Beer and Trade Marks: Samuel Smith v Lee

"This is a case about Yorkshire pride, in more ways than one" said Mr. Justice Arnold in the first sentence of his judgment Samuel Smith Old Brewery (Tadcaster) v Lee (t/a Cropton Brewery) [2011] EWHC 1879 (Ch) (22 July 2011). He continued:

"The protagonists, Samuel Smith and Cropton Brewery, are two proud, small, independent Yorkshire breweries. There is no dispute about the quality of their respective beers. The casus belli is Samuel Smith's claim that Cropton Brewery has infringed Samuel Smith's registered trade mark for a stylised white rose device, and committed the tort of passing off, by use of labels incorporating two similar stylised white rose devices. For the uninitiated, a white rose is the traditional symbol of the county of Yorkshire, having been the emblem of the House of York during the Wars of the Roses. The dispute is one which ought to have been capable of settlement out of court a long time ago. Instead it has grown into a case which is out of all proportion to what is at stake in commercial terms. One explanation for this is Yorkshire pride; but I fear that the English legal system bears a measure of responsibility as well."

The causes of action were trade mark infringement and passing off. There was also a counterclaim for groundless threats under s.21 of the Trade Marks Act 1994.

The Trade Marks

The claimant company had registered two trade marks but the one around which this case revolved was 1,006,571 for beer in class 32. Its other mark was 2,005,780 in respect of "draught and bottled beer, all brewed in Yorkshire" in Class 32. Although that mark had been pleaded the judge made no further reference to it in his judgment.

The Alleged Infringements

Mr. Lee, the proprietor of Cropton Brewery had produced two labels to which Samuel Smith objected. One was for "Yorkshire Bitter" distributed by Marks and Spencer shown to the left.

The other was "Yorkshire Warrior" which was marketed partially to raise money for the benefit of troops serving in the Yorkshire Regiment shown below.

The Arguments

The claimant complained that the "Yorkshire Bitter" and "Yorkshire Warrior" labels infringed its trade marks under art 5 (1) (b) of the Trade Marks Directive (that is to say s. 10 (2) of the Act) and also art 5 (2) or s.10 (3) and that such use also amounted to passing off. The defendant argued that the white rose elements of the signs complained of are "indications concerning the … geographical origin" of the goods, namely Yorkshire. The threats were alleged to have been contained in letters to Marks & Spencer from the claimant's trade mark agents and solicitors on 10 Dec 2007 and 7 July 2010 respectively.

Decision

Mr. Justice Arnold held that:

(1) The "Yorkshire Bitter" label did not infringe Samuel Smith's registered trade mark;

(2) The "Yorkshire Warrior" one did, but

(3) Mr. Lee had a defence under art 6 (1) (b) of the Directive or s.11 (2) of the Act in respect of its use before the end of October 2009 but not afterwards;

(4) the use of the "Yorkshire Warrior" amounted to passing off though the use of the "Yorkshire Bitter" one did not; and

(5) the counterclaim failed because the defendant had not been a person aggrieved in respect of the first letter and the second letter did not amount to a threat.

How the Judge reached his conclusions

Throughout his judgment, his lordship referred not to the Act but to the EU legislation that is implemented by the Act. He probably did that as he directed himself in the principles derived from the well known decisions of the Court of Justice of the European Union on all the points that were before him. These are so well known that it would be otiose to repeat them but if anybody wants to look them up those on the art 5 (1) (b) or s.10 (2) point start at paragraph [76], those on art 5 (2) or s.10 (3) at paragraph [107] and those of the art 6 (1) (b) or s.11 (2) defence at paragraph [111].

As to why "Yorkshire Bitter" did not infringe, he said this at paragraph [105]:

"So far as Yorkshire Bitter is concerned, the identity of the goods and the distinctive character of the Trade Mark favour a likelihood of confusion, but the differences between the white rose device and the Trade Mark, the remainder of the sign and the identification of Cropton Brewery as the producer on the front of the label all militate against it. Samuel Smith has not adduced any evidence of weight to demonstrate a likelihood of confusion. Samuel Smith's dilatoriness in pursuing Marks & Spencer and Cropton Brewery over the matter suggests that it did not consider that there was a real likelihood of confusion. I infer that Yorkshire Bitter was only included in the case because Samuel Smith thought it would look odd to pursue Yorkshire Warrior without pursuing Yorkshire Bitter. Be that as it may, the evidence of experience strongly suggests that there is no likelihood of confusion. Overall, I am not persuaded that Samuel Smith has established that there is a likelihood of confusion."

As to why "Yorkshire Warrior" did, he said at [106]:

"Turning to Yorkshire Warrior, the identity of the goods and the distinctive character of the Trade Mark again favour a likelihood of confusion. In this case the white rose device is more similar to the Trade Mark, and it is more a dominant element of the sign, than in the case of Yorkshire Bitter. Importantly, Cropton Brewery is not identified as the producer on the front of the label. Furthermore, I think many consumers would miss the small print identifying it on the rear of the label. The evidence of the three independent witnesses considered above is some evidence of a likelihood of confusion, although not strong evidence. As I have explained, there is also the evidence of how Yorkshire Warrior has been sold in at least one retail outlet. Although there is no evidence of actual confusion in practice, for the reasons given above it is more difficult to place confidence in this as showing there is no likelihood of confusion than in the case of Yorkshire Bitter. In my view the majority of consumers will not be confused. Overall, however, I am persuaded that there is a likelihood that some consumers will be confused into believing either that Yorkshire Warrior is a Samuel Smith product or that it has some other connection with Samuel Smith."

The art 6 (1) (b) defence requires "use is in accordance with honest practices in industrial or commercial matters." The Yorkshire Warrior label is based on the cap badge of the Yorkshire Regiment which the defendant honesty and reasonably thought he had been licensed to use but on 22 Oct 2009 the colonel of the regiment asked him to stop.

As to passing off, the absence of evidence of confusion scuppered any cause of action in respect of the "Yorkshire Bitter" label but the reasoning set out in paragraph [106] above sufficed in respect of "Yorkshire Warrior".

The reason why the defendant was not a person aggrieved in respect of the first letter is that Marks & Spencer do not seem to have taken much notice of it. They continued to buy "Yorkshire Bitter" for over two years after receiving the letter and did not even pass on the letter to the defendant at first. The second letter went out of its way to assure Marks & Spencer that it did not wish to drag them into the proceedings.

Mediation

The judge's postscript was that in future mediation should be explored for disputes of this kind as soon as practicable. The IPO offers an excellent mediation service as does WIPO and indeed do NIPC. The IPO has listed a whole lot of other mediation providers of whom I am one. Anyone who wants to learn more about mediation and other types of ADR should call me on 0800 862 0055 or contact me through this form.

Mentoring in Yorkshire

On 4 July 2011 the Business Finance Taskforce launched mentorsme.co.uk, an on-line gateway for mentoring services for small and medium enterprises ("SME"). I discussed it in "Oh me. Oh My, I hope the Little Mentor comes by."

One of the menu choices on the home page is "Find the Right Mentor". If you click on that link you find an interactive map of the United Kingdom. I clicked on the map of Yorkshire and the Humber and I found Success Doncaster and Business & Education South Yorkshire.

The website also listed the following national organizations that operate in our county:

• Business in the Community;
• ibd Group;
• Prime Business Club;
• Exigent Mentoring Services;
• The Prince's Trust;
• Institute of Enterprise and Entrepreneurs; and
• horesmouth.co.uk.

The last two organizations are on-line only.

Business & Education South Yorkshire describes itself as "the leading strategic body established to develop education and business links activities in South Yorkshire." It provides companies with a one-stop-shop service for developing links with education.

Success Doncaster is an initiative of Doncaster MBC whose activities can best be discerned from its brochure.

Early days I suppose.

TEDx Bradford - This is Where We Live

Whenever Imran Ali organizes something it is usually very good. He has brought us Open Coffee, Girl Geek Dinners and more good stuff. His latest initiative is TEDx Bradford.

TED stands for Technology, Entertainment and Design. It started from a conference in 1984 and has now become an international institution.

There are annual conferences in the USA and UK to which leaders in any field with something to say are invited to speak. Last Wednesday afternoon for example, we heard from cyber security expert Mikko Hypponen, lie detector Pamela Meyer, anti-torture campaigner, Helen Tse and some really lovely settings of Burn's verse by Eddi Reader. Each of those presentations is videotaped and can be viewed on the TED website. It is also possible to subscribe to the TED website free of charge and I have done just that.

TEDx is an extension of the TED formula. It enables local movers and shakers around the world such as Imran to organize their own events in the TED format. The event that Imran organized took place in the Cubby Broccoli cinema of the National Media Museum in Bradford. Its title was "This is Where We Live". The event stretched over the whole day. In the morning and afternoon we were connected by video link to TED Global Edinburgh.

From 17:00 we had our own programme with live speakers in the auditorium. They were all good but I particularly liked Mohammed Ali who has melded Western street art with Islamic calligraphy. His presentation went much further than that however. He showed photos from Australia, Germany and other countries of buildings that showed the influence of Islamic architecture long before those countries had significant Muslim communities. But what pulled me up with a jerk was something his father said. "Son, one day people like us may be forced out of the country". One of my other friends had also said something like this. I find it very sad that people who are my friends and neighbours have this threat at the back of their minds. I don't think it will ever happen but a slide of the English Defence League has made me start to worry.

But there were happier topics. Tom Wooley talked about the internet museum that he is planning for the Media museum. Emily Kecic spoke with passion about her pride in Bradford and at her disappointment at Bradfordians who claim to come from Leeds. The one talk I really wish I could have heard was historian and anthropologist Irna Qureshi's as I have also travelled a few kilometres along the Grand Trunk Road. Alas, I had tickets for Hull Truck's production of the "Lady in the Van" at the Alhambra, another great Bradford institution.

It probably takes an outsider to say this but Bradford is a great city. In my humble opinion it's as least as good as Leeds. Though my maternal family comes from Leeds I think I like Bradford even better.

Links

16 July 2011 Jane Wakefield TEDGlobal: Worshipping at the Church of TED BBC website

Angel Networks in Yorkshire

An "angel" is a wealthy individual who invests in start-ups and early stage businesses. The term probably comes from the stage. It is an actors' reference to those who support new productions and, thus, thespian livelihoods, as in: "Oh, you are such an angel, darling." According to the Annual Report on the Business Angel Market in the United Kingdom: 2009/10 published in May 2011 there were about 4,544 members of angel networks in the UK in 2010. They fill a gap between friends, fools and family who tend to provide seed funding and private equity and venture capital investors.

Why People become Business Angels

Unlike theatrical angels who were attracted as much as anything by the smell of greasepaint and the thrill of attending a first night without any expectation of every seeing their money again, business angels expect a healthy return. According to Professor Robert Wiltbank who wrote "Siding with the Angels" , a research report published by NESTA (National Endowment for Science, Technology and the Arts) and the British Business Angel Association ("BBAA") in May 2009, British business angels are attracted by such tax schemes as the Enterprise Investment Scheme ("EIS") and the enterprise management incentives ("EMI"). Others relish the challenge of a second or subsequent career in a new business having made their pile in a previous one. Yet others who attribute their success to a mentor or investor in their own businesses say they wish to give others a start or put something back into society. Yet others have seen their fellows do well out of investing in a new company and decide that they could do likewise.

Angel Networks

In recent years some but by no means all angels have begun to flock into networks that prepare and present new investment opportunities to their members. Those networks do not usually make investments of their own or even advise angels on individual investments. The decision whether or not to invest is left to each individual investor. The networks screen and filter the proposals, offer some education and training in investment to their investing members and probably, most importantly, put investors in touch with each other so that they can compare experience. Some of those angel networks are national such as Advantage Business Angels and Beer and Partners. Others are local such as YABA (the Yorkshire Association of Business Angels) in Yorkshire and the Humber. Our chambers through the NIPC Inventors Club is compiling a list of business angels broken down by region and function.

Approaching Business Angels

There are several ways of approaching business angels but the way that I would recommend is through at least one of the networks. It is in your interest as well as the networks and their members to read everything that appears on the website before picking up the phone or filling out the contact form. Most carry information that is very useful to entrepreneurs. I would commend in particular YABA's business plan template. Another way is to seek an introduction through an intermediary. I have been known to do that though I usually refer clients to an accountant, solicitor or other professional first. yet another way is through a network that enjoys good links with angels such as Connect Yorkshire, Bmedia, the Leeds or Sheffield inventors clubs or Gumption Networking. Angel News circulates proposals to subscribers and I have even seen a postcard bulletin board at the Said Business School during the Oxford Venturefest.

What happens next

If a network is prepared to present your scheme to its members the next stage they may offer help in refining your business plan and preparing your pitch. If they think you need professional help they may introduce you to one of their associated law firms, patent agencies, product development consultants or accountancy practices. And then they will invite you to pitch. To give you some idea, one that I attended a few years ago took place at a university staff club. After a good buffet lunch we were offered four short presentations on propositions ranging from a new age magazine to opera in the workplace after which investors were invited to talk to the entrepreneurs individually in an exhibition area.

Further Information

If you want to know more about angel investment you could do worse that read my article "On the Side of the Angels" and "Where are you going to get funding?" and the introduction to funding and angels on our Inventors Club website. So far have only got details of two angel networks for Yorkshire and the Humber (namely YABA and South Yorkshire Business Angels) but several national networks such as Angels Den and Beer & Partners have local representatives in our county.

We are also getting to know angels both within and outside the angel networks so you can also call us on 0113 320 3232 or through our contact form. We advise, assist and represent both angels and investors on issues relating to legal and technology issues and we have a network of colleagues with world class expertise from the Bar and other professions who can assist with all company formation, investment, patent, design and trade mark registration, product design and development and taxation including EIS, EMI and the patent box concessions.

Design Right: Albert Packaging Ltd. and Others v Nampak Cartons & Healthcare Ltd.

I've mentioned Judge Birss QC's judgment in Albert Packaging Ltd and Others v Nampak Cartons & Healthcare Ltd [2011] EWPCC 15 (2 June 2011) in IP Yorkshire because the defendant company is based in Leeds and was represented by a local law firm. This is an important case because it illustrates the limits of design right as a means of protecting investment in technology.

Why this case is important

In the last sentence of his judgement the learned judge held that the claimants had unregistered design right in the shape of their product in their assembled form and that it was "more likely than not" that that product was at least one of the sources of ideas for the defendant's products yet he found for the defendant. How could that be since s.226 (1) (a) of the Copyright Designs and Patents Act 1988 confers the exclusive right to make articles to a design on the owner of the design right? The judge's explanation was as follows:

"Design right is a right to restrain reproduction of the design by making articles to the design. That means copying the design so as to produce articles exactly or substantially to that design. When it comes to comparing the article alleged to infringe with the claimants' design in a case like this one, in which it can be seen that the article was in fact derived from multiple identifiable sources, it must be necessary to identify how much of the design of the article in question can be said to derive from the claimants' design."

He concluded that what the defendant's product owed to the claimant were the dimensions of the article which was not a substantial part of that design. To have found infringement given that all that had been derived were dimensions would have given design right to something that was no more than a method or principle of construction.

Method or Principle of Construction

I have italicized the words method or principle of construction because s.213 (3) (a) of the Act excludes those attributes from design right protection. There had been a corresponding provision in s.1 (1) (a) of the Registered Designs Act 1949 before the Registered Designs Regulations 2001 but there were not many cases on the point as it was rarely argued. The case most frequently cited was Moody v Tree (1892) 9 RPC 333 where Mr. Justice Vaughan Williams held that the pattern of a basket consisting of the osiers being worked in singly and the butt ends being outside could not be registered as a design. This case will be remembered for Judge Birss QC's explanation of the above italicized words in the context of unregistered design right.

Idea/Expression Dichotomy in Design Right

At paragraph [18] of his judgment, His Honour referred to the claimant's submission that

"although designs that serve purely functional purposes are not denied protection, it is important when identifying the aspect that is relied upon to have in mind that design right does not protect ideas per se (in the way a patent might) even though these ideas might have been important in arriving at the design in question."

He accepted that submission adding

"Design right only protects aspects of the actual physical manifestation of an idea."

Relying on Mr. Justice Mann's dicta in Rolawn Ltd and Another v Turfmech Machinery Ltd [2008] EWHC 989 (Pat) (7 May 2008) that "what is protected from copying in design right cases is the design, meaning the physical manifestation" and "not some underlying abstraction" and Lord Justice Neuberger's in Landor & Hawa International Ltd v Azure Designs Ltd [2006] EWCA Civ 1285 (28 July 2006) the judge propounded the following test:

"If it is possible to get several different appearances, which all embody the general features which he claims, then those features are too general and amount to a method or principle [of construction]. In other words, any conception which is so general as to allow several different appearances as being made within it, is too broad and will be invalid."

Comparative lawyers will immediately see the similarities between this and the somewhat cumbersome abstraction/expression filtration test in US copyright law best exemplified by Computer Associates International Inc. v Altai Inc. 982 F2d 693 (1992).

Is Design Right worth Having?

At paragraph [20] Judge Birss said

"This exclusion, and the 'interface exclusion', in s213 play an important part in the scheme of the 1988 Act by ensuring that design right provides a suitable amount of protection without unfairly restricting fair competition."

He is of course right but was that the intention of Parliament? In the white paper Intellectual Property and Innovation (Cm 9712) the government of the day considered whether a copyright based approach or utility models would best protect small businesses' investment in technology and design and opted for the former. Significantly, its example was followed by none of the other common law countries that had previously protected industrial designs by artistic copyright. Australia has opted for "innovation patents" and the Republic of Ireland for short term patents. With these and the other exclusions of s.213 (3), the availability of licences of right to anyone in the world including infringers under s.237, the qualification requirements that exclude designers in most industrial countries from protection under the Act not to mention the possibility of a threats action which did not exist under the 1956 Act, there does not seem to be a lot of point to design right. Hargreaves called for a fresh look at design right law (see "Does Hargreaves Say Anything New" IP/IT Update blog 24 June 2010) and on this if on nothing else his review is dead right.