Wirex Ltd v Cryptocarbon Global Ltd
| Jurisdiction | England & Wales |
| Judge | Hacon |
| Judgment Date | 16 March 2021 |
| Neutral Citation | [2021] EWHC 617 (IPEC) |
| Date | 16 March 2021 |
| Docket Number | Case No: IP-2019-000188 |
| Court | Intellectual Property Enterprise Court |
[2021] EWHC 617 (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
HIS HONOUR JUDGE Hacon
Case No: IP-2019-000188
and
Andrew Norris QC (instructed by Brown Rudnick LLP) for the Claimant and Defendants to Counterclaim
Jonathan Hill (instructed by Franklins Solicitors LLP) for the Defendants
Hearing date: 26 January 2021
Approved Judgment
HIS HONOUR JUDGE Hacon
Introduction
In May 2018 the Claimant (“Wirex”) launched a credit card rewards scheme. In the usual way of such schemes, account holders are issued with a credit or debit card and they receive rewards commensurate with the scale of their purchases on the card. The Wirex scheme differs from the norm in that rewards are in bitcoin. Wirex calls this its “cryptoback” rewards scheme. Shortly before the launch, on 28 April 2018 (“the Filing Date”), Wirex filed an application for a UK registered trade mark, which was registered on 27 July 2018 (“the Trade Mark”). It takes the form of the word CRYPTOBACK and is registered for, among other things, financial and software services.
The First, Second and Fourth Defendants (“the Corporate Defendants”) also offer a cryptocurrency cashback service using the word “cryptoback”. They say that the Trade Mark was invalidly registered but admit that they would infringe the Trade Mark if it were valid.
It is alleged by Wirex that the Third Defendant (“Mr Manuel”) is jointly liable with the Corporate Defendants for infringement of the Trade Mark. Mr Manuel's joint liability with the First Defendant (“Global”) and the Second Defendant (“Cryptocarbon UK”) is admitted (assuming there is any liability); joint liability with the Fourth Defendant (“Bee-One”) is denied.
The Defendants counterclaim for a declaration that the Trade Mark was invalidly registered. They advance two grounds. They say that Global acquired goodwill associated with the mark “cryptoback” before the Filing Date and thereby acquired the right to prevent use of the Trade Mark at that date. The Trade Mark was consequently invalidly registered pursuant to sections 5(4)(a) and 5(4A) of the Trade Marks Act 1994 (“the 1994 Act”). Secondly, Wirex knew this when it applied for the Trade Mark so the application was made in bad faith pursuant to s.3(6) of the 1994 Act.
The counterclaim also alleges passing off by the Second Defendant to the Counterclaim (“Wirex Gibraltar”), and that the Third Defendant to the Counterclaim (“Mr Lazarichev”) and the Fourth Defendant to the Counterclaim (“Mr Matveev”) are jointly liable with both Wirex and Wirex Gibraltar for passing off. There is a further allegation that Mr Lazarichev and Mr Matveev are primary tortfeasors for passing off.
It will be seen from the foregoing summary of the issues that the central question is whether Global owned goodwill at the Filing Date associated with “cryptoback” as a trading name.
Andrew Norris QC appeared for Wirex and the three Defendants to the Counterclaim; Jonathan Hill appeared for the Defendants.
The statutory bases for the declaration of invalidity
Sections 47, 3 and 5 of the 1994 Act provide, so far as is relevant:
“ 47 Grounds for invalidity of registration.
(1) The registration of a trade mark may be declared invalid on the ground that the trade mark was registered in breach of section 3 or any of the provisions referred to in that section (absolute grounds for refusal of registration).
…
(2) … the registration of a trade mark may be declared invalid on the ground—
…
(b) that there is an earlier right in relation to which the condition set out in section 5(4) is satisfied”
…
3 Absolute grounds for refusal of registration .
…
(6) A trade mark shall not be registered if or to the extent that the application is made in bad faith.
…
5 Relative grounds for refusal of registration .
…
(4) A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented—
(a) by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade, where the condition in subsection (4A) is met,
…
(4A) The condition mentioned in subsection (4)(a) is that the rights to the unregistered trade mark or other sign were acquired prior to the date of application for registration of the trade mark or date of the priority claimed for that application.”
Mr Matveev and Mr Lazarichev
Evidence for Wirex came from Mr Lazarichev and Mr Matveev, respectively the Third and Fourth Defendants to the Counterclaim. They are the co-founders and joint Chief Executive Officers of Wirex and each is a director of Wirex Gibraltar. They were good witnesses.
Mr Manuel
For the Defendants there was evidence from Mr Manuel, the Third Defendant, who set up all the Corporate Defendants, and from Bish Smeir, a business colleague of Mr Manuel's and an account holder with Wirex.
The bulk of the evidence of use of “cryptoback” by the Defendants was given by Mr Manuel. He explained that in 2015 Bee-One launched a conventional cashback loyalty service linked to credit and debit cards. Consumers could register their existing cards with Bee-One and thereafter purchases attracted loyalty rewards. Alternatively, consumers could obtain a new VISA debit card from Bee-One. In about mid-2016 the management of Bee-One began to plan a similar service using cryptocurrency. Global and the Second Defendant (“Cryptocarbon UK”) were set up as vehicles for the proposed business. A new cryptocurrency, called “CCRB” was launched in the summer of 2016. Mr Manuel says that he came up with the “cryptoback” name in 2017 and that it was launched by Global in November 2017. Global provided a business-to-business service to Bee-One which in turn provided the service to its business customers. Global also provided a business-to-consumer service directly to consumers. From June 2018 the business-to-consumer service was in large part transferred to Cryptocarbon UK.
Mr Manuel described a variety of uses of “cryptoback” in the UK before the Filing Date in his witness statement. In cross-examination some of this evidence was shown to be unreliable. I will give examples.
First, Mr Manuel relied on the sales of gift cards before the Filing Date, saying that there had been over 3000 transactions worth more than £600,000. In cross-examination he conceded, despite giving the figure in sterling, that the Defendants' documents do not record transactions for UK account holders selecting cryptoback.
Secondly, Mr Manuel's evidence in his witness statement was that in the first three months of 2018 Bee-One paid Global 2% of the transaction value of cryptoback services. He said this showed that Bee-One's customers had spent £136,000 in services in respect of which they had opted for the service under the cryptoback mark. In cross-examination he was asked for the records supporting this figure. He said that they existed but apparently they were not in the trial bundles.
Thirdly, he asserted in his witness statement that by the Filing Date Global's cryptocurrency cashback service had been provided under the “cryptoback” mark in over 25,000 transactions worth more than £60,000. He was asked in cross-examination where those figures came from and answered that account details had been produced. Neither at that point nor in re-examination did Mr Manuel identify accounts which established the figures he had given.
Fourthly, in his witness statement he relied on use of “cryptoback” on the Bee-One app before the Filing Date. No image of the app was included in his evidence. In cross-examination he was evasive about having access to the app as it was before the Filing Date. He was told by Mr Norris that Wirex had found it and that it contained no reference to “cryptoback”. Counsel was there giving evidence, but Mr Manuel did not deny that sight of the Bee-One app as it was before the Filing Date would not have helped the Defendants' case.
Fifthly, Mr Manuel relied on a website now at www.ccrb.io used by Global and Cryptocarbon UK (“the Website”). In his witness statement he said that it was materially the same before the Filing Date as it is now. The Website as it is now was demonstrated in a video prepared by Mr Manuel. In cross-examination Mr Manuel conceded that he could have used the Wayback machine, a digital archive of the internet based in San Francisco, to demonstrate the Website as it was before the Filing Date but had not done so. Yet Mr Manuel was happy to use the Wayback machine for other parts of his evidence.
More examples are given below. I am unable to accept any evidence from Mr Manuel concerning use of “cryptoback” by Global before the Filing Date save where it is clearly supported by documentary evidence.
Mr Smeir
The evidence from Mr Smeir was more limited and although I have no criticism of the way in which he gave his cross-examination, he worked closely with Mr Manuel when Mr Manuel was setting up Wirex's cryptoback service and was probably not a neutral witness with regard to any rights Wirex may have in the name cryptoback. As to what such rights may be, I rely only on the documentary evidence.
The law
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Decision Nº O/066/22 from Intellectual Property Office - (Trade market), 26 January 2022
...coined term, or neologism, for a new product or service may be seen as descriptive. In Wirex Ltd v Cryptocarbon Global Ltd & Ors [2021] EWHC 617 (IPEC), Judge Hacon explained that a neologism used in relation to a new product may be taken by the relevant public to be a new word for that typ......