"Hidden Use" Claim Dissected in Vet.local

In textbook infringement cases, the mark at issue is normally displayed on goods or labelling. However, in this technological age, content-bearing media such as CD-ROMs, software and DVDs contain words and images not visible on the packaging, and sometimes not even easily accessible to users. Is such “hidden use” capable of infringing?

This question was at the heart of the recent High Court decision in RxWorks Ltd. v Dr Paul Hunter (trading as Connect Computers) [2007] EWHC 3061. The answer, the deputy judge found, depends on a range of factors including the perception of the average consumer and the impact of the use on the registered mark. The judgment contains valuable leads on how infringement should be assessed not just in “buried use” cases, but in all cases in the wake of the ECJ’s decision in Céline SARL v Céline SA (Case C-17/06; see this issue, “On Business Names, ECJ Says ‘Shop Around’”).

Vet.local

The claimant, RxWorks, supplied specialist computer systems for the administration of veterinary practices. Since 2002, it supplied a system that used the term “vet.local” as a directory folder name, a file folder name, a local domain internal to the system and as a Primary Dns Suffix.

The “vet.local” domain followed the standard Microsoft systems domain naming convention involving “.local” domains preceded by other words chosen by the business user. The “vet.local” term was “buried in the workings of the system,” only likely to be seen by chance in very minor capacities on-screen when the system was used by vets and, in some cases, only ever likely to be encountered by specialist systems administrators.

The defendant, Dr Hunter, was the owner of U.K. trade mark registration no. 2397695 for VET.LOCAL in Classes 9, 16, 41 and 42 for inter alia computer software, hardware and firmware.

In February 2007, Hunter wrote to a veterinary practice that had purchased a system from RxWorks, threatening to sue it for trade mark infringement in respect of use of the term “vet.local” on the system. In April 2007, RxWorks sued Hunter for making unjustified threats of trade mark infringement proceedings. Hunter counterclaimed for infringement.

The Four-Part Test in Céline

In the summary judgment disposing of the case, the deputy judge recited the four-part test formulated by the ECJ in Céline for determining whether use of the identical sign “vet.local” on the RxWorks system infringed:

1. Was the use in the course of trade?

2. Was the use without the consent of the trade mark owner?

3. Was it use in relation to the goods for which the earlier mark was registered?

4. Was the use capable of affecting the essential function of the trade mark, namely its ability to denote the origin of the brand owner’s goods?

Part 1: Use in the Course of Trade

The deputy judge succinctly dismissed the claim that vets who bought the RxWorks system were using the VET.LOCAL sign. Any infringement claim against them, therefore, must fail.

As the architect and vendor of the system, however, RxWorks was undoubtedly using the sign, and the first question was therefore whether its hidden and minor use amounted to use in the course of trade.

The deputy judge held that it was. In his view, the question was not whether the sign was visible at the point of purchase, which was not an essential element for infringement given the vast scope for books and other content-bearing media to contain signs only visible to an end-user after purchase. Rather, the question was whether the use was private or commercial. In this case, the use was clearly commercial, and was therefore use in the course of trade.

The mere fact that some of the use involved “embedding” the sign into the goods such that it would not normally become visible at all did not avoid a finding that such use, too, was use in the course of trade. However, the deputy judge noted that such use might not be capable of affecting the essential function of the trade mark.

Part 2: Use Without Consent

There was no argument or analysis on this point; it was agreed between the parties that the use was without Hunter’s consent.

Part 3: Use in Relation to the Registered Goods or Services

In this respect, the deputy judge noted as a preliminary point that the four-part test in Céline was applicable not only to identical marks for identical goods or services, but also (with appropriate modifications to step 3) to cases of similarity of marks or goods or services, which required in addition a likelihood of confusion.

The deputy judge ruled that “use in relation to goods or services” includes use on, or embedded within, the goods. He rejected the argument that whether use was in relation to goods or services depended on how the average consumer would understand the mark to be used. In his view, the language of the Harmonisation Directive, from which the relevant provision was drawn, did not argue for any special gloss on the words “in relation to.” Whilst the perception of the average consumer might be relevant to whether the use was capable of affecting any of the functions of the trade mark, it was not relevant to the simpler question of whether the use was in relation to goods or services.

In this case, the use was of the sign embedded within the computer system, and was therefore use in relation to Hunter’s registered goods.

Part 4: Use Capable of Affecting the Functions of the Trade mark

The deputy judge reserved his most detailed analysis for this point. He affirmed that a trade mark monopoly did not entitle the owner to an absolute monopoly over all possible uses of the mark. Rather, he was entitled to protection only against those uses that affected, or were liable to affect, its origindenoting message.

In assessing whether use would have this effect, the perspective of the average consumer was key.

Having already found that RxWorks were using an identical sign to Hunter’s registered mark in the course of trade in identical and similar goods, without consent, the only question that remained was whether the use was, in the eyes of the average consumer, capable of affecting the ability of Hunter’s mark to denote trade origin.

In this case, the average consumers were not just veterinarians, but also specialist systems administrators called upon by vets to install and maintain the RxWorks computer system. With such users, the deputy judge cautioned, expectations must not be set too low: many such users were likely to know about the Microsoft “.local” domain naming convention and to understand the technical significance of “vet.local” in the ways in which it appeared on-screen.

RxWorks claimed that it had adopted the “.local” domain in line with the Microsoft convention, and had chosen “vet” as a relevant descriptive term for the ultimate users.

The deputy judge accepted this and considered it unlikely that the average user encountering “vet.local” on the RxWorks system would think that the sign was anything more than a technical setting. Hunter adduced no evidence that users would perceive the mark differently, and the deputy judge found that the use was not, therefore, capable of affecting the origin-indicating function of Hunter’s trade mark.

Summary judgment for unjustified threats was granted, and Hunter’s counterclaim for infringement failed.

Comment

This was the first English High Court decision to analyse the impact of Céline in detail, and its firm lead on the principles to be applied is extremely helpful. Useful, too, is the deputy judge’s observation that similar principles apply also to infringement involving elements of similarity rather than pure identity of marks, goods and services.

This seems right, and the structured approach advocated by the deputy judge may help to avoid errors as a result of eliding separate and distinct elements of the infringement test.

Not even the structured Céline approach, however, can avoid some of the difficult issues posed by hidden use which, as noted by the deputy judge, may often be inappropriate to resolve on an application for summary judgment.

In this case, the issues were sufficiently straightforward and the likelihood of further relevant evidence at trial so remote that it was appropriate to dispense summary relief. Influential, no doubt, was the fact that although the RxWorks system had been on the market for 5 years, Hunter was unable to point to a single instance of confusion, or to any statements from vets that they had perceived “vet.local” as denoting origin. In other cases, however, the issues may be more complex, and, given the widespread potential for embedded use in software and other electronic media, are unlikely to go away. The deputy judge’s affirmation that embedded use can amount to use in the course of trade is therefore of critical importance. The mere fact that a sign is not visible at the point of purchase will not in itself avoid a finding of infringement, provided it is capable of undermining a registered mark’s ability to denote origin.

This last point is key: whether embedded use can affect the functions of a registered mark depends very much on the nature of that use. A mark that appears on the screen when a piece of software is installed may have a very different impact on the average consumer than one that never becomes visible at all except in code accessible only by engineers repairing or modifying the system.

The issue is highly fact-dependent and the answer will vary from case to case. The prevalence of electronic media, however, is likely to ensure that this issue is examined again soon.