Publications > Own-name defence to an infringement action - Klaus Kobec

Antoni Fields v (1) Klaus Kobec Limited (2) Michael Cohen [2006] EWHC 350 (Ch)

This is a case about watch branding, business partners acrimoniously falling out, and infringement action. There is a promise of a good read with introductory comments such as 'I consider much of the evidence ... unsatisfactory and unreliable. ...their evidence was suffused by vindictiveness towards each other. Each of them sought to denigrate and downplay the role of the other...' Even if the case does not quite match up to the interest levels of the recent Da Vinci Code High Court copyright case, at least we do get some insights into own name defence and honest commercial practices plus a few other interesting titbits.

The facts of the case are complex and considerable discernment was required on the part of the deputy judge, Richard Sheldon QC, to make sense of the evidence.

Background - the inside workings

In summary, and in distilled and simplified form, the facts of the case were as follows: Mr Fields was a trader and distributor of wristwatches. Some of these wristwatches were sold under the brand KLAUS KOBEC. This Mark was registered at the UK Registry and at the OHIM, with the eventual establishment of Mr. Fields as sole proprietor. Consent was given to Mr Cohen to use the mark on and in relation to watches supplied to him by Mr Fields. Cohen traded through a company whose name was Klaus Kobec Limited ('KKL') in which Mr Fields had a small shareholding but otherwise had no part in running. Being sole director, Cohen was jointly liable for the acts of the company (MCA v Charly [2001] EWCA Civ 1441). Mr Cohen built up the business in an imaginative way by, for example, modifying Klaus Kobec watches to include the names or crests of football clubs or even the signatures of particular players. Contracts with various football clubs were signed for such bespoke watch merchandise. Domain names such as klauskobecfootball.com were registered to facilitate the expansion of this side of the business. Other domain names such as klauskobecrugby.com (for similar business with rugby clubs) and klauskobec.com were registered by the company. Mr Cohen's relationship with Mr Fields, however, deteriorated and then irretrievably broke down. Reasons included the fact that Mr. Cohen sourced watches outside Mr. Field's supply chain (contrary to their business agreement) when demand at KKL exceeded what Mr. Fields could supply. Mr. Fields withdrew his consent for use of the registered KLAUS KOBEC name. Mr. Cohen accepted the position and began to rebrand his watches and to market them through a new website 'thefootballwatchshop.com'. Nothing from KKL - the corporate entity - was now to contain any reference to the KKL brand apart from contact details. Mr. Cohen did not, however, change the licence agreements with various football clubs which had been entered with KKL. The effect of this was that watches supplied to certain football clubs still had the following words on the backplate: 'Designed and distributed by Klaus Kobec Ltd' - this having been a stipulation of the respective contracts. Mr. Fields sued for trade mark infringement.

Infringement and defences

Fields complained, inter alia, about use of the mark in relation to watches not sourced directly from him and any other actual or threatened use after the business relationship had collapsed. 'Use' meant use in advertising materials, on the bodies of watches themselves, in Internet domain names incorporating the Mark when used to promote the watches, and as a part of the company name of KKL.

Mr. Cohen denied infringement, but in the alternative (if infringing acts were established), relied on statutory defences - to be considered below - and counterclaims for invalidity on relative grounds (subsequently dropped) and absolute grounds. Also, a settlement was reached between the first defendant (KKL) and Mr Fields prior to the trial.

Identity issues

The alleged infringement in regard to use of the company name was in relation to s 10(1) of the 1994 Act - identity of sign and goods/services. Was 'Klaus Kobec Limited' identical to 'Klaus Kobec' (the protected mark)? The judge decided that it was, taking guidance from Reed Executive plc v Reed Business Information Ltd at paragraphs 37-40 and 115 ([2004] EWCA Civ 159) which itself carefully took on board the recent referral decision of the ECJ ('opaque' though that European guidance was) in LTJ Diffusion v Sadas (the 'Arthur and Félice' case - C-291/00). Essentially this stated that identity must be interpreted strictly, i.e. 'the same in all respects', 'without any modification or addition', even though perception was to be assessed globally, with imperfect recollection etc. - as per the standard recital from Lloyd Schuhfabrik etc. In practice what constitutes identity may be decided with regard to the circumstances applying, not through side-by-side visual inspection. In the present case the addition of 'Limited' to 'Klaus Kobec' was without trade mark significance and, according to Mr Sheldon QC, has an exact equivalent in the 'own name' defence question of whether 'Limited' could be ignored as an immaterial addition (cf. Reed, par. 115: "it matters not that the word Ltd or some other indication of incorporation is added". It was decided here that use of 'klauskobec.com' was identical use of the Mark because 'Klaus Kobec' was distinctive, it was usual to use the lower case in domain names and to elide company names on the internet, and that '.com' had no trade mark significance, much like 'Ltd' hadn't. These differences would, in ECJ language, "go unnoticed by the average consumer". Thus infringement, subject to defences, was established with regard to use of the KKL name on the backplates of watches sold after the relevant date, use of the name as the company name, use of 'klauskobec.com', and threats to use the Mark in the future.

Defences

A section 11(3) earlier right defence was pleaded, but rejected as not made out. The "own name" defence of section 11(2)(a) 'the use by a person of his own name or address' was more successful. As a prelimary matter, it was noted that the defence, as per the CA Reed judgment at par.116, applied to companies and not just to individuals (itself following Lord Nicholls' statement at par. 54 of the House of Lords Scandecor decision: the "better view is that a company can claim the protection of this provision"). What was at issue in the present case was whether, as per the statute, use was "in accordance with honest practices in industrial or commercial matters". After considering case law, in particular Gerolsteiner v. Putsch ('KERRY Spring'): C-100/02, and applying this to the facts, it was determined that the "own name" defence was made out for use of KLAUS KOBEC on watches where the existing contracts required it, and on advertising where the KKL name was used only as part of the address for correspondence. The defence was not made out for use of the Mark in relation to watches after the relevant date. A relevant factor in deciding the objective test of 'honest practices' was the efforts made by Mr. Cohen to rebrand his business.

Counterclaim on absolute grounds

Finally, an attempt was made to invalidate both Community and UK Marks on grounds of bad faith - s.3 (6) and CTMR Art. 51 (1)(b). The most recent UK case of note on bad faith is Harrisons TM Application ("China White"): [2004]EWCA Civ 1028. Mr Sheldon QC affirmed that the 'combined test' was to be used in determining bad faith, i.e. both the knowledge and intentions of the defendant and 'proper standards' of honest conduct. The facts, however, were such that this counterclaim failed.

Comment

A key feature of this case is the discussion of and application to the facts of the “own name” defence. Practitioners will find useful considerations of how and under which circumstances this infringement defence may be likely to succeed.

The UK courts are presently happy to apply it to company names, but this may all change if there is ever a referral to the ECJ This, of course, actually happened in the Scandecor Developments v Scandecor Marketing case, but was withdrawn as the case was settled. Thus this area of law is still unsettled.

This article first appeared in the May 2006 issue of the ITMA Review