Kitfix Swallow Group Ltd v Great Gizmos Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE MANN,Mr Justice Mann |
| Judgment Date | 12 November 2008 |
| Neutral Citation | [2008] EWHC 2723 (Ch),[2007] EWHC 2668 (Ch) |
| Date | 12 November 2008 |
| Docket Number | Claim No: HC07C00099,Case No: HC07C00099 |
| Court | Chancery Division |
[2007] EWHC 2668 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Mann
Case No: HC07C00099
Mr. M. Edenborough (instructed by Howes Percival LLP) for the Claimant.
Mr. N. Saunders (instructed by Messrs. Bird & Bird) for the Defendant.
Hearing date: 5 th November 2007
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.
Introduction
This is an application for a stay of English trade mark infringement proceedings in which there is a counterclaim for revocation, in favour of proceedings which have been commenced in the Office for Harmonisation in the Internal Market (“OHIM”). While there is a certain amount of jurisprudence in the cases about the interaction between English patent proceedings and proceedings in the European Patent Office, I am told that there is, as yet, none about the particular institutional interaction that arises in this case.
Factual background
The claimant in the present proceedings (“Kitfix”) is an English company and is the registered proprietor of a Community registered trade mark no 3850039 for the word mark “Sequin Art” registered as of 19 th May 2004 for “Artistic materials, namely craft and hobby kits for making pictures”. It also claims to be entitled to the goodwill attached to manufacturing and selling craft and hobby kits under and by reference to the name “Sequin Art”. The defendant (“Great Gizmos”) is the English distributor of craft kits for making pictures out of different coloured sequins, and bearing the name “Sequin Art”. The manufacturer of the kit is 4M Industrial Development Limited (“4M”), a Hong Kong company.
On 19 th December 2006 solicitors acting for Kitfix wrote to Great Gizmos complaining that the latter company was distributing its product and saying that the same was an infringement of the mark in suit and passing off. They were invited to give undertakings to cease dealing in the product and to withdraw the product from the market. On 8 th January 2007 patent attorneys acting for Great Gizmos responded that the mark was entirely descriptive and non-distinctive for the goods in question and that the passing off claim was not accepted. Nevertheless, they proposed dialogue. On 17 th January 2007 Kitfix issued a claim form seeking relief for trade mark infringement and passing off. Particulars of claim accompanied the claim form. A defence and counterclaim was served on 5 th March 2007. Infringement and passing off were denied, and there was a counterclaim for a declaration that the mark was invalid. The invalidity claim was based on Articles 7(1)(b) and (c) of the Community Trade Mark Regulation ( Council Regulation 40/94—“the Regulation”)—it was said that the mark was devoid of any distinctive character and/or that it consisted exclusively of signs or indications which might serve in trade to designate kind and /or quality and/or intended purpose and/or other characteristics of the goods for which it is registered.
In due course, a Reply was served, and then not much happened until there was to be a case management conference. That was due to take place on 6 th September 2007. However, shortly before then, on 28 th August 2007, 4M commenced proceedings at OHIM for a declaration that the mark be declared invalid. As well as relying on heads (b) and (c) of Article 7(1), 4M also relies on heads (a), (d) and (g). That prompted Great Gizmos to apply for a stay of the English proceedings pending a decision in OHIM. The Master conducting the CMC made various directions but adjourned the question of a stay to be heard by a judge. Thus the matter comes before me. The timetable laid down for the English action, on the assumption that it continues, is such that a trial would take place in the window June/July/October 2008. The parties agree that the OHIM proceedings, so far as they continue, would be likely to generate a decision in or about January 2009. Thus there is likely to be a three to six month time difference between the dates in which each of the proceedings would generate a decision.
Although in the end the matter was not dealt with on the basis of agreed undertakings, Great Gizmos has not in fact traded in the allegedly infringing product since April 2007. Its total turnover to date in the product was in the region of £35,000.
The proceedings in OHIM have taken what to my eyes seems a slightly odd turn. As will appear below, there is a provision in the Regulation (Article 100) which, to some extent, deals with the question of concurrent proceedings in one or more national courts and/or OHIM. Where national court proceedings are started before OHIM proceedings, OHIM ought normally to stay its proceedings unless there are special circumstances justifying their continuation. Initially, OHIM seems to have applied that provision and stayed its proceedings. The English solicitors acting for Kitfix drew the situation to the attention of OHIM and on 19 th October 2007 they were notified by OHIM that its proceedings had been stayed. However, on 26 th October 2007 OHIM sent out a document headed “Correction of Errors” to the solicitors acting for the two parties before it. It said:
“Reference is made to the Office's communication of 19/10/2007. Indeed it was an error to grant the suspension request as the request for invalidity is based on Art.7 of the CTM regulation and the Office is not bound to await the outcome of pending decision on similar cases at national level.
Thus the proceedings have to be resumed….”
It is not known what it was that prompted the change of mind. In particular, it is not known whether or not it was prompted by a communication from 4M. If it was, then that communication was not shared with Kitfix. The solicitors for Kitfix have written challenging that decision and inviting reconsideration. By the time of the hearing before me, no response had been received.
The application before me
Thus at the date of the hearing before me there were two live sets of proceedings—these proceedings and the OHIM proceedings. The principal grounds on which the defendant seeks a stay of these proceedings, leaving the OHIM proceedings to continue, are in outline as follows:
i) The mark is said to be, putting it at its lowest, highly questionable.
ii) Once the trade mark issues are disposed of, and in particular the acquired distinctiveness point, there will be little left in the passing off claim. Thus the disposal of the trade mark matters in OHIM will in substance dispose of the real issues in this action.
iii) OHIM proceedings are much cheaper. The defendant estimates that its costs of defending these proceedings will be over £200,000. Of course, the defendant is not involved at all in the OHIM proceedings, so to that extent the present proceedings are obviously more expensive for Great Gizmos itself. However, Great Gizmos acknowledges that the real comparison is between the costs of resolving the issue in OHIM (which will be 4M's costs) and the costs here. In OHIM, Great Gizmos estimates that 4M's costs will be in the region of £5,000. I confess to finding this somewhat implausible, and on analysis I think it turned out that that was merely an estimate of the first round of costs in making the application. There could be significant costs in dealing with Kitfix's case in answer. However, it was nevertheless common ground that the proceedings in OHIM will be very much cheaper than the costs in this jurisdiction, not least because the procedure is a paper-based procedure without the disclosure that takes place in English proceedings.
iv) Great Gizmos says that it is unjust that a small company who is merely a distributor should be obliged to run such large costs risks, particularly when it is prepared to undertake (as it undertook before me) not to sell any more products pending a final determination of the matter in OHIM. It is, as I understand it, part of Great Gizmos' case that the manufacturer is a rather more appropriate person to challenge the mark in proceedings.
v) Apart from the passing off claim, there is nothing in issue in the English proceedings which is not also in issue in OHIM. The OHIM proceedings will therefore decide everything relevant to the English revocation proceedings so far as trade marks are concerned.
vi) Both proceedings are at a relatively early stage; it was said that arguably OHIM's are ahead of the UK national proceedings, but that does not matter very much. The difference in time between the respective decision dates in both sets of proceedings is not very great.
vii) There is a risk of inconsistent decisions if the English proceedings are stayed and the OHIM proceedings continue.
viii) There is no prejudice in terms of trading because Great Gizmos has given its undertaking not to trade while the OHIM proceedings are extant. At the hearing, this was clarified so as to ensure that it persisted through any appeals from OHIM.
ix) The provisions of article 100(2) of the Regulation point towards a stay in these circumstances.
x) The patent law cases, which are said to demonstrate a presumption of a stay in favour of the European Patent Office are relied on by analogy.
The decision—should there be a stay?
I start by dealing with the proposed patent law analogy. I do not consider that there is a useful analogy. It is true, of course, that the operation of patents law and trade mark law have in common the existence of European institutions operating to come extent in parallel with national courts. That means that the potential for concurrent actions, and the need to consider...
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