Hearst Holdings Inc & Anor v A.V.E.L.A. Inc & Ors

Fame or decorative use of a fictional character does not, without more, establish trade mark significance. The issue is factual and turns on what the relevant average consumer understands the sign to signify. Extensive, controlled merchandising may educate consumers to regard a character’s name or image as indicating a single official commercial source.

Use may remain trade mark use even where the sign is attractive or decorative, unless it is purely decorative. Labelling goods as official or officially licensed may reinforce origin significance and misrepresentation. Passing off requires goodwill, misrepresentation and damage. A party that procures and controls the relevant licensing and approval process may be jointly liable with its licensees.

The claimants, owners or licensees of rights associated with the Betty Boop character, alleged that the defendants’ licensing and sale of Betty Boop merchandise infringed UK and Community trade marks and amounted to passing off.

The defendants contended that their use of Betty Boop imagery was purely decorative, that they licensed imagery rather than a brand, and that the marks were invalid or subject to the descriptive-use defence. The court considered the significance of the words and images to licensees, retailers and the purchasing public, the effect of many years of merchandising, the infringement claims, validity, defences, passing off and joint liability.

1. The claimants proved infringement of their UK and Community trade marks in the United Kingdom and acts of passing off. The court also considered that the same trade mark conclusion should extend throughout Europe.

2. The relevant average consumers comprised licensees, retailers and the purchasing public. By 2009, the claimants’ extensive and controlled merchandising had caused all three groups to regard the words BETTY BOOP and images of the character as indicating an official single source. Fame alone was insufficient, but the evidence established distinctive origin significance.

3. In the context of the goods, images of Betty Boop and related words were not purely decorative. They conveyed origin information and could constitute use as signs. This applied even where consumers also regarded the imagery as attractive or ornamental. The reasoning was consistent with Adidas-Salomon v Fitnessworld Case C-408/01 and the discussion of merchandising authorities including R v Johnstone [2003] UKHL 28.

4. For double-identity infringement, the required conditions included use of an identical sign in the course of trade, without consent, in relation to identical goods, affecting or liable to affect trade mark functions. The words BETTY BOOP were used by Poeticgem on product packaging and by AVELA and TPTL in offering merchandise licences.

5. For likelihood-of-confusion infringement, the Betty Boop imagery was conceptually similar to the word and device marks. Consumers would recognise the character and associate it with the claimants’ official merchandising source. The same use also created a link and took unfair advantage of the investment in the marks for the purposes of section 10(3).

6. The marks were valid. The defendants’ use was not descriptive use within the statutory defence and was not in accordance with honest commercial practices. The reference to official licensing enhanced, rather than dispelled, confusion. The defendants’ reliance on United States litigation and alleged copyright interests did not alter that conclusion.

7. AVELA and TPTL were jointly liable with the relevant licensees because they jointly procured and controlled the licensing, approval and labelling process. The licensees were not liable for AVELA’s and TPTL’s separate offer of licences.

First instance decision. The judgment states that the copyright claim and one bad-faith invalidity issue had been separated for later determination.