The Nomination Case: How Selling Individual Bracelet Links Can Amount to Trade Mark Infringement and Passing Off

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In its recent judgment in Nomination di Antonio e Paolo SNC and Nomination SRL v S and V Brealey (t/a JSC Jewellery) [2019] EWHC 599 (IPEC), the Intellectual Property and Enterprise Court (IPEC) held that the sale of the individual Nomination bracelet links together with links originating from another business under the Nomination trade mark constituted trade mark infringement and passing off.

Background

The Claimants are well-known Italian jewellers specialising in a specific type of popular composable charm bracelet. The First Claimant operates as a partnership and the Second Claimant is a marketing company (together “Nomination”). The Nomination bracelets, comprising links and charms are sold internationally, including in the UK.

Nomination owns several registered trade marks, including two registrations for the word “Nomination” (one in the EU and an international registration designating selected countries), and an international device trade mark registration in respect of a graphic representation of the word “Nomination” (the “Nomination Device Trade Mark”); (together the “Nomination Trade Marks”). The Second Claimant has an exclusive license in respect of the Nomination Trade Marks.

Nomination’s main product, a composable charm bracelet, consists of detachable rectangular base links which can be re-linked with decorated links, links with charms attached or other base links to create a new bracelet. Each of the base links bears the Nomination Device Trade Mark.

The Defendants are a husband and wife partnership trading as JSC Jewellery (“JSC”) since December 2002 and selling body and costume jewellery online.

In 2004, JSC started selling composable charm bracelets under their trading name and logo “Daisy Charm”, which has been registered as a trade mark in the UK. In 2011, JSC’s eBay listing was amended to say that JSC charms and links “fit Nomination” bracelets and that they were “Italian charms”. As a result of change of policy at eBay in 2013, both statements were removed.

JSC then started to buy the original Nomination base bracelets (i.e. bracelets consisting of links non-decorated with charms and bearing the Nomination Device Trade Mark) from retailers in Italy and Germany (and later on from UK retailers). JSC subsequently started to disassemble the Nomination base bracelets into individual base links and for a period exceeding five years (2013 – 2018), sold the single Nomination base links together with single JSC charms as a bundle on eBay. The products were packaged either in two separate blister packs, or the JSC link was supplied in a blister pack and the Nomination link in a small plastic bag with a label “Manufactured by Nomination Italy Repackaged by JSC Jewellery UK”.

Nomination claimed that JSC’s advertising and selling of the bundles of Nomination and JSC links on eBay infringed the Nomination Trade Marks and that such acts constituted passing off the bundles as being made, authorised by or otherwise associated with Nomination. As a result, Nomination brought proceedings against JSC in the UK.

The Decision

IPEC’s decision in the Nomination case considered, amongst other, the following elements:

  1. Was JSC’s use of the Nomination Registered Trade Marks in respect of genuine single Nomination links a trade mark infringement or had Nomination’s trade mark rights been exhausted as a result of the Nomination base bracelets having been put on the market in the European Economic Area (EEA) either by Nomination or with Nomination’s consent? And if the bracelets had been put on the market in the EEA with consent, were there reasons for Nomination to oppose further commercialisation of the individual base links?; and

  2. Did JSC use the Nomination Registered Trade Marks in respect of its own goods, and therefore infringe them?

Nomination argued that whilst it had put the Nomination base bracelets on the EEA market, it had not consented to the putting of the individual Nomination base links on the EEA market, and that consequently there was no exhaustion of trade mark rights in respect of the individual base links (pursuant to Article 12 of the Trade Marks Act 1994 (“TMA”) and Article 7 of Directive 2008/95/EC superseded by Article 15 of Directive (EU) 2015/2436 (“Trade Marks Directive”)1 .

It also asserted that JSC used the Nomination Registered Trade Marks in respect of their own links, therefore infringing Article 10(1) TMA.

The parties accepted that Nomination owned goodwill in their business and in the Nomination Registered Trade Marks and that the Defendants were jointly liable with JSC (which was a partnership) for the acts committed by it.

The Court held that Nomination did not impose any contractual terms or other express restrictions at the time on the retailers of the Nomination base bracelets that would prohibit them from selling the individual Nomination base links. Furthermore, there was no evidence of what view Nomination had at the relevant time regarding sales of the individual links, and it could not reasonably object to its bracelets being disassembled. The argument that there had not been exhaustion of trade mark rights in respect of sale of the individual base links, therefore failed.

However, the Court held that under Article 7(2) of the Trade Marks Directive, Nomination was entitled to object to sale of the individual links on the basis of the fact that they were supplied by JSC in a blister pack or in a plastic bag which did not convey the impression of quality. The basis for this was that the Nomination bracelets are supplied wrapped in yellow tissue paper, in an elegant black and white Nomination box containing a guarantee, which creates the impression that the goods supplied are of high quality. The concern was that JSC’s customers would never have seen such packaging, or the image of quality it conveyed to the Nomination bracelet, and so far as packaging was concerned, if they purchased a Nomination base link from JSC, they would only associate that product with a blister pack or a plastic bag.

Consequently, the Court decided that the use of low-quality packaging by JSC would likely cause damage to the reputation of the Nomination Registered Trade Marks and to Nomination as a business.

Furthermore, the Court considered a further argument relied upon by Nomination namely, the requirements set out in the Bristol Myers Squibb v Paranova A/S2  case, pursuant to which new packaging of repackaged goods must clearly state who manufactured and repackaged them. The Nomination base links supplied by JSC in a plastic bag included a label on a bag which stated that the goods had been manufactured by Nomination Italy and repackaged by JSC Jewellery UK. However, no such label was provided with the Nomination base links supplied in a blister pack. Interestingly, in respect of this point, the Court took the view that the repackaging requirements were of lesser importance in case of repackaged goods that are not of sensitive nature, unlike, for example, in the case of repackaged pharmaceuticals (as in the Bristol Myers Squibb case), in respect of which the transparency and traceability of the supply chain is particularly important.

So far as the question of whether JSC had used the Nomination marks in respect of its own products was concerned, the Court held that based on the evidence of actual customer confusion provided by Nomination, as well as JSC’s eBay advertisements, the message in respect of the source of origin of the bundle of links was blurred, and that it was likely that the customers were in fact confused and may have thought that both links were genuine Nomination links. Even though the eBay advertisements did refer to the links originating from Nomination and from JSC, the Court held that an average consumer would not be likely to review the entire advert in sufficient detail to recognise this.

It was decided that JSC used the Nomination Registered Trade Marks in respect of the bundle of links which constituted misrepresentation and led to significant confusion amongst the customers, which in turn caused damage to Nomination’s reputation. As a result, JSC was held liable for passing off and infringement of the Nomination Registered Trade Marks under s. 10(1) TMA.

Geldards Comment

From the trade mark owner’s point of view, the Nomination judgment is useful, as it confirms that it is possible to successfully protect your brand and business reputation by way of preventing another party from selling your high-quality goods in poor quality packaging. It is also possible to successfully claim against third party sellers who arguably attempt to unfairly rely on your business reputation and on your registered trade marks to drive sales of their own goods.

From the potential seller’s perspective, the decision in the Nomination case shows that supplying goods of various origin together may be a risky business choice, as it may lead to a lack of clarity and customer confusion which can result in the seller being exposed to a potential passing off and/or registered trade mark infringement claim against them.

Ultimately, the potential liability in passing off and/or registered trade mark infringement would be a question of fact and the answer may vary depending on the particular circumstances.

The Nomination case is also another addition to a long string of cases clarifying and arguably, limiting, the applicability of the Bristol Myers Squibb requirements in respect of repackaged goods. We recently wrote about another recent decision regarding these criteria (the Dansac3  case) and we will continue to monitor the developments and update you on this lively area of law.

1Although the trade marks in question are EU Trade Marks, the legal references in the case were made to the TMA and the Trade Marks Directive (rather than to the implementing UK Regulations). The references in this article follow the references in the judgment.

2Bristol-Myers Squibb v Paranova A/S, Joined Cases C-457, 429 and 436/93, EU:C:1996:282, [2003] Ch 7

3Dansac A/S v Salts Healthcare Ltd ([2019] EWHC 104 (Ch))

RELATED: COMMERCIAL DISPUTE RESOLUTION - EXPERTISEINTELLECTUAL PROPERTY LITIGATION - EXPERTISE

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