In order to avoid inconsistent decisions, EU trade mark law provides a set of rules as to which court should hear a case where there are a number of potential venues.
One of the more controversial aspects of these rules is that where the EU Intellectual Property Office (“EUIPO”) receives an application for invalidity in respect of an EU trade mark registration, a claimant who subsequently brings an infringement action in a UK court (in respect of that registration) will find its claim stayed, absent “special circumstances”. On current practice, it may take the EUIPO six or more years to reach a final decision on the validity of a registration (taking into account the possible appeal routes through the European courts). For that reason, it is not unusual for a potential defendant, when receiving a letter alleging infringement from a trade mark owner, to immediately bring an application for invalidity at the EUIPO of the registration sought to be asserted against it. Even if this application to invalidate is meritless, it can be filed quickly and cheaply and can lead to very significant delay in the case coming to a substantive decision. This may be very unattractive for a trade mark-owning claimant who wishes to see its trade mark rights promptly enforced. This tactic is colloquially known as the defendant’s “EUIPO torpedo”.
Given that background, the “special circumstances” in which a case in a UK court may continue (i.e. where a stay can be resisted) are, on that basis, very important for a Claimant EU trade mark owner in obtaining the best remedies.
In a recent case, Sky Plc the well-known provider of Sky TV as well as a wide range of other software, broadband and entertainment broadcasting services under the trade mark SKY, sought to assert its trade mark rights against a US-originating business Skynet UK Limited/Skynet Inc. Skynet provides business support goods and services to Microsoft Partners relating to the cloud-based Office 365. (Microsoft Partners assist in the sale and support of the Office 365 platform to customers and they themselves utilise software goods and services, such as those provided by Skynet, which assist with the migration of data and data back-up for the Office 365-related services they, the Microsoft Partners, provide to their customers.)
At a preliminary hearing, Skykick sought to persuade the High Court that it should seek guidance before trial from the Court of Justice of the European Union (CJEU) on the question of whether a recent EU trade mark law change to remove the availability of the “own name defence” to corporations was compatible with EU law, such as the EU Charter (Freedom to Conduct Business). The High Court was not persuaded that a reference to the CJEU was necessary at this stage. In essence, the High Court held that it may be able to determine the case without the need to address this point of law and, if it did, the reference to the CJEU could be made after trial.
The court also addressed the question of whether the case (or at least the EU trade mark infringement portion of the case) would be stayed pending determination of the application to invalidate Sky Plc’s EU trade mark registration for Sky which Skynet had filed prior to the issue of the UK court proceedings. The court held that there were “special circumstances” for the case to continue in the UK, even though there was inherently a risk of inconsistent decisions being issued by the UK court and the EUIPO. The most important factors in the court permitting the UK case to continue were that (1) neither party wanted the case to be stayed (the defendant here thought that an early determination would assist its business plans) and (2) the EU Trade Mark infringement claim in the UK proceedings was combined with a passing off claim and a UK trade mark claim. The importance of the inclusion of the UK trade mark claim was that UK trade mark law has not yet been amended to remove the defence to own-name use by corporations and the findings of fact at trial on that issue might well be determinative of the case as a whole.
This case is a good example of the wide range of “special circumstances” that might be relied upon where a Claimant finds itself on the receiving end of an EU torpedo (and the court’s sympathy with parties wishing to avoid the delay associated with EUIPO proceedings). It also suggests that trade mark owners should consider seeking UK trade mark registrations, in addition to EU trade mark registrations, for their most important marks in order to increase their chances of avoiding the effects of the EUIPO torpedo.