Can you reduce trade mark infringement risks by using your brand as the company name?

Written on 28 Apr 2015

The Court of Appeal judgment in Assos v Asos has highlighted that legal entities, such as companies, can rely on the ‘own name defence’ to trade mark infringement. The Court of Appeal found that the online clothing retailer Asos’s use of the mark ASOS would have infringed a Community trade mark registration for the cycling clothing brand ASSOS but for their ability to successfully rely on the ‘own name defence’.

In contrast to natural persons (otherwise known as human beings), companies are usually set up to engage in trade and their names chosen with this in mind. As a consequence, the ability of companies to rely on the ‘own name defence’ when the use of that name would otherwise amount to trade mark infringement can be controversial. The Court of Appeal’s decision in Assos v Asos certainly does not mean that a company can exclude the possibility of trade mark infringement claims by simply adopting its brand as its name. However, it does highlight that, in some circumstances, a company trading under a particular brand can be better placed to defend itself against third party trade mark such claims if it also uses that brand as the name of the company. Such a strategy can form a small but important role in reducing the risk that the use of the brand can be successfully challenged in the future.

Article 12(a) of the Community Trade Mark Regulation provides that:

“A Community trade mark shall not entitle the proprietor to prohibit a third party from using in the course of trade:
his own name or address;

[……]

provided he uses them in accordance with honest practices in industrial or commercial matters.

Article 6 of the Trade Mark Directive provides an identical defence for the infringement of national marks.

The Court of Justice confirmed in C-245/02 Anheuser-Busch that the ‘own name defence’ is available to legal entities, such as companies, as well as natural persons. However, the requirement for the use of a third party’s own name to be “in accordance with honest practices in industrial or commercial matters” is a significant hurdle for a company to overcome. The Court of Justice has repeatedly made it clear that this condition requires the third party to act fairly in relation to the legitimate interests of a trade mark proprietor. It is generally accepted that this means that a third party cannot rely upon the defence just because it was not aware of the trade mark proprietor, or their mark, when it adopted its name.

In a split decision, the Court of Appeal found that Asos had acted in accordance with honest practices in industrial or commercial matters and was therefore able to rely on its own name defence. The facts of the case are undoubtedly unusual. The ASSOS brand of cycling wear had been around since the 1970s but Asos first started using ASOS as the name of its clothing retail website a few years before Assos filed a CTM for ASSOS that covered clothing in general (prior to that, Assos’s trade mark protection in the UK was limited to specialist cycling clothing, although it had made some sales of casual clothing). However, although the ASOS mark had been used as the name of its clothing retail website prior to Assos’s CTM, Asos did not start to use it to identify Asos’s own branded clothes until later.

Kitchen LJ, who gave the leading majority judgment of the Court of Appeal, set out a number of factors that were material to the conclusion that Asos’s use of its own name was in accordance with honest practices. These included:

a) that the two names had been adopted independently and there had been no intention by Asos to confuse or trade off Assos’s goodwill; and

b) that there has not in fact been any confusion between the goods or businesses of the parties. Nor had there been any detriment to the ASSOS brand or advantage to the ASOS brand through the use of similar names. The finding of infringement of the CTM has been on the basis of notional use of ASSOS across the range of goods that were covered.

As mentioned above, the Court of Appeal was split on the issue and Sales LJ did not accept that the ‘own name defence’ should apply. His view was that allowing Asos to rely on the defence meant that the property rights of Assos were undermined and there was a risk that the relevant public could be misled. As Sales LJ put it: [f]undamentally, what leads me to a different conclusion on the own name defence issue from Kitchin LJ and Underhill LJ is my view regarding the weight to be given to the interests of the CTM proprietor and the relevant public in the application of the “honest practices” standard.