High Court Judge has granted summary judgment to prevent a party, whose registered trade mark had been invalidated at the Trade Marks Registry on the basis of an earlier unregistered right, from defending itself in passing off proceedings before the High Court.
Focal Point Fires Plc (Focal Point) registered the mark FIRECRAFT as a UK trade mark in February 2000 for “gas fires, electric fires, fires simulating fuel effect, fire surrounds, fire fronts and parts” in Class 11. Focal Point advertised in a trade magazine in the summer of 2000 and started selling gas and electric fires under this mark from May 2001.
Evans was a partnership which had manufactured, sold and installed bespoke stone fireplaces under the name FIRECRAFT since the 1990s.
In March 2007, Evans applied to invalidate the FIRECRAFT mark before the Trade Marks Registry under Sections 47 and 5(4)(a) of the Trade Marks Act 1994. In November 2008, the Hearing Officer found in favour of Evans, holding that at the Relevant Date (i.e., the date of the trade mark application in February 2000) the use of FIRECRAFT by Focal Point in relation to the goods covered by its registration would have amounted to a misrepresentation that they were connected with Evans, which would be liable to cause damage to Evans’ goodwill. Focal Point did not appeal the decision and the FIRECRAFT mark was invalidated.
In March 2009, Evans issued passing off proceedings against Focal Point in the High Court. Evans subsequently applied for summary judgment, submitting that Focal Point was estopped (on the grounds of issue estoppel and/or cause of action estoppel) from defending itself against the passing off claim and further or in the alternative that it would be an abuse of process to allow it to do so.
The application was heard by Peter Smith J, who found in Evans’ favour and granted the summary judgment.
The Hearing Officer’s Decision
Peter Smith J concluded that the Hearing Officer found that at the Relevant Date Evans had an actionable claim under the law of passing off and therefore invalidated Focal Point’s mark. Although the Relevant Date was more than 9 years before the commencement of the passing off proceedings, it did not follow that Evans did not have a sustainable cause of action for passing off in 2009. There was no basis for suggesting that the three factors necessary to establish the tort of passing off were not still present. On the subject of damage, the Judge concluded that even if there was no actual damage at the time, Evans could have sought quia timet relief. The Court could have awarded damages in lieu of an injunction.
The Judge noted that, although the Trade Marks Registry has different procedures to those before the High Court, it was plain when the parallel jurisdiction was set up under the Trade Marks Act 1994 that the Registry decision could have precisely the same effect as a judgment in the High Court.
For an estoppel to arise, the decision of the relevant tribunal must be final. Once Focal Point elected not to appeal the Hearing Officer’s decision, it became final. In the Judge’s view, that decision ought to be final as regards not merely the matter on which it was required to adjudicate, but on every other matter which it was necessary for it to decide in order to make the decision.
The Judge rejected Focal Point’s submission that the Hearing Officer only had jurisdiction to decide whether a notional and fair use of the FIRECRAFT mark on the goods set out in the trade mark specification at the Relevant Date would result in Focal Point passing off its goods. The Hearing Officer had to determine not merely that Evans had an argument for passing off, but that it had an actual claim for passing off; it was essential for the Hearing Officer to make this determination in order to invalidate the mark.
Cause of Action Estoppel
The Judge rejected Focal Point’s submission that the cause of action before the Registry (namely trade mark invalidity) was different to the cause of action before the Court (namely passing off). The FIRECRAFT mark could not have been declared invalid without Evans establishing that they had a subsisting cause of action for passing off at the Relevant Date. Given that, the Judge failed to see how there could be no cause of action estoppel in relation to passing off.
In relation to issue estoppel, the Judge firstly held that it was an essential element to the Hearing Officer’s decision that Evans had a subsisting cause of action for passing off at the Relevant Date; such findings were not merely collateral or incidental.
The Judge went on to note that there can be no res judicata in a changing situation. In relation to the issue of damage, the Judge accepted that the Hearing Officer had to decide whether damage was likely to be caused to Evans, but this, in his view, was simply a quia timet test. In any event, the Hearing Officer determined not only quia timet relief but he also determined that there was damage to Evan’s goodwill at the Relevant Date. The Judge acknowledged that it would be relevant if circumstances had changed, but Focal Point had not shown any basis for this.
On the issue of misrepresentation, the Judge noted that the Hearing Officer found that there would have been a misrepresentation at the Relevant Date (although Evans had not actually proved it), thus giving Evans the right to seek an injunction in the appropriate tribunal (although not the Registry). The Judge concluded that the Hearing Officer determined that Evans had a valid cause of action sufficient to prevent the use of the mark. That is the same requirement for Evans to establish passing off at the Court.
Abuse of Process
The Judge was of the view that to allow Focal Point to force Evans to re-establish the passing off claim as a matter of principle was harassment. He concluded that Focal Point fought the hearing in the Registry and subsequently wished to put up more obstacles in the hope that this would inhibit Evans’ desire to recover recompense. If Focal Point wished to adduce further evidence, it should have appealed the Hearing Officer’s decision and sought to put in fresh evidence there. The Courts are anxious to ensure that all matters so far as possible are dealt with expeditiously and with one hearing. It would be quite wrong to allow Focal Point to re-litigate the issue of liability.
The Judge considered the two authorities on this area, Hormel Foods Corporation v Antilles Landscape Investments NV  EWHC 13 (Ch) and Special Effects Ltd v L’Oreal SA  RPC 15, and concluded that there was nothing in those decisions which led him to conclude that his analysis was incorrect.
The Judge held that Focal Point had no prospect of success in defending the case as regards the determination of liability for passing off.
On the issue of relief, the Judge noted that the only relief immediately available was for a declaration that passing off had occurred. The question of whether Evans was entitled to an injunction required further argument, given the delay between Focal Point’s first use and the claim being brought; and damages or an account of profits and other relief should be assessed on a separate inquiry.
This decision has potential repercussions for both brand owners and the trade mark profession. Peter Smith J was keen to ensure that parties which have had the opportunity to put their case before the Registry do not get a second “bite of the cherry” in Court. In principle, this approach is not limited to passing off cases, but would be equally applicable to an invalidity action based on an earlier registered trade mark right, followed by a Court action for trade mark infringement.
Assuming this decision is followed, potential claimants may decide to test the waters in the Registry and then, relying on a positive outcome, obtain relief from the Court, without the Court itself having considered liability or their entitlement to an injunction.
Time will tell as to the impact of this decision upon the conduct of proceedings in the Registry. However, one consequence is that certain proceedings may become more expensive and complex as the parties know that there is a risk that they will be estopped from arguing points again (except on appeal). Alternatively, a party may elect to surrender its mark, rather than defend itself before the Registry, preferring instead to defend itself by reference to the usual Court processes in a passing off action. A further alternative would be that a trade mark owner, on receipt of an invalidity application based on prior unregistered rights, may elect to apply to Court for a declaration that its activities do not amount to passing off. Each circumstance will need to be considered separately, but the ramifications of this case cannot be ignored.
William Evans & Otr v Focal Point Fires Plc (Peter Smith J;  EWHC 2784 (Ch); 10.11.09)
Katharine Stephens and Zoe Fuller acted for Focal Point Fires Plc