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IN THE SUPREME COURT OF JUDICATURE CHANF 96/0604/B

IN THE COURT OF APPEAL (CIVIL DIVISION )

(MR JUSTICE RATTEE )

Royal Courts of Justice

Strand

London W2A 2LL

Thursday, 20th November 1997

B e f o r e

LORD JUSTICE HOBHOUSE

LORD JUSTICE MILLETT

LORD JUSTICE OTTON

THE EUROPEAN LIMITED

Appellant

v.

THE ECONOMIST NEWSPAPER LIMITED

Respondent

(Computer Aided Transcription of the Stenograph Notes of

Smith Bernal Reporting Limited, 180 Fleet Street

London EC4A 2HD

Tel: 0171 421 4040

Official Shorthand Writers to the Court)

MR CHRISTOPHER MORCOM QC and MISS JESSICA JONES (instructed by Messrs Lovell White Durrant, London EC1A 2DY) appeared on behalf of the Appellant/Plaintiff.

MISS EMMA HIMSWORTH (instructed by Messrs Rouse & Co, London E14 9SG) appeared on behalf of the Respondent/Defendant.

J U D G M E N T

(As approved by the Court )

©Crown Copyright

LORD JUSTICE HOBHOUSE: I will ask Lord Justice Millett to give the first judgment.

LORD JUSTICE MILLETT: This is an appeal by the plaintiff from an Order of Rattee J dated 14th March 1996 dismissing the plaintiff's action for infringement of a registered trade mark. It is thought to be the first case which has come before this court under the provisions of the Trade Marks Act 1994, which came into force on 31st October 1994. The appeal raises issues under section 10(2) of the 1994 Act, and a respondent's notice raises a further issue which is concerned with the availability of a defence under section 11(2) of the Act.

The plaintiff publishes a weekly newspaper called "The European" and has done so since January 1992. The newspaper was previously published by another proprietor under the same name from May 1990. The registered trade mark which forms the subject matter of the action is the plaintiff's registered trade mark no. 1,487,878 ("the plaintiff's mark") which it uses as the masthead of its newspaper. The registration is in Class 16 of the International Classification and is for "newspapers". The plaintiff alleges that the defendant has infringed its rights in its registered trade mark by the use of the sign "European Voice" ("the defendant's sign") as the masthead of its newspaper called by that name. The plaintiff's mark consists of a device comprising the words "THE EUROPEAN" in the form annexed to this judgment.

The judge described this device as follows:

"The device has two words all in upper case letters, but with the word 'THE' in much less prominent print than the word 'European'. The device includes at top and bottom of the letter 'O' a representation of a dove holding a copy of 'The European' newspaper in its beak and the northern hemisphere of the terrestrial globe."

The device appears on the masthead of each copy of "The European" newspaper.

The masthead appearing on each copy of the defendant's newspaper is in the form annexed to this judgment.

The judge described the differences between the two mastheads as follows:

"(a) the masthead of 'European Voice' includes the word 'Voice' and does not contain the word 'The';

(b) the word 'European' in the masthead of European Voice is (apart from the initial 'E') in lower case letters and not upper case as in the masthead of The European;

(c) the masthead of European Voice does not include either dove or hemisphere, but does include a star over the letter 'i'."

The plaintiff has repeatedly disclaimed any monopoly in the use of the word "European" even as the title of a newspaper. Despite this, the plaintiff's objection to the defendant's masthead, as the judge pointed out, lies in the fact that it incorporates the word "European".

The plaintiff's mark was registered under the provisions of the Trade Marks Act 1938 (as amended) ("the 1938 Act"), but is treated, by virtue of Schedule 3, paragraph 2 of the 1994 Act, as if registered under the 1994 Act. The alleged infringements commenced after 31st October 1994. Accordingly, by virtue of Schedule 3 paragraph 4 of the 1994 Act, the provisions of the 1994 Act apply for the purpose of determining whether the plaintiff's registered trade mark has been infringed.

For the purposes of this appeal it is sufficient to refer to sections 9, 10 and 11 of the 1994 Act. Section 9(1) provides that the proprietor of a registered trade mark has exclusive rights in the trade mark, which rights are infringed by the use of the mark in the United Kingdom without his consent. Under section 9(1), the acts amounting to infringement, if done without the consent of the proprietor, are specified in section 10. Section 10(1) applies where the defendant uses in the course of trade a sign which is identical with the registered mark in relation to goods or services which are identical with those for which it is registered. It is common ground that the defendant's sign is not identical with the plaintiff's mark and that accordingly the issue of infringement is to be determined under section 10(2) of the 1994 Act.

Section 10(2) provides as follows:

"(2) A person infringes a registered trade mark if he uses in the course of trade a sign where because ...

(b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered

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

The defendant admits that it uses its sign in the course of trade and that its publication is a newspaper, and that accordingly it uses its sign in relation to goods which are identical with the goods for which the plaintiff's mark is registered. The plaintiff alleges and the defendant denies that the defendant's sign is similar to the plaintiff's mark and that because of such similarity and the identity of the goods in relation to which they are used there is a likelihood of confusion on the part of the public within the meaning of section 10(2).

Section 11(2) of the 1994 Act provides that a registered trade mark is not infringed by, inter alia,

"(b) the use of indications concerning the kind, quality, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics of goods or services ... provided the use is in accordance with honest practices in industrial or commercial matters."

The judge defined the issues involved as follows:

(1) Was the defendant's sign similar to the plaintiff's mark?

(2) If so, did the use of the defendant's sign in respect of newspapers result in a likelihood of confusion on the part of the public because of such similarity and thereby constitute an infringement under section 10(2) of the 1994 Act?

(3) If so, was the use of the defendant's sign protected by section 11(2)?

The judge ruled that the question whether the defendant's sign was similar to the plaintiff's mark was a question to be decided, in the first place, by him on the basis of his own consideration of the two mastheads, although he recognized that he should reconsider his initial opinion that they were not similar if there was cogent evidence of the existence or likelihood of confusion between the two on the part of members of the public.

The judge's own comparison of the two mastheads failed to satisfy him that they were similar. He then considered the evidence called by both parties on the likelihood of confusion. He expressed doubts as to the admissibility of the evidence tendered as expert evidence, but found that, taken as a whole, it did not in any case provide any real assistance since it was clear that different persons of equal eminence and experience in the trade held different views on the question. He then conducted a detailed assessment of the other evidence, and found that it was insufficient to persuade him to depart from his initial conclusion, based on his own comparison of the two mastheads, that the defendant's sign was not similar to the plaintiff's mark "in any way that can be said to create a likelihood of confusion on the part of the public within the meaning of section 10(2) of the Act". He added that, if contrary to his own view, the defendant's sign could accurately be said to be similar to the plaintiff's mark because of the inclusion of the word "European", he did not consider that the plaintiff had established any likelihood of resultant confusion on any significant scale on the part of the public.

Accordingly, the judge found that the plaintiff had failed to establish a case of infringement, so that it was unnecessary for him to consider the scope of the potential defence under section 11(2) of the Act. He indicated, however, that he would find it "very difficult to accept" that it could be in accordance with honest commercial practice for one publisher to use as the title, and therefore as the trade mark, of his newspaper something so similar to the registered trade mark of a publisher of another newspaper that the public was likely to confuse the two.

Section 10(2): infringement or no infringement .

The defendant accepts that the judge correctly identified the relevant issues, and that he did not misdirect himself on the law, but contends that he was wrong to conclude that the defendant's sign was not similar to the plaintiff's mark and that there was no likelihood of confusion on the part of the public.

Although the judge cannot be criticised for the way in which he described the issues, it should be borne in mind that there is only one question to be decided in a case of the present kind: is there a likelihood of confusion on the part of the public because of the similarity between the defendant's sign and the plaintiff's registered trade mark and the identity of the goods in relation to which they are used? Similarity is a matter of degree; and except in the case where there is absolutely no similarity at all between sign and mark (which is not this case) the question is whether the similarity is such as to be likely to cause confusion in the mind of the public. A degree of similarity is tolerable; the question is whether there is a confusing similarity.

The plaintiff's criticisms of the judge's conclusion based upon his own comparison of the two mastheads can be summarized under five heads:

(1) he failed to attach any weight to the fact that the goods in question are identical;

(2) he failed to consider the likelihood of aural confusion;

(3) he wrongly attached great importance to the fact that the only word which is common to the two signs ("European") is used in the defendant's newspaper, though not in the plaintiff's newspaper, to describe the nature of the newspaper and its contents;

(4) he allowed his judgment to be coloured by the fact that the plaintiff was not entitled to a monopoly of the word "European", as the plaintiff itself acknowledged; and

(5) he treated the case as if it were a case of passing off and wrongly took account of matters extraneous to the plaintiff's mark, such as the different format of the two newspapers and their different readership, to exclude the likelihood of actual confusion.

I do not regard these as fair criticisms of the judgment taken as a whole. The judge was plainly aware of the fact that the goods in question were identical; he could hardly be unaware of it seeing that the signs were both used as the mastheads of rival newspapers and that he repeatedly so described them. He even rejected evidence submitted on behalf of the defendant that there were numerous other publications on the market having the word "European" in their titles on the ground that they were not newspapers. There is no justification for thinking that he did not take account of the obvious when conducting his comparison of the two signs.

The judge stated in terms that he was not entitled to consider only the visual effect of the plaintiff's mark. But the need to consider the aural effect of a registered trade mark is primarily to deal with the case where the sign and mark do not include the same word but different words spelt differently but sounding the same. This is often a method of colourable imitation. In the present case, however, the plaintiff's insistence on aural comparison is for a different purpose. It seeks to isolate the word "European" which forms part of the plaintiff's mark and to disregard other distinctive features which have not been replicated in the defendant's sign and which can be seen but not heard.

The judge pointed out that the plaintiff's mark is a device, not a trade name. It incorporates the words "The European" but it does not consist exclusively of those words. Any aural confusion, therefore, would derive from a confusing similarity between the defendant's sign and part only of the plaintiff's mark. To meet this, the plaintiff submitted that the word "European" is the essential feature of its registered trade mark, and that visual and aural confusion would follow from the incorporation of this essential feature of its registered trade mark in the defendant's masthead.

The judge rejected this submission, and in my judgment he was right to do so. He accepted, of course, that the word "European" is the most prominent feature of the plaintiff's mark, but he pointed out that it is not a made-up or invented word but an ordinary word in common use, capable of being used most naturally in a descriptive manner, and in the case of the defendant's newspaper used to describe its character and contents.

In my judgment the plaintiff's contention that the word "European" forms the essential feature of its registered trade mark does not sit comfortably with its disclaimer of any monopoly in the use of the word even as the title of a newspaper. If the plaintiff disclaims such a monopoly, it must be because it recognizes that the word is not in itself distinctive of the trade origin of its newspaper. The function of a trade mark is to serve as an indication of the trade origin of the goods to which it is applied. I do not understand the concept of a trade mark which has as its essential feature a word or phrase which does not perform this function because it is not in itself distinctive of the origin of the goods.

I accept, of course, that while the defendant's use of the word "European" in its masthead is descriptive rather than distinctive of the trade origin of its newspaper, the plaintiff's use of the word is different. It is not used descriptively but as a prominent part of its distinctive trade mark. But in my judgment any contention on the part of the plaintiff that the word "European" forms the essential feature of its registered trade mark which distinguishes the origin of its newspaper would almost inevitably lead to the very monopoly which it disclaims, and the judge was rightly reluctant to accept this. Where descriptive words are included in a registered trade mark, the courts have always and rightly been exceedingly wary of granting a monopoly in their use.

The judge did not wrongly regard the case as one of passing off. He referred at length to the differences in get-up which would be likely to preclude actual confusion, but in my opinion he did not misdirect himself. He did not use these differences to support his conclusion that there was no confusing similarity between the two mastheads, but rather to rebut the reasoning of one of the plaintiff's witnesses whose evidence he rejected.

In my judgment the judge's conclusion based on a comparison of the two mastheads cannot be faulted. Although he did not have the benefit of the decision, he did in my opinion faithfully carry out the instructions of the European Court of Justice in Sabel BV v. Puma AG (11th November 1997) to the effect that:

"The likelihood of confusion must be appreciated globally, taking into account all factors relevant to the circumstances of the case. That global appreciation of the visual, aural or conceptual similarity of the marks in question must be based on the overall impression given by the marks, bearing in mind in particular their distinctive and dominant components ... the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details.

In that perspective, the more distinctive the earlier mark, the greater will be the likelihood of confusion. It is therefore not impossible that the conceptual similarity resulting from the fact that two marks use images with analogous semantic content may give rise to a likelihood of confusion where the earlier mark has a particularly distinctive character, either per se or because of the reputation it enjoys with the public.

The more distinctive the earlier mark, the greater will be the likelihood of confusion."

The converse, of course, follows. The more descriptive and the less distinctive the major feature of the mark, the less the likelihood of confusion.

In the present case there was no evidence that the word "European" had become associated in the public mind exclusively with the plaintiff's newspaper. The judge's conclusion was essentially based on his findings (i) that the two signs were very different in appearance; and (ii) that, while the word "European" formed a prominent feature of the plaintiff's mark, it was not the essential feature of the plaintiff's mark which indicated the trade origin of its publication. In my judgment these were findings to which he was entitled to come.

The evidence of confusion or no confusion consisted of (i) evidence of witnesses purporting to testify to actual confusion; (ii) evidence of witnesses who had responded to a survey carried out on behalf of the plaintiff; and (iii) evidence of trade witnesses who gave their opinion of the likelihood of confusion. I agree with the judge that the last category of evidence was almost entirely inadmissible on the present issue. The function of an expert witness is to instruct the judge of those matters which he would not otherwise know but which it is material for him to know in order to give an informed decision on the question which he is called on to determine. It is legitimate to call evidence from persons skilled in a particular market to explain any special features of that market of which the judge may otherwise be ignorant and which may be relevant to the likelihood of confusion. It is not legitimate to call such witnesses merely in order to give their opinions whether the two signs are confusingly similar. They are experts in the market, not on confusing similarity.

In the present case the only witness who in my opinion gave relevant evidence was Mr. Shield, who testified:

"In my experience, the general public are used to distinguishing titles of publications without difficulty given the fact that most titles are descriptive of [their] contents and therefore there are many publications on a particular subject matter with similar names."

That evidence was probably unnecessary in that the judge could have taken judicial notice of the facts to which the witness deposed, but it was at least relevant evidence of the nature of the market-place in which the parties were operating and of the degree of similarity which is tolerable in that market-place without causing confusion.

The rest of the evidence was singularly unimpressive. Absence of evidence of actual confusion is rarely significant, especially in a trade mark case where it may be due to differences extraneous to the plaintiff's registered trade mark. But, in order to displace the judge's initial view, the plaintiff needed evidence of a significant degree of actual confusion and there was little or none. In my judgment neither the judge's assessment of the evidence nor his conclusion that it should not persuade him to depart from his initial conclusion based on a comparison of the signs can be faulted. In the end the question of confusing similarity was one for the judge. He was bound to make up his own mind and not leave the decision to the opinion of the witnesses.

It follows that his finding that there was no infringement cannot be disturbed.

This makes it unnecessary to consider the availability of a defence under section 11(2)(b). As at present advised, I think that there is much force in the contention that, while paragraphs (a) and (b) are directed to the use of the matters referred to as indications of the trade origin of the goods or services, paragraph (b) is different. The paragraph would make no sense if "other characteristics of the goods or services" included their trade origin. I am inclined to think that the purpose of section 11(2)(b) is to permit the fair use of the plaintiff's registered mark to indicate the characteristics of the defendant's goods or services, for example, in an advertisement, but not (whether alone or in conjunction with other words) to perform the dual function of indicating both the characteristics and the trade origin of the defendant's goods. I do not believe that it can have been intended, as the defendant submitted, to allow the use of confusingly similar indications of the trade origin of the goods or services provided that other features, such as the get-up or section of the public for whom the goods or services were designed, made actual confusion unlikely. This has never been a defence to an action for infringement, and to allow it would fundamentally subvert the policy which has hitherto underlain trade mark protection. But it is not necessary to decide the proper scope and effect of the paragraph in the present case, and I would prefer to leave these questions to a case which requires their decision.

I would dismiss the appeal.

LORD JUSTICE OTTON: I agree that this appeal should be dismissed for the reasons given by my Lord, Lord Justice Millett. I offer no view on the construction or application of section 11(2) of the Trade Marks Act 1994. It is not necessary to do so for the disposal of this appeal.

LORD JUSTICE HOBHOUSE: I too agree that the plaintiff's appeal against the decision of Rattee J. under section 10 of the Trade Marks Act 1994 should be dismissed for the reasons given by Lord Justice Millett.

The questions which we have had to consider on this appeal arise from certain features of this case:

(1) The plaintiffs and the defendants are both publishers of weekly newspapers. A newspaper has what is called a masthead which performs a number of functions. It provides a distinctive title for the publication. It also usually includes some form of a logo so as to give it a distinctive and easily recognisable appearance. It quite often includes descriptive words which relate to the content or special interest of the publication, for example: "The Financial Times", "The Racing Times". It will also serve to identify it as the product of that particular publisher. This is because each newspaper tends to be published by a distinct company of which the function is to publish that newspaper. The shifts in the ownership of newspaper companies and in their grouping means that the masthead will often provide no more than the basis for a guess as to the ownership at any given time of any given newspaper and what stable it has come from.

(2) The plaintiff's registered mark used a word "European" which is a descriptive word. Further, it is a word which unusually can be used either as a noun or as an adjective. It is an appropriate word to use as an adjective in the title of a newspaper so as to indicate the character and content of the newspaper. It is an ordinary word in everyday use in the English language. The plaintiffs, when registering their mark, did not make any disclaimer (cf section 13 of the 1994 Act) but they have expressly stated in these proceedings, and rightly repeated before us:

"It is not and never has been any part of the plaintiff's case that it is entitled to exclusivity in the word 'European' even as part of a title or trade mark of a newspaper, and certainly not as part of descriptive matter."

This affects both the legal questions, eg the interplay between section 10 and section 11(2)(b), and the factual questions, eg the likelihood of the use of a descriptive word causing confusion as to who are the publishers of the newspaper, that is to say, in the terminology used in section 1 of the Act, "the undertaker". It must always be borne in mind that in section 1(1) of the Act a trade mark is defined as meaning:

"any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings".

(3) The use of one of the same words in the two mastheads requires that the court consider not only the risk of visual confusion but also aural confusion.

The European Court has provided guidance for the decision of the issue under section 10. They have said that:

"Global appreciation of the visual aural or conceptual similarity of the marks in question must be based on the overall impression given by the marks bearing in mind in particular their distinctive and dominant components."

That is a quotation from the judgment of Sabel v. Puma case C-251/95, paragraph 23.

Here, looking at the plaintiff's mark and comparing it with the defendant's sign, there are striking differences. The appearance is different; the logos are different; the use of the word "European" is different. In the plaintiff's masthead it is used as a noun; in the defendant's it is used as a descriptive adjective. The distinctive and dominant components are different and distinctive. They are not similar and I do not see how they would cause confusion, let alone be likely to cause confusion on the part of the public, as to whether both newspapers were published by the same publisher. Why, it would be asked, make the two mastheads so distinctly different in appearance if they are to be thought to be associated publications? The only common factor is the word "European", used, as I have said, in a different sense in the two mastheads. This potentially gives rise to a question whether there might not be some aural confusion. I doubt whether such a concept is really designed to relate to a case such as the present but to a case where words with a different appearance nevertheless have a similar phonetic sound so as to create a risk of confusion when spoken. Here, the defendant's masthead includes the essential and distinctive word "Voice". In my judgment it does not create any obvious risk, let alone any likelihood of confusion, on the part of the public that the ownership of the two newspapers was the same.

Thus, I agree with both the conclusion of Rattee J and his reasons for deciding that there was no infringement under section 10. (See particularly pages 436 and 438 of the report at [1996] Fleet Street Reports.) I also agree with his assessment of the evidence at pages 439 to 445 of the same report.

The appeal therefore fails and it is not necessary to consider the effect of section 11(2). I consider that this subsection raises problems of construction and application which must, for an answer, await a case which necessitates their decision. It involves a consideration of the interrelation of not only sections 10 and 11 but also of those sections and sections 1 and 3 and the scheme of the legislation, that is to say the Act and the Directive, as a whole. On the one hand it can be argued that the holder of a registered mark should not be deprived of the protection of his mark and the prima facie infringer should not be allowed to continue to use a confusing sign. On the other hand it can be argued that the holder should not be permitted to acquire a monopoly over a descriptive word to which he is not entitled and that a competitor should be allowed to use that descriptive word if it is consistent with honest trade practice to do so.

I therefore express no opinion upon this aspect of the case or what has been said about section 11 by Rattee J and other judges at first instance.

It follows that the appeal is dismissed.

ORDER: Appeal dismissed with costs; leave to appeal to the House of Lords refused.