Trade marks: groundless threats of infringement

08 February 2017

Audrey Horton

The e High Court has held that a letter sent by German attorneys to a US parent company threatening EU trade mark infringement proceedings against its German subsidiary did not constitute unjustified threats in the UK.

Background

An action for unjustified threats of trade mark infringement proceedings in the UK may be brought under section 21 of the Trade Marks Act 1994 (TMA). Threats of proceedings for infringement of a trade mark include UK and EU trade marks (sections 52(3) and 54(3), TMA; regulation 6, EU ?Trade Mark Regulations 2006 (SI 2006/1027)).

In Best Buy Co Inc v Worldwide Sales Corp Espana, the Court of Appeal held that there was a threat of proceedings in the UK where claims of trade mark infringement extended throughout the EU, were not limited to Spain, and Best Buy was intending to launch its European business in the UK (www.practicallaw.com/3-506-6391).

In Tech 21 UK Ltd v Logitech Europe SA, the High Court held that the correct test was whether the reasonable reader, who had received correct legal advice on the relevant jurisdictional legislation, would understand the threat to be of legal action in the UK (www.practicallaw.com/8-619-7001).

Facts

H's German lawyers sent a letter addressed to N's US parent company NC complaining that NC and its affiliated German company NG were using H’s mark.

N brought proceedings for unjustified threats, arguing that the letter was a threat to take proceedings in the UK, as opposed to another jurisdiction.

Decision

The court held that the letter did not contain a threat to sue in the UK.

The letter was directed to NC not N, referred only to German-based activities involving German websites carried out by NG, and had claims for relief described in terms of  German legislation. Although the letter was a threat to sue, it did not contain a threat to sue in the UK, even though the N group of companies included three UK companies. A requirement in the letter to cease and desist from using the marks "in the course of trade in the European Union" was not enough to displace what had already appeared, which was a threat of proceedings in Germany.

A reasonable businessman would understand that unless he offered this restraint on pan-European activities he would find himself subject to proceedings in Germany. If he then took legal advice he would discover that pan-European relief would be available if the German subsidiary were sued, although it was not directly threatened in the letter and it was not invited to give the cease and desist declaration. On the true meaning of the letter it did not contain a threat of UK proceedings.

As noted in Tech 21, a threats letter should be treated as it would be viewed by a layman with the benefit of legal advice. However, here the letter did not contain enough legal technicalities for that to be required.

Comment

This decision highlights the lack of harmonisation across the EU in this area. No other country in the EU, except the Republic of Ireland, has similar statutory provisions in their current intellectual property legislation, although it may be that other sources of law provide remedies for unjustified threats.

Groundless threats cases turn on their own particular facts and the interpretation of the letter in context. Here, N failed to draw an analogy with the facts of Best Buy where knowledge of the launch of an EU business in the UK was a significant factor in the finding of a threat in the circumstances to sue in the UK.

Case: Nvidia Corporation and others v Hardware Labs Performance Systems Inc [2016] EWHC 3135 (Ch).

First published in the January & February 2017 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.

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