IP Insight: Claridge’s Hotel Limited v Claridge Candles Limited and Anor

A link to the judgment can be found here.

Background

Claridge’s Hotel started trading under the name CLARIDGE’S in 1856 and was incorporated in 1889. On 9 May 2003, the Claimant applied to register the word mark “CLARIDGE’s” (738 Mark). On 22 July 2005, the Claimant applied to register in different classes the same word mark (526 Mark). On 12 October 2018, Claridge’s Hotel Limited brought a claim against the two Defendants for trade mark infringement of the two marks. The Defendants counterclaimed on 23 October 2018 for revocation of the marks for non-use. The Claimant surrendered the 738 Mark and partially surrendered the 526 Mark. At the moment of the trial, the 526 mark was registered in classes 3, 5, 16, 35, 43 and 44.

The First Defendant also tried to register the word mark “CLARIDGE” on 8 January 2018 in classes 3 and 4. The Claimant opposed the application and the UKIPO opposition was stayed pending the result of this case.

The Court had to decide whether:

• the Defendants infringed the 526 Mark
• the Defendants’ use of CLARIDGE amounts to passing off
• the Second Defendant is liable as a primary tortfeasor
• the Claimant put the 526 Mark to genuine use

The Court’s decision

Did the Defendants infringe the 526 Mark pursuant to s 10(3)?

Since the Claimant firstly argued infringement under s10(3) of the Trade Marks Act 1994, it had to show that the mark was known “by a significant part of the public concerned by the products or services covered by that trade mark.” Mr Douglas Campbell QC stated that “the mark CLARIDGE’S has a very substantial reputation in the UK when used in relation to hotel services.” This is mainly due to the Claimant’s convincing evidence, showing a turnover of £50 million per annum and its coverage in the press. The judge also held that the reputation goes beyond the fact that the hotel is well known due to the Claimant’s image of “luxury, glamour, elegance, and exclusivity.” However, it held this is not enough to win on the basis of its reputation in relation to hotel services. The judge assumed that the mark had a reputation in relation to classes 44 and 35 services.

When considering whether there was an infringement pursuant to s 10(3), the judge stated that the issues that needed to be decided were:

“1) Whether the Defendants’ use gives rise to a link between their sign and the Claimant’s mark in the mind of the average consumer, requirement (vii) in Comic; and

2) Whether the Defendants’ use gives rise to one of three types of injury, summarised as (a) dilution (b) tarnishing or (c) unfair advantage, also known as free-riding; requirement (viii) in Comic.”

When considering the unfair advantage point, the judge referred to the case of Argos Limited v Argos Systems Inc [2018] EWCA Civ 2211. There, it was held that the mere fact of gaining an economic advantage is not enough, and it is sufficient to show a change in economic behaviour of customers for the defendants’ goods or services in order to show that the use of the sign is taking unfair advantage. We remind the readers that Virtuoso Legal successfully represented Argos Systems Inc and a summary of the decision can be read here.

In relation to s 10(3), the judge stated that there was a link between the Defendant’s sign and the Claimant’s mark because “of the similarity in the marks, the fact that both are premium offerings, the strength of the mark’s reputation and the degree of its distinctive character.” The Defendants did not only take advantage of the Claimant’s reputation in relation to hotel services, but also in relation to “luxury, glamour, elegance, and exclusivity”. Therefore:

“The Defendants’ use therefore infringes the ‘526 mark pursuant to s 10(3). Given that both sides approached this issue on an all or nothing basis, this conclusion applies to all of their products, both those they have already sold and those they intend to sell.”

Did the Claimant put the 526 Mark to genuine use?

Mr Douglas Campbell then went on to discuss whether the Claimant put the Mark to genuine use. The Claimant had to show use of its mark in the 5 year period ending on 22 October 2018. Considering all of the classes in which the mark was registered, the judge decided to revoke the mark for the products/services for which the Claimant could not prove genuine use. The judge stated firstly that “Claimant’s toiletries would properly belong in class 3, not in class 5.” Moreover, the judge revoked the mark in relation to a few products/classes relating to classes 16, 35, 43 and 44.

Did the Defendants infringe the 526 Mark pursuant to s 10(2)?

Considering his findings in relation to genuine use, the judge stated: “All of the parts of the ‘526 specification which relied upon by the Claimant in this context are areas for which no genuine use has been shown, and the mark has to be revoked to that extent.”

Does the Defendants’ use of CLARIDGE amount to passing off?

Mr Douglas Campbell QC held that it is clear that the Claimant has goodwill in relation to hotel services and there was a clear damage provided that the Claimant succeeds on misrepresentation.

It was decided that the use of CLARIDGE by the Defendants is likely to mislead the public into believing that they are the Claimant’s products or that they are connected with the claimant. Therefore, the Claimant succeeded in its passing off claim.

Is the Defendant liable as a primary tortfeasor?

The Particulars of Claim referred to the Defendants without distinguishing between their respective roles. Ms Shepherd was the only employee of the First Defendant, sole director and company secretary. Therefore, Ms Shepherd was considered to be personally liable of the acts complained of.

Our Insight

In conclusion, before making an application to register a mark, or even before starting using a name for a new product, a company should instruct IP specialists to undertake a “clearance search” in order to avoid costly proceedings. Here, although Claridge’s Hotel was using its mark in relation to different products and services, Claridge Candles Limited and Denise Shepherd were held liable for trade mark infringement due to Claridge’s Hotel’s reputation. It is also important to note that in small companies the director will have trouble hiding behind the corporate veil and most often will also be held liable.​