Trade marks: refusal of discontinuance of infringement to avoid revocation

By Audrey Horton

09-2018

The High Court has refused an application to discontinue a trade mark infringement claim and held that four EU trade marks (EUTMs) and five UK registered marks were either liable to revocation or non-use or invalid on relative grounds.

Background

A trade mark owner's rights will be revoked if, within a continuous period of five years, the trade mark has not been put to genuine use in the EU or UK in connection with the goods or services in respect of which it is registered (section 46, Trade Marks Act 1994; Article 51(1)(a), EU Trade Mark Regulation (207/2009/EC)) (EUTM Regulation).

An EU trade mark (EUTM) shall be declared invalid if there are earlier rights in a sign that fall within the scope of Article 8(4) of the EUTM Regulation (Article 53(1)(c), EUTM Regulation) (Article 53(1)(c)).

Facts

W and V had both used the name GIORDANO for men's clothing and accessories since the 1980s. W was based in Hong Kong and made most of its UK and EU sales via two international websites, a global e-shop and an online store. V was based in the Netherlands and made most of its sales in the EU. It had started trading under the GIORDANO name in the UK in 2000.

W sued V for trade mark infringement. V counterclaimed for passing off and for the revocation and a declaration of invalidity of W's marks, which included five UK and four EU registrations of the word mark GIORDANO and figurative versions of that word.

Shortly before trial W applied to unconditionally discontinue that part of the proceedings relating to its EUTMs. V applied to have the notice of discontinuance set aside.

Decision

The court set aside the notice of discontinuance. If discontinuance were to have been permitted, it would have had to be on the condition that W would not bring further infringement actions against V based on any of those marks in any other EU member state without judicial permission, nor rely on any of them to challenge any trade mark application or registration belonging to V (unless that challenge would have remained possible in the event of V's counterclaim succeeding).

The effect of the discontinuance would be to protect W's EUTMs from a determination of their validity and to leave W with the power to invoke them in other proceedings pending the outcome of cancellation proceedings before the EU Intellectual Property Office (EUIPO It was in the interests of justice so near to trial that the court should determine all the issues in the case justly and at proportionate cost. In addition, the parties had both informed the court that there were special ground for the claim and the counterclaim to proceed in the High Court despite the EUIPO cancellation proceedings and the circumstances had not changed. So, the service of the notice of discontinuance amounted to an abuse of process.

All of the marks that W relied on were either liable to revocation for non-use or invalid due to V's earlier right to sue for passing off.

In relation to two of its UK marks and one EUTM, the main uses relied on by W were advertisements and offers for sale on W's global e-shop and online store. The court analysed whether these were targeted at UK consumers and retailers. In relation to the global e-shop site, the currency of prices quoted was US dollars, and the site showed a US flag and photos of US locations. A customer could place an order via the global e-shop and have them delivered almost anywhere in the world and, although there were links to country-specific sites, there was no link to a UK site. The court examined Google analytics evidence of the number of visits to the global e-shop from UK IP addresses, the number of UK-based registered users of the site and the volume of its sales to UK consumers, as well as witness evidence of consumers' perception of the site's provenance, which seemed to indicate that they regarded the e-shop as an international site which served UK customers. The court concluded that the relevant version of the e-shop was not targeted at the UK or any EU country, and that its UK sales tended to be to users who had encountered the GIORDANO brand while in a core market country such as the US. Similar considerations applied to the online store website, where prices were displayed in US dollars, the site operated on Pacific time and it served many countries.

Although both sites had made sales to UK and EU customers, these were minimal, and the sites did not actively sell to such customers. The court therefore concluded that there was no genuine use of the relevant marks in the UK. In relation to four other UK marks and three EUTMs, there was insufficient evidence of use and the court held that these too should be revoked.

V would not have infringed W's UK marks, had they been valid. V had shown that the concurrent use had not affected the functions of W's marks. V's use started in 2001, had been continuous since then, and its UK turnover had grown steadily. V's use had been honest, as it had done nothing to increase the likelihood of confusion between the two marks. There was also no evidence of customer confusion even though W had been selling online to the UK since 2010.

The court granted V's counterclaim for passing off. W accepted that V would have acquired goodwill in the mark in relation to clothing by 2010, when W started selling to the UK, and therefore accepted liability for passing off.

Comment

An interesting aspect of this decision is that the court refused to allow an application made shortly before trial to discontinue an infringement claim based on EUTMs where it appeared this was done in an effort to shield the marks from being declared invalid or revoked.

The decision also summarises the current case law with respect to targeting and provides a useful demonstration of the aspects of a website that will be relevant when the court is looking at whether it has targeted potential customers in the UK for the purposes of determining genuine use or trade mark infringement. The court noted that the mere fact that a website is accessible from the UK is not a sufficient basis for concluding that an advertisement displayed there is targeted at consumers in the UK.

Case: Walton International Ltd and another v Verweij Fashion BV [2018] EWHC 1608 (Ch).

First published in the September 2018 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.

 

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