On yer bike Assos—Asos 'own name' defence succeeds in Court of Appeal

With Assos gearing up for an appeal to the Supreme Court, what can be learned from the Court of Appeal’s judgment on the application of the ‘own name’ defence?

The parties

Assos (owned by Roger Maier) manufactures high quality cycling clothing primarily sold in specialist cycling stores in 37 countries worldwide. Assos owns various trade mark registrations including a CTM for ASSOS in classes 3, 12, and 25 registered in September 2006.

Asos is a well-known international online fashion and beauty retailer which originally traded under the name ‘As Seen on Screen’ (replaced by the acronym ‘ASOS’ in 2002). It applied to register ASOS as a CTM in classes 3, 18, 25 and 35 which was successfully opposed by Assos save for some goods in class 18 which proceeded to registration. Asos does however own a UK trade mark covering numerous goods and services in classes 3, 8, 9, 11, 14, 18, 21, 25 and 26.

Background

In December 2011, several years after the parties started using their respective marks, Assos bought a claim against Asos for trade mark infringement and passing off. Asos counterclaimed for revocation of the Assos CTM on the grounds of non-use. The High Court (see Maier and another v Asos plc and another company [2013] EWHC 2831 (Ch), [2013] All ER (D) 185 (Sep)) ruled in favour of Asos:

  1. partial revocation of the ASSOS CTM on the grounds of non-use—its class 25 specification amended from ‘clothing, footwear, headgear’ to ‘specialist clothing for racing cyclists; jackets, t-shirts, polo shirts, track-suit tops, track-suit bottoms, casual shorts, caps’
  2. there was no likelihood of confusion between the use of ‘Asos’ and the CTM and therefore no trade mark infringement under Council Regulation (EC) 207/2009, art 9(1)(b) (the CTM Regulation)
  3. use of the ASOS mark had not caused any damage to the distinctive character of the CTM, therefore there was no infringement under the CTM Regulation, art 9(1)(c)

Asos’ own name defence would become central in the appeal proceedings, but at first instance the judge decided it need not be considered as there was no finding of infringement.

CycleA

© Annie Crawford

What were the grounds of appeal?

Assos appealed the decision, arguing that the judge erred by rejecting the trade mark infringement claims and was overly-restrictive in her amendment of the CTM specification. In its cross-appeal, Asos restated its reliance on the ‘own name’ defence should that prove necessary.

What did the Court of Appeal rule?

The Court of Appeal reversed the High Court’s decision by ruling that use of the ASOS mark did create a likelihood of confusion and damaged the distinctive character of the ASSOS mark. The Court of Appeal determined that the High Court focussed only on the actual use of the ASSOS CTM and had failed to consider a ‘notional and fair use’ in relation to all the goods and services covered by the registration—ie a hypothetical use that would be permissible within the specification of goods and services. The concept of notional and fair use underpinned the Court of Appeal’s finding of infringement under both arts 9(1)(b) and 9(1)(c) of the CTM Regulation.

However, Asos were entitled to rely on the ‘own name’ defence. Article 12 of the CTM Regulation provides that a CTM proprietor may not prohibit a third party from using in the course of trade its own name or address provided that such use is in accordance with honest practices.

Key to the Court of Appeal’s decision on Asos’ own name defence was the fact use of the name ASOS arose honestly, as an acronym for the ‘As Seen on Screen’ concept. The majority of the Court of Appeal concluded that Asos had fulfilled its duty to act fairly—after becoming aware of the CTM, Asos stopped bidding on ‘Assos’ as a keyword (to catch misspellings) and stopped selling cycling gear. While Asos did not conduct a trade mark clearance search when it switched to the acronym ASOS, its management did carry out an online Google search. Further, the Court of Appeal found that there had not been any significant evidence of actual confusion between the two marks.

In a concession to Assos, the Court of Appeal slightly broadened the redrafted class 25 specification by amending ‘specialist clothing for racing cyclists’ to ‘specialist clothing for cyclists’ (thereby undoing the inference that the CTM would not cover cycling gear for amateur cyclists).

What is the significance of the dissenting judgment?

The appellants, Assos, have indicated their intention to seek leave to appeal to the Supreme Court on the application of the own name defence—it is likely this decision was influenced or at least encouraged by Sales LJ’s dissenting judgment on this point.

In Sales LJ’s interpretation of the ‘honest practices’ requirement in the own name defence, he referred to a ruling by the Court of Justice which held that the condition of ‘honest practice’ constitutes (for the purposes of EU legislation) ‘the expression of a duty to act fairly in relation to the legitimate interests of the trade mark owner’ (Gerolsteiner Brunnen GmbH & Co v Putsch GmbH: C-100/02). In Sales LJ’s opinion, the CTM Regulation and relevant authority meant the interests of the CTM proprietor should be given significantly more weight than Kitchen LJ and Underhill LJ determined.

In particular, Sales LJ took a much harder view of Asos’ failure to carry out formal trade mark clearance searches. When Asos switched from ‘As Seen on Screen’ to Asos, it was already a well-established and successful business and not, as Sales LJ put it, ‘an under-resourced one-man company making an unwitting and perhaps excusable blunder in choosing a confusing name’. Consequently, the scope of ‘honest practices’ in these circumstances should have included formal trade mark clearance searches. Had such a search been conducted, Asos would have become aware of the ASSOS mark and perhaps made a different decision as to its branding. Once Asos did become aware of ASSOS it continued with its plans to expand its business across the EU and beyond and sell goods under the ASOS sign.

Is this ruling an encouragement for those seeking to rely on the ‘own name’ defence?

The courts have always tended to construe the ‘own name’ defence narrowly and the fact that Sales LJ gave a lengthy dissenting judgment on this point should remind brand owners to proceed with caution.

On the facts of this case, the majority of the Court of Appeal was satisfied that Asos had acted honestly and had never intended to deceive anyone. This test of honest practices will always be applied strictly and dependant on the facts—this ruling is certainly not an open door to an individual or company that considers it is in a position to exploit a name that is coincidentally identical or similar to registered mark. However, the Court of Appeal’s rather kind view on an established company such as Asos failing to carry out trade mark clearance searches may well be revisited in the future.

What else can practitioners learn from this judgment?

Arguably Assos could have avoided the attack on its CTM by providing a narrower list of goods and services in class 25 (rather than relying on the general Nice class heading: clothing, headgear, footwear). Where possible, trade mark applicants should be as precise as possible in the specification of goods and services while also building in some flexibility for future use of the mark.

In this case, Asos failure to carry out trade mark clearance searches did not backfire—though its later knowledge of the Assos mark did mean it decided against pursuing a potentially valuable market for cycling clothing. Companies routinely waste time and money investing in a new brand only to find later that it conflicts with someone else’s rights. Basic trade mark clearance searches, usually carried out by trade mark attorneys, are a quick and cheap way of establishing prior trade mark rights in selected jurisdictions. With knowledge of prior rights, a brand owner can make informed decisions on strategy and risk.

Jessica Stretch, solicitor in the Lexis®PSL IP & IT team. Article republished with kind permission of Lexis®PSL IP & IT .

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