate the financial and legal position of the defendant. They were assisted by Mr Lowdon.[32]Mr Lowdon explained that to be able to compete in the 2015 championship, the following (among other) points would have to be satisfied:(1) the defendant would need to remain solvent within the definition in the Bilateral Agreement, i.e. to avoid a “Cessation Event”;(2) it would need to obtain permission from the FIA to use the 2014 chassis for the 2015 season despite its non-compliance with the 2015 Regulations; and(3) it would need either to use its existing chassis name or to obtain permission from FOWC for a change of name.[33]Mr Lowdon estimated that even if the 2014 chassis could be re-used in 2015, the defendant would need a budget of around £60 million for that year. He explained that in 2013, although it had not scored any points, the team was 10th in the constructors’ standings by virtue of its then driver, Jules Bianchi, attaining 13th place at the Malaysian Grand Prix. During the 2014 season the team had scored two points and was placed 9th in the constructors’ standings. He estimated that this would entitle the team to prize money of approximately US $45 million (or £30 million) in the 2015 financial year. The team’s performances in 2013 and 2014 would also entitle it to further prize money in 2016 at a similar level (i.e. £30 million) if the team achieved a top 10 finish in 2015. Access to this prize money was therefore a significant source of funding.[34]Thus, if he was to achieve his ambition to acquire a Formula One team, Mr Fitzpatrick would need to acquire the unencumbered shares of the defendant and at least its 2014 chassis (for which purpose he would need to reach agreement with Marussia and LDC who together were owed some £27 million); to bring the defendant out of administration via a voluntary agreement with the defendant’s creditors (a course that would not constitute a disqualifying “Cessation Event” under the Bilateral Agreement); to obtain the necessary derogations from the 2015 Regulations to enable racing with the 2014 chassis during the 2015 season; and to deal with the question of the chassis name and hence the name under which the team would race.[35]Mr Fitzpatrick and Mr Casey decided that taking over the defendant was viable if it could receive its accrued prize money (which would be combined with other sources of income, including substantial investment of Mr Fitzpatrick’s own funds), but not otherwise. They estimated that about half of the total budget of £60 million needed for the 2015 season could be funded by Mr Fitzpatrick and other sources of income such as sponsorship. For Mr Fitzpatrick, therefore, access to the accrued prize money which would provide the balance of what was required was an essential element of any deal.[36]By early December 2014, the defendant’s administrator had scheduled two auctions of its assets to raise funds for creditors. In practice, almost all the funds raised would go to the secured creditors, Marussia and LDC. On 2 December there was a telephone conversation between Mr Fitzpatrick, the administrator Mr Rowley, Mr Webb on behalf of Marussia and Mr Carl Wormald on behalf of LDC. They spoke about the possibility of Mr Fitzpatrick purchasing Marussia’s and LDC’s secured debt before the first of these auctions. However, Marussia and LDC demanded more for this debt than the £3 million which Mr Fitzpatrick was prepared to offer. Accordingly no deal was reached. The first auction (which did not include the 2014 chassis) went ahead but realised only £1.366 million.

First contact with Mr Ecclestone

[37]Mr Fitzpatrick’s evidence, which for the purpose of this application I accept, is that he spoke to Mr Ecclestone by telephone on 10 December 2014. This was their first conversation. Mr Fitzpatrick told Mr Ecclestone that he was interested in acquiring the team and asked whether Mr Ecclestone would be in favour of it surviving. Mr Ecclestone said that he would and suggested that they should meet. The conversation was brief. Mr Fitzpatrick does not suggest that there was any mention of the name under which the team would race if he acquired it or of the possibility of a change of name.

Permission to use the 2014 chassis

[38]On 17 December Mr Lowdon requested that the FIA procure a derogation from the 2015 Technical Regulations which would enable the defendant to race the 2014 chassis. On 5 January 2015 the FIA expressed its willingness to do so and said that it would seek agreement from the other teams. In the event the FIA was unable to obtain the necessary agreement, but this did not matter as the defendant had worked out how to comply with the 2015 Regulations using the 2014 chassis.

Conclusion of the “Team Purchase Agreement”

[39]Negotiations began again in early January 2015. The team’s remaining assets (including the chassis) were to be auctioned on 21 January 2015 which therefore represented a deadline for any agreement to be reached. The estimated value of these remaining assets was £500,000 which would be divided (approximately) equally between Marussia and LDC. No other potential purchaser was in sight. Thus, if no deal was concluded with Mr Fitzpatrick, the most that Marussia could hope to achieve was a further return of only about £250,000.[40]On 9 January Mr Fitzpatrick communicated an offer for the purchase of the secured debt on the basis that £1.5 million would be paid “to the secured creditors to acquire the debt” on 6 February 2015 and that “we do not require the transaction to be dependent on FIA approval to run the 2014 car in the forthcoming season; a successful CVA; or confirmation of FOM prize money in 2015”. In response the administrator welcomed what he described as “no conditionality re FOM, FIA, CVA, etc”, but rejected the offer because of the risk that the purchaser might not complete after the scheduled auction had been cancelled which would result in further costs being incurred.[41]It is the defendant’s case that on 16 January 2015 an agreement was reached orally whereby(1) Just Racing Ltd (“JRL”, Mr Fitzpatrick’s company) would pay £1.3 million for the secured debt owed by the defendant to Marussia and LDC, of which £622,804 was payable to LDC and £677,196 to a Marussia company based in Dubai, and(2) Holdco granted JRL a call option entitling it to purchase the shares in the defendant for the nominal sum of £1 at a subsequent date of its choosing. (The reason why a call option was chosen instead of an outright share purchase was to enable the defendant to exit administration by way of a CVA before the exercise of the option and in that way to avoid the occurrence of a “Cessation Event”). It is clear that, one way or another, such an agreement was reached (or at any rate, I proceed on that basis) as, on that day, two written agreements to that effect were concluded which obviously reflect what had been agreed orally. This oral agreement was referred to in argument as the Team Purchase Agreement (although confusingly a different term was used in the Defence; also confusingly, the oral Team Purchase Agreement has the same initials as, but is different from, the written Team Partner Agreement or TPA referred to above). I will use the same description. Both of the written agreements giving effect to this oral Team Purchase Agreement were drafted by lawyers although, given the timing, this must to some extent have involved adaptation of standard drafts. Neither of them referred to the other, although it is obvious that each was part of an overall package. There would have been no point in JRL purchasing the secured debt without the right to obtain the shares in the defendant. There would have been no point in JRL obtaining the shares in the defendant if the secured debt remained.[42]Thus Mr Fitzpatrick agreed to pay about £800,000 more than the value which the defendant’s remaining assets, principally the 2014 chassis, were expected to raise at auction, but less than the £3 million which he had offered back in December.[43]The purchase of the secured debt was dealt with by two written assignments of the debt, by LDC and Marussia respectively, in favour of JRL, each of which provided for immediate payment. The assignments included the following provisions:
“4.2 NON-RELIANCE AND INDEPENDENT INVESTIGATION 4.1 Acknowledgement Each party acknowledges to the other that: (a) it is a sophisticated Assignee or Assignor (as the case may be) with respect to the transaction; and (b) it has such information as it deems appropriate under the circumstances (however obtained), concerning for example the business and financial condition of the Obligator(s) under the Credit Documentation, to make an informed decision regarding the transaction. 4.2 Independent investigation Each of the Assignee and the Assignor hereby agrees that it has made its own independent analysis and decision to enter into the transaction, based on such information as it has deemed appropriate under the circumstances, and without reliance on the other party (except for reliance on any express representation made by the other party in the terms and conditions of this Agreement). … 4.5 Material information Each of the Assignor and the Assignee acknowledges and agrees that: (a) the other may possess material information not known to it; and (b) the other shall have no liability and no action or proceedings may be taken with respect to the non-disclosure of any such information except to the extent that such information renders inaccurate an express representation made pursuant to the terms and conditions of this Agreement by the party possessing such information.”
Each party acknowledges to the other that:

Each of the Assignor and the Assignee acknowledges and agrees that:

[44]The call option agreement was between Holdco and JRL. It included an entire agreement clause:
“8.5 Entire Agreement This Deed constitutes the entire agreement between the parties and supersedes and extinguishes all previous drafts, agreements, arrangements and understandings between them, whether written or oral, relating to its subject matter.”
[45]Neither of the written agreements said anything about use of the claimant’s trade mark or the Marussia name. It is common ground that this subject was not mentioned by anyone at any stage up to and including the conclusion of the Team Purchase Agreement.

Meeting with Mr Ecclestone

[46]Mr Fitzpatrick’s evidence, which again I accept for the purpose of this application, is that he met Mr Ecclestone in London on 21 January 2015 to discuss his plans for the team. He said that he would like to drop the “Marussia” name. Mr Ecclestone responded that he would not consent to a change at that time and Mr Fitzpatrick should request a name change during the 2015 season.[47]After that meeting the defendant confirmed to the FIA that it would continue to race in 2015 with the “Marussia” chassis name.[48]On 12 February 2015 the defendant wrote to the FIA confirming that it would continue with the Marussia chassis name for the 2015 season. It followed this with a revised entry form on 20 February 2015 again confirming that the Marussia chassis and name would be used.

The defendant exits administration

[49]Meanwhile, as planned, the defendant’s creditors (including JRL as assignee of the secured debt) agreed a CVA allowing the defendant to exit administration at a meeting on 19 February 2015.

The 22 February telephone call

[50]On 22 February 2015 there was a telephone call between Mr Webb and Mr Fitzpatrick. There is a dispute about what was said in this call. However, it is common ground that Mr Webb indicated that he had heard that the defendant intended to race in 2015 with a team name which included the “Marussia” name, which he said that the defendant had no right to do as the TPA had expired at the end of 2014. He suggested (or possibly demanded) payment of 25% of the team’s accrued prize money if the “Marussia” name was going to be used. It is common ground also that this telephone call was the first occasion on which the use of the “Marussia” name was discussed between the parties.[51]This was followed by a letter dated 23 February from Mr Lowdon to Mr Ecclestone requesting consent to a change of chassis name from “Marussia” to “Manor”. However, following a telephone conversation on the same day between Mr Fitzpatrick and Mr Ecclestone, the request was withdrawn. It must therefore have been apparent to Mr Fitzpatrick and his team from this point onwards at the latest that if the defendant was to race in the 2015 season, not only would it have to do so using the name “Marussia”, but that (unless it had already given a binding consent in some way) Marussia did not consent to that use.

Exercise of the call option

[52]JRL exercised the call option on 2 March 2015. The share transfer was completed by 6 March 2015. The 2015 season began with the Melbourne Grand Prix on 15 March 2015. The defendant’s team arrived in Melbourne but was unable to race because of software problems. It raced in all the remaining races of the season, using the team name “Manor Marussia”.

Name change approved

[53]On 15 January 2016 FOWC consented to the defendant changing its chassis name from “Marussia” to “MRT”. This was ratified by the Formula One Commission on 19 January 2016. The team name has now been changed from “Manor Marussia” to “Manor Racing MRT”. Accordingly there has been and the defendant is willing to undertake that there will be no use of the Marussia trade mark during the 2016 season or thereafter.

Article 9 of the Community Trade Mark Regulation

[54]Article 9 of the applicable Community Trade Mark Regulation (Council Regulation (EC) No 207/2009 on the Community trade mark) provides:
“Rights conferred by a Community trade mark 1. A Community trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade: (a) any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered. (b) any sign where, because of its identity with, or similarity to, the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark; (c) any sign which is identical with, or similar to, the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trade mark.” (a) any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered. (b) any sign where, because of its identity with, or similarity to, the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark; (c) any sign which is identical with, or similar to, the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trade mark.”
[55]The claimant contends that the defendant’s use of the “Marussia” name in 2015 contravened Article 9(1)(b) (a likelihood of confusion arising out of the similarities between the trade mark/sign and between the goods/services) and Article 9(1)(c) (use of a sign without due cause which takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark).

Consent

[56]The defendant’s first and principal defence is that the claimant consented to the use of its trade mark pursuant to an implied term in the oral Team Purchase Agreement. It is not suggested that Marussia ever gave express consent. Mr Hugo Cuddigan QC for the defendant accepted in the course of argument that Mr Fitzpatrick and those negotiating the Team Purchase Agreement with him were not alive to the need for a trade mark licence. Acceptance of this was inevitable. If Mr Fitzpatrick or his team had thought(a) that a trade mark licence was needed and(b) that Marussia did in fact consent to grant such a licence, a fortiori an unconditional royalty free licence, they would certainly have insisted that Marussia’s consent should be formally recorded in writing in the same way that the debt assignment and call option were recorded. Conversely, if the Marussia representatives did in fact consent to the royalty free continuing use of the Marussia name, it is hard to think that they would not have wished to spell out in precise terms the extent of that consent – for example, whether it was limited to the 2015 season or might extend beyond 2015 in some (and if so what) circumstances, or whether there were any conditions as to the way in which the name would be displayed. As it is, the subject was neither mentioned nor (certainly on Mr Fitzpatrick’s side) even thought about.[57]Nevertheless, the defendant contends that it is necessary to imply a term into the oral Team Purchase Agreement as a matter of business efficacy. This requires consideration of the meaning of “consent” in the Regulation and whether the English law tests for the implication of a term are satisfied in this case.

The meaning of consent

[58]It is well established that “consent” in the Regulation has an autonomous Community meaning and requires the unequivocal demonstration by the trade mark proprietor of renunciation of its exclusive rights under Article 9. This need not be express and can be implied, but only where the facts and circumstances in question unequivocally demonstrate such a renunciation of rights. The leading authority is the decision of the European Court of Justice in Zino Davidoff (Joined Cases C-414 to 416/99 Zino Davidoff SA v A&G Imports Ltd and Levi Strauss & Co v Tesco Stores Ltd [2002] Ch 109): see in particular at [35] to [47] and [53] to [58]. These paragraphs are too well known to need citation, but I draw attention to [58] in which the Court stated:
“58. A rule of national law which proceeded on the mere silence of the trade mark proprietor would recognise not implied consent but rather deemed consent. That would not meet the need for consent positively expressed, required by Community law.”
[59]Thus a consent which is merely deemed to have been given in accordance with a provision of national law is not sufficient to amount to “consent” for the purpose of the Regulation. There must be actual consent, either because the trade mark proprietor has said in terms that it does consent or because it is obvious from the circumstances that it does so.[60]Although Zino Davidoff was concerned with a trade mark claim under Article 5 of Directive 89/104, this was in the same terms as Article 9 of the Regulation.[61]Lewison LJ provided a useful summary of the effect of the Zino Davidoff case in Honda Motor Co Ltd v Neesam [2006] EWHC 1051 (Ch) at [5]:
“5. In the joint cases of Zino Davidoff SA v A&G Imports Ltd, and Levi Strauss & Co v Tesco Stores Ltd [2002] Ch 109, the European Court of Justice said that the concept of consent for this purpose was to be uniformly interpreted across the whole of the EU. The ECJ made a number of important points. First; consent amounts to renunciation of the right to the trademark proprietor, and must, therefore, be unequivocally demonstrated. Second; an intention to renounce will normally be gathered from an express statement. Third; there may be circumstances from which consent may be inferred, but it is an actual consent, and not a deemed consent that must be established. Fourth; it is, in almost all cases, for the trader to prove consent, not for the trademark proprietor to prove the absence of consent. Fifth; consent cannot be inferred from the trademark proprietor’s silence nor from the fact that the goods carry no warning, nor from the fact that the trademark proprietor originally placed goods on the market without any further restriction on the onward sale of those goods.”
[62]In this summary too the distinction between actual and deemed consent is highlighted.

The principles for the implication of contractual terms

[63]The principles by which a term will be implied into a contract under English law have recently been restated by the Supreme Court in Marks & Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72, [2015] 2 WLR 1843. The following summary is derived from the judgment of Lord Neuberger at [16] to [23]:(1) For a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;(2) it must be so obvious that “it goes without saying”;(3) it must be capable of clear expression; and(4) it must not contradict any express term of the contract. (These conditions are taken from what was said by Lord Simon of Glaisdale in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 282–283, but omitting the requirement that the term should be “reasonable and equitable” which Lord Neuberger considered would not usually add anything to the other conditions). (2) It is not enough to show that had the parties foreseen the eventuality which in fact occurred they would have wished to make provision for it, unless it can also be shown either that there was only one contractual solution or that one of several possible solutions would without doubt have been preferred: Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472, 481, per Bingham MR. (3) The need for implication usually arises where the contract terms have not been spelled out in detail or by reference to written conditions. It is much more difficult to infer with confidence what the parties must have intended when they have entered into a lengthy and carefully-drafted contract but have omitted to make provision for the matter in issue: ibid. (4) The implication of a term is not critically dependent on proof of an actual intention of the parties. The court is concerned with the intention of notional reasonable people in the position of the parties.(5) Business necessity and obviousness can be alternatives in the sense that only one of them needs to be satisfied, although in practice it would be a rare case where only one of those two requirements was satisfied.(6) Necessity for business efficacy involves a value judgment. The test is not one of “absolute necessity”. It may be more helpful to say that a term can only be implied if, without the term, the contract would lack commercial or practical coherence.(7) The question whether a term is implied is to be judged at the date the contract is made.[64]It is apparent from this summary, and in particular from the fourth principle, that the implication of a contractual term under English law does not necessarily depend upon an actual (albeit unstated) agreement or consent by the parties. On the contrary, sometimes a term will be implied which is effectively imposed upon the parties, or to which they are deemed to have consented, merely because notional reasonable people in their position would have consented and there is nothing to show that they did not. This will be so if the term is necessary to give commercial or practical coherence to the contract even if the parties themselves did not think about it or if they are in fact unreasonable people who would not have consented. Their subjective thoughts and intentions are irrelevant.

Is consent necessarily established by an implied term?

[65]This suggests that when considering whether “consent” has been given for the purpose of Article 9 of the Regulation, which has an autonomous Community meaning, it will not be decisive to answer that question by reference to whether a term would be implied into a contract as a matter of English law. Even if a term would be implied, that may amount to no more than a deemed consent, deemed because that is what notional reasonable people would have agreed, which is not sufficient to satisfy the Regulation. However, this is not to say that the question whether a term should be implied will be irrelevant. If the need for an implication is sufficiently obvious, that may be strong evidence that the trade mark proprietor did in fact consent to the use of the trade mark. Ultimately, however, the question is not whether a term should be implied but, as held by the European Court of Justice in Zino Davidoff, whether the facts and circumstances demonstrate unequivocally a renunciation of rights by the trade mark proprietor.[66]Mr Cuddigan for the defendant submitted that consent is established by the parties’ willing entry into a contract governed by English law and that the parties have thereby consented (that is to say, have given actual consent) to whatever legal consequences – including implied terms – English law attributes to such a contract. He submitted that this analysis is supported by the decisions of the Court of Appeal in Mastercigars Direct Ltd v Hunters & Frankau Ltd [2007] EWCA Civ 176, [2007] RPC 565 and of Sir Andrew Park in Honda Motor Co Ltd v Neesam [2008] EWHC 338 (Ch).[67]Neither case, however, was concerned with whether consent could be established by reference to a contractual implied term. In Mastercigars the question was whether a Cuban company had impliedly consented to the sale of its cigars within the European Union. The Court of Appeal held that it had, not because it was deemed to have done so, but because the consent which it had given to resale of small quantities outside Cuba, including in German speaking countries, led ineluctably to the conclusion that it had given its actual consent to such sales.[68]In Honda Sir Andrew Park said at [53] and [54] that “a proved act which is consistent with consent and inconsistent with the absence of consent establishes unequivocal consent” and that “an expectation that the customer will resell the bikes and a permission to the customer to do so are inherent in the very nature of the transaction.” That, in my view, is consistent with a finding that there was an actual and not merely a deemed consent. As a matter of fact it was an inevitable conclusion from the nature of the transaction that consent was actually given.[69]Thus I would not accept that as a matter of Community law consent is necessarily established by the parties’ willing entry into a contract which English law determines to include an implied term, although depending on the circumstances an implied term may be evidence of consent. Ultimately, what matters for the purpose of the Regulation is actual consent to the use of the trade mark, not merely consent to the conclusion of a contract one incident of which is an implied term.

Do the circumstances demonstrate unequivocally a renunciation of rights?

[70]In the end, however, it does not matter whether the question asked in this case is whether the facts and circumstances demonstrate unequivocally a renunciation of rights by the claimant or whether a term should be implied into the Team Purchase Agreement. In either case the answer must be no. When the Team Purchase Agreement was concluded, Marussia had no knowledge of what had already passed between Mr Fitzpatrick and Mr Ecclestone. For all Marussia knew, Mr Fitzpatrick had already satisfied himself that the defendant would be permitted to change its chassis name for the 2015 season so as to drop any use of the word “Marussia” or the claimant’s trade mark. Far from demonstrating unequivocally a renunciation of rights by the claimant, the circumstances were consistent with confidence on the part of the defendant that it had no need of the claimant’s trade mark. Even if the relevant question is whether a term permitting such use should be implied, the answer is that it was neither necessary to do so in order to render the Team Purchase Agreement commercially or practically coherent nor so obvious that it went without saying. The Team Purchase Agreement was perfectly coherent if, as Marussia could reasonably have inferred, Mr Fitzpatrick had already satisfied himself that he did not need to use the “Marussia” name.[71]It is important here to see what the defendant’s case is. It is not that it was impossible to obtain FOWC’s (or in practice Mr Ecclestone’s) consent to a change of chassis name but only that it was “unlikely” that this consent could be obtained. Thus the defendant’s pleaded case is that prior to the conclusion of the Team Purchase Agreement both Mr Webb (and hence Marussia) and JRL were aware that:(1) JRL intended the defendant to participate as a Formula One team in the 2015 Formula One Championship using its 2014 chassis;(2) in order to do so, the defendant needed to collect the prize money accrued from its performance in the 2013 and 2014 seasons;(3) under clause 4.3 of the Bilateral Agreement the defendant would be deprived of its accrued prize money and would lose its other rights necessary to participate in Formula One if it changed its chassis name without FOWC’s consent;(4) a team’s name must include the chassis name; and(5) “it was unlikely that the defendant could obtain FOWC’s consent to a change of name prior to its entry into and the commencement of the 2015 F1 Championship”.[72]The first four of these points are admitted by the claimant. The defendant’s evidence in support of the fifth point, the unlikelihood of obtaining consent to a change of chassis name, makes clear the limitations on what is being alleged. Thus Mr Casey refers to an understanding that FOWC was “generally quite resistant to granting consent” to a change of name, while Mr Lowdon refers to the fact that Mr Ecclestone had “historically been reluctant to approve chassis name changes” albeit he had sometimes been prepared to do so and that he “was cautious about Formula One teams changing their chassis names from season to season as he wanted to protect the Formula One brand”. All this, I assume, is true, and I assume also for the purpose of this application that Marussia was equally aware that this was Mr Ecclestone’s attitude.[73]However, this evidence comes nowhere near suggesting that Marussia should have realised that consent could not be obtained or that it had not already been obtained. On the contrary, Marussia could reasonably have concluded that if the defendant needed or even might need its consent to the use of the “Marussia” name, Mr Fitzpatrick or his team (familiar with Formula One and advised by lawyers, as they were) would have asked for it. As already noted, for all Marussia knew Mr Fitzpatrick had already secured Mr Ecclestone’s agreement to a change of chassis name. The defendant does not suggest that Mr Fitzpatrick or his team ever said anything to suggest that they had not done so or (if they had not) that they anticipated any difficulty in doing so. On the contrary the email of 9 January 2015 expressly disclaimed any suggestion that the offer which it conveyed was conditional on receipt of prize money in 2015: the obvious inference was that this was either a risk which Mr Fitzpatrick was prepared to take or, more likely, because receipt of the money was known to be important, that he had already satisfied himself that the money would be forthcoming. It was never suggested thereafter that the position had changed. Even if obtaining Mr Ecclestone’s consent was “unlikely”, unlikely things do often happen. People who are known to be resistant to a course of action or cautious about making a decision are sometimes persuaded to do so.[74]For this fundamental reason, therefore, the defence of consent must fail. There is no basis on which to conclude that the claimant was unequivocally renouncing rights when it had no reason to think that those rights would be infringed. There is no basis for implying a term into the Team Purchase Agreement which the defendant did not in fact think about and which the claimant had no reason to think was necessary.[75]There are further reasons why, applying the principles set out above, no term can be implied.[76]First, applying the second principle in the summary above, it is not possible to say what term the parties would have wished to adopt if they had applied their minds to the question of use of the trade mark. The defendant’s pleaded case is that a term should be implied that it “would be entitled to enter and participate in the 2015 F1 Championship with a chassis name ‘Marussia’ and a team name incorporating that chassis name.” Initially Mr Cuddigan’s oral submission, when asked to formulate the term contended for, was to the same effect. However, when it was pointed out that this would mean that despite the substantial investment which Mr Fitzpatrick proposed to make in order to participate in Formula One racing, the defendant would have to cease racing at the end of 2015 if Mr Ecclestone’s consent to a change of name could not be obtained for the 2016 season, he modified the proposed term to include a right to use the “Marussia” name if necessary for the 2016 season. When asked about 2017, he accepted that it would be for the defendant to persuade Mr Ecclestone to permit a change of name for 2017 and that the defendant (or Mr Fitzpatrick) took the risk of being unable to do so. Later, however, Mr Cuddigan returned to this topic, saying that the defendant’s primary case was that the implied term was limited to 2015, but that in the alternative it would extend if necessary up to 2020 when the defendant’s Bilateral Agreement with FOWC would come to an end.[77]There are, therefore, at least three possible candidates as to the duration of any implied licence to use the “Marussia” trade mark, each of which has something which can be said in its favour. Even assuming that they would have wished to make some provision for the royalty free use of the “Marussia” name if they had applied their minds to the question, it is impossible to say which of these the parties would have adopted. This alone is a sufficient reason, following the Supreme Court’s approval of what Bingham MR said in the Philips Electronique case, to conclude that no term should be implied.[78]Second, the Team Purchase Agreement was on the defendant’s case an agreement with three elements, each of which was required to enable it to continue racing in 2015 (and perhaps for longer). Two of those elements, the debt assignment and the call option, were reduced into detailed written agreements with the assistance of lawyers. The third, a trade mark licence, was not even mentioned. This is unlikely in the extreme. The third principle in the summary above applies when the parties have entered into a carefully drafted written contract but have omitted to make provision for the matter in issue. That is what they did here, save that they entered into not one but two carefully drafted written agreements. In such circumstances it is impossible to say that they intended a third contract, between the claimant and the defendant, to be implied into their arrangements. As noted above, if Marussia had actually intended such a contract, or if Mr Fitzpatrick had thought that it did, this would inevitably have been recorded in writing.[79]This applies with even greater force where the written agreements, as in this case, contain provisions (in the case of the assignments the non-reliance and independent investigation clause, and in the case of the call option the entire agreement clause) which tend to exclude the possibility of implied terms. Although strictly speaking it can be said that each of these written agreements was concerned only with its specific subject matter and that these clauses do not necessarily exclude the possibility of implying a term into the oral Team Purchase Agreement itself, they do reinforce the application of the third Marks & Spencer principle set out above.[80]Looking at the issue of consent overall, the fallacy in the defendant’s approach is its submission that the purpose of the Team Purchase Agreement was to enable the defendant to race in Formula One in 2015, so that Marussia must be taken to have consented to whatever would be necessary for that to happen. Although that was no doubt Mr Fitzpatrick’s objective, there is no reason to suppose, and no suggestion in the evidence, that such a purpose was common to the parties. Rather, Mr Fitzpatrick and his team identified what they wanted, namely to acquire the shares in the defendant in a way which would avoid a Cessation Event and to acquire the secured debt owed to Marussia and LDC. No other conditions were identified and the e-mail of 9 January 2015 made clear that there were none. The parties then negotiated the sum which Mr Fitzpatrick would have to pay to acquire what he had identified.[81]I have considered whether there is a realistic possibility that the conclusions set out above may be affected by further documents or evidence which may be available at a trial. In my judgment there is no such possibility. It is accepted by the defendant, and it is in any event obvious, that Mr Fitzpatrick and his team never mentioned the possibility that a licence to use the “Marussia” name would or might be needed and never disclosed to the Marussia representatives that the question whether Mr Ecclestone would give his consent to a change of chassis name had not yet been resolved. That position will not change at trial. Nor will it be possible, in circumstances where nothing was said about the matter, to resolve the issue identified above whether any implied term would apply only to the 2015season or would extend further into the future and, if so, for how long.[82]Accordingly I conclude that the consent defence has no real prospect of success.[83]I should, however, mention one limited aspect of that defence on which I would have held that the defendant has a real prospect of success. It is the claimant’s case (citing Mastercigars at [30]) that under the Regulation consent to the use of a trade mark can only be given by the proprietor of the trade mark, and that this requirement was not satisfied in the present case because the claimant (that is to say, Marussia Communications Ireland Ltd) was not a party to the Team Purchase Agreement. I accept that principle. However, if I had found that the circumstances were such as to demonstrate unequivocally consent on the part of the Marussia representatives (in particular Mr Webb) to the use of the trade mark, I would have seen no difficulty in concluding that such consent was given on behalf of whichever Marussia company was the trade mark proprietor. At the very least, that is an issue which would have had to go to trial. As it is, it does not arise.

Estoppel

[84]As an alternative to its case on consent, the defendant contends that the claimant is estopped from asserting its rights under the Regulation. The estoppel is said to arise as a result of three matters. The first is the entry form submitted by the defendant on 30 October 2014 in which the team name was given as “Manor F1 Team” and the chassis name was given as “MNR”, the latter being expressly “Subject to confirmation of chassis name change from ‘Marussia’.” This is said to have amounted to a statement that, if the chassis name change was not approved, the defendant’s team would continue to race with the chassis’s existing “Marussia” name. The second is that Marussia knew at the time of the Team Purchase Agreement that the defendant was likely to need permission to use the “Marussia” name on its chassis. The third is that in those circumstances a reasonable person in the defendant’s position would expect Marussia, acting honestly and responsibly, to alert it to the trade mark before the Team Purchase Agreement was concluded if it was to be asserted against him. It is said, therefore, that Marussia was under a duty to speak in accordance with the principle of “estoppel by acquiescence” and that its failure to do so amounted to a representation that its property right would not be exercised against the defendant as a result of the defendant’s use of the trade mark in Formula One.

The estoppel principle

[85]The principle of estoppel by acquiescence on which the defendant relies was stated by Lord Wilberforce in his dissenting speech in Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890 at 903:
“In order that silence or inaction may acquire a positive content it is usually said that there must be a duty to speak or to act in a particular way, owed to the person prejudiced, or to the public or to a class of the public of which he in the event turns out to be one. … What I think we are looking for here is an answer to the question whether, having regard to the situation in which the relevant transaction occurred, as known to both parties, a reasonable man, in the position of the ‘acquirer’ of the property, would expect the ‘owner,’ acting honestly and responsibly, if he claimed any title to the property, to take steps to make that claim known to, and discoverable by, the ‘acquirer’ and whether, in the face of an omission to do so, the ‘acquirer’ could reasonably assume that no such title was claimed.”
[86]The principle was further explained by Oliver J in Taylors Fashions Ltd v Liverpool Victoria Trustees Co ltd [1982] QB 133 at 151-152:
“…the more recent cases indicate, in my judgment, that the application of the Ramsden v. Dyson, L.R. 1 H.L. 129 principle – whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement is really immaterial – requires a very much broader approach which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour. So regarded, knowledge of the true position by the party alleged to be estopped, becomes merely one of the relevant factors — it may even be a determining factor in certain cases — in the overall inquiry.”
[87]More recently, in Hoyl Group Ltd v Cromer Town Council [2015] EWCA Civ 782, Floyd LJ affirmed these formulations of the principle.[88]The defendant submits that applying this broad principle the outcome is not limited to a binary decision whereby either(a) the representor is entitled to assert his rights or(b) those rights are forever lost. It relies on Jennings v Rice [2002] EWCA Civ 159 as illustrating that once an estoppel is established, the court can be flexible to fashion a proportionate remedy which meets the requirements of justice between the parties in the particular case.[89]Two questions arise. The first is whether, in circumstances where ex hypothesi the defendant has failed to prove that the claimant gave consent within the meaning of the Regulation, the defendant can rely upon English law principles of estoppel in order to achieve either the same or a similar result. The second is whether, assuming that it can, the defendant is able to show a real prospect of establishing the estoppel on which it relies.

Can the defendant rely on an estoppel?

[90]As to the first question, it is clear that the Regulation operates as a complete code so far as the rights of a Community trade mark proprietor are concerned. The reason why the European Court insisted on an autonomous Community meaning of “consent” in the Zino Davidoff case was, as explained at [41] of the judgment:
“If the concept of consent were a matter for the national laws of the member states, the consequence for trade mark proprietors could be that protection would vary according to the legal system concerned. The objective of ‘the same protection under the legal systems of all the member states’ set out in the ninth recital in the Preamble to Directive 89/104, where it is described as ‘fundamental’, would not be attained.”
[91]The same unacceptable consequence would apply if, in a case where there was no consent within the meaning of the Regulation, a proprietor was nevertheless precluded from exercising its rights under Article 9 as a result of some other defence available under national law. Further, as noted above, the European Court went on to say at [58] that:
“58. A rule of national law which proceeded on the mere silence of the trade mark proprietor would recognise not implied consent but rather deemed consent. That would not meet the need for consent positively expressed, required by Community law.”
[92]Although it would not be right to describe the principle of estoppel by acquiescence as comprising “a rule of national law which proceeded on the mere silence of the trade mark proprietor” as more is required than mere silence, it is nevertheless a rule of national law which operates as a kind of deemed consent regardless of actual consent. A defendant only needs to invoke an estoppel defence when it is unable to prove actual consent within the meaning of the Regulation. While an estoppel defence may be characterised as an aspect of a wider principle of good faith or abuse of rights, to allow the possibility of such a defence would undoubtedly mean that protection would be subject to issues outside the terms of the Regulation and would vary according to the legal system concerned.[93]The exclusion of national law defences is further illustrated by Case C-661/11 Martin y Paz Diffusion SA v Depuydt [2014] Bus LR 329. The defendant sought to rely on a defence of abuse of rights under Belgian law, but the European Court held that:
“54. It is important to bear in mind, at the outset, that articles 5 to 7 of Directive 89/104 effect a complete harmonisation of the rules relating to the rights conferred by a trade mark and accordingly define the rights of proprietors of trade marks in the European Union: see, inter alia, Zino Davidoff SA v A & G Imports Ltd (Joined Cases C-414/99 to C-416/99) [2002] Ch 109, [2001] ECR I-8691, paragraph 39; Coty Prestige Lancaster Group GmbH v Simex Trading AG (Case C-127/09) [2010] ECR I-4965, para 27; and Budejovicky Budvar, narodni podnik v Anheuser-Busch Inc (Case C-482/09) [2012] Bus LR 298, [2011] ECR I-8701, para 32. Consequently, save for the specific cases governed by article 8 et seq of that Directive, a national court may not, in a dispute relating to the exercise of the exclusive right conferred by a trade mark, limit that exclusive right in a manner which exceeds the limitations arising from articles 5 to 7 of the Directive.”
[94]Mr Cuddigan for the defendant does not challenge the principle that defences under national law are not available to defeat the Article 9 rights of a Community trade mark proprietor, but submits that estoppel is merely a rule of evidence, and thus procedure, which is a matter for national law under Article 101(3) of the Regulation. This provides:
“Unless otherwise provided in this Regulation, a Community trade mark court shall apply the rules of procedure governing the same type of action relating to a national trade mark in the Member State in which the court is located.”
[95]I have no doubt that the principle of estoppel by acquiescence on which the defendant relies in this case is not merely a “rule of procedure” within the meaning of Article 101(3). Even if for some purposes estoppel can be characterised as a rule of evidence, the principle on which the defendant relies operates as a substantive defence. Moreover, according to the defendant’s own submissions by reference to Jennings v Rice [2002] EWCA Civ 159, it is a principle which enables the court to modify the parties’ substantive rights in order to achieve what it regards as a just solution in the particular case.[96]I conclude, therefore, that the defendant cannot rely on principles of estoppel to avoid liability in this case.

Can the defendant establish an estoppel?

[97]In the light of this conclusion it is unnecessary to say much about the question whether, if the defendant was able to rely on English law principles of estoppel by acquiescence by way of defence, it would be able to establish an estoppel on the facts of this case. It is sufficient to make five observations.[98]First, in my judgment the entry form submitted by the defendant on 30 October 2014 is not capable of being read as a statement that, if the chassis name change was not approved, the defendant’s team would continue to race with the chassis’s existing “Marussia” name. That is not what it says, which is only that the team would race as “Manor F1 Team” with a chassis name of “MNR” if confirmation of a chassis name change was received. The entry form said nothing about what would happen if approval of the name change was refused. It was at least consistent with the defendant ceasing in that event to participate in Formula One. If the entry form did not amount to a statement that the team would continue to race with the existing “Marussia” name at the date when it was submitted, I doubt whether it could be transformed into such a statement by subsequent events.[99]Second, there is at present no evidence, and no reason to suppose, that Marussia knew at the time of the Team Purchase Agreement that the defendant was likely to need permission to use the “Marussia” name on its chassis. As already discussed in the context of the consent issue, Mr Fitzpatrick and his team never mentioned the possibility that a licence to use the “Marussia” name would or might be needed and never disclosed to the Marussia representatives that the question whether Mr Ecclestone would give his consent to a change of chassis name had not yet been resolved. Marussia was therefore entitled to conclude, if it thought about the matter at all, that Mr Fitzpatrick had already satisfied himself on this point.[100]Third, if that is so it seems to me very doubtful whether a reasonable person in the defendant’s position would expect Marussia, acting honestly and responsibly, to alert it to the trade mark before the Team Purchase Agreement was concluded. The notional reasonable person in the defendant’s position would have thought that the fair thing to do was to raise with Marussia the question whether in exchange for Marussia’s (approximate) half share of the £1.3 million paid for the call option and the taking over of the secured debt, Marussia was also willing to grant a royalty free licence for the use of its trade mark and, if so, on what terms and for how long.[101]Fourth, it is therefore difficult to conclude that Marussia was under a duty to speak so that its failure to do so amounted to a representation that its property right would not be exercised against the defendant.[102]Fifth, despite the points made above, I recognise that estoppel by acquiescence is a broad and flexible principle, and that it is difficult to say on a summary judgment application that there is no real prospect of the defence succeeding at trial once all the facts are known. If the defence had been available as a matter of law, I would have held that it is improbable that it would succeed and would have considered making a conditional order requiring the defendant to provide reasonable security if it was to be run. As it is, I have held that the defence is not available.

Article 9.1(b)

[103]Article 9.1(b) of the Regulation entitles the trade mark proprietor to prevent use of:
“any sign where, because of its identity with, or similarity to, the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public.”
[104]The sign used by the defendant was the word “Marussia” as its chassis name and as part of its Formula One team name, in circumstances where the claimant’s trade mark was registered for “vehicles”. The issue arising under this paragraph of the Regulation is whether this gave rise to “a likelihood of confusion on the part of the public”.[105]In Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24, [2012] FSR 19 at [52] the Court of Appeal approved the following as a “useful and accurate summary of key principles”, derived from previous case law, for determining whether there is a likelihood of confusion for the purpose of Article 9.1(b):
“(a) the likelihood of confusion must be appreciated globally, taking account of all relevant factors; (b) the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question; (c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details; (d) the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements; (e) nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components; (f) and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark; (g) a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa; (h) there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it; (i) mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient; (j) the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense; (k) if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion.”
[106]The defendant admits, as it must, that the word “Marussia” is similar to the claimant’s trade mark, but denies that there is a likelihood of confusion on the part of the relevant public, which it contends is limited to those actively involved in Formula One. Its argument is that its only use of the trade mark was in Formula One racing (it does not sell or market cars) which represents a specialised trade within which all concerned were well aware that the defendant was no longer involved with Marussia and that its continued incorporation of the claimant’s trade mark in its team name was exclusively a consequence of the terms of the Bilateral Agreement which required it to use its existing chassis name. Consequently, it argues, those involved in Formula One would be under no confusion as to the existence of a connection with Marussia.[107]The claimant, on the other hand, contends in outline that:(1) the operation of a Formula One team is similar to the motor vehicles for which the trade mark is registered: the whole focus of the operation of a Formula One team is the car which is raced;(2) the defendant’s use of the trade mark included use in relation to the car itself, i.e. goods which are identical to those covered by the registration;(3) the relevant public consisted not merely of those actively participating in Formula One, but included members of the public who follow the sport and were potential purchasers of motor vehicles which (although it had ceased production) the claimant continued to display at its showroom in Monaco;(4) the defendant’s previous use of the mark under licence from Marussia and the very nature of sponsorship is such that the average consumer would have assumed that motor vehicles marked “Marussia” and racing under a team name which included that word were commercially associated with Marussia; and(5) thus the average consumer seeing the name Marussia used in the context of the Formula One race meetings and championship standings for the 2015 season (alongside the names of all the other team sponsors) would naturally have assumed that Marussia was sponsoring the team, not least because Marussia had in fact sponsored the team for the 2011 to 2014 seasons.[108]In my judgment the claimant’s submissions have considerable force. I do not accept that the relevant public is limited to participants in Formula One. The purpose of the licence granted to the defendant to use the claimant’s trade mark up to the end of 2014 was to promote Marussia vehicles to the wider public. That wider public would see the name “Marussia” continuing to be used during the 2015 season. The argument that there was no likelihood of confusion because Formula One insiders would be in the know that there was no longer any link between the defendant and Marussia seems highly artificial, even if (which I doubt) it is factually correct. The motoring public who had followed Formula One during the 2011 to 2014 seasons could not be expected to appreciate the nuances of the defendant’s new ownership.[109]Although the Specsavers principles make clear that all the circumstances must be taken into account, paragraph (k) is particularly relevant in the present case. In 2015 the defendant was continuing to use the claimant’s trade mark which it had previously used under licence and was doing so, moreover, precisely because it was important to Mr Ecclestone that the team competing in 2015 should be viewed by the public interested in Formula One racing as the same team which had competed under the “Marussia” name in previous seasons. The use of the “Marussia” name was therefore intended, by Mr Ecclestone if not by Mr Fitzpatrick, to cause the public to believe that there was a link between Marussia and the defendant when that was not in fact the case.[110]It is to my mind highly probable that this would give rise to a likelihood of confusion for the purpose of Article 9.1(b). That said, the question whether there was a likelihood of confusion “must be appreciated globally, taking account of all relevant factors”. This is ultimately a question of evidence which must be determined at trial (cf. also from the Formula One context, the kind of evidence considered by Peter Smith J on this issue in Group Lotus Plc v 1 Malaysia Racing Team Sdn Bhd [2011] EWHC 1366 (Ch), [2011] ETMR 62 at [208] to [250], where what may have appeared a plausible submission that the likelihood of confusion was “blindingly obvious” was in the end rejected). I conclude on this issue that although at present it appears improbable that the defence will succeed, it cannot be said that there is no real prospect of this following a full investigation at trial.

Article 9.1(c)

[111]Article 9.1(c) of the Regulation entitles the trade mark proprietor to prevent use of:
“any sign which is identical with, or similar to, the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trade mark.”
[112]The wonders of European legislative drafting are such that “in relation to goods or services which are not similar” must be read as meaning “in relation to goods or services whether or not similar” (Case C-292/00 Davidoff & Cie SA v Gofkid Ltd [2003] ECR I-389 and Case C-408/01 Adidas-Salomon AG v Fitnessworld Trading Ltd [2003] ECR I-12537).[113]As explained by Arnold J in Red Bull GmbH v Sun Mark Ltd [2012] EWHC 1929 (Ch), [2013] ETMR 53 at [90] to [98], a claimant must establish four requirements in order to prove infringement under Article 9.1(c). In summary these are that:(1) the trademark has a reputation in the Community, that is to say that it is known by a significant part of the relevant public in a substantial part of the territory of the European Union;(2) the defendant’s use of the sign gives rise to a “link” with the claimant’s trade mark (but not necessarily confusion) in the mind of the average consumer;(3) the defendant’s use of the sign causes one or more of three kinds of injury, namely (a) detriment to the distinctive character of the mark, (b) detriment to its repute, or (c) unfair advantage taken of the distinctive character or repute of the mark; and(4) the defendant’s use of the sign is “without due cause”.[114]The principal issue arising under this paragraph in the present case is whether the claimant’s trade mark has a reputation in the European Community among consumers concerned with the goods and services covered by the registration, namely vehicles. The claimant contends that it does, pointing out that the defendant raced in Formula One for four years between 2011 and 2014 with Marussia as its owner and sponsor and that its participation in the sport during that period was used as a marketing tool for Marussia sports cars. The defendant contends that it does not, pointing to the small number of cars actually sold by Marussia within Europe.[115]In my judgment this issue too must depend on the evidence to be adduced at trial, but as Arnold J observed in the Red Bull case at [90], “this is not a particularly onerous requirement”. The existence of a reputation is not dependent on actual sales. The evidence in the case so far establishes the unsurprising proposition that participation in Formula One is indeed a valuable marketing aid. The defendant itself points in a different context to the substantial sums which Marussia was prepared to pay under the terms of the TPA for its Sponsorship Rights. It would be very surprising if, despite this expenditure, the claimant had established no relevant reputation at all.[116]If the claimant’s trade mark does have a relevant reputation, Mr Cuddigan did not suggest in his written submissions that the remaining requirements were not satisfied. In oral submissions he referred briefly to the need for detriment or the taking of an unfair advantage to be established, but in my judgment there can be little doubt that the defendant was taking an unfair advantage in order to participate in Formula One and collect the accrued prize money when it knew that the claimant did not consent to the use of its trade mark. It did so, moreover, in circumstances where the claimant would have no say in the way in which the trade mark was presented to the public or in the investment which the defendant’s team, racing under the “Marussia” name, would make in order to enhance the Marussia reputation, so that there was a real danger of the trade mark being “tarnished”.[117]As with the issues under Article 9.1(b), I conclude that there is at any rate a sufficient prospect that the defendant’s case on the Article 9.1(c) issues will succeed that it must go to trial, but that it is improbable that it will do so.

Article 12

[118]Article 12 of the Regulation provides:
“A Community 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; … provided he uses them in accordance with honest practices in industrial or commercial matters.”
[119]The parties’ submissions concentrated on the question whether the defendant’s use of the “Marussia” name in 2015 was “in accordance with honest practices in industrial or commercial matters”. This concept was considered by the Court of Appeal in Maier v ASOS Plc [2015] EWCA Civ 220, [2015] FSR 20 at [147] to [150]. In particular:(1) There is a duty to act fairly in relation to the legitimate interests of a trade mark proprietor.(2) In considering whether a defendant is acting fairly in relation to these legitimate interests, it will be relevant to consider, among other things, (a) whether there exists a likelihood of confusion, or at any rate the extent to which the use of the defendant’s name is understood by the relevant public, or at least a significant section of that public, as indicating a link between the defendant’s goods or services and the trade mark proprietor or a person authorised to use the trade mark, (b) whether the trade mark has a reputation, (c) whether use of the sign complained of takes advantage of or is detrimental to the distinctive character or repute of the trade mark, and (d) whether the possibility of conflict was something of which the defendant was or ought to have been aware.(3) The court must carry out an overall assessment of all the circumstances and determine whether the defendant is competing unfairly.[120]Although there will no doubt be cases where the answer is clear beyond doubt, a broad inquiry of this nature is in general not well suited to a summary judgment application. I accept the defendant’s submission that summary judgment on this issue is not appropriate in this case.[121]Nevertheless many of the factors which need to be considered are effectively the same as, or are very similar to, those arising under Article 9.1(b) and (c) as to which I have already concluded that it is improbable that the defence will succeed. These include such matters as whether the trade mark has a reputation, the existence of a likelihood of confusion or at any rate an understanding by at least a significant section of the relevant public that there is a link between the defendant using the name “Marussia” and the trade mark proprietor, and whether the defendant was taking unfair advantage of the distinctive character of the mark.[122]To take a licence permitting use of a trade mark as part of the licensee’s name for a limited period and then to claim the right to use the name indefinitely thereafter pursuant to Article 12 does not strike me as being in accordance with honest practices. As Mr Roger Wyand QC for the claimant pointed out, sponsorship, licensing and franchising deals would become impossible if former licensees were able to appropriate for themselves the name of their licensor, claiming the benefit of an Article 12 defence. Again, therefore, while there are arguments to the contrary, I conclude that it is improbable that the defence will succeed.

Security

[123]I have concluded so far that the consent and estoppel defences have no real prospect of success and that, while the trade mark defences under Article 9.1 and Article 12 may succeed, it is improbable that they will do so. Accordingly the possibility arises of making a conditional order requiring the defendant to provide security for the claimant’s claim if these defences are to be pursued to trial. I consider that it would be just to do so. These may be expensive issues to take to trial. There was disputed evidence about the financial position of the defendant and its ability to pay an award of damages. These matters were not the subject of detailed argument at the hearing and it is not practicable or necessary to resolve them. However, whatever the position of the defendant itself may be, I have no doubt that either the defendant or its backers will be able if they wish to do so to provide the security which I propose to order.[124]This is not the occasion on which to determine the remedy to which the claimant will be entitled if it succeeds on liability at trial. For example, it reserves its position on whether it will seek an account of profits or damages. Nevertheless some provisional view must be formed in order to decide what security the defendant should be required to provide.[125]There is at present no material on which to form any conclusions, even provisionally, if the claimant were to seek an account of profits. Clearly it would be too superficial simply to say that the prize money represented the profit which the defendant derived from the use of the claimant’s trade mark. Substantial expenses had to be incurred in order to obtain that prize money and a much more detailed enquiry would be necessary. There is at present no reason to think, however, that the claimant would be significantly better off electing for an account of profits rather than damages.[126]If the claimant does seek damages, it is likely that they would be assessed in accordance with the principles discussed in such cases as Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, Attorney General v Blake [2001] AC 268 at 278-9 (although the actual order in that case was an account of profits) and Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2009] UKPC 45 at [48]. In summary, the court would be seeking to determine what sum of money could reasonably have been demanded by the claimant in order to permit the defendant to continue to use its trade mark in Formula One. It would have to be assumed that the claimant was a willing licensor and the defendant a willing licensee, that both parties were negotiating reasonably, and that (as Sales J put it in Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch) at [311]) “neither party would have sought to extract a ransom price from the other”.[127]In the telephone conversation on 22 February 2015 Mr Webb suggested that the defendant must pay 25% of the team’s accrued prize money if the “Marussia” name was going to be used in 2015. That may just have been an opening shot in negotiations, but there was never any realistic prospect that a sum of this magnitude would be agreed. As the claimant knew, it was critical to Mr Fitzpatrick’s takeover of the defendant in order to continue racing in 2015 that the defendant would be able to collect its accrued prize money. Any demand for payment for use of the “Marussia” name which in effect deprived the defendant of a substantial part of this money would inevitably lead to a breakdown in negotiations.[128]Nevertheless it seems likely that there would have been a deal there to be done if Marussia was prepared to moderate its demands to a more reasonable level. Marussia was substantially out of pocket from its investment in Formula One. It had no immediate plans for the exploitation of its trade mark. Whatever reputation the trade mark enjoyed would not (or would not necessarily) have been adversely affected by the defendant’s continued use of the name “Marussia” under licence. Some further return on its investment, if necessary coupled with some assurances as to the way in which the “Marussia” name would be used, could well have been beneficial and have done Marussia no harm. Conversely, although any deal which substantially deprived the defendant of access to the accrued prize money would have rendered the project unviable for Mr Fitzpatrick, he was a wealthy man, an enthusiast for Formula One and keen to acquire the ownership of a team, who was willing to make a substantial investment of his own money in order to do so. He had at one stage offered to pay £3 million to discharge the secured debt but, in the event, had only had to pay £1.3 million. In those circumstances, it is hard to think that he would not have been willing to pay something more in order to acquire the right to use the “Marussia” name once it became clear that Mr Ecclestone was not prepared to agree to a change of chassis name. The alternative would have been to write off the £800,000 which he had already paid (i.e. the amount by which the £1.3 million exceeded the estimated value of the chassis which he had bought).[129]Although I must emphasise that I am making no final decision about this, and am seeking only to identify the range within which any damages are likely to be awarded in order to determine the amount of security which the defendant must provide, it seems unlikely that the result of a reasonable negotiation along these lines would have arrived at a figure of less than £1 million or more than £2.5 million for the use of the “Marussia” name. At all events, I consider that the just outcome of this application is that if the defendant wishes to pursue its trade mark defences under Article 9 and Article 12 to trial, it must provide security to the claimant in the sum of £1.75 million. This will be available to secure payment of any financial remedy which the claimant may be awarded together with any order for costs in its favour. I add that in arriving at this figure I have not overlooked the defendant’s pending application to plead a counterclaim for the £520,000 not paid under the TPA, but say nothing about whether the amendment will be permitted or, if it is, whether the counterclaim will succeed.

Conclusion

[130]For the reasons stated above:(1) the defendant has no real prospect of proving that its use of the claimant’s trade mark was with the claimant’s consent;(2) the defendant’s estoppel defence is not available to it as a matter of law;(3) it is improbable that the defendant’s trade mark defences under Article 9 and Article 12 of the Regulation will succeed;(4) accordingly there is power to make a conditional order requiring the defendant to provide security if it wishes to pursue those defences; and(5) if it does, it must provide security to the claimant in the sum of £1.75 million.

Cited in 12 later judgments

and 3 more of the most senior