Caspian Pizza Ltd & Ors v Shah & Anor

Local goodwill capable of supporting a passing-off action may also support invalidity of a UK-wide trade mark registration under the Trade Marks Act 1994. Goodwill in an identifiable locality is sufficient; use need not extend throughout the United Kingdom. A national application operates as a notional expansion into the whole country. Section 47 does not give the court a discretion to refuse invalidity once a statutory ground is established, subject to specified exceptions. After registration, the court cannot preserve the mark by imposing a geographical limitation. A composite mark is likewise invalid where its essential and most prominent feature is the word already affected by the local earlier right.

The claimants appealed from an order of HH Judge Hacon QC dismissing claims for trade mark infringement and passing off and declaring the CASPIAN word mark invalid under the Trade Marks Act 1994. The defendants cross-appealed against the refusal to declare invalid a composite Device Mark containing the word CASPIAN.

The defendants had established goodwill in Worcester before registration of the claimants’ marks. The central issues were whether local goodwill could invalidate a UK-wide registration under section 5(4)(a), whether invalidity could be confined geographically after registration, and whether the Device Mark could be treated differently from the word mark.

Lord Justice Patten gave the judgment. Lady Justice Gloster and Lord Justice David Richards agreed.

1. Disposition. The appeal was dismissed and the cross-appeal allowed. Both the CASPIAN word mark and the Device Mark were declared invalidly registered.
2. Locality defence. The court upheld the interpretation of section 11(3) and article 6(2) of the Trade Mark Directive. An earlier right means prior use protected by passing off, including goodwill confined to a particular locality. The proprietor’s prior use elsewhere in the United Kingdom did not defeat a locality defence in Worcester. This issue was not challenged on appeal.
3. Invalidity based on local goodwill. The opening words of section 5(4), including the reference to invalidity “to the extent that” use is liable to be prevented, do not require use throughout the United Kingdom or an overlap with the applicant’s existing business. An application for a national mark is treated as a notional expansion of the applicant’s business across the country. Goodwill in an identifiable locality may therefore prevent registration of the national mark. The court preferred the approach in SWORDERS Trade Mark dated 28 July 2006 (O-212-06) and did not follow the contrary approach in Redd Solicitors LLP v Red Legal Ltd ([2012] EWPCC 54; [2013] ETMR 13). The court also noted that reputation on a very small scale may not amount to goodwill, citing Knight v Beyond Properties Pty Ltd & Ors [2007] EWHC 1251 (Ch).
4. Effect of section 47. The word “may” in section 47(2) does not confer a general discretion to refuse a declaration of invalidity once a section 3 or section 5 ground is established. The exceptions in section 47(1) confirm that invalidity should follow in cases outside those exceptions.
5. Geographical limitation after registration. Sections 47(5) and 47(6) permit partial invalidity by reference to goods or services, but provide no equivalent power concerning geographical territory. Section 13 permits a territorial limitation by consent at the application stage. Section 44 prevents the registered mark from later being altered in a way that substantially affects its identity. Any later abandonment would operate only prospectively and could not cure invalidity assessed at the filing date.
6. Device Mark. The essential and most prominent feature of the Device Mark was the word CASPIAN. No distinct pre-registration history or origin justified treating it differently from the word mark. The same earlier right therefore rendered the Device Mark invalid.

• Court of Appeal (Civil Division): by [2017] EWCA Civ 1874, dismissed the claimants’ appeal and allowed the defendants’ cross-appeal.
• High Court, Chancery Division, Intellectual Property Enterprise Court: HH Judge Hacon QC, [2015] EWHC 3567 (IPEC), dismissed the infringement and passing-off claim, declared the CASPIAN mark invalid, and refused to declare the Device Mark invalid.