Bona vacantia bags victory for defendants

The judge found in favour of the defendants who sold tote bags with similar text to those sold by the claimants who had lost exclusive rights to the Mark in 2023 following the voluntary dissolution of the company that owned it.

Background

After designing the Mark in around 2008/09 (see below), Natasha Courtenay-Smith began personally selling tote bags featuring the Mark ("Claimants' Bag") wholesale to traders on Portobello Road in Notting Hill.

In April 2010, she established a company, The Notting Hill Shopping Bag Company Limited, where she served as both director and shareholder. This company became the trading platform for selling the Claimants’ Bag, replacing her personal sales. Courtenay-Smith also collaborated with Canbolat An, one of Courtenay-Smith's largest wholesale customers, and his company, Organic Hill. In October 2013, Courtenay-Smith registered the Mark, with The Notting Hill Shopping Bag Company Limited as the owner.

In 2017, Courtenay-Smith agreed to transfer the sales operations to a new company, The Notting Hill Bag Co. Ltd (“NHBCL”), where Canbolat An was the sole director, and dissolved The Notting Hill Shopping Bag Company Limited. However, before the dissolution, the Mark was not formally assigned or transferred to NHBCL. As a result, the rights to the Mark passed to the Crown as bona vacantia (ownerless property). Although Courtenay-Smith claimed she had agreed with Canbolat An that he could use the Mark, the court noted that use alone does not constitute an assignment. Any licence to use the Mark would have required a written agreement under section 28 of the Trade Marks Act 1994 (“TMA”), and such a licence would have passed to the Crown upon dissolution of The Notting Hill Shopping Bag Company Limited.

In January 2023, Courtenay-Smith discovered that the defendants were selling bags with text similar to that used on the Claimants’ Bag (the “Defendants’ Bags”). She alleged that the defendants used the following signs (and their plain text equivalents), collectively referred to as the “Defendants’ Signs”.

Notting Hill Word Sign

Camden Town Word Sign

Trade mark infringement

Upon discovering that the defendants were selling the bags, Courtenay-Smith realised that the intellectual property rights were still registered under the name of her dissolved company, but the Mark was due to expire on 2 May 2023. On 22 March 2023, Canbolat An applied to renew it, but the judge found he had no legal authority to do so. Only the Crown, as the rightful owner, could renew the Mark or authorise someone else to do so.

In October 2023, Courtenay-Smith restored her company under a new name (07212588 Limited) ("Restored Company"), as the first defendant was now incorporated under the same company name as her previous company - The Notting Hill Shopping Bag Company Limited. Once her company was restored, it attempted to assign the Mark to Courtenay-Smith and then to NHBCL. However, the court found that the assignments were invalid. As the Mark had expired on 2 May 2023 and the company was restored in October 2023, there was no valid trade mark to revest in the company. Once restored, the company may have been able to take steps to apply to renew the Mark during the six-month grace period permitted in accordance with section 43(3) of the TMA, but it had not done that.

The judge found the defendants knowingly copied the Claimants’ Bag and acted deliberately, including incorporating a company with the same name, but ultimately the trade mark infringement claim failed. The Mark had passed bona vacantia and was invalidly renewed on 22 March 2023 and as NHBCL was not the proprietor of the Mark, it lacked standing to bring an infringement claim, as per Match Group LLC v Muzmatch Ltd [2023] EWCA Civ 454; [2023] Bus. L.R. 1097 at §§26–29.

Courtenay-Smith argued that NHBCL had acquired a beneficial interest in the mark through use and intention to transfer. However, the judge rejected this, stating that use alone—even with consent—does not create a proprietary interest. Any such interest would have needed to exist before the company’s dissolution.

Revocation for non-use

The judge held that, had the trade mark not expired on 2 May 2023, it would have revested in the Restored Company upon its restoration. However, even in that scenario, the Mark would have been vulnerable to revocation for non-use under section 46 of the TMA. There could be no genuine use with the authority of the proprietor (the Crown) after dissolution of the Restored Company on 10 April 2018 and prior to expiry of the Mark on 2 May 2023.

Passing off

As the tort of passing off can be brought by any party able to establish goodwill, misrepresentation, and damage as questions of fact, NHBCL’s claim was not subject to the same proprietorship issues that affected the trade mark claim.

NHBCL argued that it had built up substantial goodwill through its trading activities. But the court found that most of the goodwill was generated by Organic Hill and that NHBCL could not rely on Organic Hill’s reputation to support its own claim.

Moreover, the court held that any goodwill associated with Courtenay's Smith's original company was extinguished when the company was dissolved in 2018. Restoration of the company in 2023 did not revive this goodwill, nor could it be assigned to NHBCL.

Copyright infringement

The claimants' copyright claim was based solely on the Notting Hill Shopping Bag logo. The court, in applying the principles from THJ v Sheridan and Infopaq, acknowledged that Courtenay-Smith had exercised some creative freedom in designing the logo. This included:

• The use of a lowercase “t” in “the”;
• The inclusion of a full stop;
• Left justification;
• Arrangement of the text in four rows; and
• The later removal of the dot over the “i” in “shopping”.

Despite this, the judge found that the logo was not particularly unique or highly creative, especially given the constraints imposed by the use of the place name “Notting Hill” and the limited number of words. As a result, the level of copyright protection was considered low so only a close copy would constitute infringement.

The court then compared the Defendants’ Signs to the logo and found notable differences:

• Notting Hill Word Sign:
  • Did not use a lowercase “t”; instead, it used all capital letters
  • Was left-justified but arranged in three lines, not four
  • Used a different font
• Camden Town Word Sign:
  • Used capital letters at the beginning of each word
  • Used a different font

Additionally, the Notting Hill Word Sign used the word “shopper” instead of “shopping,” and the Camden Town Word Sign replaced “Notting Hill” with “Camden Town.” The claimants argued that the latter could be seen as a brand extension, but the court rejected this.

The judge concluded that given the nature of the artistic work and the features relied on as giving rise to copyright, the defendant had not copied a substantial part. Given the low degree of creativity in the original logo, the narrow scope of copyright protection, and the qualitative differences between the Defendants’ Signs and the logo, the defendants were not liable for copyright infringement.

Joint tortfeasance

Because the court found no liability for trade mark infringement, passing off, or copyright infringement, the issue of joint tortfeasance—where multiple parties are held liable for a shared wrongdoing—did not arise.

Comments

This case highlights the critical importance of properly managing intellectual property rights during corporate restructuring and dissolution. Although the claimants successfully demonstrated that the defendants had knowledge of and access to the Claimants’ Bag when creating their own, the claims ultimately failed due to procedural and legal missteps.

The key takeaway is that when a company is dissolved, any unassigned intellectual property rights pass bona vacantia to the Crown. If those rights are not recovered or reassigned before expiry, they are lost and there is no legal standing to bring a claim for infringement. It is also a stark reminder to keep on top of expiry dates and renewals generally.

With special thanks to trainee solicitor, Jessica Malone, for writing this article.