The dangers of lack of clarity over the territorial scope of co-existence agreements: Marriott Worldwide Corporation v Delta Air Lines Inc.

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In trade mark revocation proceedings, Marriott Worldwide Corporation ("Marriot") sought to argue that the scope of a co-existence agreement between it and Delta Air Lines ("Delta") covered the United Kingdom. The Hearing Officer at the UK IPO rejected this argument on the basis that it was not clear on the wording of the agreement that it applied in the UK. In response, Marriott appealed the decision to the High Court, which ultimately dismissed the appeal.


Marriott appealed the decision of the Hearing Officer at the UK IPO which invalidated Marriott's UK trade mark registration no. 3108603 for the word DELTA (the "Disputed Mark") for certain services in classes 35 and 43. The appeal was made to the High Court on three grounds; two relating to the services in class 43 which were invalidated – Marriott thought they were not similar to those in the earlier trade mark – with the other ground relating to the scope of the co-existence agreement.

The application to invalidate the Disputed Mark was filed by Delta based mainly on its earlier EU trade mark for DELTA registered for “air transportation services” in class 39 (the "Earlier Mark"). Delta argued, amongst other things, that the marks were confusingly similar under section 5(2)(a) of the Trade Marks Act 1994 ("the Act") and Marriott was taking unfair advantage of a mark with a reputation under section 5(3) of the Act. In contrast, Marriott argued that, although the marks were identical, the services were sufficiently different to avoid confusion. Further, the scope of a co-existence agreement between the parties had resulted in Delta consenting to the Disputed Mark and this meant the Disputed Mark should be allowed to be registered under section 5(5) of the Act.   

When appealing decisions, a judge conducts a review of the case, rather than a re-hearing. In these instances, it is often difficult to succeed in an appeal unless the Hearing Officer has made an error in law or didn’t apply the law correctly.

The decision

In the first instance decision, the Hearing Officer partially invalidated the Disputed Mark for "hotel services; restaurant, bar and lounge services; resort lodging services; reservations services for hotel accommodations" but did maintain it for some other services. The Hearing Officer reasoned that, "these services are commonly sold through the same channels of trade as air transport…the people who fly to a destination will also be those using accommodation services at the destination" and so there was a low degree of similarity between the respective services. Given the identity of the marks, the reputation of Delta and the low similarity of the services, the Hearing Officer found a likelihood of confusion under section 5(2) of the Act. Further, the Hearing Officer's view was that Marriott would obtain an "unfair advantage because consumers would assume there was a link with the Earlier Mark, or the Appellant would obtain sales it would not otherwise have achieved" and so the Disputed Mark fell foul of section 5(3) of the Act.  

On appeal, the Judge, Mr Karet, found that the Hearing Officer was entitled to come to these conclusions.

The co-existence agreement

The decision was not surprising to this point, but the interesting element concerned Marriott's argument based on a trade mark co-existence agreement dated 2015 between Marriott (then Delta Hotels) and Delta (the "Agreement"). Marriott argued that the Agreement demonstrated that Delta had consented to the use of the Disputed Mark by Marriott. Marriott said that whilst certain clauses applied to Hong Kong and People's Republic of China (PRC), clauses 6 and 9 were worldwide in operation. The worldwide clauses contained the consent relied upon.

Much of the Agreement made explicit reference to the PRC and Hong Kong and it was governed by Hong Kong law. The agreement detailed Marriott's marks in Schedule 1 as "Delta Hotels" and "Delta Hotels and Resorts", together the "Delta Hotels Marks". Delta's marks and applications were listed in Schedule 2, together the "Delta Air Lines Marks."

At first instance, the Hearing Officer found that the Agreement did not give consent to the registration of the Disputed Mark in the UK, and it would not give Marriott a valid reason to register the Disputed Mark in the UK. She did note, however, that some of the clauses in the Agreement clearly provided for matters in Hong Kong and the PRC and others had no territorial scope.

On appeal, Mr Karet considered the Agreement and found that it was intended to operate as a co-existence principally in Hong Kong and the PRC. In particular, he acknowledged that:

  • Clauses 1 to 4 dealt with existing oppositions and trade marks in Hong Kong and the PRC.
  • Clause 5 expressly referred to Hong Kong and the PRC, providing: "Delta Air Lines will not challenge, object and/or oppose the use and registration of the Delta Hotels Marks in classes 35, 39, 41 and 43 and will provide a letter of consent to facilitate the registration of the Delta Hotels Marks in the said classes covering services as permitted under paragraphs 1 through 4 above in Hong Kong and China as may be reasonably required by Delta Hotels. Delta Hotels shall reimburse the reasonable costs of Delta Air Lines in providing the letter of consent."
  • Clause 6 addressed the future and did not make explicit reference to Hong Kong or the PRC, providing: "Delta Air Lines will not in the future challenge, object to and/or oppose the use and registration of, and upon Delta Hotels' request will consent in writing to, any future application(s) and registrations by Delta Hotels or its affiliates or successors in interest for the mark "Delta" or any mark incorporating "Delta" (including its transliteration in Chinese and other languages) in classes 35, 39, 41 and 43, provided that the goods and services claimed in such application(s) and registrations are consistent with the services covered by the Delta Hotels Marks and permitted under paragraphs 1 through 4 above."
  • Clause 9 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 related to 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."

As we can see, Hong Kong and the PRC were expressly referred to in clause 5, and clause 6 lacked any express wording. Although the Judge did deem clause 9 to extend worldwide it lacked any explicit reference to any other jurisdiction. In construing the entire contract, he stated that the structure of the agreement was directed towards Hong Kong and the PRC. He said that, in the context of the recitals and the other clauses, it did not appear that clause 6 (and equivalent clause 8) operates worldwide. If they were intended to be worldwide, they would then significantly reduce the scope of clause 9 which incorporated other trade marks in Schedule 3 relating to Japan and the USA only.  

In analysing the parties' true intentions when entering into the Agreement, Mr Karet cited the recitals and concluded:

"Recital E, set out terms for a co-existence in respect of certain marks in Hong Kong and the PRC. If the Agreement was intended to create a worldwide co-existence, then a reader would have expected the recitals to mention jurisdictions other than Hong Kong and the PRC. Instead, a specific mention is made of only two marks outside Hong Kong and the PRC - the Schedule 3 marks of the Respondent in Japan and the USA."

One other interesting issue which was considered was judicial notices (i.e., facts which the judiciary acknowledge based on their experiences). In this case, for example, the Hearing Officer treated "passenger airlines services" as a subset of "air transportation services" based on her own experiences. The Judge had no concerns over this and said that "[i]n considering a likelihood of confusion she was entitled to take judicial notice of matters within her experience."

Therefore, the appeal was dismissed, and Marriott lost part of the Disputed Mark covering certain services in classes 35 and 43 including "hotel services, restaurant, bar and lounge services; resort lodging services, and reservations services for hotel accommodations", no doubt the services of primary interest to them.

Partner and Head of IP, Paul Cox said, "The territorial scope of co-existence agreements should always be expressly set out in the agreement and, as the Judge said in this case, often the best place to do this is in the recitals. Such agreements are designed to avoid future disputes but, in this case, the lack of clarity caused it. If such matters were clear in the agreement, then it would be unlikely that this case would have occurred. Another useful clause to include in such agreements is an alternative dispute resolution clause such as mediation or arbitration especially where the scope of the agreement is worldwide or intended to be."

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