Aiwa Co. Ltd v Aiwa Corporation

For trade-mark non-use, genuine use and use by the proprietor or with its consent are separate requirements. The absence of consent does not automatically establish absence of genuine use, although it may be highly relevant, particularly to third-party sales of second-hand goods. Consent inferred from exhaustion of trade-mark rights is not consent to subsequent use for non-use purposes. Second-hand sales must be assessed factually, including whether they amount to real commercial exploitation capable of creating or preserving market share. Mere recirculation of goods previously placed on the market will generally be insufficient without evidence of a continuing commercial outlet.

Aiwa Co. Limited appealed against a decision of the UK Trade Mark Registry hearing officer dated 4 February 2019. The hearing officer had revoked Limited’s registered Aiwa marks for non-use and dismissed its opposition to Aiwa Corporation’s applications. The evidence relied upon included third-party sales of second-hand Aiwa goods, after-sales services, and preparatory activities connected with a proposed relaunch.

The central issues were whether the hearing officer had properly separated the requirements of genuine use and use by the proprietor or with its consent, whether implied consent arose from exhaustion of trade-mark rights, and whether the evidence established genuine use during the relevant five-year period.

The appeal was dismissed. The hearing officer’s reasoning was erroneous because it treated the absence of proprietorial consent as automatically preventing genuine use and failed to consider the two statutory requirements separately.

1. Separate requirements. Genuine use and use by the proprietor or with its consent are distinct elements. Lack of consent may be important, but it does not automatically determine whether use is genuine.
2. Consent and exhaustion. Consent is relevant to the placing of goods on the market and the resulting exhaustion of trade-mark rights. Once exhaustion has occurred, later dealings are lawful because the proprietor’s rights in those goods are exhausted, not because the proprietor is treated as consenting to each later use. The appellant therefore could not rely on the original marketing of the goods as implied consent to subsequent second-hand sales.
3. Implied consent. Implied consent may qualify, but it must be unequivocally demonstrated. The evidence disclosed no express consent and did not establish the alleged implied consent.
4. Second-hand sales. Whether second-hand sales amount to genuine use depends on the facts. Relevant considerations include whether the activity constitutes real commercial exploitation of the mark and whether it is justified by the need to create or preserve market share or an outlet for the relevant goods. The appearance of the mark on resold goods may distinguish their origin, but that alone is insufficient.
5. Application. The evidence of second-hand advertising and sales was thin and uncertain. It did not establish activity capable of maintaining market share or preserving an outlet for Aiwa goods. Sony’s after-sales activities were sparse, and Limited’s later activities amounted only to exploring options. Taken cumulatively, the evidence did not establish genuine use with the proprietor’s consent.

• High Court (Chancery Division): The appeal from the UK Trade Mark Registry decision was dismissed. The hearing officer’s reasoning was defective, but the High Court reached the same ultimate conclusion on the evidence.