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Wednesday, 28 December 2016

The champagne of trade mark disputes


It is time for some seasonal trade mark fizz. This time around the question of consent to use a trade mark.

This dispute has it all, polo players, champagne and contracts! 

It is MHCS Societe En Commandite Simple & Anor v Polistas Ltd & Ors [2016] EWHC 3114 (IPEC).

It is a relatively complicated set of facts which boils down to the importance of clearly setting out the basis for an agreement.  

Polistas became an official supplier to VCGC following a series of agreements which were entered into between it and the Claimant by email in each year from 2007 to 2010.  Although the agreements varied slightly by year, broadly speaking the Claimant received some free and some heavily discounted branded polo shirts for each event in return for licensing the Veuve Clicquot brand for Polistas to sell the branded polo shirts.

It's hard to imagine polo causing
any sort of trade mark dispute
The question was essentially how far did each licence go both in terms of time and the products in question. Other related issues included licence termination, passing off, quantum (liability and quantum were decided together), joint tortfeasorship and the absence of a limitation defence or challenge to validity.

The situation was somewhat complicated by the fact that many of the events in question took place nine years ago.  Further, the second defendant and owner of the first defendant was a litigant in person.  He was also the defendants' primary witness.

The test for consent

The question of consent comes from the CJEU case Zino Davidoff SA v AG Import Ltd (and others) [2002] CH 109.  Lewison LJ summarised the position in Honda Motor Co Ltd v Neesam [2006] EWHC 1051 para 5 (not on bailii) as:
  1. Consent must be unequivocally demonstrated.
  2. An intention to renounce the right to a trade mark will normally be gathered from an express statement.
  3. Although consent may be inferred in some circumstances, an actual consent (not a deemed consent) be established. 
  4. In almost all cases, the trader must prove consent (rather than the trade mark owner being required to prove the absence of consent). 
  5. Consent cannot be inferred from a trade mark owner's silence, the absence of a warning on the goods or the goods being originally placed on the market without any further restriction on their onward sale.
Some seasonal veuve
In other words "the burden of proof is on the Defendants to unequivocally demonstrate consent" [25] (judge's emphasis).

What was the scope of the agreement?

Each year from 2007 to 2010, shortly before the VCGC, the parties entered into a new agreement by email on slightly different terms.  Consequently, HHJ Clarke had no difficulty in concluding that she was considering a series of annually negotiated agreements rather than some other form of agreement as the defendants had suggested.  Apart from the 2007 agreement, each agreement limited (1) production, promotion and sales of branded goods and (2) Polistas permission to advertise itself as an "official supplier" to the VCGC to the period "during the VCGC".  The defendants suggested that this meant all year but the judge gave this suggestion short shrift and concluded that it meant the period of six weeks ending with the VCGC finals day.  

This meant that the defendants had limited unequivocal consent to produce, promote and sell the branded goods and identifying themselves as an official supplier.

When were the agreements terminated?

Each of the agreements were terminable at will upon reasonable notice.  Although the Claimants sent a very stern email in September 2011, the email was not sufficient to terminate as it was written on the assumption that the agreements had already terminated.  However, the solicitor's letter of 11 June 2012 was sufficient to terminate each of the agreements with a termination date of 11 December 2012.

Not to be confused with...
Passing off?

Given her earlier findings on the limited consent, the judge wasted little time in concluding that other than in the six week period of the VCGC the defendants were also liable for passing off in 2008, 2009 and 2010.  

Joint tortfeasorship?

The test for joint tortfeasorship was set out by Lord Neuberger in Sea Shepherd UK v Fish & Fish Ltd [2015] UKSC 10 at paragraph 55: 

  1. the defendant must have assisted the commission of an act by the primary tortfeasor; 
  2. the assistance must have been pursuant to a common design on the part of the defendant and the primary tortfeasor that the act be committed; and, 
  3. the act must constitute a tort as against the claimant.

It was clear from the evidence that the director of the corporate defendants was the controlling mind and decision-maker.  There was no evidence of any other individual being responsible for the companies' actions.  Therefore Lord Neuberger's test was established. 

Damages

As mentioned, this case was fairly unusual for being an IP case which considered both liability and quantum in the same hearing.  The disclosure from the defendants was somewhat lacking in detail.  As the judge put it "there is no axe in the world broad enough to calculate royalty as a percentage of profit share when neither the appropriate royalty rate nor the profits made are discernible from the evidence, so I must look for an alternative way to assess damages."  Therefore, she considered quantum based on the value of the branded goods (as agreed between the parties at the relevant time). This led to a total damages award of £125,000.  

The claimant was also entitled to an injunction to prevent further infringement and passing off.

3 comments:

Anonymous said...

Deduct a point from the legal teams and the judge for referring to Article 9 1 (c) rather Article 9 2 (c).

Kant said...

Soory anon, but you are wrong. The acts were committed prior to the amendment to the regulation.

Anonymous said...

Except the facts were pre-UMTR?

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