Caspian Pizza Ltd & Ors v Shah & Anor [2015] EWHC 3567 (IPEC)

Case No IP14M1335[2015] EWHC 3567 (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 09/12/2015
Before
HIS HONOUR JUDGE HACON
Between
CASPIAN PIZZA LIMITEDClaimantsBEHZAD ZARANDIClaimantNADAR ZANDClaimantMASKEEN SHAHDefendantsMALVERN HILLS ESTATES LIMITEDDefendant
Richard Colbey (instructed by Cubism Law) for ClaimantsJonathan Moss (instructed by RadcliffesLeBrasseur) for DefendantsHearing Hearing dates: 26-27 October 2015
JudgmentJudge Hacon :Introduction
[1]This is a dispute about the right to use the trade name CASPIAN in relation to a pizza business and the right to use a device featuring that name.[2]The Second Claimant (“Mr Zarandi”) and his brother-in-law the Third Claimant (“Mr Zand”) are co-proprietors of two UK registered trade marks (collectively “the Trade Marks”):(i) No. 2 396 396, the word mark CASPIAN, registered in respect of restaurants and related services (“the Caspian Mark”) as of 8 July 2005;(ii) No. 2 559 245, a device mark registered in respect of specified foodstuffs including those suitable for making pizzas (“the Device Mark”), as of 21 September 2010, the device being in the following form:[3]Mr Zarandi says that he started his pizza business in 1991, opening a restaurant in Birmingham that year. He called the restaurant ‘Caspian Pizza’ in reference to his Iranian heritage, having arrived in this country from Iran in 1977. Since then the business has expanded into a chain of Caspian Pizza restaurants located in and around Birmingham. The business has acquired goodwill associated with the Caspian Mark and the Device Mark.[4]From 2011 Mr Zand became involved in the business. By a written agreement dated 7 August 2012 Mr Zarandi and Mr Zand licensed the Trade Marks to the First Claimant (“CP Limited”), following which the business was conducted through that company.[5]Mr Zarandi (now) says that in about 2002-3 the First Defendant (“Mr Shah”), a sole trader, approached him asking for a licence to open a Caspian Pizza restaurant at 82-84 Sidbury, Worcester WR1 2HY (“the Worcester Restaurant”). The claimants’ case is that Mr Shah subsequently operated the Worcester Restaurant under an oral and informal franchise agreement with Caspian Pizza Limited, or alternatively with Ben Zarandi and Essi Zand. Mr Shah is said to be one of 15 such franchisees. One of the terms of the agreement alleged was that the goodwill in Mr Shah’s franchised business vested in CP Limited.[6]The claimants say that since about August 2013 Mr Shah has refused to pay royalties due under the franchise agreement and has declined to recognise the agreement at all. Accordingly the franchise agreement was terminated by a letter dated 25 November 2013, taking effect from 9 December 2013. Since then the defendants’ use of the Caspian Mark and the Device Mark in relation to the business of the Worcester Restaurant has infringed the two Trade Marks and has constituted passing off. The claimants also allege, by way of alternative, that the trade mark infringement and passing off were acts of joint tortfeasorship by Mr Shah along with the First Defendant (“Malvern Hills”) and/or or a variety of other parties which I will mention later.[7]A pleaded allegation that the defendants were in breach of the franchise agreement was not pursued.[8]The defendants’ response is that there never was a franchise agreement and therefore, among other things, the goodwill in the business of the Worcester Restaurant never passed to Caspian Pizza Limited; it remained at all times with that business. According to the defendants the Worcester Restaurant started trading before the alleged franchise agreement was even suggested and in so doing created its own local goodwill in Worcester. All that happened was that from 2011 to 2013 Mr Zarandi pressured Mr Shah into entering a written franchise agreement, falsely claiming that it formalised an oral agreement already in place. Mr Shah refused. As a consequence the Worcester Restaurant has had its own distinct goodwill from a date prior to the application for the Caspian Mark, albeit limited to Worcester, which provides for a defence to both trade mark infringement and passing off. Secondly, the defendants say that the Trade Marks are invalid. Thirdly, they argue that even if the claimants have a sound case in trade mark infringement and passing off, Mr Shah and Malvern Hills were, by the time the franchise agreement was terminated, merely the ultimate freehold owner and landlord of the Worcester restaurant respectively and as such not liable for the acts complained of.[9]The Worcester Restaurant is not the only pizza business with which Mr Shah has been connected and which traded as Caspian Pizza. Mr Shah’s first Caspian Pizza outlet opened for business in 2002 and traded until 2005 at St Martin’s Gate, Worcester, a few minutes walk from 82-84 Sidbury. Next came the Worcester Restaurant and then Mr Shah opened two further Caspian Pizza outlets: one at 117 Worcester Road, Malvern Link, which traded from 2005 to 2009 and another at 26 High Street, Droitwich, trading from 2008 to 2012. They all shared the same shop front, used the same recipes for the pizza and the same online ordering system. The Droitwich restaurant was sold by Mr Shah in 2012 and now trades as Caspian Rooster.[10]These proceedings concern only the Worcester Restaurant. The restaurant at St Martin’s Gate has some relevance in that the goodwill of the Worcester Restaurant when it started in 2004 may have been shared with the St Martin’s Gate restaurant and thus dates back to 2002.[11]Mr Colbey, who appeared for the claimants, conceded that his clients’ case for passing off was unlikely to succeed if they were unable to establish trade mark infringement. With that realistic concession in mind I will focus largely on the Trade Marks.[12]The defendants also made a realistic concession: the Worcester Restaurant uses signs similar to the respective Trade Marks, in each case in relation to services or goods which were similar to those in respect of which the Caspian Mark or the Device Mark are registered. In other words the usual investigations into the likelihood of confusion pursuant to such similarities do not arise in this case. Aside from the alleged invalidity of the Trade Marks and lack of liability for any infringements that may have occurred, the specific defences run by the defendants at trial were these:(i) A defence pursuant to s.11(3) of the Trade Marks Act 1994 (“the Act): use of the signs alleged to infringe the Trade Marks constituted use, in the course of trade, of an earlier right which only applied in a particular locality (the Worcester area).(ii) The sign similar to the Device Mark used by the Worcester Restaurant appeared on pizza boxes purchased from a company called E.L.C. (UK) Limited (“the ELC Box”). ELC had used the sign with the consent of the claimants and so the rights in relation to the Device Mark had been exhausted with regard to that sign.(iii) The claimants had acquiesced in the use of the Trade Marks by the Worcester Restaurant up until 2011 to 2013, when they sought to impose a franchise agreement that had never been in place. Having so acquiesced, the claimants could not enforce the Trade Marks after 9 December 2013.[13]The defendants’ counterclaim alleged that both Trade Marks were invalid on each of the following grounds:(i) Lack of genuine use of the Trade Marks in connection with the goods or services in respect of which they are registered within a continuous period of five years following the date of completion of the registration procedures (23 December 2005 in the case of the Caspian Mark and 21 January 2011 in the case of the Device Mark) and before the date of filing of the counterclaim (9 May 2014), see s.46(1) of the Act and art.10(1) of Directive 2008/95/EC (“the Trade Mark Directive”).(ii) The applications for registration of the Trade Marks were made in bad faith within the meaning of 3(6) of the Act and art.3(2)(d) of the Trade Mark Directive.(iii) The use of each of the Trade Marks at the time it was registered was liable to be prevented by virtue of the law of passing off which protected in the Worcester area a sign used in the course of trade by the Worcester Restaurant, see section 5(4)(a) of the Act and art.4(4)(b) of the Trade Mark Directive.(iv) The use of the Device Mark was at the time it was registered liable to be prevented by virtue of the law of copyright protecting the design of the sign used on the ELC Box, see section 5(4)(b) and art.4(4)(c) of the Trade Mark Directive.

The franchise agreement

[14]I begin with an important dispute of fact: whether Mr Shah signed up to a franchise agreement, making the Worcester Restaurant a Caspian Pizza franchise of CP Limited, and if so, the date on which this happened.[15]Paragraph 19 of the Particulars of Claim pleads that Mr Shah entered into a franchise agreement with one of the claimants of any of them in combination in or around 2008, which would also mark the date on which the Worcester Restaurant first traded as ‘Caspian Pizza’. By contrast paragraph 6 states that since 23 July 2010 CP Limited has operated a franchise business under the Trade Marks.[16]The Defence pleads that the Worcester Restaurant began trading under the CASPIAN name from 2002 or 2003. The latter date is denied in the Reply, so there is a dispute as to when the Worcester Restaurant first traded as ‘Caspian Pizza’.[17]In Mr Zarandi’s first witness statement at paragraph 10 he stated that he was approached by Mr Shah between 2005 and 2008 for (by implication) permission to open a Caspian-branded pizza restaurant in Worcester. He also said that he had only granted franchises to those whom he knew personally or worked with, thus implying that his franchise business was up and running before Mr Shah’s approach. In paragraph 11 Mr Zarandi says that the Worcester Restaurant has traded under the CASPIAN name since 2008.[18]Mr Zand in a short witness statement says that Mr Zarandi’s recollection of events accords with his own, which therefore endorses Mr Zarandi’s recollection that the franchise agreement with Mr Shah, or at least the franchised trading by the Worcester Restaurant, dated from 2008. Mr Zand signed the statement of truth at the end of the Particulars of Claim and his evidence is thus consistent with paragraph 19 of the Particulars, though not paragraph 6.[19]Harry Mitchous has been Mr Zarandi’s personal accountant since the early 1990s. In his witness statement he stated that he was aware that the Worcester Restaurant operated as a franchisee of the Caspian chain. He said that he met Mr Shah in 2008. He ties the meeting to that particular year because it was the year in which he moved to a new house. Mr Shah visited him in the new home to discuss whether Mr Mitchous could act as Mr Shah’s accountant (he did not). In a detailed meeting Mr Shah also wanted Mr Mitchous’s advice on accounting and tax issues.[20]Aside from the rogue, though remarkably precise, date of 23 July 2010 in paragraph 6 of the Particulars of Claim, the rest of the Particulars along with the written evidence of Mr Zarandi and Mr Zand – and possibly that of Mr Mitchous – supported 2008 as the date of the first franchised trading by the Worcester Restaurant and its first use of the CASPIAN name according to the claimants.[21]Witness statements were exchanged on 15 May 2015. For the defendants Mr Shah’s evidence was that the Worcester Restaurant had traded as Caspian Pizza since 2003. Plainly, if correct, this could not be reconciled with either the claimants’ pleaded case or evidence. The claimants apparently elected at this stage to maintain what they said because there was no application to change or supplement their evidence on dates or to amend their pleading.[22]But on the first day of the trial Mr Zarandi did change his evidence during oral examination-in-chief. He said that the franchise agreement with Mr Shah happened 2002 or 2003. He added that he had suffered from depression for three years and although he could now remember events in detail, he could not recall dates. On that evidence I can place no faith in Mr Zarandi’s recollection of the date of anything.[23]Mr Mitchous also took the opportunity of examination-in-chief to change what he had to say about dates. He stated that in fact he had moved into his new house in 2003 and that the two occasions on which he had met Mr Shah were in 2003 or 2004. He accounted for the error in his witness statement by saying that it was a mistake on the part of the solicitors.[24]Mr Zand was asked in cross-examination why, in his witness statement, he had confirmed Mr Zarandi’s evidence that the franchise agreement with Mr Shah and the start of the Worcester Restaurant’s trading had been in 2008. Mr Zand at first said that when he had read Mr Zarandi’s statement he had noticed that the 2008 date was wrong. He told Mr Zarandi whose response was that he was speaking to the solicitors about it and that it had been sorted. Mr Zand added that he himself had spoken to the claimants’ solicitors about the incorrect date, though only after he had signed his witness statement. He then changed his account: he had not paid attention to Mr Zarandi’s statement when he signed his own and had therefore not seen the error. Mr Zand’s evidence continued to evolve. By the end of the cross-examination his final position was that he had no knowledge of the Worcester Restaurant’s trading before 2011. This was not an attractive final destination because it was Mr Zand who had signed the statement of truth at the end of both the Particulars of Claim and the Reply and Defence to Counterclaim, thus asserting knowledge of the facts there stated which in key part he now disclaimed.[25]I am unable to treat any of the claimants’ evidence regarding the date of the franchise agreement and the consequent first trading of Worcester Restaurant as reliable. I am also concerned about the way this evidence has emerged. There is a striking uniformity about the way in which the pleadings (except paragraph 6 of the Particulars of Claim) and written evidence identify the date as 2008, followed by a wholesale abandonment of that date, to be replaced by a new and unanimous view, apart from that of Mr Zand towards the end of his cross-examination, that the correct date is 2002 or 2003. Also, if Mr Zand is to be believed at all, around the time the claimants’ witness statements were finalised he, Mr Zarandi and the claimants’ solicitors considered and discussed the accuracy of 2008 as the correct date. In those discussions either it emerged that in the honest view of the witnesses 2008 was the wrong date, or alternatively it was acknowledged that the franchise agreement could not have happened before 2008. If the former, the proceedings were allowed to progress to trial with an important part of the claimants’ evidence and pleaded case left incorrect. If the latter, the written evidence and pleadings remained as they were because it was recognised that the date could not be pushed back earlier than 2008; inexplicably, something caused a change of heart by the first day of the trial. The various grounds which Messrs Zarandi, Zand and Mitchous gave for changing their evidence may well be implausible for good reason.[26]Whatever the real truth of the matter, I reject the claimants’ case regarding the date of the alleged franchise agreement and subsequent first trading by the Worcester Restaurant under the Caspian Pizza trading name. I also find myself unable to accept any of the claimants’ evidence unless it is common ground or corroborated by documents.[27]Mr Colbey formally conceded that the Worcester Restaurant began trading under the CASPIAN name in 2004 and I will take that date to be correct. Mr Shah said he knew of Mr Zarandi’s Caspian Pizza restaurants in Birmingham at this time. According to Mr Shah, however, the same name was suggested to him by an Iranian chef employed by Mr Shah at 82-84 Sidbury, at that time an Indian restaurant. In cross-examination Mr Shah identified other restaurants, not connected with any party to these proceedings, using the CASPIAN name in Norwich, Redditch and Manchester although it was not made clear when they started trading.[28]Mr Colbey drew my attention to three pieces of documentary evidence to support the existence of the franchise agreement. First, records of text messages between Mr Zarandi and Mr Shah indicate that in April 2013 Mr Shah owed Mr Zarandi £600. It was suggested that this was a year’s royalties at £50 per month, but nothing in the texts supports this. In fact this was the totality of the documents between the parties to support the allegation that there had been a franchise agreement. Mr Shah thought that the £600 concerned wages due for an individual who had worked at Mr Shah’s restaurant in Droitwich. In my view the debt proves nothing.[29]Secondly I was shown a copy of a flyer distributed on behalf of the Worcester Restaurant advertising its pizzas and the other foods and drinks on offer. Under a sign very like the Caspian Device it says “(Now over 30 branches throughout UK)”. This is clearly an incorrect representation that the Worcester Restaurant is part of a chain of around 30 restaurants. Mr Shah said that there were in fact 30 Caspian Pizza restaurants around the UK, including his and Mr Zarandi’s. Taken alone, the reference to “throughout the UK” supports this interpretation, rather than an intention to align the Worcester Restaurant with Mr Zarandi’s Birmingham-based group.[30]Thirdly, however, I was taken to a copy of the Worcester Restaurant’s Facebook page. This says:
“Caspian Pizza Head Office is located in Mosley, Birmingham, UK supporting all branches to maintain the high standard of quality in food, design and IT.”
Mr Shah conceded that the Head Office reference was to Mr Zarandi’s business. This is a false representation that the Worcester Restaurant is a branch of a larger organisation and if the reader was familiar with the Caspian Pizza restaurants in Birmingham, they might well have assumed that the Worcester Restaurant was a branch of the Birmingham chain. It was common ground that there was indeed a business connection between the Worcester Restaurant and those owned by Mr Zarandi in that he and Mr Shah had agreed to buy food and other produce needed to run their restaurants from a single supplier and thus reduce costs. Mr Shah said that he wanted to give the impression of being part of a larger group when the Worcester Restaurant started trading.[31]I accept that the Facebook page and the flyer are consistent with the Worcester Restaurant being part of Mr Zarandi’s Birmingham-based franchise chain. But there is a significant jump from that to proof of a franchise link, as opposed to a looser connection. I accept Mr Shah’s evidence that he was over-stating the connection with Mr Zarandi’s business on the Facebook page to enhance the public image of the Worcester Business, just as the flyer wrongly implies that it is part of a larger, nationwide group. I reject Mr Zarandi’s claim that there was a franchise agreement. Had the Worcester Restaurant really been franchised I think there would have been much more compelling documentary evidence of the agreement itself, together with documents establishing regular royalty payments and possibly other matters which flowed from the agreement.[32]The Worcester Restaurant has either generated its own goodwill associated with CASPIAN since 2004 or, more likely, shared and added to the goodwill of the St Martin’s Gate business, which dates from 2002. Subsequently it shared goodwill with the Malvern Hills and Droitwich businesses while they traded under the CASPIAN name. The goodwill was sufficient in 2002 and 2004 to found an action in passing off to prevent parties other than Mr Shah from conducting a pizza business under that name in Worcester.

Mr Martin

[33]Before leaving the witnesses I should say something about Steven Martin. He worked as manager at the Worcester Restaurant from about 2012 to 2014. He signed a witness statement which was served on behalf of the claimants. Mr Martin was sworn in and, in the usual way, asked by Mr Colbey to confirm that the contents of his statement were true. Mr Martin said they were not true. I informed Mr Colbey that given this answer I would not accept anything said in Mr Martin’s witness statement. Mr Colbey embarked on an oral examination-in-chief, quite short in the event. I will return to this evidence and the cross-examination of Mr Martin to the limited extent that it proved relevant.

The geographical extent of the claimants’ goodwill

[34]The claimants asserted that their goodwill associated with CASPIAN extended throughout the UK. The defendants argued that it is in the nature of small pizza outlets (as all restaurants in this case were) that customers are local and the goodwill is correspondingly very limited in geographical scope. Mr Shah’s evidence was that the Worcester Restaurant is too far from Birmingham (about 30 miles) to compete with the claimants’ restaurants even though he boasted that some friends in Birmingham preferred the Worcester Restaurant’s pizzas enough to travel to Worcester. There was no evidence from the claimants to challenge this. I find that from 1991 to the present the claimants’ goodwill associated with the trading name CASPIAN has never reached Worcester.

The proprietor of the claimants’ goodwill

[35]Mr Zarandi started the claimants’ Caspian Pizza business but said in cross-examination that from 2002 to 2009 the business was run through a company called Caspian Pizza Company Limited (“CPCL”). This is consistent with written franchise agreements that were produced, the franchises having been granted in that period to various restaurants. It appears therefore that the goodwill generated by the claimants’ business and its franchisees was owned by CPCL in May 2009. In that month the company was wound up voluntarily. There was no evidence of any transfer of goodwill. Mr Moss argued that it must have become vested in the Crown as bona vacantia.[36]Despite the lack of evidence produced by the claimants regarding ownership of goodwill, I doubt that is what happened. No formalities are needed for the transfer of goodwill. It may be done orally or even inferred from the conduct of the relevant parties. It is not clear whether goodwill passed from CPCL to CP Limited by August 2012, which appears to be the claimants’ case. Even if it didn’t, I am prepared to assume that the conduct of the Caspian Pizza business by CP Limited from August 2012 had, by 9 December 2013, generated sufficient goodwill owned by CP Limited associated with CASPIAN to give CP Limited a cause of action in passing off.

Whether the defendants were party to the acts complained of

[37]The claimants’ case was that the defendants were licensed to use the Trade Marks under the franchise agreement, until its termination on 9 December 2013, so there could be no trade mark infringement or passing off by the defendants until after that date. No alternative case was advanced in the event of a finding that there was no franchise agreement.[38]Mr Shah’s position in his witness statement was that he has always been the owner of the premises at 82-84 Sidbury, Worcester, from which the Worcester Restaurant trades. He is the sole shareholder and director, and is the company secretary of Malvern Hills. He set the company up in 2011 to manage the 82-84 Sidbury property as his lessee. Since February 2013 Malvern Hills has sub-let the property to a company called Porcelain Limited (“Porcelain”)[39]Mr Shah also said that shortly after the Worcester Restaurant started trading as ‘Caspian Pizza’ in 2004 he passed the management of the business to his brother, Wasib Shah, who undertook the day-to-day running of the business from 2005. Wasib Shah was declared bankrupt at the end of 2012, so Mr Shah resumed control of the Worcester Restaurant for just over a month until February 2013. From February 2013, Mr Shah said, the day to day running was conducted by Mr Martin and Imran Mohammed under the managership of Udnan Rasool. At a later date not identified, Wasib Shah returned to work at the Worcester Restaurant as a shift supervisor together with another brother, Sajjaad Shah and other temporary staff.[40]On 12 February 2013 Porcelain was incorporated. Since May 2014 its sole shareholder has been Bari Chohan who is one of the two directors, along with Mr Martin. Mr Shah said that Mr Chohan took over the management of Porcelain in July 2013. Mr Rasool reported to Mr Chohan in relation to the running of the Worcester Restaurant. Mr Shah’s position is that save for owning the premises and helping out if a member of staff calls in sick, he has no involvement in that business. In short, according to the claimants the acts complained of were carried out by one or more of Mr Chohan, Porcelain, Mr Rasool, Mr Mohammed and Mr Martin or possibly others, but since 2012 by neither Mr Shah nor Malvern Hills.[41]Mr Chohan’s witness statement confirms what Mr Shah says in this regard. Mr Martin in his examination-in-chief said that he was the manager of the Worcester Restaurant in partnership with Mr Mohammed. He also claimed that he had given false evidence in his witness statement because he had felt harassed and pressured by the claimants’ solicitors.[42]Aside from the witness statement of Mr Martin, which had to be abandoned, the claimants served a witness statement on this aspect of the case from a private investigator, Stephen White. Mr White disclosed in particular that the email address used by the Worcester Restaurant is maskeen3@gmail.com. He also reported that on 13 June 2015 a call was made to the Worcester Restaurant. An unidentified caller spoke to a male employee. The caller referred to Maskeen Shah as the owner of the business, though the exact question put to the employee is not stated. The employee is said to have responded “Yea man, I’ve just spoken to him, he’s my boss and he’s rather busy right now and he’s in a meeting”. In cross-examination Mr White said that the call had not been made by him and that no recording of it had been made.[43]Mr Colbey argued that the defendants’ case that neither Mr Shah nor Malvern Hills played any relevant part in the acts complained of should be rejected as being extraordinarily improbable. Mr Colbey pointed to the fact that in the pre-action correspondence between the solicitors the defendants’ solicitors referred to Mr Shah as their client and to losses suffered by Mr Shah and Malvern Hills from what was said to be an orchestrated attack to divert customers away from Mr Shah’s business. Later, in a letter dated 6 June 2014 the defendants’ solicitors rejected a request to ‘their clients’ to change the name of ‘their pizza business’ because it would cause ‘our clients’ to lose business. The letter identifies the clients in question as Mr Shah and Malvern Hills. Mr Colbey also relied on Mr Shah’s admitted ownership of the 82-84 Sidbury premises and the evidence of Mr White, especially his report of an employee as having identified Mr Shah as the boss of the business on 13 June 2013.[44]It seems that as late as June 2014 the impression held by the defendants’ solicitors was that the business of the Worcester Restaurant was that of Mr Shah and Malvern Hills, who were giving the instructions and paying the bills. Presumably this came from what they had been told by Mr Shah. However it is possible that upon a subsequent and fuller explanation of events by Mr Shah, the solicitors revised their view and that this amended view accords with the facts.[45]The fact that Mr Shah owns 82-84 Sidbury is neutral. The claimants’ evidence from Mr White was characteristically unreliable. It was only Mr White’s account second hand of what the employee at the Worcester Restaurant had said to an unidentified member of Mr White’s team who did not give evidence himself or herself. In such circumstances it is always essential to know the precise words that were used, both in the question and the response, since it takes only a slight change of wording to convey a wholly different impression.[46]In my view, who did what at the Worcester Restaurant after 9 December 2013 was probably fluid. It would not have surprised me to learn that Mr Shah was more involved, whether though Malvern Hills or otherwise, than he now recollects. But this has not been established on the evidence. I find that Mr Shah has had no material involvement in the running of the Worcester Restaurant since November 2013 and nor has Malvern Hills.[47]The claimants advance an alternative argument: Mr Shah is jointly liable with one or more of Malvern Hills, Porcelain, Mr Martin, Mr Mohammed or Wasib Shah. He is not jointly liable with Malvern Hills as I have just found, but in relation to the other four parties I am prepared to assume, and believe it to be the case, that one or more of them was sufficiently responsible for the business of the Worcester Restaurant to be liable as a primary tortfeasor if torts have been committed. Taking matters a little out of order, it is convenient to turn now to Mr Shah’s potential liability as joint tortfeasor. Whether Mr Shah is jointly liable The law

Whether Mr Shah is jointly liable

[48]I attempted to set out the law on joint tortfeasance in Vertical Leisure Limited v Poleplus Limited [2015] EWHC 841 (IPEC), referring in particular to Sea Shepherd UK v Fish & Fish Limited [2015] UKSC 10; [2015] A.C. 1229. In the present context the claimants must establish that Mr Shah actively co-operated in the relevant acts and that he intended that his co-operation would help to bring about those acts. This case[49]Mr Shah has admitted that after 9 December 2013 he owned the 82-84 Sidbury premises which were leased to Malvern Hills and sub-leased to Porcelain. Clearly Mr Shah knew that the Worcester Restaurant was trading as Caspian Pizza and even worked in room above the restaurant. However the evidence has not established that he did anything beyond that, to the extent of active co-operation in the business. I do not take the view that leasing premises to another party can of itself qualify as active co-operation in the acts conducted by that party – see the discussion of the law in Vertical Leisure.[50]It follows that even if there was infringement of the Trade Marks and/or passing off, neither of the defendants to this claim is liable. But in case I am wrong about that, I now turn to whether either tort was committed at all. Infringement of the Trade Marks Defence under s.11(3)/art.6(2)

Infringement of the Trade Marks

[51]Article 6(2) of the Trade Mark Directive provides as follows: 2. The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade, an earlier right which only applies in a particular locality if that right is recognised by the laws of the Member State in question and within the limits of the territory in which it is recognised.[52]Section 11(3) of the Act states: (3) A registered trade mark is not infringed by the use in the course of trade in a particular locality of an earlier right which applies only in that locality. For this purpose an “earlier right” means an unregistered trade mark or other sign continuously used in relation to goods or services by a person or a predecessor in title of his from a date prior to whichever is the earlier of –(a) the use of the first-mentioned trade mark in relation to those goods or services by the proprietor or a predecessor in title of his, or(b) the registration of the first-mentioned trade mark in respect of those goods or services in the name of the proprietor or a predecessor in title of his; and an earlier right shall be regarded as applying in a locality if, or to the extent that, its use in that locality is protected by virtue of any rule of law (in particular, the law of passing off).[53]Argument focussed on section 11(3). In relation to the Caspian Mark Mr Colbey relied on the unchallenged evidence that Mr Zarandi started his first Caspian Pizza business in 1991 which pre-dates any earlier right to which Mr Shah may be entitled. Mr Zarandi remains joint proprietor of the Trade Marks and therefore his earlier use of the Caspian Mark is relevant. On a straightforward reading of s.11(3), particularly sub-paragraph (a), the defendants have no defence under that subsection.[54]However I am not sure that is right. Section 11(3) must be interpreted in a manner consistent with art.6(2) of the Trade Mark Directive. The right of the proprietor of a registered trade mark to claim a priority (in the sense of defeating a defence to infringement under s.11(3)) dating from the first use anywhere of the mark before registration, either by him or a predecessor in title of his, does not shine out from the words of art.6(2). Take the present case. I have concluded on the facts that since 2002 Mr Shah’s businesses in Worcester have generated local goodwill sufficient to enable him or his successors to restrain the use by others of the CASPIAN name for a pizza business in Worcester. That being so, the words of art.6(2) would seem to prevent the proprietors of the Caspian Mark from enforcing it in Worcester despitethe local goodwill generated by Mr Zarandi since 1991 in Birmingham.[55]The draftsman of s.11(3) appears to have elaborated on art.6(2). However, to quote Jacob J: “What matters is the language of the Directive”, see British Sugar plc v James Robertson & Sons Ltd [1996] R.P.C. 281, at 292; see also the speech of Lord Nicholls of Birkenhead in R. v Johnson [2003] UKHL 28; [2003] F.S.R. 42, at [30]. In Budějovický Budvar NP v Anheuser-Busch Inc. (Case C-482/09) [2012] R.P.C. 11 (“Budweiser”), the Court of Justice of the European Union (“the CJEU”) said this: “[30] Although the third recital in the preamble to Directive 89/104 states that ‘it does not appear to be necessary at present to undertake full-scale approximation of the trade mark laws of the Member States’, the directive nonetheless provides for harmonisation in relation to substantive rules of central importance in this sphere, that is to say, according to the same recital, the rules concerning the provisions of national law which most directly affect the functioning of the internal market, and that recital does not preclude the harmonisation relating to those rules from being complete (Silhouette International Schmied GmbH & Co. KG v Hartlauer Handelsgessellschaft mbH (C-355/96)[1998] E.C.R. I-4799; [1998] E.T.M.R. 539 at [23], and Ansul BV v Ajax Brandbeveiliging BV (Minimax) (C-40/01) [2003] E.C.R. I-2439;[2003] E.T.M.R. 85 at [27]). [31] Further, it is stated, in the seventh recital in the preamble to Directive 89/104, that the ‘attainment of the objectives at which this approximation [of the legislation of Member States] is aiming requires that the conditions for obtaining and continuing to hold a registered trade mark are, in general, identical in all Member States.’ The ninth recital of the same directive states that ‘it is fundamental, in order to facilitate the free circulation of goods and services, to ensure that henceforth registered trade marks enjoy the same protection under the legal systems of all the Member States.’ Lastly, the eleventh recital of that directive further states that ‘it is important, for reasons of legal certainty and without inequitably prejudicing the interests of a proprietor of an earlier trade mark, to provide that the latter may no longer request a declaration of invalidity nor may he oppose the use of a trade mark subsequent to his own of which he has knowingly tolerated the use for a substantial length of time, unless the application for the subsequent trade mark was made in bad faith.’ [32] In the light of the recitals in the preamble to Directive 89/104, the Court has held that arts 5-7 of that directive 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 (Silhouette International Schmied [1998] E.T.M.R. 539at [25]; Zino Davidoff v A&G Imports Ltd (C 414–416/99) [2001] E.C.R. I-8691; [2001] E.T.M.R. 67 at [39], and Coty Prestige Lancaster Group GmbH v Simex Trading AG (C-127/09) [2010] E.T.M.R. 41 at [27]).” (Arts.5-7 of Directive 89/104 are the predecessors of arts.5-7 of the Trade Marks Directive, now in force).[56]I could speculate as to how s.11(3), especially sub-paragraph (a), should be notionally reworded so as to arrive at a correct interpretation, but in my view it is better to ignore it and focus on art.6(2). I have reached the view that art.6(2) provides the defendants with a defence.

Exhaustion of rights in relation to the Device Mark

[57]Mr Moss, who appeared for the defendants, did not place any great emphasis on this defence. It could apply only to use by the defendants of pizza boxes supplied by ELC and not, for instance, to use of the Device Mark on the leaflets I have mentioned. I reject it.

Acquiescence

[58]This was a defence of common law acquiescence and was argued as follows. If the claimants were entitled to prevent use of the Caspian Pizza trade name from 9 December 2013, they had actively encouraged its use up to then and the defendants (assuming here that they are the relevant parties) relied on the representation that they could use the CASPIAN name this to build up their business. To my mind the evidence in the period up to the claimants first suggesting that the alleged franchise agreement should be formalised was more one of friendly co-existence rather than a representation by the claimants about anything. I reject this defence. Validity of the Trade Marks Revocation for lack of genuine use

Validity of the Trade Marks

[59]The claim for revocation was raised only in relation to the Caspian Mark. It was an opportunistic allegation, going no further than putting the claimants to proof of use. That is not to say that the allegation must therefore fail. In fact it came quite close to succeeding because the claimants put no effort into providing evidence of their use of the mark in Birmingham. However Mr Shah admitted in cross-examination, and seemed in no doubt at all, that the claimants used the Caspian Mark at least from 2005 to 2014. I find that the Caspian Mark was used in the relevant periods and that the claim for revocation fails.

Bad faith

[60]Alleged registration in bad faith was the first of three grounds for seeking a declaration that both Trade Marks were invalid. I was referred to Chocoladefabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH (Case C-529/07) [2009] E.T.M.R. 56 and Red Bull GmbH v Sun Mark Limited [2012] EWHC 1929 (Ch); [2013] E.T.M.R. 53. In Red Bull Arnold J summarised the law in this way:
“Bad faith: general principles [130] A number of general principles concerning bad faith for the purposes of s.3(6) of the 1994 Act/art.3(2)(d) of the Directive/art.52(1)(b) of the Regulation are now fairly well established. … [131] First, the relevant date for assessing whether an application to register a trade mark was made in bad faith is the application date: see Chocoladenfabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH (C-529/07) [2009] E.C.R. I-4893 at [35]. [132] Secondly, although the relevant date is the application date, later evidence is relevant if it casts light backwards on the position as at the application date: see Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2008] EWHC 3032 (Ch), [2009] R.P.C. 9 at [167] and c.f.La Mer Technology Inc v Laboratoires Goemar SA (C-259/02) [2004] E.C.R. I-1159 at [31] and Alcon Inc v OHIM (C-192/03) [2004] E.C.R.I-8993 at [41]. [133] Thirdly, a person is presumed to have acted in good faith unless the contrary is proved. An allegation of bad faith is a serious allegation which must be distinctly proved. The standard of proof is on the balance of probabilities but cogent evidence is required due to the seriousness of the allegation. It is not enough to prove facts which are also consistent with good faith: see BRÜTT Trade Marks [2007] R.P.C.19 at [29], von Rossum v Heinrich Mack Nachf. GmbH & Co KG (R 336/207-2) OHIM Second Board of Appeal, 13 November 2007 at [22] and Funke Kunststoffe GmbH v Astral Property Pty Ltd (R 1621/2006-4) OHIM Fourth Board of Appeal, 21 December 2009 at [22]. [134] Fourthly, bad faith includes not only dishonesty, but also “some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined”: see Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [1999] R.P.C. 367 at 379 and DAAWAT TradeMark (C000659037/1) OHIM Cancellation Division, 28 June 2004 at [8]. [135] Fifthly, s.3(6) of the 1994 Act , art.3(2)(d) of the Directive and art.52(1)(b) of the Regulation are intended to prevent abuse of the trade mark system: see Melly’s Trade Mark Application [2008] R.P.C. 20 at [51] and CHOOSI Trade Mark (R 633/2007-2) OHIM Second Board of Appeal, 29 February 2008 at [21]. As the case law makes clear, there are two main classes of abuse. The first concerns abuse vis-à-vis the relevant office, for example where the applicant knowingly supplies untrue or misleading information in support of his application; and the second concerns abuse vis-à-vis third parties: see Cipriani at [185]. [136] Sixthly, in order to determine whether the applicant acted in bad faith, the tribunal must make an overall assessment, taking into account all the factors relevant to the particular case: see Lindt v Hauswirth at [37]. [137] Seventhly, the tribunal must first ascertain what the defendant knew about the matters in question and then decide whether, in the light of that knowledge, the defendant’s conduct is dishonest (or otherwise falls short of the standards of acceptable commercial behaviour) judged by ordinary standards of honest people. The applicant’s own standards of honesty (or acceptable commercial behaviour) are irrelevant to the enquiry: see AJIT WEEKLY Trade Mark [2006] R.P.C. 25 at [35]-[41], GERSON Trade Mark (R 916/2004-1) OHIM First Board of Appeal, 4 June 2009 at [53] and Campbell v Hughes [2011] R.P.C. 21 at [36]. [138] Eighthly, consideration must be given to the applicant’s intention. As the CJEU stated in Lindt v Hauswirth : “41. … in order to determine whether there was bad faith, consideration must also be given to the applicant’s intention at the time when he files the application for registration. “41. … in order to determine whether there was bad faith, consideration must also be given to the applicant’s intention at the time when he files the application for registration. 42. It must be observed in that regard that, as the Advocate General states in point 58 of her Opinion, the applicant’s intention at the relevant time is a subjective factor which must be determined by reference to the objective circumstances of the particular case. 43. Accordingly, the intention to prevent a third party from marketing a product may, in certain circumstances, be an element of bad faith on the part of the applicant. 44. That is in particular the case when it becomes apparent, subsequently, that the applicant applied for registration of a sign as a Community trade mark without intending to use it, his sole objective being to prevent a third party from entering the market. 45. In such a case, the mark does not fulfil its essential function, namely that of ensuring that the consumer or end-user can identify the origin of the product or service concerned by allowing him to distinguish that product or service from those of different origin, without any confusion (see, inter alia, Joined Cases C-456/01 P and C-457/01 P Henkel v OHIM [2004]E.C.R. I-5089, paragraph 48).” ”
[61]The present allegation of bad faith turns on a short point. The defendants allege that at the time of applying for each of the Trade Marks it was the subjective intention of Messrs. Zarandi and Zand to force all users of the CASPIAN trade name to enter into retrospective franchise agreements. Yet the highest that the defendants can put their case on the evidence available is that the claimants knew about the Worcester Restaurant when the application for each of the Trade Marks was made. This does not go far enough. There remains the likely possibility that at the time of the applications Messrs Zarandi and Zand had it in mind to protect their own business and it was only later that they turned their minds to franchise agreements. I reject the allegation of bad faith.

Section 5(4)(a) of the Act and art.4(4)(b)of the Directive

(b) of the Directive

[62]The defendants allege that both the Caspian Mark and the Device Mark were registered in contravention of s.5(4)(a) of the Act. The law[63]Pursuant to s.47(2)(b) the registration of a trade mark may be declared invalid on the ground that there is an earlier right in relation to which the condition set out in s.5(4) is satisfied. Section 5(4) provides: (4) A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented—(a) by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade, or(b) by virtue of an earlier right other than those referred to in subsections (1) to (3) or paragraph (a) above, in particular by virtue of the law of copyright, design right or registered designs. Art.4(4)(b) of the Trade Mark Directive is in similar terms to s.5(4)(a) and raises no points of distinction.[64]I have found that Mr Shah or his successors owned goodwill in the business conducted by the Worcester Restaurant under the CASPIAN name from 2004 until the present and shared goodwill with the St Martin’s Gate business which was conducted from 2002 until 2005. The Caspian Mark was applied for on 8 July 2005 and the Device Mark on 21 September 2010. On each of those dates Mr Shah or his successors were entitled to prevent another party trading in the sale of pizzas in Worcester under the CASPIAN name.[65]Mr Moss argued that therefore the defendants are entitled to invoke s.5(4)(a) and relied on the decision of Allan James for the Registrar in SWORDERS Trade Mark dated 28 July 2006, (O-212-06). This was an opposition to an application to register SWORDERS as a trade mark for real estate and related services in class 36 and land surveying and related services in class 42. The applicant and opponent, though sharing a common origin, had for some time before the application date conducted separate businesses in different parts of the country. Mr James found that the applicant’s use of the mark at the application date in Bishop’s Stortford (the locality of the opponent’s goodwill) would have given rise to a sound claim by the opponent for passing off. Therefore in the absence of a voluntary restriction on the geographical scope of the registration under s.13 of the Act (there was none), the opposition pursuant to s.5(4)(a) succeeded.[66]In Redd Solicitors LLP v Red Legal Ltd [2012] EWPCC 54; [2013] E.T.M.R. 13 the claimant, a firm of solicitors, sued a firm of licensed conveyancers trading under the name ‘Red Legal’ for infringement of two registered trade marks, one of which was the UK trade mark RED, registered for legal services. It was accepted by the first defendant, Red Legal, that if the trade mark were valid it was infringed, subject to a defence under s.11(3) of the Act. Red Legal also alleged that the RED mark was invalidly registered pursuant to s.5(4)(a).[67]His Honour Judge Birss QC found that at the relevant date the defendant had sufficient local goodwill to rely on an action for passing off in order to prevent another party offering services under the name ‘Red Legal’. He held that this gave Red Legal an earlier right which afforded a defence to infringement of the RED mark under s.11(3) but which did not afford a ground for invalidity of the RED mark under s.5(4)(a). He said this: “[121] In this case both s.5(4) and s.11(3) depend on the same facts. The question is whether Red Legal acquired an ‘earlier right’ to sue for passing off by the use of the name ‘RED LEGAL’ for residential conveyancing. The dividing line between rights sufficient to give rise to a locality defence under s.11(3) and rights sufficient to satisfy a challenge to validity under s.5(4) was not explored in argument in any detail. Given the small scale of Red Legal’s trade up to the relevant date (10 June 2010) and crucially given its clearly localised nature, focused on Northampton, I reject Red Legal’s case of invalidity under s.5(4). However I would accept that Red Legal has the benefit of a locality defence under s.11(3). If another firm of licensed conveyancers had opened up for business in Northampton in June 2010 and called itself Red Legal, I am sure the first defendant had sufficient local goodwill and reputation to prevent them from doing so. I think a fair assessment of the geographical extent of that goodwill would be the county of Northamptonshire. Mr Smith’s evidence showed Red Legal had nearly 500 properties or clients in that county by the relevant date. I do not accept that the evidence justifies a locality defence as at 10 June 2010 which goes any wider than the county of Northamptonshire. [122] Thus, I reject the s.5(4) ground of invalidity of the RED mark but, subject to Inter Lotto [2003] EWCA Civ 1132, I would allow the s.11(3) defence in relation to the first defendant’s use of RED LEGAL in Northamptonshire.” (The point raised in Inter Lotto which Judge Birss had in mind concerned the question whether a finding that the exercise of an earlier right infringed a different registered trade mark affected reliance on the earlier right for a defence under s.11(3) to infringement of the trade mark immediately in issue, so it is not relevant to this case).[68]It appears that the judge was not referred to the SWORDERS decision. I think the difficulty with the approach to s.5(4)(a) taken in Redd may be that the resolution of the conflicting rights of parties using the same trade mark in different localities would come to depend arbitrarily on which party first gets to the tape of making an application to register the mark. Party A may have the more geographically widespread business and a greater legitimate expectation of expanding further. Party B, using the same trade name in another part of the UK, may be satisfied with a business limited to a relatively small locality. But if party B applies for a trade mark first then following Redd there would be nothing that Party A could do about it, save rely on its ‘earlier right’ to provide a defence to infringement under s.11(3), a defence strictly limited in geographical scope. The approach in SWORDERS is more likely to give the tribunal the opportunity, where possible and appropriate, to set a fair territorial limit to the trade mark right or rights granted. I therefore prefer the approach to s.5(4)(a)/art.4(4)(b) in SWORDERS.

This case

[69]On that interpretation of s.5(4)(a) and art.4(4)(b) it is convenient to consider first the validity of the Device Mark. Mr Shah said this about the sign used by the defendants similar to the Device Mark, at paragraph 39 of his witness statement:
“I first used the logo of a running pizza chef in 2007 when it was provided to me as the logo on a generic pizza box which we purchased from ELC (UK) Limited (‘ELC’), a catering wholesaler…”
At paragraph 75 he said that this pizza box was “…still widely available for purchase, by anyone.”[70]Given that evidence from the defendants, the relevant sign used by the Worcester Restaurant since 2007 cannot have generated an earlier right on which the defendants can rely. No argument was raised regarding the effect, if any, of the device on the ELC boxes on the distinctiveness of the Trade Marks or on any party’s goodwill in relation to CASPIAN. In any event, the true origin of the Device Mark remains unresolved.[71]Turning next to the earlier right based on the name CASPIAN, I have found that the elements necessary for the existence of such an earlier right were in place by 8 July 2005. Therefore the defendants’ application for a declaration that the Caspian Mark is invalid would succeed, subject to s.48 of the Act and art.9(1) of the Trade Mark Directive.

Section 48/art.9(1)

[72]Mr Colbey raised s.48 during the trial. Although I did not notice at the time, reliance on s.48 had not been pleaded by the claimants in their Reply and Defence to Counterclaim. In the normal course I would have refused permission to rely on s.48 without exceptional reasons, but no objection was taken by the defendants and therefore I believe I should consider the point.

The law

[73]Section 48 is as follows: 48.(1) Where the proprietor of an earlier trade mark or other earlier right has acquiesced for a continuous period of five years in the use of a registered trade mark in the United Kingdom, being aware of that use, there shall cease to be any entitlement on the basis of that earlier trade mark or other right – (a) to apply for a declaration that the registration of the later trade mark is invalid, or (b) to oppose the use of the later trade mark in relation to the goods or services in relation to which it has been so used, unless the registration of the later trade mark was applied for in bad faith.(2) Where subsection (1) applies, the proprietor of the later trade mark is not entitled to oppose the use of the earlier trade mark or, as the case may be, the exploitation of the earlier right, notwithstanding that the earlier trade mark or right may no longer be invoked against his later trade mark.[74]Section 48 implements arts.9(1) and (2) of the Trade Mark Directive: 1. Where, in a Member State, the proprietor of an earlier trade mark as referred to in Article 4(2) has acquiesced, for a period of five successive years, in the use of a later trade mark registered in that Member State while being aware of such use, he shall no longer be entitled on the basis of the earlier trade mark either to apply for a declaration that the later trade mark is invalid or to oppose the use of the later trade mark in respect of the goods or services for which the later trade mark has been used, unless registration of the later trade mark was applied for in bad faith. 2. Any Member State may provide that paragraph 1 shall apply mutatis mutandis to the proprietor of an earlier trade mark referred to in Article 4(4)(a) or an other earlier right referred to in Article 4(4)(b) or (c).[75]The concept of statutory acquiescence within the meaning of art.9(1) was addressed by the CJEU in Budweiser:
“[44] As observed by the Advocate General in point 70 of her Opinion, referring in particular to the Danish and Swedish language versions of art.9 of Directive 89/104, the characteristic of a person who acquiesces is that he is passive and declines to take measures open to him to remedy a situation of which he is aware and which is not necessarily as he wishes. To put that another way, the concept of ‘acquiescence’ implies that the person who acquiesces remains inactive when faced with a situation which he would be in a position to oppose. [45] For the purposes of art.9(1) of Directive 89/104 , that concept of ‘acquiescence’ must therefore be interpreted as meaning that the proprietor of an earlier trade mark cannot be held to have acquiesced in the long and well-established honest use, of which he has long been aware, by a third party of a later trade mark which is identical with that of the proprietor if that proprietor was not in any position to oppose that use. [46] That interpretation is supported by the context of art.9(1) of Directive 89/104 and by the objectives of the directive. … [50] In the light of the foregoing, the answer to parts (a) and (b) of the first question is that acquiescence, within the meaning of art.9(1) of Directive 89/104, is a concept of EU law and that the proprietor of an earlier trade mark cannot be held to have acquiesced in the long and well-established honest use, of which he has long been aware, by a third party of a later trade mark identical with that of the proprietor if that proprietor was not in any position to oppose that use.”
[76]Art.9(1) ‘acquiescence’ is thus an independent concept of Community law which can be summarised as the characteristic of a person remaining inactive when faced with a situation which he is in a position to oppose. In Budweiser the CJEU listed four pre-requisites to be satisfied before the five year period of acquiescence can start to run. The fourth was that the proprietor of the earlier right must have known that the later trade mark has been registered as well as used:
“[53] It is apparent from the wording of art.9(1) of Directive 89/104 that four conditions must be satisfied before the period of limitation in consequence of acquiescence starts running if there is use of a later trade mark which is identical with the earlier trade mark or confusingly similar. … [58] Fourthly, the proprietor of the earlier trade mark must be aware of the registration of the later trade mark and of the use of that trade mark after its registration.”
[77]In the context of applying for a declaration that the later trade mark is invalidly registered, there can be no question of the proprietor of an earlier right acquiescing to the registration until he knows that the later trade mark has been registered, so to that extent anyway this is not a gloss on the words of art.9(1).

This case

[78]It seems to me that it should make no difference to the operation of s.48/art.9(1) that the earlier right was assigned from Mr Shah to successors in running the business of the Worcester Restaurant (and its related restaurants). I have found that the Caspian Mark was not registered in bad faith. The issue in the present case is therefore whether a five year period has elapsed since Mr Shah or his successors learned of the registration of the Caspian Mark, during which period they knew that the Caspian Mark was being used by the claimants.[79]Mr Shah gave clear answers about this in cross-examination. He knew that the Caspian Mark was being used by the claimants in the five years since registration. On the other hand he did not know that the Caspian Mark had been registered until the present dispute began. The relevant five year period therefore did not start to run until around the end of 2013. The defendants have accordingly not acquiesced within the meaning of s.48/art.9(1) and are entitled to pursue their application for a declaration that the Caspian Mark is invalid.[80]I find that the Caspian Mark is invalidly registered pursuant to s.5(4)(a) and art.4(4)(b).

Section 5(4)(b)/art.4(4)(c)

[81]The defendants alleged that the Device Mark was registered in contravention of s.5(4)(b) of the Act (set out above) because the device infringed the copyright in the ELC pizza box. No real attempt was made to make good this allegation. The claimants said that they created the design in question. Their evidence is unreliable but the defendants bore the burden to prove that a third party owned a copyright on which it could have relied to prevent the registration of the Device Mark. That was not done and, as I have said, the origin of the Device Mark was not resolved. The allegation does not succeed.

Passing Off

[82]The short point in relation to passing off is that the claimants have not established that their goodwill extended as far as Worcester when the Worcester Restaurant started trading in 2004, or even that it does now. There is therefore no possibility of any relevant misrepresentation having occurred – or of any consequent passing off – as a result of trading by the Worcester Restaurant. The claim for passing off fails.

Conclusion

[83]The Caspian Mark is invalidly registered pursuant to s.5(4)(a) of the Act and art.4(4)(b) of the Trade Mark Directive. The Device Mark remains validly registered. Neither of the Trade Marks has been infringed by the defendants. The claim for passing off fails.

Cited in 1 later judgment