IN THE UK OFFICE

Residual Goodwill: How Good is Yours?

A recent appeal from a U.K. Registry decision offers interesting insight into what happens to goodwill after a brand has fallen from use.

Farmacia Chemists Ltd. owned a registration for a series of two trade marks whose main elements were the words FARMACIA URBAN HEALING in colour and a small rectangular device containing a cross in the top left corner. The registration covered beauty and healthcare products in Classes 3 and 5 and pharmacy advice, medical clinics and surgeries in Class 42.

Pharmacia AB challenged the validity of the registration based on its earlier U.K. registrations for PHARMACIA in Classes 1, 5, 9 and 10. The Registry rejected the challenge except in relation to some of the Class 3 and 5 goods and “pharmacy advice” in Class 42 for which the Registry considered there to be a likelihood of confusion. Pharmacia appealed the rejection of its challenge for the other goods and services, inter alia under Section 5 (4) which required goodwill sufficient to allow Pharmacia to stop Farmacia’s use in an action for passing off.

On appeal, Pharmacia argued that it had established goodwill and a reputation in PHARMACIA at the relevant date, 21 March 2000, through use for pharmaceuticals since 1962. The hearing officer’s finding to the contrary was heavily influenced by the fact that from 1995 to 2000, Pharmacia had replaced PHARMACIA with PHARMACIA & UPJOHN following a corporate merger. However, after five years, PHARMACIA on its own was re-adopted.

The Appointed Person supported Pharmacia’s contention that goodwill generated over thirty years under PHARMACIA did not disappear between the years 1995 and 2000, but was, on the contrary, kept alive by the use of PHARMACIA & UPJOHN. The re-adoption of PHARMACIA in 2000 was evidence of continuing goodwill in that mark.

In the event, the Appointed Person partially rejected the appeal because he did not regard the use of the FARMACIA logo marks for the contested goods to be likely to constitute a misrepresentation. The Class 3 and 5 goods in question were personal care products including cosmetic preparations and aromatherapy preparations. Farmacia had been using its mark for years without apparent confusion.

The appeal was upheld, however, in relation to medical services and surgeries in Class 42. There was no evidence of actual confusion, but that was because Farmacia had not used its mark in respect of these services. They were complementary to Pharmacia’s pharmaceutical products and would have the same users. The appeal was allowed in respect of these services.

Comment

This decision raises the following questions:

1) What period of prior use is necessary to provide continuing goodwill after the use has ceased, particularly where the mark is not used at all after that period, even as part of a composite mark?

2) For how long can such goodwill last once use of the mark has ceased?

The answers are likely to depend on the facts of each case. However, it seems likely that goodwill can only last as long as the mark remains in the minds of the consumers who helped generate it. Brand owners should be aware that there is much competition in the marketplace and customers move on. Brand owners who think that they may go back should make their minds up quickly, and maybe keep a foot in the door with prominent use of the old brand as part of a new composite mark.

The outcome of this case may have been different had the Registrar regarded the similar elements of the two marks - the words FARMACIA and PHARMACIA - as being inherently weak. Both clearly allude to pharmacies, and consequently are arguably of minimal distinctiveness for pharmaceutical products and products sold in pharmacies. If this view had been taken, more weight would probably have been placed on the differences between the marks, and the application for invalidity may not have succeeded for any of the goods or services.