14 November, 2017

Indistinct Taxi Service - London Taxi Design not Distinctive, says UK Court of Appeal

Shape trademarks have always been a difficult issue for the courts. The balancing act of trying to protect the general shape of something while being distinctive to get protection is a difficult line to tread, as the recent Kit Kat cases have shown among other decisions. One such saga that is currently being waged is over the design of the London black taxi, which many, this writer included, have used on a regular basis in the city. After a defeat at first instance, The London Taxi Company pursued the matter further into the Court of Appeal, who rendered their decision very recently.

The case of The London Taxi Corporation Ltd (t/a the London Taxi Company) v Frazer-Nash Research Ltd dealt with, as mentioned above, EU and UK trademarks over the design of the London black taxi (EUTM 951871 and UKTM 2440659). Frazer-Nash Research, a vehicle research and design company, designed and were ready to launch a new London taxi called the Metrocab (a hybrid electric car). In anticipation of infringement, LTC sued FNR for trademark infringement and passing off.

The Court had to look at 8 different points of appeal focusing on the validity of the trademarks and infringement of the trademarks if deemed valid.

The first point dealt with the definition of the average consumer in the case, particularly whether it would be the taxi driver who purchases the taxi or the same together with members of the public who hire taxis. Having extensively considered case law on the definition of 'average consumer', Lord Justice Floyd saw that the 'average consumer' is "…any class of consumer to whom the guarantee of origin is directed and who would be likely to rely on it". It followed from this that the 'average consumer' could include both the purchaser and the hirer of the services, but the Court didn't make a full decision on this point.

The second point dealt with the trademarks' inherent or acquired distinctive character.

In terms of inherent distinctive character, Lord Justice Floyd observed that the test for assessing distinctiveness for 3D trademarks, as set in Freixenet, is whether "…the appearance of the product itself [is] no different from those applicable to other categories of trade mark". Additionally, the trademark has to depart significantly from the norm of the customs of the sector would have distinctive character. Lord Justice Floyd then set out his test for determining whether a mark departs significantly from the norms and customs of the sector (1) determine what the sector is; (2) identify common norms and customs, if any, of that sector; and (3) whether the mark departs significantly from those norms and customs. Following this test, Lord Justice Floyd determined that the trademarks didn't have inherent distinctive character, since none of the features in the design registered were a significant departure from features in other taxis in the sector.

Therefore, the only way for the trademarks to have distinctive character is for them to have acquired it through use. As set in the recent Court of Appeal judgment in Nestle (see more in the link above), the test for acquired distinctiveness is that "…the mark must have come to identify the relevant goods as originating from a particular undertaking and so to distinguish those goods from those of other undertakings". In other words, the London Taxi Company's taxis would have to be distinguishable from other taxis through their design.

Blake loved the design of his taxi a little too much
Following the decision of Justice Arnold at first instance, Lord Justice Floyd decided that the trademarks had not acquired distinctive character among taxi drivers, and that consumers were not concerned with the origin of the taxis they hired and therefore the trademarks wouldn't have acquired distinctive character in the mind of the average consumer. Lord Justice Floyd ultimately considered the marks to be invalid, but still went through the other points of appeal for the sake of clarity.

The third point is whether the shape of the mark gives substantial value to the goods, exclusive of any goodwill in the shape. Lord Justice Floyd found the guidance on this point unclear, and would have referred the matter to the CJEU if this point would still have been relevant.

The fourth point was revocation for a lack of use of the EUTM. If the mark hasn't been used in five years within the EU, the trademark is revoked. The only activity that LTC had undertaken in the EU in relation to the marks was to sell them second-hand, as production had ceased some time ago (the EUTM model was an older model of the taxi). Lord Justice Floyd, in his hypothetical answer, saw that the mark had been used in the EU, although only through the later models that were sold.

The fifth and sixth points dealt with infringement of the trademarks under Article 9(1)(b) and 5(1)(b), and Articles 9(1)(c) and 5(2). As the Metrocab and the trademark designs differed significantly, there would likely be no infringement on the marks under the former two Articles, according to Lord Justice Floyd. With regards to the latter two, there could be infringement, had distinctive character been established in the marks, as the Metrocab would've caused detriment to the trademarks' distinctiveness.

The seventh point concerned a defence of using an EUTM as an indication of, among others, quality, quantity and geographical origin. As set in Maier v ASOS, the legitimacy of the use is considered looking at "…whether there exists a likelihood of confusion; whether the trade mark has a reputation; whether the use of the sign complained of takes advantage of or is detrimental to the distinctive character or repute of the trade mark; and whether the possibility of conflict was something which the defendant was thought to have been aware".

Having considered the matter briefly, Lord Justice Floyd accepted LTC's assertion that there would be no defence of legitimate use, as the rights of a trademark holder should not be trumped by the conveying of a message that the vehicle is a licenced London taxi. This would be possible to be displayed otherwise, without infringement (although none happened in the matter).

Finally, the Court looked at the point of passing off. Lord Justice Floyd swiftly dismissed the claim of passing off, as, similarly to acquired distinctiveness above, LTC would struggle to prove goodwill in the design of the trademark. Even so, the design of the Metrocab is very different to LTC's design, and therefore wouldn't infringe even if goodwill were present in the case. The Court ultimately dismissed the appeal.

The case is yet another painful reminder of the difficulty in registering and particularly maintaining 3D trademarks. Distinctiveness is the hurdle most fall on, and the LTC taxi was no different. LTC have indicated that they might appeal to the Supreme Court, so the fight over taxis might not be over just yet.

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