Summary
In the case of AGA Rangemaster Group Ltd v UK Innovations Group Ltd and Another [2024] EWHC 1727 (IPEC), the Intellectual Property Enterprise Court addressed questions of trade mark and copyright infringement within the secondary market. In particular, the Court had to consider when a brand owner can prevent the refurbishment and modification of genuine goods which it has placed on the market.
This article examines the legal principles of trade mark exhaustion and explores how brand owners can manage their reputation after goods have been sold.
Background
The Claimant, AGA Rangemaster Group Ltd (AGA), brought a claim for trade mark and copyright infringement against UK Innovations Group Ltd (UKIG) and its director.
For context, AGA manufactures cookers and UKIG converts AGA cookers to run on electricity. However, AGA did not complain that the supply or conversion of cookers infringed its rights. Instead, AGA’s complaint was that UKIG was selling genuine AGA cookers which had already been retrofitted with the conversion. AGA’s position was that the sale of cookers bearing the AGA trade mark was infringement.
While acknowledging the legitimate aftermarket, AGA argued that the extensive modifications meant the cookers were no longer original AGA products, thus infringing its trade marks. AGA also claimed that UKIG’s control panels infringed its copyright in the design of its electronically controlled cookers.
Trade Mark Infringement
AGA alleged that UKIG’s practices violated sections 10(1), 10(2), and 10(3) of the Trade Marks Act 1994. In particular, AGA alleged that the use constitutes infringement because:
- under section 10(1) the use of an identical mark in relation to identical goods and is liable to affect one of the functions of the trade mark;
- under section 10(2) the use of an identical mark on identical or similar goods creates a likelihood of confusion;
- under section 10(3) the use of an identical mark takes unfair advantage of and is detrimental to AGA’s reputation or distinctive character without due cause.
UKIG denied the allegations under section 12 of the Act on the grounds that the rights were exhausted and under section 11(2)(b) and (c) of the Act because their use of AGA was descriptive.
The Court chose to focus first on whether the rights were exhausted. If they were then the trade mark infringement allegations would fail.
The law
At the relevant time when the alleged acts took place, section 12 of the Trade Marks Act 1994 stated:
12 Exhaustion of rights conferred by registered trade mark
(1) A registered trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in the United Kingdom or the European Economic Area under that trade mark by the proprietor or with his consent.
(2) Subsection (1) does not apply where there exist legitimate reasons for the proprietor to oppose further dealings in the goods (in particular, where the condition of the goods has been changed or impaired after they have been put on the market).¹
The effect of section 12(1) was summarised by the CJEU in Parfums Christian Dior SA v Evora BV² as follows:
“… when trade-marked goods have been put on the Community market by the proprietor of the trade mark or with his consent, a reseller, besides being free to resell those goods, is also free to make use of the trade mark in order to bring to the public’s attention the further commercialisation of those goods“.
This is often referred to as the exhaustion of a trade mark proprietor’s rights, meaning that the proprietor cannot object to further dealings with those goods by others using the mark. However, by reason of section 12(2), this exhaustion of rights does not apply where the proprietor has legitimate reasons for opposing such further dealings.
Legitimate reasons include circumstances where the condition of those goods has been changed or impaired after being put on the market. Other examples are where the further dealings might seriously damage the reputation of the trade mark.³ or give the impression that there is a commercial connection between the person responsible for those dealings and the trade mark proprietor and, in particular, the impression that that person’s business is somehow affiliated to the trade mark proprietor or that there is a special relationship between them⁴.
Application of the law
The Court found that the refurbishment and conversion work alone was not sufficient to give the trade mark owner legitimate grounds to oppose further dealings with the goods. It did find however that the way in which the refurbished and converted items were marketed and sold were legitimate reasons to stop the use of AGA.
The goods were found to be marketed and sold in a way in which customers would believe that there was a commercial connection between UKIG and AGA. In other words, a normally informed and reasonably attentive customer would be unable, or would be able only with difficulty, to ascertain whether the goods originate from AGA or from an unrelated third party, such as the Defendants.
The Court found:
51. In effect, the website was offering customers the opportunity to “Buy an eControl AGA”… with a warranty… in one of a range of colours and/or the opportunity to convert an existing AGA Cooker using the eControl System.
52. In my judgment, these statements taken as a whole were likely to give customers the impression that what they were being offered was an AGA product…
54. Ultimately, if the Defendants wished to sell these converted cookers, there was a need for them to ensure that customers were not given the impression that the conversion was somehow connected to the Claimant and even… to take steps to dispel such an impression. As set out above, the website and invoices did the opposite.
UKIG therefore had no defence under section 12 to the trade mark infringement allegations.
Copyright Infringement
AGA also alleged that UKIG had copied the control panel design of its own electronically controlled cookers. In particular, AGA claimed copyright in the CAD drawing below:
AGA claimed that the manufacture of the control panels by UKIG shown below infringed the copyright.
UKIG claimed it had a defence under section 51 of the Copyright, Designs and Patents Act 1988, which permits reproductions of certain functional designs. Section 51 of the CDPA states:
51 Design documents and models.
(1) It is not an infringement of any copyright in a design document or model recording or embodying a design for anything other than an artistic work or a typeface to make an article to the design or to copy an article made to the design.
(2) …
(3) In this section—
“design” means the design of any aspect of the shape or configuration (whether internal or external) of the whole or part of an article, other than surface decoration; and
“design document” means any record of a design, whether in the form of a drawing, a written description, a photograph, data stored in a computer or otherwise.
The Court found that copyright subsisted in AGA’s panel design as an original artistic work. However, because that drawing was a design document for the control panel which was not an artistic work, section 51 CDPA becomes operational. This meant that it was not an infringement of copyright in the drawing for UKIG to make control panels to the design recorded in that drawing.
Key takeaways
- This case illustrates the legal and practical challenges of balancing intellectual property protection with the evolving and nuanced dynamics of secondary markets.
- Brand owners cannot prevent the use of their trade marks for the refurbishment or conversion of their goods unless there are legitimate reasons to do so. They should be vigilant in monitoring the resale and retrofit sectors to mitigate risks such as reputational harm from substandard refurbishments and misleading marketing practices.
- Businesses which retrofit or refurbish goods must be clear about their independence from the original equipment manufacturer.
¹On 31 December 2023, the wording was changed to read:
Subsection (1) does not apply where—
(a) there exist legitimate reasons for the proprietor to oppose further dealings in the goods for the purpose of protecting the proprietor’s property (in particular, where the condition of the goods has been changed or impaired after they have been put on the market), and
(b) the opposition to those dealings interferes with the rights of any other person no more than is necessary to achieve that purpose.
²Parfums Christian Dior SA v Evora BV, Case C-337/95, [1997] EUECJ C-337/95 at paragraph 38
³Portakabin Ltd v Primakabin BV, Case C-588/08, [2010] EUECJ C-558/08 at paragraphs 79 and 91
⁴Bayerische Motorenwerke AG v Deenik, Case C-63/97, EU:C:1999:82 at paragraph 51
