Intellectual Property Law in the UK - Research Paper Example

1.0 Prior to 2010: Protecting the Business 1.1 Trademark In addition to the trademarks Betty registered, viz. “GreenGauge,” “Green,” and “GGG,” she should have also registered “Betty’s” and “Triple G” to ensure her right to use these marks exclusively. Moreover, it is a good anticipatory move to obtain a Community Trademark (or CTM), which can extend protection over Betty’s trademarks throughout the European Community. As registration in the Intellectual Property Office in the UK secures trademark protection only within its territory, it would have been a wise move to obtain protection that extends to the whole of the EU in preparation for a potential expansion in the future. In addition, Betty had the option to apply for trademark protection in individual states within the UK. In both instances, she can use her UK application for trademark within six months of such application to apply for a CTM, and have the application treated as if filed on the day the UK application was filed. 1 The same application can also be used as a springboard to an application for trademark registration in 85 other countries all over the world, or the applicant may also indicate specific countries (but Member States), under the Madrid Protocol with just one application. The Madrid Protocol and the Madrid Agreement are components of a treaty entered into by various countries all over the world to register and protect trademarks of registrants from Member States. 2 1.2 Registration with the Companies House Betty should have also incorporated the business under the Companies Act 2006 and registered it with the Companies House, where she will be registering, in the process, the company name. Under s. 66 of the said Act, it is prohibited to register a name that has similarity or close similarity with other names previously registered with it. The purpose of this would have been to reinforce her exclusive use to her company name, whether ‘GGG’ or ‘Greengauge,’ and be able to interpose a formal objection in the event any other company will register with the same name. 1.3 Employment Contract Betty’s employment contracts with her employees should have also stipulated the express prohibition, once contract of employment is severed, of engaging in the same business and using company clients for that purpose. Such clauses, inserted into the employment contract, are often called ‘restraint of trade’ and ‘confidentiality’ clauses. 3 In the case of Gilford Motor Co Ltd v Horne, 4 the Court of Appeal sustained an agreement between an employer and his employee contained as a clause in the employment contract prohibiting the employee to solicit the employer’s clients once he severs his employment with the company. Although this is primarily a case of piercing the corporate veil, the facts and issues in this case is applicable to Betty’s case, since the employee also engaged in the same business as the employer after he left the company and solicited from the employer’s clients. After he was apprised that he may be breaching the contract he entered into with his former employer, he set up a company in the name of his wife and continued with the same activities. The Court ruled that a breach of contract, after it had used its prerogative to set aside the veil of incorporation, was committed by the former employee. 2.0 2010: Protective Actions 2.1 Use of ‘Betty’s Produce’ Had Betty also registered the name “Betty’s” with the IPO (then called The Patent Office) or registered it in the Companies House as part of the incorporation process, she could have contested Jenny de Winter’s use of ‘Betty’s Produce’ as well as her application for it as her trademark. In such an event, the appropriate process would be to pursue an infringement action against Jenny on the ground that she is using a registered trademark that belongs to another. The basis for this is ss. 9 and 10 of the Trade Lark Act 1994, which confers, amongst others, the exclusive right to use a trademark to its holder, which is infringed if another uses the same for similar goods or services for which it was registered without the consent of the holder. As it is, Betty cannot now contest Jenny’s use of “Betty’s Produce” under the said law. Nevertheless, Betty can resort to the more difficult and more expensive common law action of ‘passing off.’ This action requires proof of express or implied misrepresentation and damage to the goodwill of the plaintiff and is resorted to when the trademark in question is unregistered. In the case of Erven Warnink v Townend & Sons Ltd, 5 the Court enumerated five factors to make good a claim of ‘passing off’ after the plaintiff, a primary producer of Advocaat, a liquer made from egg yolks, brandy and other ingredients, filed a case against the defendant for producing and selling a drink called Keeling’s Old English Advocaat, where the main ingredients were Cyprus wine and egg. Lord Diplock established these factors as: misrepresentation; by a trader during the course of his business; made to customers, potential and prospective; for the purpose of destroying the goodwill or business of the plaintiff, and; causes damage, actual or potential, to the plaintiff. In this case, the almost similar labels did not create confusion in the minds of the public as between the two products but diluted the meaning of the word ‘Advocaat.’ 6 These five elements have been trimmed down to three in subsequent cases and the test related to ‘passing off’ is now known as the classic trinity test composing of: goodwill; misrepresentation, and damage. The action of ‘passing off’ does not protect the trade name itself but the goodwill that the trader has built up for his business over the years. Thus, it is not the use per se of the trade name of the plaintiff that the ‘passing off’ action protects but the use of that trade name in relation to a business similar to that of the plaintiff. In the Harrods Ltd v Harrodian School Ltd, 7 the Court rejected the plaintiff’s contention that the use by the defendant of the name ‘Harrodian School’ to the school he had set up will cause damage to the goodwill that the trademark Harrods has gained through the years. The Court said that “To be actionable, the confusion caused must lead the public to believe that the goods or services offered by the defendant are the goods or services of the plaintiff and by reason of that erroneous belief in the public be likely to cause damage to the goodwill of the plaintiff’s business.” Put another way, there must be a common field of activity between the plaintiff and the defendant’s businesses. Applying this dictum to the case at hand, there is great likelihood that the courts will sustain Betty once she files an action against Jenny. First, she has already gained a lot of goodwill over the years when she marketed her produce using the name “Betty’s” and secondly, Jenny not only used a trade name that is similar to ‘Betty’s’, she is also using it to market the same kind of goods as Betty had, when she was still marketing her produce as “Betty’s.” Although she rebranded her business, nevertheless, the business persists and many of her customers might still connect it to the business she carried on as “Betty’s”. This has the potential to create confusion in the mind of customers and destroy the goodwill of Betty’s trade. However, the existence of confusion in the minds of the public does not by itself make a case of ‘passing of’ but what is important is that the use of the trademark to the business by the defendant is “calculated to deceive” according to the court in Spalding v Gamage. 8 Thus, misrepresentation may either be express, as in the case of Frank Reddaway Ltd v George Banham, 9 where the defendant who was an ex-employee of the plaintiff used the name ‘Camel Hair Belting’ in his machine belting-making business, which are the exact name and business of his former employer, or it may be implied. In the Scottish case of Haig & Co v Forth Blending Co, 10 the plaintiff succeeded in an action of ‘passing off’ against the defendant who used the same bottle shape to sell whiskey as his although the labeling was different. In holding for the plaintiff, the Court rationalised that although only the bottle shapes were similar and there would be no confusion unless they were opened revealing their content viz. whiskey, the fact that both were sold in pubs, in opened condition with a pourer at the top attached, the likelihood of confusion between the two products was high. The likelihood of confusion is high as well in the present case considering that the business of Betty and Jenny are the same and that Betty used to trade under the name ‘Betty’s.’ Operating as ‘Betty’s’ for a number of years, Betty’s business had already gained substantial goodwill in the eyes of the public and must have already been associated with the business considering that it is also her name. In the case of Bulmer (H P) Ltd v J Bollinger SA 11 the Court explained that the element of damage in a ‘passing off’ case need not be actual: “It is well-settled that the plaintiff in a passing-off action does not have to prove that he has actually suffered damage by loss of business or any other way. A probability of damage is enough, but the actual or probable damage must be damage to him in his trade or business, that is to say, damage to the goodwill in respect of that trade or business.” 12 In the present case, there is no doubt that in selling goods that are similar to Betty’s couple by the use of trade name closely similar to her old trade name has the potential of damaging Betty’s goodwill and business. First, if Jenny will not be able to sustain the kind of quality of the produce that Betty has cultivated through the years with her produce and people buy Jenny’s goods thinking that they are Betty’s goods, Betty’s goodwill will sustain damage. Secondly, if customers will buy Jenny’s goods because they are associating it to Betty’s goods, the goodwill of Betty’s business still suffers because of the decreased patronage Jenny’s business will cause. In addition, had Betty wisely employed preventive techniques, such as inserting confidentiality and restraint of trade clauses into the employment contract, she could have used them as preliminary leverage against Jenny to deter her from making use of her own list and contacts. However, there is a view that these clauses may be difficult to enforce or may fail because the court may find them to be unreasonable or when the information fails to be categorised as a trade secret, and therefore cannot protected by the confidentiality doctrine. 13 Nevertheless, Betty may also opt to pursue an action for the protection of trade secret. In Faccenda Chicken Ltd v Fowler, 14 the Court ruled that information considered as trade secret, the knowledge of which was gained by the employee in the course of his employment cannot be used or revealed by him even after he is no longer connected with the employer, and such information will be protected even in the absence of a contract to that effect. There is, however, no hard and fast rule as to what constitutes ‘trade secret.’ In SBJ Stephenson Ltd v Mandy, 15 the Court used the distinction between objective knowledge and subjective knowledge to distinguish trade secrets from non-trade secrets. In this case, the defendant signed a contract of employment with an insurance broker that has a confidentiality clause incorporated on it as well as an express prohibition from soliciting the clients of the company for a period of 12 months after severing employment from it. After he was offered work by another insurance broker, the defendant left the company and used the list of clients for solicitation with his new employment even before the 12 months has passed from the time of his resignation. When the case reached the Court, it ruled that the employer is entitled to protect itself and that the employee is prohibited from using or revealing objective information it acquired in the course of employment and that the non-solicitation clause was also a legitimate way of protecting itself. Another alternative is for Betty to file an action against Jenny for breach of confidentiality under the ‘springboard doctrine’ enunciated in the case of Terrapin v Builders Supply Co (Hayes) Ltd (1959) 16 which the Court referred to as: “… a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication, and springboard it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public.” Filing an action under the springboard doctrine is an alternative to filing a case for protection of trade secret, since there may be difficulty in establishing the knowledge gained by Jenny, viz. lists of farmers and restaurants, as trade secret. The knowledge and use of such list may not necessarily constitute a trade secret and therefore protected by the common law doctrine of confidentiality. 2.2 The GGG Case If the trademark registration of Betty for ‘GreenGauge,’ ‘Green’ and ‘GGG’ was successful, then it is likely that the Intellectual Property Office (IPO) will notify her that the delivery firm is registering a trademark similar to hers and she should file an opposition letter with the Office. Even of the IPO fails to notify her or of she was not able to file her opposition in time and the IPO has accepted the application of the delivery firm, she could still file an opposition within the publication period of the registration in the Trade Marks Journal. An opposition process subsequently follows in which the merits of the opposition and the answer will be decided. 17 She should file an opposition under s. 5(3)(a), which states to the effect that if the mark being registered is identical to a mark which had been earlier registered, the application could be rejected on the ground that its registration would be an undue advantage or may harm the earlier registered mark, which has gained considerable reputation within the UK. In the 1998 VISA case, for example, VISA International successfully opposed the application of Sheimer, a Malaysian company, for the registration of VISA as a UK trademark for condoms. VISA International’s opposition was grounded on s 5(3) of the TMA 1994.18 This is not however, a sure path to take considering that there were a lot of opposition cases to registration application on the ground of s. 5(3)(a) that had been rejected by the IPO and the Patents Office before it such as the Ever Ready and Audi Med cases. 19 Besides, VISA is a huge international name with a solid reputation and the potential for it associated with condoms can have a big impact on that reputation. 2.3 The Greengage Wines Case In the Greengage Wines case, it is unlikely that Betty can successfully file an opposition to the use of the trademarks because there is no pending application for registration of trademark filed. In the event Greengage Wines files an application, she can oppose under s. 5(3)(a) of the TMA 1994 but the prospect for this is not bright considering that only a few cases succeeded in employing this ground with the IPO. Moreover, Betty cannot file an action under the ‘passing off’ doctrine even if “Triple G Gin,” Triple G Scotch,” and “Triple G Vodka” makes use of the Triple G name because it is not involved in the same business and therefore confusion between Betty’s products and Greengage Wines will not likely result. In line with this, a long line of English caselaw has established that using products, particularly liqueurs, whose trade names are attached to certain geographical indications are entitled to protection from passing off. In the case of John Walker & Sons v Henry Ost & Company Ltd, 20 the Court reached the conclusion that Scotch whiskey is sort of ‘endemic’ to Scotland because it was first produced in Scotland and its formula is kept secret within the region. Therefore, the defendant’s act of importing Scotch whiskey to Ecuador and mixing it with locally made spirits and labeling it as Scotch Archer was an instance of passing of. This kind of holding was also similar in the cases of J Bollinger v Costa Brava Wine Company 21 involving the word ‘Champagne’ used in Spanish Champagne since Champagne is inherently used and associated with France, and of Vine Products Limited & Others v Mackenzie & Company & Limited, 22 where the word Sherry was used as British Sherry because Sherry is associated with Jerez in Spain. In the latter case, however, the Court ruled that since that the plaintiffs had impliedly waived their rights over the exclusive use of the term having consented to its use by others for a long time without lodging any formal objections, it can no longer avail of the protection as if it had waived such. In the present case, involved parties will likely intervene with Greengage Wine’s use of their trademark used with the words ‘Triple G” because they could constitute passing off as was also held in the case of Long John International v Stellenbosch Wine Trust, 23 where the Court overruled the use of the trade name ‘Ben Navis Scotch Whiskey Liqueur.’ On the other hand, had Betty registered the name GreenGauge with the Companies House, she could object to Greengage Wines, in the event that it will register with it, on the ground of ‘too like.’ Registration in the Companies House is not concerned with the application of the company name to specific goods or services as opposed to the TMA 1994 or the ‘passing off’ doctrine, or of the geographical field of activity because it is not obliged to protect applicants from confusion of their products and services with another. The Companies House’s only main purpose is to prevent misleading means of identifying companies. 24 2.4 The Advertising Campaign Under the Copyright, Designs and Patents Act 1988, films, dramatic works and broadcasts, amongst others, enjoy protection from infringement. Films are defined therein as “recording(s) or any medium from which a moving image may by any means produced” 25 whilst dramatic work is defined as a work of dance and mime 26 although in one case, the Court held that the contents of a film likewise enjoy protection as a dramatic work. 27 On the other hand, broadcast is defined as “an electronic transmission of visual images, sounds or other information which (a) is transmitted for simultaneous reception by members of the public and is capable of being received lawfully by them and (b) is transmitted at a time determined solely by the person making the transmission for presentation to the members of the public.”28 Betty’s advertisement campaign could very well fall into any of these categories and is therefore protected under the Copyright law from copyright infringement without any need of prior registration. However, attacking the advertising campaign of the car insurance under copyright infringement is not a very bright prospect as past caselaw suggests. In the Norowzian v Arks Ltd et al 29 case, for example, the Court found against the plaintiff because it determined that there was no substantial copying of his film by the defendant. The plaintiff had previously submitted video clips to the defendant, including one called Joy, as sample work to a prospective employer. Joy was a short clip of a man dancing energetically against a plain background. The defendant, an Irish advertising agency, was subsequently contracted to launch a campaign ad and decided it would use the same concept as Joy but the plaintiff refused the job. The ad agency contracted another director and told him to use the Joy concept and the result was an advertisement where a man is seen executing strange dance moves whilst waiting for his order of Guinness drink. As earlier stated, the Court did not sustain the plaintiff’s contention on the ground that there was no substantial copying and assessed him instead a large amount as legal costs. The only possible action that Betty can resort to is under the common law ‘passing off’ doctrine. However, previous case law also suggests that when it comes to advertisements, the Courts will require that the alleged copying is done in such a distinguishing manner that will amount to representation. An action for passing off relative to advertisement campaigns is often grounded on similarity of packaging as was the issue in the Hoechst Pharmaceuticals (Pty) Ltd v The Beauty Box (Pty) Ltd 30 or similarity of the products themselves as was the case in Cadbury Schweppes Pty Ltd v The Pub Squash Co Ltd. 31 Moreover, Betty has the option to argue on the basis of the dilution theory or that the car insurance’s act of copying the images for which the GGG is known or have become distinguishable to the public is bound to dilute the goodwill or the reputation that the company has built over years, an argument that has similarity to the trademark dilution doctrine espoused in the Advocaat (Erven Warnink) case. 2.5 Dave Stroud Betty could bring an action for malicious falsehood, also known as injurious falsehood or trade libel, against Dave Stroud. Malicious falsehood is akin to defamation except that it relates to injury to purely financial interests whereas defamation finds basis on damage to reputation. This tort has three elements: falsehood; malice, and; special damage, 32 as was laid down by Lord Davey in the case of Royal Baking Powder Co v Wright Crossley & Co. 33 The precedent-setting case involving this tort is the old case of Ratcliffe v Evans, 34 where the defendant published a story in the newspapers that the firm of the plaintiff was not anymore operating, which was contrary to the truth. It was revealed that the act of publishing the story was done in bad faith and was calculated to injure the business of the plaintiff. Damage was also proven as the plaintiff’s business had decreased owing to the published misinformation. In a more recent case, Joyce v Motors Services Ltd, 35 the defendant likewise caused damage to the plaintiff when he told third parties that the plaintiff had changed its address and had stopped operating its business. The difference between the doctrine of passing off and malicious falsehood, is that in the former the defendant makes false representation about his own goods whilst in the latter, the defendant commits misrepresentation concerning the goods, services or the business of the plaintiff. 36 Thus, in the case of Dave Strout, who went on national television and described GreenGauge’s business as struggling and has ceased to be a source of fresh produce because of the recession, the remedial action is one for malicious falsehood. References: (1999) VISA Wins Landmark Trade Mark Case, Managing Intellectual Property. http://www.managingip.com/Article/1256920/Visa-wins-landmark-trade-mark-case.html Cadbury Schweppes Pty Ltd v The Pub Squash Co Ltd [1981] RPC 429. Companies Act 2006. Copyright, Designs and Patents Act 1988. Carty, H. (2001) An Analysis of The Economic Torts. Oxford University Press. Davis, J. (2007) ‘Unfair Competition Law in the United Kingdom’ Law Against Unfair Competition: Towards a New Paradigm In Europe? By Hilty, R. & Henning-Bodewig, F. New York: Springer. De Lacy, J. (2002) The Reform of United Kingdom Company Law. Routledge. De Very, R.W. (2006). Towards A European Unfair Competition Law: A Clash Between Legal Families: A Comparative Study Of English, German And Dutch Law In Light Of Existing European And International Legal Instruments. The Netherlands: BRILL, 2006. Erven Warnink v Townend & Sons Ltd [1979] AC 731[1980] RPC 31 Faccenda Chicken Ltd v Fowler [1986] IRLR 69 Frank Reddaway Ltd v George Banham [1896] AC 199. Gilford Motor Co Ltd v Horne [1933] Ch 935 Haig & Co v Forth Blending Co [1954] SC 35. Harrods Ltd v Harrodian School Ltd [1996] RPC 113(21): 697-732. Hoechst Pharmaceuticals (Pty) Ltd v The Beauty Box (Pty) Ltd [1987] (2) SA 600. Holland, J. & Burnett, S. (2007) Employment Law. New York: Oxford University Press. IPO Trade mark Protection in Europe http://www.ipo.gov.uk/types/tm/t-manage/t-abroad/t-europe.htm. IPO Trade Marks: Essential Reading 13. http://www.ipo.gov.uk/t-essential.pdf. J Bollinger v Costa Brava Wine Company [1959] 3 All ER 800. John Walker & Sons v Henry Ost & Company Ltd [1970] 2 All ER 106. Joyce v Motors Services Ltd [1948] Ch 252. Long John International v Stellenbosch Wine Trust [1990] 4 SA 136. MacQueen, H.L. & Waelde, C. & Laurie, G.T. (2007) Contemporary Intellectual Property: Law And Policy, 2nd Edn. New York: Oxford University Press. Norowzian v Arks Ltd et al [1998] FSR 394. Ratcliffe v Evans [1892] 2 QB 524. Royal Baking Powder Co v Wright Crossley & Co [1901] 18 RPC 95. Spalding v Gamage [1915] 84 LJ Ch 449. Terrapin v Builders Supply Co (Hayes) Ltd (1959) [1967] RPC 375. Trade Mark Act 1994. WIPO Madrid System for International Registration of Marks http://www.wipo.int/madrid/en/. Read More