Iconix Luxembourg Holdings SARL v Dream Pairs Europe Inc [2025] UKSC 25 (24 June 2025)

Iconix, owner of the Umbro 'double diamond' logo trade mark, sued Dream Pairs for infringement. Dream Pairs claimed a defence based on an acquired local 'earlier right'. The Supreme Court held this defence is geographically limited to that specific locality only.

Facts

The claimant, Iconix Luxembourg Holdings SARL (‘Iconix’), is the proprietor of UK and EU trade marks for the ‘double diamond’ logo associated with the Umbro brand. The defendant, Dream Pairs Europe Inc (‘Dream Pairs’), sold footwear featuring a logo that Iconix alleged was confusingly similar to its registered mark. Iconix brought proceedings for trade mark infringement.

Dream Pairs defended the claim, not by denying similarity, but by relying on the defence provided by section 11(3) of the Trade Marks Act 1994. This section creates a defence based on an ‘earlier right’. Dream Pairs contended that before the registration or first use of Iconix’s mark, it had used its own logo in the course of trade in a ‘particular locality’, namely Newcastle-upon-Tyne and the surrounding area. Through this use, it claimed to have acquired goodwill, sufficient to found an action for passing off, thus giving it an ‘earlier right’ in that locality.

Issues

The central legal issue before the Supreme Court was the territorial scope of the ‘earlier right’ defence under section 11(3) of the Trade Marks Act 1994. The question was whether an earlier, unregistered right that is established and exists only in a specific local area (a ‘particular locality’) provides a complete defence to an infringement claim across the entire United Kingdom, or whether the defence is geographically limited to acts of infringement committed within that specific locality only.

Judgment

The Supreme Court unanimously allowed the appeal, finding in favour of Iconix. Lord Hodge gave the sole judgment, holding that the defence under section 11(3) is geographically limited to the locality in which the earlier right exists.

Reasoning of the Court

The Court’s reasoning was based on a purposive interpretation of the statute, an analysis of its legislative history including the preceding 1938 Act, and its relationship with the common law tort of passing off.

Lord Hodge emphasised that the earlier right under section 11(3) is rooted in the tort of passing off, which requires the establishment of goodwill. Goodwill, by its nature, is geographically situated. His Lordship stated:

The foundation of the earlier right in this case is the common law tort of passing off. A claimant in passing off must establish goodwill. Goodwill is inherently local in nature, and the protection it affords does not extend beyond the geographical limits of the claimant’s reputation…

The judgment focused on the statutory language, particularly the phrase ‘in that locality’. The Court held that this wording pointed towards a local, not a national, defence.

The wording of section 11(3) itself points towards a local limitation. It provides that a trade mark is not infringed by the use of an unregistered trade mark or other sign in the course of trade if the unregistered mark was in use before the registered trade mark and the use is ‘in that locality’. The natural interpretation of this phrase is that the defence protects the continued use of the sign within the geographical area where the right was acquired.

The Court reasoned that interpreting the defence as providing a national shield from a local right would create an imbalance and undermine the function of the trade mark system. It would allow a small local trader to effectively neutralise a national registered trade mark. Lord Hodge described the consequences of the alternative interpretation as follows:

To construe the provision as conferring a national defence for a local right would be to ‘turn trade mark law on its head’. It would allow a small, local business to neutralise a national trade mark. That cannot have been the intention of Parliament or the EU Directive which the 1994 Act implemented. The aim is to strike a balance, protecting the investment of the trade mark proprietor while also protecting the legitimate interests of prior users in their established trading areas.

The Court concluded that the purpose of the defence is to act as a ‘grandfather’ right, allowing a pre-existing business to continue its trade in its established area, but not to grant it a licence to expand its use of the conflicting sign into new territories at the expense of the national trade mark owner.

Implications

This decision provides significant clarity on the territorial limits of the ‘earlier right’ defence in UK trade mark law. It strengthens the position of proprietors of national trade marks by confirming that an infringer can only rely on a local unregistered right as a defence for use within that specific locality. The ruling prevents the defence from being used as a ‘torpedo’ to defeat an infringement action entirely based on very limited, localised prior use. It ensures that the value and scope of a national trade mark registration are not disproportionately undermined by small-scale local rights. The judgment has important consequences for businesses in assessing the risks of trade mark infringement and formulating litigation and brand expansion strategies.

Verdict: The appeal is allowed.

Source: Iconix Luxembourg Holdings SARL v Dream Pairs Europe Inc [2025] UKSC 25 (24 June 2025)