Threats Actions: Best Buy v Worldwide Sales Corp

A Spanish company, Worldwide, held a number of CTM and EU national trade mark rights incorporating the words BEST BUY in conjunction with other graphical elements.

Best Buy applied for a CTM incorporating the words BEST BUY (as shown, left), which was opposed by Worldwide.

Best Buy wrote to Worldwide to try to explore the possibility of arriving at a co-existence agreement. They received a ‘without prejudice’ letter in return which included a statement that Worldwide would be entitled to take appropriate legal action to defend their interests in the event that Best Buy should commence use in the European market. Best Buy raised proceedings for unjustified threats under Section 21 of the UK Trade Marks Act 1994.

Readers will recall that Section 21 permits an aggrieved party to commence proceedings for unjustified threat of legal action unless the threat relates to the following acts:

• the application of the trade mark to goods/packaging
• importation of goods to which (or the packaging of which) the trade mark has been applied
• the supply of services under the trade mark.

The following issues were to be decided:

Did the letter actually threaten proceedings? If so, was the threat permissible as being within the un-actionable category in Section 21(above)? If an actionable threat had been made, was the letter in any event inadmissible as it was marked ‘without prejudice’? Did Section 21 apply only to threats in respect of infringement of UK registrations, or did it also apply to CTM infringements anywhere in the EU?

The court dismissed the action for unjustified threats, answering the above questions as follows:

Section 21 concerns threats of infringement proceedings to be raised in the UK only (whether of a UK or CTM registration). However, Section 21 applies even if proceedings in the UK are not specifically mentioned, provided this would be one of the ranges of options available.

However, the reasonable recipient of the letter would have understood the threat as relating to the supply of services under the BEST BUY brand – and was therefore excluded as an un-actionable threat.

In any event, the letter fell within the protection of without prejudice correspondence – part of the letter was in response to the offer to open negotiations; the other part sought to underline Worldwide’s rights if agreement could not be reached. The letter could not be chopped up and the whole was entitled to protection as a genuine offer to settle.