Guide to Trade Mark Litigation in the UK
Section 10 of the Trade Marks Act states that a UK-registered trademark will be infringed if a sign is used in the course of trade in the United Kingdom which is:
- identical to the trademark and used in relation to goods or services which are identical to those for which the trademark was registered;
- identical or similar to the trademark and used in relation to goods or services which are identical or similar to those for which the trademark was registered, where there exists a likelihood of confusion on the part of the relevant public (including a likelihood of association); or
- identical or similar to a trademark with a reputation in the United Kingdom and where the use of the sign without due cause takes unfair advantage of or is detrimental to the distinctive character or repute of the trademark.
The Trade Marks Act also includes separate provisions on criminal offences which are usually enforced by the Police and Trading Standards. Until Brexit is finalised, the UK courts will continue to serve as EU trademark courts. As to the position post-Brexit (i.e. as of 1 January 2021), UK courts will no longer be able to decide matters regarding EU trade marks.
EU trade marks will however automatically be converted into equivalent UK trademarks (with no examination required) and continue to take effect in the United Kingdom. The comparable UK trade mark will keep the original EU trade mark filing date, have the same legal status as if it were applied for and registered under UK law, and keep the original priority or seniority date. Where an EU trade mark application is still pending on 1 January 2021, the proprietor may:
- apply to register the same trade mark as a UK trade mark within nine months after the end of the transitional period (this being up to and including 30 September 2021);
- retain the earlier filing date of the pending EU trade mark; and
- retain the same priority and/or seniority date as recorded against the EU trade mark.
Parties litigating in the United Kingdom should be aware of the laws relating to unjustified threats. These provisions are intended to prevent spurious threats of trademark infringement being made against traders and distributors, whose fear of being involved in costly litigation may result in them capitulating and their businesses being damaged, even where the trademark at issue is invalid or not infringed.
The law of unjustified threats has recently been reformed and new legislation came into force in October 2017 which clarified certain provisions of the Trade Marks Act. However, care must still be taken when sending cease and desist letters to traders and distributors, as such letters could constitute actionable threats which may entitle their recipients to commence proceedings at court and seek an injunction to restrain further threats, along with damages.
Unregistered rights are protected under the common law tort of passing off, which protects goodwill accrued through trading activities conducted in the United Kingdom. A claim for passing off is often run in conjunction with a claim for registered trademark infringement; however, passing off may be the only cause of action available if no trademarks have been registered.
In a claim for passing off, the claimant must prove the following:
- goodwill in, for example, a trading name or get up – it is generally easier to establish goodwill when the claimant has been trading for a number of years, although it is sometimes established after only a short period of time, depending on the scale of activity;
- a misrepresentation by the defendant to the public, leading or likely to lead people to believe that the goods or services offered by the defendant are the goods or services of the claimant, or commercially connected with the claimant (eg, licensed or a brand extension); and
- damage to the claimant as a result of the defendant’s misrepresentation – this could be loss of sales or more intangible damage arising as a result of being mistakenly associated with the defendant.
It is generally difficult to succeed in a claim for passing off based on the get-up of products alone, as in such cases the ‘look and feel’ or shape of a product must serve as an indication of origin in its own right. The evidence required to support such a claim tends to be difficult to gather and, as discussed below, surveys are not generally favoured by the courts.
The United Kingdom has no law of unfair competition as such, although passing off shares some similarities with unfair competition law principles in continental European jurisdictions (eg, Germany).
Alternative dispute resolution
The Civil Procedure Rules encourage parties to try to settle matters without recourse to full court proceedings and the courts will generally look unfavourably on parties who refuse to engage in alternative dispute resolution – indeed there may be unfavourable cost consequences. Many cases are settled via mediation before trial.
There is no formal requirement to engage in arbitration, unless there is a contract in place between the parties which contains an arbitration clause (in which case the arbitration clause will usually prevail over court litigation).
Litigation venue and format
The UK contains three separate judicial systems: England and Wales, Scotland, and Northern Ireland. All courts within the UK are bound by the decisions of the Supreme Court.
It is standard practice that liability and quantum are bifurcated, meaning there will be a trial on infringement, followed – if appropriate – by an inquiry as to damages or an account of profits.
Trade mark infringement proceedings are typically brought before either the High Court or the Intellectual Property Enterprise Court (IPEC).
The High Court is the premier venue in the United Kingdom for large and complex litigation. At the High Court there are, in principle, no limits on how much a claimant may claim in damages or the amount of costs which may be recovered by the successful party. However, the High Court will play an active role in managing costs and parties are likely to be subject to costs-management orders relating to approved cost budgets. These may be compulsory or – if discretionary – ordered at the request of one of the parties. Costs recoverable by the successful party, not subject to a costs-management order, will typically be between 60% to 70% of the costs actually incurred.
In contrast, the IPEC is intended to provide a cost-effective forum to hear IP claims. The focus is on active case management and streamlining proceedings. In the IPEC, the following rules apply:
- The court’s permission must be sought for disclosure, witness statements, expert evidence or cross examination of witnesses;
- The trial is limited to one or two days;
- Costs recoverable by the successful party are limited to £50,000; and
- Claims brought before the IPEC must not exceed £500,000 in value.
Claims valued at no more than £10,000 may be brought in the IPEC’s ‘small-claims track’ which is intended to be an even more streamlined and cost-efficient way of dealing with low-value claims. The recovery of legal costs in the small-claims track is extremely limited.
Due to its special procedural and costs rules, the IPEC is generally suited to less complex, lower-valued claims. This makes it most suitable for individuals and small to medium-sized enterprises, although larger businesses can make use of the forum so long as their claims satisfy the criteria.
Claims issued before the High Court or the IPEC will generally be listed for trial between 12 to 15 months from the date of issue. Judgments are generally handed down within three months after trial.
Courts fees will vary depending on the value of the claim and the remedies sought. They start at £35 for claims valued up to £300, and go up to £10,000 for claims valued at more than £200,000. Claimants seeking non-monetary relief (e.g. an injunction) will incur an additional fee of £528 if litigating before the High Court, or £308 if litigating before the IPEC.
As stated above, UK courts will no longer be able to decide matters regarding EU trade marks as of 1 January 2021.
Damages and remedies
The owner of a trademark can recover damages in relation to acts of infringement. Damages may be calculated based on the profits lost by the claimant as a result of the infringement or based on the notional licence fee that the claimant and defendant would have agreed for use of the infringing mark.
Damages for infringement of a UK-registered trade mark can be recovered from the date of the trade mark application.
Damages may include damage to reputation and goodwill, which – although difficult to assess – may yield a figure significantly higher than can be gained by opting for an account of profits.
Account of profits
An account of profits is an equitable remedy which requires the infringing party to surrender the profits made from its infringing activity. However, an account of profits is not intended to be punitive.
Claimants may seek damages or an account of profits, but not both. The choice between these remedies may lead to the claimant recovering very different amounts, so due consideration must be given to the election. Limited disclosure of financial information from the defendant may be available in order to assist the election process.
A permanent injunction is usually granted as a form of relief, following a finding of infringement at trial. Interim injunctive relief may also be granted at an earlier stage of proceedings, where appropriate.
An interim injunction is a discretionary remedy and is granted only in urgent circumstances. Exceptionally, an application for an interim injunction may be made without notice to the respondent, although the courts have emphasised that ‘without notice’ applications should be made only in very limited circumstances (e.g. where giving notice would enable the defendant to take steps to defeat the purpose of the injunction).
Any application for an interim injunction (with or without notice) should be made as soon as possible after the applicant becomes aware of the circumstances requiring it. Indeed, a delay of just a few weeks can be fatal to the application. The applicant must also show that damages would be inadequate to compensate it for the respondent’s continued infringing activities up to the trial date.
The party seeking an interim injunction must also give a cross-undertaking in damages, by which the defendant will be compensated if it transpires that the interim injunction should not have been granted (ie, the infringement claim fails at full trial).
In practice, interim injunctions are relatively rarely sought in trademark cases.
Where an injunction, granted before the end of the transitional period, prohibits actions in the UK which would infringe an existing EU trade mark, the terms of that injunction will continue to apply to the new comparable UK trade mark.
Other remedies available to a successful claimant in a trademark infringement action include orders for:
- erasure, removal or obliteration of offending signs from infringing goods, materials or articles;
- delivery up and destruction of infringing goods, materials or articles; or
- payment of legal costs (usually a contribution).
Evidencing the case
Investigations and first steps
While there are no hard and fast rules, it is advisable to carry out proper enquiries before contacting the potential infringer and to record evidence of any infringing activities. For example, a potential claimant may keep records of any infringing items or activities found online, carry out test purchases and hire private investigators to conduct suitable investigations.
The court is generally reluctant to admit survey evidence in trademark infringement proceedings. Interflora Inc v Marks & Spencer plc ( EWCA Civ 1501) remains the leading UK authority governing situations where permission is sought to admit survey evidence. In deciding such matters, the court must be satisfied that the survey evidence will be of sufficient value to justify the costs involved. The court will consider:
- the method by which the survey participants are selected;
- the size of the survey;
- the questions asked (these must be non-leading questions);
- the exact answers provided by the participants (abbreviations or digests will not be accepted);
- the instructions given to participants; and
- the costs of carrying out the survey.
Use of expert witnesses
The use of expert testimony is subject to the permission and control of the court. Expert evidence is restricted to that which is reasonably necessary to resolve the proceedings. Expert evidence on issues such as likelihood of confusion is generally not admissible.
There are a number of statutory defences to trademark infringement, most of which are contained within Section 11 of the Trade Marks Act, as follows:
- A UK trade mark registration is not infringed by use of a later trademark registration in relation to goods and services for which the latter is registered. This defence does not apply if the later trade mark is invalid.
- A person’s use of his or her own personal name or address does not constitute infringement, provided that such use is in accordance with honest practices in industrial or commercial matters.
- Provided that such use is made in accordance with honest practices in industrial or commercial matters, it does not constitute infringement to use indications concerning:
- the kind, quality, quantity, intended purpose, value or geographical origin of the goods or services concerned;
- the time of production of the goods or rendering of the service concerned; or
- other characteristics of the goods or services concerned.
Further, a defence can be based on the continuous use, in the course of trade and in a particular locality, of an earlier right which applies only in that locality. An ‘earlier right’ is defined as an unregistered trademark or other sign continuously used in relation to goods or services to the extent that its use is protected by virtue of any law (in particular, passing off).
Section 11(2)(c) of the Trade Marks Act provides that a registered trademark is not infringed by use of a mark for the purpose of identifying goods or services as those of the proprietor, as long as such use:
- is in accordance with honest commercial practices; and
- does not without due cause take unfair advantage of, or constitute a detriment to, the distinctive character or repute of the trademark.
A party seeking to appeal a decision of a county court or the High Court (which includes the IPEC) may do so at the Court of Appeal and ultimately the Supreme Court. Permission to appeal must be sought and granted in relation to both levels of appeal. In deciding whether to give permission to appeal, the court will consider whether:
- the appeal would have a real prospect of success;
- there is any other compelling reason for the appeal to be heard; and
- it raises an issue of general public importance.
Appeals will usually only be allowed if the lower court erred in law or fact, or if the decision is unjust due to a serious procedural or other irregularity
Trade Mark Litigation: A Global Guide 2019
An amended version of this article first appeared in Trademark Litigation: A Global Guide 2019, a supplement to World Trademark Review, published by Globe Business Media Group - IP Division. To view the guide in full, please visit the World Trademark Review website.TM Litigation Guide