Summary of Opinion — Court of Appeal (Civil Division)
Factual and Procedural Background
The Plaintiff manufactures and sells a well-known range of cookers. The First Defendant / Appellant's business involved taking the Plaintiff's older cookers (originally running on fossil fuels), renovating and converting them to run on electricity, and fitting the First Defendant's control system described as the "eControl System". The Plaintiff brought claims for trade mark infringement and copyright infringement arising from the sale of the converted cookers. The action against the Second Defendant was dismissed at trial and is not appealed.
This appeal concerns primarily the trade mark claim (the First Defendant / Appellant's appeal). The trade mark issue turns on whether the First Defendant was protected by the exhaustion defence in section 12 of the Trade Marks Act 1994 or whether section 12(2) provided legitimate reasons for the Plaintiff to oppose the First Defendant's further dealings. A separate judgment by another judge in the panel addresses the copyright issues, including a dispute concerning the application of section 51 of the Copyright, Designs and Patents Act 1988.
Legal Issues Presented
- Whether the First Defendant's use of the Plaintiff's trade mark in relation to renovated and converted cookers was covered by the exhaustion defence in section 12(1) of the Trade Marks Act 1994.
- Whether legitimate reasons to oppose under section 12(2) existed in the circumstances, in particular whether the First Defendant's marketing and sale of converted cookers gave rise to a (i) change or impairment of condition, (ii) risk of serious damage to reputation, or (iii) an impression of a commercial connection between the First Defendant and the Plaintiff.
- Whether the judge at first instance applied the correct legal test when assessing whether the marketing created an impression of a commercial connection (including the relevance of the "with difficulty" formulation derived from keyword-advertising cases).
- Whether the judge's factual findings about the impression created by the First Defendant's marketing and invoices were rationally supportable.
- On the cross-appeal, whether the control panel at issue was an "artistic work" for the purposes of copyright (such that section 51 did not apply), and whether section 51 is incompatible with assimilated EU law (an academic issue in the Court's view).
Arguments of the Parties
First Defendant / Appellant's Arguments
- The First Defendant argued that its activities fell within s.10 (use of the sign) but that the exhaustion defence in s.12(1) applied because the goods had been put on the market by the Plaintiff or with its consent.
- It contended the judge applied the wrong legal test for the impression of a commercial connection by adopting a "with difficulty" formulation (derived from keyword-advertising cases) that should not apply outside that context.
- The First Defendant submitted that the relevant connection must be between undertakings and not at the level of products, and that the judge wrongly treated product-level indications as establishing a relevant connection.
- It further argued that the judge impermissibly carried out a balance of interests instead of applying the correct statutory/legal tests and that the judge failed properly to take account of sector practices and the legitimate interests of the secondary market.
- Finally, the First Defendant sought to challenge the factual findings as irrational and not open on the evidence, including points about how customers would reasonably understand the marketing and sales process.
Plaintiff / Respondent's Arguments
- The Plaintiff argued that although the goods had been placed on the market, section 12(2) applied because the First Defendant's marketing and description of the converted cookers (notably use of composite signs such as "eControl AGA") was likely to give customers the impression that the goods were products of the Plaintiff or that the conversion/service was an activity connected with the Plaintiff.
- The Plaintiff further submitted that the website presentation, invoices and the physical presence of both an AGA badge and an "eControl System" badge risked creating pre-sale and post-sale confusion that would justify the derogation in section 12(2).
- By respondent's notice the Plaintiff also challenged the judge's rejection of post-sale confusion as a basis for legitimate reasons to oppose.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Precedent A (Case C-16/03) [2005] ETMR 28 |
Exhaustion principle: trade mark rights are exhausted once goods are put on the market by the proprietor or with consent; sale puts goods into free circulation and enables proprietor to realise economic value of the mark. |
Used to explain the basis of s.12(1) and the general exhaustion doctrine. |
| Precedent B (Case C-46/10) [2011] ETMR 58 |
Clarifies factors for impression of commercial connection and average consumer standard; also discussed balancing of interests between proprietor and purchasers. |
Applied in explaining that the test is assessed from the viewpoint of a normally informed and reasonably attentive consumer and in analysing types of connection (undertaking-level and product-level). |
| Precedent C (Case C-337/95) [1998] RPC 166 |
Dior: reseller free to use trade mark to indicate resale; damage to reputation can be legitimate reason to oppose. |
Relied on to identify one category of legitimate reasons under s.12(2): risk of damage to reputation. |
| Precedent D (Case C-558/08) [2010] ETMR 52 |
Portakabin: connection between keyword-advertising tests and exhaustion; if use of sign makes it difficult for average internet user to ascertain origin then Art 7(2) may apply. |
Examined for limits of the "with difficulty" formulation and for the point that that formulation arises in the keyword-advertising context rather than universally. |
| Precedent E (Case C-63/97) [1999] ETMR 339 (BMW) |
False impression of a commercial connection (e.g. affiliation with authorised dealer network) may justify opposing further dealings. |
Used to identify the category of an impression of a commercial connection as a basis for legitimate reasons to oppose. |
| Precedent H (Joined Cases C-236-08 to C-238/08) [2010] RPC 19 (Google France) |
Introduces the "with difficulty" test concerning origin ascertainment in the context of internet keyword advertising. |
Identified as the source of the "with difficulty" wording; court explained that that limb is specific to the online advertising context and not generally applicable. |
| Precedent F (Joined Cases C-427/93, C-429/93 & C-436/93) [2003] Ch 75 (Bristol-Myers Squibb v Paranova) |
Principles for addressing repackaging/relabelling in parallel import cases; steps required to dispel impression in that specific context. |
Referred to as guidance that sellers should take steps to dispel false impressions; court noted those guidelines were framed in the pharmaceutical repackaging context. |
| Precedent G ([2023] EWCA Civ 1478) (Montres Breguet v Samsung) |
Post-sale confusion can be taken into account in trade mark cases. |
Cited to support that post-sale confusion is relevant for consideration (but not determinative) in assessing legitimate reasons to oppose. |
| Precedent I ([2014] EWCA Civ 1403 / [2015] ETMR 5) (Interflora v Marks & Spencer) |
Explains the narrower origins of the "with difficulty" test as applied to internet advertising and its policy context. |
Used to show that the "with difficulty" test was devised for keyword advertising and is not a free-standing, broadly applicable test for Art 7(2)/s.12(2). |
| Precedent J (Case C-197/21) (Soda-Club / SodaStream) |
Emphasises that legitimate reasons to oppose are derogations from free movement principles; cautions about applying repackaging principles beyond pharmaceutical context. |
Referred to as context for caution in applying repackaging-focused principles (e.g. Paranova) to other sectors. |
| Precedent K ([2025] UKSC 25) (Iconix v Dream Pairs) |
Supreme Court acknowledgment that post-sale confusion can be taken into account. |
Cited to support that post-sale confusion may be relevant evidence in assessing impression of connection. |
| Precedent L ([2020] EWHC 148) (Response Clothing v Edinburgh Woollen Mill) |
Discusses the character of "graphic work" and limits of that concept. |
Applied by the judge considering whether a control panel constituted a graphic/artistic work for copyright purposes. |
| Precedent M ([1994] FSR 659) (Anacon v ERT) |
Considered whether circuit diagrams are artistic works; distinction between subsistence and infringement; "visually significant" concept. |
Discussed in the copyright analysis about what amounts to a graphic/artistic work and the limits of that category. |
| Precedent N (Case C-683/17) (Cofemel v G-Star Raw) |
Clarifies when designs may qualify for copyright under the Information Society Directive: originality as expression of author's own intellectual creation; cumulation of design and copyright protection. |
Raised in argument about whether s.51 is compatible with assimilated EU law; Court treated the question as academic in the circumstances. |
| Precedent O (Case C-106/89) (Marleasing) |
Duty to interpret domestic legislation so far as possible in conformity with EU law. |
Referred to in the copyright compatibility discussion and limits of conforming interpretation. |
| Precedents P, Q, R (Domestic authorities: Litster, IDT Card Services, Vodafone 2) |
Support the duty and limits on courts to interpret domestic law in conformity with EU law. |
Quoted to explain interpretative obligations and their limitations in relation to alleged incompatibility of s.51 with EU law. |
| Precedents S, T (Interlego; Rose Plastics) |
Discuss "visually significant" and originality in artistic works. |
Used in the copyright discussion to explain the nature of artistic/graphic works and the boundary between functional articles and graphic artistic works. |
Court's Reasoning and Analysis
The Court addressed the trade mark appeal primarily through analysis of section 12 of the Trade Marks Act 1994 (implementing the EU exhaustion principle and its derogations). The Court identified three categories, derived from the statute and CJEU authorities, in which a proprietor may have legitimate reasons under s.12(2) to oppose further dealings: (1) change or impairment of the condition of the goods after being put on the market, (2) risk of serious damage to the reputation of the mark, and (3) where further dealings create the impression of a commercial connection between the reseller and the proprietor.
On the first two categories (condition change/impairment and damage to reputation) the first-instance judge found that the refurbishment and conversion work carried out by the First Defendant did not, on the facts, amount to changed/impaired condition sufficient to defeat exhaustion, and did not create a risk of serious damage to the Plaintiff's reputation. Those findings were not challenged successfully on appeal.
The central issue was the third category: whether the First Defendant's marketing and sales practices created the impression of a commercial connection with the Plaintiff. The first-instance judge made detailed findings about the First Defendant's website and invoices. Key findings were that the website offered customers the opportunity to "Buy an eControl AGA", displayed images of cookers with the Plaintiff's badge alongside an "eControl System" badge, and included text (for example references to warranty and a display of "Aga Colours") that, taken together, were likely to give customers the impression that the products were part of the Plaintiff's product range or that the conversion/eControl system was connected with the Plaintiff.
The First Defendant advanced two principal legal criticisms: (i) the judge had used the "with difficulty" formulation derived from the keyword-advertising authorities (e.g. Google France / Portakabin) which is inappropriate outside the internet keyword context; and (ii) the judge incorrectly assessed the existence of an impression of a commercial connection, conflating product-level indications with undertaking-level connections and improperly performing a balancing exercise. The Court accepted that the "with difficulty" language derives from internet advertising jurisprudence and is not generally applicable in non-keyword cases; however, the Court concluded that although that phrase appeared in the judge's statement of the law, the judge did not rely upon that less stringent limb when reaching his conclusion. Instead, the judge explicitly found that the totality of the First Defendant's marketing created the impression of an "eControl AGA" product in the Plaintiff's range and that this impression was not corrected by documents or invoices (the invoices, if anything, reinforced the impression).
On the question whether a relevant impression may be product-level rather than solely an undertaking-level connection, the Court held that the law does not restrict the relevant impression to an affiliation between undertakings only. The authorities (including Viking Gas) recognise that a false impression about the origin of the product itself (e.g. that the product or service originates from the proprietor) can justify opposition under the derogation. The Court therefore rejected the submission that the judge was wrong to treat product-level impressions as capable of satisfying s.12(2).
The First Defendant's complaint that the judge impermissibly carried out a balancing exercise was also rejected. The Court explained that references in prior authority to striking a balance describe the purpose of the legal framework rather than confer on courts a duty to perform a free-standing balancing test. Reading the judgment as a whole, the Court concluded the judge applied the correct legal framework (asking whether the marketing gave an impression of a commercial connection) and that a passing reference to the proprietor's interests "outweighing" others was a statement of result rather than an indication of an impermissible method of decision-making.
On the review of facts (ground 2), the Court recognised the usual appellate restraint on overturning primary findings of fact. The Court concluded the first-instance judge's finding that the marketing material (website and invoices) was likely to create the impression that "eControl AGA" indicated a product in the Plaintiff's range, that the eControl System was connected to the Plaintiff, and that the conversion was an AGA-provided service, was open on the evidence and supported by cogent reasons. The Court accepted that alternative, less misleading ways of presenting the converted products were available and that the First Defendant could have dispelled any misleading impression by clear statements; the absence of such corrective statements supported the judge's conclusion.
On post-sale confusion (the Plaintiff's respondent's notice), the Court noted the issue was finely balanced on the facts and ultimately unnecessary to decide given dismissal of the appeal; the Court was not persuaded that the first-instance conclusion rejecting post-sale confusion should be overturned.
In the copyright cross-appeal, the judge (another member of the court) analysed whether the control panel as a whole constituted an "artistic work" (in particular a "graphic work") such that the documentary/design defence in section 51 could not apply. The judge concluded the control panel was primarily a functional object incorporating graphic elements and that the control panel as a whole was not a graphic work for the purposes of the 1988 Act. The judge also observed that the question whether section 51 is incompatible with assimilated EU law (Cofemel) raised an academic issue in the circumstances and declined to decide that compatibility point since it would not affect the parties' rights.
Holding and Implications
Holding:
THE APPEAL BY THE FIRST DEFENDANT / APPELLANT IS DISMISSED. The cross-appeal (copyright) advanced by the Plaintiff is also dismissed.
Implications:
- Direct effect on the parties: The First Defendant cannot rely on the exhaustion defence in respect of the specific manner in which it marketed and sold the converted cookers; the court upheld the first-instance finding that the marketing gave a legitimate reason for the Plaintiff to oppose further dealings under s.12(2).
- The First Defendant was required, if it wished to sell converted cookers, to ensure its marketing and documentation did not give customers the impression of a commercial connection with the Plaintiff (the judgment expressly noted the availability of corrective steps the First Defendant could take, such as avoiding compound labels like "eControl AGA" and making clear statements dispelling any false impression).
- No broader novel precedent was created by this decision. The Court framed its decision within existing authorities, clarifying that the "with difficulty" formulation derives from and is tailored to internet keyword-advertising contexts and that product-level impressions can be material in assessing a commercial connection under s.12(2).
Availability of Information
This summary is based exclusively on the provided opinion. All personal names and party names appearing in the original text have been replaced with role-based placeholders to preserve anonymity.