Inter Lotto (UK) Ltd v Camelot Group Plc

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Laddie
Judgment Date06 Jun 2003
Neutral Citation[2003] EWHC 1256 (Ch)
Docket NumberCase No: HC 03 C00093

[2003] EWHC 1256 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Honourable Mr Justice Laddie

Case No: HC 03 C00093

Inter Lotto (uk) Limited
Claimant
and
Camelot Group Plc
Defendant

Mr Geoffrey Hobbs QC and Mr Philip Roberts (instructed by McDermott, Will & Emery for the Claimant)

Mr Michael Silverleaf QC and Mr Michael Hicks (instructed by Jones Day Gouldens for the Defendant)

Hearing dates: 20 21 May, 2003

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.

Mr Justice Laddie Mr Justice Laddie
1

This is the judgment on the trial of a preliminary issue ordered by consent by Patten J on 19 March 2003. The claimant, Inter Lotto (UK) Limited ("Inter Lotto"), is engaged in the business of running lotteries on behalf of a number of charities. The defendant is Camelot Group Plc ("Camelot"). It also runs lotteries. In particular it manages the National Lottery under an operating licence from the National Lottery Commission ("NLC").

2

By claim form dated 9 January of this year, Inter Lotto brought proceedings for trade mark infringement and passing off against Camelot. For present purposes it is only the passing off claim which is of interest. In substance Inter Lotto alleges that continuously since 4 August 2001 it has promoted and organised the running of lotteries throughout the country in relation to which it has used the trade mark "HOT PICK". It claims to have built up a reputation and goodwill in that mark. It alleges that from about 7 July 2002, Camelot launched a new lottery game under or by reference to the trade mark "HOTPICKS". It alleges that HOTPICKS is confusingly similar to HOT PICK and that the defendant's activities have resulted in confusion in the market place and constitute passing off.

3

Camelot raises a number of defences. For example it says that Inter Lotto did not use HOT PICK as a mark for a lottery and, if it did, it did not start promoting the mark until much later than it claims and that, for various reasons which are not relevant to the current application, Camelot's activities have not and will not cause any or any significant damage to Inter Lotto. However, central to the current application are the defences arising out of Camelot's use of a registered trade mark. By the terms of its operating licence, all intellectual property rights relating to the National Lottery are owned by NLC and licensed to the operator, Camelot. On 17 October 2001 Camelot caused NLC to apply to register the name HOTPICKS as a trade mark under application number 2 283 392 ("the '392 mark"). It was advertised for opposition on 7 August 2002. Inter Lotto opposed on 7 November 2002. That opposition in the Trade Marks Registry is currently stayed pending the outcome of the current application. A number of other trade mark applications were made and, in some cases, opposed. They can be ignored for present purposes.

4

Camelot was exclusively licensed by NLC to use the '392 registered mark on 24 April 2002. It pleads that its use of the registered trade mark gives it a number of defences. The only ones relevant to this application are pleaded as follows:

"11. In the premises:

(a)

by reason of the provisions of section 9 of the Trade Marks Act 1994 ("the Act") and the NLC Licences, the Defendant has at all material times had the exclusive rights in [the '392 mark] ; …

(c)

by reason of the provisions of sections 9, 10(1), 10(2) and 30 of the Act and the provisions of the NLC Licences, upon the premises of the particulars of claim (namely that the word HOTPICKS so resembles the words HOT PICK when used in relation to lotteries as to give rise to confusion), the Claimant's use of the words HOT PICK in relation to its lottery game is and always has been unlawful and may therefore not be relied upon by the Claimant in support of any action for passing off against the Defendant which is the lawful user of the trade marks the subject of [the '392 mark].

13

… By reason of the facts and matters set out in paragraph 11 above, no goodwill or reputation in the words "Hot Pick" can accrue to the Claimant and the Claimant may not rely upon any use it may have made of the words "Hot Pick" in relation to any case made against the Defendant.

5

The effect of these pleas may be summarised as follows. Because of the exclusive rights which will exist in NLC's trade mark, all use of Inter Lotto's mark after the date of registration is to be treated as unlawful. As a result, Inter Lotto can not rely upon any reputation or goodwill generated by such unlawful use (i.e. after 17 October, 2001) in support of its passing off case. This was the way in which Mr Silverleaf put his client's case:

"The claimant's use of its mark is unlawful and cannot found an action

If the defendant is entitled to the benefit of a valid trade mark registration, it has the exclusive right to use the mark. It follows that the claimant's use of the same mark is unlawful. On this basis alone the claim for passing off should fail: ex turpi cause non oritur actio. There has to be a nexus between the illegality and the claim for passing off: ICI v Berk [1981] FSR 1. However, it is difficult to think of a closer nexus than that the use relied upon in support of a passing off claim is an infringement of a trade mark registration. The effect of an unlawfully acquired reputation has been raised before and it has been held that such a reputation is incapable of supporting a claim for passing off." (defendant's skeleton paragraph 3.23)

6

The point is emphasised in a supplementary skeleton argument served by Mr Silverleaf shortly before the hearing. In response to a large number of authorities cited in the claimant's skeleton by Mr Hobbs QC, who appears for Inter Lotto, Mr Silverleaf expressed his client's position as follows:

"The defendant's case is based upon the proposition that a valid trade mark registration which is of such scope as to prevent the specific user relied upon by the claimant to support its claim for passing off entitles the defendant to restrain the claimant from infringing his registration and is therefore a bar to the passing off claim." (paragraph 2, emphasis as in the original)

7

Thus, because Inter Lotto's use of its mark after 17 October 2001 was unlawful, it was, per se, incapable of giving rise to any goodwill and reputation which a court would be prepared to protect. The date of registration of Camelot's mark therefore acts as a guillotine. Only rights accrued before then can be taken into account in support of Inter Lotto's case of passing off.

8

Inter Lotto's case is that it can rely on all the goodwill built up by its alleged use of the HOT PICK mark from 4 August 2001 until Camelot commenced using HOTPICKS in July 2002. It is not disputed that, absent the special defence which is central to this application, it is the date when the defendant started using its mark which is relevant for determining the passing off claim. On the other hand Mr Hobbs accepts that if Camelot's plea is good in law, so that it can only rely on the reputation and goodwill generated in the period prior to the date of application to register the '392 mark, that is to say prior to 17 October 2001, this could have a significant impact on his client's passing off claim since it would need to demonstrate the development of sufficient reputation and goodwill in a few months at the very early stages of its use of the HOT PICK mark. Mr Hobbs argues that defendant's plea is bad in law. Inter Lotto can rely on the later and more extensive use which it alleges.

9

It is against that background that the parties agreed to the making of the consent order requiring the determination of the following preliminary issue:

"Is the 17 th October 2001 (the date on which the National Lottery Commission applied under application number 2283392 to register the designation HOT PICKS as a trade mark) the relevant date at which the claimant's reputation and goodwill for its claim in passing off falls to be assessed?"

10

Before considering the arguments advanced by the parties, it is necessary to have a clear understanding of what is in issue. I have already referred to the relevant pleadings in the defence and passages in Mr Silverleaf's skeleton arguments. However the nature of Camelot's case changed significantly during the course of the hearing.

11

It is possible to formulate a defence to the passing off action in two ways. First, it could be said that Inter Lotto has no enforceable goodwill and reputation. If that is the case, the claim will fail. Inter Lotto will have no rights which it can assert. The sword is taken from its hand. Second, it could be said that, even if Inter Lotto does have enforceable goodwill and reputation, Camelot cannot be restrained because it has an overriding entitlement to do the acts of which complaint is made. In such a case Camelot would have a personal shield. As can be seen from the pleadings and extracts from the its skeletons above, the plea advanced on behalf of Camelot was of the first type. The numerous authorities relied on by Mr Hobbs addressed the second type of defence. Because they did so, Mr Silverleaf said they were irrelevant and did not deal with the point he was raising. However, during the course of his speech he changed position. He asserted that Camelot's ownership of the '392 registered mark provided it with an entitlement to use it. He said that his client had a "better" claim than Inter Lotto to the marks in suit. He said that the issue was one of priority of rights and "hierarchy". His client's right to use its registered trade mark overrode any common law rights Inter Lotto might have.

12

Although this second type of defence is...

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