Conference Report: IBIL's Annual Hugh Laddie Lecture

The AmeriKat gets a twinge of nostalgia whenever she walks up Gower Street to UCL, returning to her LL.M alma mater and the scene of her first sturdy paw prints into her career in IP. Perched at the back of the lecture theatre this evening, sandwiched between a counsel and a colleague, she observed the IP glitterati as they shuffled in to this year's IBIL Annual Hugh Laddie Lecture entitled, "Killing the Goose that Laid the Golden Egg: Too Many Trademarks?" - a lecture all about trade mark use (the bane of many a IP practitioner's existence). This year's lecture was given by The Honourable Mrs Justice Fidelma Macken of the Irish Supreme Court, and formerally Ireland's appointee on the European Court of Justice. (picture, left - the AmeriKat during her time at UCL living in the shelf next to one of her many IP text books)



Before Mrs Justice Macken began her speech, there was the matter of introductions - all three of them! Dame Hazel Genn DEB QC, Dean of UCL Faculty of Laws (and an inspiration to this Kat) first welcomed everybody, with Sir Robin Jacob (picture, right) seconding the welcome together with a brief statement of intent now that he finds himself truly "arrived at UCL". Sir Robin stated that he wanted the function of his role at IBIL to be "not an academic IP lawyer or a solely practical IP lawyer, but something in between" with the view that IBIL is to be the institute that the IP world looks to for their views on IP goings-on. Sir Robin stated that when he tried to convince Mrs Justice Macken to speak at this year's lecture, there was really very little convincing to be done; her answer was

"Yes, because of Hugh."

Lord Justice Mummery, the Chairman of the evening's lecture, in introducing Mrs. Justice Macken set out her list of accomplishments and highlights - from her educational background at Trinity College, to her work as a barrister and then as a judge first for the High Court and then as the first woman judge at the European Court of Justice. Before handing over the floor, Mummery LJ, like any good judge and chariman could not help but make some observations about the topic of trade marks:

"Why should such a simple idea of having a sign to indicate the source of goods be so unpredictable?...Why does a subject that is all about preventing confusion be so confusing?"

Mrs Justice Macken (picture, left) in brief response, after thanking Michael Fysh and Valentine Korah (thanks!), stated that the reason that trade mark law is of great interest, annoyance and confusion is probably due to more than just Europe and the Court of Justice for the European Union (CJEU) "sticking their nose in", it is also due to the fact that it probably "pays to have a great deal of problems with IP" from the perspective of all stakeholders = the trade mark proprietors who fight to protect and strengthen their rights, the trade mark users, and of course, us lawyers.

Mrs Justice Macken commenced her speech by acknowledging that "trade marks are the most wonderful things in the world apart from children, grandchildren..." and that it is a great area to work in because, she says, the philosophical reasonings underpinning trade mark law can be traced to logical (sometimes) answers in legislation. But trade marks, despite all of their merits, only function well if they are actually suitable for their job and that they are in fact used. She then regaled the audience of stories of yesteryear that when registering a trade mark in Ireland the most difficult element to prove was not the requirements for registrability but that the applicant had an intention to use the trade mark.

Following a brief recap of the Community Trade Mark (CTM) story, Mrs Justice Macken criticized the Trade Mark Directive and Regulation for lacking a unified rationale and for the lack of clarity on the issue of use/non-use. Even after seven years of these instruments being in force, she said, you would think that there are few legal questions left to resolve - not so. The criticism that was at the focus of Mrs Justice Macken's discussion was Article 15 of Council Regulation 40/94 which states:

"If, within a period of five years following registration, the proprietor has not put the Community trade mark to genuine use in the Community in connection with the goods or services in respect of which it is registered, or if such use has been suspended during an uninterrupted period of five years, the Community trade mark shall be subject to the sanctions provided for in this Regulation, unless there are proper reasons for non-use."

The provision, she argued, does not impose a positive obligation of use on the proprietor despite Recital 9 of the Regulation stating that there really is not much point of having a trade mark without it being used. Recital 9 states:

"Whereas there is no justification for protecting Community trade marks or, as against them, any trade mark which has been registered before them, except where the trade marks are actually used"

Clark & Smyth (Please help the AmeriKat out on referencing if you can!) was cited in support of the argument that Article 15 had no teeth in specifying the sanctions provided for in the regulation for non-use (i.e. Article 9) especially as it does not present a "stumbling block to registration". Mrs Justice Macken also cited an article by Shane Smyth in Intellectual Property who argued that the problem of the use/non-use issue has meant that the trade mark register is crowded with inactive marks. This is as a result of two things: First, that during registration an application can apply a mark for two or three classes of goods for the price of one (bargain!); and second, that the Nice Classification system is so broad that an application can obtain a registration for a full class of goods even though they have no intention to use the mark for a subset of that class of goods. This overly broad and crude classification is especially problematic in priority applications. For example, if the priority mark is from the US the mark is first subject to tighter registration proceedings and more restricted goods/services specifications, but as soon that mark gets to European shores their registrable class suddenly enlarges.

OHIM apparently responds to these concerns by saying that there is no clutter on the register and that every year when some marks are up for renewal, a very large proportion (tens of thousands?) of marks are not renewed either for classes of goods/service or at all. Mrs Justice Macken argued that in an academic world that would be fine, but in the real world it is not attractive to be advising your client that they have to wait 10 years for that mark to come up for renewal before you can grab it. Sure, there are revocation and cancellation proceedings but they are expensive, lengthy and highly uncertain. It was suggested that it is better to advise a client to get their marketing people to find a better mark that is available, then waiting around or bringing proceedings. One would only be sensible to use revocation proceedings to oppose registration or if they are being sued for infringement and are able to use it as a defence.

Mrs Justice Macken then went on to tackle the issues and comments raised in the Max Planck Institute's recent report (see here) on the European trade mark system. When the Trade Mark Directive and Regulation were originally published a joint statement was issued that stated that adequate use of a trade mark would be use of a trade mark in a single member state. Such use would then be sufficient against a non-use attack. The Max Planck report examined whether this was a justifiable approach and whether there was any feeling from concerned parties that the 5 year period for use should be reduced to 2 years. According to the report, a vast majority of practitioners and users wanted to keep the 5 year period, but the lawyers did not - but no reasons were given for this view (Does anyone want to give any thoughts?)

Mrs Justice Macken then briefly turned to the issue currently being raised in the ONEL case (supported by the VP of the Hungarian Patent Office and the Danish IPO). She stated that the reasoning behind this support is that if a trader wants to trade in a small area, like Belgium, under Mark X but has no interest in trading in Slovenia why should a trader in Slovenia who has no interest in trading in Belgium not be able to trade under Mark X? The current Community Trade Mark system does not allow this because there is a very European rationale underpinning this position, i.e., trade mark use is to be considered use for the purposes of the internal market, not merely as use as per each Member State. The joint statement can be interpreted as saying that use in one state "could be" use through out the Community, i.e., it does not necessarily have to be, but such an interpretation although logical, Mrs Justice Macken stated, is not found in the text.

Mrs Justice Macken then closed by touching briefly on the issue of competition law and intellectual property - the necessary evil the AmeriKat feels she needs to start taking seriously in her own education. She stated that with the rise in consumer protection the impact of competition law on IP is more and more intrinsically felt. Mrs Justice Macken stated that in her opinion trade marks, patents and other IP rights, provided they are not abused should not be heavily restricted by competition law because IP rights are a integral part of a functioning market - only if they are abusive should competition law intervene. In closing, she also expressed concern that there is an automatic assumption that if a company is large, has a large IP portfolio they ipso facto are bound to abuse their IP rights; this is a falsity that Mrs. Justice Macken wishes to correct.

The floor was then open for questions. Kate Szell was the first up who echoed, from experience, Mrs Justice Macken's speech. Szell stated that the cluttering of the trade mark register was a significant problem when advising clients to register especially from the "use" perspective. It is rare that a search does not reveal anything of potential concern and as a practitioner one has to advise their client that if they proceed they could be faced with an interim injunction. Szell also stated that it can also be the case that after an internet search a prior mark can seem to be limited for a class of goods, but the risk is of course still there. There is this element of risk due to the "use" problem, but if an overly-cautious approach is taken then new registrations may never occur because clients would be too reluctant to adopt a mark. The general opinion was that this state of the law is massively undesirable.

Steven Jones of Baker & McKenzie clarified for the audience that the 5 year period is from date of registration, so during the application time as much as an additional 2 years can be added to this period. Therefore, during the 5+ year period the mark is "stuck like glue" and there is very little one can do to challenge it. Roland Mallinson of Taylor Wessing stated that under UK law one can attack a mark on the grounds of "bad faith" for non-use or non-intention to use the mark. Under CTM you cannot do this at pre-registration stage and Mallinson questioned whether this could be a way forward. Mrs. Justice Macken stated that she was unsure if this was practically feasible and stated that bad faith arguements can also be a huge expense (quite, says the AmeriKat, someone please define "bad faith" under the Trade Mark Act 1994 because she has yet to find anyone who can).

The most interesting part of the discussion was when a member of the audience (now identified as Richard Ashmead) questioned why there is a lack of transparency regarding the observations that governments are making in respect of the ONEL case and the recent German reference on embryos. We should be able to see what the UK government is saying about these issues and that the secrecy is absurd. Mrs Justice Macken had sympathy with this position and stated that this is something that should be reviewed. This Kat absolutely agrees. How can the UK Government, or any EU Government, expect the people of their countries, including trade mark users, proprietors and practitioners to work under their trade mark law if they do not even know what their Government thinks about such issues? Why should there be such secrecy at all? These are cases that are being referred to the Court of Justice which we will eventually be bound by in some respect. Thoughts?

The Annual Sir Hugh Laddie Lecture was closed by Lord Justice Mummery and the participants ventured across Gower Street for much-deserved drinks and canapés and an evening of further topical trade mark discussions. Mrs Justice Macken's paper will be made available through the IBIL website in due course and this Kat will be greatly interested to get her paws on it for some light summer reading.

The AmeriKat would like to thank the wonderful Lisa Penfold of the UCL Law faculty for getting this Kat into the session after she neglected to register in time.

INTA Special Report: Sir Robin Jacob's Speech

Sir Robin Jacob was the final speaker of the concurrent session ( see previous report here) and opened by stating that

"This is my first time at INTA and I have been told that it involves everyone here exchanging their business cards with everyone else, which by my calculation is 81 million exchanges of cards. I have not brought enough cards."

Sir Robin stated that he cannot give a 100 year perspective on European trade mark law because there has yet to be 100 years of European trade mark law: the Directive was only introduced in 1994, however he was able to comment on UK law. Sir Robin began his substantive speech by giving a short overview of the beginning of trade mark registration in the UK in 1875 and told the audience about the story of the first UK trade mark - that of Bass Beer as a word mark and the more recognisable red triangle. Even back then UK judges were cautious about allowing trade mark and brand owners go too far for registrations. Sir Robin quoted the dicta in Joseph Crosfield & Sons' Application in a case dealing with the registration of PERFECTION for soap

"Wealthy traders are habitually eager to enclose part of the great common of the English language and to exclude the general public of the present day and of the future from access to the enclosure."

This was the general theme of pretty much everything that Sir Robin said during his speech - that the powerful trade mark owners have pushed the boundaries forward over the past several years and the courts are going to start pushing them back. He stated that the wealthy marks, known in chambers as "snob-marks", have been around for hundreds of years and exist today, and these marks try to show off all the time and shout the loudest about others "free-riding" off their esteem. Sir Robin stated that this argument is listened to more by Continental judges than by English ones, which is worrying. He stated that the Continental systems do not seem to have the same suspicious of monopolies than we do in the UK and that they are more comfortable with the fuzzily defined areas of unfair competition (The AmeriKat thinks there should be a drinking game for every time Sir Robin says he hates unfair competition in a speech. One talk she attended by Sir Robin, the AmeriKat would have been on the floor by minute-10). Sir Robin stated that he believed that the Far East is more in favor of competition than that of Europe when it comes to addressing trade mark owner's rights.

Sir Robin concluded his speech by criticizing the L'Oreal v Bellure decision (the AmeriKat agrees) and that this was an unfortunate development in trade mark law in Europe. He stated that

"I think people should be allowed to tell the truth."

So if they say they are a smell-a-like, then why should trade mark law "save" a big brand owner where the consumer is not confused because the defendant has informed the consumer that they are a smell-a-like. A member of the audience took fault with that view, but Sir Robin stated that if someone tells truth in a trade and has not made anything infringing, i.e. making smell-alike perfume is not infringing, then what is the problem? We do not need to protect brands that far, stated Sir Robin.

Probably seeing his time quickly evaporating, Sir Robin starting spilling out other criticisms. He took issue with the terminology used in trade mark law. If we started referring to "protecting a monopoly" than "protecting a brand" people and courts may be more cautious in protecting trade mark rights to such extremes, as that in the L'Oreal case. Also, he said that some of the exhaustion rules in Europe were "stupid", but the Amerikat could not write fast enough to take everything down (did anyone else?). Sir Robin went on:

"Trade marks say something and if they are telling the truth that is okay, but if they are lying they should be strangled."

Sir Robin closed with the following three comments:

1. The impact on technology in this field cannot be predicted and we will not yet be able to understand it.
2. The most important trade marks that matter have always been, are and will always be word marks.
3. From 100 years ago today, there is nothing all that different because trade marks are still performing the same function. [Note: Was this a quick attempt to discuss the functionality doctrine of trade marks and criticism of recent EU case law in this area? Surely not!]

It was a fascinating discussion and spurred a lot of debate following the close of the speeches. One audience member passionately questioned why the panel was so reluctant to refer to trade mark's as property. The panel were in agreement in stating that the use of the word "properly" when referring to IP is not helpful to IP because IP is really only a "bundle of rights". The term "property" also negative in term as it ring-fences rights as "ours" and "not-yours", which is unhelpful PR-wise as well is inaccurate. Miles also stated that if international trade mark systems are to be successful they need to recognize registered marks only in so far as a local use does not pre-date it.

This was the first speech the AmeriKat has seen by Sir Robin since he left he bench earlier this Spring and is very much looking forward to more uncensored commentary on IP law from the bastion of UK intellectual property law

INTA Special Report: A Century of Trade Mark Law

As Day 197 (or so it feels) of INTA 2011 enters the afternoon lull between the early morning breakfasts and the late evening cocktails, the AmeriKat has stolen herself away to her hotel room to report on one of the concurrent sessions - A Century of Trade Mark Law: Looking Back and Looking Forward. The special session was to commemorate the 100th anniversary of The Trademark Reporter and the large number of INTA attendees reflected the esteemed panel.

Miles Alexander of Kilpatrick Townsend & Stockton LLP opened his discussion by quoting the comic strip, Pogo:

"We have met the enemy and he is us"

Miles stated that the criticism of trade mark law is not of trade mark lawyers or the law per se, but the excesses in the trade mark, copyright and patent laws that rightsholders take advantage of and lobby for that go beyond their legitimate interests. From a fundamental level trade mark law, like any law, is a series of maxims along the line of "Thou shall not reap what you did not sow". At the heart of these maxims are a recognition that we consider some sort of conduct in the use of trade marks as "being immoral in our own minds". Courts will thus still recognize what they believe to be inherently wrong conduct when enforcing (or not) trade mark rights. This is something that has lasted the past 100 years. What has changed, however, is that the legislature is beginning to recognize that another form of immoral conduct can come from the rights owners themselves, such as trade mark bullies (see previous AmeriKat report here). Miles also stated that he believed that trade mark is "being tainted by what others in copyright" are experiencing (i.e. large damages awards against individuals).

Miles stated that what has been the more difficult area of practice in recent years is that where clients have a valuable mark being used by another party in circumstance where there is no trade mark use, no dilution and no real trade mark harm but where the use is still potentially damaging to the mark's reputation, it has been challenging to advise clients to let the matter go. This issue was picked up later by Eric Goldman when he spoke about the blurring of use between commercial and non-commercial use which has been exacerbated by the internet and social-media use.

Miles stated that for counterfeiting to ever stop, the law must criminalize the most dangerous areas of counterfeiting where there is a lot of harm being done. The sanctions must be incredibly harsh in order to make a real effect on this. He also stated that the internet "will solve more problems than it will create" because knowledge will help inform brand owners of what is taking place on-line and in the real world. He also stated that social networks will give consumers easily accessible information pertaining to what products are counterfeit goods. Brands will also be able to more easily assess what marks they should register and how consumers view and cognitively assess their brands which will streamline the trade mark registration process. Miles closed his bit my stating something the AmeriKat tells everyone "We are all products". The AmeriKat lost the reasoning why Miles was stating this, but it is still a powerful statement.

Santa Clara University School of Law professor and fellow blogger, Eric Goldman, was up next speaking on the impact on technology on trade marks. He stated that the biggest overarching change was that trade mark owners have lost the ability to control their marks on-line and how consumers receive information on trade marks. Eric stated that back in the day (whenever that is, he says) brands were able to tightly control the marketing channels. There were defined roles of the press and how one communicated and promoted their brand to its consumers. Now, the once-controlled channels have degraded and multiplied. The concept of the press has transformed to that of social-media. The rise of new intermediaries who talk about the brand, and even the consumers themselves (says the AmeriKat), have meant that there is more information about the brand but less control by the brandowner of that information. The "online word-of-mouth" has contributed to this incredibly fast and massive scale impact on the rules of consumer engagement on trade mark owners and their marks.

Eric also stated (as refered to above) that the impact of technology has also resulted in the crumbling distinction between commercial and non-commercial use in trade mark law. US trade mark law is predicated on the constitutional basis of commerce law so trade mark law and use has to be "in commerce" and so, where there is a dispute, the dispute needs to be in relation to how the law should regulate how parties sell and use marks as against each other in commerce. However, where the definition of "in commerce" is not present, trade mark law cannot deal with it although it desperately tries to.

Eric stated that unlike times gone-by, commercial activity is not necessary in order to reach large audiences, i.e. posting a parody video on YouTube or a parody Twitter account. For example, analogue examples of use include Mickey Mouse with a gun and Pillsbury Doughboy in Screw magazine. Now with Twitter we see the BP parody Twitter account. These uses, however, are not trade mark uses in commerce but trade mark owners and the law struggle with this. Eric also gave the example of the tension between trade mark registered rights and private name spaces such as user accounts and domain names. So even though there may be a prior trade mark registration, you may not necessarily be able to get your domain name or a Twitter account. Eric explained that trade mark law struggles each time a "private name space" arises and has to formulate its own rules, as in the case of 1-800 phone numbers.

Eric's final point dealt with what Miles referred to - overzealous enforcement of trade marks by owners. Eric stated that when the concepts of confusion and dilution were established they were established by the courts who were not educated by how consumers process information. Consumers today arguably have more sophisticated channels to process information and thus are more sophisticated in not being confused by trade mark use. However, this increased sophistication of a consumer is not reflected in trade mark law. Trade mark litigators try to "inject social science" by way of consumer surveys "into trade mark adjudications", but as we all know how unfortunate survey evidence can be in trade mark cases in the UK and the US (expensive to produce, cheap to destroy). Eric indicated that there is a need for lawmakers to be educated in the social science of consumers and trade marks before law is made. The AmeriKat could not agree more!

For Sir Robin's following speech, click here.

Phony Sony -- or 索爱

The IPKat's friend Paul Jones is a formidable character. Paul has the responsibility for preparing the section on IP in China for the ABA International Section’s Year In Review. In the course of making his preparations he came across a case involving Sony Ericsson that is of great interest to foreign companies doing business in China, particularly those threatened by bad faith registrations in China. He writes:

"A number of famous marks have had problems in China with bad faith registrations by third parties. If somehow the registration of the mark in China has been overlooked, the third parties will register the mark in the Latin alphabet. And if not they will try to register the Chinese characters. It is always important to develop and register a Chinese character version of the brand.

Sony Corporation has a long history of doing business in China, and its Chinese character name, 索尼 (pronounced “suo’ni”) is well recognized. Ericsson was founded in 1876 in Sweden and it too has an established Chinese name, 爱立信 (pronounced “ai li xin”). But in 2001 when they formed a joint venture to manufacture and sell mobile phones a trade mark problem developed in China. How would the new venture, Sony Ericsson, be written in Chinese characters?

Unfortunately for Sony Ericsson a PRC businessman in the electronics industry saw the answer faster than their trade mark counsel. Liu Jianjia from Guangzhou in southern China filed an application to register the mark “索爱” (pronounced “suo’ai”) with respect to DVD/CD players, mobile phones, speakers and entertainment goods, cassette players and the like on March 19, 2003 (No. 3,492,439). Sony Ericsson opposed the application but the mark was registered on August 7, 2004. Sony appealed to the Trade Mark Review and Adjudication Board (“TRAB”) but it lost again. China is a first-to-file jurisdiction.

Sony Ericsson then appealed the TRAB decision to the Beijing No.1 Intermediate People’s Court. The decision, dated August 10, 2008, is available here.

Sony Ericsson had put forward three reasons as to why Mr. Liu’s registration should be expunged. The first reason was that the registration was contrary to Article 10, first paragraph, (8) of the Trade Mark Law. This provision denies registration to marks which are “detrimental to socialist ethics or customs, or having other unwelcome influences.” The court in a somewhat incredulous manner said that while the dispute has a certain public interest, its impact does not reach the field of ideology or the political system.

Secondly Sony Ericsson said that there mark was “well-known.” But the Chinese version of the joint venture, and the plaintiff in this case was known as “Sony Ericsson Mobile Communications Products (China) Ltd.” (in Chinese - 索尼爱立信移动通信产品（中国）有限公司 – Suo’ni Ailixin Yidong Tongxin Chanpin (Zhongguo) Youxian Gongsi) and had only been in existence for a short time, and the evidence to prove such status was insufficient. So Sony Ericsson lost on this point also.

Thirdly Sony Ericsson argued that the registration was contrary to Article 31 of the Trade Mark Law, which provides that "No applicant for trade mark registration may infringe another person’s existing prior rights, nor may he, by illegitimate means, rush to register a trade mark that is already in use by another person and has certain influence'.

Sony Ericsson had advertised on the internet in China from December 2002 using the mark “索爱.” The Court took note of the fact that, to a Chinese speaker, the name 索尼爱立信 (Suo’ni Ailixin) is cumbersome. It is very common in Chinese to shorten such names or phrases by using the first characters of each word. Thus the Court said that the abbreviation of Sony Ericsson to “索爱”would be very natural (其简称是非常自然的). Accordingly it is not surprising that most Chinese would consider the mark “索爱” to suggest goods that are associated with Sony Ericsson.

The Court said that the purpose of Article 31 is to prevent violations of the principle of good faith (“诚实”chengshi). This is a key principle of China’s civil law system and is enunciated in Article 4 of the General Principles of the Civil Law. The Court said that the joint venture between Sony and Ericsson was widely reported in the press and that therefore Mr. Liu would obviously know about it. Therefore his actions do not have a clear legitimacy (不正当性). Mr. Liu’s application for the mark was in violation of the principle of good faith.

Accordingly the Court ruled that the decision of TRAB in favor of Mr. Liu was overturned and that the opposition by Sony Ericsson to the registration of “索爱” by Mr. Liu is to be reviewed again by TRAB.

It should be added that the currently proposed amendments to the PRC Trade Mark Law include a new Article 7 that requires that all applications for and use of a trade mark be undertaken in good faith (诚实)".

The IPKat is heartened to see that things are gradually moving in the right direction. Merpel is less optimistic. This is good news for big companies whose activities are highly publicised in the media, and who have the resources and the patience to press their case -- but how would things work for a smaller, less well known and less persistent enterprise?