MG X POWER : Bad news for Mr Riley…

Clive Goldthorp

MG XPower SV

AROnline last reported on the MG X POWER Trade Mark dispute in November, 2008 when the Intellectual Property Office’s Hearing Officer exercised the Trade Mark Registrar’s discretion under the Trade Marks Act, 1994 and referred MG Sports and Racing Europe Limited’s (SREL’s) Applications for rectification of the Trade Marks Register in respect of Registration No. 2296016 (the MG X POWER Trade Mark) and revocation of thirty one other MG Trade Marks to the High Court (See: MG X POWER: The IPO’s Hearing Officer delivers his decision 17th November, 2008).

Nanjing Automobile (Group) Corporation had, in fact, already commenced Infringement Proceedings against SREL and Mr William Riley in the High Court on the 5th September, 2008. SREL’s above-mentioned Applications were, in the circumstances, consolidated with the Infringement Proceedings which duly proceeded to trial on the 8th to the 11th December, 2009 before Sir William Blackburne, who subsequently delivered his Judgment on the 19th February, 2010. The Judgment has now been published on the British and Irish Legal Information Institute’s (BAILII’s) website. Any AROnline readers wishing to read the full version can do so by following this link to Nanjing Automobile (Group) Corporation and Ors -v- MG Sports and Racing Europe Limited and Anr. [2010] EWHC 270 (Ch).

However, in summary, Sir William Blackburne found in favour of the Claimants Nanjing Automobile (Group) Corporation (NAC China), Nanjing Automobile Corporation (UK) Limited and MG Motor UK Limited and granted an Injunction to restrain passing off and trademark infringement as sought. He also ordered SREL to change its name to one which did not include the letters MG and (inter alia) directed the First Defendant to remove all references to MG on its website and to take all necessary steps to transfer the domain name and any other domain name including the mark ‘MG” into NAC China’s name. The Counterclaim for revocation and rectification failed as did the parallel Trade Mark Registry Proceedings. The Second Defendant, Mr William Riley, was also held to be jointly liable for the activities of which NAC China had complained and which had been carried out in SREL’s name.

The Judgment does, though, merit closer scrutiny because a number of interesting points emerge:-

1) The Judge found that the Asset Sale Agreement between MG Rover Group Limited (in Administration), Powertrain Limited (in Administration) and NAC China dated the 22nd July, 2005 (‘the 2005 Agreement”) was effective to pass the MG X POWER Trade Mark to NAC China but he observed that how the relevant Clauses in the 2005 Agreement and, in particular, Clause 2.2.13(ii) should be interpreted was ‘far from clear.” (See: Paras. 55 to 67 of the Judgment).

2) A Solicitor on the Second Claimant, Nanjing Automobile Corporation (UK) Limited’s, own in-house Legal Team had concerns ‘about the correctness of the action taken by NAC China to record NAC China as the proprietor of some of the MG marks following the signing of the 2005 Agreement.” The Solicitor’s concerns specifically related to ‘the change in ownership recorded for the MG X POWER marks.” The Claimants’ Solicitors were therefore instructed ‘to alter the record of ownership to the MG X POWER marks back into the name of MG Rover” pending clarification of the issue with the Administrators at PricewaterhouseCoopers LLP. However, following an exchange of correspondence between the Claimants’ then Solicitors and PricewaterhouseCoopers LLP, NAC China was re-recorded as the proprietor of the MG X POWER Trade Marks with effect from the 18th April, 2007. (See: Paras. 68 to 73 of the Judgment).

3) The Judge then found that ‘by April 2007 (if not before) any doubts as to whether the 2005 Agreement passed to NAC China the rights in the MG X POWER marks and whether those doubts were justified had been resolved in the sense that without objection from MG Rover Group Limited or its Liquidators (or for that matter from MG Sport and Racing Limited or its Liquidators) NAC China had become re-registered as the proprietor of the MG X POWER marks and, no less significantly, Mr Riley and SREL (and their advisers) were fully in the picture as regards NAC China’s claim to be entitled to those marks and the willingness of the Liquidators of MG Rover Group (and of SREL) to concede that claim (or, at the least, not to make an issue of it) and, thus, to deal with the Defendants accordingly.” (See: Para. 75 of the Judgment).

4) The Judge also held that the Asset Sale Agreement between MG Rover Group Limited (by then in Liquidation), MG Sport and Racing Limited (SRL) (by then also in Liquidation) and SREL dated the 27th June, 2007 (‘the 2007 Agreement”) could not be interpreted as having sold the right to use the MG X POWER Trade Mark to SREL. Indeed, Clause 2.3.2 contained an acknowledgement by the parties that ‘no licence, express or implied, is being granted by either Sellers under this Agreement to use the words ‘MG’ or ‘Rover’ and therefore that the Buyer has no right under this Agreement to use those words in a business name, trademark or otherwise in the course of its business”. The Judge added that: ‘It hardly needs stating that this denial of the grant of any such licence is wholly inimical to the suggestion that, even ignoring other material clauses, the 2007 Agreement should be interpreted as having sold to SREL the right to the use of the MG X POWER trade mark.” (See: Paras. 20 to 31 of the Judgment).

5) The Judge gave detailed consideration to the correspondence passing between NAC China (and its advisers), the Liquidators of MG Rover Group Limited and SRL (and their advisers) and the Defendants (and their advisers) in order ‘to highlight the complete lack of merit in the stance that the Defendants have adopted to the claims in these proceedings and to make the point that some at least of the contentions that have been advanced by them are impossible to reconcile with their knowledge and actions in the weeks leading up to the making of the 2007 Agreement.” Indeed, the Judge stated that ‘even if Mr Riley has since convinced himself that [the 2007 Agreement transferred the MG X POWER rights to SREL], this was certainly not his belief at the time that the 2007 Agreement was entered into.” (See: Paras. 36 to 48 and 77 to 94 of the Judgment).

6) The Judge also noted the Defendants’ actions subsequent to the making of the 2007 Agreement and concluded that, after ‘making all due allowances for the incomplete state of the evidence, the strong impression conveyed by this and the other material before me is that having failed, as he knew at the time, to acquire for SREL from MG Rover Group the UK and Community trademark rights in MG X POWER, Mr Riley was intent on other ways of achieving this end or, at the least, on making life difficult for NAC.” (See: Paras. 95 to 99 of the Judgment).

The Judgment should therefore pave the way for the Claimants to use the MG X POWER badge as a BMW M Division or Mercedes-Benz AMG-like high performance sub-brand at some point in the future. However, the impact of the Judgment on SREL’s plans to re-launch what should probably now be described as the car formerly known as the MG X POWER SV remains to be seen…

A final point: recently ran an article by the magazine’s Senior Contributing Editor, Richard Bremner, headlined ‘MG plans TF replacement” in which ‘well-placed insiders” within the 200-strong Longbridge-based Engineering Team were reported as saying that a front-engined, rear-drive layout was favoured for the proposed TF replacement and that the plan, although ‘far from concrete,” was for the new model to be launched in 2014. Bremner commented that ‘a major challenge will be finding the funds to pay for an all-new rear-drive platform.” AROnline, though, wonders whether a down-sized and updated version of the MG X POWER SV platform (which, admittedly, dates back to the MY96 De Tomaso Biguà!) might provide a quick and cost-effective solution to that problem…

Clive Goldthorp

1 Comment

  1. All very interesting and, as so often in such cases, beggaring of belief that Riley thought he had any sort of a claim to the name!

    In the mean time, as regards your suggestion of adapting the SV platform, I fear that the cost base would be just too high. As you might recall, it uses a laser-cut and welded flat-panel steel chassis, a design which works well for low-volume production but which is unlikely to be scalable to any sort of volume production.

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