In February, the Intellectual Property Enterprise Court (IPEC) ruled on the scope of the honest concurrent use defence in trade mark proceedings concerning the “China Tang” mark. For those launching new brand names without carrying out basic clearance searches and seeking advice, it will be increasingly difficult to rely on honest concurrent use to avoid liability for trade mark infringement.
Background: honest concurrent use
The concept of “honest concurrent use” can arise in trade mark opposition proceedings[i] and it can also constitute a defence to trade mark infringement. The key principles were summarised by Henry Carr in the Victoria Plum[ii] case:
- Where two separate entities have co-existed for a long period, honestly using the same or closely similar names, the inevitable confusion that arises may have to be tolerated
- This will be the case when the trade mark indicates the goods/services of either of the entities. In those circumstances, the guarantee of origin of the claimant’s trade mark is not impaired by the defendant’s use, because the trade mark does not denote the claimant alone
- However, the defendant must not take steps which exacerbate the level of confusion beyond that which is inevitable and so encroach upon the claimant's goodwill
The Dispute: Gnat and Co Ltd v West Lake East Ltd[iii]
In 2005, Gnat had registered “CHINA TANG” as a trade mark for restaurant services, catering services, cafes, cafeterias and self-service restaurants (in class 43). The mark was licensed to the second claimant, CTL, which ran the CHINA TANG Cantonese restaurant at the Dorchester Hotel in London.
The defendants ran a Chinese takeaway in Barrow-in-Furness, which started trading in 2009 under the name "China Tang".
The claimants claimed trade mark infringement under sections 10(2) and 10(3) of the Trade Marks Act 1994, as well as passing off. In response, the defendants argued that: (i) differences in location and style between an upmarket restaurant in London and a modest takeaway in Barrow removed any likelihood of confusion; and (ii) the CHINA TANG mark did not have a reputation in the UK when the defendants' use of their sign commenced. They also relied on the defence of honest concurrent use and sought revocation on grounds of non-use for certain goods and services.
Ruling in favour of the claimants on trade mark infringement, the court found that:
- Given the aural identity and close visual similarity of the two signs, together with the close similarity between the respective services, there was a likelihood of confusion and the mark was infringed under section 10(2).
- As regards the alleged defence of honest concurrent use, the defendants had not even conducted a basic internet search before choosing the name "China Tang" for the restaurant. Had they done so, they would likely have found the claimants' website (and/or reviews and commentary about it). Given the current climate of easy trade mark and internet searches, using a trading name without seeking appropriate advice and basic searches would not be considered as “honest concurrent use” (in the absence of some reason why it should be taken to have been so).
The claims for passing off and infringement under section 10(3) did not succeed, as: (i) the claimants’ evidence did not go far enough to demonstrate the necessary “reputation” in the UK; and (ii) in any event, there was no evidence of any deception about a connection between the two businesses in the minds of the relevant public, despite the fact that these businesses had traded simultaneously for 12 years.
The decision serves as a helpful reminder of the criteria used to assess “honest concurrent use” in the context of trade mark disputes. Some of the key factors taken into account when making this assessment will include:
- Whether the defendant knew of the existence of the other trade mark and, if not, whether it would have been reasonable for the defendant to conduct a search;
- Whether the defendant used its own trading name in reliance on competent legal advice based on proper instructions; and
- Whether the defendant knew that the trade mark owner objected (or at least appreciated that there was a likelihood that the owner would object).
In this particular case, Mr Justice Hacon placed significant weight on the fact that no trade mark or internet searches had been conducted. Simply pleading ignorance about the existence of a third party’s trade mark will not satisfy the threshold of honest use needed to rely on this defence.
From a practical point of view, this therefore highlights the importance of business owners carrying out appropriate clearance searches in the early stages of a brand launch and seeking appropriate advice.