Thomson Holidays Limited v Norwegian Cruise Line Limited

Partial revocation for non-use requires a trade mark specification to reflect the proprietor’s actual use, the circumstances of the trade and the way in which the average consumer would describe that use. The court may look beneath an unduly broad category, but should adopt a fair commercial description rather than confine registration to every market segment.

Use of an identical sign for identical registered services infringes under section 10(1) of the Trade Marks Act 1994. Under section 10(2), confusion exists where the average, reasonably informed and observant consumer, allowing for imperfect recollection, might believe that the services come from the same or economically linked undertakings. Identical marks, closely related services and common trade channels may establish that risk despite limited distinctiveness.

Thomson Holidays Limited owned two registrations for the word FREESTYLE covering travel, tour, cruise, accommodation and related services. It had used the mark for youth-oriented summer package holidays and skiing holidays, but had not offered cruise-ship holidays under the mark during the relevant five-year period. Norwegian Cruise Line Limited subsequently promoted cruise holidays using FREESTYLE and FREESTYLE CRUISING.

A deputy judge of the Chancery Division partially revoked the registrations by excluding services relating to cruises on cruise ships. He then held that Norwegian’s use did not infringe and dismissed the action. Thomson appealed against both the formulation of the surviving specifications and the finding of non-infringement.

The central questions were how a fair specification should be framed following non-use under section 46(5) of the Trade Marks Act 1994, and whether Norwegian’s use infringed under section 10(1) or, alternatively, section 10(2).

1. Appeal allowed unanimously. Aldous LJ delivered the judgment, with which Waller and Scott Baker LJJ agreed. The registrations were partially revoked, but the surviving specifications extended to services provided for package holidays. Norwegian’s use of FREESTYLE therefore infringed. The deputy judge’s order was set aside.

2. For non-use under section 46 of the Trade Marks Act 1994, Thomson had used FREESTYLE in relation to the composite service of arranging and providing holidays. The mark had not been used separately for every constituent activity listed in the specifications. The specifications consequently required qualification.

3. The court rejected the approach in Premier Brands UK Ltd v Typhoon Europe Ltd [2000] FSR 767, under which a court ordinarily took each registered category as it found it. A court may and sometimes must look more deeply into a broad description. The proper starting point is the goods or services for which actual use has been proved. The court must then formulate a fair specification by considering the particular trade and how the average, reasonably informed consumer would describe that use.

4. The deputy judge had gone too far by excluding cruise-ship holidays as a distinct market segment. Applying equivalent reasoning would also have required the exclusion of safaris, city breaks and activity holidays. Consumers would describe Thomson’s services more generally as package holidays. Both specifications were therefore to be limited by words making clear that the services were for package holidays.

5. Norwegian used a sign identical to FREESTYLE in relation to package holidays. Its cruise-ship packages consequently fell within the surviving specifications. Section 10(1) applied and infringement followed without proof of confusion.

6. Alternatively, infringement was established under section 10(2). The deputy judge had applied an excessively demanding test by asking whether consumers would believe that the cruise product was Thomson’s product or an associated product. The correct inquiry was whether there was a risk that consumers might believe the services came from the same or economically linked undertakings. The assessment was global and allowed for imperfect recollection.

7. Although FREESTYLE was evocative rather than highly distinctive, Norwegian used the identical word as a brand. CRUISING was descriptive and did not differentiate the sign. The parties’ package holidays were marketed through the same trade channels, frequently in neighbouring displays or the same brochures. Those circumstances created a risk of confusion even if cruise-ship holidays were excluded from the specifications.

1. Court of Appeal (Civil Division): The appeal was allowed unanimously. The surviving specifications were reformulated to cover services for package holidays, infringement was established and the deputy judge’s order was set aside: [2002] EWCA Civ 1828.

2. Chancery Division: Mr David Young QC, sitting as a deputy judge, partially revoked the registrations by excluding services relating to cruises on cruise ships. He found no infringement and dismissed the action. No citation for that judgment is stated.