Caspian Pizza Ltd and Others v Maskeen Shah and Another
| Jurisdiction | England & Wales |
| Judge | Judge Hacon |
| Judgment Date | 09 December 2015 |
| Neutral Citation | [2015] EWHC 3567 (IPEC) |
| Docket Number | Case No: IP14M1335 |
| Court | Intellectual Property Enterprise Court |
| Date | 09 December 2015 |
[2015] EWHC 3567 (IPEC)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
His Honour Judge Hacon
Case No: IP14M1335
Richard Colbey (instructed by Cubism Law) for the Claimants
Richard Colbey (instructed by Cubism Law) for the Claimants
Hearing dates: 26–27 October 2015
Introduction
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.
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:
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.
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.
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.
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.
A pleaded allegation that the defendants were in breach of the franchise agreement was not pursued.
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.
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.
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.
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.
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.
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
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.
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.
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'.
In Mr Zarandi's first witness statement at paragraph 10 he stated that he was approached by Mr Shah between 2005 and 2008 for...
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Caspian Pizza Ltd and Others (Appellants/Claimants) v Maskeen Shah and Another (Respondents/Defendants)
...(CIVIL DIVISION) ON APPEAL FROM THE HIGH COURT OF JUSTICE CHANCERY DIVISION INTELLECTUAL PROPERTY ENTERPRISE COURT HH JUDGE HACON QC [2015] EWHC 3567 (IPEC) Royal Courts of Justice Strand, London, WC2A 2LL Mr Simon Harding (instructed by Cubism Law) for the Mr Jonathan Moss (instructed by R......
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Decision Nº O/665/19 from Intellectual Property Office - (Trade market), 31 October 2019
...could not register the mark.” 15 28) The applicant referred me to the case of Caspian Pizza and others v Maskeen Shah and another [2015] EWHC 3567 (IPEC) where His Honour Judge Hacon stated: “34. The claimants asserted that their goodwill associated with CASPIAN extended throughout the UK.......