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IPEC considers ‘Caspian’ pizza trade mark case

Written by Ellis Sweetenham on 15 December 2015

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Caspian Pizza Ltd and others v Shah [2015] EWHC 3567 (IPEC), [2015] All ER (D) 113 (Dec)

Facts:

The claimant (ZR) and his brother-in-law (ZN) were the co-proprietors of two United Kingdom registered trade marks, the word mark 'CASPIAN' registered in respect of restaurants and related services in July 2005 and a device mark registered in respect of specified foodstuffs, including those suitable for making pizzas in September 2010.

A dispute arose as to the right to use the trade name 'CASPIAN' in relation to the pizza business and the right to use a device featuring that name.

ZR stated that he had started his pizza business in 1991 called 'Caspian Pizza' and had expanded into a chain of Caspian pizza restaurants in Birmingham. ZN became involved in the business from 2011.

ZR also stated that, in about 2002-3, the first defendant, S, a sole trader had approached him for a licence to open a Caspian pizza restaurant (in Worcester).

The claimants contended that S subsequently operated the Worcester restaurant under an oral and informal franchise agreement with the first claimant (CP Ltd). One of the terms of the agreement was that the goodwill in S's franchised business vested in CP Ltd.

The claimants contended that, since August 2013, S had refused to pay royalties due under the franchise agreement and had declined to recognise the agreement at all. The franchise agreement was later terminated, to take effect from 9 December 2013.

The claimants contended that, since then, the defendants' use of the two marks in relation to the business of the Worcester restaurant had infringed the two trade marks and constituted passing off.

The defendants contended that there had never been a franchise agreement and that the goodwill in the business of the Worcester Restaurant had not passed to CP Ltd and remained with that business.

Further, they contended that the two marks: (i) had been registered in contravention of s 5(4)(a) of the Trade Marks Act 1994 (by virtue of an earlier right); and (ii) were invalid and should be revoked for lack of genuine use and bad faith.

Issues:

  1. Who owned the goodwill in the business conducted by the Worcester Restaurant under the CASPIAN name
  2. Whether the defendants had established a case for revocation for lack of genuine use and bad faith
  3. Whether the Caspian Mark had been invalidly registered pursuant to s 5(4)(a) of the Act and art 4(4)(b) of the Trade Mark Directive 2008/95EC, or whether the defendants had accepted the use of the trade mark for a continuous period of five years such that they were not entitled to pursue their application for a declaration that the Caspian mark was invalid
  4. Whether the claim for passing off or trade mark infringement had been established. Consideration was given to whether the defendants had a defence under s 11(3) of the Act, which provided that a trade mark was not infringed where there was an earlier right, which applied only in that locality. Consideration was also given to art 9 of the Trade Mark Directive.

Judgment:

The court ruled:

Regarding ownership of goodwill, no formalities were needed for the transfer of goodwill. It might be done orally or even inferred from the conduct of the relevant parties.

The court was prepared to assume that the conduct of the Caspian pizza business by CP Ltd from August 2012 had, by 9 December 2013, generated sufficient goodwill owned by CP Ltd associated with CASPIAN to give CP Ltd a cause of action in passing off.

On the facts, on the relevant dates, S had owned goodwill in the business conducted by the Worcester restaurant under the CASPIAN name and had been entitled to prevent another party trading in the sale of pizzas in Worcester under the CASPIAN name.

The claim for revocation for lack of genuine use was an opportunistic allegation going no further than putting the claimants to proof of use.

On the facts, the claimants had used the Caspian mark from 2005 to 2014. Accordingly, the Caspian mark had been used in the relevant periods and the claim for revocation failed.

Further, the Caspian mark had not been registered in bad faith and that allegation would be rejected.

The issue was whether a five year period had elapsed since S had learned of the registration of the Caspian mark, during which period they had known that the Caspian mark was being used by the claimants.

On the evidence, S had known that it was being used by the claimants in the five years since registration. On the other hand he did not know that the Caspian mark had been registered until the present dispute had begun.

The relevant five year period, therefore, had not started to run until around the end of 2013. It followed that, the defendants had been entitled to pursue their application for a declaration that the Caspian mark was invalid.

In all the circumstances, the Caspian mark had been invalidly registered pursuant to s 5(4)(a) of the Act and art 4(4)(b) of the Trade Mark Directive.

The device mark remained validly registered.

Neither of the trade marks had been infringed by the defendants.

In relation to passing off, the claimants had not established that their goodwill when the Worcester restaurant started trading in 2004, or even that it had presently. There was therefore no possibility of any relevant misrepresentation having occurred as a result of trading by the Worcester Restaurant.

The claim for passing off failed.

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