Battle of the brands: ASOS defence upheld by Court of Appeal majority and ASSOS refused permission to appeal

ASSOS is a specialist cycling clothes business founded in Switzerland which ‘offers advanced, technical apparel’ at the top end of the market. ASSOS sells its goods in 37 countries worldwide, almost exclusively through specialist cycling stores. This is to ensure a high quality purchasing experience consistent with the brand. For this reason, ASSOS does not have an online store.

ASOS is a global online fashion and beauty retail business aimed primarily at fashion-conscious young people. It has always been conducted solely online with no physical shops. Originally called ‘As Seen on Screen’ and offering clothing, accessories and other items worn in TV or in films, the acronym ‘ASOS’ was adopted in early 2002 when ASOS moved towards general fashion clothing.

So far, so distinctive. But with only one letter between them, ASSOS was concerned about potential confusion between the brands.

Community trade mark dispute

ASSOS owns various trade mark registrations including a Community Trade Mark (CTM) for ‘ASSOS’ registered in September 2006 (following its application which had priority from 14 June 2005) in three classes including clothing, footwear, headgear (class 25).

On 30 June 2005, ASOS applied to register as a CTM in various classes including class 25. ASSOS opposed the application, arguing that its application had priority. This led to separate proceedings which reached the Office for Harmonisation in the Internal Market (Trade Marks and Designs). The Office rejected ASOS’s application on the basis of ASSOS’s opposition, save for some goods. This decision was upheld by the EU General Court in April 2014. A further appeal to the Court of Justice was dismissed in January 2015.

ASOS has, however, owned a UK trade mark since December 2012 covering a long list of goods and services in various classes including clothing, footwear and headgear (class 25).

English Court proceedings

In December 2011, the owners of ASSOS issued proceedings against ASOS plc alleging infringement of the CTM and passing off. It also alleged that the UK trade mark was invalid in for certain classes of goods.

ASOS denied any infringement and relied on a number of defences, including the ‘own name’ defence (see below). ASOS counterclaimed to partially revoke the CTM for non-use and argued that it was invalid on the basis of ASOS’ prior rights.

High Court decision

The case went to trial in June 2013 and the main judgment was handed down in September 2013. Deciding in favour of ASOS, Mrs Justice Rose held that:

  • ASOS’ argument that the ASSOS CTM was invalid based on ASOS’ alleged earlier rights failed. However ASSOS’ CTM for ‘clothing, footwear and headgear’ was partially revoked for non-use to cover only ‘specialist clothing for racing cyclists; jackets, t-shirts, polo shirts, track-suit tops, track-suit bottoms, casual shorts, caps’
  • Based on the available survey evidence and ASOS’ use of the trade mark, there was no likelihood of confusion between the use of ‘ASOS’ and the ASSOS CTM
  • Use of the ‘ASOS’ trade mark had not damaged the distinctive character of the ASSOS CTM
  • ASSOS’ passing off claim was dismissed
  • As the Judge found there was no infringement, she said it was not necessary to decide the question of whether ASOS’ ‘own name’ defence applied.

Both parties appealed. ASSOS argued that the judge had erred in finding there had been no trade mark infringement and had been overly restrictive in amending its CTM specification. ASOS cross-appealed, restating its ‘own name’ defence.

Court of Appeal Decision

Reversing the High Court decision, in April 2015 the Court of Appeal unanimously found that the ‘ASOS’ trademark was likely to cause confusion and damage the distinctive character of the ‘ASSOS’ mark. The High Court had erred in considering only the actual use of the ‘ASSOS’ mark and should have considered the hypothetical ‘notional and fair use’ across all of the goods and services covered by the registration (even once partially revoked).

The Court was split on two questions:

  • Whether ASOS could rely on the ‘own name defence’ and
  • The extent to which ASSOS’ CTM should be revoked

ASOS’ own name defence

A majority (Lord Justices Underhill and Kitchin) held that ASOS was entitled to rely on the ‘own name’ defence in Article 12 of the CTM Regulation. This defence provides that where the ‘infringer’ is using its own name in the course of its trade, provided it does so in accordance with honest practices, then it cannot be prevented by enforcement of a CTM right. So, for example, Mr McDonald may be entitled to run a fast food restaurant but if he were to call it ‘McDonalds’ to attempt to profit from the well-known chain, then this would not be permitted under the ‘honest practice’ requirement.

ASOS’ conduct both before and after the proceedings had commenced were scrutinised by the Court. In deciding that ASOS could rely on the defence, the majority held that ASOS had fulfilled its duty to act fairly in relation to the ASSOS’ legitimate interests and had not conducted its business so as unfairly to compete with the ASSOS (ASOS had stopped bidding on ‘assos’ as a keyword to catch misspellings and had stopped selling cycling clothing). ASOS had adopted the name innocently as an acronym of their previous name “As Seen on Screen” and before adopting the name ‘ASOS’, it had done a Google search for “ASOS” (although it had not conducted any trade mark searches). ASOS maintained it had never intended to confuse the public and the Court found there was no significant evidence of ‘actual confusion’ between the two trademarks.

In his dissenting judgment, Lord Justice Sales said that ASOS should not be allowed to rely on the own name defence. He referred to the recitals to the CTM Regulations and emphasised that more weight should be given to the interests of the trade mark proprietor and the interests of the public in avoiding confusion. Lord Justice Sales said there was no corresponding reference in the recitals to the emphasis to be placed on the right to use an own name for marketing.

Lord Justice Sales found that as a well-resourced business, ASOS’ Google search was not sufficient. ASOS should have carried out formal trade mark clearance searches to see whether the name was already being used by another party to market similar goods. This was necessary to satisfy the ‘honest practices’ requirements. Formal searches would have brought the ASSOS trademark to its attention. After ASOS became aware of the ASSOS’ CTM, it continued to expand its business across the EU using the ASOS branding.

Partial revocation of the ASSOS’ CTM

Lord Justices Underhill and Kitchin removed the word ‘racing’ to slightly broaden the CTM so that it covered: ‘specialist clothing for racing cyclists; jackets, t-shirts, polo shirts, track-suit tops, track-suit bottoms, casual shorts, caps’. However they rejected ASSOS’ request that the CTM covered ‘specialist clothing for cyclists and casual clothing’ which was considered too broad a category, and held that the list of items in that category (‘jackets, t-shirts, polo shirts, track-suit tops, track-suit bottoms, casual shorts, caps’) was therefore too wide.

Dissenting, Lord Justice Sales held that ‘casual clothing’ was an appropriate category, since it was the smallest category encompassing the items on which use had been proved. He said that listing the goods on which use had been proven was unduly restrictive on the rights of ASSOS and its CTM.

Court of Appeal refuse ASSOS’ application for permission to appeal

Perhaps encouraged by Lord Justice Sales’ dissenting judgment, ASSOS applied for permission to appeal to the Supreme Court on the Court of Appeal’s decision that ASOS could rely on the ‘own name’ defence. On 22 April 2015, the Court of Appeal refused permission to appeal stating that: “We have decided, by a majority, that Asos is entitled to the benefit of the use of own name defence. Each member of the Court has carried out the necessary evaluative exercise. It is true that the members of the Court have arrived at different conclusions, but we do not see that as justifying the grant of permission to appeal.” ASSOS must now decide whether to apply for permission to the Supreme Court or accept defeat in this battle of the brands.

This article was written by Becky Shaw, a Solicitor at Boodle Hatfield. 


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