J.w. Spear & Sons Ltd and Others v Zynga Inc.

JurisdictionEngland & Wales
JudgeThe HOnourable Mr Justice Peter,Peter Smith J
Judgment Date13 June 2013
Neutral Citation[2013] EWHC 1640 (Ch)
Docket NumberCase No: HC12B01387
CourtChancery Division
Date13 June 2013

[2013] EWHC 1640 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Honourable Mr Justice Peter Smith

Case No: HC12B01387

Between:
(1) J.w. Spear & Sons Ltd
(2) Mattel Inc
(3) Mattel Uk Ltd
Claimants
and
Zynga Inc
Defendant

Mr Thorley QC & Mr Heald (instructed by Bird and Bird) for the Claimants

Mr Mellor QC & Mr Roberts (instructed by Olswang LLP) for the Defendant

Hearing dates: 15, 16, 17, 20, 21, 22, 23 and 24th May 2013

RULING ON AMENDMENT

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.

The HOnourable Mr Justice Peter Peter Smith J

INTRODUCTION

1

On the eighth day of this 5 day action I heard an application by the Defendant for permission to Re-re-re Amend its Defence and Counterclaim. The application was fully contested and at the conclusion I indicated that I would grant the Defendant permission subject to production of a revised draft in the light of my disallowance of various matters set out in the proposed Re-re-re Amended Defence and Counterclaim produced at the hearing.

2

I said I would give reasons in a later judgment. This is that judgment.

BACKGROUND

3

The Claimants have a number of trade marks ("the Scrabble trade marks") and a further trade mark ("the Scramble trade mark"). These the Claimants contend are designed to protect the goodwill and property the Claimants have in the well known board game Scrabble. They have exclusive rights in respect of these marks save in the United States and Canada. In those countries a different company has the relevant exclusive rights, Hasbro.

4

The Scrabble game is a well known board game and I do not think it is necessary to set it out in this judgment.

5

The Defendant is the world's largest social gaming company and leading applications software ("App") developer and retailer. Social games are digital games that are played between two or more players over the internet or mobile telecommunications network.

6

The Defendant's relevant game which is under challenge in this action is "Scramble with Friends" which was launched on 5 th January 2012.

7

The Claimants contend that Scramble with Friends infringes the trade marks and constitutes a misrepresentation that it is provided by or with the consent of the Claimants. It is contended by the Claimants that the representation is calculated to lead to the perception on the part of a substantial number of members of the public to that effect and is therefore trading off the Claimants' goodwill in relation to the Scrabble sign in particular.

8

The Defendant denies it is liable and further challenges (inter alia) the validity of the Scramble trade mark and seeks declarations that it is invalid or ought to be revoked.

ISSUE

9

The issue that has arisen arises out of the fact that the Defendant's game Scramble with Friends is it says a 5 th version of the game. In paragraph 11 of the Defence and Counterclaim it set out the 4 previous versions which were launched between late 2007 and December 2011.

10

Neither side clearly addressed the relevance of those earlier games. The Defendant referred to them but did not expressly in its pleading allege that the Claimants were aware of the earlier games and that awareness with no action taken in respect of the alleged infringement prohibited the present claim.

11

The nearest the Defendant comes to putting the fact of those earlier games in issue is in paragraphs 33 and 34 of the Defence and Counterclaim. In those paragraphs the Defendant responded to the Claimants' assertions that the use of the sign Scramble or Scramble with Friends or Scramble with Friends device constituted use where there might exist a likelihood of confusion or use of the sign without due cause and thus taking advantage of or was detrimental to the distinctive character or reputation of the trade marks.

12

In respect of both of those allegations the Defendant referred back to paragraph 11 of its Defence and Counterclaim. It did not set out how the earlier user of the earlier versions was relevant to those paragraphs.

13

The Claimants in their Re-Amended Reply and Defence to Counterclaim did not plead in response to those paragraphs.

14

There the matter rested with a certain element of opaqueness as to the relevance of the Defendant's earlier Scramble versions.

DISCLOSURE

15

The Claimants on advice provided no disclosure of any internal documents which related to any of the earlier versions of the Defendant's games. Nor did they seek to amend the Particulars of Claim to seek to claim any relief in respect of those earlier games. By the time of the issue of the proceedings in March 2012 those earlier games had been superseded by version 5 which might explain why the Claimants chose not to pursue those earlier games in 2012. It does not explain why they did not pursue them between 2008 and 2012.

16

The Defendant did not challenge the lack of disclosure in respect of the earlier games provided by the Claimants.

EVIDENCE

17

The Claimants provided (inter alia) a witness statement dated 8 th March 2013 by Nick Karamanos a Vice President of Mattel's Girl's Brands Portfolio (he having been Vice President of Mattel Games Global Marketing until February 2013). He had responsibility for the global marketing of Scrabble.

18

In this first witness statement (paragraph 22) he referred to the 4 earlier versions produced by the Defendant describing them in some detail. He did not explain why he felt the need to refer to these earlier versions. Finally in paragraph 52 he said this:-

"As the above chronology shows, Zynga says that it first launched a game called "Scramble" in late 2007 or early 2008. I do not know how successful the game described at point (i) to (iv) of paragraph 22 above were for Zynga. However I do know Zynga's Scramble App did not register with management at Mattel until it was released in its current form".

19

That was a paragraph which to my mind posed a considerable number of questions. First it was provided by Mr Karamanos who was not involved in the marketing of Scrabble until July 2011. Therefore he was commenting on things before he had a relevant role in the Claimants. Second the expression that the "Defendant's Appdid not register with the management at Mattel" is difficult to understand.

20

The Defendant upon receipt of Mr Karamanos' witness statement contended that his evidence was incongruous when compared with the Claimants' pleading and sought clarification as to whether or not the claim of infringement arose in respect of any previous versions of the Defendant's game. The Defendant's solicitors chased that on 12 th April 2013 and they did not receive any response beyond the Claimants confirming their case remained as pleaded and that they were free to refer to the previous versions of the Defendant's Apps in evidence.

21

During the cross examination of Mr Karamanos it emerged that members of the Games and Digital teams of the Claimants were responsible for monitoring what other games similar to Scrabble were on the market.

22

As a result of that evidence the Defendant made an application for further disclosure of documents that the Claimants might have in relation to the monitoring activities carried out by employees of the Claimants concerning other products that were on the market. The Claimants opposed that application but I granted it for reasons set out in an extempore judgment. It seemed to me that although it was somewhat oblique the question of what happened in relation to the previous versions was germane to paragraphs 33 and 34 of the Defence and Counterclaim. Further it seemed to me that when Mr Karamanos gave evidence in respect of these products, and in particular the express reference to the lack of register with the management the Defendant was entitled to disclosure of the internal documents of the Claimants to be satisfied that what Mr Karamanos was saying was true.

23

The relevance of it is clear. First whilst the question of infringement and confusion is a matter for the trial Judge the fact that the Claimants' internal people do not believe there is any threat for many years might be supportive evidence of the Defendant's case that there is in reality no threat to the Claimants' products. The same thing happened in A & E Television Networks LLC v Discovery Communications Europe Ltd [2013] EWHC 109 (Ch). It is not determinative but is it evidentially probative. Further the internal documentation might show that the present action is being brought not because of any genuine belief that the sale of the Defendant's product infringes any of the Claimants' rights but rather as an attempt to drive a competitor out of the market without any legal basis for doing so. This is particularly significant bearing in mind the fact that these parties were in negotiations about (for example) the Claimants manufacturing a board game based on the Defendant's product at the same time they apparently believed that the Defendant's products were an infringement of their own rights. The litigation ensued after those negotiations broke down.

24

These are all matters which in my view the Defendant is entitled to investigate as relevant material to the issues between the parties in this action.

25

I do not think the Defendant's desire to investigate the extent of the Claimants' internal response to the previous 4 products is merely fishing or as to credit. It therefore goes beyond the refusal of disclosure for those reasons see Thorpe v Chief Constable of Greater Manchester [1989] 1WLR 665.

DISCLOSURE PURSUANT TO ORDER

26

The Claimants disclosed a large amount of material pursuant to the disclosure order. The...

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