Who: Caspian Pizza Limited v Shah
Where: Intellectual Property Enterprise Court
When: 9 December 2015
Law stated as at: 5 January 2016
What happened:
The Claimant, Caspian Pizza Limited held trade mark rights in the word mark for CASPIAN for restaurants and related services and the logo for specified foodstuffs including those suitable for making pizzas.
The Claimant started their pizza business in 1991 in Birmingham.
The Claimant claimed that Mr Shah, the Defendant, operated a Caspian Pizza restaurant in Worcester under an oral and informal franchise agreement around 2002-3.
The Claimant further claimed that around 2013, Mr Shah refused to pay royalties and declined to recognise the agreement at all. Accordingly the Claimant alleged trade mark infringement and passing off from 2013.
The Defendant claimed there was no agreement and that the Claimant’s goodwill never passed on to the Defendant. The Defendant also claimed that it had started trading before the alleged franchise agreement was suggested.
The Court considered the facts and rejected the Claimant’s assertion that there was a franchise agreement in place between the parties. It also held that the Defendant generated its own goodwill associated with CASPIAN.
The Claimant also asserted that their goodwill extended throughout the UK. The Defendant responded that Worcester was too far from Birmingham to compete with the Claimant’s restaurant. The judge held that the Claimant’s goodwill had never reached Worcester.
Defence to trade mark infringement
Under s 11(3) of the Trade Marks Act 1994 (the Act), a registered trade mark is not infringed by use in the course of trade in a particular locality of an earlier right which applies only in that locality. The judge held that the Defendant could rely on this defence to trade mark infringement.
Validity of the trade marks
The Defendant argued that the CASPIAN word mark should be revoked for non-use and that the registration was in bad faith. These arguments both failed.
The Defendant also argued that both the CASPIAN word mark and the logo were registered in contravention of section 5(4) of the Act. This states that a mark shall not be registered if its use in the UK is liable to be prevented by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade.
In relation to the validity of the word mark registration for CASPIAN, the judge held that the mark was invalidly registered in breach of section 5(4) of the Act because the Defendant owned goodwill in the business under the CASPIAN name from 2004 and the mark was only applied for by the Claimant in 2005. The logo was applied for even later, in 2010.
In relation to the validity of the mark for the logo, the judge held that due to the defendant not meeting the burden to prove that a third party, and not the claimant, owned the copyright in the logo, the revocation application failed.
Passing Off
As the Claimant had failed to establish that its goodwill extended as far as Worcester, there was no misrepresentation, therefore no passing off by the Defendant.
Why this matters:
This case highlights the importance of being aware of a businesses’ unregistered or registered trade mark rights and the risk of them relying on those rights in order to prevent a subsequent entity from registering an identical or similar trade mark for similar or identical goods and services. The locality defence in trade mark law is generally a fairly narrow defence to trade mark infringement, but it succeeded in this case.
