In a longstanding civil action involving competing claims
to the right to use the term “Budweiser” as between the larger U.S. Company and
the Czech Company who both manufacture and market beers in many nations, after
a reference to the European Court of Justice, the English Court of Appeal
(Civil Division) addresses whether English or European Union law enables the
proprietor of its earlier mark to prevail in England even where there has been
a long period of honest concurrent use in the English market of two identical
trade marks for substantially identical goods
[Sir Robin Jacob: (giving the first judgment at the
invitation of Ward L.J.)]
1. “By our judgment of 20th October 2009, [2009] EWCA Civ
1022, we decided to refer to the Court of Justice of the European Union (the
CJEU) some questions of trade mark law: the answers would be necessary to
resolve this appeal. It is from the decision of Norris J of 19th February 2008
dismissing BB’s (as I shall call the appellants) appeal from the decision of
2nd August 2007 of the Hearing Officer, Mr Foley, in the Trade Mark Registry.”
2. “The general facts and background to the appeal are
already set out in our first judgment ¼. In the first judgment we
resolved certain English law defences (abuse of process, estoppel) against BB.
No more need be said about them.”
3. “BB also raised a defence of acquiescence under Art. 9(1)
of the Directive. This raised two questions of law for the CJEU. BB accepts
that the response from the CJEU rules out any defence of acquiescence. So no
more need be said about that.”
4. But we had a third question. It was this: In Council
Directive 89/104/EEC: 3. Does Art 4(1)(a) apply so as to enable the proprietor
of an earlier mark to prevail even where there has been a long period of honest
concurrent use of two identical trade marks for identical goods so that the
guarantee of origin of the earlier mark does not mean the mark signifies the
goods of the proprietor of the earlier and none other but instead signifies his
goods or the goods of the other user?”
5. “The CJEU ruled that Article 4(1)(a) of Directive 89/104
must be interpreted as meaning that the proprietor of an earlier trade mark
cannot obtain the cancellation of an identical later trade mark designating
identical goods where there has been a long period of honest concurrent use of
those two trade marks where, in circumstances such as those in the main
proceedings, that use neither has nor is liable to have an adverse effect on
the essential function of the trade mark which is to guarantee to consumers the
origin of the goods or services.”
6. “Mr Mellor QC submits that answer to the case is now
clear. It is that where a long‑standing situation of honest concurrent user of
the same mark for the same goods has come about, each user can register its
mark, each can stop third parties from using it, but that neither can stop the
other. The state of honest concurrent use means that the essential function of
the parties’ trade marks is not regarded as having adverse effect. True it is
that there will always be some confusion, but that does not matter. It is also
true that cases of honest concurrent use are rare, but this is such a case.”
7. “Mr Bloch QC for AB submits: (a) The honest concurrent
use point is not open for BB to take on appeal; (b) If it can be taken, then on
the basis of findings of fact in the earlier litigation between the parties, he
can demonstrate an ‘adverse effect’; (c) If that be not so, then it would be
unfair and unjust to resolve the appeal against AB because AB never had an
opportunity of proving an adverse effect. Instead we should remit the case back
to the Trade Marks Registry so that the issue of ‘adverse effect can be
properly investigated by way of further evidence.”
Is it open for BB to take the point on appeal?
8. “I see nothing unfair about allowing the point to be
taken on appeal to this court. It is simply a point of law which is taken on
the basis of the evidence before the Hearing Officer. There is generally no
unfairness in the Court of Appeal considering whether on the facts a case has
been made out as a matter of law, even if the point is raised for the first
time in that court. Things are of course different if the point also involves
questions of fact which require further evidence.”
“It is perhaps worth observing that the great ‘honest
concurrent use’ case, GE itself, involved two fresh points of law on appeal.
The first instance case was concerned with issues about alleged improper
licensing and ‘muddying the mark’, the Court of Appeal was concerned with
whether the GE and GEC marks were confusingly similar and whether s.11 of the
1938 [Act] therefore invalidated GE’s mark and the House of Lords was concerned
with the meaning of ‘disentitled to protection in a court of justice’ within
s.11. Lord Diplock was moved to describe the case as having a ‘chameleon‑like
history’ [1973] RPC 297 at p.318
9. “In considering whether it is unfair it is also pertinent
to note that BB raised the point fairly and squarely in its Notice of Appeal.
There is no question of AB being taken by surprise. Moreover, the fact that we
referred a question about the point over AB’s objection shows that we have
already allowed the point to be taken.”
10. “Accordingly, I think there is nothing unfair about
allowing BB to run the point now. It is merely saying that in law, on the
existing evidence, AB has failed to make out its case. The fact that AB did not
put in evidence on essential function is due solely to its mistaken view of the
law. I deal with the possibility of further fact finding later.(b)
Is there harm to the essential function made out on the
existing evidence?
11. Mr Bloch submitted that the earlier cases between the
parties established a non de minimis level of confusion. He then submitted that
the old English rule permitting honest concurrent use was wider than the EU
rule. The latter only permitted it where the level of confusion was de minimis.
If there was a level of confusion above that, then the essential function of
the mark relied on would be impaired and a case of permissible honest
concurrent use would not be made out. So here BB was outside the scope of the
Court’s ruling.”
12. “It is therefore necessary to consider what the findings
of confusion in the earlier cases were and whether the Court’s answer was
confined to de minimis levels of confusion only.”
The level of confusion
13. “In my judgment giving rise to the reference (with which
the other members of the court agreed),I said: ‘[3] But although the names are
the same, the beers are not. Their tastes, prices and get‑ups have always been
different. In markets where they have co‑existed, consumers have by and large
become aware of the difference, though of course there will always be some
small level of confusion. And the question asked (I repeat the key bit) was on
the basis that there had been: a long period of honest concurrent use of two
identical trade marks for identical goods so that the guarantee of origin of
the earlier mark does not mean the mark signifies the goods of the proprietor
of the earlier and none other but instead signifies his goods or the goods of
the other user.”
14. “Mr. Bloch submitted that it was wrong for us to hold
that ‘consumers have by and large become aware of the difference, though of
course there will always be some small level of confusion’. On the contrary, he
said, the earlier cases show significant levels of confusion.”
15. “To substantiate this he took us to the following
passages in the earlier judgments. Firstly Oliver LJ (in the passing off case
reversing Whitford J on the facts) said at [1984] FSR p. 461: ‘In fact there
was ample and unchallenged evidence of confusion. It should be mentioned that
apart from the name, there is no similarity of get‑up, so that no one would
pick up the Czech beer mistaking it for the American by reason of its
appearance. But there was ample evidence of cases in which orders had been
placed for Budweiser by people expecting the Plaintiffs’ beer and in which they
had been served instead with the Defendants [beer]. And there was ample
evidence that in the minds of several people the impression was created that
the two were in some way connected.
“Next Dillon LJ said at p.477: ‘The learned judges’
conclusion that at the date of issue of the writ there was a dual reputation in
the name Budweiser which neither party could claim had been improperly achieved
is correct. It is the inevitable consequence of this that there will be some
degree of confusion among some members of the public and some traders, as there
has in fact been.”
16. “Similarly in the second Court of Appeal case Peter
Gibson LJ said at [2000] RPC p.916: AB’s action [i.e. the earlier passing off
action] failed because at the date of inception of the conduct complained of,
in 1973/4, AB, whilst possessing the reputation in the name Budweiser and
whilst proving confusion and the risk of deception could not establish that it
possessed goodwill in this country. Judge LJ (as he then was) said, in a
typically common sense way, at p. 920: ‘Further it seems to me likely that
there is some continuing confusion between the two products, at any rate in the
cases of those individuals who do not appreciate that there are differences
between American Budweiser and Czech Budweiser.’”
17. “I do not accept that these findings are inconsistent
with what I said in my first judgment. I did not hold that the level of
confusion was de minimis. I said it was small, not that it was negligible. The
level of confusion in the earlier cases was clearly not negligible: otherwise
the claims in passing off would have failed for that reason alone, not because
there was [a] defence of honest concurrent use or failure to prove goodwill.
What I said is entirely consistent with the findings relied upon by Mr Bloch.”
“Common sense prevails here. These two brands have lived
side by side for many, many years in different get‑ups, prices and taste and
with large sales: the sales of AB’s beer are much greater than BB’s but the
latter are substantial. You do not have to be a genius to infer from those very
facts alone that the public by and large will have got used to that. Or that
there will always be some who are confused, albeit that many are not.”
Was the Court’s ruling confined to de minimis levels of
confusion?
18. “Mr. Bloch took us to some passages in the Judgment: 75.
‘In the present case, it is to be noted that the use by Budvar of the Budweiser
trade mark in the United Kingdom neither has, nor is liable to have, an adverse
effect on the essential function of the Budweiser trade mark owned by Anheuser‑Busch.
76. In that regard, it should be stressed that the circumstances which gave
rise to the dispute in the main proceedings are exceptional.’ 77. ‘First, the
referring court states that Anheuser‑Busch and Budvar have each been marketing
their beers in the United Kingdom under the word sign ‘Budweiser’ or under a
trade mark including that sign for almost 30 years prior to the registration of
the marks concerned. 78. Second, Anheuser‑Busch and Budvar were authorised to
register jointly and concurrently their Budweiser trade marks following a
judgment delivered by the Court of Appeal (England & Wales) (Civil
Division) in February 2000.79. Third, the order for reference also states that,
while Anheuser‑Busch submitted an application for registration of the word
‘Budweiser’ as a trade mark in the United Kingdom earlier than Budvar, both of
those companies have from the beginning used their Budweiser trade marks in
good faith. 80. Fourth, as was stated in paragraph 10 of this judgment, the
referring court found that, although the names are identical, United Kingdom
consumers are well aware of the difference between the beers of Budvar and
those of Anheuser‑Busch, since their tastes, prices and get‑ups have always
been different.”
Fifth, it follows from the coexistence of those two trade
marks on the United Kingdom market that, even though the trade marks were
identical, the beers of Anheuser‑Busch and Budvar were clearly identifiable as
being produced by different companies.’”
19. “He submitted (correctly) that the circumstances of the
dispute are exceptional. But then he suggested that the five factors referred
to by the Court, and in particular that ‘consumers are well aware of the
difference between the beers’ and that ‘the beers [of the parties] were clearly
identifiable as being produced by different companies’ circumscribed the ruling
so much that it was limited to cases of de minimis confusion.”
20. “I do not accept that. The Court could have said just
that but did not. The rather self‑evident point as to the effect of a long
period of honest concurrent use was clearly laid before the Court when I
summarised Mr Mellor’s submission: Mr Mellor suggests that the Court might
recognise a further exception in the case of long established honest concurrent
use. For in such a case the guarantee of origin of the mark is not impaired by
the use of the mark by each party. Once such concurrent use is established the
mark does not solely indicate the goods of just one of the users. It means one
or the other. Hence there is no impairment of the guarantee and, if impairment
is the touchstone of Art 4(1), no infraction of it.”
21. “The Court did not rule that only de minimis levels of
confusion are acceptable when there is honest concurrent use. Nor did the Court
rule that the inevitable confusion in a same mark/same goods case is enough to
take a case out of acceptable concurrent use. Yet that is what Mr Bloch’s
submissions involve.”
22. “More fundamentally, Mr Bloch’s submissions involve the
unstated premise that even where there is long established honest concurrent
use the mark of one party must provide a guarantee of origin in that party and
not the other. That is quite unrealistic. Here for instance, Budweiser has
never denoted AB’s beer alone.”
23. “So I do not think that there is any impairment of the
guarantee of origin—of either side’s mark. The guarantee is different given a
situation of long established honest concurrent use.”
Would it be unfair to resolve the appeal without remittal
for further fact finding?
24. “It is here necessary to chart the course of proceedings
below. I concentrate only on the essential elements. AB’s Statement of Grounds
in the Registry claimed that its registration of Budweiser under No. 1,125,449
was of an ‘earlier trade mark’. It then referred to BB’s impugned registration
of Budweiser and alleged it post‑dated its own registration. All that was
correct.”
25. “It then went on to allege that this was a ‘same mark,
same goods’ case and so BB”s registration was invalid under s.5(1) of the Trade
Marks Act 1994 (corresponding to Art. 4(1)(a)).”
26. “The pleading did not stop there. It went on to allege
that AB had used Budweiser since 1974 and relied on the ‘previous findings in
respect of such use’ referring expressly to the decision of Whitford J in the
passing off case [1984] FSR 413. It claimed ‘continued use and substantial
accrued reputation’ in Budweiser ‘from 1974 on a continuous basis to date.”
27. “The pleading did not allege any ‘adverse effect’ on the
essential function of the trade mark. It is unclear why, given that it was a
same mark, same goods’ case any use was relied upon, but it was.”
28. “BB responded by raising acquiescence and other points
which no longer matter. It expressly referred to the earlier passing off and
trade mark registration Court of Appeal decisions, [1984] FSR 413 and [2000]
RPC 906. Both of these decisions confirm the state of honest concurrent use
between the parties.”
29. “AB filed evidence. It was simply of its extensive use
of Budweiser since 1974, giving the sales figures. AB did not allege any
adverse effect on its trade mark or of confusion.”
30. “BB responded with evidence of its sales figures,
claiming use from 1973 though the detail of the earlier years is not specified
(most of the figures are there in the reports of the earlier cases). There was
a hearing, at which BB did not expressly say: ‘but it has not been proved or
pleaded that there was an adverse effect on AB’s mark’. And AB did not
expressly contend the opposite.”
31. “The hearing officer in his decision reluctantly decided
in AB’s favour. He held that this was a case of same mark same goods and that
alone was enough to satisfy Art. 4(1) (s.5(1) of the UK Act). But he said this:
[61]¼¼
‘Such as it is, the evidence indicates (although it does not substantiate) that
the two marks have co‑existed for some considerable time with no apparent
confusion, a fact that on its face could have provide[d] a compelling reason to
allow what exists in the market to remain undisturbed. It may well be that
having traded side by side for so long the consumer is now fully aware of the
two competing brands, but equally could mean that confusion is there but this
had not surfaced; there is no evidence one way or another.’
[62] ‘The question of confusion or no confusion is, however,
academic, for under Section 5(1) there is no requirement for there to be a
finding of confusion. If the marks and goods are found to be identical, the
potential for confusion is simply assumed. No amount of evidence of non‑confusion,
if there is such a thing, nor the absence of any confusion, can change the
conclusion. The position is that even though the parties appear to have traded
alongside one another without there being any harm, because the marks and goods
are identical, concurrent use is not a factor that I can properly take into
account; refusal is mandatory.’
“I have certain unease at the position in which I find
myself. The court of appeal issued a decision that on the facts, allowed the
status quo in the reality of the market. In concentrating on the legal issues
the parties have left me in the position of having to determine these
proceedings on the thinnest of evidence.”
32. “We know now from the Court’s answer that the hearing
officer was wrong to conclude that ‘concurrent use is not a factor I can
properly take into account’. If the concurrent use is honest (as is accepted to
be the case here) and there is no adverse affect on the essential function of
the trade mark, the case is not within Art.4(1).”
33. “It is just worth stepping back and examining what has
happened in the jurisprudence of the Court. Those who framed the same mark/same
goods rule were rather naive. To say that confusion is necessarily so in such a
case, is wrong. The apparently black and white rigid application of the rule
which the hearing officer thought was compelled, has been tempered to produce
rational answers. The Court has steadily been recognising this in a series of
cases, O2 v. Hutchison case C‑533/06, [2008] ECR I‑4231 (comparative
advertising conforming with the Comparative Advertising Directive); Holterhoff
[2002] ECR I‑4187 (purely descriptive use); BMW v Deenik [1999] ECR I‑905
(honestly stating that a garage repaired BMWs); Adam Opel v. Autec case C‑48/05
[2007] ETMR 5 (use of mark on a toy car not infringing if no effect on
essential function even though mark was registered for toys), Celine v. Celine
case C‑17–06 [2007] ECR I‑7041 (use as a business name for a clothes shop not
affecting essential function of mark registered for clothing). The ruling here
is another example of tempering the apparently inflexible same mark/same goods
rule to produce a rational answer.”
34. “Turning back to the present case, it is now apparent
that AB approached it on a wrong legal basis. It was quite clear, following
BB’s explicit reference to the Court of Appeal cases in its pleading, that
honest concurrent use was somehow in play though it is fair to say that exactly
how was obscure at best. AB could have put in a reply pleading saying ‘ah but
the use affects the essential function of our mark’ and so is no defence, or it
could have left it at that. It did the latter. Perhaps it had in mind to
advance something more, something in the nature of an adverse affect, for it is
difficult to see why it put its extensive sales in evidence. Mr. Bloch said he
personally had no idea why the figures were put in—but there must have been
some reason. But what is clear is that no case of affecting the essential
function of the mark was pleaded or proved.”
35. “Mr Bloch submits that my approach is not fair. He
asserted (but provided no material to support his assertion) that, at the time
the pleading was filed (2005), the practice for a case under s.5(1) was merely
to assert same mark/same goods. By implication he was suggesting that it was
for BB to raise a defence of honest concurrent use which did not affect the
essential function of the mark. I do not agree. The alleged practice was not
established. The fact of honest concurrent use under the old law was clearly
raised on the pleadings by BB’s references to the two Court of Appeal cases. ”
“The legal consequence was not spelt out. It was quite open
to AB to reply by alleging that the essential function of its mark was
adversely affected. It did not do so. Probably it was acting under a mistake of
law (the same mistake as was made by the hearing officer, namely that proof of
same mark/same goods was enough). I am not entirely convinced of that, however,
because there must have been some purpose in putting the sales figures in—I can
only surmise that it was a desultory attempt at something intended to show
harm. It does not matter, however. The fact was that the onus lay on AB to
plead and prove what was necessary to make out a case under s.5(1) and it
failed to do so.”
36. “One can find confirmation of this if one considers what
would be necessary if the case were, as Mr Bloch suggested, remitted to the
Registry. AB would have to amend its pleadings to allege for the first time
(and particularise) damage to the essential function of its trade mark. It
would then have to adduce evidence in support of its case. It would be a new
trial, caused by the fact that AB failed to put its case at the first trial.
Justice does not require this—indeed it would be unjust to allow AB to assail
BB yet again.”
37. “I therefore reject all Mr Bloch’s points and conclude
that the appeal should be allowed.”
Mr. Justice Warren:
38. “I agree with the conclusion of Jacob LJ. However, I see
rather more force in Mr Bloch’s complaints about unfairness than he does. I
would therefore like to say a little more about it.”
39. “I agree with Jacob LJ that the onus was on AB to plead
and prove what was necessary but when it was necessary to do so is a matter to
which I will come. I also agree that honest concurrent use was in the frame
from the beginning but exactly how was, as he says, obscure at best. Had BB
made its point clearly, AB would have realised that it might need to amend its
pleadings and to adduce further evidence. But the point was not clearly raised
at the beginning. Further, even as the case proceeded, there was still no
explicit reference to the point by BB. It did not surface before Norris J. It
only surfaced in the Grounds of Appeal to this court.”
40. “BB needs our permission to raise the point before us.
If there were evidence which enabled AB to establish adverse effect, I do not
think that it would be right to allow BB to take the point without affording AB
the opportunity to establish adverse effect on the facts. Jacob LJ take a
different view which he tests by considering what would happen if we remitted
the matter to the Registry.”
41. “He says that AB would have to amend its pleadings and
to allege for the first time damage to the essential functions of its trade
mark. That is true. But in purely pleading terms, one might have expected BB’s
response in the Registry to have asserted that it had a defence based on honest
concurrent use to which AB would have responded by way, in effect, of reply,
that there was adverse effect. After all, the literal meaning of the words of
section 5(1) are absolute. It is only judicial interpretation, both in the
Court and in our domestic courts, which has put a gloss on the words of the EU
and domestic legislation in order to make the provisions workable in a sensible
commercial way. Even if Jacob LJ is right to say that the new trial would be
caused by the fact that AB failed to put its case at the first trial, I do not,
for my part, consider that the circumstances are such that it would be unjust
to allow AB to amend and to adduce further evidence.”
42. “But before that can happen, I would need to be
persuaded that at least, in theory, there could be evidence of some sort to
support a claim of adverse effect. In that context, evidence of confusion
would, in my judgment, be insufficient. However much evidence of confusion is
adduced, I do not see how that could, in the light of the earlier cases, be
sufficient to establish any impairment of the guarantee of origin given the
unstated premise in Mr Bloch’s submissions identified by Jacob LJ in paragraph
22 of his judgment.”
43. “In any case, AB has known since the service of the
Grounds of Appeal that honest concurrent use was being relied on by BB in the
context of section 5(1) ; it has known since the decision of the Court on 22
September 2011 that it might need to show adverse effect affirmatively. And yet
it has not, notwithstanding this passage of time, given this court any hint
about how such adverse effect might be established or the nature of the
evidence which might be adduced to establish such adverse effect. I do not
consider that we should remit the matter to the Registry without at least
knowing in outline the nature of the evidence which AB would want to adduce. It
is now too late for us to be told.”
Lord Justice Ward:
44. “I agree the appeal should be allowed.”
Citation: Budejovicky Budvar Narodni Podnik (BB) v.
Anheuser‑Busch, Inc.(AB), [2012] EWCA Civ. 880; 2012 WL 2499981 (U.K.Ct. App.
(Civ.Div.) July 3, 2012).
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