Inter Lotto (UK) Ltd v Camelot Group Plc

Registration of a trade mark gives the proprietor exclusive rights to prevent specified infringing acts. It does not confer a positive entitlement to use the mark in a manner which infringes another person’s rights, including goodwill protected by passing off. Nor does alleged infringement, without more, automatically deprive a trader of the ability to rely on goodwill and reputation in a passing-off claim. The ex turpi causa principle applies only where the claimant’s wrongdoing is substantial and goes to the heart of the right asserted. In a passing-off action, reputation and goodwill are ordinarily assessed at the date when the defendant began the complained-of use.

Inter Lotto operated lotteries using the mark HOT PICK and claimed goodwill and reputation in that mark. Camelot operated the National Lottery and used HOTPICKS after the National Lottery Commission applied to register that designation on 17 October 2001. Camelot argued that registration either gave it an overriding right to use the mark or made Inter Lotto’s later use unlawful, so that goodwill arising after the application date could not support passing off.

By consent, the court was asked to determine whether 17 October 2001 was the relevant date for assessing Inter Lotto’s reputation and goodwill.

1. Preliminary issue answered in the negative. The relevant date for assessing reputation and goodwill was the date on which Camelot began using HOTPICKS in relation to its lottery product, not the date on which the application to register the mark was made.

2. Section 2(2) of the Trade Marks Act 1994 preserved the independence of passing off from registered trade mark rights. Its historical predecessors confirmed that registration legislation did not generally alter the common law action protecting goodwill and reputation.

3. Section 9(1) conferred exclusive rights in the registered mark which were infringed by specified unauthorised uses. It did not confer an exclusive or positive right to use the mark. Registration therefore did not create a hierarchy under which the registered proprietor could override earlier common law rights or use the mark deceptively.

4. The authorities, including Re Lyle & Kinahan Ltd’s Application, supported the conclusion that registration only enabled the proprietor to restrain others from infringing the mark. Camelot could use its mark provided that its use did not constitute passing off.

5. The ex turpi causa principle did not create an automatic bar merely because the claimant’s use might infringe a registered trade mark. Whether conduct was sufficiently wrongful to disentitle a claimant was a question of fact. The wrongdoing had to be substantial and go to the heart of the right asserted. Trade mark infringement without dishonesty or flagrancy was insufficient on the assumed facts, although exceptionally flagrant and knowingly wrongful conduct might justify exclusion from relief.

6. It was unnecessary to consider the Trade Mark Directive because the preliminary issue was clear as a matter of domestic law.