[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> South Cone Incorporated v. Bessant, Greensmith, Kenwyn House and Stringer trading as "REEF" [2001] EWHC Ch 420 (16th May, 2001) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2001/420.html Cite as: [2001] EWHC Ch 420

[New search] [Help]

South Cone Incorporated v. Bessant, Greensmith, Kenwyn House and Stringer trading as "REEF" [2001] EWHC Ch 420 (16th May, 2001)

HC 2000 APP 00617

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Mr Justice Pumfrey

IN THE MATTER of the Trade Marks Act 1994
AND IN THE MATTER of Trade Mark Application Number 2050662 'REEF'
AND IN THE MATTER of an opposition thereto number 46380

BETWEEN

		SOUTH CONE INCORPORATED		Appellant/ Opponent
		– and –
		JACK BESSANT, DOMINIC GREENSMITH, KENWYN HOUSE and GARY STRINGER (a partnership) trading as 'REEF'		Respondents/ Applicants
	Christopher Morcom QC instructed by Ashurst Morris Crisp for the Appellant
	Roger Wyand QC instructed by Statham Gill Davies for the Respondents
	Hearing date(s): 16 May 2001
		JUDGMENT

I direct that no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic. DATED 25 July 2001

Introduction

1. This is an appeal from the decision of Dr W J Trott, a Principal Hearing Officer acting for the Registrar of Trade Marks, dismissing the opposition of the appellant ('South Cone') to the registration of Trade Mark number 2,050,662 in the name of the applicants. The mark in suit consists of the word REEF. Its date is the 10 January 1996 and the specification of goods is

(Class 25) 'T-shirts, sweat shirts, jackets, hats and headbands; all being promotional or souvenir articles relating to a music group.'

(Class 26) 'Badges, buckles and ornaments all for wear; tie clips; buttons.'

The applicants are the members of a pop group called 'Reef' and I shall refer to them collectively by this name.

2. South Cone raised one absolute ground for refusal of registration, that the application was made in bad faith (subsection 3(6) of the Trade Marks Act 1994). They also raised two relative grounds, one based on their own prior registration number 1,340,547 REEF BRAZIL registered in Class 25 as of 6 April 1988 in respect of 'footwear included in Class 25' (subsections 5(1) and 5(2) of the Act) and the other based upon their common law rights created by their use of REEF BRAZIL in the United Kingdom (subsection 5(4) of the Act). Before the hearing officer the only relative grounds persisted in were those arising under subsections 5(2) and 5(4), the opponents not contending that the marks and goods in respect of which they were registered were identical.

The nature of this appeal

3. On behalf of the applicants, Mr Wyand submitted that this appeal was a review of the hearing officer's decision, rather than a rehearing. Paragraph 9.1 of the Practice Direction relating to appeals as printed in the Spring 2001 edition of the White Book provides as follows:

'9.1 The hearing of an appeal will be a re-hearing (as opposed to a review of the decision of the lower court) unless it is required by any enactment or rule or the appeal is from the decision of a minister, person or other body and the minister, person or other body -

(1) did not hold a hearing to come to that decision; or

(2) held a hearing to come to that decision, but the procedure adopted did not provide for the consideration of evidence.'

while the principal rule provides that

'52.11 Hearing of appeals

(1) Every appeal will be limited to a review of the decision of the lower court unless -

(a) a practice direction makes different provision for a particular category of appeal; or

(b) the court considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing.'

Unsurprisingly Mr Wyand QC identified an inconsistency between the Practice Direction and the Rule. There is obviously something wrong with the first version of paragraph 9.1 set out above. This printed edition of the Practice Direction is incorrect. The correct version is as follows:

'9.1 The hearing of an appeal will be a re-hearing (as opposed to a review of the decision of the lower court) if the appeal is from the decision of a minister, person or other body and the minister, person or other body—

(a) did not hold a hearing to come to that decision; or

(b) held a hearing to come to that decision, but the procedure adopted did not provide for the consideration of evidence.'

The error has now been corrected. It is clear that this provision of the Practice Direction does not apply to an appeal from the Registrar who conducted a hearing at which the parties were represented and who considered the evidence in detail. On the face of it, therefore, this appeal is a review only. Since this question has not been considered since the coming into effect in May 2000 of the new Rules in CPR 52 relating to appeals, I should briefly refer to the changes which have been made in the context of trade mark appeals.

4. Under the Trade Marks Act 1938, special provision was made in relation to the discretionary powers exercisable by the Registrar in section 52:

'In any appeal from a decision of the Registrar to the Court under this Act, the Court shall have and exercise the same discretionary powers as under this Act are conferred upon the Registrar.'

The nature of the appeal under the 1938 Act can be seen from examining the admission of fresh evidence on appeals in oppositions. There was a statutory power (section 18(8) of the 1938 Act) to admit further evidence on an appeal from the Registrar in opposition proceedings. In practice evidence was perhaps more readily admitted on appeal where the Court had a fresh discretion to exercise: see Thornhill's Appln [1963] RPC 13 (Cross J, who sought the submissions of the Registrar). In Oxon Italia [1981] FSR 408 Dillon J sought the views of the Registrar but held that the principles of Ladd v Marshall applied. Undoubtedly the approach was far from uniform (see the judgment of Laddie J in Hunt Wesson's Appln ('Swiss Miss') [1996] RPC 233) but it is plain that the appeal was a rehearing, and, though the Court had its own discretion to exercise, it would pay attention to the manner in which the Registrar had exercised the discretion. Thus in "Yorkshire" [1954] 71 RPC 150 Viscount Simonds said

'And if it were a border-line case, which it is not, I think that a Court, to which an appeal is brought from the Registrar, though, no doubt, it must exercise its own discretion in the mater should be slow to differ from the experienced official whose constant duty it is to protect the interests of the public not only of today but of tomorrow and the day after.'

The Registrar no longer has a discretion in relation to registration, but must decide the questions arising under section 37 of the 1994 Act, as Geoffrey Hobbs QC said in EUROLAMB TM [1997] RPC 279 at 288, approved by Robert Walker LJ in Procter & Gamble Ltd's Applns [1999] RPC 673:

'… the combined effect of subsections (4) and (5) of section 37 is to eliminate the discretion which the Registrar previously had with regard to registration under the 1938 Act and to put him in the position of having to make a judgment, yes or no, upon the materials before him as to the registrability of a mark put forward for registration.'

Evans-Lombe J and Park J have both, in OPEN COUNTRY TM [1998] RPC 408 and MAGIC BALL TM [2000] RPC 439, come to the conclusion prior to the new rules that an appeal from the Registrar was to be considered in the same manner as the Court of Appeal would consider an appeal from a judge, while attaching particular weight to the conclusions reached by the hearing officer in the light of his experience. In general trade mark appeals in oppositions have been conducted as appeals to the Court of Appeal were conducted before the new rules, but the nature of the appeal is revealed by the somewhat more relaxed attitude to the admission of fresh evidence.

5. CPR 52 now governs the position, and thus at first sight the appeal is a review, on the principles set out in Tanfern v Cameron Macdonald [2000] 1 WLR 1311. The position appears to be that the principles stated by Lord Hoffmann in Designers Guild Ltd v Russell Williams (Textiles) Ltd [2001] FSR 113 approving Buxton LJ's statement in Norowzian v Arks (No. 2) [2000] FSR 363 at 370 will apply. These cases were both concerned with the issue of copying a substantial part of a copyright work. Buxton LJ said this:

'…where it is not suggested that the judge has made an error of principle a party should not come to the Court of Appeal simply in the hope that the impression formed by the judges in this court, or at least by two of them, will be different from that of the trial judge. This in my view is a particularly strong example of the general principle stated by Robert Walker LJ in Pro Sieben Media…'

Robert Walker LJ said this in Pro Sieben:

'There is another general point which should be mentioned, that is the approach which this court should take on appeal against a judge's ruling, after a full trial, on an issue of fair dealing. It is an issue on which the judge had to come to a judgmental conclusion after taking into account a number of factors. In such a case the correct approach for an appellate tribunal was described as follows by Hoffmann LJ in Re Grayan Building Services Ltd [1995] Ch 241, 254 …,

"The judge is deciding a question of mixed fact and law in that he is applying the standard laid down by the courts ([in that case] conduct appropriate to a person fit to be a director) to the facts of the case. It is in principle no different from the decision as to whether someone has been negligent or whether a patented invention was obvious: see Benmax v Austin Motor Co. Ltd. [1955] AC 370. On the other hand, the standards applied by the law in different contexts vary a great deal in precision and generally speaking, the vaguer the standard and the greater the number of factors which the court has to weigh up in deciding whether or not the standards have been met, the more reluctant an appellate court will be to interfere with the trial judge's decision."

… That is the right approach on this appeal. The judge's conclusions, especially on fair dealing, should not be disturbed unless they proceeded from some error of principle or are clearly unsustainable.'

On the face of it, these observations apply to an appeal from the Registrar to the Court. The assessment under section 5 of the act depends upon a welter of factors and also upon experience.

6. There are other factors to be considered. There is a concurrent jurisdiction in the Court, the Court of Session and the Appointed Person under section 76 of the 1994 Act. It is in my view important that similar principles are applied by each of the jurisdictions, if only because the appointed person may refer to either tribunal either because a point of law of general importance is involved or on the application of either party or the registrar. My attention was not drawn to any decision, either in Scotland or of the appointed person considering the correct approach to be followed. I should mention one other point. It could be suggested that this appeal is the first judicial consideration of the opposition, as the hearing officer, who is a member of the Registry, cannot be considered to be an independent tribunal. Since this point was not argued, I say no more about it. This appeal was argued on the basis of the practice hitherto followed. My approach will be as follows. Findings of primary fact will not be disturbed unless the hearing officer made an error or principle or was plainly wrong on the evidence. His inferences from the primary facts may be reconsidered, but weight will be given to his experience. No question of the exercise of a discretion arises. In this way, error will be corrected, but a different appreciation will not be substituted for that of the hearing officer if he has arrived at his conclusion without error.

The opposition under section 32(3) — bad faith

7. Sub-section 3(6) of the act provides that a trademark shall not be registered if or to the extent that the application is made in bad faith. This provision is found in the Trade Marks Directive (Council Directive 89/104), and in the Trade Marks Regulation (Council Regulation 40/94). The only basis on which this ground of opposition is advanced is that the applicants do not have any bona fide intention to use the trade mark as a trade mark, relying on section 32(6). This provides that

'The application shall state that the trade mark is being used, by the applicant or with his consent, in relation to those goods or services, or that he has a bona fide intention that it should be so used.'

This is a 'home-grown' provision, and has no parallel in the Trade Marks Directive. It states a requirement for the contents of the application. I have expressed the view elsewhere that lack of a bona fide intention to use a mark on the date of application does not provide a ground of revocation of a Community Trade Mark under the Regulation (see Decon v Fred Baker [2001] RPC 293, [2001] ETMR 486.)

8. This requirement for the contents of the application used to be the counterpart of an express ground of revocation under the Trade Marks Act 1938. Section 26(1)(a), under which revocation would only be ordered if the mark had been registered without any bona fide intention to use it and it had in fact not been used up to a date one month before the application to rectify. Under the 1938 Act, it was not a ground of revocation merely that the mark had been registered without a bona fide intention to use. I say this notwithstanding the decision in 'NERIT' Imperial Group v Philip Morris [1984] RPC 293, in which on one reading the Court of Appeal may have held that any mark not 'proposed to be used' was not a trade mark. The only express ground of rectification relating to non-use under the 1938 Act is s 26(1)(a). I would be very reluctant to import into the 1994 Act a concept which does not appear in the Directive or the Regulation and which did not represent the law under the 1938 Act.
9. The meaning of 'bona fide' must also be considered. Under the Trade Marks Act 1938, a mark could be removed from the register either if it was applied for without a bona fide intention to use it and it had not in fact been used prior to the application to remove it from the register, or alternatively if it had not been used bona fide for five years prior to the application. In relation to removal for non-use, the term bona fide had a wide meaning, extending to acts which were reprehensible but not necessarily dishonest: see Imperial Group v Philip Morris [1982] FSR 72 (CA) and the discussion of this topic in Robert Walker J's judgment in Road Tech Computer Systems Ltd v Unison Software (UK) Ltd [1996] FSR 805: Robert Walker J considered in this case that this question might require a reference to the Court of Justice, as there was no clear answer to the question. The Community Trade Mark Office (Office for the Harmonisation of the Internal Market, OHIM) considers that the provisions of the Regulation corresponding to section 3(6) require subjective bad faith. I shall assume (without deciding) that the old criterion that the applicant's conduct has to be reprehensible, is enough.
10. Mr Morcom QC puts his point thus:

'The Appellant's objection is that the mark … REEF, which is the name of the Applicants' rock band, had never been used and was never intended to be used, as a 'trade mark' in relation to the goods concerned, whether by the [Applicants] or by anyone with their consent, in accordance with the statement to that effect required by section 32(3) of the Act to be made in the application form; on this basis the Opponent contends that the application was made in bad faith, contrary to section 3(6) of the Act.'

Rolled up in this submission is the contention that 'use' means 'trade mark use'. This point is not settled, and has now been referred to the Court of Justice on two occasions. The hearing officer relied upon the decision of the of the Court of Justice in the Canon case (Case C–39/1997 Canon v MGM [1998] ECR I-5507, [1999] RPC 117), setting out paragraph 28 of the judgment, and continued

'A mark whose sole purpose is to promote something other than the article it appears on cannot be acting as an indicator of origin for that article – as where T-shirts carrying the mark REEF are intended to 'sell' the band … and not the T-shirt. By classifying their clothing items as promotional it may be argued that the applicants have effectively and conclusively indicated that they have no intention of using their mark as an indicator of a trade in the goods ehy seek registration for in Class 25. Where such goods are sold, they are done so [sic] on the basis of the band's notoriety as music group and, in turn, the sales are a means of extending that notoriety, i.e. endorsing the band (not the items in question).

However, I think this is rather an extreme conclusion. It is equally possible that the applicants also aim to trade in the 'promotional' goods for which they have sought registration, under their trade mark: it really is a matter for the evidence.

11. I shall assume that the hearing officer is correct in his view that use has to be trade mark use, since I think it is the preferable view. He is right that the distinction is between use of the sign so as to indicate a trade origin of the goods (for example T-shirts) as opposed to using the T-shirt as a sort of billboard. The problem is that the two types of use are not necessarily mutually exclusive. One may establish a trade in one's promotional goods, as is quite commonly the case: see for example DaimlerChrysler v Alavi (unrep. 17 January 2001). In such cases, the mark is fulfilling a dual function. I agree with the hearing officer when he refuses to regard the limitation to 'promotional' goods as determinative. To take a simple example, a T-shirt with REEF on the neckband and 'ORCHESTRA OF THE AGE OF ENLIGHTENMENT' across the chest is within the specification of goods, and plainly a trade mark use of REEF.
12. As the hearing officer held, the real question is a question on the evidence: how do the applicants intend to use the mark? Mr Gilks, the applicants' manager, exhibits a T-shirt with the word REEF over the left breast, a very traditional place for clothing marks. But this T-shirt also has two other marks on a single label in the neckband: SCREEN STARS and FRUIT OF THE LOOM. This use is at worst equivocal. As the hearing officer held, if that is the intended use, it cannot be regarded as an example of a use which is clearly not a trade mark use, and a trade mark application to protect it cannot be regarded as reprehensible. I do not consider that the hearing officer's conclusion in this regard can be challenged.

The grounds of opposition under section 5

13. Sub-section 5(2) provides:

'A trade mark shall not be registered if because—

(a) it is identical with an earlier trade mark and is to be registered ifor goods or services similar to those for which the earlier trade mark is protected, or

(b) it is similar to an earlier trade mark and is to be registered for goods or services identical with or similar to those for which the earlier trade mark is protected

there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the earlier mark.'

By sub-section 5(4)

'A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented—

(a) by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade …

a person thus entitled to prevent the use of a trade mark is referred to in this act as the proprietor of an "earlier right" in relation to the trade mark.'

14. Only paragraph (b) of sub-s 5(2) is relied on. The rules of comparison are not just 'mark for sign', but 'global'. This provision (or the corresponding infringement provision, sub-s 10(2)) has been the subject of a number of decisions, notably British Sugar v. James Robertson ('Treat') [1996] RPC 281 and Pfizer Limited v Eurofood Link (United Kingdom) Ltd (Viagra/Viagrene) S Thorley QC [2000] ETMR 896. The domestic provisions are not 'home grown' and there is a growing body of authority from the European Court of Justice on the corresponding provisions of the Directive, that is, Arts 4(1) and 5(1): Case C–251/95 Sabel v Puma [1997] ECR I-6191, the Canon case and case C–342/97 Lloyd Schuhfabrik Meyer & Co GmbH v. Klijsen Handel BV [1999] ECR I-3819, [1999] ETMR 690. I can summarise the position as follows:

1. Under Art 4(1)(a) the test is a straightforward mark for sign test. Extraneous considerations have no effect (British Sugar). The use to be considered is fair use of the prior registered mark within its specification of goods.
2. However, under Art 4(1)(b) the comparison is not a straightforward mark for sign comparison. On the contrary, it involves a global assessment of the likelihood of confusion as to origin of the goods or services concerned. This involves an assessment of the distinctiveness of the mark, and involves the assessment of many factors familiar in passing-off cases (Sabel, Lloyd).
3. The person to be considered in considering the likelihood of confusion is the ordinary consumer, neither too careful nor too careless, but reasonably circumspect well-informed and observant. There must be allowance for defective recollection, which will of course vary with the goods in question.
4. The phrase 'likelihood of association' is an explanation of the kind of confusion as to origin with which the provision is concerned. It is not a different type of confusion from confusion as to origin. (Sabel, Canon).
5. There is a greater likelihood of confusion with very distinctive marks (Sabel, Canon, Lloyd). This is a very surprising proposition (and perhaps only a presumption of fact, since this cannot be a legal issue), since normally it is easier to distinguish a well-known word mark from others close to it. But it seems to me to make more sense when one comes to consider device marks. I have difficulty understanding how it can affect the similarity of goods, but that is the law.

To this list, the hearing officer adds the following:

(6) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;

(7) the visual, aural and conceptual similarities of the marks must therefore be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components; and

(8) a lesser degree of similarity may be offset by a greater degree of similarity between the goods, and vice-versa.

The hearing officer clearly directed himself correctly on the law in this respect.

1. I should add, however that it is clear from the decision is Canon that factors which Jacob J set out in Treat as indicating whether the goods of both registrations are 'goods of the same description' (to use the old term) are directly relevant. The Court of Justice said

'22. It is, however, important to stress that, for the purposes of applying Article 4(1)(b), even where a mark is identical to another with a highly distinctive character, it is still necessary to adduce evidence of similarity between the goods and services covered. In contrast to Article 4(4)(a) , which expressly refers to the situation where the goods or services are not similar, Article 4(1)(b) provides that the likelihood of confusion presupposes that the goods or services covered are identical or similar.

23. In assessing the similarity of the goods or services concerned, as the French and United Kingdom Governments and the Commission have pointed out, all the relevant factors relating to those goods or services themselves should be taken into account. Those factors include, inter alia, their nature, their end users and their method of use and whether they are in competition with each other or are complementary.'

The list to which the Court refers in paragraph 23 of its judgment is this (paragraph 45 of Advocate-General Jacobs's Opinion):

(a) The uses of the respective goods or services;

(b) The users of the respective goods and services

(c) The physical nature of the goods or acts of service;

(d) The trade channels through which the goods or services reach the market;

(e) In the case of self-serve consumer items, where in practice they are respectively found or likely to be found in supermarkets, and in particular whether they are, or are likely to be, found on the same or different shelves;

(f) The extent to which the respective goods or services are in competition with each other: that enquiry may take into account how those in trade classify goods, for instance whether market research companies, who of course act for industry, put the goods or services in the same or different sectors.

The French government took a very similar view (paragraph 47 of the Opinion), considering that, in assessing the similarity of goods and services, the factors to be taken into account should include the nature of the goods or services, their intended destination and clientele, their normal use and the usual manner of their distribution.

The facts

2. In this opposition, the relevant evidence is the evidence of use of the applicants' and opponent's marks before the date. The hearing officer found that at the date the opponent had 'significant goodwill in footwear, mainly sandals'. He further found that there was not enough evidence to extend this goodwill to other products, in particular clothing. The basis of this finding was that the opponents had not used the mark in the United Kingdom in respect of clothing sufficiently to entitle them to any goodwill in respect of that use, and that there was no 'spillover' from their admitted use on sandals. He found that there was no evidence of use by the applicants before the date, a conclusion which is unchallenged.
3. The hearing officer is criticised, however, on a number of grounds. First, it is said that he did not have proper regard to the manner in which the mark was used on sandals. While the mark as registered contains the word Brazil it is contracted to REEF in use and, so Mr Morcom submits, the word BRAZIL is minimised in the various logos used by the opponents. I can set out these logos here:



In my judgment, it is not legitimate effectively to vary the mark under consideration by considering how it (or related marks) have been used in practice. Thus, if the opponent's use is fairly to be considered as use of the mark REEF alone, that use does not assist under section 5(2)(b), although it will be highly relevant under section 5(4). However, fair use of the opponent's mark as registered must encompass versions where BRAZIL does not play a prominent role. Thus, fair use of the mark will include uses generally of the type represented by these logos. In my judgment, the manner in which the word BRAZIL is to be taken to be used for the purpose of this comparison must also be taken to include a use suggesting a sub-class or sub-division of the notional range of products offered under the specification of goods. A geographical term is apt to denote a subclass of this type.

4. The hearing officer said that he considered that the opponent's reputation did not assist them in the relevant comparison. To the extent to which the opponent's evidence suggested a reputation in the word 'REEF' alone, I think he was right.
5. Second, it is said that he ignored the fact that the appellant's sandals are directed primarily at surfers, and that the respondents' band can be said to be strongly orientated towards surfers. What the hearing officer seems to have ignored, it is said, are the channels of trade through which the opponents' goods are sold and the similarity of the interested public in the case of both appellant and respondents. I think that there is force in this criticism. His conclusion was as follows:

'Though I consider these goods to be similar [sc. the specifications of the applicants' and the opponent's marks] that is a matter of degree; the goods are not so similar that they override the differences I have noted between the marks; rather the opposite – the goods are far enough apart to confirm them. Clearly, it logically follows from this result that confusion is even less likely for the items in class 26: 'Badges, buckles and ornaments all for wear; tie clips, buttons.'

The global comparison called for in these cases is intended to answer the question whether the marks are so close, having regard to the goods in respect of which they are registered, that there is a likelihood of confusion on the part of the public. It is not, I think, a question merely whether similarities between the goods can 'override' differences between the marks. If this question were rephrased as 'do the similarities between the goods reinforce the similarities between the marks?' one can see that the mode of putting the question runs the risk of providing the answer.

6. In approaching the question in the way he has, without considering such matters as the channels of trade and the users of the goods, I think that the hearing officer has fallen into error. These factors are an essential part of the comparison called for by s 5(1)(b). I can substitute my own appraisal for that of the hearing officer. I start with the shops in which the goods are sold. So far as the opponents are concerned, these are shops catering to surfers. There was no evidence as to trade by the applicants (although there was some evidence of free promotional gifts) but the band itself is promoted as a band of interest to surfers. I was referred to the following in the extensive coverage in the music press:

'…the last thing Reef want to be called is a surfer band. That said, they love surfing and played at a Cornish surfer festival in the summer.'

'Cornwall's craggy beaches are a haven for the UK's burgeoning surf culture. VOX grabs a woody and hangs ten with REEF at the summer's hippest outdoor waterworld event…'

'REEF surf or die! with the board generation.'

'Groovy surf rockers–Chances are you've caught a glimpse of Reef already, doing the surf-rock-god bit in that Sony Minidisc advert…'

'When REEF aren't treading the boards as a band, they like nothing better than to get their boards out and go surfing!'

'REEF "Replenish" (Sony S²) A big live hit with Camden retro rockers and Portobello snowboarders alike, Reef are fast emerging as the acceptable face of British rawk. They surf, they skate and, at times, their bluesy rock really hits the spot…'

7. I conclude from this that there is a substantial overlap in the group of potential customers targeted by applicants and opponent.
8. Second, the applicants' mark consists of a prominent, and potentially distinctive, part of the opponent's mark.
9. Third, fair use (and in my judgment the primary use) of the applicants' mark is as a swing-ticket or neck band label, but includes front-of-T-shirt use as well. Thus, it includes use on the parts of the garment which traditionally indicate trade origin of the goods.
10. Fourth, fair use of the applicants' mark includes sale in shops selling surfing equipment, including (notionally) the opponent's footwear. The goods in question, while not cheap, are not the sort of goods which call for extensive examination by the averagely intelligent and perspicacious purchaser, and in any event any close examination will not necessarily undo any confusion which has been caused. In my judgment, there is here a likelihood of confusion between the marks. No other REEF mark has been shown to exist. These two stand alone. Accordingly I have come to the conclusion that the hearing officer came to the wrong conclusion under s 5(2)(b) and his decision should be reversed in this respect. That is sufficient to dispose of the case, but I should refer to the objection under s 5(4).

Section 5(4)

11. By section 5(4) of the 1994 Act,

'A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented—

1. by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade, or
2. by virtue of an earlier right other than those referred to in subsections (1) to (3) or paragraph (a) above, in particular by virtue of the law of copyright, design right or registered designs.

A person thus entitled to prevent the use of a trade mark is referred to in this act as the proprietor of an "earlier right'" in relation to the trade mark.

The objection in this case is under s 5(4)(a). It is said that the opponent can prevent use of the applicants' mark by invoking the law of passing off.

12. Where the applicants' mark is unused, this section presents a number of conceptual questions. Passing off is essentially a question of fact: does the defendant in fact make a false representation as to the origin of this goods by using the mark in suit? The first question is, when the mark is unused, what use is to be considered? The natural response is to say all normal and fair uses of the mark in respect of all the goods in respect of which the mark is sought to be registered. This is capable of raising a number of factual difficulties which, unless kept within proper bounds, run the risk of turning every opposition in the Registry into a passing off action with cross-examination and disclosure. As Mr Hobbs QC said in WILD CHILD tm [1998] RPC 455 the Registrar is often required to act upon evidence that might be regarded as less than perfect when judged by the standards applied in High Court proceedings. The second question follows: how cogent must the evidence be upon which the Registrar should act in upholding an opposition on this ground?
13. There is one major problem in assessing a passing off claim on paper, as will normally happen in the Registry. This is the cogency of the evidence of reputation and its extent. It seems to me that in any case in which this ground of opposition is raised the Registrar is entitled to be presented with evidence which at least raises a prima facie case that the opponent's reputation extends to the goods comprised in the applicant's specification of goods. The requirements of the objection itself are considerably more stringent that the enquiry under s 11 of the 1938 Act (see Smith Hayden (OVAX) (1946) 63 RPC 97 as qualified by BALI [1969] RPC 472). Thus the evidence will include evidence from the trade as to reputation; evidence as to the manner in which the goods are traded or the services supplied; and so on.
14. Evidence of reputation comes primarily from the trade and the public, and will be supported by evidence of the extent of use. To be useful, the evidence must be directed to the relevant date. Once raised, the applicant must rebut the prima facie case. Obviously, he does not need to show that passing off will not occur, but he must produce sufficient cogent evidence to satisfy the hearing officer that it is not shown on the balance of probabilities that passing off will occur.
15. Here, the hearing officer directed himself in accordance with Mr Hobbs QC's correct statement in WILD CHILD of the 'classical trinity' of ingredients in a passing off action—goodwill and reputation, deception, and damage. He found that the opponent had a trading goodwill in relation to sandals and other beach footwear at the date; that there was a reputation associated with REEF BRAZIL with which the goodwill was associated. He seems to have assumed that in use REEF BRAZIL would be abbreviated to REEF, and that there was accordingly a reputation associated with REEF as well. This reputation was primarily among surfers. On the trade evidence, I think that he was more or less bound to come to this conclusion.
16. In considering deception, he again followed what Mr Hobbs QC said in WILD CHILD, quoting paragraph 184 of Vol 48 of Halsbury's Laws (4th Edn 1995 Reissue) now paragraph 316 of the 2000 Reissue of Vol 48.

'To establish a likelihood of deception or confusion in an action for passing off where there has been no direct misrepresentation generally requires the presence of two factual elements:

1. that a name, mark or other distinctive feature used by the plaintiff has acquired a reputation among a relevant class of persons; and
2. that members of that class will mistakenly infer from the defendant's use of a name, mark or other feature which is the same or sufficiently similar that the defendant's goods or business are from the same source or are connected.

While it is helpful to thing of these two factual elements as successive hurdles which the plaintiff must surmount, consideration of these two aspects cannot be completely separated from each other, as whether deception or confusion is likely is ultimately a single question of fact.

In arriving at the conclusion of fact as to whether deception or confusion is likely, the court will have regard to:

1. the nature and extent of the reputation relied upon;
2. the closeness or otherwise of the respective fields of activity in which the plaintiff and the defendant carry on business;
3. the similarity of the mark, name etc used by the defendant to that of the plaintiff;
4. the manner in which the defendant makes use of the name , mark etc complained of an collateral factors; and
5. the manner in which the particular trade is carried on, the class of persons who it is alleged is likely to be deceived and all other surrounding circumstances.

In assessing whether deception or confusion is likely, the court attaches importance to the question whether the defendant can be shown to have acted with a fraudulent intent, although a fraudulent intent is not a necessary part of the cause of action.'

The hearing officer remarked that he had no evidence from the public as to whether they would be deceived. The question is primarily one for the court properly instructed as to the reputation of the opponent, and taking into account instances (if any) of actual deception. But this does not matter.

1. The main objection taken is that the hearing officer should have held that the opponents had used the mark on socks before the date, and ignored this fact in his assessment of the extent of their reputation. It is right that there was some evidence of use on socks, bags and other items (primarily a 1992 UK price list) but the extent of the use was quite unclear. Indeed, much of the opponent's evidence of the extent of use was open to criticism as lacking in consistency. I am not impressed by this criticism.
2. The hearing officer concentrated on the closeness of the respective fields of activity of the opponent and the applicants. The crucial finding is:

'I think I must struggle to believe that the required misrepresentation will take place. I do not accept that the opponents'' goodwill in specialist footwear will carry over into clothing in general, such that the typical surf fan, considering a purchase in January 1996, will assume clothing carrying the REEF name comes from the opponents.'

He then quotes extensively from a submission by Mr Morcom QC on the basis of LRC International Ltd v Lilla Edets Sales Co. Ltd ('Marigold') [1973] RPC 560, remarking that it was of persuasive authority only, being a decision on an application for an interlocutory injunction, and distinguishing it on its facts. I should just say a word about this use of authority: where a case illustrates a general approach, it can be referred to. But this area is bedevilled by the citation of cases which are merely examples of the application of well-established principles to particular facts, and such citation should be discouraged, unless the facts are substantially indistinguishable.

3. In the end, the hearing officer took into account the fact that the applicants' band was orientated towards surfers and took into account the fact that the opponent's mark was abbreviated to REEF in use, but considered that this helped the applicants. He said

'If the relevant public – surfers – are also aware of the band REEF are they more or less likely to be confused as to the origin of the latter's products? I think less likely. They would be able to make a distinction between T–shirts and the like merchandised by the rock band and sandals known as REEFS.'

He came to the conclusion that the opponent had not discharged the burden of demonstrating passing off.

4. In my judgment, this short passage entirely overlooks the fact that while merchandising use of the goods to which the applicant's mark is applied is the relevant use, the relevant representation is not necessarily that on the front of the T-shirt. It also overlooks the fact that at the date there had been no use of the applicants' mark. Among those surfers unaware of the band and aware of the sandals it seems to me that there is implicitly a finding of a possibility of deception and hence of passing off. But in the end the evidence is probably insufficient to come to a different conclusion from that reached by the hearing officer. While therefore I am not confident that I would have come to the same conclusion, I do not find that his decision is either mistaken in principle or obviously wrong on the facts, and I dismiss the appeal against the decision in so far as it relates to the opposition under s 5(4).

Conclusion

5. In the result, the appeal must be allowed and the hearing officer's order reversed in so far as it relates to the opposition under s 5(2). I will hear counsel on the form of relief.