This month we report on use of the term CANNABIS used to describe ingredients n foodstuffs in Giampietro Torresan v OHIM, we also report on Agencja Wydawnicza Technopol v OHIM and their application to register numeral and figurative marks and look at the decision of the ECJ concerning whether a law firm could bring a cancellation action in its own right in Lancôme parfums et beauté & Cie SNC v OHIM and CMS Hasche Sigle.
To be taken to your case of interest within the table please click on the below:
Bayer Healthcare LLC v OHIM
Frag Comercio Internacional, SL v OHIM
Spa Monopole, compagnie fermière de Spa SA/NV v OHIM
Apollo Group, Inc v OHIM
Giampietro Torresan v OHIM
Clearwire Corporation v OHIM
Agencja Wydawnicza Technopol v OHIM (CFI (second chamber);
Lancôme parfums et beauté & Cie SNC v OHIM and CMS Hasche Sigle
Wasabi Frog Ltd (“Wasabi Frog”) v Miss Boo Ltd * Anr
Strip Ltd v Strip Pte. Ltd Anr*
Sun Microsystems Inc (“Sun”) v M-Tech Data Ltd & Anr*
Gilham v R* (Burnton LJ; Davey & Sharpe J;
Scopelight Ltd & Ots v The Federation Against Coyright Theft & Anr (“FACT”)*
Force India Formula One Team Ltd v Etihad Airways P.J.S.C.*
Butters & Ots v BBC Worldwide Ltd (“BBCW”) & Ots*
Hudson Bay Apparel Brands LLC (“Hudson”) v Umbro International Ltd
|Application (and where applicable, earlier mark)
- dietary supplements, including dietary supplements inclusive of calcium salt (5)
- chemical products and specialties (1)
- pharmaceutical products and specialties of all types (5)
(Spanish national registration)
The CFI upheld the decision of the BoA that there was a likelihood of confusion between the marks under Art 8(1)(b).
The BoA was correct to hold that the goods were similar. The instruction leaflet for Uriach’s product made it clear that the earlier mark had been used in relation to ‘healing salves’; the BoA was correct to refer to these goods when making a comparison between the two marks. The differences in the way in which the products were administered and their therapeutic indications did not outweigh the nature and common intended purpose of the respective goods.
Visually and phonetically the marks had a high degree of similarity. The inversion of the syllables in the middle of the marks was not enough to disturb the overall impression of similarity. Neither mark had a clear and established meaning. Any allusions made by the marks were not strong enough to offset the visual and phonetic similarities. Taking into account the high degree of visual and phonetic similarity and the lack of any conceptual content, the marks were very similar overall.
The BoA was correct to hold that there was a likelihood of confusion.
|Application (and where applicable, earlier mark)
- perfumery (3)
- clothing, outerwear and clothing accessories (25)
- franchising (35)
- leather and imitations of leather (18)
- clothing, footwear, headgear (25)
- retail services in shops (35)
(CTM and Spanish registrations)
The CFI upheld the decision of the BoA that there was no likelihood of confusion between the marks under Art 8(1)(b).
It was not in dispute that the goods in Class 25 of the mark applied for were identical or similar to the goods in Classes 18 and 25 of the earlier mark. However, the CFI held that perfumery goods were plainly different in their nature, intended purpose and method of use to the goods in Classes 18 and 25. Further, the services protected by the earlier mark in Class 35 were too vague to enable a proper comparison to be made with those under the mark applied for.
The CFI agreed with the BoA that the representation of the sun and the word element ‘green’ were dominant and of major importance in the overall impression of the mark applied for. The word element ‘by missako’ (under the ‘en’ of ‘green’) was negligible because it was almost illegible. There was no visual, phonetic or conceptual similarity between the marks resulting from the overall impression conveyed by them.
The BoA was correct to hold that, even though some of the goods were identical or similar, the visual, phonetic and conceptual differences between the marks were sufficient grounds for finding that there was no likelihood of confusion.
|Application (and where applicable, earlier mark)
- alcoholic beverages (except beers) (33)
- mineral and aerated waters and other non-alcoholic drinks, syrups and other preparations for making beverages (32)
The CFI upheld the decision of the BoA rejecting the opposition to the registration of SpagO under Art 8(5).
The CFI concluded that overall the marks were only slightly similar. Visually and phonetically the difference between the marks was due to the addition of the suffix ‘go’. No conceptual comparison was possible because, for the relevant public, the earlier mark referred to the Belgian town of Spa and SpagO was an invented word.
The average consumer was aware of the distinction between alcoholic and non-alcoholic drinks. The fact that they could be consumed by the same people and sold at similar locations did not affect the CFI’s finding that the goods were different in nature.
It was common ground that the earlier mark enjoyed a reputation in the Benelux countries for mineral waters. Further to Intel (C-252/07), a well established reputation did not automatically imply the necessary link between the marks for Art 8(5). Despite the highly distinctive character acquired by the earlier mark, the similarities between the signs at issue were not sufficient for such a link to be established between the marks and thus the appeal was rejected.
|Application (and where applicable, earlier mark)
- education, providing of training, entertainment, sporting and cultural activities, education services, namely, providing courses of instruction at the post-secondary level (41)
The CFI upheld the decision of the BoA that the mark was devoid of any distinctive character under Art 7(1)(b).
It was not disputed that the relevant public was average consumers who were English speaking or had an elementary knowledge of the English language and who represented a very large part of the relevant European public.
The combination of the two words conveyed a clear and unambiguous meaning, namely that of thinking in advance, which did not go beyond the meaning of its constituent elements.
From the point of view of the relevant public, the mark constituted a promotional slogan in relation to all the services applied for. The BoA was therefore correct to hold that the mark was devoid of distinctive character.
|Application (and where applicable, earlier mark)
- beers (32)
- wines, spirits, liquers, sparkling beverges, sparkling wine, champagne (33)
The CFI upheld the BoA’s finding that the mark was invalid as being descriptive contrary to Arts 52(1)(a) and 7(1)(c).
The CFI noted that ‘cannabis’ did not solely refer to drugs and therapeutic substances. Cannabis, also referred to as ‘hemp’, was lawfully used in production of foodstuffs and beverages, including beers.
The average consumer would thus consider the mark CANNABIS on an alcoholic beverage as a description of the characteristics (one of the possible ingredients) of the goods.
The BoA did not err in finding the mark descriptive of the relevant goods.
|Application (and where applicable, earlier mark)
- telecommunications services, namely, providing high-speed access to computer and communication networks, and the electronic transmission of voice, video and data via computer and communication networks (38)
The CFI upheld the BoA’s finding that the mark was descriptive of the services concerned under Art 7(1)(c).
The CFI held that ‘wifi’ was a commonly used term to designate technology enabling the wireless connection of computers and electronic equipment between each other and to Internet access points. The BoA did not err in holding that the noun ‘wifi’, qualified by the adjective ‘clear’, would be perceived by the relevant public as a reference to wireless technology which was “free from disturbance”, so as to denote a quality of that connection.
Accordingly, the BoA was correct in holding that the relevant public was likely to perceive the mark as designating wireless technology that offers clear, disturbance-free access to the Internet, for example, and would be inclined to equate Internet access via a wifi connection with high-speed access to that network.
The fact that some of the services applied for did not necessarily involve high-speed access would not affect the lawfulness of the decision. A sign which is descriptive in relation to only some of the goods or services within a category listed as such in the application does not preclude that sign being refused registration.
Descriptive Nature of Numeral Marks and Disclaimers
Agencja Wydawnicza Technopol v OHIM (CFI (second chamber); T-298/06, T-66/07, T-67/07, T-200/07, T-202/07, T-425/07 and T-426/07; 19.11.09)
Agencja applied to register the marks 1000, 350, 250, 150, 222, 333, and 555 (the ‘Numeral Marks’) for brochures, periodicals, including periodicals containing crosswords and rebus puzzles, and newspapers (Class 16); and the marks reproduced below (the ‘Figurative Marks’) for posters, booklets, magazines, printed matter and newspapers (Class 16) and manipulative puzzles, riddles and puzzles (Class 28).
The examination division rejected all the applications under Articles 7(1)(b) and (c) and the BoA dismissed the appeals. In relation to the Figurative Marks, the BoA requested that Agencja file a disclaimer under Article 37(2), disclaiming any exclusive rights to the numerals 100 and 300 included in the marks. Agencja refused the request and appealed to the CFI on all applications. The CFI dismissed all the appeals.
In all cases, the relevant public was deemed to consist of the average consumer in relation to the goods in question throughout the Community.
The CFI concluded that there was a direct and specific link between the signs and the essential characteristics of the goods concerned. The Numeral Marks alluded to a quantity and would be immediately perceived by the relevant public as descriptive of the characteristics of the goods in question, in particular the number of pages, amount of data, the number of puzzles or games in a collection or the ranking of items referred to in them. The relevant public would take all these aspects into account when deciding whether or not to purchase the goods and they therefore constituted essential characteristics of the goods.
Agencja submitted that OHIM had failed to take account of Article 12, which limits the exclusive rights granted by a CTM registration in the case of, for example, descriptive indications. The CFI rejected this submission. Article 12 was not applicable to the CTM registration process; it could only be used as a defence in the case of infringement.
The CFI noted that the function of disclaimers under Article 37(2) was to make apparent the fact that the exclusive rights of the proprietor of a mark did not extend to the non-distinctive elements of that mark. Therefore, whether the elements of the marks applied for were distinctive, for the purposes of Article 38(2), had to be assessed not by reference to the overall impression given by those marks, but by reference to the elements comprising them. The issue before the CFI was therefore the distinctive character of the elements ‘100’ and ‘300’ of the marks applied for and whether their inclusion in the marks might give rise to doubts as to the scope of protection of those marks.
The CFI, applying the same reasoning as for the Numeral Marks, held that the figures ‘100’ and ‘300’ referred to quantities, and would immediately be perceived by the relevant public as a description of characteristics, of the goods in question. The quantities related particularly to the number of posters in the sales batches, the number of pages in the publications or the number of pieces in the puzzles and riddles, which determine their degree of difficulty and were essential characteristics in deciding whether to make a purchase. Thus, the relevant public would perceive those numerical elements as providing information on the designated goods and not as to their commercial origin.
As the figurative elements, i.e. the colours, frames, ribbons and the typography used, were too ordinary to make an impression on consumers, the CFI found that the numerals were the dominant element of the marks applied for. Therefore, if the registration of the Figurative Marks were not made subject to any conditions, the impression might be given that exclusive rights extended to the elements ‘100’ and ‘300’, thereby preventing them from being used in other marks. Accordingly the CFI upheld the BoA’s finding that the inclusion of those signs in the marks applied for might give rise to doubts as to the protection of the marks. Since Agencja failed to submit disclaimers under Article 37(2), the CFI concluded that the BoA was correct to refuse registration of the Figurative Marks.
Decision of the ECJ
Right for solicitors to bring cancellation proceedings
Lancôme parfums et beauté & Cie SNC v OHIM and CMS Hasche Sigle (Advocate General Colomer for the ECJ; C-408/08; 15.10.09) (Decision not yet available in English)
The case concerned: (i) whether, under Article 55(1)(a), a law firm could bring a cancellation action in its own right; and (ii) whether the mark COLOR EDITION should be annulled under Article 7(1)(c) for being descriptive of “cosmetic products and make up” in Class 3. In the AG’s opinion, the CFI had correctly held, in relation to (i), that a law firm could so act and there was no need for it to have an economic interest to do so; and, in relation to (ii), that the mark was invalid under Article 7(1)(c).
CMS (a law firm) had brought a cancellation action against Lancôme’s COLOR EDITION mark. The CFI upheld the BoA’s decision that the mark was invalid under Articles 7(1)(c) and (b). Lancôme appealed, submitting that lawyers could not bring a cancellation action in their own right, because that was inconsistent with their functions and duties as officers involved in the judicial process. Even if lawyers could do so, they needed to show an economic interest.
The AG rejected Lancôme’s submissions. He saw nothing in the case cited by Lancôme (A.M.& S. Europe Limited v Commission 155/79, Rec. 1982, p.1575), nor in Article 19 of the Court Statutes, which prevented lawyers from bringing cancellation actions in their own right. Further, the literal and purposive interpretation of Article 55(1)(a) was that cancellation actions could be brought by any natural or legal person with the capacity to act, regardless of economic interest. This was consistent with the general interest protected by absolute grounds of invalidity (as opposed to, for example, the relative grounds under Articles 55(1)(b) and (c)).
In arguing against descriptiveness, Lancôme sought to rely on the Baby-Dry decision (Case C-383/99) to submit that the CFI should have assessed the discrepancy between the conjoined terms COLOR and EDITION, and the language used by average consumers to describe the essential characteristics of the relevant goods. The AG described Baby-Dry as an isolated case, which had been superseded by other ECJ authorities, such as Postkantoor (Case C-363/99), “Doublemint” (Case C-191/01) and “Biomild” (Case C-265/00), in which the correct test had been posited. The AG noted that the test proposed by Lancôme had been confirmed as incorrect in the “Celltech” case (Case C-273/05).
The AG therefore proposed that the ECJ dismiss Lancôme’s appeal.
UK - Interim Injunctions
Wasabi Frog Ltd (“Wasabi Frog”) v Miss Boo Ltd * Anr (“Defendants”)* (Warren J;  EWHC 2767 (Ch); 04.11.09)
The Judge granted an interim injunction requiring the Defendants to disable their website www.missboo.co.uk and refrain from trading under the MISS BOO mark. The Judge held that Wasabi Frog had a strong arguable case of infringement of its Community trade marks, BOO, BOOHOO and BOOHOO.COM (the “Trade Marks”) under Article 9(1)(b) and an arguable case in passing-off.
Wasabi Frog had a substantial reputation in the Trade Marks. It had sold fashionable women’s clothing, shoes and accessories online under the BOOHOO mark since November 2006 through its website www.boohoo.com. It also had a number of other registered domain names including www.missboohoo.com and www.missboohoo.co.uk which directed visitors to its main boohoo.com website. The Defendants launched their website, www.missboo.co.uk on 1 September 2009 and traded under the marks MISS BOO and MISSBOO.CO.UK knowing of Wasabi Frog’s business. The Defendants also sold women’s clothing, shoes and accessories to the same target demographic and geographical area as Wasabi Frog.
The Judge held that the average consumer of the goods for which the Trade Marks were registered would be 17-25 year old women and that these consumers would be “very very savvy”. Wasabi Frog provided two examples which the Judge held demonstrated a well arguable case of likelihood of confusion. Firstly that Wasabi Frog had received a call from a marketing organisation targeting the fashion industry which referred twice to Wasabi Frog as MISS BOO. Secondly, Wasabi Frog had purchased the Google keywords ‘miss boo’ which produced the fourth largest source of traffic to the ‘boohoo.com’ website.
The interim injunction was granted by the Judge as damages would not be an adequate remedy; the Defendants had very few assets and could irreparably damage the reputation Wasabi Frog had built up. In addition, the balance of convenience favoured Wasabi Frog as the Defendants could continue to trade using another domain name and to market their goods as these were not branded with the MISS BOO mark.
Strip Ltd v Strip Pte. Ltd Anr* (Richards J;  EWHC 2070 (Ch); 22.07.09)
The Judge granted an interim injunction restraining the Defendants from launching their salon or carrying on any depilatory salon business under the name “Strip Co-Ed” or using the word “Strip”, holding that the Claimant had an arguable case in passing off.
The Claimant operated salons in London under the name “Strip”. The Claimant had no registered trade marks but had pending applications for the word mark STRIP and the sylised word mark, both of which are opposed by Strip Pte Ltd.
Strip Pte Ltd operated waxing salons abroad under the names “Strip” and “Strip Co-Ed”. In August 2007 Strip Pte Ltd registered a UK trade mark for STRIP CO-ED which the Claimant applied to invalidate. In addition, Strip Pte Ltd incorporated a UK subsidiary which it proposed would open a waxing salon in Mayfair. The launch party of the salon was to be the day after the hearing.
The Judge held that the Claimant had a good argument that the word “Strip” used in the context of the provision of depilatory services in London was not simply a descriptive term and granted the interim injunction. The Claimant had not delayed in making its application; its knowledge of the registration of STRIP CO-ED and incorporation of the UK subsidiary was irrelevant as the Claimant was not aware of any planned salon opening by the Defendants. Although by granting the injunction, there was a real prospect of damage to the Defendants, this was almost exclusively their responsibility, having failed to disclose to the Claimant their plans to open a salon under the STRIP CO-ED mark at an earlier date.
Sun Microsystems Inc (“Sun”) v M-Tech Data Ltd & Anr* (“M-Tech”) (Kitchen J;  EWHC 2992 (Pat); 25.11.09)
The Judge granted summary judgment in favour of Sun holding that M-Tech had infringed the Sun trade marks by parallel importation of 64 Sun disk drives. The Judge held that Sun’s authorised distribution network had not partitioned the secondary market in Sun hardware and so was not a breach of Articles 28 to 30 EC and its enforcement of its trade mark rights was not prohibited under Article 81 EC.
M-Tech purchased 64 Sun disk drives from a broker in the USA and sold them to a business in the UK. The disk drives had originally been sold by Sun to customers outside the EEA and were branded with the SUN trade mark. It was established that only traders within Sun’s authorised distribution network could ascertain whether a product had previously been placed on the EEA market with Sun’s consent and that where possible those authorised distributors had to purchase products from within the authorised distribution network. A trader purchasing a Sun product from an independent dealer would not be able to establish whether the products had previously been legitimately marketed in the EEA.
M-Tech had no defence to the claim of trade mark infringement under Article 5(3)(c) as there was sufficient evidence that the disk drives were placed on the market outside the EEA by Sun. There was also no evidence that Sun had consented to sale of the disk drives within the EEA and so there was no exhaustion of Sun’s rights under Article 7. M-Tech’s defences to the allegations of parallel importation had no real prospect of success.
The Judge held that Sun’s aggressive enforcement of its rights under Article 5 and the inability of independent traders to identify whether the hardware had been legitimately marketed in the EEA did not infringe Articles 28 to 30 EC (now Articles 34 to 36 of the Treaty on the Functioning of the European Union). The Judge reiterated the statement of the ECJ in Zino Davidoff v A & G Imports (Joined Cases C-414 to 416/99) that Articles 5 to 7 provide a complete harmonisation of the rules relating to the rights of a trade mark proprietor and that these rules were specifically not subject to the requirement of free movement of goods. They provide the trade mark proprietor with the right to control the first marketing of its goods in the EEA. The reason for the declining secondary market in Sun hardware was caused by the verification difficulties of independent traders and not by Sun’s enforcement of its trade mark rights.
Sun admitted for the purpose of the application that the agreements with its authorised distributors were contrary to Article 81 EC (now Article 101 of the Treaty on the Functioning of the European Union). The Judge held that M-Tech’s argument that the enforcement by Sun of its trade marks was prohibited under Article 81 EC as this was connected with the agreements with its authorised distributors, had no real prospect of success.
Playing Counterfeit Games is an Infringement of Copyright
Gilham v R* (Burnton LJ; Davey & Sharpe J;  EWHA Crim 2293; 09.11.09)
The Court of Appeal held that the Appellant’s sale of modification computer chips (“modchips”), allowing counterfeit games to be played on games consoles was an infringement of copyright in the original game. It held that the playing of a counterfeit game involved substantial copying of a copyright work by the display of images on the screen, being copies of the original artistic work. In so finding, it dismissed the appeal.
The Appellant sold modchips which enabled counterfeit games to be played on games consoles by circumventing the embedded codes within the games consoles which required the CD-ROM or DVD containing the game to contain a corresponding code. When a game is played, data is copied from the games disc onto the RAM of the console and images are displayed on the screen. The data stored in the RAM is continually being overwritten as the game is played. At any one time only a very small percentage of the total data on the disc is copied onto the RAM.
At first instance, the Appellant was convicted by jury trial of offences under Section 296ZB CDPA. On appeal the Appellant challenged the finding that a substantial part of the copyright work had been copied as, at any one time, only a very small amount of data would be recorded in the RAM. The Court of Appeal held that the Judge had over simplified the substantial part test in his direction to the jury where he stated that “substantial has its plain English meaning of ‘more than minimal’”. The reproduction of images on the screen by playing a counterfeit game constituted copying of a substantial part of the artistic works from which the images derived and, accordingly, was an infringement of copyright in the original game. The fact that the images on the screen could only be seen for an instant was not relevant as under Section 17(6); a transient copy is still a copy. In reaching this conclusion, Court did not decide whether the contents of the RAM were a substantial part of the copyright in the game as a whole.
Police Can Retain Seized Property Pending a Private Criminal Prosecution
Scopelight Ltd & Ots (“Scopelight”) v The Federation Against Coyright Theft & Anr (“FACT”)* (Ward; Wilson; Leveson LJ;  EWHA Civ 1156; 05.11.09)
The Court of Appeal upheld an appeal by FACT that under Section 22 of the Police and Criminal Evidence Act 1984 (“PACE”), the police could make an assessment as to whether property seized by them under a warrant could “be retained so long as is necessary in all the circumstances” for use in a private criminal prosecution for copyright infringement where the CPS had decided not to prosecute.
Scopelight ran a video search engine website, SurfTheChannel.com (“STC”), consisting of thousands of links to third party websites. These links directed visitors of STC away from the site to third party websites which carried a variety of videos. It was common ground that STC was not a file sharing site. FACT is a trade body representing the interests of the audio-visual industry and was formed to counter copyright piracy.
Following a complaint by FACT, the police obtained a warrant and seized certain “information holding equipment” including internet servers and computer towers as well as financial paperwork (the “Equipment”) from the property of the owners of Scopelight. The police obtained the search warrant on the basis of suspicion as to conspiracy to defraud and money laundering due to information provided to the police by FACT that two internet file sharing sites were being hosted from the address. The CPS decided not to bring a prosecution and FACT requested that the seized Equipment be retained to enable it to consider whether to bring a private criminal prosecution including under Section 107(2A) CDPA. Scopelight brought an action for recovery of the seized Equipment.
The Court held that the police could continue to retain seized property after the CPS had decided to not to bring a prosecution as FACT had informed the police that it was taking advice in bringing a private criminal prosecution. It was irrelevant that FACT brought its case under Section 107(2A) whereas the warrant under which the goods were seized was granted on suspicion of conspiracy to defraud and money laundering. The police must decide whether the continued retention of the property is required in all the circumstances of the case. In considering each case on its facts, the Court stated that the police should take into account a number of factors including the identity and motive of the prosecutor and the reasons behind the CPS decision not to bring a prosecution.
Repudiatory Breach of Sponsorship Agreement
Force India Formula One Team Ltd v Etihad Airways P.J.S.C.* (Gray J;  EWHC 2768 (QB); 04.11.09)
The Judge held that Etihad were in repudiatory breach of a sponsorship agreement (the “Agreement”) in respect of a Formula One (“F1”) racing team having either waived or acquiesced to any breaches of the sponsorship agreement as they had failed to raise any complaint when the team name or livery on the cars was changed without their consent. Force India were able to recover damages for bonus payments due under the agreement and the Judge took account of facts occurring between the breach and the trial in quantifying the damages in respect of a points bonus due.
Etihad Airways and Aldar Properties P.J.S.C. (the “Sponsors”) entered into a sponsorship agreement with an F1 team owned by Spyker Cars NV with the team name being Spyker (the “Team”). The sponsorship agreement provided that the Sponsors would sponsor the Team for 2007 – 2009 paying a sponsorship fee as well as certain bonus payments. The Agreement provided that Etihad would be the sole and exclusive airline brand associated with the Team and that there would be no major livery changes during 2007. The Agreement contained a term permitting the Team to source alternative sponsorship for 2008 and/or 2009 and if this occurred the Sponsors would have certain options including terminating their sponsorship.
In August 2007, the Team was acquired by Orange India Holdings. One of the investors had an interest in Kingfisher which ran Kingfisher Airlines and also produced Kingfisher branded beer. The livery on the cars was changed to include the Kingfisher logo for the 2007 winter testing period. On 27 January 2008, Etihad purported to terminate the Agreement claiming the Team had changed the livery on the cars without consent as required under the Agreement as well as obtaining sponsorship from another airline.
The Judge held that Etihad’s termination constituted a repudiatory breach of the Agreement as Etihad had been aware of the change to the livery on the cars and the new owner’s involvement with Kingfisher since August 2007 but had not raised any complaint. Accordingly, Etihad had either waived or acquiesced to the breach and the Team were awarded damages. The damages awarded were in relation to sponsorship payments as well as bonus payments. The bonus payments were performance related payments in respect of each of the three years of the agreement. In calculating the quantum of damages to award in respect of the bonus payments, the Judge took into account the Team’s performance from the date of the repudiatory breach by Etihad up to the date of trial.
Provisions Struck out of Licence to Avoid Infringing Deprivation Principle
Butters & Ots v BBC Worldwide Ltd (“BBCW”) & Ots* (Smith J;  EWHC 1954 (Ch); 20.08.09)
The Judge held that the link between a clause in a licence of certain intellectual property rights which provided for automatic termination on an insolvency event with a clause in a joint venture agreement (“JVA”) which provided an option to acquire shares on an insolvency was void as an infringement of the deprivation principle i.e. the principle that states that a person cannot make it part of a contract that in the event of bankruptcy, his property does not go to his creditors. However, the Judge held that striking out the linking provisions rendered both agreements valid.
The facts of the case were complicated but, in summary, BBCW entered into a JVA with Woolworths Entertainment Group Ltd “Group” and a subsidiary of the Group, governing how the parties held shares in a joint venture company. Entry into the JVA was conditional on the grant of a licence of certain intellectual property rights to the joint venture company.
The JVA set out provisions under which BBCW could serve a notice to acquire shares on the insolvency of a member of the Group. The licence referred to the JVA and provided that where BBCW served a notice to acquire shares on an insolvency event under the JVA, the licence would terminate automatically. The JVA provided that an independent valuation would be carried out to determine the value of the shares to be acquired by BBCW. Termination of the licence had the effect of reducing the value of the shares allowing BBCW to purchase them at a depressed value and deprive the creditors of Woolworths of those assets.
The Judge struck out the provisions of the licence which linked its automatic termination to the JVA. The clause in the licence providing that it would terminate on the insolvency of a member of the Group was valid. It was the provision which linked BBCW’s option to serve a share notice on an insolvency event with the termination of the licence which was void and was an infringement of the deprivation principle.
Licensor Granted Overlapping Exclusive Licenses
Hudson Bay Apparel Brands LLC (“Hudson”) v Umbro International Ltd (“Umbro”)* (Mr Mark Herbert QC;  EWHC B28 (Ch); 4.11.09)
Hudson was successful in its claim that Umbro had breached its exclusive licence in respect of off-field apparel by permitting its licensee of on-field apparel to sell off-field garments. The Deputy Judge implied a term into the Hudson licence providing a positive obligation on Umbro to consider products submitted by Hudson for approval. Umbro were successful in their counterclaim that Hudson were in breach of its licence having marketed “pocketless soccer basics” which the Court held were on-field apparel.
Hudson entered into an exclusive licence to manufacture, market and sell off-field soccer wear in the USA bearing the UMBRO and double diamond marks. Off-field apparel was defined in the licence as “all apparel that are not specifically intended to be used on the field of play”. Under the licence, Hudson were obliged to provide production samples for approval, such approval was required to be given in writing. The licence provided that any product which had not been approved within 10 days of submission would be deemed disapproved.
Umbro granted a second exclusive licence under its marks to Dick’s Sporting Goods in relation to on-field wear in the USA. This licence specifically excluded teamwear which Umbro supplied itself.
The Deputy Judge distinguished between on-field and off-field and considered the meaning of “specifically intended for use on the field of play”. In determining whether garments were “specifically intended” for use on the field of play, the Deputy Judge considered that the relevant factors were “fabric, design (including the presence or absence of pockets), fit, colours, artwork and finish.” The Deputy Judge held that sale by Hudson of “pocketless soccer basics”, made from performance fabrics with modest logos was held to be sale of on-field wear and as such Hudson had breached its licence to sell off-field wear.
The Deputy Judge held that Dick’s sales of certain cotton T-shirts incorporating elaborate artwork were sales of off-field apparel and that Umbro was in breach of its exclusive licence with Hudson in permitting such sales. The Deputy Judge considered that Umbro may inadvertently have granted exclusive licences to Dick’s and Hudson covering the same descriptions of property. If this was the case, Umbro would be in breach of its warranty that it had authority to grant the rights it had granted to Hudson.
The Deputy Judge implied a duty of co-operation into Hudson’s licence. The Deputy Judge considered the House of Lords decision in Mackay v Dick (1881) 6 App Cas 251 and held that in order to ensure consistency with the purpose of the agreement, Umbro was not permitted to refuse or fail to consider products submitted to it for approval. If it did so it would prevent Hudson from fulfilling its obligations under the licence, such as in respect of sales targets.
Questions have been referred to the ECJ by the High Court in the Interflora v Marks and Spencer case. Details of the questions can be found here: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2009:282:0019:0020:EN:PDF
Questions have been referred to the ECJ by the Court of Appeal in the Budvar v Anheuser-Busch case. Details of the questions can be found at http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Ch/2009/B33.html&query=budvar&method=boolean
Katharine Stephens, Zoe Fuller and Emily Peters
Reporters’ note: We are grateful to our colleagues at Bird & Bird LLP for their assistance with the preparation of this report: Claire Barker, Clare Wilson, Chelsea Roche, Jack Jones, Nathan Capone and Nick Aries.
The reported cases marked * can be found at http://www.bailii.org/databases.html#ew and ECJ and CFI decisions can be found at http://curia.europa.eu/jcms/jcms/j_6/home.