Facts

Monster Energy Company, which makes energy drinks, applied to register RED DAWG as a UK trade mark in class 32 for “Non-alcoholic beverages”.

The well-known energy drinks manufacturer, Red Bull GmbH, which owns an earlier UK trade mark for RED BULL, opposed registration of Monster’s sign on the basis of ss 5(2)(b) and s 5(3) of the Trade Marks Act 1994.

The IPO Hearing Officer, James Hopkins, rejected Red Bull’s opposition based on s 5(2)(b), but upheld the opposition under s 5(3), finding that a significant part of the relevant public would make a link between RED BULL and RED DAWG and that, although consumers would not be prone to the effects of direct or indirect confusion, they would be reminded of the RED BULL mark when confronted with the RED DAWG mark and would find Monster’s sign instantly familiar. This would make it easier for Monster to establish its mark and sell its energy drinks without incurring the usual marketing costs required, thereby allowing Monster’s mark to free ride on the reputation of RED BULL and gain an unfair commercial advantage.

Monster appealed Mr Hopkins’ decision, arguing that his analysis was flawed as he had conflated the “link” requirement of s 5(3) with the “unfair advantage” requirement. This was illegitimate, Monster said, because analysing whether there has been free riding is a separate legal step to that of deciding whether there is a “link”, requiring analysis of the evidence in relation to that step, which Mr Hopkins had not done. Specifically, Monster said, Mr Hopkins had not explained why any “advantage” there might be to Monster was “unfair” by undertaking an evidential analysis.

Decision

Mr Justice Adam Johnson found that, as set out in Jack Wills Ltd v House of Fraser (Stores) Ltd [2014] EWHC 110 (Ch), it is possible for an advantage to be characterised as unfair, irrespective of whether the owner of the later mark had the subjective intention of taking advantage of the earlier one. In an appropriate case, unfairness can be shown from use of a sign that has the objective effect of creating an unfair advantage even if it is not proven that, subjectively, that is what the owner of the later mark wanted to achieve. Mr Hopkins had therefore been entitled to conclude that unfair advantage had been made out despite the lack of any subjective intention on Monster’s part to take advantage of Red Bull’s earlier mark. Further, Johnson J said, there is no requirement that a form of “diffuse” intention, i.e. the user of the later mark having an eye on the earlier mark, must be proved by evidence. There was nothing in Jack Wills to suggest that that is a necessary element of the test of unfairness.

Further, in Jack Wills, Arnold J (as he was then) had said that he could legitimately infer from the primary facts, including the nature of the market, the nature of the signs and the circumstances of the case, that “the effect of the later mark would have been to cause a subtle but insidious transfer of image from the [earlier mark] to the [later mark] … in the minds of some consumers, whether that was [the intention of the owner of the later mark] or not”. In other words, Johnson J said, a legitimate analysis of unfairness could be made that was not dependent on any subjective intention vis-à-vis the earlier mark. The only form of intention required was a general one, i.e. intending to influence the economic behaviour of consumers by adopting a certain logo with an intention to help sell the goods. Choosing such a logo, even without any subjective intention to take advantage, was unfair, not because any subjective intention had been acted on, but because, it was simply, in fact, taking advantage, as the similarity would enable sales more easily without spending money on marketing. This amounted to free riding.

Therefore, Johnson J said, there was nothing wrong with the approach taken by Mr Hopkins. He had simply recognised an established form of unfairness.

Johnson J also found that Mr Hopkins had not impermissibly elided the “link” issue with the separate question of “unfair advantage”. He had considered both questions and properly addressed himself to the second by reference to a form of unfairness that the law plainly recognised. Given that there was clearly unfairness due to the boost to Monster’s business that it was likely to obtain from the similarity of the signs and the impact that would have on consumer behaviour, Mr Hopkins had concluded that it was objectively unfair and there was no justification for it.

Johnson J also found that Mr Hopkins’ earlier decision that there was no likelihood of confusion between the signs did not preclude him from making the findings he had made because the question under s 5(3) was an entirely different one, i.e. whether consumer behaviour was likely to be influenced in a way that produced an objectively unfair result.

Further, Johnson J said, as stated in Jack Wills, it is not necessary for the claimant to adduce positive evidence that consumers had, in fact, changed their behaviour. It is enough to show a risk, provided it is a real or serious one. Jack Wills confirmed that the court can draw inferences based on the inherent probabilities by considering normal practice in the relevant sector and the circumstances of the case. Mr Hopkins’ conclusions were not mere suppositions but legitimate inferences reflecting the inherent probabilities, arrived at in light of the findings taken as a whole and informed by Mr Hopkins’ experience as a Hearing Officer of commercial practice in the exploitation of trade marks.

Johnson J concluded that it was entirely legitimate for Mr Hopkins: (i) to proceed on the basis that in adopting the RED DAWG mark, Monster was intending to seek to influence the economic behaviour of consumers of their products, as that was the most obvious reason for doing so; and (ii) to infer that the similarity between RED BULL and RED DAWG, although not apt to cause confusion, would nonetheless make it easier for Monster to sell its products without incurring the marketing costs that would otherwise have been required. Both were entirely legitimate and common-sense propositions. The appeal was dismissed. (Monster Energy Company v Red Bull GmbH [2022] EWHC 2155 (Ch) (12 August 2022) — to read the judgment in full, click here).