Iconix vs Dream Pairs: Clarifying post-sale confusion and affirming the discretion afforded to trial judges

In this article, intellectual property lawyers Kate Marrs and Lloyd Lane examine the recent Supreme Court decision in Iconix v Dream Pairs. They analyse the implications of the Supreme Court’s confirmation that post-sale confusion can be sufficient to establish trade mark infringement, and the threshold for overturning findings of a trial judge.

The Supreme Court’s judgment clarifies that:

• Post-sale confusion can be a sufficient basis for infringement under UK trade mark law, even where there is no confusion at the point of sale.
• The post-sale environment, such as how a logo looks in ‘real life’ (for example, in the case of clothing, when it’s being worn) and the impact of marketing is relevant to assessing whether two marks are similar, providing the evidence is “realistic” and “representative”.
• Appellate Courts should be slow to interfere with a lower court’s assessment, unless this assessment was entirely irrational or contained an error of law or principle so that no reasonable judge could have come to the same conclusion.

This decision shows the Court placing greater legal emphasis on how consumers experience and recognise brands, while highlighting the power of trade marks to protect brands outside of the context of sales. However, the importance of this case in breaking new ground should not be overstated: ultimately, the Supreme Court held that the High Court had considered all the relevant factors and came to the correct conclusion back in March 2023.

The decision is also a reminder that experienced judges can come to very different conclusions on trade mark similarity and likelihood of confusion, and that appellate judges should not interfere with first-instance decisions simply because they disagree with the conclusion. If anything, it emphasises the importance of convincing the trial judge in trade mark litigation.

Background

Facts

Iconix owns trade marks for the famous UMBRO logo. In 2021, Iconix sued Dream Pairs Europe Inc and Top Glory Trading Group Inc (together “Dream Pairs”) for trade mark infringement. The claim related to the logos used by each party:

Iconix alleged infringement under s.10(2) of the Trade Marks Act 1994 (“TMA”), claiming that the Dream Pairs Sign was similar to the UMBRO trade marks and was likely to cause confusion on the part of the public.

In its March 2023 judgment, the High Court dismissed Iconix’s claim. Miles J found that there was a “very low degree of similarity” between the UMBRO Trade Marks and the Dream Pairs Sign, and no likelihood of either point-of-sale or post-sale confusion. Iconix appealed.

In January 2024, the Court of Appeal allowed Iconix’s appeal, finding infringement under s.10(2) TMA. Court of Appeal concluded that there was a “moderately high level of similarity” between the UMBRO trade marks and the Dream Pairs Sign in a post-sale context, resulting in a likelihood of confusion, which the trial judge failed to properly consider. Arnold LJ held that: 

• The finding of a low degree of similarity was irrational when looking at the Dream Pairs Sign from any angle other than square-on;
• The judge was wrong to be swayed by side-by-side graphical representations rather than images affixed to footwear when assessing post-sale confusion; and
• The judge did not consider that, in a post-sale context, the average consumer would see the Dream Pairs Sign from an angle (usually from above) rather than side-on.

Dream Pairs appealed to the Supreme Court.

Supreme Court Decision:

Key Issues

The Supreme Court considered 3 main issues in Dream Pairs’ appeal: 

1: The “Similarity Issue” – when assessing trade mark similarity, which angles and viewpoints is it permissible to consider? Is the post-sale environment relevant? 

Dream Pairs submitted that the Court of Appeal was wrong to assess similarity based on the view of an onlooker in the post-sale environment. They argued that an initial assessment should be based on a side-by-side comparison of the intrinsic features of the marks. If marks are intrinsically similar, only then should external factors (such as the view of an onlooker post-sale) be considered.

The Supreme Court dismissed this submission:

• The Court did not agree that there was a 2-stage test. In any case, the Umbro marks and Dream Pairs Sign were intrinsically similar.
• Evaluating the similarity of two marks by considering their perception in ‘realistic’ and ‘representative’ post-sale environments is consistent with CJEU authority that comparison “must be based on the overall impression made by those signs on the relevant public”. ¹
• There was no dispute that in the post-sale context, a realistic and representative way in which the average consumer would encounter the sign was by seeing it from head height on footwear being worn by another person.

2: The “Confusion Issue” - What is the proper role of post-sale confusion in the assessment of trade mark infringement?

Dream Pairs submitted that post-sale confusion should not amount to infringement unless the confusion persists in the mind of the consumer at the point of a subsequent sale or other transactional context.

The Supreme Court dismissed this submission, agreeing with Arnold LJ’s ruling that “… it is possible in an appropriate case for use of a sign to give rise to a likelihood of confusion as a result of post-sale confusion even if there is no likelihood of confusion at the point of sale”.

The Supreme Court held that CJEU authorities supported Arnold LJ’s finding, that there were no policy reasons for agreeing with Dream Pairs’ submission, and that finding otherwise would lead to “unsustainable” outcomes, for example in the context of using an infringing sign in advertising materials which does not lead to subsequent consumer confusion when buying goods or services.  

3. Was the Court of Appeal entitled to re-make the decision?

Despite the above, the Supreme Court found that the Court of Appeal was wrong to find that the High Court’s decision was “irrational”.

The Supreme Court noted that “reasonable judicially trained minds, each faithfully applying the relevant law and principles, will come to different conclusions” in relation to the type of multifactorial questions common in trade mark law, and that appellate courts should only interfere with a lower decision if it is irrational.

The Supreme Court also cited its recent decision in Lifestyle Equities CV v Amazon UK Services Ltd [2024] UKSC 8, in which it made clear that “it is not enough to show, without more, that the appellate court might have arrived at a different evaluation”.

The Supreme Court held that in this case the Court of Appeal had fallen into the trap of simply substituting its view for that of the trial judge, merely based on the Court of Appeal’s “own firm contrary view”. For this reason, the Supreme Court allowed the appeal and upheld the decision of the High Court.

It is worth noting that the Supreme Court made clear that the basis for its decision (i.e. the Court of Appeal overstepping its appellate function) was not the reason why permission to appeal was granted. In other words, if this case had not thrown up other trade mark issues of general public importance, it is unlikely that permission to appeal to the Supreme Court would have been granted, meaning that the Court of Appeal decision would have stood despite being wrong in law.  

Outcome

Dream Pairs’ appeal was allowed under point (3) above, despite this not being the reason why permission to appeal to the Supreme Court was granted and despite the Supreme Court disagreeing with Dream Pairs on the Confusion Issue and Similarity Issue. Accordingly, the original High Court ruling stands, and there is no infringement under s.10(2) TMA.

Key Takeaways

• When assessing whether trade marks are similar, post-sale circumstances can be considered to establish the existence and degree of similarity, providing the circumstances are ‘realistic and representative’. Two signs that look dissimilar when side-by-side could be considered similar depending on consumer impression post-sale.
• Post-sale confusion can be a sufficient basis for infringement under UK trade mark law, even where there is no confusion at the point of sale.
• Appellate courts should only intervene with an earlier decision when there has been an error of law, principle, or an irrational conclusion applied, not because the appellate judges might have reached a different conclusion themselves. There is a slight tension when considering this principle in the context of appeals to the Supreme Court. In these cases, permission to appeal will only be granted where there is a legal argument on an issue of general public importance, and an argument that the Court of Appeal merely overstepped its appellate role is unlikely to qualify.

1: European Union Intellectual Property Office v Equivalenza Manufactory SL (Case C-328/18 P) [71]