Pliteq Inc. v Ikoustic Ltd
| Jurisdiction | England & Wales |
| Judge | Amanda Michaels |
| Judgment Date | 02 October 2020 |
| Neutral Citation | [2020] EWHC 2564 (IPEC) |
| Docket Number | Claim No. IP-2019-000069 |
| Date | 02 October 2020 |
| Court | Intellectual Property Enterprise Court |
[2020] EWHC 2564 (IPEC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY ENTERPRISE COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
MISS RECORDER Amanda Michaels
(sitting as a Judge of the Intellectual Property Enterprise Court)
Claim No. IP-2019-000069
Michael Silverleaf QC and Tom St Quintin (instructed by Brandsmiths) for the Claimants
Chris Aikens (instructed by Appleyard Lees IP LLP) for the Defendants
Hearing dates: 23 and 24 June 2020 (trial held remotely, by Microsoft Teams)
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.
This is a case of trade mark infringement and passing off which raises some unusual issues. The trade marks used by the parties for their respective products are not said to be similar or confusing. Instead, the Claimants allege that the Defendants used the Claimants' trade marks in order to sell their own goods under their own distinct trade marks, and that this amounted to infringement by “bait and switch” selling. They also complain of passing off. The Defendants' case is that they were making legitimate use of the Claimants' marks in relation to genuine goods.
The trial was heard remotely over video-link, and I am grateful to everyone concerned for their efforts in setting up the hearing, including by attending a pre-trial case management conference, sorting out the electronic documents and ensuring that the trial ran to time. Whilst we experienced intermittent issues with internet connections, and there were some issues with using the electronic bundles, it seems to me that those difficulties did not derail the proceedings.
Background
The Claimants are members of the same group of companies. The First Claimant is incorporated in Canada and designs, makes and sells a range of acoustic damping and sound control products. It was founded in 2006 by Paul Downey who remains its CEO. It is the proprietor of the four registered trade marks (“the Marks”) relied upon in these proceedings:
a. UKTM 3246779, registered as of 28 July 2017: GENIECLIP
b. UKTM 3246778, registered as of 28 July 2017: GENIEMAT
c. EUTM 7592892, registered as of 10 February 2009: GENIECLIP and
d. EUTM 8501918, registered as of 20 August 2009: GENIEMAT.
The Marks are all registered for a range of goods, in particular goods in Class 17. The GENIECLIP mark specifications include construction clips of various materials for fixing panels to walls, etc, and the GENIEMAT mark specifications include acoustic mats.
The Second Claimant was incorporated in March 2011 and became the First Claimant's UK licensee, under an informal licence. A formal licence was executed in writing dated 10 April 2019, doubtless in contemplation of these proceedings. There was no dispute as to the nature of the goods sold by the Claimants under the Marks. They have two key product lines designed to reduce sound transmission in buildings. First, the Claimants sell clips and brackets under the GENIECLIP Marks. The clips are made of moulded rubber and steel and are used to attach plasterboard to either wall or floor-ceiling assemblies by means of a “furring” or “top-hat” channel clipped into them, which holds the plasterboard. They are used to dampen sound travelling through walls and floors/ceilings. The Claimant sells a number of products under the GENIEMAT Marks, broadly speaking, a rubber mat product with different acoustic characteristics. It is typically installed on top of or between hard surfaces such as concrete or wooden floors, again to dampen or prevent sound travelling in buildings.
The Claimants started to market and sell both GENIECLIP and GENIEMAT products in the UK in around 2009 or 2010 (the exact date is unclear, but not of significance). After the Second Claimant was incorporated in March 2011, Simon Jones was employed as its managing director, but it seems that Mr Downey has been the sole registered director of the Second Claimant throughout. Mr Downey gave evidence about the marketing and distribution channels used by the Claimants, which was not disputed by the Defendants. He said that GENIECLIP and GENIEMAT products have been very successful, and that the Claimants have spent significant sums advertising and promoting them in the UK since 2011, in architectural, construction, hospitality, fitness and building trade publications. As a result, according to Mr Downey, the Marks have become well-known to professionals in the construction business, such as architects, engineers and noise consultants, so that GENIECLIP and GENIEMAT products are specified by name in the building specifications of commercial building projects. Mr Downey also said that the Claimants' goods had been tested and certified, and from 2017 the test results were available to specifiers on Pliteq's EchoOne web platform. I do not think that any of those facts was contested by the Defendants. Currently some 380 professionals have access to EchoOne in the UK. It seems to me that the target customers for the Claimant's products are acoustic consultants and the other professionals mentioned above. Mr Downey accepted in cross-examination that such customers would specify use of a GENIEMAT or GENIECLIP product in the light of the technical reports on the products and a contractor would not normally substitute another product, or would do so only after checking its properties with care.
In 2011 Mr Downey asked Mr Jones to seek out potential distributors in the UK. This led to a meeting with the Defendants in late October 2011. At that stage, the First Defendant, iKoustic Ltd, was a relatively new business, which had been incorporated on 14 October 2010. Mr Ricky Parsons, the Second Defendant, was and remains its sole director and shareholder. I think that it was common ground that at that early stage in iKoustic's business it was mainly supplying acoustic products made by third parties to small businesses or domestic customers. Mr Parsons said that he sold a combination of goods for use in a novel arrangement which he had designed to improve acoustic performance. He also said that he dealt in products from different suppliers, and that iKoustic's business model was to provide customers with free technical advice. Although at trial the Claimants expressed doubts about Mr Parsons' technical expertise as an acoustic engineer, which he explained was self-taught, plainly they were sufficiently impressed by him and his company in 2011 to agree that iKoustic should become one of its distributors, and it traded successfully as such distributor from 2012 until 2018. Indeed, according to Mr Windle, now the managing director of the Second Claimant, iKoustic became a key distributor for Pliteq in the UK. Mr Parsons said that iKoustic marketed the Claimants' products at its own cost.
Mr Downey said that between 2012 and 2016 iKoustic placed regular orders with the Claimants for 19 different product lines, six GENIECLIP products and thirteen GENIEMAT products. The first order was placed in January 2012 and the last on 27 November 2018. In the last year of the distributorship, that is between September 2017 and November 2018, 93,932 products were supplied to iKoustic with a total order value of some £365,000. Mr Windle indicated that this represented a significant proportion of the Claimants' UK sales.
After iKoustic became a distributor of the Claimants' goods, it began to supply larger customers than before, especially where GENIECLIP and GENIEMAT products were identified in building specifications. In some such cases at least, the customers were referred to iKoustic by the Claimants and Mr Parsons accepted that the Claimants' advertising therefore benefited iKoustic indirectly, at least to some extent. No written terms were agreed between the parties. The Claimants relied at trial upon certain of their standard terms and conditions of sale, and I do not think that it was disputed that (in principle) those Ts & Cs applied, although it was also common ground that Mr Jones had agreed to supply goods to iKoustic at a significant discount from the Claimants' standard prices.
At no point was iKoustic an exclusive distributor for the Claimants' products, and at times the same goods were supplied in the UK directly by the Claimants, or by other distributors such as Travis Perkins. Equally, there was no express agreement between the parties that iKoustic should not stock products competing with the Claimants' products. Mr Downey contended that iKoustic was contractually obliged not to sell competing products, or that such exclusivity had been understood by the parties, but he conceded that this was not agreed with iKoustic, or even discussed with Mr Parsons. I find that there was no obligation of exclusivity imposed on iKoustic. Mr Parsons said that he had in fact sold competing products to the Claimants' goods at various times. That statement was challenged in cross-examination, but I was not able to conclude from the evidence before me whether or not that was the case, nor do I think it a point of any real significance.
The relationship between the parties appears to have started to break down at some point in 2017 and certainly there were problems (evidenced for example by the transcript of a telephone call between Mr Parsons and Mr Jones) in March 2018. The reasons why it broke down were hotly disputed between the parties and a fair amount of time was spent exploring this at trial.
Mr Parsons' evidence was that he felt that he was being unfairly treated by the Claimants in various ways. There...
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