Introduction

The UK Court of Appeal recently upheld a decision in a trademark dispute between Morley’s (Fast Foods) Limited, a longstanding fast-food chain, and eight Defendants operating under the “Metro’s” brand (Morley’s (Fast Foods) Ltd v Nanthakumar & Others [2025] EWCA Civ 186). The case centred on allegations of trademark infringement and breach of a 2018 settlement agreement. The court reaffirmed key principles for assessing confusion in trademark disputes, the significance of contextual use, and the strict interpretation of settlement terms.

Background

Morley’s, founded in 1985, operates a franchise fast food chain specializing in fried chicken and related fast-food offerings. It is the proprietor of three UK trademarks:

1.       A stylized word mark (“the Morley’s Mark”) registered in respect of food and non-alcoholic beverages in Classes 29, 30 and 32, and in respect of food preparation and restaurant and takeaway services in Class 43, since 8 November 2002;

 

2.       The series of two words TRIPLE M, TRIPLE-M registered in respect of food in Class 29, and in respect of food preparation and restaurant and takeaway services in Class 43, since 30 November 2009 (“the Triple M Mark”);

 

3.       The device shown below registered in respect of food and non-alcoholic beverages in Classes 29, 30 and 32, and in respect of food preparation and restaurant and takeaway services in Class 43, since 3 September 2018 (“the Morley’s Red and White Mark”).

The Defendants, led by the seventh appellant Kunalingam Kunatheeswaran (“KK”), operated Metro’s, a competing fried chicken franchise chain. Morley’s alleged that Metro’s used three infringing signs:

1.       Sign 1: “Metro’s... It’s The Real Taste” used by each of the Defendants on the fasciae of their respective restaurants.

2.       Sign 2: “MMM” used by KK and the Sixth Defendant in their respective shop windows and on menus.

3.       Sign 3: “TRIPLE M/TRIPLE ‘M’” used by KK, the Fifth Defendant and the Eighth Defendant on menus.

At first instance, the Court found that Metro’s use of these signs infringed Morley’s trademarks under sections 10(1) and 10(2)(b) of the Trade Marks Act 1994. KK was also held to have breached the 2018 Agreement, which settled prior litigation but restricted modifications to Metro’s branding. The Defendants appeal on eight grounds:

1.       the judge wrongly assessed the identity and attributes of the average consumer.

2.       the judge erred in the visual comparison between the Morley’s Red and White Mark and Sign 1.

3.       the judge erred in the conceptual comparison between the Morley’s Red and White Mark and Sign 1.

4.       the judge erred with respect to the context of use of Sign 1.

5.       the judge erred as to the effect of the 2018 Agreement upon likelihood of confusion so far as KK is concerned.

6.       the judge wrongly interpreted the 2018 Agreement so far as the other Defendants (hereinafter the “Franchisee Defendants”) are concerned.

7.       the judge wrongly held that KK had acted in breach of the 2018 Agreement.

8.       the judge wrongly assessed the similarity between Sign 2 and the Triple M Mark, and therefore wrongly found a likelihood of confusion in the case of Sign 2.

Key issues

The “average consumer” and likelihood of confusion (Grounds 1 and 4)

The Intellectual Property Enterprise Court (“IPEC”) defined two classes of average consumers: (1) low-income families/students with medium-to-low attention, and (2) late-night and early-morning revelers (including intoxicated individuals) with low attention. The Defendants argued the judge erred by focusing on actual consumers instead of the relevant class of notional consumers, segmenting the population, and only considering intoxicated individuals which by definition were not reasonably well informed and circumspect.

While the Court of Appeal agreed that segmenting consumers and factoring in intoxication were errors, it found these mistakes immaterial, as both classes would choose based on convenience and shopfront appearance, with overlapping attention levels.

The Defendants conceded that assessing confusion from the first class’s perspective (medium-to-low attention) would have been valid. The Court concluded that even if the judge had focused solely on this class, the outcome would likely remain unchanged. The Court further emphasized that Metro’s shopfront design (e.g., red-and-white branding, similar interior layouts visible from the street) and nighttime visibility of signage heightened the risk of confusion.

Visual and conceptual similarity (Grounds 2, 3, and 8)

For Sign 1 (Metro’s logo), the Court of Appeal agreed with the IPEC’s finding of “medium” similarity. Both marks used a dominant stylized “M,” white text on a red background, and straplines emphasizing taste (e.g., “It Tastes Better” vs “It’s The Real Taste”). While the brand names (“Morley’s” vs “Metro’s”) differed, the overall visual and conceptual impressions were sufficiently aligned to create confusion. The court rejected arguments that the word “Metro’s” overshadowed the design elements, noting that the stylized “M” and colour scheme dominated consumer perception.

Regarding Sign 2 (“MMM”), the Court of Appeal upheld the finding that its use on menus (e.g., “MMM Burger”) could be pronounced “Triple M,” creating aural and conceptual identity with Morley’s Triple M Mark. This contrasted with Morley’s use of “MMM” in a strapline, which consumers were unlikely to vocalize as “Triple M.” The context of use, product names requiring verbal orders, was pivotal to this conclusion.

Breach of the 2018 Settlement Agreement (Grounds 5–7)

The Court of Appeal upheld that the 2018 Agreement permitted KK to use specified “Metro’s Signs” with reasonable modifications, but could not have allowed modifications increasing similarity to the Morley’s marks. Consequently, Sign 1’s alterations, such as adding a strapline, altering colours, and removing a border breached these terms. Critically, the agreement did not give KK the right to sub-license the Signs. The Court of Appeal emphasized that third-party rights were expressly excluded, and no implied term allowed franchising. Thus, Metro’s franchisees could not rely on the agreement as a defence.

Takeaway

While courts may consider varying attention levels (e.g., late-night vs daytime patrons), classifications must align with the “reasonably observant” standard. The “average consumer” is a hypothetical construct rather than a reflection of real-world buyers. While actual customer behaviour may be taken into account, the benchmark consumer must remain a fictitious, sober, and purely notional figure.

Further, courts are generally reluctant to read or imply third-party rights into contracts, especially concerning franchisees or sub-licensees. This underscores the need for parties to carefully assess their future plans and anticipate how the other side may develop its brand at the time of signing any form of agreement.

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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.

Published by ONC Lawyers © 2025