Caspian Pizza Ltd and Others (Appellants/Claimants) v Maskeen Shah and Another (Respondents/Defendants)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten,Lady Justice Gloster,Lord Justice David Richards |
| Judgment Date | 23 November 2017 |
| Neutral Citation | [2017] EWCA Civ 1874 |
| Docket Number | Case No: A3/2015/4394 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 November 2017 |
[2017] EWCA Civ 1874
Lady Justice Gloster
Vice President of the Court of Appeal, Civil Division
Lord Justice Patten
and
Lord Justice David Richards
Case No: A3/2015/4394
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT
HH JUDGE HACON QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Simon Harding (instructed by Cubism Law) for the Appellants
Mr Jonathan Moss (instructed by RadcliffesLeBrasseur) for the Respondents
Hearing date: 26 October 2017
Judgment Approved
This is an appeal by the claimants from an order of HH Judge Hacon dated 18 December 2015 dismissing a claim for trade mark infringement and passing off and declaring that a UK trade mark No. 2 396 396 ("the Caspian Mark") was invalidly registered.
The second and third claimants are the co-proprietors of two UK registered trade marks:
(i) the Caspian Mark comprising the word mark CASPIAN registered with effect from 8 July 2005 in respect of restaurants and related services; and
(ii) mark No. 2 559 245 ("the Device Mark") registered with effect from 21 September 2010 in respect of certain specified foodstuffs including those suitable for making pizzas. The mark is reproduced below:
The background facts are no longer in dispute. As the judge found, the second claimant, Mr Zarandi, started a pizza business in Birmingham in 1991 trading under the name "Caspian Pizza". The business has subsequently expanded into a chain of restaurants under the same name in and around Birmingham and has acquired goodwill associated with the Caspian and the Device Marks. Since 2011 the third claimant has been involved in the business and on 7 August 2012 Mr Zarandi and Mr Zand licensed both marks to the first claimant ("CPL") through which the business has been conducted since that time. The fourth named appellant, Caspian Franchise Holdings Limited, was not a claimant in the proceedings but was added as a party to the appeal by Floyd LJ on 18 October 2016. It was set up in February 2016 and both trade marks were assigned to it. CPL remains the licensee of the marks.
The defendants operate pizza restaurants in Worcester using the Caspian name. The first of these restaurants opened in 2002 at St Martin's Gate, Worcester and traded until 2005. A second restaurant also trading under the name Caspian Pizza was opened at 82–84 Sidbury, Worcester in 2004. Since then further outlets have been opened in Malvern Link and Droitwich. The business has been carried on through the second defendant since 2011.
The proceedings before Judge Hacon concerned only the restaurant at 82–84 Sidbury. I shall refer to it as the judge did as the Worcester Restaurant. The allegation in the amended particulars of claim was that in 2008 the first defendant, Mr Shah, entered into an oral franchise agreement with the claimants permitting him to operate the Worcester Restaurant under the Caspian Pizza name; that it was a term of this agreement that any goodwill generated by the use of the mark would be vested in or assigned to the first claimant; and that monthly royalty payments would be made for the use of the name. It was claimed that in 2013 the defendants refused to regularise the position by entering into a written agreement and failed to pay the royalties due. In November 2013 CPL terminated the agreement but the defendants have continued to trade using the Caspian Pizza name and have therefore infringed both of the claimants' registered trade marks.
The defence joined issue with the claimants on whether the defendants have operated under a franchise agreement as alleged but also averred that since 2002/2003 the defendants have acquired goodwill at least in Worcester from the use of the Caspian Pizza name. On this basis, the defendants counterclaimed for a declaration that both the Caspian and the Device Marks are invalid because they were registered in contravention of s.5(4)(a) of the Trade Marks Act 1994 (" TMA 1994").
It was conceded by the defendants at the trial that the Worcester Restaurant uses signs similar to the registered trade marks in relation to the supply of similar goods or services: see TMA 1994 s.10(2)(b). Nor was the judge required to investigate the likelihood of confusion. But the defendants relied on three defences to the claim for trade mark infringement:
(i) s.11(3) TMA 1994;
(ii) the use of the Device Mark with the consent of the claimants; and
(iii) acquiescence.
Section 47(2)(b) provides:
"(2) The registration of a trade mark may be declared invalid on the ground—
…..
(b) that there is an earlier right in relation to which the condition set out in section 5(4) is satisfied,
unless the proprietor of that earlier trade mark or other earlier right has consented to the registration.
Under s.5(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.
A person thus entitled to prevent the use of a trade mark is referred to in this Act as the proprietor of an "earlier right" in relation to the trade mark."
Article 4(4)(b) of the Trade Mark Directive (2008/95/EC) is to the same effect.
Limits on the effect of a registered trade mark are also imposed by s.11 TMA 1994. Section 11(3) provides:
"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)."
The judge rejected the defences based on consent and acquiescence. Nor did he accept the claimants' evidence about the franchise agreement. He found that the St Martin's Gate and subsequently the Worcester Restaurant had established sufficient goodwill in the CASPIAN name in 2002 and 2004 so as to found an action for passing off against anyone using the name to run a pizza restaurant in Worcester. The reliance by the defendants on s.11(3) was, however, contested on the basis of the unchallenged evidence of Mr Zarandi that he had operated a pizza business using the CASPIAN name in Birmingham in 1991.
In relation to s.11(3), the claimants contended that "the use" of the trade mark by the proprietor referred to in paragraph (a) of the definition of "earlier right" in that section meant pre-registration use anywhere and did not have to be use in the locality in which the defendants had established goodwill in the same mark. On this basis the defendants would not satisfy the conditions in s.11(3). The judge, however, concentrated on Article 6(2) of the Directive which s.11(3) was intended to implement and which is in these terms:
"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."
Judge Hacon interpreted Article 6(2) as limiting the enforcement of the registered mark against the defendants in Worcester even though Mr Zarandi had established goodwill in the CASPIAN name in Birmingham from 1991. In my view he was right to do so. There is nothing in Article 6(2) which in terms defines an earlier right by reference to pre-registration use of the mark by the proprietor anywhere in the UK. It would also be odd if the s.11(3)/Article 6(2) defence were denied to the defendants on the basis of the claimants' prior use of the mark in Birmingham but they were nonetheless entitled to object to the subsequent registration of the mark under s.5(4)(a) to the extent that its UK-wide registration would include...
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