Fit Kitchen Ltd v Scratch Meals Ltd
| Jurisdiction | England & Wales |
| Judge | Hacon |
| Judgment Date | 29 July 2020 |
| Neutral Citation | [2020] EWHC 2069 (IPEC) |
| Date | 29 July 2020 |
| Docket Number | Case No: IP-2018-000157 |
| Court | Intellectual Property Enterprise Court |
[2020] EWHC 2069 (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: IP-2018-000157
David Ivison (instructed by Appleyard Lees IP LLP) for the Claimants
Beth Collett (instructed by Waterfront Solicitors LLP) for the Defendant
Hearing date: 17 June 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE Hacon
Introduction
The Second Claimant (“Mr Lodhia”) is a businessman who with his late sister had the idea of setting up a provider of healthy foods. The First Claimant (“FKL”) was incorporated in February 2015 as the vehicle for the business. FKL started trading in 2015 under the name “Fit Kitchen”.
Since June 2016 its products have been marketed and sold solely using the website www.fitkitchen.uk.com. Customers register online, enter their details including food preferences, and ready meals are delivered to the customer's door. Among the details entered are the customer's desired macronutrients or “macros” – the relative proportions of carbohydrates, protein and fat preferred. The meals delivered are advertised as conforming with the customer's macros and as providing healthy eating.
On 8 August 2016 FKL applied to register a trade mark in respect of “Catering (Food and drink); Food preparation and services” in Class 43: The mark (“the Trade Mark”) was granted as UK Trade Mark No. 3179170 on 4 November 2016. It takes this form:
The Defendant (“SML”) makes ready meals, selling them through supermarkets. Between December 2016 and November 2019 SML sold its meals under the sign FIT KITCHEN. This is an image of one of SML's meals in its former packaging:
The Claimants allege that the sales of SML's products under the FIT KITCHEN sign infringed the Trade Mark and constituted passing off.
Those allegations are denied by SML which counterclaims for revocation of the Trade Mark pursuant to sections 47(1) and 3(6) of the Trade Marks Act 1994 (“the Trade Marks Act”).
David Ivison appeared for the Claimants, Beth Collett for SML.
The issues
The issues as argued at trial fell under three heads. The first was the validity of the Trade Mark which turns on whether it was registered in bad faith. Under the second were the issues of infringement under ss.10(2) and 10(3) of the Trade Marks Act. The third concerned passing off. I will take them in that order.
The witness
Mr Lodhia was the only witness. He was a very good witness, giving clear answers without prevarication.
Bad Faith and the validity of the Trade Mark
The evidence
On 17 May 2016 the Registrar of Companies sent a letter to FKL headed “Companies Act 2006 (Section 1000(3))” stating:
“The Registrar of Companies gives notice that, unless cause is shown to the contrary, at the expiration of 2 months from the above date the name of FIT KITCHEN LIMITED will be struck off the register and the company will be dissolved. Upon dissolution all property and rights vested in, or held in trust for, the company are deemed to be bona vacantia, and accordingly will belong to the crown.”
Section 1000 of the Companies Act 2006 as amended (“the Companies Act”) is concerned with companies which, on the reasonable belief of the registrar, are not carrying on business or in operation and is therefore liable to be struck off:
“ 1000 Power to strike off company not carrying on business or in operation
(1) If the registrar has reasonable cause to believe that a company is not carrying on business or in operation, the registrar may send to the company a communication inquiring whether the company is carrying on business or in operation.
(2) If the registrar does not within 14 days of sending the communication receive any answer to it, the registrar must within 14 days after the expiration of that period send to the company a second communication referring to the first communication, and stating –
(a) that no answer to it has been received, and
(b) that if an answer is not received to the second communication within 14 days from its date, a notice will be published in the Gazette with a view to striking the company's name off the register.
(3) If the registrar –
(a) receives an answer to the effect that the company is not carrying on business or in operation, or
(b) does not within 14 days after sending the second communication receive any answer,
the registrar may publish in the Gazette, and send to the company a notice that at the expiration of 2 months from the date of the notice the name of the company mentioned in it will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved.
(4) At the expiration of the time mentioned in the notice the registrar may, unless cause to the contrary is previously shown by the company, strike its name off the register.
(5) The registrar must publish notice in the Gazette of the company's name having been struck off the register.
(6) On the publication of the notice in the Gazette the company is dissolved.
(7) However –
(a) the liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved, and
(b) nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register.”
It was common ground that if a company fails to file its annual accounts, that may be sufficient to give the registrar reasonable cause to believe that a company is not carrying on business. FKL's accounts for the year 2015–16 were not filed. It is to be assumed that since the letter of 17 May 2016 was sent under s.1000(3) this was the second communication from the registrar and there may have been publication of a notice in the Gazette that upon the expiration of two months from 17 May 2016 FKL would be dissolved unless cause was shown to the contrary. In all events, the company was dissolved on 2 August 2016. On 30 May 2017 an application was made on behalf of FKL to restore it to the register. It was restored on 11 December 2017.
The significance of this is that FKL applied for the Trade Mark on 8 August 2016, after the date of dissolution and before the date of restoration to the register.
Mr Lodhia said that he could not be completely sure why he did not receive notifications from the registrar, but the most likely reason was that for some years, including 2016 and 2017, there had been persistent problems with post intended for FKL being wrongly delivered to the East London Arts and Music School. The address of the school is 45 Maltings Close, London E3 3TA whereas Mr Lodhia's address for correspondence at that time was 45 Maltings Close, London E3 3TB. Mr Lodhia explained that since 2017 there had been large scale instances of post destined for the school being sent to him. This prompted the placing of a notice at Mr Lodhia's property stating “We are not East London Arts and Music School”. The school was not yet operating in 2016 although it was being set up. It did not receive students until September 2017.
It was not in dispute that in all likelihood FKL's failure to file its accounts for the year 2015/16 led to the sending of notices by the registrar and the dissolution of the company. There was a letter in evidence from FKL's accountants stating that they were at fault in failing to file the accounts.
Mr Lodhia continued his explanation of events. In May 2017 he noticed that FKL's bank app on his mobile phone would not allow the transfer of funds, showing “error”. He went to the branch of Metro Bank in the City and was told that Companies House had frozen the account. He described this as coming to him as a massive shock. At the bank's suggestion he contacted Companies House, discovered what had happened and asked a lawyer friend how to go about restoring FKL to the register. The application was made on 30 May 2017 and the company was restored on 11 December 2017.
Mr Lodhia' evidence was that during the period in which FKL was dissolved he continued running the Fit Kitchen business as before. If the business is not deemed to have been conducted by FKL during that period (as to which, see below), it was conducted by Mr Lodhia. On advice from Mr Lodhia's solicitor, on 4 October 2018 Mr Lodhia and FKL each granted to the other a sole licence to use the name FIT KITCHEN and the device registered as the Trade Mark, retrospectively from 2 August 2016, and a sole licence to use the Trade Mark itself, retrospectively from 8 August 2016. The licences also provided that goodwill accruing from the licensee's use of the name or device would accrue to the licensor.
The pleaded argument of bad faith
I will set out SML's pleaded case on bad faith because it came to have some significance (it was not drafted by Ms Collett):
“33. The First Claimant's Mark should be declared invalid pursuant to s. 47(1) of the Trade Marks Act 1994 (“the Act”) on the ground that the application for the First Claimant's Mark was made in bad faith contrary to s. 3(6) of the Act.
PARTICULARS
(1) The application for the First Claimant's Mark was made in the name of the First Claimant on 8 August 2016.
(2) The First Claimant was dissolved and struck off the register of companies on 2 August 2016.
(3) The Claimants knew that the First Claimant was liable to be dissolved and struck off as from 17 July 2016 as they had received the notice from Companies House at p. 10 of Annex 2.
(4) The Second Claimant filed, alternatively...
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