This month we report on the CJEU's decision that a trade mark infringement action against an advertiser using keyword advertising can be brought either in the Court of the Member State where the trade mark was registered or in the place of establishment of the advertiser. We also report on the High Court decision in the ongoing Samsung v Apple proceedings concerning Apple's jurisdictional challenge and request for a stay of Samsung's application for a declaration of non-infringement of Apple's registered designs.
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Decisions of the GC (formerly CFI)
UYou-Q BV v OHIM; Apple Corps Ltd
|Application (and where applicable, earlier mark)
- wheelchairs and scooters specially made for sick and disabled persons and other persons requiring assistance, parts and fittings for the aforesaid goods included in this class (12)
- sound records, video records, films (9)
- toys, games and playthings (28)
(various Community and national marks)
The GC upheld the BoA’s finding that it was likely that the mark applied for would take unfair advantage of the repute and consistent selling power of the earlier marks under Art 8(5).
The BoA was correct to find that the earlier marks had an enormous reputation for sound records, video records and films, and an at least substantial reputation for merchandising products such as toys and games.
The BoA was correct to find that, visually, phonetically and conceptually, the marks at issue were very similar. Additionally, the earlier marks had a distinctive character such that the public would immediately think of the eponymous band and their products. As a result, the BoA was right to infer that there was a link between the signs at issue notwithstanding the dissimilarity of the goods.
Due to that link, the relevant public would be led to transfer the enduring positive values of the earlier marks to the goods bearing the mark applied for. That could benefit the mark applied for as the relevant public, with the specific handicap in question, would be particularly attracted by the positive image of freedom, youth and mobility associated with the earlier marks. This was particularly the case as part of the public targeted belonged to the generation who knew the Beatles’ goods in the 1960s. That image transfer would enable You-Q to introduce its own mark and not incur any great risk or the advertising costs usually associated with launching a new mark thereby taking unfair advantage of the repute and selling power of the earlier marks.
Jurisdiction for trade mark infringements via the internet
Wintersteiger AG v Products 4U Sondermaschinenbau GmbH (CJ (First Chamber); Case C-523/10; 19.04.12)
The CJ concluded that Article 5(3) of the Brussels I Regulation (EC No 44/2001) must be interpreted as meaning that an action relating to infringement of a trade mark registered in a Member State initiated because of the use, by an advertiser, of a keyword identical to that trade mark on a search engine website operating under a country-specific top-level domain name of another Member State may be brought before either (i) the courts of the Member State in which the trade mark was registered; or (ii) the courts of the Member State of the place of establishment of the advertiser.
Wintersteiger, an Austrian manufacturer and distributor of ski and snowboard servicing tools, replacement parts and accessories, owned the Austrian trade mark WINTERSTEIGER. Products 4U, established in Germany, developed and distributed worldwide ski and snowboard servicing tools, including accessories for the tools manufactured by Wintersteiger. Wintersteiger neither supplied its products to, nor authorised the sale of its products by, Products 4U. Products 4U registered “Wintersteiger” as a Google AdWord, although it limited the registration to searches carried out via the Germany top-level domain (“.de”). When “Wintersteiger” was entered into Google search engine for the .de top-level domain, an advertisement appeared with a link to a section of the Products 4U website entitled “Wintersteiger accessories”.
Wintersteiger brought an action for an injunction in Austrian Courts. At first instance the application was ruled inadmissible since the AdWord was limited to google.de and there was not a significant connection with the Austrian territory. This finding was overturned on appeal. On further appeal, the Oberster Gerichtshof was unclear as to whether it had jurisdiction and referred questions to the CJ on the interpretation of Article 5(3) of the Brussels I Regulation which provides that a person domiciled in a Member State may be sued in another Member State in the courts for the place where the harmful event occurred or may occur.
The CJ noted that Article 5(3) was based on the existence of a particularly close connecting factor between the dispute and the courts of the place where the harmful event occurred, which justified the attribution of jurisdiction to those courts for reasons relating to the sound administration of justice and the efficacious conduct of proceedings (eDate Advertising (joined Cases C‑509/09 and C‑161/10)). The expression “place where the harmful event occurred or may occur” was intended to cover both the place where the damage occurred and the place of the event giving rise to it, so that the defendant may be sued, at the option of the applicant, in the courts for either of those places.
The place where the damage occurred
For claims of infringement of a national mark in situations such as this case, both the objective of foreseeability and that of sound administration of justice pointed to conferring jurisdiction on the courts of the Member State in which the mark was protected. Such courts would be best able to assess whether actual infringement had occurred (taking account of Directive 2008/95, Google France (Cases C-238/08 to C-238/08) and L’Oréal (Case 324/09)), would have the power to determine any damage caused and would be able to hear an application seeking cessation of infringement.
The place where the event giving rise to the damage occurred
In reaching its conclusion that jurisdiction was also conferred on the courts of the Member State of the place of establishment of the advertiser in key-word advertising cases, the CJ noted the following:
- The advantage of conferring jurisdiction on the courts of the place where the event giving rise to the alleged infringement occurred included the ease with which those courts may gather evidence relating to that event.
- The event giving rise to the alleged infringement was the activation by the advertiser of the technical process displaying, according to pre-defined parameters, the advert which it created for its own commercial communications, and not the display of the advert itself.
- Following Google France, it was the advertiser choosing the keyword, and not the provider of the referencing services, who uses it in the course of trade. Therefore, the event giving rise to a possible infringement lies in the actions of the advertiser.
- Although the technical display process by the advertiser is activated ultimately on a server belonging to the search engine operator, in the interests of foreseeability, the place of establishment of the server cannot be considered to be the place where the event giving rise to the damage occurred, by reason of its uncertain location. Instead, it is the place of establishment of the advertiser which is the place where the activation of the display process is decided. This would be a definite and identifiable place and would be likely to facilitate the taking of evidence and the conduct of the proceedings.
Reporters’ note: This decision relates only to Article 5(1). There is no mention of the relationship between Article 5(1) and Article 22(4) which provides that the Courts of the Member State where the trade mark is registered shall have exclusive jurisdiction in relation to questions of validity of that mark. The reason is not apparent from the decision, but it may be because there was no such challenge.
Restitutio in integrum
Brainlab AG v OHIM (GC; Case T-326/11; 25.04.12)
The GC anulled the BoA’s decision to reject the application for restitutio in integrum and held that the BoA had misapplied Article 81(1).
OHIM had sent, in error, the reminder notification for the renewal of Brainlab’s trade mark to Brainlab’s former address, rather than to its appointed representatives (a firm of lawyers and patent agents). That reminder notification was re-directed to Brainlab’s agent, but it was not forwarded to the appointed representatives. The appointed representatives’ system for monitoring time-limits also failed and Brainlab’s trade mark was not renewed.
OHIM rejected Brainlab’s application for restitutio in integrum on the basis that neither Brianlab nor its appointed representatives had displayed the due care required under Article 81(1). The BoA dismissed Brainlab’s appeal, concluding that that there was no causal link between OHIM’s inaccurate sending of the reminder notification and the expiration of the trade mark. The sole cause of the non-renewal was the absence of renewal instructions by Brainlab, even after Brainlab’s agent had received the reminder notification.
In contrast to the BoA’s findings, the GC concluded that, had it not been for OHIM’s error, the appointed representatives would have received the reminder notification directly and there was a degree of likelihood bordering on certainty that, if the appointed representatives had been placed in a position to contact Brainlab, Brainlab would have given instructions to renew the trade mark.
The BoA wrongly failed to take into account the error made by OHIM, that being one of the relevant circumstances for the purposes of applying Article 81(1). Consequently, the BoA misapplied that provision.
Form of injunctions
Specsavers International Healthcare Ltd & Ots v Asda Stores Ltd* (The President of the Queen’s Bench Division; Black & Kitchin LJJ;  EWCA Civ 494; 26.04.12)
Following its main judgment (reported in CIPA Journal, February 2012), the Court of Appeal (Kitchin LJ giving judgment) addressed the precise wording of the injunction, and refused Asda permission to appeal to the Supreme Court on the point.
In its main judgment, the Court of Appeal had found that Asda’s straplines “Be a real spec saver at Asda” and “Spec savings at Asda” infringed Specsavers’ marks under Article 9(1)(c). A logo used by Asda was also found to infringe under Article 9(1)(c) as part of the composite advertising and promotional campaign.
The parties has agreed the following form of order for the injunction save for the inclusion of the words “or otherwise howsoever”: “The Defendant is restrained... from infringing the following Community Trade Marks or any of them... whether by use of the straplines “Be a real spec saver at Asda”, “Spec savings at Asda” or the logo comprising two adjacent ellipses or otherwise howsoever. Nothing in the foregoing shall prevent the Defendant from making any reference to Specsavers in lawful comparative advertising in accordance with EC Directive 2006/114/EC concerning misleading and comparative advertising”.
The Court found that it was necessary to grant the general form of injunction sought by Specsavers in respect of both straplines and the logo. The parties remained competitors and Specsavers was properly concerned to prevent future invasion of its trade mark rights in ways which it could not foresee or describe with greater precision, but which Asda had shown itself capable of devising.
The Court of Appeal refused Asda permission to appeal to the Supreme Court on the ground that the proposed injunction was not justified by the infringement found. The Court held that the principles upon which it would grant an injunction in intellectual property cases were exactly the same as those which applied in other cases. An injunction would be granted to prevent future wrongs, not as punishment for past wrongs, and there must therefore be a threat or risk of further infringement.
Contempt of court
Dame Vivienne Westwood OBE v Anthony Edward Knight* (Judge Birss;  EWPCC 14; 24.04.12)
In an application to commit Mr Knight for contempt of Court, which he failed to attend, Judge Birss held that the PCC had the power to issue a bench warrant to secure Mr Knight’s attendance at Court, and that if Mr Knight did not attend, in the absence of any compelling reason why not, it was likely that the Judge would issue a bench warrant to bring him before the court to decide the proper punishment.
Following the Court’s findings of trade mark infringement, copyright infringement and passing off (reported in CIPA Journal, April 2011), various orders had been made against Mr Knight, with which Ms Westwood contended Mr Knight had not complied.
Although Mr Knight had claimed that he had not complied with the trial order because he was seeking to appeal, an order that was the subject of an appeal still had to be complied with. An appeal did not operate as a stay of any order of the lower Court. In any event, the Court of Appeal had dismissed Mr Knight’s application for permission to appeal as being totally without merit. Even if Mr Knight may have believed that he did not need to comply with the order because it was being appealed, it was not necessary to show that Mr Knight appreciated that what he was doing was a breach of the order.
Mr Knight had acted in clear, flagrant contempt of Court, and his contempt’s were numerous, substantial in nature and had continued for a very long time, and the circumstances were such as to make immediate imprisonment a real possibility.
Declarations of non-infringement and groundless threats
Samsung Electronics (UK) Ltd (“Samsung UK”) & Anr v Apple Inc* (Mann J;  EWHC 889 (Ch); 04.04.12)
Mann J heard various applications within the UK proceedings, which formed part of an ongoing international dispute between the parties concerning Samsung’s “Galaxy” tablet and Apple’s Registered Community Design for its “iPad” device. The Judge held that the High Court did not have jurisdiction to hear the second claimant’s (Samsung Electronics Co Ltd (“SEC”)) claim for a declaration of non-infringement of Apple’s design under the Community Design Regulation (6/2002/EC) (the “CDR”), however, Samsung UK’s claim should not be stayed pending invalidity proceedings at OHIM. The Judge set aside Samsung UK’s and SEC’s permission for service outside the jurisdiction of its claims for groundless threats, and held that expedition was appropriate.
Apple had challenged SEC’s right to bring a claim for a declaration of non-infringement and requested that Samsung UK’s claim be stayed as well as seeking to set aside the claims for groundless threats. Samsung sought expedition.
SEC’s claim for a declaration of non-infringement
Mann J held that the High Court did not have jurisdiction to hear SEC’s claim under Articles 81 and 82 CDR. SEC had not made any attempt to establish its own domicile or establishment in the UK. The Judge rejected SEC’s argument that Apple was estopped from denying that SEC was established in the UK on the basis that it had successfully argued in the German litigation that Samsung Germany was an establishment of SEC. An estoppel could not be founded on such a non-assertion; it could only be founded on a positive assertion (or denial). Since SEC had not established jurisdiction the claim could not proceed.
Samsung UK’s claim for a declaration of non-infringement
Mann J rejected Apple’s argument that Article 91 CDR covered any challenges that went to the validity of a design and that, since the case involved the scope of protection of Apple’s design, it should be stayed. Mann J held that such an interpretation would amount to a serious limitation on the plain words of Article 91 and a serious emasculation of actions for declarations of non-infringement. It was not right that OHIM had exclusive jurisdiction of validity questions, and validity could be considered by a national court where infringement proceedings were also in issue.
Samsung UK’s and SEC’s claims that Apple had made groundless threats
Although permission to serve its claims for groundless threats outside the jurisdiction had initially been obtained by Samsung, Mann J considered that since the threats were said to arise out of an accumulation of events, the picture at each stage should be considered in light of the significance of the UK market. The Judge concluded that from the Dutch and German proceedings that it would have been apparent that Apple was seeking to prohibit the sale of the Galaxy tablet throughout the EU, but that this was not specifically a threat to sue in the UK despite its relative market importance. He found that media statements should be viewed as a justification of what was going on in Germany rather than an intention to sue elsewhere. Further, Apple’s non-response to a letter seeking confirmation that Samsung did not infringe Apple’s rights in the UK was not a failure to provide assurance not to bring proceedings, given that the letter was only an invitation to agree that there was non-infringement. Mann J ruled that there was no good arguable case for the claims of groundless threats for the purposes of service outside the jurisdiction. Permission for service of the claim was therefore set aside.
Mann J held that expedition was appropriate in the commercial circumstances of the case and made an order with a view to the case being heard in June 2012.
Declaration of ownership of unregistered designs
Bruhn Newtech Ltd v Datanetex Ltd & Anr* (Mr John Baldwin QC;  EWPCC 17; 18.04.12)
The Judge rejected Bruhn’s claim for a declaration of ownership of unregistered design rights where Bruhn did not claim that any such rights actually subsisted in any of the designs in dispute.
Without attempting to establish that any intellectual property rights subsisted in them, Bruhn sought a declaration that it was the owner of any UK and Community unregistered design rights in three versions of a device used in the field of predicting hazards, which had been made and supplied to Bruhn by Datanetex. Bruhn did not attempt to identify any designs in which such rights might subsist. Its basis for this assertion was that the products were designed and made pursuant to a commission for money’s worth under Section 215(2) CDPA. It also sought injunctive relief to restrain infringement of those rights and damages.
In the absence of any authority on the point, the Judge was of the view that it would be dangerous to grant such a declaration, as third parties might well be led to believe that some such rights did subsist and alter their economic behaviour.
The Judge found that for there to be a commission within Section 215(2), there had to be something from which one could infer that designs in which design rights subsisted were being ordered by A from B such that A would own the rights to the designs. However, on the facts, there was merely an order for the supply of a product which had to be designed before it could be made; there was nothing to suggest that Datanetex did not remain free to deal in any of the designs it made in any way it chose. The Judge also concluded that there was insufficient evidence to support a finding that there was a commission in equity.
BREACH OF CONFIDENCE
Force India Formula One Team Ltd v 1 Malaysia Racing Team SDN BHD & Ots* (Arnold J;  EWHC 616 (Ch); 21.03.12)
Arnold J held that the subsequent use of CAD files, which had been used in the aerodynamic design of Force India’s Formula 1 racing car, in a car designed for another F1 team amounted to a misuse of confidential information and copyright infringement.
Force India operated a Formula 1 (“F1”) racing team. The first and second defendants were respectively a Malaysian company (“1 Malaysia”) and its English subsidiary (“1 Malaysia UK”), which operated a F1 racing team, known as “Lotus”. The third defendant, Mr Gascoyne, had been Chief Designer and Technical Director in several F1 teams, including Force India, and was subsequently appointed Chief Technical Officer at Lotus. The fourth defendant (“Aerolab”) and its parent company, the fifth defendant (“FondTech”), specialised in the aerodynamic development of F1 cars. Force India entered into an aerodynamic development contract with Aerolab, which provided that Aerolab would deal with Force India in the utmost good faith, that intellectual property created or developed by Aerolab would be owned by Force India, and that Aerolab and its employees would be bound by confidentiality and non-disclosure provisions. Aerolab designed a half-size wind tunnel model of an F1 car for Force India pursuant to the development contract. It terminated the agreement after Force India fell into arrears, and began working for Lotus.
Force India alleged that Aerolab had used the half-size wind tunnel design in a car which Aerolab went on to design for Lotus. Force India brought a claim against the defendants for, among other things, breach of confidence. It also brought a claim against 1 Malaysia UK for copyright infringement. The defendants did not dispute that some of Aerolab’s employees had engaged in some copying of CAD files containing Force India designs. Arnold J identified the following four areas of dispute: (i) how much copying took place; (ii) to what extent was the copying actionable; (iii) which of the defendants were liable; and (iv) what sum should be awarded to Force India.
Breach of confidence
Arnold J referred to Megarry J’s statement in Coco v A.N. Clark (Engineers) Ltd  RPC 41 as the clearest statement of the elements necessary to found an action for breach of confidence, i.e. (i) the information itself must have the necessary quality of confidence; (ii) that information must have been communicated in circumstances importing an obligation of confidence; (iii) there must have been an unauthorised use of the information to the detriment of the party communicating it. It was settled law that, with the exception of trade secrets, after the termination of a contract of employment and in the absence of an enforceable restrictive covenant, a former employee was entitled to use for his own benefit or that of third parties information which forms part of his own skill, knowledge and experience even if it confidential and was learnt during the course of his employment.
The Force India model consisted of around 370 parts, of which about 203 were aerodynamic parts and the remainder mechanical parts. Force India alleged copying of 71 designs. The Judge considered that a number of the initial Lotus model parts were drawn by a process which involved misuse of confidential information, as it involved use of the Force India CAD files as a shortcut. However, it did not necessarily follow that Force India’s confidential information had been misused in creating the designs of those parts. Force India’s case had lacked particularity in failing to identify the precise dimensions alleged to have been confidential and misused. It was held that insofar as Aerolab/FondTech had used Force India CAD files to take a short cut, they had misused confidential information akin to a trade secret, as such information was widely regarded in F1 a highly confidential. Even if some individual dimensions were memorable and could be regarded as forming part of the employees’ skill, knowledge and experience, it was generally separable.
Aerolab/FondTech accepted that they were liable for any misuse of confidential information made by their respective employees. The Judge dismissed the suggestion that Mr Gascoyne had agreed that Force India’s CAD files would be used as the starting point for the design of the Lotus model, that he had induced Aerolab’s breach of the original agreement, or that by turning a blind eye to the copying he could be jointly liable for acts of breach of confidence committed by Aerolab/FondTech. As the claim against Mr Gascoyne had failed, so too did the claim against Lotus.
The Judge found that the Aerolab/FondTech CAD files reproduced a substantial part of the corresponding Force India CAD files for certain parts of the car, and that 1 Malaysia UK had infringed Force India’s copyright by making electronic copies of those files in the UK.
Arnold J acknowledged that the current case law on the principles applicable to the assessment of damages for breach of confidence was very confused. The Judge found that it established the following principles:
(i) the overriding principle is that the damages are compensatory;
(ii) the primary basis for the assessment is to consider what sum would have been arrived at in negotiations between the parties, had each been making reasonable use of their respective bargaining positions, bearing in mind the information available to the parties and the commercial context at the time that notional negotiation should have taken place;
(iii) the fact that one or both parties would not in practice have agreed to make a deal is irrelevant;
(iv) as a general rule, the assessment is to be made as at the date of the breach;
(v) where there has been nothing like an actual negotiation between the parties, it is reasonable for the court to look at the eventual outcome and to consider whether or not that is a useful guide to what the parties would have thought at the time of their hypothetical bargain; and
(vi) the court can take into account other relevant factors, and in particular delay on the part of the claimant in asserting its rights.
The Judge held that Force India was entitled to damages/equitable compensation from Aerolab/FondTech in the sum of 25,000 Euros, which would be set off against the sum of 846,230 Euros owed by Force India to Aerolab under the development contract.
Reporters’ note: We are grateful to our colleagues at Bird & Bird LLP for their assistance with the preparation of this report: Alexander Payne, Laura Holt and Zoe Fuller.
The reported cases marked * can be found at http://www.bailii.org/databases.html#ew and the CJ’s decision can be found at http://curia.europa.eu/jcms/jcms/j_6/home