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Frank Industries v. Nike: IPEC takes modern approach to assessment of consumer perception

22/11/2018

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United Kingdom

This article looks at the decision in Frank Industries Pty Ltd v Nike Retail BV ([2018] EWHC 1893 (Ch)) concerning a dispute over the claimant's LNDR trade marks for clothing.

This article first appeared on WTR Daily, part of World Trademark Review, in September 2018.  For further information, please go to www.worldtrademarkreview.com.

  • Frank Industries' registrations for LNDR for clothing were found to be valid

  • Nike had infringed those registrations by using LDNR sign in advertising campaign

  • Courts are willing to consider practicalities and logistics of social media

The recent decision in Frank Industries Pty Ltd v Nike Retail BV ([2018] EWHC 1893 (Ch)) has highlighted a number of interesting points for brand owners considering bringing a trademark infringement action in the United Kingdom.

From a procedural point of view, this case serves as an excellent demonstration of how quickly the Intellectual Property Enterprise Court (IPEC) can act when time is of the essence. The IPEC is an alternative venue to the High Court for IP disputes, and typically hears simpler cases which can be dealt with by way of a cheaper and more streamlined procedure, and where the claim is under £500,000.

It is also a modern decision, showing that the court will consider context, including the relatively new landscape of social media, when assessing the average consumer and how they might perceive a trademark and likelihood of confusion. Issues surrounding how a social media campaign might comply with an interim injunction were also raised earlier in the proceedings.

Background

Frank Industries Pty Ltd (‘Frank’) is an Australian company and the owner of UK and EU trademark (designation of IR) registrations for LNDR in relation to “clothing”, including “sportswear” in Class 25. It has been using the LNDR trademark in the United Kingdom since it launched in 2015. Frank's business experienced a very steep growth trajectory in the first few years and its clothing has been stocked by premium retailers and stores such as Net-a-Porter and Harrods, Harvey Nichols and Selfridges.

In January 2018, the well-known sportswear manufacturer, Nike, commenced an advertising campaign which used the sign LDNR in a number of ways, for example:

                                     

The aim of Nike's campaign was to appeal to the London-based 16-24 demographic. The campaign comprised a number of elements including a film and social media.

Frank commenced proceedings against Nike for trademark infringement and passing off in the IPEC. Nike denied infringement and counterclaimed to invalidate Frank's registrations.

Injunction

Frank was granted an interim injunction in March 2018 by Mr Justice Hacon. The injunction contained a mandatory order for Nike to take all reasonable steps to delete the signs LDNR and LNDR from social media accounts within its control, including Twitter, Facebook, Instagram and YouTube.

Nike appealed against the injunction, arguing that Hacon J was wrong to make this order. Nike raised some interesting points regarding the use of social media in its campaign, and the consequences of complying with the mandatory order. For example, arguing that deleting posts from Instagram would cause the whole conversation to disappear, deleting a post from Twitter would also remove all likes and re-tweets, and Nike's YouTube video would need to be removed and re-edited, and then reposted with a different URL, thereby losing all the existing comments, links, likes and shares.

Lord Justice Lewison considered the options and arrived at a compromise which balanced the requirements of an injunction with the realities of a social media campaign. The original order was varied to require Nike to archive (rather than delete) its Instagram posts so that they remained in existence but invisible to the public. Nike was also ordered to edit its promotional videos to pixelate or blur the LDNR sign (instead of taking down and re-posting an edited version of the video). The appeal was allowed in relation to Nike's Twitter feed on the basis that "on an interlocutory application it would not be right to deprive Nike of the benefit of the continuing conversations between young Londoners". Nike was therefore not required to delete the original tweets or continuing conversation.

Decision

The trial took place in July 2018, with Mr Justice Arnold's decision being issued just 12 days later.

Average consumer

The average consumer was deemed to be a purchaser of clothing, in particular ladies' sportswear, who is a member of the general public and exercises a moderate degree of care and attention.

Arnold J considered that modern consumers in the United Kingdom, particularly younger consumers, are in the habit of writing and reading abbreviations in digital forms of communication such as texts, messages, tweets and Instagram posts, and in particular abbreviations in which vowels are omitted from words. However, such abbreviations can be used and understood because the context makes the intended meaning clear.

Similarity of marks

LDNR was considered to be highly aurally and visually similar to LNDR. The marks are identical save that the middle two letters are transposed. The marks were also considered to be highly conceptually similar - the average consumer would either understand both marks as an abbreviation of the term ‘Londoner’ or would perceive both marks as meaningless. Arnold J considered it obvious that the average consumer would be likely to misread, mistype, mishear or misspeak one for the other from time to time.

Use of a sign in the course of trade

One of the key issues was whether Nike had used LDNR as a sign in the course of trade. While the LDNR mark had been placed on promotional clothing by Nike, it argued that the origin of those goods was clear because the famous Nike ‘Swoosh’ was also present. In addition, Nike contended that the average consumer would understand LDNR as a reference to Londoner rather than a reference to the origin of the goods.

Arnold J considered that some consumers would understand LDNR as ‘Londoner’ and others would see it as a brand name, depending on the context of the use. For example, in relation to Nike's t-shirts, there was no context to inform a consumer of the meaning of LDNR so they would perceive it as a brand name. Nike's t-shirts also (mistakenly) bore ® symbols, which reinforced LDNR as a brand rather than merely a descriptive abbreviation.

Frank argued that the combined presence of the Nike ‘Swoosh’ and the LDNR mark would cause consumers to incorrectly believe that there had been a collaboration between Frank and Nike. This was supported by witness evidence of actual confusion, which Arnold J thought reinforced the fact that LDNR had been used by Nike as a trademark.

Invalidity

Nike submitted that Frank's registrations were invalid, since LNDR is inherently descriptive as an abbreviation meaning Londoner. However, Nike was unable to provide any dictionary evidence (including online evidence such as Wikipedia or Urban Dictionary) to support this claim.

Nike presented social media evidence showing that the term ‘LNDR’ was used as an abbreviation of ‘Londoner’, but Arnold J considered that all this showed was that LNDR was capable of being used and understood by some consumers to mean ‘Londoner’, but only when used in an appropriate context in digital media. Without this context, the mark LNDR has a moderately strong distinctive character in relation to clothing. There was no evidence to show that the sign LNDR was perceived by the average consumer as denoting a characteristic of clothing, so as to render the registrations invalid.

Outcome

The outcome of the decision was that Frank's trademark registrations were found to be valid, and Nike was found to have infringed those registrations. Because the passing-off claim stood or fell with the infringement claim, that also succeeded.

Comment

It is reassuring to see the UK courts taking a modern approach when assessing the average consumer and how they might perceive a trademark and likelihood of confusion. Use of abbreviations is very common when commenting or sending messages on social media, and the courts have taken note of this trend and have considered how this interplays with trademark use and confusion.

It is also refreshing to see that the courts are willing to take into account the practicalities and logistics of social media when making an order that directly impacts on a social media campaign.

 

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