Calm Down Dear, it’s only a Community trade mark

Hotel Cipriani srl and others v. Cipriani (Grosvenor Street) Limited and others [2008] EWHC 3032 (Ch)

High Court, Mr Justice Arnold, 9 December 2008

The Claimants own the world-famous Hotel Cipriani in Venice, a favourite destination of royalty, politicians and celebrities, and successfully established passing off and infringement of Community trade mark registration no. 000115824 CIPRIANI pursuant to Articles 9(1)(a) and (9)(1)(b) of the Community Trade Mark Regulation (40/94/EEC) (the “Regulation”) by the owners of the restaurant “Cipriani London”.

The Defendants’ “own-name” defence under Article 12(a) of the Regulation was rejected, as was the Defendants’ attack on the validity of the Claimants’ CTM and UK marks on the grounds of bad faith.

Mr Justice Arnold acknowledged the well-known status of the Hotel Cipriani mark and also granted an injunction pursuant to section 56 of the Trade Marks Act 1994 (the “Act”) prohibiting the Defendants from carrying on a restaurant business in the UK using the names “Cipriani” and “Cipriani of London”.

The judgment means that members of the Cipriani family, who still own the famous Harry’s Bar in Venice but who sold their interests in the hotel more than forty years ago, can no longer use their name on restaurants in the UK.

The nine-day hearing featured evidence from a string of witnesses including Michael Winner, the hotel, restaurant and food critic.

Background

The first defendant was a company with a single director, Mr Guiseppe Cipriani, the second defendant. The second defendant’s grandfather, also called Mr Guiseppe Cipriani (senior) was one of the founders of Hotel Cipriani when it opened for business in 1958.

The hotel business attracted various investors until it was sold in 1967. One of the terms of the sale agreement was that the Hotel Cipriani should enjoy an exclusive right to use the name Cipriani even after all members of the Cipriani family have ceased to be involved with the hotel. This interpretation of the sale agreement was honoured by the Cipriani family for over 30 years until a restaurant in Italy was opened in 2000.

In 1996, the Claimants registered UK and CTM registrations for CIPRIANI and HOTEL CIPRIANI in relation to, inter alia, hotel and restaurant services.

In April 2004, the first defendant opened a restaurant in London called “Cipriani London” but this was commonly known by the distinctive element alone: “Cipriani”.

Proceedings were issued in November 2006 for infringement of the CTM, passing off and infringement of a well-known mark under section 56 of the Act. The Defendants:

  • accepted there was infringement under Article 9(1)(a) of the Regulation (identical mark on identical services)

  • denied infringement under 9(1)(b) of the Regulation on the basis that there was no likelihood of confusion

  • sought to rely on the own-name defence to defend the claims of infringement

  • denied passing-off and liability under section 56 of the Act

  • counterclaimed for declarations of invalidity against the Claimants’ UK and CTM registrations for CIPRIANI on the grounds that they had been made in bad faith

Decision

Mr Justice Arnold upheld all the Claimants’ claims and rejected the Defendants’ defence and counterclaims. The judgment gave a comprehensive analysis of the case law in relation to the own name defence as well as trade mark and passing-off law.

Infringement under Article 9(1)(b)

In a comparison of the marks, Arnold J applied the established general principles relating to the likelihood of confusion. He found that, even without a reputation in the UK, the CIPRIANI mark was fairly distinctive to a UK consumer whereas the “London” element was non-distinctive.

Arnold J considered that use of a Community trade mark was notional and not actual use in that a CTM registration could be infringed even if the mark was not being used by the proprietor in the same particular territory as the infringer (Compass Publishing BV v Compass Logistics Ltd [2004] EWHC 520 (Ch), [2004] RPC 41).

It was also noted that it is sufficient for the purposes of Article (9)(1)(b) that existence of confusion was necessary in only one member state of the European Union (Case C-514/06P Armacell Enterprise GmbH v OHIM [2008] ECR I-0000). It was therefore irrelevant that the Claimants had not used the CIPRIANI mark in the UK, as a CTM registration entitles such use to be assumed in favour of the proprietor.

As a consequence, the dominant and distinctive elements of the marks were identical, as were the services. The average consumer would regard the services denoted by the marks as deriving from the same or economically-linked undertakings and hence there was trade mark infringement

Own-name defence

The Defendants’ defence was based on Article 12(a) of the Regulation which states:

“A Community trade mark shall not entitle the proprietor to prohibit a third party from using in the course of trade:

(a) his own name and address;

… provided he uses [it] in accordance with honest practices in industrial or commercial matters”.

The defence is available to all legal entities and not only individuals (Case C-245/02 Anheuser-Busch Inc v Budejovicky Budvar NP [2004] ECR I-10989 and Case C-17/06 Céline Sàrl v Céline SA [2007] ECR I-7041).

To avail itself of the defence, a company must use its full registered name and not a trading name (following Premier Luggage & Bags Ltd v Premier Co (UK) Ltd [2002] EWCA Civ 387, [2003] FSR 5 and Asprey & Garrard Ltd v WRA (Guns) Ltd [2001] EWCA Civ 1499, [2002] FSR 31). It is not necessary to use the “limited” and “plc” elements.

The Defendants did not use the full registered name of Cipriani (Grosvenor Street) or Cipriani International. Furthermore, Arnold J found that the use was not in accordance with honest practices. One particularly important factor was the Defendants’ failure to conduct a trade mark search before the business opened. This was commented on by Advocate General Sharpston in Céline, who noted:

“Honest practice in the choice of a name to be used in trade must imply reasonable diligence in ascertaining that the name chosen does not conflict with, inter alia, an existing trade mark”.

Arnold J found further multiple failings on the part of the Defendants which precluded them from entitlement to the defence. He found that the Defendants:

  • knew of the existence of the CTM

  • failed to clear use of the restaurant’s name with the Claimants

  • continued to use the restaurant’s name when they became aware of the CTM

  • failed to take proper advice

  • failed to properly address their minds to the likelihood of confusion

  • failed to properly address their minds to the likelihood of damage to reputation

  • failed properly to react to the fact that the restaurant was referred to as Cipriani not Cipriani London

  • failed properly to consider the consequences for the Claimants’ exploitation of the CTM

Failure to even conduct a trade mark clearance search before use of an infringing mark is in itself may be likely therefore to preclude the successful defence plea under Article 12(a) of the Regulation.

Validity

The Defendants attacked the validity of the CTM and UK registrations on the grounds of bad faith under Article 51(1)(b) of the Regulation. They argued that any party which sought a monopoly over a name which it shared with other businesses was tantamount to bad faith. Such an argument was novel and would have created new law.

In dismissing the invalidity action, it was held that the Claimants had a legitimate interest in applying to register the CIPRIANI mark, having historic use and substantial reputation across the EU. Furthermore, no objection had been made to either application on relative grounds by the Defendants during the application process. In addition, the sale agreement of 1967 conferred a right of exclusivity to the Claimants.

Passing off

To found a passing off claim in the UK, the Claimant must establish that he has goodwill and there has been a misrepresentation as a result of which he has suffered a loss. The case therefore focussed on whether there it was possible for a restaurant based in Italy to own goodwill in the UK; reputation alone being insufficient: Anheuser-Busch Inc v Budejovicky Budvar NP [1984] FSR 413.

At the material time in April 2004, Arnold J found that the Claimants had customers in the UK who booked the hotel and restaurants directly as well as via tour and travel operators. Following Pete Waterman Ltd v CBS United Kingdom Ltd [1993] EMLR 27, these bookings were sufficient to establish goodwill.

Little evidence was submitted of actual confusion but Arnold J regarded this as irrelevant as whether there is misrepresentation is a matter of independent judgment for the court. He nevertheless provided some useful guidance on the relative strength of evidence when he commented obiter that:

“evidence of actual custom is more significant than entries in guidebooks; while entries in guidebooks are more significant than passing mentions in the media”.

Arnold J thought it likely that customers would be deceived into thinking that the Defendants’ restaurant was connected in some way with the Claimants’ businesses. The Defendants were therefore passing off.

Arnold J also held that the CIPRIANI mark was a well-known mark and is therefore entitled to protection by injunction pursuant to Article 6bis of the Paris Convention 1883 and section 56 of the Act.

The Defendants’ request for a referral to the European Court of Justice under Article 234 of the EC Treaty was denied.

Summary

The case raises a number of important elements of trade mark law, all of which have been addressed comprehensively by Mr Justice Arnold, who was clearly unimpressed by the Defendants’ conduct. The decision is likely to be appealed and it will be interesting to see if any other novel arguments will be presented to the Court of Appeal and whether they will be given similar short shrift.

First published in the ITMA Review, January 2009.

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