Frank Industries Pty Ltd v Nike Retail BV & Ors

Trade mark infringement must be assessed in the precise context in which the sign is used. An abbreviation may be capable of conveying a descriptive meaning in some contexts without being descriptive of the goods, or without ceasing to function as a trade mark. Where a sign is confusingly similar to a registered mark, is used in relation to identical goods, and a significant number of consumers may believe that there is a collaboration or commercial tie-up, likelihood of confusion is established. A defence based on descriptive use requires use in accordance with honest commercial practices. Actual confusion, knowledge of the earlier mark, the defendant’s use of the sign as a trade mark, and the absence of sufficient justification may be important factors.

Frank owned UK and EU trade marks comprising the letters LNDR, registered principally for clothing and sportswear. Nike launched a London-focused advertising campaign using LDNR, including on clothing, websites, social media, advertising and promotional materials.

Frank claimed trade mark infringement and passing off. Nike counterclaimed that the marks were invalidly registered because LNDR was descriptive of Londoner. The central issues were whether LNDR was inherently distinctive, whether LDNR was used in relation to clothing, whether the use created a likelihood of confusion, and whether Nike could rely on the descriptive-use defence.

1. Validity. LNDR was inherently distinctive, and moderately strongly distinctive, for clothing at the relevant dates. The evidence showed that LNDR could be understood as Londoner in an appropriate digital context, but did not establish that the average consumer would understand it as Londoner when used on clothing without contextual assistance. Nor did it identify any characteristic of clothing designated by the sign. Nike’s invalidity counterclaim therefore failed.

2. Assessment of infringement. The court applied the global likelihood-of-confusion assessment, considering the average consumer, the marks and signs, the goods and the circumstances of use. LNDR and LDNR had a high degree of visual and aural similarity. Clothing was identical to the registered goods. The relevant consumer paid a moderate degree of attention.

3. The court was required to assess the signs in context and not strip them of their surrounding circumstances. In the various campaign contexts, some consumers would perceive LDNR as Londoner, but some would not. Among those who did, some would also perceive LDNR as a brand name. LDNR therefore had an independent distinctive role, or at least was a distinctive component, of the devices used by Nike.

4. Actual confusion supported the conclusion. The evidence showed consumers believing that Frank and Nike had entered into a collaboration or tie-up. There was therefore a likelihood of confusion under Article 10(2)(b) of the Directive and Article 9(2)(b) of the Regulation.

5. Descriptive-use defence. LDNR was not an indication of a characteristic of clothing. In any event, Nike’s use was not in accordance with honest practices. Nike knew of the marks, used LDNR at least partly as a trade mark, should have appreciated the risk of confusion and objection, and lacked sufficient justification when Londoner or LDN could have been used instead. The defence under Article 14(1)(b) failed.

6. The alternative claim under Article 10(2)(c) did not require determination. The passing-off claim succeeded because it stood or fell with the primary infringement claim.

The judgment records that HHJ Hacon granted an interim injunction on 2 March 2018 and directed an expedited trial. On 13 March 2018 the Court of Appeal substantially upheld that decision and varied it in one respect. The present judgment determined the merits.