esure Insurance Ltd v Direct Line Insurance Plc

Factual and Procedural Background

This opinion concerns a renewed application for permission to appeal against an order dated 5 July 2007 of Judge Lindsay, arising from opposition proceedings under section 5 of the Trade Marks Act 1994 ("TMA 1994"). The appellant ("esure") sought to register a three-dimensional image of a computer mouse on wheels for insurance and financial services (class 36), while the respondent ("Direct Line") opposed the registration based on its own registered mark of a red telephone on wheels in the same class.

The opposition was grounded on claims of similarity and likelihood of confusion under section 5(2)(b) and unfair advantage under section 5(3) of the TMA 1994. The hearing officer upheld the opposition on both grounds, finding indirect confusion and unfair advantage. The judge dismissed an appeal against the hearing officer's decision on section 5(3) but found an error of principle regarding confusing similarity under section 5(2)(b), concluding there was no likelihood of confusion. Esure challenges the judge's findings, particularly on the role of expert evidence and the application of the similarity threshold under section 5(3).

Legal Issues Presented

1. Whether a minimum threshold level of similarity between trade marks must be established before considering the likelihood of confusion under section 5(2)(b) of the TMA 1994.
2. Whether the hearing officer and the judge correctly applied the principles governing confusing similarity and likelihood of confusion, including the structured approach mandated by the Court of Justice of the European Communities.
3. The admissibility and weight of expert evidence, specifically branding expert testimony, in assessing consumer perception, confusion, unfair advantage, and detriment under sections 5(2)(b) and 5(3).
4. Whether the judge erred in upholding the hearing officer’s decision on unfair advantage under section 5(3) despite rejecting confusing similarity under section 5(2)(b).
5. The proper interpretation and application of relevant provisions of the Trade Marks Act 1994 and the Trade Mark Directive, including the concept of an "additional link" under section 5(3).
6. The appropriate standard of appellate review regarding the evaluation of evidence and findings of fact by the hearing officer and the judge.

Arguments of the Parties

Appellant's Arguments

• The judge was correct in finding no confusing similarity under section 5(2)(b), and by parity of reasoning, no objectionable link exists under section 5(3).
• Expert evidence on consumer perception, confusion, and unfair advantage is inappropriate; only actual consumer evidence or surveys can establish these matters.
• The branding expert's evidence was flawed and undermined in cross-examination, as it did not reflect the average consumer’s perception but rather a conceptualisation of the marks as "oblong block-like shapes," which is not how consumers perceive them.
• The judge erred by using different comparisons of the marks under sections 5(2) and 5(3), and by assessing similarity at an incorrect level of generality.
• The hearing officer and judge failed to apply a structured approach separating similarity and likelihood of confusion, improperly conflating these issues.
• The judge wrongly held there was a low threshold for similarity; in fact, a condition of similarity must be satisfied for objections under both sections 5(2) and 5(3) to succeed.
• There was no cogent evidence supporting a finding of unfair advantage or detriment under section 5(3).
• The judge improperly relied on evidence from a marketing director, who could not give evidence on average consumer perception.

Respondent's Arguments

• The application for permission to appeal should be dismissed as there is no real prospect of success.
• Esure did not object to the admissibility of evidence before the hearing officer and cross-examined witnesses, so it is too late to challenge the evidence now.
• Trade witnesses may give opinion evidence relevant to their sphere, and the judge was wrong to require evidence substantiating likelihood of confusion when the hearing officer’s decision was supported by his own assessment.
• The hearing officer's decision on confusing similarity was correct and should not be disturbed; the marks could both be red, increasing the likelihood of confusion.
• Similarity and confusion require a global assessment of all relevant factors, including visual, aural, and conceptual similarities.
• Use of the mark by esure would fetter Direct Line’s ability to exploit its mark commercially in the future.
• The judge erred in substituting his view for that of the hearing officer and in relying on the branding expert’s evidence selectively.

Table of Precedents Cited

Court's Reasoning and Analysis

The court examined the statutory framework under sections 5(2)(b) and 5(3) of the Trade Marks Act 1994, which implement the Trade Mark Directive, requiring a global assessment of similarity and likelihood of confusion from the perspective of the average consumer. The court acknowledged the debate over whether a minimum threshold of similarity must be established before considering confusion, concluding there is no such threshold; rather, if there is any similarity, the likelihood of confusion must be assessed globally.

The hearing officer had found indirect confusion based on visual and conceptual similarities, particularly the unusual combination of wheels attached to electronic communication devices, and that use of the mark in red would increase confusion. The judge had overturned this on the basis of insufficient evidence of confusion, relying on differences in visual and conceptual elements and rejecting the survey evidence due to its timing after an advertising campaign.

The court held that the hearing officer was entitled to reach his conclusions based on his own observation and experience, without requiring formal evidence such as consumer surveys, especially given the nature of the goods and services sold directly to the public. The judge’s interference with the hearing officer’s factual evaluation was deemed incorrect, and the hearing officer’s decision on confusing similarity under section 5(2)(b) was reinstated.

Regarding expert evidence, the court was critical of the branding expert's testimony, finding it largely opinion-based, lacking relevance to the average consumer’s perception, and not constituting proper expert evidence. The court emphasized that confusion must be assessed from the viewpoint of the average consumer and that tribunals are generally well placed to form their own views without expert assistance unless the market is unfamiliar.

The court also noted the principle of interdependence between similarity of marks and similarity of goods or services, cautioning against rigid compartmentalization of factors but recognizing the need for structured analysis. The apparent inconsistency between the judge’s findings on sections 5(2)(b) and 5(3) was resolved by reinstating the hearing officer’s decision on confusing similarity, making further consideration of section 5(3) unnecessary.

The court encouraged the use of case management directions for consumer surveys to avoid unnecessary costs and unreliable evidence.

Holding and Implications

The court granted permission to appeal due to the complexity and real prospect of success in challenging the judge’s appellate function. However, on the substantive appeal, the court DISMISSED the appeal, reinstating the hearing officer’s decision that the opposition to registration based on confusing similarity under section 5(2)(b) succeeds.

The direct consequence is that the appellant’s application to register the mark is refused on the basis of confusing similarity with the respondent’s earlier mark. The court did not need to consider the section 5(3) ground further. No new legal precedent was established; rather, the decision reinforces established principles on the assessment of similarity, confusion, and the role of expert evidence in trade mark opposition proceedings.