War of the Roses

The English Court highlighted the importance of keeping litigation costs proportional in Intellectual Property Disputes in this interesting trademark ruling. We examine the reasoning behind the judgment in Samuel Smith Old Brewery v Philip Lee (t/a Cropton Brewery).

Samuel Smith Old Brewery registered a stylised rose device as a trademark in 1973 and used the mark extensively for its marketing and branding. Cropton Brewery, a rival Yorkshire brewery, produced a bottled beer called Yorkshire Bitter exclusively for Marks & Spencer which also used a white rose on its label. Cropton Brewery also used the Yorkshire Regiment cap badge image on the label of its Yorkshire Warrior beer, which included a white rose emblem. Samuel Smith claimed both labels infringed its trademark and issued proceedings for trademark infringement and passing off in the High Court.

Decision – 22 July 2011

Mr Justice Arnold held that Cropton Brewery was liable for trademark infringement in respect of the Yorkshire Warrior label, but not in respect of the Yorkshire Bitter label.

In respect of the Yorkshire Bitter label the judge held that, whilst the identity of the goods and distinctive nature of the trademark indicate a likelihood of confusion with Samuel Smith’s beer, there are certain factors which “militate against it”. These factors include the differences between the emblem used by Cropton Brewery and the trademark, the clear identification of Cropton Brewery as producer of the beer and the fact that Samuel Smith has not adduced any substantial evidence of actual confusion. This meant that the judge could not find that Samuel Smith had established that there was a likelihood of confusion.

In addition, the Yorkshire Bitter label was not an infringement of the trademark because it had been used in accordance with “honest practices in industrial and commercial matters” ( A defence to infringement under Section 11 (2) of the Trade Marks Act 1994 and Article 6 of Council Directive 2008/95) due to the following factors:

The label was designed by or on behalf of Marks & Spencer (with whom Samuel Smith had previously reached a settlement agreement);

• Cropton Brewery was not aware (and there was no reason why it should have been aware) of Samuel Smith’s trademark before June 2009 and was only aware that Samuel Smith objected to its use in September 2009. There was no reason why Cropton Brewery should have carried out any trademark searches as it was entitled to assume that Marks & Spencer (who designed the label) would do what was necessary in that regard;
• There was no evidence of actual confusion;
• Most consumers will assume that the white rose indicates the geographical origin of the product (rather than the trade origin) and so Cropton Brewery was justified in using the white rose to indicate the Yorkshire origin of the beer.

In respect of the Yorkshire Warrior label, the judge found that in this instance there was a likelihood of confusion with Samuel Smith’s products. This was due to the closer similarity between the images used and, importantly, the fact that Cropton Brewery was not identified on the front of the label. Whilst there was no strong evidence of confusion, due to the above factors, the judge was persuaded that there was a likelihood of confusion

Again Mr Justice Arnold found that Cropton Brewery had a defence because the Yorkshire Warrior label had been used in accordance with “honest practices in industrial and commercial matters” – but only up to October 2009. Before October 2009, the following factors applied:

• Cropton Brewery used the Yorkshire Regiment cap badge image on the label with the consent of Lt Col O’Kelly. Cropton Brewery had no reason to suspect that Lt Col O’Kelly did not have authority to give consent, nor that the use of the cap badge would infringe a third party’s rights;
• Cropton Brewery was not aware (and, given its status as small sole trader, there was no reason why it should have been aware) of Samuel Smith’s trademark before June 2009;
• There was no evidence of actual confusion;
• Most consumers will assume that the white rose indicates the geographical origin of the product (rather than the trade origin) and so Cropton Brewery was justified in using the white rose to indicate the Yorkshire origin of the beer.

After October 2009, the last two factors remained the same however the first two factors changed. In October 2009 the Ministry of Defence withdrew permission to use the badge because they were concerned that its use was infringing Samuel Smith’s trademark and they indicated that they were happy for the label to be changed. Despite this, Cropton Brewery continued to use it. In addition, by October 2009 Samuel Smith’s claim was underway and Cropton Brewery had a reasonable opportunity to consider its position. Therefore Mr Justice Arnold found after October 2009 the badge had not been used in accordance with “honest practices in industrial and commercial matters” and so Cropton Brewery’s Yorkshire Warrior label had infringed Samuel Smith’s trademark from that date.

Mr Justice Arnold also held that Cropton Brewery was liable for passing off in relation to the Yorkshire Warrior label (although the judgment is not clear whether there are any similar time restrictions in this regard). Samuel Smith owned substantial reputation and goodwill in the trademark. The judge held that Cropton Brewery’s use of the Yorkshire Warrior label gave rise to a misrepresentation (for the similar reasons set out above regarding the likelihood of confusion) which caused damage to the reputation and goodwill of the trademark.

Comment

Even though Cropton Brewery was held liable for trademark infringement and ordered not to use the white rose emblem on its Yorkshire Warrior beer, Mr Justice Arnold did not make any award for payment of damages to Samuel Smith. Mr Justice Arnold commented that the costs of this action were “out of all proportion to what is at stake” and that this had become a barrier to settlement. In his view, the parties had become entrenched in their respective positions rather than seeking common ground. In future, Mr Justice Arnold recommended that the possibility of mediation should be fully explored at an early stage.

It is clear that any strategy in similar trademark/Intellectual Property disputes should carefully consider issues of proportionality of costs and the availability of mediation as an alternative to litigation.

 

For more information on this or any other similar IP law issue, please contact Liane Bylett or Clive Lee by emailing Liane or Clive or by calling her on 08450 990045, or speak to your usual contact in the Commercial Disputes Team.

This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this document.