Trademark Systems in the UK

5388 words (22 pages) Essay in Business Law

02/02/18 Business Law Reference this

Last modified: 02/02/18 Author: Law student

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A registered trade mark system was introduced in the UK by the Trade Marks Act 1875; it is believed that before the act, marks were protected under the law of the tort of deceit. [1] An action could be brought if a trader knowingly used a mark belonging to another on his own goods. The law of passing-off was then used to protect traders in a situation where they had developed goodwill and a reputation with regards to the use of a mark. [2] It is generally agreed that traditionally, the main function that was protected by trade mark law was that of origin and this was stated explicitly in the definition of a trade mark in the Trade Marks Act 1938. [3] The trade mark served to identify the source of the goods and also to distinguish it from that of other manufacturers, this function flows into the function of guaranteeing the quality of the goods; where the origin of a product is known, consumers may also use the knowledge as a guarantee of the quality they have become accustomed to. [4] It can be said that historically, trade mark law was concerned with avoiding consumer confusion as to the origin of the product as well as protecting proprietors of registered marks.

However, the concept of ‘brand’ developed vastly from the beginning of the 21st century [5] and the law gradually recognised that there are other functions which a trade mark serve that need to be protected.

Although four acts [6] passed after the 1875 act, it was not until the Trade Marks Act 1994 (TMA) that the trade mark legislation in the UK received a vast overhaul and explicitly recognised that other functions of a trade mark may viable for protection.

Protection of trademarks with a reputation under the TMA 1994

TMA incorporated the Trade Marks Directive [7] (the directive) which indicated in its preamble that the functions of a trade mark are not limited to identification of origin; it also gave member states the option of extending the protection given to trade marks with a reputation in the same section. As a result the UK exercised the option of extending the protection of trade marks with a reputation, although there are arguments that extending the protection to this extent undermines the fact that there are different classes under the registration system and that trademarks with a reputation would be able to monopolise the mark in relation to all goods and services [8] , it is clear the proprietor of later mark should not be able to ‘free ride’ on the effort and investment put into the acquiring of the reputation in the first place.

The sections of the TMA which in essence extended the protection given to proprietors of a registered mark with a reputation are the sections that relate to relative grounds for refusal of registration [9] and infringement of a trade mark [10] , they essentially have the same requirements. The relative grounds for refusal of a trade mark are important also because they can be invoked to declare an already registered trade mark invalid. [11] These sections provide protection for trade marks in situations where it is not their essential function, the origin function which is threatened but the function the mark serves as a result of its reputation, the marketing and advertising function.

Section 5 (3) of the TMA

A trade mark may not be registered if it is identical or similar to an earlier trade mark and the goods or services that relate to the registration are dissimilar to those under which the earlier trade mark is protected, if the earlier mark has a reputation in the United Kingdom and the use of the later would take unfair advantage of or cause detriment to the distinctive character or repute of the earlier mark and its use is without due cause. This provision however also applies in cases where the goods are similar. [12]

This provision applies in situations where an earlier mark has developed a reputation which has surpassed the range of goods or services it was registered under. In such cases the function of the trade mark is not restricted to identify the origin of the goods only; the trade mark would have gained through advertising and marketing, the ability to convey certain information in relation to prestige, ‘adventure, youth’ [13] etc. The trade mark would have developed an innate economic value so that using it on any type of products or services confers an advantage because consumers associate the trademark with positive images. The protection under section 5 (3) can be classified into three parts:

Dilution: Under this heading, trade marks with a reputation are protected against the later use of a similar or identical mark where the use of the mark would weaken the ability of the trade mark to identify the goods or services it was registered for in the first place; detriment is caused to the distinctive character of the mark where there is ‘…dispersion of the identity and hold upon the public mind of the earlier mark.’ [14] This process is also known as blurring. [15] An excellent example is that of Frank Schechter who said that ‘…if you allow Rolls Royce restaurants, Rolls Royce Cafeterias and Rolls Royce pants, and Rolls Royce candy, in ten years you will not have the Rolls Royce Mark anymore.’ [16]

‘Tarnishment’ [17] : There is also protection for the trade mark with a reputation where the the appeal of such trademark will be reduced because a similar or identical mark is being used on goods perceived in a negative way by the public. [18] An example of this situation is the Klarein/Claeryn case [19] where it was said that the use of the later mark on a toilet cleaner would bring negative association to the earlier mark registered for an alcoholic drink.

‘Free riding’ [20] : Finally, a trade mark is protected where to register the similar or identical mark or to not declare it void will be giving the third party an unfair advantage over the use of the mark. This is occurs where the new mark will be taking advantage of the investment and marketing efforts used to develop a good reputation of the earlier mark without the consent of the proprietor of the mark. [21] For example the use of the mark ‘Gucci’ on cars may be prevented even though the mark is not being use on any item of clothing because it has a certain element of luxury and prestige attached to it which has been developed over the years by marketing and advertising.

A claim to any of the three injuries will suffice [22] however to qualify for the protection under the TMA, the claimant must prove that the marks are similar or identical, establish that the mark has a reputation in the UK and show the damage caused by the later mark. It will then be for the defendant to show that the use was with due cause.

Identity and similarity between the mark and the sign and the global approach

It was held in LTJ Diffusion SA v Sadas Vertbaudet SA [23] that a sign is similar to a trade mark where there has been a reproduction of all the elements constituting a trade mark without any modification or alteration. [24] The global approach is taken and the average consumer test is to be applied looking at the mark in whole, this is a question of fact according to the circumstances of the case and the mark and sign will be identical unless the average customer notices the differences between them. [25]

In relation to the assessment of similarity between marks, the average consumer test will apply again; the marks should be compared as a whole in the way that an average consumer would perceive them. Attention should be given to the features that stand out and are unique on the mark, the extent of ‘…the visual, aural or conceptual similarity…’ [26] between the sign and mark should also be examined. [27] The distinctiveness of the earlier mark is an important factor that affects that test for similarity, the more distinctive the earlier mark is, and the more alteration and modifications are needed to make it dissimilar. [28] It is however sufficient for protection under s.5 (3) of the TMA that the sign and mark are similar enough that the public can establish a link between them. [29] This is a requirement for an association between the two signs, it is a less stringent requirement than that of confusion under section 5 (2) of the TMA. The question of whether such a link exists is to be assessed globally taking all the facts of the case into account, the fact that a reasonably circumspect and observant average consumer would call the earlier mark to mind when the later sign is seen is ‘tantamount’ but not exclusive to finding such a link. [30] Other factors that may be taken into account include the degree of similarity between the mark and the sign, the strength of the reputation of the mark and the level of distinctiveness of the mark. [31] It was however held that that fact that the mark and sign are similar or identical is not sufficient for a link to exist, as the sections of the public targeted might be different so it is possible for the section targeted by the later sign to be unfamiliar with the earlier mark. [32]

The ECJ has construed the requirement for a ‘link’ strictly and a trademark with a reputation will not be protected unless the ‘average reasonably circumspect consumer’ can draw a link between the two marks. [33] This requirement of a link in the mind of the relevant public puts a limit on the protection given to trade marks with a reputation, this restriction is needed otherwise the proprietors of trademarks with a reputation could potentially monopolise the use of the mark in any area of trade and services they wanted and this could lead to unfair competition and also restrict trade, a reputable trademark would be able to prevent anyone from using a similar or identical mark in any form of trade or services unless the protection was capped. The existence of a link is also not enough to establish any of the damage needed to be proved for the protection to take effect. [34]


As the protection is afforded to trade marks with a reputation, the earlier mark has to show that it is known by a significant number of the public which the goods or services that bear the mark are targeted at. [35] Section 5(3) requires a degree of knowledge of the earlier mark by the public if there is going to be any possibility of an association between the mark with a reputation and the later mark as the products will probably not be similar. The relevant public may be general or a specific sector but there has to be a sufficient number to result in any detriment where the mark is associated with another product. [36]

In establishing whether a trade mark has a reputation, the court must take into account all the relevant factors of the case including ‘…the market share held by the trademark, the intensity, geographical extent and duration of its use and the size of the investment made by the undertaking in promoting it.’ [37] There is no requirement for a percentage of the public to have knowledge so far a ‘substantial part’ of the territory has the knowledge. This ruling was made in the context of the Benelux territories so it was held that substantial part could be one part of one of the Benelux countries [38] , in application to the UK it means that it may be substantial for the mark to have a reputation in England or Wales alone instead of throughout the UK.

It has been noted [39] that this requirement for the trade mark to have a reputation is wider than that which is required under Article 6bis of the Paris convention [40] for well known marks, a mark does not necessarily have to be well known to have a reputation whereas for a mark to be well known it can be argued that a significant number of the relevant public has to have knowledge and it will probably be quantitatively higher than that which is needed to establish reputation. It may be argued that this is another way by which the law is extending the protection given to trade marks with a reputation however, this protection is limited because the proprietor of the trade mark still has to show that detriment has or will be suffered or an unfair advantage has been gained by the third party.

Unfair Advantage or Detriment

The fact that the mark has a reputation and the sign is found to be similar or identical and is being used on similar or dissimilar products is not sufficient to qualify for protection under section 5(3) of the TMA. It has to be shown by the proprietor of the earlier mark that the later use of the similar/identical mark has caused detriment to the distinctive character of the trade mark or has caused detriment to the repute of the trade mark. In addition, the proprietor can also show that the third party is taking an unfair advantage of the distinctive character or repute of the earlier mark by using a similar/identical mark.

In relation to the distinctive character of the mark, this process of ‘dilution’ or ‘blurring’ leads to a reduction in the uniqueness of the trade mark there by undermining its ‘selling power and magnetism’ [41] , the existence of this detriment must be assessed globally by taking into account all the factors relevant to the case and those factors are the same as the ones included in the criteria for establishing a link. [42]

Although the more unique an earlier mark is the more likely it will be that detriment has been caused to its distinctive character, it is not necessary for a mark to be unique before detriment is caused or is likely to be caused in the future and such detriment may be caused by the first use of the later mark. [43]

As the cause for this detriment is the weakening of the attraction of the earlier mark in relation to the relevant public, there must be proof of a change in the economic behaviour of the average consumer the goods or services were directed at or at least the proof of a serious likelihood that such change would occur as a result of the use of the later mark. [44]

Real damage to the repute of the trade mark has to be proved for the protection to be based on this ground; the existing image projected by the earlier mark and how the use of the later mark would adversely affect this image has to be shown. [45] ‘Tarnishment’ might occur [46] where the later mark is used on goods of an inferior quality or where the mark is used on goods which are regarded negatively in the mind of the relevant public. [47]

Unfair advantage as a concept has to do with the benefit which is gained by the third party as a result of; it has been defined as a ‘clear exploitation and free-riding on the coattails of a famous mark or an attempt to trade upon its reputation’ [48] , the underlying principle behind this provision seems to that of unjust enrichment. [49]

Doubt was however expressed by Jacob LJ in L’Oreal v Bellure [50] whether the fact that the third party was enriched was enough, he distinguished the case from the earlier case of Mango Sport v Diknah [51] where the marks used were identical and very distinctive and the goods involved were similar so it was likely that consumers may establish a link between the parties to the present case where no such link could be established. If a link is not established then how can it be shown that an advantage is actually taken from the earlier trade mark? The claimant will have to show how value would be transferred, it will be easier to show this in a situation where the earlier mark is highly distinctive, the goods and the marks are similar and the earlier mark has a high level of reputation. [52]

The fact that marks are identical is not enough for the one with repute to confer any advantage on the later mark as the goods or services involved and their target public may be so different and that no association is made between them. [53] A mark with repute may however transfer an advantage to a mark which is not identical if there is some sort of ‘logical or conceptual connection’ [54] as seen in the Primavera v Spa case. [55]

Jacob LJ suggested in L’Oreal that the fact that there has been an advantage does not necessarily mean that it was unfair, he believed that the word ‘unfair’ should not be meaningless and feared that the law would be over protective in situations where there has been no harm to the claimant. He then in essence asked the ECJ if unfair advantage can be established even in situations where detriment such as dilution, tarnishment, lower sales and confusion as to origin has not been suffered by the proprietor of the earlier mark but the third party has however enjoyed some commercial benefit by using a sign similar to the earlier mark. The ECJ held that, as the unfair advantage concept relates to the benefit conferred on to the third party and not the detriment suffered by the claimant, the use of a mark which is similar or identical to a mark with repute may be unfair so far an advantage is taken of its repute or distinctive character even if no detriment is suffered by the claimant. [56]

A global assessment is to be undertaken in order to establish whether a third party takes an unfair advantage of the distinctive character or repute of a sign, all factors relevant to the circumstances of the case including how strong the reputation of the mark is, the level of distinctiveness of the mark and the degree of similarity between the marks are to be taken into account. The more easily a link is made by the public between the marks, the more likely it is that an unfair advantage is taken or will be taken of the distinctive character or repute of the mark. [57]

There is no requirement for likelihood of confusion or detriment to the mark or its proprietor, the advantage taken by the third party is the use of the similar/identical mark to ‘benefit from the power of attraction, the reputation and prestige of that mark and to exploit, without paying any financial compensation, the marketing effort expended by the proprietor of the mark in order to create and maintain the mark’s image’ [58]

When it has been established that the trade mark is similar or identical to the later mark and the earlier mark is a mark that has a reputation, also that the use of the later mark is detrimental to the distinctive character or repute of the earlier mark or takes an unfair advantage of the distinctive character or, it will then be up to the defendant to show that the use of the mark was with due cause. [59]

Without Due Cause

The phrase ‘without due cause’ was considered in relation to infringement [60] in the case of Premier Brands UK v Typhoon Europe Ltd [61] , it was held that the provision taken as a whole serves the purpose of protecting the reputation and goodwill of well known trademarks so it will be difficult for a sign that unfairly takes advantage of the earlier mark or its reputation not to fall foul. The provision is to be interpreted taking commercial reality into account so that the defendant not only has to prove that the later sign is being used with due cause but also that although the sign is taking unfair advantage or is detrimental to the mark, such advantage or detriment is not without due cause. It is difficult to see how an earlier mark can satisfy all the requirements for protection under Article 5(3) or 10(3) and then fall at the last hurdle because the later mark is being used or will be used with due cause. However Premier Brands UK applied the Benelux case of Lucas Bols [62] where it was held that use may be with due cause where the user is compelled to use the mark and he cannot be asked to stop doing so in regardless of the damage suffered by the earlier mark owner or the user also has a right to use the mark and his right is as good as that of the earlier mark owner; this will be the case where the mark is also on the register and has not been revoked on the ground of invalidity. Neuberger J believed in Premier Brands that although it was difficult to see how an unfair advantage can be with due cause, such a situation can be envisaged where there is detrimental use; the due cause may outweigh the unfairness to the earlier mark, this will be dependent on the facts of each case.


It is clear from the discussion above that the protection of the marketing and advertising function of a trade mark is now firmly entrenched.

The assessment of the requirement of this protection is based on a global approach [63] , which means that all relevant factors are inter-dependent i.e. the level of similarity between marks is connected to the level of the similarity between the goods or services this in turn is connected to the likelihood of the average consumer establishing a link between the two marks. The whole assessment system seems to be highly based around the concept of the ‘average consumer’; which is understandable as a ‘relevant public’ is needed but, it has been argued that ‘the perceptions of the average consumer have been generally presumed but seldom interrogated.’ [64] The argument about the perception of the average consumer is valid but it is highly unlikely that the courts will start basing their assessments on another concept because as can be seen from all the cases discussed above, the system seems to work.

As important as the marketing and advertising function of the trade mark is, it may be argued that this function is only an extension of the essential function of origin and also guarantee of quality. At the initial stage, a trade mark has to be able to distinguish the goods and services it represents from others that is have an origin function before it can invest in marketing and advertising to gain the reputation that gives it the wider scope of protection. This view was cemented in Arsenal v Reed [65] where it was held that the main function of a trade mark is the origin function.

Although, the nature of a registered trademark is described under Section 22 of the TMA as personal property, the right of the proprietor is arguably not an absolute property right in the sign. The act gives a proprietor exclusive rights in the trade mark but the definition of a trade mark and its functions may however limit the rights conferred and these could potentially place a limitation beyond what was envisaged by the sections defining and how it may be infringed in the act. [66] The exclusive right is only in the rights covered by the definition and the recognised functions of the trade mark. If the word ‘sign’ used to defined a trade mark [67] is limited to its dictionary meaning as a symbol or mark ‘then descriptive and decorative use will continue to fall outside the exclusive right’ [68]

Other ways this exclusive right may be limited is where an action does not fall within the ambit of Section 10 of the act as an infringement for example, if it falls under the ambit of comparative advertising under section 10(6) or falls within Section 11 of the act as a limit on the effect of the registered right.

It is clear that the proprietor of a mark cannot exercise total control over every use of the mark; he will however be able to deal with it like most other property rights by for example by assigning, licensing and mortgaging it. [69] The fact that the marketing and advertising function of the trade mark is protected is quite simply due to the fact that the law is moving with the times, this function has a vast economic value to its proprietor and a lot of investment and effort would have been utilized to develop and maintain the function, so the proprietors should be allowed to reap the benefits by protecting them from interference by third parties. The relative grounds for refusal and the grounds for infringement have so far provided an adequate solution.

Phillips states that the function of a trade mark system in any developed economy is to balance the inter

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