Ipsofactoj.com: International Cases [2002] Part 14 Case 6 [CAEW]


COURT OF APPEAL, ENGLAND & WALES

Coram

Bessant

- vs -

South Cone Incorporated

LORD JUSTICE ROBERT WALKER

LORD JUSTICE BUXTON

LORD JUSTICE CLARKE

28 MAY 2002


Judgment

Lord Justice Robert Walker

INTRODUCTION

  1. This is a second appeal in proceedings about the registration of a trade mark. Trade mark law is a fairly specialised area and it may be helpful to begin with some background material. The law is to be found in the Trade Marks Act 1994 (“the 1994 Act”), the purpose of which (as appears from its long title) was to implement Community legislation and other international obligations in relation to trade marks, including in particular Council Directive 89/104/EEC to approximate the laws of the Member States relating to trade marks (“the Directive”).

  2. The 1994 Act repealed and replaced the whole of the Trade Marks Act 1938 (“the 1938 Act”) and made substantial changes in the law. But the 1994 Act left largely untouched the official infrastructure for registration of trade marks which has existed since 1875. The full official title of the Registrar of Trade Marks is the Comptroller-General of Patents, Designs and Trade Marks. In practice it is the Assistant Comptroller who has special responsibility for registration of trade marks, and where an opposed application for registration becomes the subject of opposition proceedings under section 38(2) of the 1994 Act, hearings are conducted before the Assistant Comptroller or a Principal Hearing Officer (acting in either case as the authorised delegate of the Registrar). Hearing officers are usually very experienced in the practicalities of trade mark registration but are not normally qualified lawyers. Under sections 69 and 78 of the 1994 Act and the Trade Mark Rules 2000 (SI 2000/136) evidence in opposition proceedings is given by affidavit or statutory declaration. Orders for cross-examination of deponents are permissible but have been rare in the past (although counsel suggested that there may be a trend towards their becoming rather less rare).

  3. An appeal from a decision of the Registrar lies (in England) to the Chancery Division of the High Court or to an ‘appointed person’ (sections 76 and 77 of the Act). The appointed person is in practice usually drawn from a small panel of Queen’s Counsel practising in the Chancery Division and having special experience of trade mark law – in effect a specialised deputy judge. In the case of an appeal to the Chancery Division a further appeal lies (but only with the permission of this court under section 55 of the Access to Justice Act 1999) to this court. In this case the first appeal was heard by Pumfrey J and it is his order dated 25 July 2001 from which an appeal has been made to this court.

  4. This background material will help any non-specialised reader to understand the way in which this appeal has reached this court. It also has some relevance to the first issue in the appeal, which is a general issue as to the nature of an appeal under s.76 of the 1994 Act, and the function of the appellate judge (whether High Court judge or appointed person) in hearing it. The second and third issues are whether the appellate judge, even if he approached his task correctly, erred in his decision to reverse the Registrar’s decision to dismiss the opposition to the application on one ground, but not to differ from it on another ground.

  5. The application had been made by Mr. Jack Bessant, Mr. Dominic Greensmith, Mr. Kenwyn House and Mr. Gary Stringer, trading as Reef. They are the members of a very successful pop group of that name, and I shall refer to them as “the group”. They applied on 10 January 1996 to register the word mark REEF for the following classes of goods:

    Class 25:

    ‘T-shirts, sweat shirts, jackets, hats and headbands; all being promotional or souvenir articles relating to a music group’ and

    Class 26:

    ‘Badges, buckles and ornaments all for wear; tie clips; buttons’.

    The group (who have been represented throughout by Mr. Roger Wyand QC) were successful before the Registrar but unsuccessful before the judge; they are the appellants in this court.

  6. Opposition to the application was put forward by South Cone Inc (“South Cone”) an American company based in San Diego, California. It is (and was before the group’s application, and indeed before the coming into force of the 1994 Act) the registered proprietor of the word mark REEF BRAZIL, registered for ‘Footwear included in Class 25’. Its best-known and most successful products were and are surfers’ sandals, although its product lines have been diversified. South Cone (which has been represented throughout by Mr. Christopher Morcom QC) was successful before the judge and is the respondent in this court.

    THE STATUTORY PROVISIONS AND THE HEARING AT FIRST INSTANCE

  7. Part I of the 1994 Act contains (in implementation of the Directive) ‘absolute’ and ‘relative’ grounds for refusal of registration in sections 3 and 5 respectively. South Cone’s opposition put forward one absolute ground, that the application was made in bad faith (section 3(6)). This ground failed both before the Registrar and before the judge and it has not been relied on in a respondent’s notice in this court. It is not therefore necessary to go far into this ground. But it is worth noting that the allegation of bad faith turned on the proposition that the group did not intend to use the REEF mark as a trade mark (that is, an indicator of trade origin) but as a means of promotion of the group as a pop group.

  8. The relative grounds relied on were those in section 5(2)(b) and section 5(4)(a) of the 1994 Act. Section 5 (as supplemented by the definition of “earlier trade mark” in section 6) implements article 4 of the Directive, and it is best to set out the whole section in order to see its fairly complex structure:

    (1)

    A trade mark shall not be registered if it is identical with an earlier trade mark and the goods or services for which the trade mark is applied for are identical with the goods or services for which the earlier trade mark is protected.

    (2)

    A trade mark shall not be registered if because –

    (a)

    it is identical with an earlier trade mark and is to be registered for goods or services similar to those for which the earlier trade mark is protected, or

    (b)

    it is similar to an earlier trade mark and is to be registered for goods or services identical with or similar to those for which the earlier trade mark is protected.

    there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the earlier trade mark.

    (3)

    A trade mark which –

    (a)

    is identical with or similar to an earlier trade mark, and

    (b)

    is to be registered for goods or services which are not similar to those for which the earlier trade mark is protected,

    shall not be registered if, or to the extent that, the earlier trade mark has a reputation in the United Kingdom (or, in the case of a Community trade mark, in the European Community) and the use of the later mark without due cause would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark.

    (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.

    (5)

    Nothing in this section prevents the registration of a trade mark where the proprietor of the earlier trade mark or other earlier right consents to the registration.

    It is common ground that South Cone’s REEF BRAZIL mark is an earlier trade mark.

  9. It is also common ground that under section 37 of the 1994 Act (examination of application) the Registrar no longer has any discretion (as he had under the 1938 Act) about registration of a mark. He has to make a straightforward decision, one way or the other, on the material placed before him by the applicant and any opponent.

  10. The hearing before the Principal Hearing Officer (Dr W J Trott) took place on 25 September 2000 and his written decision was given on 14 November 2000. There were a number of statutory declarations before the hearing officer, the bulk of these having been made on behalf of South Cone: they included evidence from Mr. Peter Caldwell, the managing director of The Watersports Company Ltd, which was said to be the sole United Kingdom importer of South Cone’s goods, and from Mr. Chris Thompson, South Cone’s chief financial officer.

  11. The hearing officer noted that there were very significant inconsistencies between the figures for United Kingdom sales given by Mr. Caldwell and Mr. Thompson respectively. Parts of the written evidence put in on behalf of South Cone were struck out as inadmissible as evidence in reply. The statutory declaration of Mr. Christopher Gilks, the group’s manager since October 1996, contained a lot of material about its success as a pop group which the hearing officer regarded as irrelevant. Mr. Gilks did not in terms either accept or challenge Mr. Caldwell’s assertion that at least one member of the group was a surfer, but material in the copious exhibits confirmed it. Later declarations on behalf of South Cone enlarged on the group’s links with surfing and skating. No application for cross-examination was made by either side. It is unnecessary to go further into the evidence at this stage.

  12. In his written decision the hearing officer examined the written evidence and rejected the opposition based on the allegation of bad faith. Then he went on to section 5(2), concentrating on section 5(2)(b) because it was common ground that the registered marks were not identical, neither were the goods for which they were registered. He instructed himself as to the law in terms which the judge described as clearly correct. I need not set out the passage since it appears (partly in summary and partly in direct quotation) in the judge’s judgment reported at [2002] RPC 387, 396.

  13. So the hearing officer embarked on what he described as a multi-factorial comparison. He gave weight to four points in particular:

    1. the marks are one word (REEF) as against two words (REEF BRAZIL), even though the evidence indicated that South Cone’s sandals were often referred to as Reef (or Reefs);

    2. in REEF BRAZIL both words were equally distinctive (even though BRAZIL had been ‘disclaimed’ in the technical sense, under a provision of the 1938 Act which is now obsolete);

    3. South Cone’s goods and the group’s goods “are not so similar that they override the differences I have noted between the marks; rather the opposite – the goods are far enough apart to confirm them”;

    4. the reputation attaching to the REEF BRAZIL mark (in the United Kingdom in January 1996) was not on the evidence so great as to tip the balance of the likelihood of confusion.

    For these reasons the hearing officer rejected the opposition based on the likelihood of confusion.

  14. He then considered section 5(4)(a). This called for an assessment of the prospects of success of a notional action for passing off launched by South Cone against the group in January 1996 (but on the assumption that the group had commenced, or were just about to commence, their merchandising operation using the REEF mark). The hearing officer carefully scrutinised the evidence and pointed out several deficiencies in it. Having done so he summarised the issue as he saw it (with the correction of what I take to be a drafting error):

    Thus, in January 1996 the opponents have a goodwill in the UK mainly amongst the surfing community, limited to footwear, particularly sandals. Was this enough to result in the necessary misrepresentation, as required by the law of passing off?

  15. This way of posing the question rather telescoped the issues. The essential ingredients of the tort of passing off (as the hearing officer had already reminded himself) are

    1. goodwill,

    2. misrepresentation (except in cases of ‘reverse’ passing off, that the defendant’s goods are the claimant’s goods) and

    3. consequent damage.

    But the hearing officer cannot have been under any misapprehension since he then quoted a passage from Halsbury's Laws (now at 4th ed vol 48 (2000 reissue) para 316) which identifies as material, in addition to other factors, the manner in which the defendant makes use of the mark, the manner in which the particular trade is carried on, the class of persons said to be likely to be deceived, and other material circumstances. This led the hearing officer to pose the question in different terms:

    The opponents’ reputation was primarily amongst surfers. Would they be confused about the source of products carrying the applicants’ mark?

  16. The hearing officer answered that question in the negative, and so the opposition failed on that ground also. In reaching that conclusion he again relied on four main points.

    1. The declarants’ evidence of actual confusion came from selected retailers (rather than customers) and did not refer to the right date.

    2. The hearing officer did not accept that the REEF BRAZIL goodwill in specialist footwear “will carry over into clothing in general, such that the typical surf fan, considering a purchase in January 1996, will assume clothing carrying the REEF name comes from the opponents”.

    3. He was not prepared to accept, in the absence of evidence, that there would be a sufficient overlap of retail outlets (this led to a subsidiary issue about the group’s links with surfing).

    4. The evidence that customers asked for sandals as ‘Reefs’ did not lead to any assumption that customers would ask for T-shirts as Reefs, or be confused or deceived in that respect.

    So the opposition as a whole failed.

    THE FIRST ISSUE: THE APPELLATE FUNCTION

  17. On the first, general issue as to the nature of his appellate function the judge began by referring to CPR 52.11(1):

    Every appeal will be limited to a review of the decision of the lower court unless –

    (a)

    a practice direction makes different provision for a particular category of appeal; or

    (b)

    the court considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing.

    Neither side suggested that either of these exceptions applied. But that still leaves room for argument as to what the function of review amounts to on any particular category of appeal, and especially in relation to the sort of issue which often arises in appeals on trade marks, patents, copyright and design right.

  18. The judge cited the observation of Buxton LJ in Norowzian v Arks Ltd (No.2) [2000] FSR 363, 370, an unusual (and unsuccessful) claim for breach of copyright in an avant-garde film said to have been infringed by a television commercial:

    .... where it is not suggested that the judge has made an error of principle a party should not come to the Court of Appeal simply in the hope that the impression formed by the judges in this court, or at least by two of them, will be different from that of the trial judge.

    That observation was approved by at least three members of the House of Lords in Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] 1 WLR 2416.

  19. The judge also cited what Hoffmann LJ said in Re Grayan Building Services Ltd [1995] Ch 241, 254, applied by this court to the issue of fair dealing in Pro Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605, 612:

    The judge is deciding a question of mixed fact and law in that he is applying the standard laid down by the courts ([in that case] conduct appropriate to a person fit to be a director) to the facts of the case. It is in principle no different from the decision as to whether someone has been negligent or whether a patented invention was obvious: see Benmax v Austin Motor Co Ltd [1955] AC 370. On the other hand, the standards applied by the law in different contexts vary a great deal in precision and generally speaking, the vaguer the standard and the greater the number of factors which the court has to weigh up in deciding whether or not the standards have been met, the more reluctant an appellate court will be to interfere with the trial judge’s decision.

  20. The judge might also have cited what Lord Hoffmann has since said in Biogen Inc v Medeva plc [1997] RPC 1, 45,

    The question of whether an invention was obvious had been called “a kind of jury question” (see Jenkins LJ in Allmanna Svenska Elektriska A/B v The Burntisland Shipbuilding Co Ltd (1952) 69 RPC 63, 70) and should be treated with appropriate respect by an appellate court. It is true that in Benmax v Austin Motor Co Ltd [1955] AC 370 (1955) 72 RPC 39, 42, this House decided that, while the judge’s findings of primary fact, particularly if founded upon an assessment of the credibility of witnesses, were virtually unassailable, an appellate court would be more ready to differ from the judge’s evaluation of those facts by reference to some legal standard such as negligence or obviousness. In drawing this distinction, however, Viscount Simonds went on to observe, at page 374, that it was “subject only to the weight which should, as a matter of course, be given to the opinion of the learned judge”. The need for appellate caution in reversing the judge’s evaluation of the facts is based upon much more solid grounds than professional courtesy. It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance (as Renan said, la vérité est dans une nuance), of which time and language do not permit exact expression, but which may play an important part in the judge’s overall evaluation. It would in my view be wrong to treat Benmax as authorising or requiring an appellate court to undertake a de novo evaluation of the facts in all cases in which no question of the credibility of witnesses is involved. Where the application of a legal standard such as negligence or obviousness involves no question of principle but is simply a matter of degree, an appellate court should be very cautious in differing from the judge’s evaluation.

  21. At the end of that section of his judgment the judge set out what his approach would be:

    Findings of primary fact will not be disturbed unless the hearing officer made an error of principle or was plainly wrong on the evidence. His inferences from the primary facts may be reconsidered, but weight will be given to his experience. No question of the exercise of a discretion arises. In this way, error will be corrected, but a different appreciation will not be substituted for that of the hearing officer if he has arrived at his conclusion without error.

  22. Mr. Wyand accepted the first sentence of this formulation but took issue with the second. He submitted that the judge should not have reconsidered inferences drawn from the primary facts unless the hearing officer had made an error of principle or was plainly wrong. As he went on to develop his case Mr. Wyand submitted that the judge had been wrong in discerning an error of principle in the hearing officer’s decision when there was none – that is, that even if the judge set out to apply the right test, he did not apply it correctly (and that he reached inconsistent conclusions in relation to section 5(2) and section 5(4)). Mr. Morcom supported the judge’s approach and his conclusions, and submitted that there was no significant inconsistency in them.

  23. In my view the judge’s approach was not wrong, but his formulation

    His inferences from the primary facts may be reconsidered, but weight will be given to his experience

    would, if taken in isolation, be a rather meagre summary of what is quite a complex point. The judge cannot, I think, have intended it to be taken in isolation. He cannot have overlooked the passages which he had just cited from Norowzian and Pro Sieben.

  24. It is worth reflecting on what judges mean when they speak of ‘inferences’ in this context. An inference from a number of primary facts may itself be a simple matter of fact. That is an inference from circumstantial evidence, or what might be called the ‘smoking gun’ type of inference. (Inferences from a litigant’s failure to call a particular witness are also akin to this category.) In the present context, however, the inference is not a simple matter of fact because it involves a process of evaluation. It was put very clearly by Viscount Simonds in Benmax v Austin Motor Co Ltd [1955] AC 370, 373 (a patent case on obviousness):

    I cannot help thinking that some confusion may have arisen from failure to distinguish between the finding of a specific fact and a finding of fact which is really an inference from facts specifically found or, as it has sometimes been said, between the perception and evaluation of facts.

  25. A few months later in Edwards v Bairstow [1956] AC 14, 29 (a tax case about an ‘adventure in the nature of trade’) Viscount Simonds referred to the “inference or conclusion” which the general commissioners had drawn from the primary facts. Similar statements of high authority can be traced through to the recent decisions of the House of Lords in Designers Guild and Biogen.

  26. How reluctant should an appellate court be to interfere with the trial judge’s evaluation of, and conclusion on, the primary facts? As Hoffmann LJ made clear in Grayan there is no single standard which is appropriate to every case. The most important variables include the nature of the evaluation required, the standing and experience of the fact-finding judge or tribunal, and the extent to which the judge or tribunal had to assess oral evidence.

  27. It is worth noting that Biogen was a case very close to the top end of the scale. It involved very complex biotechnology which was the subject of a lot of expert evidence given at a lengthy trial before a very experienced judge of the Patents Court. In the circumstances Lord Hoffmann’s memorable reference to Renan was not (if I may respectfully say so) out of place. There are far fewer nuances to be picked up from a bundle of statutory declarations which contain a good deal of irrelevant or tendentious material and on which there is no cross-examination.

  28. In this case the hearing officer had to make what he himself referred to as a multi-factorial comparison, evaluating similarity of marks, similarity of goods and other factors in order to reach conclusions about likelihood of confusion and the outcome of a notional passing-off claim. It is not suggested that he was not experienced in this field, and there is nothing in the Civil Procedure Rules to diminish the degree of respect which has traditionally been shown to a hearing officer’s specialised experience. (It is interesting to compare the observations made by Lord Radcliffe in Edwards v Bairstow [1956] AC 14, 38-9, about the general commissioners, a tribunal with a specialised function but often little specialised training.) On the other hand the hearing officer did not hear any oral evidence. In such circumstances an appellate court should in my view show a real reluctance, but not the very highest degree of reluctance, to interfere in the absence of a distinct and material error of principle.

  29. The appellate court should not treat a judgment or written decision as containing an error of principle simply because of its belief that the judgment or decision could have been better expressed. The duty to give reasons must not be turned into an intolerable burden: see the recent judgment of this court in English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605, 30 April 2002, para 19:

    .... the judgment must enable the appellate court to understand why the Judge reached his decision. This does not mean that every factor which weighed with the Judge in his appraisal of the evidence has to be identified and explained. But the issues the resolution of which were vital to the Judge’s conclusion should be identified and the manner in which he resolved them explained. It is not possible to provide a template for this process. It need not involve a lengthy judgment. It does require the Judge to identify and record those matters which were critical to his decision.

  30. The judge did not go into these matters in detail and he is not to be criticised for not having done so. I have gone into them only because they figure prominently in the grounds of appeal. I am not persuaded that the judge did not set out with the right general approach to his task.

    THE SECOND ISSUE: SECTION 5(2) - LIKELIHOOD OF CONFUSION

  31. In considering South Cone’s appeal so far as it related to section 5(2) the judge noted the hearing officer’s conclusion (which was unchallenged) that there was no evidence of use by the group of REEF (on T-shirts or other goods covered by their application) before the date of the application. But his decision was, the judge said, criticised on two grounds.

  32. The first was that he had not had proper regard to the way in which South Cone actually used the REEF BRAZIL mark. The judge reproduced in his judgment three logos used by South Cone. In each REEF was far more prominent than BRAZIL (which was barely legible in one of the logos as copied). The judge dismissed this criticism but added some rather delphic remarks which were the subject of discussion in the course of argument:

    However, fair use of the opponent’s mark as registered must encompass versions where BRAZIL does not play a prominent role. Thus, fair use of the mark will include uses generally of the type represented by these logos. In my judgment, the manner in which the word BRAZIL is to be taken to be used for the purpose of this comparison must also be taken to include a use suggesting a sub-class or sub-division of the notional range of products offered under the specification of goods. A geographical term is apt to denote a subclass of this type.

  33. The judge then set out the second criticism, that the hearing officer had ignored the channels of trade through which South Cone’s goods were sold, and the interest in surfing which was shared by both parties’ target customers. The judge saw force in this criticism. He thought that the hearing officer had posed a question to himself in terms which led to only one answer. He concluded that the hearing officer had fallen into error in failing to consider such matters as the channels of trade and the users of the goods.

  34. The judge then proceeded to make his own evaluation. In doing so he attached importance to four points:

    1. there was a substantial overlap between the targeted customer groups;

    2. the REEF mark consisted of a prominent, and potentially distinctive, part of the REEF BRAZIL mark;

    3. fair use of the REEF mark would include use on the front of a T-shirt; and

    4. “fair use of the [group’s] REEF mark includes sale in shops selling surfing equipment, including (notionally) [South Cone’s] footwear”.

    He concluded that there was a likelihood of confusion and that the hearing officer had reached the wrong conclusion.

  35. Mr. Wyand has attacked this as not only an unjustified substitution of the judge’s own view for that of the hearing officer, but also as itself erroneous. He submitted that the judge’s remarks about BRAZIL denoting a sub-class came near to treating South Cone’s mark as if it were really simply REEF. He sought to buttress that by another rather delphic observation of the judge,

    No other REEF mark has been shown to exist.

    But the following sentence shows, I think, that that is not the point which the judge was making.

  36. Mr. Morcom submitted that the judge was right in his approach and his conclusion on section 5(2). He was not, Mr. Morcom said, incorrectly treating the REEF BRAZIL mark as if it were REEF; he was correctly considering the whole range of possible fair use. He was right to look for what was prominent and distinctive in a mark. On this point Mr. Morcom referred to De Cordova v Vick Chemical Co (1951) 68 RPC 103, 106 and Taw Manufacturing Co Ltd v Notek Engineering Co Ltd (1951) 68 RPC 270 (both cases of pictorial devices, although there was also a word mark in the former case). Mr. Morcom submitted that the hearing officer was clearly wrong in principle as regards the trade channels through which the parties’ goods would be sold, and the similarities in the interested public.

  37. In my view the judge should not have accepted the second criticism of the hearing officer’s decision on section 5(2). I think that his point about the hearing officer asking himself the wrong question was, with respect, over-refined. More significantly, I think that the hearing officer did very carefully examine the evidence about trade outlets and target customers (more carefully, possibly, than the judge himself, so far as appears from a comparison of the decision and the judgment).

  38. The fact is that the evidence before the hearing officer was very unsatisfactory. The group’s merchandising had not started at the date of the application and all that Mr. Gilks’ declaration (made in June 1998) disclosed about its retailing methods at that time was:

    .... various articles are sold to fans through the fanclub newsletter and merchandising is also sold at the band’s concerts.

    On the other side there were four declarations from the owners or managers of shops in Chiswick, Colchester, Bridgetown and East Wittering (three specialising in surfing and other active sports, and one apparently more general) which sold REEF BRAZIL sandals and also “casual and leisurewear”, “sportswear”, “clothing and leisurewear” and “clothes”. There is an obvious lack of detail here. Moreover (as the hearing officer pointed out) these declarations were made at the end of 1998 or early in 1999 and they did not state what the position had been at the beginning of 1996.

  39. Of course the hearing officer was not obliged to disown all his knowledge of the day-to-day world in which we all live. Probably no evidence is needed, for instance, to come to the conclusion that the public would regard rubber household gloves, plastic pants for babies and toilet paper as being goods which would be sold through the same sort of trade outlets (see LRC International Ltd v Lilla Edets Sales Co Ltd (the Marigold case) [1973] RPC 560, 562-3; it is not clear from the report whether the affidavit evidence covered this point). But there is a limit to how far it is right to go without evidence. The judge seems to have attached weight to paragraphs culled from the popular music press associating the group with surfing. That no doubt justified his conclusion that fair use of the REEF mark would include sale in shops selling surfboards and REEF BRAZIL sandals. But it could not be a basis for deciding how much weight to give to that possibility, or how large a part of the public would be potential customers for goods from both sources. It would not have been right for the hearing officer to fill that gap in the evidence by some sort of intuition.

  40. I do therefore reach the conclusion that the judge should not have reversed the hearing officer on the section 5(2) issue. I have done so with some hesitation, because the judge (as well as the hearing officer) has great experience in trade mark matters, and it might be said that he was in as good a position to evaluate the written material. I am also inclined to share the judge’s view that REEF is a prominent and distinctive part of REEF BRAZIL, and that the hearing officer might have attached more weight to that. Nevertheless I consider that the hearing officer did not err in principle, nor was he clearly wrong. The judge’s criticisms of the hearing officer had little substance. He ought not to have substituted his own view.

    THE THIRD ISSUE: SECTION 5(4) - NOTIONAL PASSING OFF

  41. On this issue the judge criticised some of the hearing officer’s reasoning but declined to say that his conclusion was wrong:

    But in the end the evidence is probably insufficient to come to a different conclusion from that reached by the hearing officer. While therefore I am not confident that I would have come to the same conclusion, I do not find that his decision is either mistaken in principle or obviously wrong on the facts, and I dismiss the appeal against the decision in so far as it relates to the opposition under s5(4).

    This equivocal support was never going to provide a strong platform for an attack based on inconsistency.

  42. Mr. Morcom has in his respondent’s notice contended that the judge should have gone further and allowed South Cone’s appeal under section 5(4). So if this court allows the group’s appeal under section 5(2), the inconsistency argument, for what it is worth, shifts round. It is common ground that the tests in subsections (2) and (4) are not identical, although it is no doubt possible to imagine particular sets of facts on which there would be no perceptible difference between the ways in which the two tests had to be applied (they would probably be cases of pictorial devices rather than word marks).

  43. In his oral submissions on this part of the case Mr. Morcom invited the court to compare the actual use, as at the beginning of 1996, of the South Cone REEF BRAZIL mark against any possible use (as regards the trade channel used, or the mark’s position on a garment) of the REEF mark. He submitted that there was evidence that REEF BRAZIL goods were referred to as Reef (or Reefs). He criticised the hearing officer for referring to surfing as a minority sport.

  44. I have already referred to the hearing officer’s careful analysis of the evidence and his conclusion as to the extent of South Cone’s goodwill in the United Kingdom in 1996. In relation to association of different types of goods and trade channels he referred to LRC International (the Marigold case). In relation to the link between the group and surfing he said:

    I am not sure that this link helps the opponents’ case. If the relevant public – surfers – are also aware of the band REEF are they more or less likely to be confused as to the origin of the latter’s products? I think less likely. They would be able to make a distinction between T-shirts and the like merchandised by the rock band, and sandals known as REEFS.

  45. These last remarks attracted criticism from the judge as entirely overlooking two points. I am afraid that I cannot understand the first point. The second – that there had been no use of the group’s mark at the date of the application – was well in the hearing officer’s mind, but in applying section 5(4) he was required to contemplate a notional passing-off claim based on likely or possible use. I am not persuaded that there was an error in this part of the hearing officer’s reasoning. Nor do I think he was unfair in describing surfing as a minority sport, although I do not think that that was a significant step in his reasoning.

  46. In the end there was only one respect in which South Cone’s case under section 5(4) might be stronger than under section 5(2). The contention that in practice customers called its goods Reefs, if established, could or might carry more weight on the notional passing-off claim than on the evaluation under section 5(2). But the hearing officer concluded, and on the evidence he was entitled to conclude, that the contention had been made good only in relation to sandals:

    What are they referring to when they do [ask specifically for Reefs]? On the evidence, I think it must be sandals. This is where the opponents’ goodwill rests, and I do not accept that they would call T-shirts ‘REEFS’ in a similar manner.

  47. So the hearing officer concluded that South Cone had not proved its case in opposition under section 5(4). In my view he was right to do so, and the judge was right not to disturb his conclusion.

  48. I would therefore allow this appeal and restore the decision of the hearing officer.

    Lord Justice Buxton

  49. I agree.

    Lord Justice Clarke

  50. I also agree.


Cases

Norowzian v Arks Ltd (No.2) [2000] FSR 363; Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] 1 WLR 2416; Re Grayan Building Services Ltd [1995] Ch 241; Pro Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605; Biogen Inc v Medeva plc [1997] RPC 1; Benmax v Austin Motor Co Ltd [1955] AC 370; Edwards v Bairstow [1956] AC 14; English v Emery Reimbold & Strick Ltd (and two other appeals heard with it) [2002] EWCA Civ 605; De Cordova v Vick Chemical Co (1951) 68 RPC 103; Taw Manufacturing Co Ltd v Notek Engineering Co Ltd (1951) 68 RPC 270; LRC International Ltd v Lilla Edets Sales Co Ltd [1973] RPC 560

Legislations

Trade Marks Act 1994: s.3, s.5, s.6, s.37, s.69, s.76, s.77, s.78

Trade Mark Rules 2000 (SI 2000/136)

Council Directive 89/104/EEC: Art.4

CPR 52.11(1)

Authors and other references

Halsbury's Laws of England, 4th ed vol 48 (2000 reissue)

Representations

Mr. Roger Wyand QC (instructed by Forbes Anderson) for the appellant

Mr. Christopher Morcom QC (instructed by Ashurst Morris Crisp) for the respondents


all rights reserved