The Court of Appeal considers whether the average consumer is tipsy in a chicken shop trade mark dispute

This decision discusses some key issues about settlement agreements, the average consumer and the similarity of marks. 

The Court of Appeal (COA) dismissed an appeal against the owner of Metro’s fast food outlets (the defendant) and agreed with the judge at first instance that the use of the Metro mark for a chicken shop restaurant did infringe the trade marks owned by Morley's (Fast Foods) Limited.

Morley's is a well-known fast food chain that serves burgers and fried chicken. They own a number of UK registered trade marks, including the Morley trade mark set out below. 

Morley trade mark	Metro mark

In 2018 a settlement agreement was previously signed by the two companies that granted the defendant use of a prior version of the Metro mark, set out below: 

Metro settlement mark

The agreement allowed the defendant to use the Metro Settlement mark or “any reasonable modifications thereto”. In the first instance decision, it was held that the Metro mark (that had been updated to include a strapline) was not considered a “reasonable modification” of the Metro settlement mark, as the addition of the strapline brought the marks closer in similarity. 

The first instance judge found that the defendant had infringed Morley’s registrations and the judge considered the average consumer to be split into two groups: (i) low income children and young people, students and families and (ii) early morning and late night revellers.

The Court of Appeal decision

The COA agreed with the first instance decision in so far as the use of the Metro mark for a chicken shop restaurant did infringe Morley’s trade mark. However, LJ Arnold held that the first instance judge had erred by “salami slicing” the average consumer into two groups consisting of late night revellers who would be intoxicated. LJ Arnold held this approach was inappropriate and went too far, as it was not necessary to include a separate class of intoxicated late night consumers. Furthermore, the average consumer could essentially fall into the same two groups (i.e., a student who is also a late night reveller). Despite disagreeing with this, LJ Arnold did agree that the decision was correct to find a likelihood of confusion, as the errors in respect of the average consumer were not considered to be material. 

The COA agreed that the Metro mark was not a reasonable modification of the Metro settlement mark and also agreed the strapline made the marks look even more similar. Therefore, the defendant had breached the settlement agreement. There was also a discussion as to whether the settlement agreement granted the defendant the right to sub-licence the use of the Metro settlement mark to its franchisees. LJ Arnold agreed with the first instance judge that it could not.

LJ Arnold also agreed with the visual and conceptual analysis that was decided by the first instance judge and found it was “well within the bounds of rationality”. He agreed that there was visual similarity despite the different brand names, and there was conceptual similarity due to both marks having a strapline that evokes a good taste. 

Key Takeaways

This decision highlights the need to be extremely careful when drafting settlement agreements. The Court will not imply third-party rights (such as sub-licensees or franchisees) into an agreement, and if you do want a right to sub-licence, it needs to be explicit in the agreement. This decision also illustrates that the average consumer is well established in trade mark law and their characteristics are established as “reasonably well-informed, observant, and circumspect” although the average consumer can be less attentive, they cannot be drunk.