Gnat and Company Limited and China Tang London Limited v West Lake East Limited and Honglu Gu (China Tang)

Background

The Second Claimant was the proprietor of a restaurant called ‘China Tang’ at the lavish Dorchester Hotel in Park Lane, London. The First Claimant was the owner of a series trade mark for CHINA TANG, registered in respect of, inter alia, restaurant services in class 43 (the Trade Mark) and the licensor of the Trade Mark to the Second Claimant. The Second Defendant ran a Chinese takeaway in Barrow-in-Furness through the First Defendant, a company which he owned.

In 2009 Mr Gu began operating a Chinese takeaway under the name ‘China Tang’. The Claimants subsequently became aware of this and issued a claim for trade mark infringement and passing off. In response, the Defendants pleaded honest concurrent use and counterclaimed for partial revocation of the Trade Mark in relation to “cafes; cafeterias; and self-service restaurants” (but not restaurant or catering services).

The Court first considered and dismissed the Defendants’ counterclaim for partial revocation (otherwise than in relation to an agreed deletion of “self-service restaurants”). The Court then turned to infringement under Section 10(2) of the TMA and held that, in view of the similarity between the Trade Mark and the sign ‘China Tang’, as well as the similarity between the respective services, there was a likelihood of confusion on the part of the public. Finally, the Court dismissed the Claimants’ claim under Section 10(3) of the TMA as well as their claim for passing off.

The case does not appear to be subject to appeal.

Practical implications

There are three main takeaways (pun intended) from this recent decision:

1. Actual confusion is not necessary – the full range of the specification is relevant when assessing likelihood of confusion under s. 10(2) TMA.

The Defendants argued, in effect, that if there had been any likelihood of confusion then instances of confusion would have emerged by now. However, HHJ Hacon considered that there did not need to be actual confusion for there to be a likelihood of confusion. He held that the principle in Compass Publishing BV v Compass Logistics Ltd [2004] EWHC 520 (Ch) remained good law, namely that no actual confusion meaning there is no likelihood of confusion is no more than a rule of thumb and notional use must also be considered. The Judge said that:

“The defendants’ point that WLE’s modest takeaway has little in common with the claimants’ opulent Park Lane restaurant largely fades away if the relevant comparison includes, on the side of the Trade Mark, its use as the trading name of a low price restaurant, such as a pizza restaurant or indeed a low price Chinese restaurant, as would be the case following the principle of law explained in Compass”.

He continued that:

“The comparison between trade mark and sign in the context of s.10(2) requires consideration of the sign only in the particular circumstances of the alleged infringement, but consideration of the trade mark as used across any part of its specification, most relevantly as used for the type of product or service closest to that of the alleged infringement” (emphasis added).

Therefore, in the proceedings the likelihood of confusion had to be approached by considering the perception of the average consumer who was notionally aware of low-price restaurants trading under the Trade Mark and the Defendants’ takeaway using the name ‘China Tang.’

HHJ Hacon also explained that the differences in location and style between an upmarket restaurant in London and a modest takeaway in Barrow-in-Furness could well have militated against there being confusion in the real world. However, this did not necessarily mean there was no “likelihood of confusion” under the TMA. The implication of this in practice is that, in terms of infringement, a difference in location, style or indeed value is not actually a decisive factor in establishing a likelihood of confusion for the purposes of Section 10(2).

2. Do your due diligence before using a trading name.

In this case, the Defendants tried to rely on the defence of honest concurrent use. However, Mr Gu admitted that when he chose the name for his business neither he nor anyone else did a trade mark search for ‘China Tang’ or an internet search for restaurants with that name. Accordingly, HHJ Hacon said:

“…in the modern climate of easy trade mark and internet searches, I think that if a party starts to use a trading name without appropriate advice and simple searches, such use will not have been honest concurrent use without some reason why it should be taken to have been so. There was no such reason in the present case”.

The effect of this is that, without good reason to the contrary, a party will not be able to rely on honest concurrent use if they have failed to undertake the necessary searches and obtain appropriate legal advice before using a particular trading name. Importantly this applies whether the party is a small or large business as “…even the smallest business is likely to require competent legal advice on a variety of matters and that should include the trading name”.

3. Services relating to the provision of food under class 43 are likely to be deemed similar.

HHJ Hacon said that in his view “restaurant services” was “not a broad term such that it would be fair to slice and dice it into subsets” and dismissed the Defendants’ counterclaim.

More importantly, in relation to the claim for infringement under Section 10(2), the Defendants alleged that takeaway food services were not the same as those under the Trade Mark’s specification. They argued that restaurants usually provide their services on the premises whereas takeaways require the customer to collect the food for eating off-premises. The Claimants argued otherwise and emphasised that many restaurants also offer takeaway services. The Second Claimant itself even provided “takeaway food” to (wealthy) individuals. Ultimately, the Court took the view that takeaway services are indeed closely similar to restaurant services for the purposes of infringement under Section 10(2).

This is an important point to bear in mind for those operating in the food service industry: getting bogged down in the nuanced differences between establishments seems unlikely to aid in avoiding infringement.

Conclusion

The judgment in China Tang should come as a warning to those in the restaurant business. It does not matter where in the United Kingdom it is located, how upmarket it is or indeed whether there is any actual confusion, if a business is trading under a name similar to that protected by a registered trade mark and in relation to similar services, there is a very real risk of an adverse judgment in the event of a claim for trade mark infringement.

For further information on this topic, please read our blog 'From Park Lane to Cumbria: Chinese Takeaway sued over name' written by Oliver Fairhurst.