Storage and retrieval -- or removal of a trade mark? A strange tale of the NGRS

Sometimes trade mark owners can get themselves into an awful pickle when it comes to maintaining the integrity of their registered rights and to keeping their licensees in order; licensees can generally be made to toe the line, but uses made by those licensees may be beyond recall, causing some vexation to the trade mark owner. A good example of this phenomenon can be found in a curious little episode involving a trade mark owner who is relatively little-known in consumer circles but whose trade mark is important, and valuable, enough to litigate over. Here's a very helpful note from Katfriend Natasza Slater to guide us.

NGRS or no NGRS, some folk
like to do their own removals

One of the biggest challenges faced by trade mark owners who grant a substantial number of licences is how to regain control of the trade mark from a licensee who apparently continues to use the trade mark after expiry of the licence. The web in particular poses a problem. For example, where the ex-licensee continues to use the trade mark on its own website, which it controls and maintains, removing the trade mark should be relatively easy for the ex-licensee. Failure on the part of the ex-licensee to do this will constitute infringement. However, there will likely be other uncontrolled web references that denote a connection between the ex-licensee and the trade mark--  and these are far more difficult to remove. It also is apparent from the judgment handed down by Judge Hacon QC yesterday in the Intellectual Property Enterprise Court, England and Wales, in National Guild of Removers and Storers Limited v Derek Milner t/a Intransit Removals and Storage and TDL Realisations Limited in administration [2014] EWHC 670 (IPEC) that infringement in such circumstances is not a clear-cut proposition.

Put simply, Milner, ran Intransit, a storage and removal business. Between September 2008 and November 2010 he was a member of the National Guild of Removers and Storers Limited (“NGRS”). One of the benefits of being a member of NGRS, a body representing and providing services to those in the removal and storage business, was a licence to use the NGRS name and logo in association with the member’s business.

Following a dispute with NGRS, Milner's membership of the NGRS terminated on 30 November 2010. After this date, advertisements for Milner’s business, featuring the NGRS name and logo, appeared in two publications at issue. First, the 212-13 edition of the Salisbury Thomson Local Directory (“Salisbury”) and secondly, a website set up by British Teleconm (www.wiltshireremovals4less.co.uk).

NGRS sued for (i) trade mark infringement, (ii) infringement of copyright in its logo, which was registered as a trade mark and (iii) passing off by misrepresenting he was still a member of NGRS. The learned judge dismissed all three claims. On the facts the court found that, in relation to the advertisement in Salisbury, Milner went out of his way to ask Thomson to remove the NGRS logo from the advertisement by calling the company and directing it accordingly. Although he failed to return to Thomson an updated version of the advertisement without the logo (a version of which Thomson previously added the logo to), the judge felt that Milner’s actions clearly conveyed that he did not provide consent to Thomson's use of the logo. Thus the court found no infringement on Milner’s part, a finding that also led to the failure of the third claim. The court could not find the principle of ostensible authority applicable where the defendant had no intention of giving authority to Thomson to use the trade mark and where he did not represent himself as having such authority from the NGRS.

In relation to the website, the court similarly found there was no infringement on Milner’s part. The website, controlled by British Telecom, was asked in a letter from Milner to remove the logo. Counsel for NGRS raised an interesting argument which related to the addressee of Milner’s letter: Milner had addressed the letter to "Head Office" and not to a specific person at British Telecom. Was this not done with the intention that his letter would not reach the appropriate person, so that presumably, he could continue to reap the benefit of NGRS’s logo on the website? Fortunately, the court was not convinced. In my view, this was the correct approach. Generally, companies do not freely provide individual contact details of their employees and of their relative responsibilities within the company. How many readers have addressed a letter to “Head Office” and trusted it would reach the correct individual?

Milner counterclaimed for revocation of some of NGRS's trade mark registrations for non-use (this counterclaim succeeded in part) and he also asserted that two of the NGRS’s trade marks were applied for in bad faith because that body intended to use them as collective marks and had no bona fide intention to use them as ordinary trade marks. The court looked to guidance of the UK Intellectual Property Office (IPO) and a vintage House of Lords ruling, Scandecor Development AB v Scandecor Marketing AB [2001] UKHL 21 [says the IPKat, Scandecor is one of the most perplexing cases on the planet. Only one person really understands it, and that's fellow Kat Neil -- and even he isn't so sure about what it actually means]. Both of which appeared to conflict when applied to the facts.

The Court held the function of NGRS’s trade marks was to distinguish its members from non-members. Following the IPO’s practice amendment notice PAN 2/01, it would seem that such a trade mark could not distinguish goods of one trader from those of another -- in which case the trade mark would be contrary to public policy and of such nature as to deceive the public. The legislature devised regulations surrounding collective marks to protect the public, so choosing to register a trade mark instead could potentially circumvent these regulations. 

However, the Court was eventually persuaded by the view expressed in the House of Lords decision in Scandecor, and in particular by Lord Nicholls’s speech (described by Judge Hacon as “the direction of travel in the development of trade marks in modern commerce”. Lord Nicholls described consumers as being aware that goods affixing a mark have either been produced by the owner of the mark or a third party acting with the owner’s consent. The case at issue in Scandecor related to a bare exclusive licence, but the court extended this to the case of a non-exclusive licence. Even though the function of NGRS’s trade marks was not capable of distinguishing goods or services from one licensee to another, such use following the case of Scandecor (handed down after PAN 2/01) was held permissible and thus neither deceptive of the public nor contrary to public policy.

In conclusion, Milner’s alleged storage and retention of NGRS’s trade mark for advertising was held not to constitute infringement, since his actions were sufficient to display an intention to the contrary. Clearly, an ex-licensee in a similar position to Milner (i.e. lacking control over the previously-licensed trade mark) should ensure any evidence showing an intention to remove the trade mark is safely stored, should the trade mark owner sue. As for Milner’s counterclaim for the removal of NGRS’s trade marks from the register for bad faith, the court was correct to take a modern approach. The legislature may previously have been concerned over protecting the public so that it is not misled by inappropriate collective marks but, in reality, the public is a far more sophisticated consumer with the knowledge and awareness that trade marks are not exclusively used by the trade mark owner.