Special Effects Ltd v L'Oréal SA

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Lloyd
Judgment Date12 Jan 2007
Neutral Citation[2007] EWCA Civ 1
Docket NumberCase No: A3 2006/0744

[2007] EWCA Civ 1

[2006] EWHC 481 (Ch)

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

INTELLECTUAL PROPERTY

THE CHANCELLOR OF THE HIGH COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

Lord Justice Chadwick

Lord Justice Lloyd and

Lord Justice Leveson

Case No: A3 2006/0744

Between
Special Effects Limited
Claimant/First Part 20 Defendant/Respondent
and
(1) L'Oreal SA
(2) L'Oreal (UK) Limited
Defendants/Appellants
and
Special Effects (a partnership of Jenifer Ann Jones and David Charles Jones)
Second Part 20 Defendant
International Trademark Association
Intervener

Henry Carr Q.C. and Jacqueline Reid (instructed by Baker & McKenzie) for the Appellants

Richard Meade (instructed by Pinsent Masons) for the Respondent

Emma Himsworth (instructed by Slaughter & May) for the Intervener

Lord Justice Lloyd
1

This is the judgment of the court. The Claimant is the proprietor of a registered trade mark SPECIAL EFFECTS in respect of goods in Class 3, covering (among others) soaps, perfumery and other cosmetics including hair products. It alleges that the Defendants' use of “Special FX” in relation to a range of hair products sold in the UK infringes its trade mark. The Defendants deny infringement, for a number of reasons, but also seek, if necessary, to counterclaim for a declaration of invalidity of the registered trade mark, and for passing off. They have also obtained the registration of a Community trade mark SPECIAL FX in respect of goods in Class 3, though an appeal is pending and the effect of the registration is therefore suspended.

2

The Claimant contends that the Defendants are not entitled to challenge the validity of its UK trade mark, because the First Defendant opposed the application for registration on similar grounds, but failed. It is said that this unsuccessful attempt debars the First Defendant, and the Second Defendant as well, from raising again points which were taken in the course of the opposition proceedings, and that the effect of the resulting estoppel also prevents the claim in passing off.

3

Sir Andrew Morritt, Chancellor, heard preliminary issues arising out of the contention that the Defendants were estopped, and held that the Claimant was correct. On this appeal, for which he himself gave permission, the Defendants argue that his conclusions were wrong.

4

The point is seen as being of considerable importance, in that, if the Chancellor's decision is right, the practice in relation to opposition proceedings will change in one or both of two ways: either parties will not attempt to oppose or, if they do oppose, they will seek to do so in a much more substantial way, similar to the conduct of litigation in court. The implications of the decision were such that the International Trademark Association intervened, with permission, and the Institute of Trade Mark Attorneys also made a written submission to us. The Trade Marks Registry chose not to intervene. We were much assisted by full, clear and helpful submissions from Counsel for the parties and for the Intervener.

The facts

5

Although the essential points are of law, it is necessary to bear clearly in mind the facts from which they arise. In order to do justice to some of the submissions made to us, we will set these out in some detail.

The proceedings in the Trade Marks Registry

6

On 30 June 2000 Mr and Mrs Jones applied to the Trade Marks Registry to register the mark SPECIAL EFFECTS in relation to goods in Class 3 as well as services in Class 42. After initial examination the application was advertised in August 2000. This attracted the attention of L'Oreal. On behalf of the First Defendant, trade mark agents gave notice of opposition to the application in November 2000. The grounds of opposition included the following contentions:

i) The words SPECIAL EFFECTS were not distinctive in relation to the goods and services in question, because they would be understood as meaning make-up used to produce a special effect such as is used in films and television. Section 3(1)(a) of the Trade Marks Act 1994 (the Act) was relied on in this respect.

ii) The words were not distinctive as they would be understood as laudatory. Alternatively if the products do not produce a special effect the public would be deceived by the use of the mark. This was said to attract sections 3(1)(a) and 3(3)(b) of the Act.

iii) L'Oreal had made extensive use of the letters FX in the UK in relation to hair products and had a substantial goodwill and reputation in those letters. They had also used the trade mark in the form SPECIAL FX. Use of the mark SPECIAL EFFECTS would be liable to be prevented by an action for passing off based on L'Oreal's reputation in the letters FX. The relevant provision here was section 5(4)(a).

iv) L'Oreal had three UK registered trade marks (which we will call the earlier marks), one for FX and a device, and the others for FX STUDIO LINE and a device, for similar or identical goods and services to those in relation to which the application for SPECIAL EFFECTS was made. The earlier marks were similar to SPECIAL EFFECTS because they include the letters FX, phonetically and conceptually identical to the word EFFECTS. Accordingly, the subject of the pending application was similar to the earlier marks and was to be registered for similar or identical goods and services, and there was therefore a likelihood of confusion including a likelihood of association with the earlier marks. This provided the basis for reliance on section 5(2)(b).

7

Mr and Mrs Jones disputed each of these grounds of opposition. They admitted the registration of the earlier marks but not that FX or SPECIAL FX had been used within the UK or that L'Oreal had acquired any reputation in them. In particular they denied that FX or SPECIAL FX were similar or identical to the mark applied for, so as to be subject to an action for passing off, and that there was any likelihood of confusion on the part of the public or of association with the earlier marks.

8

In support of the opposition, a declaration was filed on the part of José Monteiro, Chief Trade Mark Counsel for the First Defendant, which he said he referred to as “my Company”. In his declaration, dated 10 July 2001, he said that “my Company” had been using the trade mark FX in the UK since September 1995 in relation to hair products. He gave figures for the turnover of such sales for each year from 1995 onwards and for the first four months of 2000, as well as figures for the annual cost of advertising and marketing, with examples of the latest advertising campaign. He also said that “my Company” marketed products under the SPECIAL FX trade mark, exhibiting examples of the packaging used. He said that the first use of this mark was 1 June 2000, and gave figures for the turnover and advertising in relation to those sales, with examples of the advertisements. He asserted that SPECIAL FX had been launched with a great deal of publicity in the month before the application was filed for SPECIAL EFFECTS, and that therefore there was a great chance of confusion as to the origin of the applicants' product. With hindsight it is clear that only some of his references to “my Company” are to the First Defendant. Those which refer to use of the mark in the UK are to the Second Defendant.

9

Mr and Mrs Jones put in a declaration in answer. The appeal bundles do not include a copy of this, but its relevant content can be seen from Mr Monteiro's declaration in reply, dated 3 January 2002, and from the terms of the Hearing Officer's decision. They had searched unsuccessfully for examples of relevant advertisements in the magazines mentioned in his first declaration published in the period May, June and July 2000. He put some magazines in evidence, but all were dated after July 2000. He also put in evidence a schedule from L'Oreal's media buyer which was said to record advertising for the FX and Special FX products. This schedule does not show any advertising which can be identified as being for Special FX (as opposed to FX) products before 1 July 2000.

10

The matter came on for hearing before one of the Registry's Hearing Officers, Mr Allan James, on 8 August 2002. There had not been any application for disclosure or for cross-examination. Each party was represented by trade mark agents. As summarised in their skeleton argument, the applicants contested the points based on confusing similarity and on passing off by putting the use of FX by L'Oreal in context. The context included trade marks L'OREAL and STUDIO LINE, as well as a logo consisting of three squares, and other words of varying significance. There was said to be no evidence that these products were known with reference to FX alone. Even if they were, there would not be confusion with SPECIAL EFFECTS. As to the SPECIAL FX mark, the applicants pointed out that use before 1 July 2000 was not supported by any document, and was therefore only vouched for by Mr Monteiro's uncorroborated statement. The opponent's skeleton argument did not refer to goodwill or reputation in Special FX, but only in FX, but it seems that reliance was placed on Special FX at the hearing.

11

It appears from the terms of the decision, given on 22 August 2002, that, at the hearing, the opponents were allowed to amend the grounds of opposition so as to rely on section 3(1)(c) rather than, as before, section 3(1)(a) in relation to the first and second points identified above. In relation to distinctiveness the Hearing Officer applied the then latest decision of the European Court of Justice on the point, Procter & Gamble...

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