Mind the Gap – Trade mark infringement found in Athleta v Athlecia dispute

The dispute raised key questions about brand protection, trade mark infringement and consumer confusion in the retail market.

Background

Founded in 1998, Athleta has been growing its presence internationally for many years, gaining a foothold in prominent markets. Having an existing reach in the UK, Athleta decided to officially launch in the country in 2023, selling through Gap and other retailers including John Lewis and Zalando. Athlecia entered the retail market in Denmark in 2017 and sold its products in the UK through a UK retailer between November 2021 and June 2022. This raised alarm bells for Athleta, due to potential consumer confusion between the two brands.

Athleta claimed its name and SGD's brand Athlecia were strikingly similar, especially since both brands traded in the activewear clothing industry, targeting a similar (if not the same) consumer base.

Athleta first took action against SGD in the US, claiming that SGD's use of the name ATHLECIA infringed its registered trade mark rights, providing a springboard for its action in the UK.

UK High Court: Areas of dispute

The case focused on Athleta's two UK registered trades marks (registered in September 2008) and SGD's unregistered signs listed below (NB. SGD had applied to register UK trade marks for the ATHLECIA Word Mark and the ATHLECIA Vertical Combination but the proceedings were stayed pending the outcome of this judgment).

Athleta's claims:

Trade mark infringement: Althleta claimed that the use by SGD of the Athlecia Signs amounted to trade mark infringement under section 10(2) of the Trade Marks Act 1994 (the TMA). They alleged the ATHLECIA Signs were similar to the ATHLETA Marks, causing confusion by the relevant public.

Passing off: Athleta also pursued a passing-off claim, arguing that Athlecia's name could mislead consumers into thinking that the two brands were connected. Athleta claimed goodwill in its marks above and also two unregistered signs depicted here:   

SGD's counterclaims:

• Revocation for non-use -: SGD submitted a counterclaim challenging the genuine use of the ATHLETA Marks in relation to some of the goods and services. Initially, Athleta had claimed to use its marks for a broader range of goods, but by the trial, Athleta had narrowed its claimed use to bags (Class 18), clothing, footwear, headgear and clothing accessories (Class 25) and retail store services in the field of clothing (including providing online retail services) (Class 35).
• Invalidity under section 47(1) TMA : SGD claimed that the ATHLETA Marks were descriptive/devoid of distinctive character.

The judgment

In summary, the invalidity counterclaim failed, the non-use revocation claim succeeded in part and the trade mark infringement claim succeeded in part.

Invalidation claim

Revocation for non-use

David Stone, sitting as Deputy High Court Judge, found genuine use in the ATHLETA Word Mark in relation to clothing, bags, and headgear and genuine use in the Combination Mark, but only in relation to clothing. Registrations for the remaining goods and services were revoked.

Some of the use relied on by Athleta was on its US website. The court helpfully confirmed the important principle (following the recent Supreme Court ruling in Lifestyle Equities v Amazon [2024] UKSC 8) that in order for that use to count as genuine use in the UK (or the EU if relevant), it was necessary to show that the websites were specifically targeted at consumers in the UK (or the EU if relevant).  The deputy judge went on to say that, '..it is not enough to say that UK/EU consumers could access the postings – they have to consider that the postings are targeted at them'. Based on this, the judge found that despite sales from the US website being made in the UK, they were not targeted at UK consumers and therefore did not constitute genuine use of the trade marks in the UK. 

Descriptiveness/distinctive character

SGD's invalidity claim failed on the basis that the ATHLETA Word Mark was not devoid of distinctive character and the roundel in the ATHLETA Combination Mark was clearly distinctive.

The court found that the ATHLETA Word Mark was not devoid of any distinctive character as it was a coined term which, whilst clearly alluding to 'athlete, 'athletic/s' or similar, was not a word devoid of distinctive character. SGD had failed to provide sufficient evidence to support its claim that that, 'in 2008, the ATHLETA Marks were not capable of distinguishing the goods and services of one undertaking from those of another'.

The deputy judge went on to say that in relation to the ATHLETA Combination Mark the case was 'more hopeless'. He considered the roundel to be clearly distinctive and there was no evidence to the contrary. 

Therefore, the invalidity claim failed.

Trade mark infringement

The court held that SGD had infringed, but only in part:

ATHLETA Combination Mark – infringed

Focusing on the Combination Marks, the court found the ATHLECIA Horizontal Mark infringed the ATHLETA Combination Mark. This was because the addition of the roundel and its specific placement (on the left) in combination with the word mark increased the likelihood of confusion, particularly taking into account the imperfect recollection of the average consumer.  However, the judge did not believe that a reasonably circumspect consumer would be confused where the goods were only similar – that likelihood would only exist where the goods were identical. The judge therefore concluded that there would only be a likelihood of confusion in relation to clothing.

The court emphasised the importance of the roundel's placement when assessing trade mark infringement. This was reflected in its final assessment of the ATHLECIA Vertical Mark where no likelihood of confusion was found to exist between the marks or identical goods.

ATHLETA Word Mark – not infringed

The ATHLETA and ATHLECIA Word Marks were found to be highly visually, aurally and conceptually similar, yet weakly distinctive, as both marks were based on the words "athlete" or "athletics" and were being used in relation to clothes aimed at athletes. Athleta therefore fell down on the low level of distinctiveness because as the judge noted, 'trade marks with a less distinctive character enjoy narrower protection than marks with a highly distinctive character'.  

Passing off

The passing off claim failed. The court assessed whether Athleta had acquired goodwill in its marks and any resulting misrepresentation. The assessment of goodwill was based on analysing evidence of Athleta's sales made through third party retailers (e.g. John Lewis). It was therefore found that Athleta had established goodwill in its Word Mark, but only in relation to clothing. However the same could not be said of the ATHLETA Combination Mark which had not really been used significantly in the UK to establish goodwill.

Despite the establishment of goodwill in the ATHLETA Word Mark, the deputy judge found there was no misrepresentation. He had already found, in the trade mark infringement claim, that the reasonably circumspect consumer of clothing, bags etc would not be confused between the respective Word Marks, as a result of the weak distinctive character of each. He stated that his findings on passing off were the same – even with the finding of goodwill in ATHLETA, a substantial proportion of consumers would not be misled by SGD’s uses of ATHLECIA. Consumers would understand that they were different activewear brands.  To corroborate this, he pointed to his rejection earlier in the judgment of Athleta's claims that SGD had 'sailed close to the wind' or 'lived dangerously'.

Comment

The UK judgment emphasises the importance of global brand protection, especially, in an era where companies are rapidly expanding into new international and online spaces. The judgment further reinforces the principle that trade mark rights are transnational, and companies must be diligent in protecting their brand identity in the jurisdictions in which they operate. It is important for business to consider trade mark clearances, research and legal protection strategies in every market in which they have an interest.

The case also highlights the importance of targeting when relying on genuine trade mark use on non-UK websites. The court confirmed that use on a non-UK website may infringe a UK-registered trade mark if the non-UK website 'targets' consumers in the UK. It is not enough for a US retailer posting on Instagram, for example, to create or maintain a market in all countries around the world. There must be something more, and that something more is the targeting described by the Supreme Court in Lifestyle Equities. Will consumers accessing the site consider that it is targeted at them?

Brand owners should also consider whether their marks are distinctive enough. It will be disappointing for Athleta that despite an initial finding that the Word Marks were highly similar in relation to identical or similar goods, there was no likelihood of confusion because of the low degree of distinctiveness. Although interesting that the addition of a distinctive device element in a particular place led to the finding of infringement.     

For Athleta, the judgment represented a partial victory in its efforts to safeguard its brand and the goods they offer. On the other hand, it will be interesting to understand the permitted extent of Athlecia's use of its marks going forward, all of which will presumably be ironed out in the final order. As the judgment stands, it seems that Athlecia will be able to continue operating under this name in the UK if it carefully considers the position of its roundel and even just the word marks were found not to be confusing.

We will be watching closely to see if this case is appealed. We are aware of a hearing on 26 November 2024, also conducted by Deputy Judge Stone, on 'Consequentials/Further Arguments'. This may relate to his comment at the end of his judgment, 'If a suitable order cannot be agreed, I will hear the parties on the appropriate remedies given my findings of trade mark infringement'.

With special thanks to trainee, Pavandeep Chumber, for her contribution to this article.