Draft EU Withdrawal Agreement – IP Provisions

On 14 November 2018, after months of negotiations, UK and EU officials agreed the draft text of an agreement on the UK’s withdrawal from the European Union. This includes provisions relating specifically to Intellectual Property, and the highlights are follows:

Existing registered EU trade marks and registered Community designs will be “cloned” onto the UK Registers

  • Whilst registered EU trade marks and registered Community designs will cease to be valid in the UK after the expiry of a transitional period (due to run until the end of December 2020), the UK will grant equivalent national rights in the UK, without any re-examination.
  • The Withdrawal Agreement confirms that the “cloning” of EU registered rights onto the UK Register will be carried out without the need for the owners of these rights to file any applications or take any other administrative steps.
  • The transposition of the EU rights onto the UK Register will not incur official fees.
  • The filing/priority dates of (and any seniority claims relating to) the EU rights will be maintained in the corresponding UK right. The first renewal date of the equivalent UK trade mark and design will correspond to the renewal date of the EU right from which the UK right arose.
  • The “cloned” UK trade mark created before the end of the transition period will not be subject to revocation on the ground that the corresponding EU trade mark had not been put to genuine use in the UK before the end of the transition period.
  • The owner of the equivalent UK trade mark will be able to rely upon the reputation acquired in the mark in the EU up until the end of the transitional period. Thereafter, any rights on the basis of reputation in the mark will need to be exercised on the basis of reputation acquired in the UK.

Option to “transpose” pending EU trade mark applications and Community design applications onto UK Registers on application

As envisaged in the case of a “no-deal Brexit”, EU trade mark applications and Community design applications pending at the end of the transitional period will not be automatically cloned onto the UK Registers, but the owners of these rights will have 9 months from the end of the transition period to apply to register an identical UK trade mark or design maintaining the filing/priority dates of the equivalent EU right.

International trade mark and design registrations

The Withdrawal Agreement also includes a commitment on the part of the UK to take measures to ensure continued protection in the UK of International trade mark and design registrations designating the EU in relation to which protection is obtained before the end of the transitional period. The Agreement does not include any provisions in relation to pending EU designations.

Unregistered Community designs

All unregistered Community designs which arise before the end of the transition period will also continue to be protected and enforceable in the UK for the remaining period of protection of the corresponding unregistered Community design. Since the UK law currently does not envisage the same level of protection for UK unregistered design as the EU regime, the UK will need to legislate in this respect.

Geographical Indications

The draft Withdrawal Agreement confirms that EU geographical indications, designations of origin or transitional speciality guaranteed, and traditional terms for wine, will remain protected in the UK “until the future economic relationship comes into effect and supersedes those arrangements”. Existing UK GIs will continue to be protected by the current EU regime.

Exhaustion of rights

The draft Withdrawal Agreement briefly states that IP rights which were exhausted both in the EU and in the UK before the end of transition period will remain exhausted both in the EU and in the UK. Goods will, accordingly, continue to move freely between the EU and UK during the transition.

Analysis of effect in UK

The provisions of the draft Withdrawal Agreement for the most part replicate the UK Government pledges in relation to IP rights in the case of a no-deal Brexit, but it is reassuring to see confirmation of the following:

  • That the status quo will remain until the end of transition period and that after the end of the transition period:
  • EU registered IP rights will be cloned onto the UK Registers;
  • Such cloned rights will retain the filing/priority/seniority dates of their EU equivalents;
  • The cloning process will incur no official fees for the IP rights owners.

The Withdrawal Agreement requires Parliamentary approval (and the matter is due to come before the House of Commons on Tuesday 11 December 2018). In the event that Parliament does not approve the agreement (and the EU/UK do not agree other arrangements), the UK will leave the EU on 29 March 2019 without an agreement. Our summary of the UK Government’s guidance notes on intellectual property in the event of a “no-deal” Brexit can be found here.

Please contact your usual CSY adviser if you have any questions about any of these issues.

By Magda Ostrowska

Are you a BURGISTA? Sorry, BURGERISTA?

Burgerista Operations GmbH v Burgista Bros Limited et al [2018] EWHC 35 (IPEC)

This case, heard by His Honour Judge Hacon, relates to a trade mark infringement action brought in the IPEC on 26 October 2015 by Burgerista Operations GmbH (“the Claimant”) against six defendants, and a counterclaim for invalidity of the Claimant’s European Union Trade Mark for BURGERISTA.

The Claimant obtained a judgment in default against four of the defendants with only UK Prosper Limited and its director, Mr Khetriyan, seeking to defend the claim (“the Defendants”).

Background

The Claimant runs a restaurant business, with nine restaurants in Austria and nine in Germany. It has used the name BURGERISTA in relation to its restaurants since October 2014. The Claimant’s European Union Trade Mark for the mark BURGERISTA relied upon in these proceedings also dates back to October 2014. It is registered in relation to inter alia “Provision of food and drink; Restaurants, Canteens and Bars” in class 43.

The claim at issue was brought by the Claimant in connection with the use by the Defendants of the signs BURGISTA (word) , BURGISTA BROS (word) and stylised versions of these words , in relation to restaurants in London, operated under a franchise agreement with a Hong Kong company, Burgista Bros Ltd.

The grounds relied upon by the Claimant were (1) likelihood of confusion with its BURGERISTA trade mark and (2) unfair advantage/detriment to the distinctive character /repute of its mark.

Validity of the Claimant’s mark relied upon

The Defendants counterclaimed that the Claimant’s EUTM relied upon should be declared invalid because it is descriptive. The Defendants argued that the average consumer would understand BURGERISTA to mean a person who made burgers, or a person who served them, or a person who was a burger enthusiast. The Court did not find the evidence produced by the Defendants (i.e. two extracts from Oxford English Dictionary and Oxford Advanced Learner’s Dictionary showing three alternative definitions of the suffix “–ista” dating from 2017) to be sufficient to show that the average consumer would perceive the BURGERISTA mark as descriptive at the time the application for this mark was filed, that is in October 2014. Whilst the average consumer at that date may have understood the meaning assigned to the word BURGERISTA by the Defendants, if this meaning was explained to him/her, the Court’s view was that this was insufficient to satisfy the requirement of “immediate perception”. 

Infringement – likelihood of confusion

The Court found the signs BURGISTA and BURGISTA BROS (word and stylised) to be similar to the Claimant’s BURGERISTA mark on visual and phonetic levels. On this basis, and in light of unchallenged evidence of confusion provided by the Claimant (which showed that (1) a Google search for BURGERISTA showed hits for the BURGISTA restaurants in London, and (2) that third party online references to the BURGISTA restaurants in London included BURGERISTA hashtags) the Court found there to be a likelihood of confusion between the BURGERISTA trade mark and the BURGISTA and BURGISTA BROS (word and stylised) signs, and thus use of all four signs by the Defendant infringed the Claimant’s trade mark. As a result, the Claimant was entitled to an injunction to restrain further use of the BURGISTA  and BURGISTA BROS signs by the Defendants and to related relief (no damages or an account of profits were claimed).

Infringement – the sign is taking unfair advantage of or is detrimental to the distinctive character or repute of the trade mark

The Court considered the four requirements necessary in order to succeed under this ground and found that there was the necessary mental link between the Claimant’s trade mark and the Defendant’s sign on the basis that a likelihood of confusion between the trade mark and the sign had already been established.  No argument of due cause was advanced by the Defendant. The court found that there would have been dilution of the Claimant’s trade mark, if it had proved the necessary reputation in its mark.

At the date of the Defendants’ first use of its marks, July 2015, the Claimant had six restaurants in Austria and one newly-opened restaurant in Germany; two of these were in Vienna, and the others in much smaller towns, but no evidence was produced by the Claimant to elevate any local reputation these restaurants may have enjoyed to reputation in the European Union at large within the meaning of the EU Trade Mark Regulation (e.g. there was no evidence that the restaurants had been presented to the public as part of a chain, or that the knowledge of the restaurants extended beyond their locality). Consequently, the court found that the Claimant’s had not established that they had a reputation in the BURGERISTA  mark in July 2015 and, consequently, the dilution portion of the claim failed.

As an aside, the Claimant was not doing any business in the United Kingdom, but the Court was satisfied that it had a genuine intention to open restaurants in the London area and, in any event, it would have been possible for the Claimant to prove an EU-level reputation in its trade mark without any use at all in the UK..

Points to take away

This case shows the fine distinctions that the courts draw in assessing the validity, and scope of protection, of trade marks with descriptive or allusive characteristics and highlights the importance of producing persuasive evidence focused on the relevant dates. It also serves as a useful reminder that a genuine intention to trade in the United Kingdom, without any use or reputation in the UK, may suffice to support a Claimant’s dilution claim in an EU trade mark.

Authored by Magda Ostrowska[:]

Don’t squeeze the juice out of Elvis

Background

Brewdog plc (“Brewdog”), a multinational brewery and pub chain based in Scotland, applied to register ELVIS JUICE and BREWDOG ELVIS JUICE as UK trade marks.

ELVIS JUICE is a grapefruit-infused American-style IPA sold by the brewery in the United Kingdom since July 2015. Both applications were made in class 32; the application for ELVIS JUICE was filed in relation to beer and ale only, whereas the application for BREWDOG ELVIS JUICE covered a wider range of beers and brewery products, as well as non-alcoholic beverages and preparations for making beverages.

The applications were opposed by ABG EPE IP LLC (“ABG”), the company representing the estate of Elvis Presley. The oppositions were based on a likelihood of confusion between Brewdog’s marks and the EUTM registrations for ELVIS and ELVIS PRESLEY held by ABG, covering beers and non-alcoholic drinks in class 32, as well as retail of such goods in class 35; the oppositions were originally also based on the reputation in the ELVIS and ELVIS PRESLEY marks, but this ground was dropped. Neither of ABG’s marks was subject to proof of use requirements. At the hearing, Counsel for ABG accepted that ABG’s position was not improved by relying on the ELVIS PRESLEY mark, and so in his decision the Hearing Officer focused principally on the ELVIS mark.

The Hearing Officer’s decision

The Hearing Officer found in favour of ABG. There was little dispute in relation to the comparison of the goods covered by the parties’ marks, and the Hearing Officer found the goods to be identical (no assessment was made of the services in class 35 covered by ABG’s registration for ELVIS PRESLEY, on the basis that if the opposition failed in relation to identical goods, then it would also fail where the goods /services are only similar). The Hearing Officer found that both ELVIS JUICE and BREWDOG ELVIS JUICE were similar to ABG’s mark ELVIS, the degree of similarity being higher in the case of the mark ELVIS JUICE.

The Hearing Officer’s view was that Elvis Presley was such an iconic figure that, notwithstanding the fact that it has been over 40 years since his death, it would be surprising if many people, including those at the younger and average age spectrum, had not heard of him. In addition, Elvis was not a popular name, and Elvis Presley was the most popular of Elvises. In the circumstances, the Hearing Officer’s view was that on seeing the word ELVIS, the relevant public would think of the famous singer.

In light of the above, the Hearing Officer held that the public was likely to be confused as to the origin of the goods branded with both ELVIS JUICE and BREWDOG ELVIS JUICE. The Hearing Officer rejected Brewdog’s arguments that the mark ELVIS JUICE is a fanciful combination of words, and instead held that the word JUICE is to an extent allusive to the goods covered by the application, although any such allusive properties would be mild given that JUICE is not the usual word to refer to beer. The Hearing Officer’s conclusion was that the ELVIS element of the ELVIS JUICE mark was the one more likely to be remembered by consumers, such that they would likely either mis-recall ELVIS JUICE as ELVIS, or think that the goods sold under the mark ELVIS JUICE are a brand extension of the ELVIS offering. With regard to the BREWDOG ELVIS JUICE mark, after a detailed consideration of the CJEU’s decision in Medion and related case law, the Hearing Officer’s view was that both components of this mark, which the Hearing Officer identified as BREWDOG and ELVIS JUICE, retained an independent distinctive role within the mark. As a consequence, whilst the element ELVIS JUICE was not identical to the earlier mark ELVIS, but only similar to it, there nevertheless was a likelihood of indirect confusion such  that the average consumer would assume that the BREWDOG ELVIS JUICE branded goods originate from the Opponent or from a related undertaking.

What’s next?

Based on the evidence produced by Brewdog in these proceedings, the turnover for the ELVIS JUICE product increased from just over £44k in 2015 to £1.9 million in 2016, and so the Hearing Officer’s decision is a serious blow to Brewdog’s business in what is a clearly a successful product. An appeal in relation to this matter is scheduled to be heard by the Appointed Person on 19 December 2017, and it will be interesting to see whether Brewdog will be allowed to squeeze some more juice out of its brands.

Authored by Magda Ostrowska

 [:]

Threat of infringement, but not in the United Kingdom

Nvidia Corporation & Anor v Hardware Labs Performance Systems Inc [2016] EWHC 3135 (Ch)

On 6 December 2016, Mr Justice Mann delivered a summary judgment in relation to an action filed at the Chancery Division of the High Court of England and Wales seeking injunctive relief and damages for groundless threats of trade mark infringement proceedings, and a declaration of non-infringement. The action was filed by Nvidia Corporation and associated companies (Nvidia), who manufacture and trade in graphics processing units under the marks GTX and GTS, against Hardware Labs Performance Systems Inc (Hardware Labs), a specialist in the computer watercooling industry and the proprietor of EUTM registrations for GTX, GTS and GTR. Hardware Labs filed an application for Nvidia’s claim to be struck out and summary judgment issued.

The groundless threats claim was accompanied by Nvidia’s motion to stay its own action pending the outcome of invalidity proceedings, which Nvidia brought before the EUIPO against Hardware Labs’ EU registrations for the GTX, GTS and GTR marks. The third action brought before the Court was an application by Hardware Labs to transfer Nvidia’s claim to the IPEC or have it allocated to the shorter trial scheme. Both applications were dismissed by Mr Justice Mann. This article will focus on the groundless threats portion of the judgment.

Nvidia’s claim in relation to groundless threats arose from a letter it received from Hardware Labs’ German Attorneys, threatening to bring proceedings against Nvidia unless it ceased to use the GTX mark, and asking that Nvidia provide undertakings not to use the mark in the EU. In his judgment, Mr Justice Mann cites large portions of the letter and of the cease and desist declaration attached to it because, as Mr Justice Mann put it, “what it does not say is said to be as significant as what it does say”. Whilst it was not in dispute that the letter constituted a threat of infringement proceedings, the heart of the issue before the Court was whether the threat related to bringing infringement proceedings in the United Kingdom. In this respect, Mr Justice Mann referred himself to the test set out by Lord Nuberger in Best Buy Co Inc v Worldwide Sales Corporation Espana [2011] FSR 742, according to which the question as to whether a letter constitutes or includes a threat of infringement proceedings should be answered “with 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”.

On the face of it, the letter was directed to Nvidia Corp, the group’s holding company located in California, and made reference only to German-based activities, carried out by Nvidia’s associated German company, and referred to German legislation.

Counsel for Nvidia presented an array of arguments in favour of the letter to be considered as a threat of infringement proceedings in the United Kingdom, including the following:

  • that the letter was written in English;
  • that Nvidia Corp was a parent company of a group which includes 3 UK entities;
  • that the German company was identified in the letter not as an infringer, but an “affiliated party” or “associated company”;
  • that the references to the German website were “for example”, and as a result the threat of infringement was not limited to Germany;
  • that the cease and desist declaration attached to the letter sought a declaration not to use the GTX mark “in the course of trade in the EU”, which would encompass activities in countries other than Germany too;
  • that the cease and desist declaration sought information about the commercial origin and distribution channels of goods, which indicated that future infringement proceedings were being contemplated by Hardware Labs;
  • that the cease and desist declaration sought payment of compensation for acts committed throughout the EU “to be reviewed by the competent Court”;
  • that the UK is a large and important market for Nvidia, and that this would have been well known to the parties as a result of the parties previous dealings before the EUIPO, and the use of the mark made by Nvidia in Germany was akin to its use of the GTX mark in the United Kingdom; and
  • that parallels can be drawn between the case in situ and the Best Buy case, in that Hardware Labs referred in its letter to activities throughout the EU, and that it was known in the case in situ that Nvidia has a substantial business in the United Kingdom.

Counsel for Hardware Labs counter-arguments revolved around the following points:

  • that the letter was in English because it was addressed to a US company;
  • that the letter only referred to the activities of the US and German companies;
  • that the examples of activities complained of were limited to those conducted in Germany;
  • that the letter referred to German provisions in relation to infringement;
  • that the letter referred to a pan-European injunction, and that such an injunction would only be available if the action was brought against the German company referred to in the letter in a German Court. In this respect, Counsel for Hardware Labs relied on the judgment in Tech 21 UK v Logitech Europe [2015] EWHC 2614 (Ch), in which “whether the Letter would have been understood by a reasonable recipient, who had received correct legal advice on the provisions governing where proceedings for infringements of Community design rights may be brought, as indicating that there was a realistic possibility of UK proceedings being brought… in respect of the [alleged] infringement.” (emphasis added by Mann J) was considered to be a relevant factor in making an assessment as to whether the letter included a threat of infringement proceedings. On this basis, Counsel for Hardware Labs argued that a reasonable defendant in this case would have contacted a lawyer following receipt of Hardware Labs’ letter, and that the lawyer would have appreciated that in the circumstances of the case, pan-European relief could only be obtained against the German company in Germany;
  • that Nvidia appeared to have understood that the infringement threats included in the letter were limited to proceedings in Germany, as based on the evidence, it filed “protective briefs in various courts in Germany in order to protect” its position.

Mr Justice Mann was of the view that, based on a proper reading, there was nothing in the letter to indicate a threat of proceedings anywhere outside Germany, and that the letter did not constitute a threat of infringement proceedings in the United Kingdom. The requirement for Nvidia to cease use of the mark in the course of trade in the EU was not sufficient to “displace what has already appeared, which is a threat of proceedings in Germany”. With regard to Hardware Lab’s Counsel’s submission that a reasonable defendant would have obtained legal advice (and thus found out that that an injunction in this case would only be available if the action was brought against the German company referred to in the letter in a German Court), Mr Justice Mann pointed out that the letter in situ did not include enough legal technicalities to require legal advice to be given in order for the meaning of the letter to be understood by the reasonable recipient. Instead, Mr Justice Mann decided that literal reading of the letter was sufficient to conclude that, as a whole, it did not suggest that proceedings were being threatened anywhere outside Germany.

Mr Justice Mann was not receptive to Nvidia’s Counsel’s arguments on surrounding circumstances which should be taken into account in interpreting the letter. The Counsel for Nvidia argued that Germany and United Kingdom are major commercial jurisdictions in the context of European IP litigation and that if one sued and won in those jurisdictions, it was often unnecessary to bring proceedings in other jurisdictions. Mr Justice Mann concluded that the letter included a threat of proceedings in one major IP litigation centre, and that the recipient of the letter would not make the assumption that he would also be sued in another jurisdiction which is not mentioned in the letter.

In light of the above, Mr Justice Mann granted Hardware Labs’ application for summary judgment and struck out Nvidia’s claim relating to groundless threats of infringement.

Whilst in this case the issuer of the threat was not held to be liable in a groundless threats action, this decision is a reminder of the importance of drafting correspondence which alleges trade mark infringement carefully, so as to avoid it being caught by the groundless threats regime, even where that correspondence is issued outside the United Kingdom.[:]

Assos v Asos – the end of a saga

On 29 July 2015 the Supreme Court refused to hear Assos’ appeal in the long-standing Assos v Asos trade mark dispute. As a result, the decision of the Court of Appeal handed down in April this year ([2015] EWCA Civ 220) stands.

The Court of Appeal found that whilst use of the trade mark ASOS on clothing, by the online fashion retailer Asos, infringed the ASSOS CTM of the Swiss high-end cycling gear manufacturer Assos, the former could rely on the own name defence.

In finding infringement on the basis of likelihood of confusion with the ASSOS CTM and detriment to the distinctive character of that mark, the Court emphasised the need to consider the notional and fair use of ASSOS in relation to the full spectrum of goods covered by  Assos’ specification, rather than limiting the assessment to only those particular kinds of goods which Assos were likely to sell (cycling clothing).

With regard to the own name defence, whilst Asos did not conduct any clearance searches prior to adopting the ASOS trade mark in relation to its own-branded clothing and continued with the mark after becoming aware of Assos’ CTM, the Court found that the own name defence was made out as Asos acted fairly towards the legitimate interests of Assos in that (1) it adopted the ASOS mark as an acronym for AS SEEN ON SCREEN, and without knowledge of ASSOS (or Assos) (2) it never sold cycling gear or took any steps towards Assos’ business model, and (3) no actual confusion between the businesses occurred.

It is, however, worth noting Lord Justice Sales’ firm dissent on the applicability of the own name defence. In his view, a greater weight should have been given to the interests of the CTM proprietor and the relevant public in the application of the “honest practices” standard. In his judgment, Sales LJ stressed that Asos’ investment in its mark, where it was aware of ASSOS (and Assos) “was in a sense precarious and deserves to carry less weight”. Whilst the Assos v Asos saga has now been concluded, Sales LJ’s comments may echo in future cases.