September 14, 2023
This case concerned what is perhaps the revered Le Mans winner Carroll Shelby’s most loved contribution to the automotive world, the “Cobra” sports car, for which the modified chassis was provided by the Surrey based firm AC Cars and the powerful V8 engine by the Ford Motor Company. In the US, the iconic cars were sold as “Shelby Cobra” by Shelby American Inc, whilst AC Cars sold them in the UK under the name “AC Cobra”.
The claimants in this case were Acedes Holdings Ltd (“Acedes”) and AC Cars (England) Ltd (“AC Cars”). In 1996, Acedes acquired some of AC Cars’ business assets, which included the intellectual property rights and goodwill relating to ‘AC Cobra’. Since 2016, AC Cars has made cars in the United Kingdom and sold them under the name “AC Cobra”.
The defendants were Clive Sutton Ltd (“CSL”) and its sole director and shareholder, Jeremy Sutton. Since 2021, the defendants have imported and sold replicas of the 1960s Shelby Cobra cars made by an American company, Superformance LLC (“Superformance”).
Acedes is the owner of a UK registered trade mark for ‘AC COBRA’ covering “Automobiles, cars and sports cars”, filed on 12 April 2007 (the “AC Cobra Mark”). In May 2022, the claimants issued proceedings against the defendants for trade mark infringement in respect of its sales in the UK of ‘Shelby Cobras’.
The defendants denied infringement and counterclaimed for a declaration that the AC Cobra Mark was invalidly registered and should be revoked for non-use. The defendants relied on two UK registered trade marks owned by Ford for ‘COBRA’ in class 12, which covered “Motor land vehicles”, and were filed in December 1996 and January 2021 respectively (together the “Ford Cobra Marks”).
In June 2023, the claimants discontinued their infringement claim, which meant that at the trial the Court was only concerned with the counter-claim, and thus only had to consider the following broad issues:
- Was the AC Cobra Mark invalidly registered in light of the earlier Ford Cobra Marks?
- If not, should the AC Cobra Mark be revoked for non-use?
Was the AC Cobra Mark valid?
Standing to bring an invalidation action
Only the owner or a licensee of an earlier trade mark can apply for a declaration of invalidity. Therefore, the question arose as to whether CSL was a licensee of the Ford Cobra Marks.
The relevant licence agreement referred to an “exclusive worldwide royalty-free licence to use Ford’s federally registered marks” (our emphasis). The word ‘federally’ suggested that the licence was only for Ford’s trade mark registrations in the USA, and not the UK registered Ford Cobra Marks. However, this interpretation was difficult to reconcile with the licence being ‘worldwide’. The ambiguity of the wording meant that there were compelling arguments from both sides as to the parties intentions. However, applying well-established English law principles of contractual interpretation, the Court opted for a narrow reading of the licence, holding that it was a licence of Ford’s US federal trade marks only, and not the Ford Cobra Marks as well.
Perhaps recognising the problems caused by the licence’s ambiguous wording, CSL had attempted to remedy the position by way of an amendment agreement with Ford in December 2022. However, as this was after the invalidation action had been commenced, the Court held that CSL lacked the necessary standing when it filed the invalidation action and this could not simply be ‘cured’ by acquiring standing at a later date. Accordingly, a fresh claim should have been commenced after the amendment agreement had been entered into.
The invalidation action therefore failed at the first hurdle.
Whilst CSL’s invalidity attack failed due to lack of standing, the Court nevertheless went on to assess the other elements of the counterclaim.
As both Ford Cobra Marks were over 5 years old when the defendants filed the invalidation application, they were subject to the requirement to demonstrate that they had been put to ‘genuine use’.
In undertaking this assessment, the Court noted that various factors were to be considered, including that in order to satisfy this requirement the use relied upon “must be more than merely token”, “must be by way of real commercial exploitation…to create or preserve an outlet for goods and services which preserve the mark”, and “need not always be quantitatively significant”. In this case, the Court held that the sale of 11 cars was sufficient to show genuine use of the Ford Cobra Marks, noting that where goods were costly, the profit from a few sales would be significant and would show that the mark had been used to create or maintain a share in the market.
Likelihood of confusion, harm to reputation and acquiescence
The Court then went on to consider whether there was a likelihood of confusion with the AC Cobra Mark and whether the use of the AC Cobra Mark was liable to take unfair advantage of or cause detriment to the reputation of the Ford Cobra Marks.
The Court noted that the respective marks were registered for identical goods (“motor land vehicles”). Accordingly, the real issue was whether or not AC COBRA was similar to COBRA. In that regard, CSL found itself in the unfortunate position of having put forward evidence in response to the (now abandoned) infringement claim that the name “Cobra” was a generic description of the type, shape and ethos of a car. The Court accepted this evidence and, as such, determined that the use of the AC Cobra Mark could not have affected the function of the Ford Cobra Marks as a guarantee of origin. Therefore, the Court held there could be no likelihood of confusion as to origin between the two marks in issue.
As for unfair advantage and detriment to the reputation of the Ford Cobra Marks, the Court highlighted a ‘curiosity’ of CSL’s case in that on the one hand it sought to argue that use of the AC Cobra Mark in the UK before the registration of the Ford Cobra Marks helped to establish the reputation of those later filed marks, whilst on the other it argued that use of the AC Cobra Mark after registration of the Ford Cobra Marks took unfair advantage of, or was detrimental to, the distinctive character of them. The Court did not accept this argument, declining to find that any harm to the reputation of the Ford Cobra Marks arose.
For good measure, the Court found that Ford had acquiesced to AC Cobra’s use of the AC Cobra Mark in any event. The Court identified two letters from the defendants’ solicitors to the claimants in 2017 and 2020 respectively, alleging infringement of the Ford Cobra Marks. The Court noted that whilst there was no express evidence that the claimants’ responses were passed back to Ford, given it had provided permission for them to be sent, it was likely it was told of the replies. The Court highlighted the fact that the 2020 letter showed that the 2017 letter did not stop the claimants’ use of the AC Cobra Mark and that Ford was, presumably, aware of that. Accordingly, the Court held that on the balance of probabilities Ford was aware of the claimants’ use of the AC Cobra Mark and had therefore acquiesced in relation to it.
Should the AC Cobra Mark be revoked for non-use?
The defendant’s argument for revocation of the AC Cobra Mark was advanced as a ‘squeeze’ and on the basis that the non-use attack against the AC Cobra Mark could only succeed if the Court found that the Ford Cobra Marks had not been put to genuine use. Having established that the Ford Cobra marks had been put to genuine use, the revocation action accordingly filed.
The facts underlying this dispute were undoubtedly unusual and complex. However, there are a number of useful practice points to take away from the Court’s decision.
The Court’s finding that a lack of standing at the time of bringing an action cannot be remedied at a later stage within the same proceedings provides a stark warning to potential litigants to ensure that a thorough ‘evidence of title’ review and necessary remedial steps are taken before any action is commenced. A failure to ensure that all the necessary rights are in place may well prove fatal to an action from the get-go, as this case highlights.
The decision also gives plenty of food for thought in respect of the potential pitfalls of defending an allegation of infringement, whilst at the same time running a counterclaim for invalidation and/or cancellation of the marks relied upon. In particular this case demonstrates the need to continually assess the extent to which the arguments and evidence put forward in support of one aspect of a dispute may impact another.
Finally, the decision also provides a very useful reminder on what constitutes ‘genuine use’ for trade mark purposes, and that for high value goods, even a relatively low number of sales that turn a substantial profit may be enough.