AGA Saga – AGA retrofitter liable for trade mark infringement, but Lifestyle Equities saves director from joint tortfeasorship

In AGA Rangemaster Group v UK Innovations Group, [2024] EWHC 1727 (IPEC), AGA Rangemaster UK Ltd (AGA), brought a successful claim against UK Innovations Group Ltd (UK Innovations) and its director Michael McGinley for trade mark infringement in relation to their marketing and sales of AGA cookers that had been "retrofitted" with electrifying control panels, using UK Innovations' specialised "eControl System".

UK Innovations' business model is to refurbish old AGA cookers and parts to their original state and then convert them into electric ovens by fitting the eControl System, which impacts the control panel of the AGA. The modified cookers were then sold to consumers as an “eControl AGA” or an “AGA Cooker eControl”, under the direction of Mr McGinley as the inventor of the system.

The Intellectual Property Enterprise Court (IPEC) decided that the AGAs fitted with the eControl System by UK Innovations did infringe AGA's trade marks in the AGA name and logo. UK Innovations had sought to rely on the principle of exhaustion under s12 of the Trade Marks Act 1994 (TMA) as a defence to infringement, but this was unsuccessful.

AGA also argued that their copyright in the AGA control panels had been infringed, and that Mr McGinley was liable for the infringements as a joint tortfeasor with his company. While both of these arguments were unsuccessful, the IPEC's reasoning on these issues provides useful examination of both s 51 of the Copyright Designs and Patents Act 1988 (CDPA) and the recent decision in Lifestyle Equities v Ahmed¹.

Trade mark infringement

AGA owns a number of trade marks for the word "AGA" and the "AGA" Logo (the AGA Marks) and for images of an AGA Cooker and control panel.

It was common ground between the parties, that selling refurbished AGA cookers under the AGA Marks brought UK Innovations within scope for a finding of trade mark infringement under ss 10(1), 10(2) and 10(3) of the TMA. However, UK Innovations claimed that AGA's rights in the AGA Marks had been exhausted and that they therefore benefitted from the defence under s12 TMA (the s12 Defence), on the basis that they were a legitimate reseller. AGA objected to this on the grounds of s12(2) TMA, which allows a trade mark proprietor to oppose resale under their mark if they have a "legitimate reason" to do so. 

The IPEC concluded that, although AGA did not have legitimate reasons for opposing UK Innovations' selling of the AGAs fitted with the eControl System, they did have legitimate reasons in opposing way in which the products were sold and marketed to the public. UK Innovations had marketed the modified AGA cookers in a way that would have given customers the mistaken impression that there was a connection or commercial partnership between AGA and UK Innovations, when no such connection existed. They could not therefore rely on the s12 Defence and were found to have infringed the AGA Marks.

The judge reminded the parties that established case law² suggests that resellers seeking to rely on the principle of exhaustion are actively obliged to try and dispel any impression on customers that there is a commercial partnership. In his view, UK Innovations had done "the opposite" in this case.

Copyright infringement

AGA also alleged that UK Innovations and Mr McGinley had infringed their copyright in its design drawing for the control panel of its own electronically controlled AGA Cookers (the Control Panel Drawing). The defendants relied on two defences to this claim for copyright infringement.

Firstly, they denied that copyright subsisted in the Control Panel Drawing on the basis that the work was entirely dictated by function and was not an expression of the artist’s "own intellectual creation". The judge was not convinced by this, and decided that although it depicted a technical product, there were clearly any manner of ways in which the designs could have been made up, and the design shown in the drawing was therefore not dictated by the technical function of the product. The IPEC concluded that copyright did subsist in the drawing, applying Cofemel.

However, in the event that copyright was found to subsist in the drawing, the defendants also sought to rely on the defence to infringement under s51 of the CDPA, which provides that there can be no copyright infringement of a design document that records "anything other than an artistic work". UK Innovations argued that the control panel depicted in the Control Panel Drawing was not an artistic work.

This defence, as the IPEC acknowledged, has had a difficult status in recent years following the CJEU decision in Cofemel, which suggested that what constitutes a copyright work is less restrictive than previously thought under English law. While the judge in this case was alive to this issue, in the absence of any specific submissions on it, he did not think that it was possible for the court to reach a final conclusion as to the impact of Cofemel on s51. The judge instead dealt with the s51 issue simply on the basis of its own wording and found that although copyright subsisted in the design drawing, the actions of the defendants were permitted by reason of s51 as the control panel was not an artistic work.

Joint tortfeasorship

AGA also argued that the director of UK Innovations, Mr McGinley, was liable for any infringements personally as a joint tortfeasor. Mr McGinley ran UK Innovations on a day-to-day basis and had control of the actions (e.g., the invoices and sales techniques) which were found to infringe the AGA Marks.

Unusually, the judge was unable to consider this issue until after trial had concluded, as the outcome was dependent on the recent judgment in Lifestyle Equities v Ahmed³, which was handed down after the trial in this case had concluded.

The judge started by explaining that accessory liability differed for trade mark and copyright cases. As no copyright infringement was found (due the s51 defence being successfully deployed by the defendants), there could be no liability although the judge did note that Mr McGinley could have been liable as a primary infringer if infringement had been found.

The same was not true for the trade mark infringement. Following Lifestyle Equities, for Mr McGinley to be liable as an accessory, he must have had "requisite knowledge" of what the company was doing. This contrasts with the conditions of primary liability for trade mark infringement which does not require any level of knowledge. The "requisite level of knowledge" determined in Lifestyle Equities amounts to evidencing that the individual "knew the essential facts that made the act unlawful" - in this case, the act amounting to trade mark infringement.

On evaluation, the IPEC judge was unable to find sufficient evidence that Mr McGinley knew that UK Innovations' activities in relation to the eControl AGAs were liable to affect the function of the AGA Marks, nor that they might give rise to a likelihood of confusion.  As such, he did not have the requisite knowledge that his activities would be unlawful and could not be liable for trade mark infringement.

Comment

Although the facts of this case were relatively straightforward from a trade marks perspective, the judgment does provide an indication as to how the courts may be minded to approach two distinct, but contentious, judgments. 

The decision in Lifestyle Equities v Ahmed has proved to be divisive in the legal sphere, as it creates a high bar for the level of knowledge required before an individual can be liable as an accessory for actions carried out by a company that they have control of. In this case, Mr McGinley was, in effect, the controlling mind of the company and carried out the acts (albeit in the company's name) that led to a finding of primary infringement for UK Innovations. However, his lack of knowledge of trade mark law, in conjunction with the decision in Lifestyle Equities, appears to have saved him from a finding of accessory liability.

In relation to the application of Cofemel to s51 of the CDPA, and not for the first time, it seems that judges (particularly those sitting in lower courts) are, perhaps wisely, reluctant to open this potentially thorny set of issues.