The National Guild of Removers and Storers Ltd v Milner (t/a Intransit Removals and Storage) & Ors [2014] EWHC 670 (IPEC)

Case No CC12P02507[2014] EWHC 670 (IPEC)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 18/03/2014
Before
HIS HONOUR JUDGE HACON
Between
THE NATIONAL GUILD OF REMOVERS AND STORERS LIMITEDClaimantDEREK MILNERDefendantt/a INTRANSIT REMOVALS AND STORAGEThird PartyTDL 2013 REALISATIONS LIMITEDin administration
Jonathan Hill (instructed by Coyle White Devine) for ClaimantThomas St Quintin (instructed by Backhouse Jones) for DefendantHearing Hearing dates: 4 th and 5 th February 2014
JudgmentJudge Hacon :The Claim
[1]The Claimant (“NGRS”) is a trade body which represents and provides services to its members, firms and individuals in the removal and storage business. The Defendant (“Mr Milner”) runs a removal and storage business in Trowbridge, Wiltshire.[2]Between September 2008 and November 2010 Mr Milner was a member of NGRS. He entered into a contract with NGRS which took the form of rules of membership. One of the benefits of membership of NGRS is a licence to use the NGRS name and logo in association with the member’s business, in particular in advertisements for that business. The logo has taken a number of forms over the years. The most recent, used since 2006, has been registered by NGRS as UK Trade Mark No. 2425258 (“TM 258”).[3]During his time as member Mr Milner used the NGRS name and its logo in the form of TM 258 to promote his business. Following a dispute with NGRS Mr Milner’s membership came to an end on 30 November 2010.[4]After November 2010 advertisements for Mr Milner’s business featuring the NGRS name and logo continued to appear in the 2010/11 editions of Bath Yellow Pages and the Bath Thomson local directory. NGRS threatened proceedings but these were settled by a payment of £6,000 from Mr Milner to NGRS.[5]Since then two further matters have emerged, leading to these proceedings. First an advertisement promoting Mr Milner’s business appeared in the 2012-13 edition of the Salisbury Thomson Local Directory. I will refer to this as “the Salisbury Advert”. It featured the NGRS logo in the form of TM 258. NGRS allege:(1) Infringement of TM 238(2) Infringement of NGRS’s copyright in the logo registered as TM 238(3) Passing off by Mr Milner in the form of a misrepresentation that he was still a member of NGRS.[6]The second bone of contention is the website www.wiltshireremovals4less.co.uk (“the Website”). This website was for Mr Milner’s business and it stated among other things “We have a range of memberships with various schemes and associations, such as … National Guild of Removals”. It also indicated that the business was “Ombudsman accredited and inspected”. NGRS allege that although its name was not correctly stated on the website, what was there was close enough to represent continuing membership of NGRS. Further, the reference to the ombudsman would be wrongly taken to mean that Mr Milner’s business continued to benefit from the ombudsman scheme associated with NGRS. Consequently Mr Milner had been passing himself off as being still a member of NGRS.[7]The skeleton argument of Mr Hill, who appeared for NGRS, made the further allegation that the Salisbury Advert and the Website gave rise to a cause of action for breach of contract, namely breach of the post termination provisions of the NGRS rules. Mr St Quintin, who appeared for Mr Milner, pointed out that the Particulars of Claim pleaded that the breach complained related to the Bath Yellow Pages and this had been compromised by the settlement between the parties. In all events the alleged breach of contract was not pressed with any force by Mr Hill at trial.[8]Mr Milner’s defence in relation to both the Salisbury Advert and the Website was that he was responsible for neither of them and therefore had a complete defence.[9]NGRS’s case was(a) on the facts Mr Milner was personally responsible for both; alternatively(b) the publishers of the Salisbury Advert, Thomson Directories Limited (“Thomson”) and the creators of the Website, British Telecom (“BT”), had both acted as agents of Mr Milner and therefore he was liable for the torts alleged; alternatively(c) Mr Milner had procured the torts complained of and was therefore jointly liable for them.(d) With regard to copyright infringement and the Salisbury Advert, Mr Milner had authorised the infringement and was therefore liable.

The Counterclaim

[10]Mr Milner counterclaimed. By the start of the trial the allegations were:(1) TM 258 and three other marks owned by NGRS, namely UK Registered Trade Mark nos. 2130351 (“TM 351”), 2299722 (“TM 722”) and 299710 (“TM 710”) were invalidly registered on the ground of bad faith, contrary to section 3(6) of the Trade Marks Act 1994, because at the time of filing of each them NGRS had intended to use the mark as a collective mark, not a trade mark;(2) All four trade marks were liable for revocation for non-use.[11]NGRS accepted that TM 351 and TM 710 are liable to be revoked for non-use. NGRS also admitted that TM 722 was liable to be revoked for non-use in relation to all classes for which it was registered except Class 39. That left TM 258 and TM 722 registered in respect of goods in Class 39.

Third Party Claim

[12]Mr Milner made a Third Party claim against Thomson seeking an indemnity for Mr Milner’s liability to NGRS, if any, arising form the Salisbury Advert. Thomson pleaded a Third Party Defence on 7 November 2012 but went into administration in August 2013. The Third Party proceedings are therefore stayed.

The Witnesses

[13]There were three witnesses for NGRS: John Martin, a director of NGRS, Lynne Stone who is a former employee of NGRS and had discussions with the UK Intellectual Property Office regarding NGRS’s application for TM 258 and David Sheahan who signed the statement of truth on behalf in NGRS’s pleadings.[14]Mr Milner gave evidence on his own behalf.[15]My impression of all four witnesses was that they gave their evidence in a straightforward manner and were each doing their best to assist the court. The Salisbury Advert The facts

The Salisbury Advert

[16]The Salisbury Advert, along with advertisements in the Bath and Swindon Thomson directories, were arranged by Mr Milner completing a Thomson order form on 19 May 2011. Thomson accepted such orders on its standard conditions which included the following:
“5.6 If you want to change part of the Content [of the proposed advert] you must send written details of the change to the Publishing Department at our Head Office. The Publishing Department must receive the details before the Directory Close Date. … 6.1 In addition to any statutory rights you may have to cancel your Order, you may cancel part or all of your Order by giving notice in writing to Customer Services at our head office. We must receive this notice by the Directory Close or within 14 days of the date of the Order, whichever is earlier. This applies whether or not your Order is for single year or multi-year advertising.”
[17]By a letter of 31 May 2011 Thomson accepted Mr Milner’s order. On 13 June 2011 Mr Milner sent Thomson an email with an attachment showing the advertisement he wanted them to use. Thomson found that there were problems with the advertisement, largely to do with size, and there followed emailed exchanges addressing this. On 28June 2011 Mr Milner emailed a further amended version of the advertisement to Thomson. None of the versions sent to Thomson contained the NGRS logo.[18]Subsequently Mr Milner received a final advertisement proof from Thomson with a covering letter dated 27 June 2011. A further letter dated 30 June 2011 contained another proof. Mr Milner says that the earlier letter was for the advertisement intended for the Salisbury and Swindon directories and the proof attached to the later letter showed the advertisement intended for the Bath directory. Both proofs contained the NGRS logo.[19]On 5 July 2011 Mr Milner emailed Thomson asking them to confirm that they had received the amended advertisement he had sent on 28 June, adding “I have received generic artwork from you that will NOT be used”. By ‘generic artwork’ Mr Milner said he meant artwork other than that he had expressly approved.[20]On 6 July 2011 Thomson sent Mr Milner a letter attaching a new final advertisement proof for the Bath directory. It now did not contain the NGRS logo. Mr Milner was content with this version of the advertisement, but had received no confirmation that the advertisement for the Salisbury and Swindon directories was in the form he had approved. On 16 July 2011 he emailed Thomson again. He marked the email ‘high importance’ attached the earlier email exchanges with Thomson, including his email of 28 June attaching the approved version of the advertisement and his follow up of 5 July. He used block capitals for his new message:
“YET AGAIN LOOKING FOR CONFIRMATION THIS HAS BEEN RECEIVED AND AWAITING A PROOF. I RECEIVED A GENERIC ARTWORK ATTEMPT FROM YOURSELVES WHICH IS NOT TO BE USED IN THE PUBLICATION PLEASE LET ME KNOW ALL IS OK AND PROOF BACK”
PLEASE LET ME KNOW ALL IS OK AND PROOF BACK”[21]On 29 July 2011 Mr Milner phoned Thomson. Thomson kept a record of the call which apparently took place at 17.05. The individual at Thomson who took the call made the following notes:
“cust called to make us aware he does not want to use the advert we have made for the salisbury and swindon book because there are logos on there that he is not allowed to have on there.” “cust is going to send us his own advert once he has put it together.”
[22]It is common ground that Mr Milner did not send a further version of the advertisement he wanted for the Salisbury and Swindon directory.[23]Mr Milner received a copy of the Salisbury directory on 24 February 2012. He noticed that it contained the NGRS logo. He contacted Thomson shortly thereafter asking for the Salisbury Advert to be removed.

Alleged consent by Mr Milner

[24]NGRS conceded that Mr Milner did not want his logos to appear in the Salisbury (or Swindon) Advert. It was submitted that by failing to follow up the phone call on 29 July 2011 with another version of the advertisement for the Salisbury and Swindon directories, he did not comply with paragraph 5.6 of Thomson’s standard conditions and left Thomson contractually bound to use the version he had objected to. This qualified as consent on Mr Milner’s part to use the NGRS logo in the Swindon Advert.[25]Mr Milner said that he felt he had time to update the proof for the Salisbury Advert before the deadline of February 2012 but was busy and so did not do so. He also gave evidence that in the phone call of 29 July 2011 he had been told by the Thomson representative that if Mr Milner did not send an updated advert Thomson would use a version without any logos. He therefore did not feel he had to send a further version. If this was said, the Thomson representative did not record it.[26]Irrespective of what reassurance was given to Mr Milner on the phone on 29 July 2011 it is clear that Mr Milner went out of his way(a) to inform Thomson that he did not want them to use an advertisement in the form of the draft sent for the Salisbury and Swindon directories and(b) that this was because it displayed the NGRS logo which he was not entitled to use. Mr Milner’s very clear wish that the NGRS logo should not appear in the Salisbury Advert never changed. I do not accept the suggestion that he consented to the use of the logo in the Salisbury Advert by default – by failing to send an updated version of the advertisement to be use. In my view the likelihood is that Mr Milner overlooked sending an updated version. He may have felt that it was not essential for him to do so. In any event Thomson can have been in no reasonable doubt that he did not consent to the use of the NGRS logo or the name NGRS in the Salisbury Advert. I find that he did not consent.[27]It follows that (subject to a point on authorisation in relation to copyright, considered below) Mr Milner did not himself do any act of advertising which directly infringed NGRS’s trade mark or copyright or which was directly an act of passing off.

Authorisation

[28]In relation to infringement of copyright in the NGRS logo it would have been an act of infringement by Mr Milner if he had authorised Thomson to use and thus to copy the NGRS logo in the Salisbury Advert, see s.16(2) of the Copyright, Designs and Patents Act 1988. It is well established that authorisation, in the context of copyright infringement, means the grant or purported grant, express or implied, of the right to do the act complained of (see CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] RPC 567, at 604). On the facts as I have found them Mr Milner did not approve Thomson’s use of the NGRS logo; even less did he purport to grant Thomson the right to use it. He did not authorise Thomson to copy the logo.

Agency

[29]NGRS’s first alternative argument was that Thomson was acting as Mr Milner’s agent and therefore Thomson’s use of the NGRS logo rendered Mr Milner liable, as principal, for infringement of NGRS’s trade mark and copyright and for passing off.[30]Mr Hill relied on Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480. He argued that Thomson used the NGRS name and logo in the Salisbury Advert with the ostensible authority of Mr Milner and therefore Thomson was Mr Milner’s agent and Mr Milner, as principal, was liable for the acts of Thomson.[31]The surprising consequence of this argument would be that if a directory, newspaper or anyone else were to publish an advertisement for the business of a person, contrary to his clear and express instructions, or even entirely without his knowledge, that person could still be liable as principal for infringement of trade mark or copyright, or for passing off, by the directory or newspaper acting as his agent, solely because the world would be likely to believe that the advertisement appeared with his authority.[32]I do not agree that Freeman & Lockyer supports Mr Hill’s submission. In Freeman & Lockyer the relevant individual acted as if he were managing director of a company to the knowledge of that company’s board and in so doing engaged a firm of architects to carry out work for the company. Thus the company had allowed the individual to deal with the architects with the ostensible authority of a managing director and the company could not escape liability for the architect’s fees which would have followed if the individual had actually been managing director.[33]The obligation of a principal arising out of apparent or ostensible authority is based on estoppel. It depends on the principal having made a representation to a party which the principal intends to be acted upon and which is acted upon by that party. Diplock LJ said this in Freeman & Lockyer at [503]:
“An “apparent” or “ostensible” authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the “apparent” authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.”
See also ING Re (UK) Limited v R & V Versicherung AG [2006] EWHC 1544 (Comm); [2006] 2 All ER (Comm) 870, at [99].[34]In the present case Mr Milner plainly had no intention of giving Thomson apparent authority to use the NGRS name or logo. He had no knowledge of such use before it happened. He made no representation to NGRS that Thomson had such authority. No estoppel has been pleaded. Thomson was not Mr Milner’s agent.

Joint liability

[35]Mr Hill’s second alternative argument was that Mr Milner procured the use of the NGRS name and logo by Thomson and is therefore jointly liable for torts committed by NGRS. A key element in any act of procurement is that the procurer intends that the act should happen. In CBS v Amstrad Lord Templeman said this at [608]; “My Lords, I accept that a defendant who procures a breach of copyright is liable jointly and severally with the infringer for the damages suffered by the plaintiff as a result of the infringement. The defendant is a joint infringer; he intends and procures and shares a common design that infringement shall take place. A defendant may procure an infringement by inducement, incitement or persuasion.”[36]Mr Milner neither induced, incited nor persuaded Thomson to use the NGRS logo in the Salisbury Advert. Above all, he did not intend that Thomson should do so. He is not therefore jointly liable with Thomson for torts committed by Thomson relating to the use of the NGRS logo, if any.

The Website

[37]It is common ground that the Website was set up by British Telecom (“BT”) as part of a business package provided to Mr Milner connected with his advertising in BT directories.[38]Mr Milner said that the BT package, which included the Website, was offered free of charge. He already had a website, www.wiltshireremovals.com. Mr Milner’s case was that he never saw the Website NGRS complained about in a letter dated 9 March 2012. He made inquiries as to who owned the Website and only then discovered that it had been created by BT as part of the advertising package. He said he never received a proof of the website or approved any of its content. Mr Milner’s assumption was that when BT created the Website in July 2010 they took information from his www.wiltshireremovals.com website. At that time he was a member of NGRS, so he thought this would account for the reference to “National Guild of Removals” which gave rise to the complaint of trade mark infringement and passing off.[39]Mr Milner also relies on a letter dated 2 December 2010, addressed to the head office of BT in London in which he stated:
“Due to unforeseen circumstances when placing my associated adverts with you it is with regret that I have to inform you that from Midnight on 30th November 2010 The National Guild of Removers and Storers (NGRS) have terminated our membership. Where possible, any association with the NGRS including the use of their logo’s inclusive of the ombudsmans scheme logo have to be removed immediately, and my company cannot be referred in conjunction with the NGRS in any way.”
[40]Mr Milner’s was challenged on this in cross-examination. It was put to him that the letter of 2 December 2010 was similar though not identical to similar letters sent on the same date to Thomson and Yell Limited. Mr Milner said that he drafted the earlier letters and his secretary will have created the BT letter using what Mr Milner had already written. It was also suggested that had he wanted the letter to reach the appropriate person in BT, he would not have sent it to head office. Mr Milner stated that the address used was the one set out on the back of the folder given to him by the BT sales rep.[41]In argument Mr Hill submitted that these answers from Mr Milner were unsatisfactory, particularly since there had been no disclosure of the contract with BT which led to the creation of the website, nor the folder from which he said that the BT address his secretary had used had been taken. Mr Hill also pointed out that the Website refers to his membership of “British Association of Removers”, or BAR, an organisation that Mr Milner did not join until August 2010. It was said that this implied that Mr Milner amended the website after it was created in July 2010. Mr Hill invited me to draw adverse inferences from all of this and to conclude, contrary to Mr Milner’s evidence, that he had controlled and used the Website.[42]I think it is likely that Mr Milner could have sought control over the Website had he been aware of it. But I reject the burden of Mr Hill’s submission which was that Mr Milner did know of the website, took control of it and, by implication, allowed the reference to “National Guild of Removals” to remain on it.[43]It seems to me very telling that the Website contains a series of mistakes that would give the reader an impression of a sloppy and disorganised business. On the first page the Website identifies the business in large and bold print as “Removal Service in Wotton Bassett”. The business is based in Trowbridge and although it provides services in Wootton Bassett, potential customers there would be unimpressed by the misspelling of their town’s name, both prominently at the start and elsewhere in the Website. The Website later states that the business in based in Melksham. It is not; it is based in Trowbridge. The Website is dated 2012 and says that the business was created 13 years ago. This was inaccurate by 2 years. Then there is the reference complained of:
‘National Guild of Removals’
. If, after November 2010, Mr Milner had wanted to represent a continuing association with NGRS I think he would have used the correct name:
‘National Guild of Removers and Storers’
. I also think that if Mr Milner has been aware of the Website and therefore the mistakes contained it he would have corrected them rather than risk his business acquiring an image of being strikingly careless. I accept Mr Milner’s evidence that he did not know of the Website until NGRS complained about it.[44]Mr Hill argued that even if Mr Milner was ignorant of the Website, in fact he had control over it and so was liable for the torts alleged. I do not agree. First, the extent and nature of Mr Milner’s control was not established. Secondly, he wrote the letter of 2 December 2010 to BT instructing BT to remove any reference in his advertising to NGRS or their ombudsman scheme. He was presumably entitled to instruct BT how to represent his business in all the advertising handled by BT, including the Website. He used that control, albeit without the Website in mind, to require removal of any reference to NGRS or its ombudsman scheme generally. I reject the suggestion that the letter in which he did this was sent to BT’s headquarters in the hope that it would not be acted on by BT. I find that implausible.[45]I conclude that Mr Milner is not liable for passing off in relation to the Website. Agency is not pleaded in this context and the allegation would anyway fail for reasons analogous to those given above in the context of the Salisbury Advert. I do not accept that Mr Milner procured BT to pass off his business by the creation and maintenance of the Website. As discussed earlier, Mr Milner could not procure a tort of which he was unaware.

Breach of contract

[46]I am not sure whether the allegation that Mr Milner was in breach of the NGRS rules was in the end pursued. There was very little argument about it. Certainly there is no relevant allegation in the pleadings. I have already mentioned that the breaches relied on in paragraph 39 of the Particulars of Objection appear to relate to the Bath edition of Yellow Pages. The complaint about that publication has been compromised. Furthermore no relief for breach of contract is sought in the Particulars of Claim. In any event it seems to me that the clauses of NGRS’s rules referred to in paragraph 39, namely 7.1.4 and 7.1.6 could not have been breached by Mr Milner given my findings above.

The Counterclaim

[47]As mentioned earlier, NGRS concedes that TM 351 and TM 710 are to be revoked in their entirety for non-use and TM 722 is also to be revoked save in relation to Class 39. I need say nothing more about the two former marks or TM 722 in respect of its deleted classes of goods and services.

Collective Marks

[48]Mr Milner alleges that NGRS applied for TMs 258 and 722 in bad faith because it intended to use them as collective marks and had no bona fide intention to use them as trade marks; the declaration made by NGRS that they would use them as trade marks under s.32(3) of the Trade Marks Act 1994 was false. What is more, it is argued, NGRS thereby evaded the requirements and fee imposed on an applicant for collective marks by the 1994 Act, avoided the proper scrutiny by the Registrar of collective marks and attempted to bypass the grounds for revocation and invalidity which apply to collective marks. In short it is said that TMs 258 and 722 were always intended to function as collective marks, they always have so functioned, and NGRS should not be permitted to maintain them as trade marks, which they are not. They should be declared invalid under s.3(6) of the 1994 Act.[49]This raises a point about the relationship between trade marks and collective marks. (A collective mark is a species of trade mark but for simplicity of expression a ‘trade mark’ here means an ordinary trade mark which distinguishes the goods of one trader from those of another).[50]Collective marks are available both at Community and national level and were introduced into the English trade mark system by the 1994 Act. Section 49 of the Act defines such a mark as “a mark distinguishing the goods or services of members of the association which is proprietor of the mark from those of other undertakings”. The Act does not define ‘association’ but Article 66(1) of Council Regulation (EC) No. 207/2009 does:
“Associations of manufacturers, producers, suppliers of services, or traders which, under the terms of the law governing them, have the capacity in their own name to have rights and obligations of all kinds, to make contracts or accomplish other legal acts and to sue and be sued, as well as legal persons governed by public law…”
[51]Typically an association will be a professional body or trade association – such as NGRS. The collective mark serves to identify members of the association and to distinguish them from other traders who are not members. The members are authorised users of the collective mark and have the same rights as a licensee of a trade mark in relation to infringement and related matters (schedule 1 of the 1994 Act, para 11).[52]A number of requirements are imposed on the applicant for a collective mark which do not apply to trade mark applicants, in particular the following (the references in brackets are to Schedule 1 of the 1994 Act):(i) A collective mark will not be registered if the public is liable to be misled as regards the character or significance of the mark, in particular if it is likely to be taken to be something other than a collective mark (para. 4(1)).(ii) The registrar may require that the mark includes some indication that it is a collective mark (para. 4(2)).(iii) The applicant must file with the registrar the association’s regulations governing the use of the mark (para. 5(1)).(iv) The regulations must at least specify the persons authorised to use the mark, the conditions of membership of the association and, where they exist, the conditions of use of the mark, including any sanctions against misuse (para. 5(2)).(v) The regulations must not be contrary to public policy or accepted principles of morality (para. 6(1)((b)).(vi) The applicant association must file the regulations with the registrar and pay the prescribed fee (para. 6(2)).(vii) If the applicant fails to satisfy the registrar that the requirements of the regulations imposed by Schedule 1 of the Act and related rules are not met, the application will be refused (para.7).(viii) The regulations submitted by the association are published and may be raised in an opposition to the grand of the collective mark (para. 8).(ix) If the collective mark is granted, the regulations remain open to public inspection (para. 9).(x) Any amendment to the regulations must be filed with the registrar and are not effective unless accepted by him (para. 10(1)).(xi) The registrar may elect to publish proposed amendments; if he does, third parties may file a notice of opposition in relation to them (para. 10(2) and (3)).[53]Once a collective mark is granted, an application to revoke it may be made under the grounds set out in section 46 which apply to trade marks, and in addition on the following grounds:(i) the manner in which the mark has been used by the proprietor has caused it to become liable to mislead the public as regards the character or significance of the mark (para. 13(a)); or(ii) the proprietor has failed to observe, or to secure the observance of, the regulations governing the use of the mark (para. 13(b)); or(iii) an amendment of the regulations has been made such that they no longer comply with the rules or are contrary to public policy or accepted principles of morality (para. 13(c)).[54]Finally, apart from the grounds of invalidity provided for in section 47 of the Act, the registration of a collective mark may also be declared invalid on the ground that the mark was registered in breach of the requirements as to its character or significance, or in breach of the rules in relation to its governing regulations (para. 14).[55]The legislature was thus apparently at pains to protect the public from misleading or otherwise inappropriate collective marks, to require the registrar to scrutinise with some care the regulations for control of the mark proposed by the association proprietor and to permit the public access to those regulations. Collective marks which have not met the safeguards imposed on them are vulnerable to revocation. On its face all this also seems to imply a legislative intent of ensuring that an association may not be granted, or if granted may not maintain, a trade mark which in reality functions as a collective mark since that would undermine the protection of the public afforded by the provisions of Schedule 1 of the 1994 Act which I have summarised above.[56]Essentially this was the submission of Mr St Quintin on behalf of Mr Milner. NGRS was an ‘association’. It could and should have applied for collective marks. Its applications for the trade marks had been made in bad faith and, as I will go on to discuss, Mr St Quintin also submitted that the trade marks granted were vulnerable to an attack of non-use because they had never been used as trade marks (as opposed to use as collective marks).

IPO Practice Amendment Notice PAN 2/01

[57]In this context I asked the parties to consider the Intellectual Property Office’s practice amendment notice PAN 2/01, published on the IPO’s current website. It discusses the IPO’s policy regarding applications for trade marks, collective marks and certifications marks and includes the following “If applications in the same ownership are made to register an identical (or essentially the same) mark as both a collective mark … and as an ordinary trade mark (or vice versa) for the same goods/services, objections should be taken to the later filed application under Section 3 (1)(a) and Section 3 (3)(a) and/or (b). If the later mark is a collective mark an objection should also be taken under Section 49. … An objection should be raised under Section 3 (1)(a) as the mark would be incapable of distinguishing goods and/or services of a particular trader from members of an association (if it is a collective mark) … . The filing of an identical mark, or essentially the same mark, as both a trade mark and collective mark for the same goods/services would be contrary to Schedule 1, Paragraph 2 which states:• "In relation to a collective mark the reference in Section 1 (1) (signs of which a trade mark may consist) to distinguishing goods or services of one undertaking from those of other undertakings shall be construed or interpreted as a reference to distinguishing goods or services of members of the association which is the proprietor of the mark from those of other undertakings." and hence Section 3 (1)(a). … An objection should also be raised under Section 3 (3)(a) or (b) as a trade mark [or] collective mark … shall not be registered if it is contrary to public policy and/or of such a nature as to deceive the public (for instance as to the nature, quality or geographical origin of the goods or services). The basic rule is that we should not register identical marks of different statuses for identical goods/services in any circumstances. Whether there is consent or they are in the same name is irrelevant because the Section 3 (3)(a) objection and (depending of the status of the later application) Section 3 (1)(a) [or] Section 49 … are insurmountable.”[58]In relation to collective marks, although PAN 2/01 only expressly addresses IPO policy where a party seeks to apply for both a trade mark and a collective mark, nonetheless if the objections to such concurrent registrations are correct – specifically under s.3(1)(a) and s.3(3)(a) or (b) if the application for the trade mark follows an application for a collective mark – it would seem that those objections should apply if an association applies for a trade mark which will be used as a collective mark, that is to say for distinguishing the goods or services of members of the association from those of other undertakings. In the IPO’s estimation (as represented by PAN 2/01) the trade mark would be incapable of distinguishing the goods of one trader from those of another (s.3(1)(a)), contrary to public policy (s.3(3)(a)) and of such a nature as to deceive the public (s.3(3)(b)).[59]There was evidence that NGRS supplies boxes for packaging items to its members and to that extent TM 258 was used as a trade mark for goods in Class 16 although the dates of use were not clear. But I have no doubt that the main function of TM 258, and the only function of TM 722 in relation its remaining specification for services under Class 39, is to distinguish members of NGRS from non-members. In fulfilling that function it might seem that neither mark is capable of distinguishing the services of one trader from those of another if both are members of NGRS. It would follow that TMs 258 and 722 are deceptive for the same reason and possibly contrary to the public policy of ensuring the protection of the public required by Schedule 1 of the 1994 Act.[60]Mr St Quintin submitted that PAN 2/01 was right, that it supported his case in relation to bad faith and non-use and raised additional objections to the validity of TMs 258 and 722 pursuant to ss.3(1)(a), 3(3)(a) and 3(3)(b).[61]Mr Hill took the position that there was one basic objection in all of this, namely that NGRS’s trade marks were incapable of distinguishing the services of one member of NGRS from those of another. Arguments on deceptiveness, public policy and Mr Milner’s pleaded arguments on bad faith and non-use depended on the correctness of that basic objection. As to that, Mr Hill’s shortly stated answer was that there was nothing wrong in law with a trade mark proprietor granting licences to use the trade mark. Such a trade mark would not be capable of distinguishing the goods or services of one licensee from those of another, but so what? Mr Hill referred to Scandecor Development AB v Scandecor Marketing AB [2002] FSR 7 although he did not take me to it.[62]I think the passage in Scandecor which Mr Hill may have had in mind was the following from the speech of Lord Nicholls. Here Lord Nicholls was considering an interpretation of the message which a trade mark will convey to the public as to the source of the goods – a wider interpretation than that favoured by the trade mark old school. “[38] Thus, the wider interpretation, according to which the source may be either the proprietor or an exclusive licensee, would not be at variance with customers’ perceptions. Customers are well used to the practice of licensing of trade marks. When they see goods to which a mark has been affixed, they understand that the goods have been produced either by the owner of the mark or by someone else acting with his consent. [39] Nor does the wider interpretation undermine the protection which a trade mark is intended to afford customers. For their quality assurance customers rely on the self-interest of the owner. They assume that if a licence has been granted the owner can be expected to have chosen a suitable licensee and imposed suitable terms. They also assume that during the currency of any licence the licensee, as well as the owner, is likely to have an interest in maintaining the value of the brand name. Customers are not to be taken to rely on the protection supposedly afforded by a legal requirement that the proprietor must always retain and exercise an inherently imprecise degree of control over the licensee's activities.” Lord Nicholls concluded that the sale of goods bearing a trade mark under a bare exclusive licence to use the mark did not render the trade mark liable to mislead public within the meaning of s.46(1)(d) of the 1994 Act.[63]This is not direct authority for Mr Hill’s proposition that the exploitation of a trade mark by the proprietor licensing several other parties to use it would not render the mark liable to mislead the public. The House of Lords was only concerned with a bare exclusive licence. Nor does it take NGRS the important further step of establishing that a trade mark which by its nature could only be used by any number of licensees and not by the proprietor (I focus here on the function of the NGRS logo as a badge of membership) does not offend s.3(1)(a) for being incapable of distinguishing the goods or services of one undertaking from those of another and, by extension, the other provisions of the 1994 Act I have referred to above.[64]Even so I agree with Mr Hill. In my view the direction of travel in the development of trade marks in modern commerce, discussed by Lord Nicholls, leads to the conclusion that the message conveyed by a trade mark attached to the goods or services is that they come either from the owner of the trade mark or from someone he has permitted, i.e. licensed, to use the trade mark. Although not expressly considered in Scandecor, in my view that licence need not be exclusive. Put another way, the trade mark still distinguishes the goods and services of one trader from those of another in the sense that those goods and services come from a source which either is, or alternatively is licensed by, a single entity.[65]Therefore to the extent that TM 258 (largely) and TM 722 (now exclusively) function to identify traders as members of NGRS and therefore do not function to distinguish one member from another, or the services of one member from those of another, this does not offend s.3(1)(a). Since the use of a trade mark in that way is thus permissible such use is not deceptive within the meaning of s.3(3)(b) and there can be no objection to such use under s.3(3)(a) on grounds of public policy.[66]This conclusion does not sit easily with the usual rule of construction that statutes should not be interpreted to render provisions (I have in mind those provisions of Schedule 1 to the 1994 Act summarised above) if not quite otiose, then largely pointless. I find it hard to think of a circumstance in which an association entitled to apply for a collective mark could not avoid the cost and inconvenience of those provisions, and indeed evade the safeguards to the public they afford, by applying instead for a trade mark. But whatever the legislative intent at the time of drafting, the view on how a trade mark may be used has been updated and has altered.[67]I turn to the objections to the validity of the mark that were pleaded.

Bad Faith

[68]There can be no bad faith on the part of an applicant for a trade mark on the ground of intended use when the applicant intends to use the mark in a lawful manner.[69]The present case goes further in that there was evidence from Lynne Stone, a former employee of NGRS, who filled in the forms and dealt with communications with the IPO on the part of NGRS during the prosecution of TM 258. Ms Stone professed no expertise whatever in the law of trade marks and said that she was entirely guided by the IPO. She spoke in particular to Andrew Lockyer of the IPO and explained how TM 258 was to be used. In cross-examination Ms Stone said that she must have discussed the alternative possibilities of applying for a collective mark or a trade mark, but in any event she would have gone with whatever he advised. She also said that she would have had no difficulty over NGRS having to pay a further £200 for a collective mark. Ms Stone said she would have agreed had Mr Lockyer told her the extra fee was £500.[70]I accept Ms Stone’s evidence. It seems to me that there can have been no bad faith on the part of NGRS for the further reason that NGRS was open about its intentions regarding at least TM 258 and was willing to accede to any advice given by the IPO.[71]I also note in passing that Mr Lockyer’s view on NGRS’s right to apply for and be granted a trade mark might reflect a change from the apparent policy reflected in PAN 2/01 which I imagine was drafted in 2001 before the judgment of the House of Lords in Scandecor.

Non-use

[72]Use of a trade mark by licensees as if it were a collective mark may be lawful for the reasons I have discussed and therefore will qualify as genuine use. When TMs 258 and 722 were used as a badge of membership by licensees of NGRS there was genuine use of those trade marks with the consent of NGRS. This aspect of Mr Milner’s allegation of non-use fails.

Conclusion

[73]NGRS’s claim against Mr Milner fails in relation to trade mark infringement, copyright infringement and passing off. It also fails in relation to breach of contract to in so far as this allegation was raised.[74]Mr Milner’s counterclaim succeeds to the extent that TMs 351 and 710 are revoked for non-use and TM 722 is also revoked for non-use in relation to all classes save Class 39. The counterclaim otherwise fails.

Cited in 1 later judgment