Okotoks Ld & Anor v Fine & Country Ltd & Ors

A franchisor may own and protect goodwill in a licensed brand where it controls the brand and provides the associated marketing services. The absence of a common field of activity with the defendant does not prevent a passing-off claim.

Adopting descriptive words entails tolerating some confusion, but the principle does not protect a deceptive combination of name, typography, colour, underlining and strapline. A descriptive device mark may acquire distinctiveness where a significant proportion of the relevant public identifies the services as originating from a particular undertaking.

Use of a descriptive indication as a brand does not itself defeat the statutory defence. The decisive question is whether the use accords with honest commercial practices, assessed in all the circumstances.

The respondents operated a national estate-agency licensing and marketing network under the “Fine & Country” name and device marks. The appellants introduced a competing premium-property brand using the word “FINE”, a similar font, capitalisation and gold underlining, together with a strapline referring to “country”.

Hildyard J held after trial that the appellants were liable in passing off and had infringed the respondents’ national and Community trade marks: [2012] EWHC 2230 (Ch). A supplemental judgment addressed the descriptive-use defence: [2012] EWHC 2528 (Ch).

The appeal concerned ownership of goodwill, tolerated confusion arising from descriptive language, the evidence of deception and damage, the validity and acquired distinctiveness of the device marks, likelihood of confusion, and whether the appellants’ use complied with honest commercial practices.

1. Appeal dismissed. The trial judge had applied the correct principles and his evaluative conclusions were not plainly wrong. Appellate courts should exercise particular caution before disturbing a trial judge’s application of an imprecise legal standard to a combination of features of differing importance.

2. The parent company could sue in passing off. It carried on the business of licensing estate agents, organised national advertising and operated the website. In substance it was the franchisor of the brand. Damage to the brand would impair its ability to attract licence fees, which was itself goodwill. A common field of activity between claimant and defendant was unnecessary.

3. The rule that a trader choosing descriptive words must tolerate some confusion did not determine the case. That rule principally concerns similarities between words, whereas the misrepresentation arose from the detailed get-up. The name, font, capitalisation, gold underlining, strapline and overall impression represented the appellants as successors to, or members of, the licensed network. The judgment did not confer a monopoly over the word “fine” itself.

4. The relevant public included both property sellers and buyers. Sellers consumed the licensees’ services directly, while buyers were essential to the ability of the licensed agents to sell properties. The evidence of live witnesses, supported to a limited extent by emails and other material, entitled the judge to find deception and a realistic prospect of damage through erosion of the brand.

5. The trial judge’s treatment of inherent and acquired distinctiveness had been insufficiently separated. The descriptive words and their ordinary combination did not establish inherent distinctiveness. Nevertheless, the device marks had acquired distinctiveness by 2009. The relevant evidence included market share, geographical spread, long-standing use, industry recognition, promotional expenditure and recognition among the relevant public.

6. The marks were infringed under article 9(1)(b) of the Community Trade Mark Regulation and section 10(2) of the Trade Marks Act 1994. The overall visual impression and the evidence of actual confusion supported a likelihood of confusion.

7. Use of “FINE” as a brand did not itself exclude the descriptive-use defence. The judge had erred on that point. The defence nevertheless failed because the use was not in accordance with honest practices. It caused deception, threatened the marks, exploited their reputation and had been adopted despite awareness of the risk of confusion.

Lady Justice Gloster and Lord Justice Lloyd agreed with Lord Justice Lewison. The judge’s order, including the injunction and transfer of the domain name, was upheld.

1. Court of Appeal (Civil Division): The appeal was dismissed and the trial judge’s order was upheld: [2013] EWCA Civ 672.
2. High Court, Chancery Division: Hildyard J held the defendants liable for passing off and infringement of the national and Community trade marks: [2012] EWHC 2230 (Ch). A supplemental judgment rejected the descriptive-use defence: [2012] EWHC 2528 (Ch).