Trade marks / passing off

Can localised goodwill prevent the registration of a UK trade mark?

The facts

The claimants started a pizza business in Birmingham in 1991, registering the word mark CASPIAN in 2005 and a device mark featuring the words CASPIAN PIZZA alongside an image in 2010.

The defendants were also in the pizza business and had operated a restaurant in Worcester called Caspian Pizza since 2004.

The claimants brought a claim for trade mark infringement and passing off, with the defendants counterclaiming that the claimants' trade marks were invalid.  At first instance, the judge found that the defendants had acquired localised goodwill in the name CASPIAN for a pizza restaurant in Worcester. 

The defendants could therefore rely on the locality defence at s11(3) of the Trade Mark Act 1994 in response to the infringement proceedings.  The judge also found that the claimants' word mark was invalid based on this earlier passing off right, but that their device mark was valid.

The claimants appealed for the validity of their word mark, whilst the defendants cross-appealed that the claimants' device mark was also invalid.

The decision

The Court of Appeal confirmed that:

• the defendants could rely on the locality defence, despite the claimants having goodwill in the word CASPIAN in Birmingham since 1991;
• the relevant threshold for goodwill in a mark is "over an identifiable geographical area that would qualify for protection in passing off proceedings";
• goodwill in a particular locality, and not throughout the UK, would be enough to prevent another party registering a UK trade mark;
• the Trade Mark Act 1994 does not allow for a partial declaration of invalidity; and
• a party cannot retrospectively remove locations from the geographical scope of their trade mark registration, the trade mark owner would have to pre-emptively remove areas from the scope of the registration.

The Court of Appeal therefore dismissed the appeal, and accepted the cross-appeal and declared that the claimants' CASPIAN PIZZA device mark was also invalid.

Why is this important?

This decision highlights that a localised passing off right can be relied upon to invalidate a registered UK trade mark (which provides national protection).

Any practical tips?

Consider carrying out common law as well as registry searches and evaluate trade mark use, even if only on a localised basis.  Depending on the results, consider whether registered rights should be subject to a limitation or disclaimer.  Above all, apply to register marks early!