Clear and precise agreements can be a useful and practical mechanism for resolving complex trade mark disputes. Where plain English is not used in agreements, however, this can lead to further subsequent disputes. Our Intellectual Property team examines the lessons learnt from a recent High Court of England and Wales case involving Marriott and Delta. They also highlight some practical points for brand owners to consider.

The High Court of England and Wales recently dismissed an appeal by Marriott Worldwide Corporation (Marriott) against the decision of a UKIPO Hearing Officer to invalidate Marriott’s UK registration number 3108603 for the word DELTA (the Mark) for certain retail store and hotel services. The Court arrived at this decision as it determined that a co-existence agreement did not apply to the UK. In appealing the Hearing Officer’s decision, Marriott had sought to rely on a trade mark co-existence agreement which was entered into by Marriott and Delta Air Lines Inc (Delta) in 2015 to argue that Delta had consented to the use of the Mark by Marriott, but which made references to the Chinese and Hong Kong markets.

This argument was ultimately not accepted by the High Court and, therefore, the takeaway is the importance of using very clear language in co-existence agreements so that there can be no doubt, ambiguity, or question as to their scope and application. We take a look at what went wrong and lessons learnt for brand owners.

Background

In bringing the invalidity application initially, Delta relied on its earlier UK registrations for the mark DELTA, the first of which protected “Air transportation services” in class 39. A second DELTA trade mark was registered in class 39 for: “Storage services for freight and for goods; all relating to air transport; air transport services, but not including any such services relating to air courier services; all included in class 39.”

The UKIPO Hearing Officer concluded that there was sufficient similarity between the competing marks to give rise to a likelihood of confusion. This was based on the consumer's above-average level of attention, which would lead to a conclusion that there was an economic connection between the uses of the marks. The Hearing Officer therefore maintained the Mark for a wide range of services in classes 35 and 43. On the other hand, the Mark was invalidated for a wide range of “Retail store services” in Class 35 and “Hotel services” in Class 43.

Marriott appealed in the hope of restoring the portion of the Mark that the Hearing Officer invalidated.

Co-existence

The central issue in the dispute revolved around the interpretation of a trade mark co-existence agreement, which was made on 25 March 2015 between Delta Hotels Limited Partnership (Marriott’s predecessor in title) and Delta. The agreement was governed by Hong Kong law. In reviewing the terms of the agreement, the UKIPO Hearing Officer concluded that some of the clauses clearly provided for matters in Hong Kong and China while other clauses did not contain that express territorial limitation. On the whole, the Hearing Officer was satisfied that the agreement did not amount to consent to an application for trade marks in the UK, and consequently, the agreement did not assist Marriott’s case.

The UK High Court examined the following key provisions of the agreement:

• Clause 5 which provided that Delta Air Lines would not challenge, object and/or oppose the use and registration of the Delta Hotel Marks in classes 35, 39, 41 and 43. It also set out that Delta Air Lines would provide a letter of consent to facilitate the registration of the Delta Hotel Marks in the identified classes…in Hong Kong and China as may reasonably be required by Delta Hotels.

• Clause 6 which provided that Delta Air Lines would not in the future challenge, object to and/or oppose the use and registration of, and upon Delta Hotel’s request will consent in writing to, any future applications and registrations by Delta Hotels or its affiliates or successors in interest for the mark “Delta” or any mark incorporating “Delta” in classes 35, 39, 41 and 43. This clause was provided that the goods and services claimed were consistent with the services covered by the Delta Hotels Marks.

• Clause 9 which provided that “each of Delta Hotels and Delta Air Lines undertakes to the other that it will cooperate in good faith to agree upon a mutually acceptable compromise, consent and/or co-existence.” This undertaking concerned the Delta Hotel Marks and the Delta Air Lines marks, or similar variations including transliterations in Chinese and other languages. It similarly extended to marks for or comprising “DELTA” such as “DELTA VACATIONS” owned by Delta Air Lines, where they conflict or overlap in other jurisdictions in the future.

Decision

In reviewing these clauses, the High Court determined that the structure of the agreement is directed towards Hong Kong and China. The High Court also decided that if an agreement was intended to create a worldwide coexistence “then a reader would have expected the recitals to mention jurisdictions other than Hong Kong and China.” For that reason, the High Court concluded that the Hearing Officer was entitled to reach the conclusion that the agreement did not provide consent by Delta to the use of the Mark by Marriott.

Practical points

The decision is a reminder of the need for very clear and precise drafting of terms in co-existence agreements. If the terms of co-existence agreements are not clear and drafted in plain English, this case is a prime example of how difficulties and further disputes can arise. In addition:

• All points which are agreed by parties in ‘off the record’ or ‘without prejudice’ negotiations should be recorded in writing and should form the basis of an agreement on an open basis.

• The territorial scope of the agreement should be clearly defined, and the specific obligations being imposed on all parties who are bound by the agreement should be clearly listed. In the Marriott v Delta case, the co-existence agreement should have said in clear terms if the obligations in clauses 5, 6 and 9 applied to specific territories and those territories should have been identified and listed.

• Agreements should also contain appropriate dispute resolution or escalation clauses which may in certain cases avoid the need for issuing legal proceedings.

• Lastly, brand owners should always seek expert legal advice before entering into trade mark co-existence agreements, particularly where the disputes in question are complex and/or where there are multiple jurisdictions involved.

For more information and expert legal advice on express terms to be set down in trade mark settlements, please contact a member of our award-winning Intellectual Property team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.