Introduction

The recent judgment in Morley's (Fast Foods) Ltd v Nanthakumar & Ors ([2025] EWCA Civ 186) provides a detailed analysis of trademark infringement claims, particularly concerning the usage of signs by fast-food chains operating under similar brand presentations. The dispute centres on allegations of trademark infringement involving well-established marks used by Morley's and signs employed by a competing group (Metro's) led by KK and various franchisees.

In this case, the Claimant (Morley's) accused the Defendants—comprising franchisee operators and KK—of infringing on one or more registered trademarks, specifically the Morley's Red and White Mark and the Triple M Mark, and also claimed that KK had breached the terms of a previous settlement known as the 2018 Agreement. The dispute is not only an exploration of the standard principles governing the assessment of "likelihood of confusion" among consumers but also raises intricate issues regarding the extent of rights granted under a settlement agreement vis-à-vis sub-licensing.

Summary of the Judgment

The court affirmed many of the findings of the lower court and rejected most of the Defendants' appeal grounds. The Court’s principal conclusions were as follows:

• The Defendants and KK infringed the Morley’s Red and White Mark by using Sign 1, thereby creating a medium degree of visual and conceptual similarity.
• Both the Sixth Defendant and KK infringed the Triple M Mark through the use of Sign 2. Additionally, the Judge found that KK and the Fifth Defendant infringed the Triple M Mark by using Sign 3 under the double identity test.
• KK was held jointly and severally liable with the Franchisee Defendants for the infringement linked to Sign 1.
• The court found that KK’s use of the disputed signs was in breach of the 2018 Agreement, especially in relation to the limitations imposed on modifying and sub-licensing trademark use.

The Defendants raised multiple grounds of appeal—concerning the assessment of the average consumer, the visual and conceptual comparisons between the disputed signs and the registered marks, the context of use issues, and the interpretation of the 2018 Agreement—but the appellate court found none of these challenges to merit overturning the lower court’s rational assessments.

Analysis

Precedents Cited

The judgment relies heavily on established precedents in trademark law. For example, the court extensively quoted the guidelines set out in the Specsavers International Healthcare Ltd v Asda Stores Ltd decision, emphasizing that for assessing "likelihood of confusion," the examination must be undertaken from the viewpoint of the average consumer. Similarly, references were made to cases such as London Taxi Corporation Ltd v Frazer-Nash Research Ltd for the concept of consumer class segmentation.

The decision also cited the principles laid out by Lord Neuberger and Lord Hodge regarding multi-factorial assessments, ensuring that factual findings made by the trial judge would only be disturbed on the basis of legal error or irrationality. These precedents have been instrumental in framing both the conceptual and visual comparisons that underpinned the lower court’s findings.

Legal Reasoning

The Court’s legal reasoning involved a detailed analysis of both the trademark infringement claims and the contractual obligations under the 2018 Agreement. The central issue of "likelihood of confusion" was approached by examining:

• The overall impression created by Sign 1 in relation to the Morley’s Red and White Mark, especially the visual similarities involving color schemes, fonts, and the dominant stylised 'M'.
• A comparison of the conceptual similarities, notably the use of similar straplines that evoke the notion of taste and culinary quality.
• The operational context, where factors such as the time of day (including late-night usage by consumers with low degrees of attention) played a role in reinforcing the conclusion on confusion.

On the contractual side, rigorous principles of contractual interpretation were applied to the 2018 Agreement. The court scrutinised clauses that explicitly limited the rights of KK to sub-license trademark usage. The agreement’s wording—even when factoring in modifications permitted under the settlement—was held not to extend to third-party franchisees who were not parties at the date of the agreement. This safeguard was deemed essential to ensure that the established distinctiveness of the Morley’s marks could not be compromised by later, unauthorized modifications nudging the Metro’s signs closer to the Claimant’s trademarks.

Impact on Future Cases and the Area of Law

This judgment reinforces the stringent criteria required for establishing trademark infringement in a competitive marketplace where visual, aural, and conceptual similarities are closely scrutinized. By affirming the use of a comprehensive, multi-factorial approach in assessing likelihood of confusion, the decision is poised to influence future cases involving branding disputes in the fast-food sector and beyond.

In addition, the ruling has significant implications for contractual interpretations of settlement agreements in intellectual property disputes. It clearly establishes that consent under a licensing agreement does not automatically extend to sub-licensing rights unless expressly provided for, thereby fortifying trademark owners against potential dilution of their brand identity through unauthorized third-party use.

Complex Concepts Simplified

The Judgment employs several complex legal concepts, which it explains with illustrative clarity:

• Likelihood of Confusion: The court emphasized that this concept is assessed from the perspective of the "average consumer" – a consumer who is reasonably well informed yet does not scrutinise every detail. The assessment considers all sensory impressions (visual, aural, conceptual) to determine whether a consumer might mistakenly believe that the goods or services come from the same source.
• Context of Use: This refers to how and where the sign is used, including the physical environment (e.g., shopfronts at night) and the surrounding elements that may enhance or detract from its distinctiveness. The judgment highlights that even when usage occurs in a less attentive context, the inherent similarities can lead to consumer confusion.
• Sub-licensing in Settlement Agreements: The judgment clarifies that a license to use a trademark does not automatically create the power to sub-license that trademark to third parties unless the agreement explicitly allows it. This distinguishes between direct licensing rights and the indirect extension of those rights, thereby preserving the integrity of the original mark.

Conclusion

In summary, the Court’s decision in Morley's (Fast Foods) Ltd v Nanthakumar & Ors provides a robust reaffirmation of the fundamental principles governing trademark infringement and the circumstances under which contractual settlements may limit the use of trademarked signs. Through its detailed analysis of the visual, aural, and conceptual similarities between disputed signs, and by affirming the necessity of precise contractual language in licensing agreements, the judgment lays down a precedent that will affect both future commercial disputes and the drafting of branding agreements.

The key takeaways are:

• The multi-dimensional analysis of "likelihood of confusion" remains a bedrock of trademark disputes, requiring courts to consider every factor that influences the average consumer’s perception.
• The context of use plays a critical role; even environmental factors and variations in consumer attention levels must be taken into account.
• Settlement agreements in trademark disputes must be drafted with precision, ensuring that any rights to sub-license or modify usage are clearly delineated to prevent inadvertent infringement.

This comprehensive judgment, therefore, not only reinforces current trademark law practices but also sets a clear guideline for how similar disputes should be navigated in the future.