UK: Court of Appeal - Threats Action

IP Bulletin - June 2011

Best Buy Co Inc and another v Worldwide Sales Corporation Espana SL, [2011] EWCA Civ 618, 24 May 2011

The Court of Appeal has allowed an appeal in an action for threats under section 21 of the Trade Marks Act 1994.

The dispute concerned the trade mark "Best Buy". The claimants, Best Buy, planned to open consumer electronics shops in the UK and other EU countries under the Best Buy name, which the first claimant had used in the US. The defendant, a Spanish corporation, owned a number of figurative CTMs and national registered trade marks including the words "Best Buy".

A company related to the claimants, BBES, applied to register "Best Buy" as a CTM. The defendant opposed based on its trade marks. The applicant commenced a revocation action against one of the defendant's trade marks for non-use.

In a letter from Clifford Chance S.L. Abogados, acting for the defendant, the first part of the letter stated that use by BBES represented "a conflict with the intellectual property rights duly registered by [their] client in Spain and Europe which would entitle it to take the appropriate legal action to defend its interests" and "would cause confusion and lead to an unacceptable association with [their] client's products causing irreparable and irreversible damage which would undoubtedly entail the cessation of its activity".

The last three paragraphs stated:

"If, taking into account the above, [BBES] were to remain interested in using the BEST BUY trademark in Europe my client would be prepared, taking up the proposal made by your client in your facts of 28 August 2008, to reach a negotiated solution which would enable your client to do so while at the same time compensating my client for the cessation of its activity that this would undoubtedly entail.

Until a negotiated solution is reached, we hereby request that your client refrain from using the BEST BUY trademark in Europe, issuing any press articles or making any announcements of its imminent activities in Europe (news that has already caused confusion and concern among my client's customers).

In order to ensure that my client is able to protect its rights in a proper fashion, we hereby request that, within a term of fifteen (15) calendar days as of the date of receipt of this letter, you reply to us in writing confirming (i) [BBES's] willingness to start a negotiation process with my client in order to attempt to find a negotiated solution to the conflict; or (ii) your client's undertaking to not use the BEST BUY trademark in Europe, or issue any news in the press or make any announcements of any imminent activity in Europe, or indeed use such trademark in any other way."

The High Court had previously dismissed an action for unjustified threats. It held that, viewed as a whole, the threat was in the context of a negotiating response to the claimant's proposal, and so attracted the protection of privilege. This was the first time that a threats provision has been applied to a Community right. The High Court also ruled that section 21 referred to the threat of proceedings in the UK courts, and its extension to CTMs had no widening effect. The section was not concerned with the harmful effects of proceedings threatened in other jurisdictions.

The Court of Appeal has now allowed the claimant's appeal. It said that the proper approach to the interpretation of the letter was to be answered by reference to what a reasonable person, in the position of the recipient of the letter, with its knowledge of all the relevant circumstances as at the date the letter was written, would have understood the writer of the passage to have intended, when read in the context of the letter as a whole.

The court said that the issue was whether the letter, or at least the last three paragraphs of it, would reasonably have been understood to have been intended to have privileged status. Floyd J reached the wrong conclusion: he had failed to consider the letter as a whole and had focused too much on the last three paragraphs, containing the "without prejudice" offer, which merely underlined the defendant's belief in its case and its determination to pursue it.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Charles Russell's Intellectual Property Group
 
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