Hearst Holdings Inc. v AVELA Inc.

Court:Chancery Division
Docket Number:Case No: HC12D01447
Judge:Mr. Justice Birss
Judgment Date:19 May 2014
Jurisdiction:England & Wales
Neutral Citation:[2014] EWHC 1553 (Ch)

[2014] EWHC 1553 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

INTELLECTUAL PROPERTY and

COMMUNITY TRADE MARK COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr. Justice Birss

Case No: HC12D01447

Between:
(1) Hearst Holdings Inc.
(2) Fleischer Studios Inc.
Claimants
and
(1) A.V.E.L.A. Inc.
(2) Poeticgem Limited
(3) The Partnership (Trading) Limited
(4) U Wear Limited
(5) J Fox Limited
Defendants

James Mellor QC and Thomas Moody-Stuart (instructed by Field Fisher Waterhouse) for the Claimants

Emma Himsworth QC (instructed by Hamlins) for the Defendants

Hearing dates: 6th May 2014

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr. Justice Birss Mr. Justice Birss
1

This judgment deals with two matters which arose after my main judgment in this case was handed down on 25 th February 2014. The background is set out in that judgment at [2014] EWHC 439 (Ch). The representation before me is the same as the representation at trial. The case concerns claims by the claimants against the defendants in relation to Betty Boop merchandise. In the judgment I found that the defendants were liable for trade mark infringement and passing off. The court sat as a Community Trade Mark Court in hearing the case because four of the registered trade marks relied on were Community trade marks.

2

In December 2013, following a very late amendment to the defendants' pleadings, the issues in these proceedings as a whole were split. The main trade mark and passing off case remained on track for trial in January 2014. That is the trial to which my main judgment relates. Two issues were separated to be tried at a later date, currently listed in January 2015. The two issues hived off were the claimants' claim for copyright infringement and the defendants' claim that the registered trade marks were invalid on bad faith grounds. The reason the latter was separated from the rest of the trade mark case to be tried with the copyright claim was because the bad faith allegations were linked to the copyright argument. The trial for which I have just given judgment was also subject to certain conditions set out in the December 2013 order.

3

The trial considered not only the question of infringement in the United Kingdom but also looked at the position in other European countries. So for example, there was evidence about the claimants' Betty Boop merchandise in Spain and France. It was clear that the claimants were seeking pan-European relief relating to the Community trade marks under Art 98(1) of the Community Trade Marks Regulation (EC) 207/2009 (the CTMR) based on the court having jurisdiction under Art 97(1) to 97(4) CTMR.

4

After judgment the defendants raised a new point. The claim form in England was issued on 4 th April 2012 but it turns out that when this claim began there were already proceedings in Italy concerning Betty Boop merchandise. In Italy the first claimant, Hearst Holdings Inc., sued a number of Italian companies in three separate proceedings in the court in Bari. One proceeding is against a company called Grimaldi Group SRL. Grimaldi were a licensee of AVELA Inc.. So, just as AVELA had granted licences to the second, fourth and fifth defendants in the English proceedings, so it had granted a licence to use Betty Boop imagery to Grimaldi. The goods which were complained of by Hearst in Italy and were sold by Grimaldi were goods which had been produced pursuant to the AVELA licence. In Italy, Grimaldi sought to bring a third party indemnity claim against AVELA and on 26 th October 2010 the Bari Court authorised Grimaldi to serve a third party claim on AVELA, service being effected on 31 st January 2011. AVELA entered an appearance before the Italian Court on 25 th May 2011 which included a claim for invalidity of the Italian and Community registered trade marks alleged to have been infringed. Following a hearing on 15 th July 2011, Hearst filed a brief in Italy which included a claim against AVELA for joint liability for the acts of Grimaldi in Italy. All of these procedural steps took place before the claim form in the United Kingdom was issued.

5

The other two Italian cases are against C3V SRL and Eurofil SRL. They began with customs seizures in August 2010 and led to civil proceedings being commenced by Hearst against C3V and Eurofil in the court at Bari. C3V and Eurofil brought third party indemnity claims against AVELA. AVELA introduced a counterclaim for invalidity of the registered marks in January 2012 and in March 2012 in oral submissions Hearst contested AVELA's appearance, asked for a rejection of the claims raised but also argued that AVELA was liable for the acts of trade mark infringement of C3V and Eurofil.

6

All three Italian actions are running concurrently. They are next due in court on 6 th June 2014. The Italian actions include two Hearst Community Trade Marks No.s 008596348 and 008596546. The same marks are in issue in this case. In Italy AVELA has advanced a claim that these two CTMs are invalid. The other registered trade marks in issue in Italy are Italian national trade marks, for the same Betty Boop device which is depicted in my judgment at paragraph 4, registered in classes 16, 18, 25, 28 and 3.

7

The defendants before me now contend that the UK court should decline jurisdiction on part of these actions and stay the remainder on three grounds, they are;

i) Under Article 109 of the CTMR;

ii) Under Article 104 of the CTMR;

iii) Under Article 28 of Council Regulation 44/2001 (the so called " Brussels I" Regulation).

8

The relevant part of Article 109 of the CTMR is as follows:

Article 109

Simultaneous and successive civil actions on the basis of Community trade marks and national trade marks.

1. Where actions for infringement involving the same cause of action and between the same parties are brought in the courts of different Member States, one seised on the basis of a Community trade mark and the other seised on the basis of a national trade mark:

(a) the court other than the court first seised shall of its own motion decline jurisdiction in favour of that court where the trade marks concerned are identical and valid for identical goods or services. The court which would be required to decline jurisdiction may stay its proceedings if the jurisdiction of the other court is contested;

(b) the court other than the court first seised may stay its proceedings where the trade marks concerned are identical and valid for similar goods or services and where the trade marks concerned are similar and valid for identical or similar goods or services.

9

Counsel for the defendants submits that Article 109 1(a) and (b) are both engaged in this case. She submits that the proceedings in Italy and the UK involve the same cause of action, the same parties and that, depending on which trade marks are considered, the conditions in sub-paragraphs (a) or (b) are satisfied. Counsel argues that the Italian court in Bari was the court first seised and accordingly the UK court must decline jurisdiction, at least in relation to the issues covered by Article 109 1(a). In relation to issues covered by Article 109 1(b), Ms Himsworth submits that if the court has declined jurisdiction on certain issues under Article 109 1(a), that will have an important impact on the exercise of the discretion arising under Article 109 1(b) and in the present circumstances would lead to a stay of the remainder of the trade mark infringement proceedings (whether under UK national or Community trade marks) at least insofar as that claim was brought against AVELA.

10

Counsel for the claimants submits that Article 109 does not apply. He accepts that the cases involve the same parties (at least in part, which he accepts is sufficient to satisfy requirements of the Article) and he accepts that some of the various trade marks in issue in the two member states satisfy the requirements of sub-paragraph (a) and some satisfy sub-paragraph (b). However Mr Mellor argues that the action in England does not involve the same cause of action as any of the three actions in Italy and so Art 109 is not engaged.

11

The second argument is advanced under Article 104. The relevant parts of that Article provide that:

Article 104

Specific rules on related actions

(1) A Community trade mark court hearing an action referred to in Article 96, other than an action for a declaration of non-infringement shall, unless there are special grounds for continuing the hearing, of its own motion after hearing the parties or at the request of one of the parties and after hearing the other parties, stay the proceedings where the validity of the Community trade mark is already in issue before another Community trade mark court on account of a counterclaim or where an application for revocation or for a declaration of invalidity has already been filed at the Office.

12

Counsel for the defendants submits that Article 104(1) applies because the validity of two of the Community trade marks in this case were already in issue in Italy and so since the trial before me was an action referred to in Article 96, I must stay the proceedings unless there are special grounds for continuing the hearing. Again Counsel for the claimants does not agree. He submits that in this case although Article 104(1) clearly applies there are special grounds for continuing and in the exercise of my discretion I should not grant a stay.

13

The third argument arises under Article 28 of the Brussels I Regulation. That article is best considered alongside Article 27 of the same Regulation. They are:

Lis pendens – related actions

Article 27

(1) Where proceedings involving the same cause of action and between the same parties are brought in...

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