Bagging rights: a Notting Hill tale of trade mark tussles

Tote bags have become more than carriers; from farmers’ markets to fashion runways, these cultural statement accessories are a staple of urban life and an important source of income for independent retailers.

More recently, tote bags have also been a source for courtroom drama – an interesting story involving competing brands, mistaken witnesses, insolvency, and a warning to businesses to treat their intellectual property (IP) assets with care.

The takeaway lesson: make sure to deal with IP owned by a company before it is dissolved.

Background

By way of background to the claimants, it is easiest to set out a timeline of events:

Meanwhile, the defendants – at various times – were selling tote bags labelled with and under the signs “Notting Hill Shopper Bag” and “THE CAMDEN TOWN SHOPPING BAG,” prompting NCS and NHBCL to issue proceedings on 24 December 2023, asserting ownership and infringement of the Trade Mark, goodwill in the Sign, and artistic copyright in the stylised logo.

Decision

The Intellectual Property Enterprise Court found in favour of the defendants and dismissed all claims.

The court was critical of inconsistencies in the claimants' evidence, including about the passing of title and licensing of rights to use the Trade Mark, and the procedural steps taken by the claimants.

Trade mark infringement

The court's analysis hinged on the legal status of the Trade Mark following the dissolution of TNHSBC in 2018.

The court held that, as the Trade Mark had not been assigned prior to the dissolution of TNHSBC in 2018, the Trade Mark had become bona vacantia. "Bona vacantia" means vacant goods and is the name given to ownerless property which, by law, passes to the Crown.

As a result, the renewal in March 2023 was invalid, because it was made by someone without standing (the director of the then dissolved NHBCL). According to section 43(1) Trade Marks Act 1994, a registration may be renewed at the request of the proprietor only.

• Neither the director nor NHBCL owned the Trade Mark at the time of renewal, given that it had transferred to the Crown as bona vacantia
• If the Trade Mark had been retained by TNHSBC (rather than become bona vacantia), the director still could not have been acting on the authority of TNHSBC as a dissolved company.

The court also determined that, even if the Trade Mark had been validly renewed, it would have been subject to revocation for non-use. Any use during the bona vacantia period (April 2018 – October 2023) would have required consent from the Treasury Solicitor, which was not obtained, so could not prove use of the Trade Mark. Further, any use after May 2023 cannot have been "use of the Trade Mark" because the Trade Mark did not exist after the invalid renewal.

Compounding the claimants' issues, the 2023 Assignments were deemed ineffective.

• There was no valid assignment of the Trade Mark as it had already expired due to ineffective renewal
• The goodwill was not assigned by the TNHSBC prior to its dissolution and it was unclear who would own any such associated goodwill: the initial goodwill belonging to TNHSBC was abandoned or extinguished on its dissolution and, even if this was not the case, according to the claimants' submissions, any further goodwill was attached to the Trade Mark. When the Trade Mark expired, this goodwill also ceased to exist. Therefore, the court held that there was no goodwill to assign in the 2023 Assignments.

Furthermore, the order permitting restoration of TNHSBC did not retroactively revive the Trade Mark or its commercial history.

Passing off and copyright infringement

The court rejected the claimants' passing off claim as NHBCL lacked continuous and demonstrable goodwill and there was insufficient evidence of misrepresentation. The gap in trading activity following TNHSBC's dissolution weakened the claimants' position.

The court also found insufficient evidence to support the copyright infringement claim. Although NCS established ownership of the artistic copyright in the stylistic version of the Sign, this was limited, it had a low degree of creativity and the defendants' activities did not infringe.

Conclusion and lessons for businesses

This case underscores the critical importance of undertaking IP due diligence at various stages of a company's life – including before dissolution, at the point of renewal of rights, and when considering issuing infringement proceedings.

Procedural missteps can unravel long-standing brand rights. While in this case, the claimants had a connection to the Sign, their failure to maintain legal continuity proved fatal to their claims.

Key lessons for business owners and their advisers are:

• Ensure that the registered owner is still active before renewing registered IP
• Coordinate IP strategy with your corporate governance – assign all IP rights and goodwill before dissolving a company
• Restoration does not automatically revive IP rights – some may have expired or lapsed, so make sure specialist legal advice is sought before proceeding with the restoration, and
• Have processes in place for robust record-keeping around IP creation, subsistence, use (including licensing) and ownership.