Court of Appeal of England and Wales reminds rightholders to monitor trade mark registers to avoid acquiescence

In a recent decision ([2023] EWCA Civ 1451) which is relevant to all trade mark practitioners, the Court of Appeal of England and Wales (the Court) has departed from EU case-law and held that the defence of statutory acquiescence, in respect of UK trade mark infringement, only requires that the owner of the earlier mark have knowledge of use of a later registered mark for five years, and not knowledge of its registration. 

Background

The Claimant, Industrial Cleaning Equipment (Southampton) Limited, was incorporated in 1992 and provides retail, rental and maintenance services for commercial and consumer cleaning equipment in the UK, using the name INDUSTRIAL CLEANING EQUIPMENT, the acronym ICE, and a number of logos including (since 2007) the following: 

The First Defendant, Intelligent Cleaning Equipment Holdings Co Ltd, is the IP holding company of the ICE Group, which since 2011 has designed and manufactured floor cleaning machines in China. Those machines have been imported into the UK for distribution and sale since June 2013, and marketed using the acronym ICE and the following logo:

Both the Claimant and the First Defendant have trade mark registrations in the United Kingdom. The Claimant applied to register the above logo as a UK trade mark on 23 October 2015, in class 3 (including for "retail, wholesale and online retail services relating to the sale of industrial cleaning equipment, machines and vehicles"), and the application proceeded to register on 22 January 2016 (the Claimant's UKTM). 

The First Defendant applied for International Trade Mark registrations (ITMRs) in respect of its logo and the word ICE, and these were registered at World Intellectual Property Organization (WIPO) on 18 June 2015 in respect of "floor cleaning machines" in class 7, based on an earlier registration in the United States. 

One of the various territories designated by the ITMRs was the European Union, and they were accepted accordingly by the EU Intellectual Property Office (EUIPO) on 24 May 2016 and 14 June 2016 respectively (the EUTMRs). Following Brexit the EUTMRs were replaced, in the UK, by two comparable ITMRs designating the UK (the Defendants' UKTMs) . 

It was accepted that the Claimant had knowledge of use of the Defendants' UKTMs in the UK since around July 2014, but denied having any knowledge of registration of such marks until July 2019, when the Claimant's solicitors sent the Defendants a letter before claim alleging trade mark infringement and passing off. 

Proceedings were issued on 24 May 2021, and the judge at first instance found in favour of the Claimant. The judge held that the defence of statutory acquiescence raised by the Defendants under section 48 of the Trade Marks Act 1994 (TMA 1994), could not succeed because the five year period only starts to run when the earlier trade mark owner has knowledge of both the use of the later trade mark, and of its registration (applying Case C-482/09, Budejovický Budvar np v Anheuser-Busch Inc [2011] ECR I-08701). 

As the defence of acquiescence did not apply, the Defendants had infringed the Claimant's UKTM, and the Defendants' UKTMs were invalid on the ground that their use was liable to be restrained as passing off, pursuant to section 47(2)(b) TMA 1994. 

The Defendants appealed. 

The Court of Appeal's decision

The Defendants' appeal was, in summary, based on the following two grounds: 

1. That it is not necessary for the proprietor of the earlier trade mark to be aware of the registration of the later trade mark in order for time to run: it is sufficient that the later trade mark is in fact registered and that the proprietor of the earlier trade mark is aware of the use of the later trade mark; and
2. Where the later trade mark is an international trade mark protected in the EU, the registration date for the purpose of determining when time starts to run is the international registration date, and not the date from which the trade mark is protected in the EU. 

Kat prefers cleaning the old fashioned way... 

Knowledge of registration

The Court engaged in a lengthy analysis of the Budvar decision, the EU General Court's case-law, the EUIPO's practice, and the reasoning underlying the principle of statutory acquiescence.  

It noted, firstly, that in Budvar, the Court of Justice of the EU had indeed held that the period of five years had to run from knowledge of registration of a later trade mark. It did so largely on the basis of its interpretation of Article 9(1) of Directive 89/104, the key wording of which is "has acquiesced, for a period of five successive years, in the use of a later trade mark registered in that Member State while being aware of such use".  

The Court of Justice reasoned that "the proprietor of an earlier trade mark cannot be held to have acquiesced in the long and well-established honest use, of which he has long been aware, by a third party of a later trade mark identical with that of the proprietor if that proprietor was not in any position to oppose that use", and that there are four conditions which must be fulfilled for the defence of statutory acquiescence to be successful, namely: 

1. Since Article 9(1) refers to a 'later registered trade mark', that the later mark be registered; 
2. That the application for registration of such mark have been made in good faith; 
3. that the later trade mark be used in the Member State where it is registered; and 
4. That the proprietor of the earlier trade mark be aware of the registration and use of the later trade mark after its registration. 

The Court of Appeal explained that, although it was free to depart from "retained EU case law", it can only do so on the same basis as the Supreme Court can depart from one of its own precedents, which is a power to be exercised with "great caution" (see Horton v Sadler [2006] UKHL 27).  

The Court of Appeal noted, in this respect, that the decision in Budvar was an isolated judgment, and that other decisions of EU courts were inconsistent with its reasoning, including the decision of the EUIPO Board of Appeal in Cristianini v Ghibli, Case R 1299/2007-2, in which the Board interpreted the reference in the legislation to a "later registered mark" as simply requiring that the later mark must have been registered for a period of five years, without requiring knowledge of such legislation. The Board considered that to require such knowledge would be contrary to the objective of the legislator to create legal certainty. 

The Court of Appeal also noted that the decision in Ghibli was in fact applied by the EU General Court in Marchi Italiani (Case T-133/09), and a later appeal against the General Court's decision was quashed by the EU Court of Justice (Case C-381/12), which reiterated the four conditions above, but found that  "the relevant date for the purpose of calculating the starting point of the period limitation by acquiescence is that on which the proprietor of the earlier mark has become aware of the use of the later Community mark and that date can only be later than that of the registration of that mark, from which the right to it is acquired."

The Court of Appeal held that the more natural reading of the operative words in the legislation was that applied by the General Court in Marchi Italiani, and trade mark policy considerations militated towards the same conclusion, including the following factors: 

1. Use and registration are two different concepts - use affects the market, while registration does not; 
2. Proving knowledge of registration is likely to be more difficult in circumstances where communications between parties and their trade mark attorneys regarding third party registrations are more likely to be privileged; 
3. The practical consequence of applying Budvar would be that to give the proprietor of the earlier trade mark "a perverse incentive not to consult the register in order to delay time running", whereas the purpose of the legislation is to sanction trade mark proprietors who are insufficiently vigilant. 

For these reasons, the Court of Appeal decided to depart from Budvar and hold that statutory acquiescence only requires knowledge of use of a later mark after its registration.  

Date of registration

Unfortunately for the Defendants, they were still ultimately unsuccessful in their appeal as the Court held that the relevant starting point for calculating five years of acquiescence, was either the date on which the ITMRs were accepted by the EUIPO, or the second republication date by the EUIPO - and not, in any event, the WIPO registration date. 

Other issues

Two remaining issues which the Court commented on, although strictly unnecessary for the purposes of its ruling, were: 

1. When did acquiescence cease: the Court held that merely sending a warning letter is not enough to cease acquiescence, unless a claim form or other legal action is issued shortly thereafter; and 
2. Passing off: in the Court's ruling, the defence of acquiescence, if it applied, would also have barred the Claimant's claims for passing off, as well as trade mark infringement. 

Comment

In this Kat's view, the Court of Appeal seems to have gotten it right, and decided consistently with what appears to be the evolving trend in the case-law of the EU General Court and EUIPO's Boards. It is absolutely key for trade mark owners who may be monitoring third party uses of a mark (which they may be unable to take action against without an equivalent registration in a particular territory) to ensure that they regularly also check whether any registrations have been filed in respect of such marks, so that they do not inadvertently acquiesce.