UK: IP Bulletin - Autumn 2012


CJEU considers whether use within a single Member State may constitute "genuine use in the Community" (Article 15(1) Regulation 207/2009)

AG Sharpston's opinion on the meaning of "genuine use in the Community" (Article 15(1) CTM Regulation) makes clear that genuine use should not be assessed solely on geographical lines but should take into account other factors such as the characteristics of the products and services and features of the relevant market for those products and services (all of which may change over time). Use in a single Member State might be sufficient.

Leno Marken BV v Hagelkruis Beheer BV, Case C 149/11, 5 July 2012 x=0&doclang=en&mode=req&dir=&occ=first∂=1&cid=540897 3

Hagelkruis Beheer BV ("Hagelkruis") applied to register the word OMEL as a Benelux trade mark in connection with services in classes 35, 41 and 45 of the Nice Classification. Leno Marken BV ("Leno") opposed the registration arguing that it was the proprietor of the already registered Community Trade Mark ("CTM") ONEL for certain services in classes 35, 41 and 42. In response, Hagelkruis asked Leno to prove genuine use of the ONEL mark. Leno responded by providing proof of use in the Netherlands.

The Benelux Office for Intellectual Property rejected Leno's opposition and decided Hagelkruis should be permitted to register OMEL as a Benelux mark. Leno appealed that decision before the Regional Court of Appeal in The Hague. The matter before the court was whether Leno was required to demonstrate genuine use of its CTM for the mark ONEL in more than a single Member State in order to be able to oppose Hagelkruis' registration of OMEL. The Dutch court referred the following questions to the Court of Justice of the European Union ("CJEU").

1. Must Article 15(1) of [the CTM Regulation 207/2009] be interpreted as meaning that use of a Community trade mark within the borders of a single Member State is sufficient to constitute genuine use of that trade mark, given that, had it been a national trade mark, such use would have been regarded as genuine use in that Member State (see Joint Statement No 10 regarding Article 15 of Council Regulation (EC) No 40/94 of 20 December 1993 and the Opposition Guidelines of the OHIM)?

2. If Question 1 is answered in the negative, can the use of a Community trade mark within a single Member State as described above never be regarded as genuine use in the Community as referred to in Article 15(1) of [the Regulation]?

3. If the use of a Community trade mark within a single Member State can never be regarded as genuine use in the Community, what requirements apply' in addition to the other factors' in respect of the territorial scope of the use of a Community trade mark when assessing genuine use in the Community?

4. Or else' as an alternative to the above' must Article 15 of [the Regulation] be interpreted as meaning that the assessment of genuine use in the Community should be carried out wholly in the abstract, without reference to the borders of the territory of the individual Member States (and that, for example, market share (product markets/geographic markets) should be taken as the point of reference)?'

The CJEU was asked to determine the extent of the territorial area in which the proprietor of a CTM must use the mark to avoid the sanctions set out in the Regulation. Article 15 provides that a proprietor of a trade mark must put the CTM to use and if, within a period of five years following registration, the proprietor has not put the mark to "genuine use in the Community" in connection with the goods or services in respect of which it is registered, or if such use has been suspended during an uninterrupted period of five years, the CTM shall be subject to the sanctions provided for in the Regulation. In opposition proceedings, an opponent can be asked by the applicant for a mark to prove that the earlier mark (on which the opposition is based) has been put to "genuine use in the Community". If not used for five years, a mark may be revoked.

Advocate General Sharpston considered "genuine use in the Community" as an indivisible concept, meaning that "genuine use and "in the Community" are not cumulative conditions to be examined separately. In Sunrider (C-416/04 P Sunrider [2006] ECR I-4237) the CJEU accepted that territorial scope of use is only one of several factors to be taken into account in the determination of whether use is genuine or not. Whilst the place of use is a factor to consider in assessing whether the mark has been put to genuine use, it is not the sole or dominant factor.

AG Sharpston concluded that use within the borders of a single Member State is not, of itself, necessarily sufficient to constitute genuine use of that mark because the territorial scope of use is merely one of the factors to take into account at the assessment. Leno submitted evidence of use of the ONEL mark in the Netherlands only. AG Sharpston commented on the difference between national and Community marks. In determining genuine use of a national mark, only instances of use within the territory of the Member State where the mark is registered are relevant, even if the proprietor uses it elsewhere. Use of a Community trade mark within the meaning of Article 15(1) of the Regulation, on the other hand, must be assessed taking into account instances of use in the entire internal market. Whether a Community trade mark has been used in one Member State or several is irrelevant. What matters is the impact of the use in the internal market: more specifically, whether it is sufficient to maintain or create market share in that market for the goods and services covered by the mark and whether it contributes to a commercially relevant presence of the goods and services in that market.

The court found in Sunrider that a national trade mark has been put to genuine use "Üwhere the mark is used in accordance with its essential function, which is to guarantee the identity of the origin of the goods or services for which it is registered, in order to create or preserve an outlet for those goods or services'. Whether a trade mark has been put to genuine use must be determined taking into account all the facts and circumstances of the case, including the characteristics of the economic sector and the market at issue, the nature of the goods and services protected by the mark, and the scale and frequency of the use. Essentially, trade marks are used in markets. The relevant market for a Community trade mark is the internal market. AG Sharpston considered that to determine whether the condition of genuine use in the Community is satisfied, the court must examine all forms of use of the mark within the internal market. The geographical definition of the relevant market is the entire territory of 27 Member States. In the present case, AG Sharpston considered that use of the mark in the Netherlands forms part of the assessment and may contribute to establishing whether the mark has penetrated the internal market for the services covered by the mark. Use or non-use outside the Netherlands is equally relevant to use inside.

In AG Sharpston's opinion, the case-by-case assessment of what constitutes genuine use involves determining the characteristics of the internal market for the particular goods and services involved and those features may change over time. "Demand or supply in, or access to, parts of the internal market may be limited depending on, for example, language obstacles, transportation or investment costs, or consumer tastes and habits. Use of a trade mark in an area where the market is particularly concentrated may thus play a more significant role in the assessment than use of the same mark in a part of the market where sources of supply and demand for these goods or services hardly exist or arise." The decision of the national court on whether the condition of genuine use is satisfied cannot be based on an assessment solely of use of ONEL in the Netherlands. Instead, the national court must consider all instances of use in the internal market, including in the Netherlands, and give weight to each use against the background of the particular characteristics of the market and the market share of the proprietor in that market.

AG Sharpston has recommended that the CJEU should respond to the national court as follows:

Article 15(1) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark must be interpreted as meaning that:

i. use of a Community trade mark within the borders of a single Member State is not, of itself, necessarily sufficient to constitute genuine use of that trade mark, but ii. it is possible that, when account is taken of all relevant facts, use of a Community trade mark within an area corresponding with the territory of a single Member State will constitute genuine use in the Community.

Genuine use in the Community within the meaning of Article 15(1) of Regulation No 207/2009 is use that, when account is taken of the particular characteristics of the relevant market, is sufficient to maintain or create market share in that market for the goods and services covered by the Community trade mark.

Therefore, what amounts to genuine use for the purposes of Article 15(1) will depend upon the characteristics of the relevant market for the products and services and the market share of the proprietor as well as the area of territory in which the mark is used. If the CJEU follows AG Sharpston's opinion, it can be anticipated that there will be several more references to the CJEU before there is a clear picture of what actually will amount to "genuine use in the Community".

Success for RED BULL and BULLIT

The High Court has found in favour of the manufacturer of the popular energy drink "Red Bull" following trade mark infringement proceedings and granted an EU wide injunction preventing infringement of its Community trade mark. The High Court found there was no bad faith on the part of Red Bull regarding "intention to use" when the trade mark was applied for and concluded that there was no need to make reference to the CJEU on the possible compatibility of UK law and the Trade Marks Directive on this issue.

Red Bull GmBH v Sun Mark Limited and another [2012] EWHC 1929 (Ch), 17 July 2012

Red Bull GmBH ("Red Bull") alleged infringement by Sun Mark Limited ("Sun Mark") of two international trade marks designating the United Kingdom for the word "BULLIT" and a Community Trade Mark ("CTM") for the words "RED BULL". Sun Mark counterclaimed seeking declarations of invalidity concerning two of Red Bull's trade marks, saying that Red Bull had applied for the international trade marks in bad faith with no genuine intention to use the BULLIT trade mark in the United Kingdom. Sun Mark used the sign "BULLET" in relation to its own energy drink product and also used the strap line "NO BULL IN THIS CAN" in advertising its own product.

Arnold J found in favour of Red Bull. In relation to the claim for infringement of the international trade marks, Sun Mark used its BULLET sign on the drink can, on its website, and in its product's logo. The BULLET sign and Red Bull's mark BULLIT were "visually, aurally and conceptually very similar", and the goods concerned were identical (both energy drinks). Arnold J held there was "a clear likelihood of confusion and it was immaterial that there was no evidence of actual confusion, since BULLIT had been little used by Red Bull in the United Kingdom". A registered trade mark proprietor was entitled to prevent third parties from using similar signs which would give rise to a likelihood of confusion (Directive 2008/95 Article 5(1)(b)). The likelihood of confusion would be appreciated globally; would be judged through the eyes of the average consumer, who would perceive a mark as a whole; the visual, aural and conceptual similarities had to be assessed by reference to the overall impressions created by the marks, following Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24, [2012] E.T.M.R. 17. (See paragraphs 71, 74, 80, 84-86 of judgment).

In relation to the claim for infringement of the CTM, a CTM proprietor has the right under Article 9(1)(c) of Directive 2008/95 to prevent third parties using an identical or similar sign to take unfair advantage of its mark, subject to certain requirements being satisfied. Red Bull's CTM RED BULL had a substantial reputation in the United Kingdom due to the popularity of the energy drink. Sun Mark's use of the sign BULL in its strapline "NO BULL IN THIS CAN" would call the CTM RED BULL to the mind of the average consumer. Thus, there was a link between the strapline and the CTM and the strapline took unfair advantage of the repute of RED BULL. (See paragraphs 87, 90-92, 98-99, 103, 109, 111- 112).

Concerning the claim for invalidity, Arnold J commented that "it appears that there is no requirement under the Regulation that an applicant for registration of a Community trade mark must intend to use the mark. Accordingly, a lack of intention to use does not, at least without more, constitute bad faith." Although "By virtue of section 32(3) of the 1994 [Trade Marks] Act an applicant to register a trade mark in the UK must state in his application either that the trade mark is being used or that he has a bona fide intention to use it", "¦ "section 32(3) of the 1994 Act [does] not apply to an application to extend an international registration to the UK" and finally "I do not think it matters to the Defendants' case that the requirement for a declaration of intention to use did not form part of domestic law at the relevant dates". (See paragraphs 124' 127 and 158.)

He went on to say "If the UK's requirement for a declaration of intention to use is compatible with the Directive, and the making by the applicant of a false declaration of intent to use can amount to bad faith, the next issue concerns the intention which the applicant must have in order to be able to declare in good faith that he intends to use the mark in relation to the goods or services specified in the application in the UK. Counsel for the Defendants submitted that a concrete present intention was required, whereas counsel for Red Bull submitted that a possible or contingent future intention was sufficient". Whether a contemplated use, or a possible or conditional intention to use, can suffice must depend upon the circumstances, "[this] appears to me to be not only correct in principle, but also supported by the subsequent jurisprudence of the CJEU in Lindt v Hauswirth and Internetportal v Schlicht. I therefore conclude that a possible or contingent intention to use the mark at some future date may suffice. Whether it does suffice will depend on all the circumstances of the case." (See paragraphs 159 - 163.)

Arnold J found that although Red Bull had not had any concrete intention to use the BULLIT marks in the United Kingdom at the date they were registered, it had contemplated using the marks at some point in the future, most likely in relation to energy drinks, in countries which might include the United Kingdom. That was considered sufficient intention to be able to claim in good faith that it intended to use the marks. (See paragraphs 131-133, 138, 191-192, 196.)

At a later hearing, the High Court handed down declarations of infringement of Red Bull's trade marks and granted a certificate of invalidity of the international marks together with an EU-wide injunction against infringement of Red Bull's CTM.

Following this decision, it would be sensible for an applicant to show that a mark is being used or that there is a clear intention to use / ability to demonstrate a clear intention to use a mark in the future at the time the application is filed.

Budejovicky Budvar Narodni Podnik v Anheuser-Busch Inc [2012] EWCA Civ 880, 3 July 2012

The Court of Appeal has now handed down its judgment in this case following the decision of the CJEU concerning interpretation of Article 9(1) of Directive 89/104 (acquiescence) and Article 4(1) of Directive 89/104 (the defence of honest concurrent use to a claim for a declaration of invalidity). The decision is as expected and in line with the ruling of the CJEU. Budvar's appeal against the grant of a declaration of invalidity of its trade mark was allowed. The Court of Appeal held that Budvar was entitled to take the honest concurrent use point on appeal, that there was no adverse effect on either party's mark and that it would be unjust to order a new trial.


This case is the latest chapter in a long running saga between the American manufacturers, Anheuser-Busch Inc. (AB), and the Czech manufacturers, Budejovicky Budvar Narodni Podnik (Budvar). Both have been selling "Budweiser" beer in the UK since the 1970s. In a passing off action brought by AB, the Court of Appeal held, in 1984, that both "Budweiser" brands were entitled to co-exist in the UK because a dual reputation had been established.

In 1979, AB applied to register BUDWEISER for "beer, ale and porter" which was opposed by Budvar. In 1989, Budvar applied to register BUDWEISER for "beer ale and porter; malt beverages" which was opposed by AB.

In March 2000, the Court of Appeal held that both AB and Budvar were entitled to register BUDWEISER as a trade mark in the United Kingdom. The decision was reached under the old (1938) United Kingdom Trade Marks Act which expressly allowed concurrent registration of the same or confusingly similar marks in circumstances where there was honest concurrent use or other special circumstances. Both AB's and Budvar's BUDWEISER marks were put on the register on 19 May 2000.

On 18 May 2005, four years and 364 days after the parties' BUDWEISER marks were put on the register, AB applied for a declaration that Budvar's BUDWEISER registration was invalid, pursuant to Article 4(1)(a) of the Directive. AB's case was that:

  • Although both side's marks were put on the register on the same day, AB's was an "earlier trade mark" by virtue of Article 4(2), as its date of application was some ten years earlier.
  • The marks and goods were identical and so, by virtue of Article 4(1)(a), Budvar's mark was liable to be declared invalid.
  • There was no question of acquiescence because the five-year period provided by Article 9 had not quite expired.

The timing of the application was such that, although it was issued within the five-year period, it was not served on Budvar until after the five-year period had expired. This denied Budvar the opportunity to respond with a cross-application to have AB's 1979 BUDWEISER trade mark registration declared invalid on the basis of Budvar's ownership of a 1976 registration of the word BUD.

The High Court upheld the decision of the Intellectual Property Office ("IPO") Hearing Officer granting a declaration of invalidity, on the ground that Budvar's mark was identical with the earlier trade mark owned by AB, and was registered in respect of identical goods.

Budvar appealed to the Court of Appeal which stayed the proceedings and referred questions to the ECJ concerning the nature of acquiescence under the Directive, the time periods involved in applying Article 9(1), and the relevance (if any) of honest concurrent use. The decision of the CJEU provided helpful guidance on the meaning of acquiescence and also confirmed that one party cannot cancel the trade mark of the other where they have been co-existing for 30 years each having used their marks in good faith from the very beginning and where the use has no adverse effect on the essential function of the trade marks to guarantee to consumers the origin of the goods concerned. The Court of Appeal has now handed down its judgment in the case following the decision of the CJEU.

Court of Appeal Decision

Budvar's appeal against the grant of a declaration of invalidity of its trade mark was allowed. The Court of Appeal held that Budvar was entitled to take the honest concurrent use point on appeal, that there was no adverse effect on either party's mark and that it would be unjust to order a new trial.

Budvar accepted that the response from the CJEU ruled out any defence of acquiescence to AB's application for a declaration of invalidity. However, the Court of Appeal considered the effect of the CJEU's decision (below) on the defence of honest concurrent use.

"Article 4(1)(a) of Directive 89/104 must be interpreted as meaning that the proprietor of an earlier trade mark cannot obtain the cancellation of an identical later trade mark designating identical goods where there has been a long period of honest concurrent use of those two trade marks where, in circumstances such as those in the main proceedings, that use neither has nor is liable to have an adverse effect on the essential function of the trade mark which is to guarantee to consumers the origin of the goods or services." [Emphasis added]

AB submitted that the defence was not one open to Budvar to take on appeal and that, if it was taken, then on the basis of findings of fact in the earlier litigation between the parties, AB would be able to demonstrate an "adverse effect". Finally, if that would not be so, it would be unfair and unjust to resolve the appeal finding against AB because AB never had an opportunity of proving an adverse effect. Instead, the case should be remitted back to the IPO so that the issue of adverse effect could be properly investigated by way of further evidence.

The Court of Appeal considered in turn each of the points raised by AB. The Court concluded that there was nothing unfair about allowing Budvar to take the point of honest concurrent use on appeal. The point was a matter of law which could be taken on the basis of evidence before the Hearing Officer. (Things would be different if the point also involved questions of fact which required further evidence.) In addition there was no question of AB being taken by surprise; Budvar had raised the point fairly and squarely in its Notice of Appeal.

In considering the second submission of AB (namely adverse effect on guarantee of origin), the Court assessed the findings of confusion in the earlier cases between the parties and considered whether the Court's answer was confined to de minimis levels of confusion only. Sir Robin Jacob concluded:

"I do not accept that these findings are inconsistent with what I said in my first judgment. I did not hold that the level of confusion was de minimis. I said it was small, not that it was negligible. The level of confusion in the earlier cases was clearly not negligible: otherwise the claims in passing off would have failed for that reason alone, not because there was defence of honest concurrent use or failure to prove goodwill. "¦. These two brands have lived side by side for many many years in different get-ups, prices and taste and with large sales: the sales of AB's beer are much greater than Budvar's but the latter are substantial. You do not have to be a genius to infer from those very facts alone that the public by and large will have got used to that. Or that there will always be some who are confused, albeit that many are not."

The CJEU did not rule that only de minimis levels of confusion are acceptable when there is honest concurrent use. Sir Robin Jacob rejected AB's argument as being unrealistic that, even where there is long established honest concurrent use, the mark of one party must provide a guarantee of origin in that party and not the other. The sign Budweiser had never denoted AB's beer alone. Concluding, there was no impairment of the guarantee of origin of either side's mark.

Finally, concerning AB's third submission, Sir Robin Jacob concluded that if the case were to be remitted to the IPO, AB would need to amend its pleadings to allege and particularise damage to the essential function of its trade mark. Evidence in support would need to be adduced. This would amount to a new trial caused by the fact that AB had failed to put its case at the first trial. It would therefore be unjust to allow AB to pursue BUDVAR yet again. In addition, Mr Justice Warren remarked that, although AB had known since September 2011 that it might need to show adverse effect affirmatively, AB had not given the Court any hint of how adverse effect might be established or the nature of evidence which might be adduced to establish such adverse effect. He did not feel that the matter should be remitted to the IPO without knowing in outline the nature of the evidence AB would want to adduce.

The decision is as expected and in line with the earlier ruling of the CJEU. Allowing the appeal, the Court of Appeal concluded that Budvar was entitled to take the honest concurrent use point on appeal, that there was no adverse effect on either party's mark and that it would be unjust to order a new trial.

Fine & Country limited and Others v Okotoks Limited and Another [2012] EWHC 2230, 31 July 2012

This passing off decision illustrates that compelling evidence of consumer confusion is required. Email evidence collected from the claimants' licensees was not regarded as useful' it was indicative of confusion but not compelling evidence of it and it was not easy to distinguish between muddle and really substantial and operative confusion. Witness evidence of persons connected with the claimants was devalued because of the connection. Evidence from apparently independent witnesses, however, provided support for a finding of confusion and deception.


The claimants were estate agents operating under the name "Fine & Country" since 2001. A number of different estate agency businesses were licensed to use the brand name. The name and device was also registered as a UK trade mark and a CTM in class 36.

The defendants were a group of companies who operated a number of national estate agencies under the name "Fine" since 2009. Their logos are shown below and they also used the strap line "selling fine homes through the country".

The claimants said that the defendants' use of the name and logo created substantial confusion amongst the public and that their conduct amounted to passing off, or, in the alternative, an infringement of their trade marks. The defendants contended that the trade marks and the "Fine" brand were descriptive with no distinctive character and that there was no likelihood of confusion, let alone deception, so as to found a claim in passing off.


The High Court ruled that the use of the word "Fine" did amount to passing off and trade mark infringement, on the grounds below:

The defendants argument that the goodwill had accrued to the claimants' licensees was rejected. The goodwill had been generated by the services and brand provided by the claimants and accrued to the claimants as the source of those services and that brand. The attractive force attached to the brand was what allowed the claimants to charge significant licence fees.

There was some indication of confusion in emails, but this was not compelling. It was not easy to distinguish between muddle and really substantial operative confusion. However, the evidence of four witnesses who were cross-examined supported a finding of confusion and deception. In addition, the defendants gave evidence that they had decided to "live dangerously" with a risk of confusion, which they appreciated, even though they felt they had done enough to avoid deception. The defendant also failed to show evidence as to the genesis of their mark. The evidence as a whole was enough to demonstrate that there was deception, even if it was not so deep-rooted that it could not be corrected or dispelled.

The erosion and damage to the claimants' business was a likely consequence of such confusion and deception.

Concerning trade mark infringement, since the claim in passing off was established, infringement under section 10(2) of the Trade Marks Act and Article 9(1)(b) of the CTM Regulation, and under section 10(3) of the Act and Article 9(1)(c) of the CTMR followed. Nevertheless, the court considered the marks and applied relevant case law, concluding that the overall impression given by the marks was similar and confusing.

The court considered that the claimants established the ingredients for a successful claim in passing off (reputation/goodwill, deception/confusion and damage). The case illustrates that compelling evidence of consumer confusion is required. In the present case, email evidence collected from the claimants' licensees was not regarded as useful' it was indicative of confusion but not compelling evidence of it and it was not easy to distinguish between muddle and really substantial and operative confusion. Witness evidence of persons connected with the claimants was devalued because of the connection. Evidence from apparently independent witnesses, however, provided support for a finding of confusion and deception. This evidence was supportive of the judge's own assessment that the similarities between the Fine & Country marks and the Fine sign as well as the unusual use by the first defendant of the single descriptive word "Fine" to denote its business, were confusing and deceptive and/or likely to confuse and deceive; and that erosion and damage to the claimants' business was a likely consequence.

Meaning of "special grounds" in Article 104(1) of the CTM Regulation considered by Court of Appeal

In two actions concerning infringement of Community Trade Marks and applications for declarations of invalidity before OHIM, the Court of Appeal has provided guidance on the meaning of "special grounds" in Article 104(1) of the CTM Regulation. Essentially, unless there are "special grounds", a Community trade mark court hearing an infringement or revocation action concerning a Community Trade Mark must stay the proceedings, where the validity of that mark is already in issue before another Community trade mark court or OHIM. The special grounds must relate to the factual circumstances of the particular case before the court.

Starbucks (UK) Ltd v British Sky Broadcasting Group plc and others; EMI (IP) Ltd and others v British Sky Broadcasting Group plc and another [2012] EWCA Civ 1201, 13 September 2012

Two sets of proceedings for trade mark infringement and passing off were brought against companies in the British Sky Broadcasting Group ("BSkyB"). The claimants were Starbucks (UK) Ltd ("Starbucks"), a subsidiary of the Hong Kong company PCCW Ltd (there is no suggestion in the judgment of any connection with the Starbucks coffee company) and EMI (IP) Ltd. Legal proceedings were prompted by BSkyB's announcement that it intended to launch a new internet television service under the NOW TV name and Logo:

Sky applied in both sets of proceedings for a stay under Article 104 (1) of Council Regulation 207/2009/EC of 26 February 2009 on the Community Trade Mark (codified version) ("the CTM Regulation") pending the outcome of applications by Sky to the Office for Harmonisation in the Internal Market (Trade Marks and Designs) ("OHIM") to invalidate the relevant marks. In the EMI proceedings Mr John Baldwin QC, sitting as a deputy judge of the Chancery Division, granted a stay on 25 June 2012 on the basis that there were no special grounds within Article 104 of the CTM Regulation ("Article 104"). In the Starbucks proceedings, on 29 June 2012, Arnold J refused a stay and ordered an expedited trial on the ground that there were special grounds within Article 104(1). EMI appealed the decision of Mr John Baldwin QC and Sky appealed the decision of Arnold J on the ground that the respective judges made errors of principle in their approach to what constitutes special grounds within Article 104(1). Sky's internet TV service launched on 17 July 2012.

In the Court of Appeal, Lord Justice Etherton dismissed both appeals, concluding that:

  • the policy objective of Article 104 (1) is the avoidance of inconsistent decisions (just as it is in the case of Articles 27 and 28 of the Judgments Regulation, as argued by counsel for Sky);
  • the policy objective is of particular importance in the context of a Community trade mark ("CTM") because of the unitary character of such a mark, and because of OHIM's exclusive jurisdiction to hear invalidity and non-use applications in cases where there is no counterclaim in infringement proceedings (Articles 52, 95, 96 and 100 of the CTM Regulation), as well as the absence of any hierarchy between different CTM courts and between such courts and OHIM in relation to claims of invalidity and for revocation;
  • the issue to be addressed under Article 104(1) is whether, on the making of a counterclaim for invalidity or revocation, the infringement claim should be permitted to proceed notwithstanding the risk of inconsistent decisions;
  • the presumption in favour of a stay under Article 104(1) is a strong one (because of the rule that a derogation from an EU general rule is to be narrowly interpreted and because of the importance of the policy of avoiding inconsistent decisions). Inconsistent decisions in relation to a CTM could give rise to grave uncertainties and commercial difficulties;
  • it would be a rare and exceptional case where special grounds within Article 104(1) exist. The parties themselves cannot determine the issue of a stay merely by reaching agreement between themselves (following Samsung Electronics UK Ltd v Apple Inc. [2012] EWCA Civ 729). The matter of a stay will be a decision for the court itself;
  • the expression "special grounds" in Article 104(1) bears the same meaning and is to be applied in the same way as the expression "special reasons" in Article 102 of the CTM Regulation. As such, special grounds must relate to factual circumstances specific to the given case (following Case C-316/05 Nokia Corp v Joacim Wardell [2006] ECR I-12083). (Systemic differences in terms of rules of evidence, procedure and powers of case management applicable to CTM proceedings in Member States and at OHIM are irrelevant. The fact that an application to OHIM takes a long time or a longer time to be finally determined than in proceedings in this jurisdiction is irrelevant.)
  • there is no reason why specific facts giving rise to particular urgency may, depending on the precise circumstances, constitute special grounds within Article 104(1). In particular, the general need of business to know where it stands is not sufficient. In addition, the urgency must be such as to surmount the heavy presumption in favour of a stay, bearing in mind that protective and provisional measures may be available to protect the claimant in the event of any delay.
  • Finally, in the light of all the above, it is not of any relevance that the application to OHIM has been made on a purely reactive basis to a threat of infringement proceedings (following Case C-159/02 Turner v Grovit [2004] ECR I-3565. That matter does not address in any relevant way the policy issues underlying Article 104(1).

In Starbucks, Starbucks had written a letter before action to Sky and subsequently commenced proceedings in the UK. Between these two events, Sky applied to OHIM for cancellation of the relevant CTM. Lord Justice Etherton concluded that the reactive nature of Sky's application to OHIM and the fact of the existence of a passing off claim did not amount to special grounds:

"It is commonplace that infringement claims are accompanied by passing off claims. That is not a special feature of these proceedings distinguishing them from others for the purpose of compromising the strong policy considerations underlying Article 104(1) and overcoming the high bar for establishing special grounds."

However, he agreed that the trial judge was entitled to take the view that there were exceptional circumstances of urgency. Sky had plans to launch its new service very shortly, and it was in its interests to be able to do so. It did in fact do so on 17 July 2012. Starbucks' evidence was that the promotion of that service would soon undermine its goodwill and would undermine its ability to exploit its registered mark and undermine its plans to expand its imminent rival service later in 2012. The urgency justified the judge's decision to refuse a stay on proceedings.

In EMI, Lord Justice Etherton concluded that the deputy judge was both correct and entitled to take a different view on urgency (to that taken by the judge in Starbucks). EMI had shown no urgency in launching a NOW branded music TV channel and still had no definite plans. EMI had made no investment in or commitment to the channel.

Furthermore EMI had made an agreement with Starbucks for the latter to use the NOW mark in relation to a TV service in the near future. The deputy judge also concluded and was entitled to conclude that EMI could be adequately compensated in damages for any loss.

Both appeals were dismissed.

The cases, especially the Starbucks case, illustrate that it is important to recognize that a party threatened with proceedings for infringement of a CTM may well launch a preemptive attack on the CTM at OHIM' which as the Court of Appeal recognized "can take as much as a decade to resolve". It may be that in some circumstances it is appropriate to commence proceedings rapidly.

National Lottery Commission defends its "Üsmiling hand' figurative CTM

Following the EU General Court's recent ruling, the National Lottery Commission has successfully defeated an application for a declaration of invalidity of its smiling hand figurative CTM based upon alleged earlier copyright in the Italian figurative sign "mano portafortuna". The case is in essence a practical example of showing the difficulties that can arise in relying on documents of dubious origin.

Case T-404/10, National Lottery Commission v OHIM National Lottery Commission v OHIM, Case T-404/10, 13 September 2012

In 2007, the National Lottery Commission ("NLC") obtained a registration, in classes 9, 16, 25, and 28 for the "Üsmiling hand' figurative mark below at the Office for Harmonisation in the Internal market (Trade Marks and Designs) ("OHIM").

In 2007, Mediatek Italia Srl and Guiseppe De Gregorio (the "applicants") filed an application for a declaration of invalidity in the light of the copyright, predating the NLC mark, of the figurative sign "mano portafortuna" (shown below).

The declaration was granted on the basis that (i) the applicants had demonstrated that Italian legislation offered copyright protection to "mano portafortuna"; (ii) the copyright pre-dated NLC's sign; and (iii) "mano portafortuna" and NLC's sign were almost identical (pursuant to Article 53(2)(c) of CTM Regulation (207/2009)).

NLC appealed and the First Board of Appeal dismissed the appeal, finding that (a) copyright protection under the Italian Civil Code and Italian law on copyright could apply to the humorous representation of a smiling hand; (b) sufficient evidence of the existence of copyright had been provided through the submission of a copy of an agreement purporting to assign copyright from the author of the "mano portafortuna" to one of the applicants; (c) the Board of Appeal was competent to assess only the content of the agreement and not the provenance of the statements contained within it; (d) certain anomalies highlighted by NLC concerning the agreement gave no grounds for doubting the veracity of the agreement's content; (e) the NLC mark, under Italian law, constituted an unauthorised reproduction and infringement of copyright; (f) NLC evidence did not establish that its mark had been created independently; (g) given that "mano portafortuna" had been printed on 400 T-shirts in Naples, Italy, it was more probable that the creators of NLC's mark had been inspired by the Italian figure than the mark being created independently.

NLC made an application to annul the decision of the Board of Appeal. Upon consideration, the General Court found that:

  • It cannot validly be found that an "Üagreement confirming assignment' signed in the presence of a notary on 4 August 2008, confirming the clauses laid down in an agreement executed in 1986 is capable of authenticating the signatures of the parties to the 1986 agreement for the purposes of Article 2703 of the Italian Civil Code. (Such an assumption would mean that an agreement signed in 1986 was enforceable against third parties by virtue of the intervention of a notary 22 years later. This would be in direct contradiction with the terms of Article 2703, under which authentication consists in attestation by a public official that the signature has been written in his presence, not his absence.)
  • By finding that the 1986 agreement "Ü[was] a document under private signature and therefore [constituted] full proof of the provenance of the statements made by the signatories, pending a declaration of forgery in accordance with Article 2702 of the Civil Code', when it was not necessary to bring proceedings for a declaration of forgery in the circumstances, the Board of Appeal based its approach on a misinterpretation of the national law applicable pursuant to Article 53(2) of Regulation No 207/2009 and therefore failed to assess accurately the precise scope of its own powers.
  • During the proceedings before the Board of Appeal, NLC drew attention to certain factors, which it referred to as "Üanomalies' and which showed that it was unlikely that the 1986 agreement had been drafted in that way on the date claimed. Those factors included, in particular, the facts that the date of the post office stamp (21 September 1986) corresponds to a day on which post offices were closed and that the 70 year copyright protection provided for under the agreement corresponds to the term of copyright protection applicable after 1996, whereas, at the time when the 1986 Agreement was purportedly drafted, copyright protection lasted for only 50 years.

The General Court concluded that, in finding that the applicants had shown the existence of an earlier right, the Board of Appeal based its approach on a misinterpretation of the national law governing copyright protection. This error of the Board of Appeal may have had an effect on the content of the contested decision. Consequently, the plea alleging infringement of Article 53(2)(c) of Regulation No 207/2009 must be upheld and the contested decision must be annulled.

The decision appears to have been heavily influenced by the apparently dubious origin of one of the documents on which an applicant seeking a declaration of infringement had relied.


Barring Orders - Court of Appeal considers the status of in-house legal Professionals

There are important issues to be considered when any legal professional changes employment and joins a competitor, not least the issue of use of information which may or may not be confidential. The Court of Appeal has recently considered the status of inhouse patent attorneys in an application by Teva for an injunction to prevent an exemployee, who joined a competitor, from using alleged confidential information. The Court of Appeal considered, obiter, whether the principles in Bolkiah v KPMG [1999] 2 A.C. 222 applied to the same extent to a former employed or in-house litigator as they did to a former independent litigator. Opinion tentatively inclined towards a view that Bolkiah should not be extended to former internal legal advisers or patent attorneys).

Generics (UK) Ltd v Yeda Research & Development Co Ltd & Teva Pharmaceutical Industries Ltd [2012] EWCA Civ 726

Generics (UK) Ltd ("Generics") sought a declaration of non-infringement and revocation of EP (UK) No. 0,762,888, a patent of Yeda Research & Development Co Ltd ("Yeda"), in respect of which Teva Pharmaceutical Industries Ltd ("Teva") was the exclusive licensee. The patent related to a pharmaceutical called Copaxone, an important product for Teva's business. The action commenced in March 2011 and the trial commenced on 14th May this year.

In February 2011, a senior in-house patent attorney was employed by Generics as its Director of Intellectual Property with responsibility for managing Generics' European patent matters, including litigation, oppositions and prosecutions. Her duties included the conduct of the Copaxone action and a corresponding action in France. Generics' solicitors took their instructions from the senior in house patent attorney.

From 2008 to January 2011 Generics' in-house patent attorney had been employed by Teva where she was responsible for oppositions in the European Patent Office. Whilst at Teva, she was not concerned with any litigation concerning Copaxone. No one in her department at Teva had any involvement with Copaxone litigation; the matter was being handled by a team in Israel.

However, Teva claimed that whilst working at Teva, the in-house patent attorney had learned of confidential information about Copaxone litigation and therefore ought not to be doing any work for Generics in the action. Floyd J agreed, granting an injunction that Generics should cease to act by, or otherwise seek assistance or advice from, its Director of Intellectual Property in relation to the action.

Teva claimed that the in-house patent attorney had been privy to some discussion about Copaxone litigation whilst employed by Teva. Teva said she had been copied in on some emails and had been party to an oral discussion with Dr Hausdorff, Teva's Associate General Patent Counsel who had responsibility for Copaxone. Teva said that this communicated significant confidential information which, although not remembered by Generics' in-house patent attorney, might be remembered, albeit subconsciously, and might be used against Teva in the Copaxone action.

Floyd J agreed, granting Teva injunctive relief and saying "..I think there is a risk in the present case that if [Generics' in-house patent attorney] continues to act on behalf of Generics her memory of events such as those to which I have referred, "¦, may be at the back of her mind and may, I suspect unconsciously, nevertheless in fact influence her strategy and conduct and the consequent instructions she gives in the case".

Generics appealed. The injunction had been granted on the basis of the principles in Bolkiah v KPMG [1999] 2 A.C. 222 (in Bolkiah, a barring order was granted restricting a former external legal adviser from acting for a third party whose interests were adverse to those of Prince Jefri Bolkiah because the legal adviser was in possession of confidential information belonging to the Prince).

On appeal, Generics submitted a number of points which may be summarised into two broad groups: (1) assuming the Bolkiah principles apply, the information in respect of which there was said to be a danger of misuse was too nebulous to satisfy the test in Bolkiah and there was no realistic risk of the Generics' in-house patent attorney misusing the information; and (2) in any event, the Bolkiah principles did not apply because they were limited to the provision of services by third party professionals as opposed to employed professionals (here, an in-house patent attorney).

Teva submitted that the Bolkiah principles applied whether or not the litigator was inhouse or external and that, even if the Bolkiah principles did not apply, the patent attorney's contract of employment would lead to the same result.

The Court of Appeal considered, obiter, whether the principles in Bolkiah applied to the same extent to a former employed or in-house litigator as they did to a former independent litigator. The Court allowed the appeal although Lord Justice Etherington, Lord Justice Ward and Sir Robin Jacob had differing views on whether the principles in Bolkiah applied in the present case (although opinion tentatively inclined towards a view that Bolkiah should not be extended to former internal legal advisers or patent attorneys). Sir Robin Jacob concluded that the trial judge was incorrect in his assessment concerning the information, finding instead that the alleged confidential information was peripheral to the Copaxone litigation and Teva itself did not regard a possibility of misuse as realistic (if it had done so it would have raised the point much earlier - the fair inference on the evidence is that Teva delayed at least eight months before it applied for an injunction. Teva's conduct shows that there was no real risk of misuse of information).

Sir Robin Jacob also concluded that (i) an employed patent attorney litigator stands in exactly the same position as an employed lawyer litigator (barrister or solicitor); (ii) the Bolkiah principles apply with equal force to a former employed litigator as they do to a former independent litigator; and (iii) there is no difference between the position of an inhouse patent attorney and an in-house lawyer -both stand in the same position (they are members of professional bodies subject to rules of professional ethics and disciplinary proceedings for breach of those rules. The work of both attracts litigation privilege. These factors set them apart from "ordinary" employees, and from other sorts of professional employee - both are obliged to put their professional duties first where there is a conflict between them and the employer's interests. There is no reason to treat the work of in-house patent attorneys and that of in-house lawyers differently). The Bolkiah principle applies every bit as much to a former employed litigator as it does to a former privately engaged litigator.

If the Bolkiah principle applies to a former employed patent attorney, what exactly is the principle to be applied in the present case? It is that the court should intervene unless it is satisfied that there is no risk of disclosure. The risk of disclosure must be a real one and not merely fanciful or theoretical. It need not be substantial. Teva, by its conduct, showed that there was no real risk of disclosure. The appeal should be allowed.

Etherington LJ agreed that the appeal should be allowed because there was no real risk that the alleged confidential information would be disclosed. However, his opinion was that Bolkiah did not apply to the case because the Bolkiah principles did not apply to an employed patent attorney or to an employed solicitor; if they did, the burden would be on the in-house patent attorney (or rather the appellant Generics) to satisfy the court that there was no real risk of disclosure (or other unauthorised use) of the confidential information. Etherington LJ's opinion was that there were sound reasons of principle and policy why (in the case of an employed patent attorney or employed solicitor) the burden of proof lay with the former employer to satisfy the court of the probability of wrongful disclosure or use of information. There are material differences between the position of an employed solicitor or patent attorney and an independent external solicitor or attorney. For an employed adviser, the foundation of the relationship is a contract of employment. The terms of the contract is the appropriate mechanism to protect confidential information post-termination of employment. In the present case the patent attorney's contract of employment did contain a restrictive covenant to protect against wrongful use of information. Whilst in exceptional cases, in the absence of a restrictive covenant, it may be appropriate to make a barring order against an employee to prevent disclosure, this could not be considered to be an exceptional case on its facts.

Ward LJ shared the concerns of Etherington LJ concerning the application of the Bolkiah principles to employed advisers. He considered that there was a "thicket of confusion" surrounding the topic, which had not been fully developed in argument due to the urgency of the case. Concerning the burden of proof, he said "The search for justice should not require a former employed solicitor or an assistant solicitor to prove a negative and show there is no risk that confidential information will fall into the possession of those with an adverse interest to his former employer/client".

Concluding, he said ".. if Sir Robin Jacob is correct, the ramifications for the legal profession as a whole "¦ are important enough for us to reserve our fully considered judgments for another case and another day when full argument will guide through the thicket".

Thus in summary, the Bolkiah principles apply to former external legal advisers (that is, it will be up to them to demonstrate that they are not in possession of confidential information belonging to a former client if they wish to act against the interests of that former client). The same principles will apply to a former external patent attorney' but they do not appear to apply to former internal legal advisers or patent attorneys. Pending further clarification, it is clear that restrictive covenants have a role to play in the protection of confidential information post-employment. Employers may not rely simply on Bolkiah. A court is unlikely to grant a barring order in respect of an ex-employee other in exceptional circumstances.

Court of Appeal finds remaining HGS Neutrokine-patent claims valid

In 2011, the Supreme Court held that Human Genome Sciences' European patent for Neutrokine-α was not invalid for lack of industrial applicability. The Court of Appeal has now decided three remaining invalidity issues which were remanded back to the Court of Appeal by the Supreme Court. The judgment provides useful comments concerning sufficiency and the principles of purposive construction of claims laid down in Kirin- Amgen.

Human Genome Sciences Inc v Eli Lilly and Co, 5 September 2012

Human Genome Sciences ("HGS") and Eli Lilly and Company ("Lilly") had been in dispute over HGS' Neutrokine-α patent for some time (see here for more information). Lilly brought an action to revoke HGS' patent on the grounds of obviousness, insufficiency and lack of industrial applicability. In 2011, the Supreme Court held certain claims sufficient and valid but left three issues, concerning claims 13, 18 and 19, outstanding for determination.

The validity of the three claims remained to be decided by the Court of Appeal. HGS had appealed against a decision by Kitchen J that claims 18 and 19 were insufficient. Lilly appealed against the decision by Kitchen J that claim 13 was sufficient.

Claim 13' Sufficiency

Claim 13 was for an antibody that bound specifically to Neutrokine. Lilly claimed that although individual antibodies could be made and isolated, it was not clear from the patent which had any practical use. Further it would take undue effort to find out which antibodies had any use. The patent itself was aimed at products of valuable use and so claim 13 should be confined to such products. Because of the undue effort which was required in finding out which antibodies had any use, Lily submitted that the claim must be insufficient.

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Charles Russell's Intellectual Property Group
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