Nanjing Automobile (Group) Corporation & Ors v MG Sports and Racing Europe Ltd & Anor

A clear contractual exclusion of trade marks prevails over general transfers of goodwill, type approvals or other business assets. An international registration under the Madrid Protocol has no effect in the country of its Office of origin and cannot confer domestic rights where that country was not designated. Ownership of a registered trade mark does not itself constitute use of the mark for deceptive-use revocation. Genuine goods placed on the market with the proprietor’s consent may be resold, but that does not authorise manufacture and sale of new goods under the mark. A controlling director is jointly liable for infringement where his participation goes beyond constitutional control and includes procuring a common design.

The claimants, members of the Nanjing Automobile group, owned or licensed the MG and MG X POWER trade marks and associated goodwill. They alleged that the defendants had used those marks in the manufacture, promotion and sale of sports cars, in their company name and on their website.

The defendants contended that the 2007 asset sale agreement transferred relevant mark rights to them. They also relied on the 2005 asset sale agreement, goodwill, statutory defences, exhaustion, and counterclaims seeking revocation or rectification of the claimants’ registrations. Registry revocation and rectification proceedings were transferred to the court. The central issues were ownership, construction of the agreements, infringement, passing off, deceptive use and the personal liability of the second defendant.

The claimants succeeded. The court granted relief for trade mark infringement and passing off, ordered the first defendant to change its name, and imposed delivery-up, website-removal and domain-name-transfer orders. The counterclaim and the parallel Registry proceedings failed.

1. The 2007 Agreement did not transfer the MG, MG logo or MG X POWER marks. The express exclusion of “Third Party Intellectual Property” and the acknowledgment that no licence to use “MG” or “Rover” was granted prevailed over general provisions concerning goodwill, type approval or other assets.

2. The Madrid Protocol international registration concerned Australia, China, Japan and Switzerland. Because the United Kingdom was the Office of origin and was not designated, the registration had no effect in the United Kingdom and could not affect the CTM registration.

3. The 2005 Agreement transferred the MG X POWER mark to NAC China. Although the relevant sports-car business and some intellectual property were excluded, the exclusion did not extend to trade marks. The wide definition of intellectual property and the contractual treatment of trade marks therefore carried the mark to NAC China.

4. The statutory defences under sections 10(6) and 11(1) of the Trade Marks Act 1994 were unavailable because SREL was not the registered proprietor. Nor did goodwill acquired from SRL provide a defence to infringement.

5. Revocation under section 46(1)(d) of the Act and article 50(1)(c) of Council Regulation 40/94 required use by the proprietor or with its consent which was liable to mislead the public. Mere ownership, or sales of genuine goods made with the former proprietor’s consent, did not satisfy that requirement. There was no evidence of deceptive use by NAC or with its consent.

6. Section 12(1) permitted dealings in genuine spares and other goods placed on the market with the proprietor’s consent. It did not authorise the defendants to manufacture and sell new MG-branded cars.

7. Passing off required goodwill, a misrepresentation causing or likely to cause confusion, and damage or likely damage. Those elements were established. Mr Riley was also jointly liable because he personally procured and controlled the infringing activities, going beyond the constitutional governance of SREL.

The court reserved the precise form of order and costs for further submissions.

The judgment records that the IPO Hearing Officer declined to stay the Registry revocation and rectification proceedings and referred them to the High Court. The referral became unconditional on 10 December 2008. This court determined those proceedings together with the claim.