Luen Fat Metal and Plastic Manufactory Company Ltd v Funko UK, Ltd
| Jurisdiction | England & Wales |
| Judge | Amanda Michaels |
| Judgment Date | 27 April 2022 |
| Neutral Citation | [2022] EWHC 951 (IPEC) |
| Docket Number | CLAIM NUMBER IP-2020-000053 |
| Court | Intellectual Property Enterprise Court |
[2022] EWHC 951 (IPEC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
INTELLECTUAL PROPERTY ENTERPRISE COURT
Royal Courts of Justice
Rolls Building, London, EC4 1NL
MISS RECORDER Amanda Michaels
CLAIM NUMBER IP-2020-000053
Jonathan Gale (instructed by Excello Law Limited) appeared on behalf of the Claimant
Victoria Jones (instructed by Burges Salmon LLP) appeared on behalf of the Defendant
Hearing date: 17 January 2022
Approved Judgment
Miss Recorder Amanda Michaels
This is the judgment following the trial of liability only of a claim for infringement of a UK registered trade mark, and an equivalent EU trade mark, the claim having been issued before the end of the transition period for the departure of the UK from the EU. There was no counterclaim, and the validity of the marks was not in issue.
Background
The Claimant is a manufacturer of toys, which have been imported into the UK since around 1989, and its sole agent and distributor for the UK and Ireland is Padgett Bros A to Z Ltd (“Padgett”). The Claimant is the proprietor of UK registered trade mark No 2132000, registered with effect from May 1997 for a series of word marks: FUNTIME, FUN TIME and FUN-TIME. The specification covers games, toys and playthings, and electronic games in Class 28. It also owns a registered EU trade mark No 000806281, filed on 21 April 1998, which is just for the word FUNTIME, and is registered for the same specification of goods. That mark now has a UK registered equivalent, No 900806281.
The Defendant put the Claimant to proof of use of the Marks. No use was shown in relation to electronic games, but the Claimant relied upon use of the Mark in relation to toys and playthings (it is not altogether clear to me that it also claimed use on “games” but this distinction is of no relevance). The Claimant's evidence showed use of the Marks in relation to and on the packaging of toys aimed predominantly at babies and toddlers, most of which are made of brightly coloured plastic, and include items such as rattles, shape-sorters, pull-along toys and an alphabet train. By way of example, the Claimant pointed to the popularity of its bright yellow pop-up “Farmyard Friends” toy, which is sold as suitable for toddlers of 18 months and upwards, and is clearly aimed at a child of about that age, with buttons and levers to push. See examples in Annex A.
The Claimant's case was that its products are sold throughout the UK and Europe. Its evidence however concentrated upon the sales made through Padgett in the UK and Ireland, through toy retailers and a variety of high street outlets such as Morrisons, and TK Maxx. Sales are also made through Amazon.co.uk.
The Defendant's US parent company was described by Mr Oddie, the managing director of the Defendant, as one of the world's leading creators of licensed pop culture products. For convenience, I shall refer to the various companies in the group as “Funko.” Funko takes intellectual property licences from rights owners, and makes and sells merchandise as spin offs from games, films and the like. For instance, it has a licence to produce Harry Potter merchandise. It sells a range of “Pop! Vinyl” figures, which are small plastic figures with an oversized square head depicting a character from a film, game, etc. Funko also sells action figures, which more accurately depict the characters, plush soft toys, and board games, as well as ranges of clothing, homeware, etc. Mr Oddie accepted that the pop vinyls and action figures are toys although some may also be classed as “collectibles.”
The alleged infringements arise out of a licence granted to Funko in 2015 by Scottgames LLC, which owns the rights in the designs, copyright, characters, trade marks and other indicia associated with its “Five Nights at Freddy's” (“FNAF”) video game franchise. The FNAF games are highly popular, and have been spun off into novels and short stories as well as merchandise. The Defendant accepted that the games are popular with young teenagers as well as adults. Mr Oddie's evidence was that they are not aimed at children under the age of 6, but have an age rating of 12, and may be played by some younger children.
The Claimant's counsel described FNAF as “a series of horror video games which might be said to invoke the ‘evil toys come to life’ trope.” Mr Oddie of Funko described them as “fright video games … intended to scare the player …” In the first three games of the franchise, the player controls a security guard at “Freddy Fazbear's Pizza,” who tries to avoid being attacked by various hostile animatronic characters including Freddy (a bear), Foxy, Chica and Bonnie. Different versions of the characters feature in the various games in the series. For instance, I was told that the third game features “Phantom Freddy” and “Phantom Foxy”, the fourth, “Nightmare Freddy” and “Nightmare Foxy” and later games have “Rockstar Freddy”, “Molten Freddy” and “Twisted Foxy.” Numerous products have been produced by Funko under the licence from Scottgames, including pop vinyls of many of these characters.
This claim relates to characters from the fifth game in the FNAF series, the first iteration of which was launched in 2016, which is called “Five Nights at Freddy's: Sister Location.” As the name suggests, the location of the action is different. This game features the characters “Funtime Freddy” and “Funtime Foxy.” A range of action figures, pop vinyl and plush toys which represent “Funtime Freddy” and “Funtime Foxy” were developed by Funko during 2017. These were sold in the UK by the Defendant and the Claimant complains that as they have the word Funtime on their packaging these goods infringe its Marks. Images of some of the Defendant's goods are at Annex B to this judgment.
The Claimant wrote a letter of claim to the Defendant in September 2019 and issued these proceedings on 14 May 2020. In its Particulars of Claim it relied on all three heads of infringement of s10 of the Trade Marks Act 1994, and the equivalent provisions in Art. 9 of the Regulation in respect of its EU Mark.
In its Defence, the Defendant denied infringement. In particular, it said that the names “Funtime Freddy” and “Funtime Foxy” (“the Names”) were not used as a trade mark, but to designate the characters from the computer game. It also denied that there was any likelihood of confusion or any damage leading to infringement under s 10(3). The Defendant put the Claimant to proof of use of its Marks, albeit at paragraph 2 of the Defence it admitted that the Claimant had supplied toys and games aimed at the baby/toddler market in the UK under the Mark FUN TIME (that is, in the version consisting of two separate words).
On 23 April 2021, not long before the CMC, the Defendant told the Claimant that it had ceased to have any products in its control bearing the Names and gave an undertaking that it would not sell in the UK or the EU any toys, figures, or similar goods, bearing or under or containing the sign “FUNTIME” either as a stand-alone word or as part of the Names. It proposed that the proceedings be discontinued with no order as to costs.
The Defendant's proposal was not accepted by the Claimant, and directions for this trial of liability were given on 5 May 2021. A list of issues was appended to HHJ Hacon's CMC order, and I shall address the merits of the claim by reference to those issues.
The witnesses
For the Claimant, I heard evidence from Mr Alex Kenyon, a director of Padgett, as to the Claimant's business and use of the Marks in the UK. Mr Kenyon had a tendency to seek to add in additional evidence, for instance as to alleged detriment, and about the scope of the Claimant's UK sales, rather than answer the questions put to him, but seemed to me to be an honest witness. I also heard from Ms Vikki Garratt, a primary school headteacher, who gave evidence by video-link of some concerns which she had about the exposure of young children to FNAF. Again, I found her to be an honest witness, to the extent that her evidence was relevant to any matters I need to decide.
For the Defendant, I heard evidence from Ms Kalai Wineland, in-house counsel for Funko US, who gave evidence by video link, about the legal side of licensing, and from Mr Andrew Oddie of Funko UK who dealt with sales of the goods. I found both of them to be careful, honest and reliable witnesses.
Proof of use
The Particulars of Claim relied upon toys, games and playthings in the Claimant's specifications. No distinction was made between those three categories of goods, and the Particulars of Claim did not make it clear whether the Claimant was relying upon all of those goods (the reliance upon toys alone was express). I have mentioned, the Defendant had admitted use of FUN TIME in relation to toys and games aimed at the baby/toddler market in the UK. Nevertheless, the Defendant also expressly put the Claimant to proof of the extent of any use of the Marks, and submitted in its skeleton argument that use had only been proved in respect of “toys and playthings for babies and toddlers.”
At trial, counsel for the Claimant submitted that the argument about the scope of the fair specification took the Claimant by surprise, as it raised an issue under section 11A of the Act which had not been foreshadowed by the pleadings. He said that the Defendant should not be permitted to run the point at trial, as it would have been necessary for the Claimant to adduce evidence about it. Counsel for the Defendant said that the point was clear...
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