La guerra della moda
A fashion-brand conflict turned on genuine use, bad faith and passing off, reports Jade MacIntyre. [2018] EWHC 1608 (Ch), Walton International Ltd & Anor v Verweij Fashion BV, High Court, 28th June 2018.
[2018] EWHC 1608 (Ch), Walton International Ltd & Anor v Verweij Fashion BV, High Court, 28th June 2018
Key points
- Summarises the CJEU and domestic case law on targeting, and the factors that will determine whether online offers containing trade marks are targeted at the UK or other EU Member States (and therefore represent genuine use in those countries)
- Suggests that trade mark applications will not be bad faith just because they are filed during dispute negotiations and are intended to bolster a party’s negotiating position. This is the case even if the applicant does not inform the other party of the application
This case concerned what Mr Justice Arnold called a “trade mark war” between two well-established fashion businesses. Both had used the Italian-sounding GIORDANO mark since the 1980s, the first Claimant’s (Walton) main markets being Asia, Australasia and the Middle East, and the Defendant’s (Verweij) main market being Europe. While neither party is an Italian company, the brands had been inspired by the name of a pizza restaurant and a wine brand respectively.
The case featured Walton’s claim for the infringement of various UK and EU trade marks and Verweij’s counterclaim for revocation for non-use and/or invalidity (on the grounds of bad faith and passing off). Ultimately, all of Walton’s marks, save for one UK mark, were revoked for non-use. The remaining mark was invalidated on the basis of passing off, and Verweij’s passing off counterclaim was also successful.
Discontinuance
On the “eve of trial”, Walton filed a notice of discontinuance in relation to infringement of its EU trade marks. Verweij applied for the notice to be set aside, arguing that Walton was seeking to shield its EU marks from a determination of validity by the Court. Arnold J concurred and set aside the notice as an abuse of process. He explained that, if the notice were to be permitted, it would only be on the condition that Walton undertook not to assert the EU marks against Verweij in any other EU Member State or rely on them before EUIPO. Even if the discontinuance were not an abuse, the Court would have still set the notice aside so as to determine all issues justly and at proportionate cost.
Revocation for non-use
Verweij sought and obtained revocation of all of the trade marks save for one UK mark. Arnold J pointed out that revocation for non-use was “the most important issue in the case”.
The judge divided up the question of genuine use by Walton of the GIORDANO mark in the UK/EU by Walton into:
- offline use in pop-up stores and by means of a licence agreement; and
- online use in the form of (a) advertising and offers for sale; and (b) specific sales.
In respect of offline use, the Court agreed with Verweij that pop-up stores represented token use, ie non-genuine use for the purpose of trying to maintain trade marks. It was accepted that the online use was not merely token.
Sales considered
The Court considered Walton’s online offer of GIORDANO branded clothing, especially on its “global e-shop”, and whether this targeted the UK or elsewhere in the EU. Arnold J considered a number of CJEU and domestic authorities, and favoured the judgment of Mr Daniel Alexander QC sitting as a Deputy High Court Judge in Abanka dd v Abanca Corporación SA [2018] Bus LR 612, which he found to be consistent with CJEU case law. This judgment emphasises that mere online visibility of the mark in the UK and the possibility of deliveries to the UK were not sufficient to establish genuine use. A proprietor has only targeted the UK/EU and genuinely used its mark therein if it has “itself ‘pushed’ its business and mark into the UK [or EU], not if it has been ‘pulled’ into the UK [or EU] by (for example) its customers abroad, even though they may be based in the UK [or EU]” (see paragraph 103 Abanka).
While the e-shop offered delivery to the UK and the EU, Arnold J noted it offered delivery to nearly all countries in the world and that prices and payment were in US dollars. The e-shop had no UK or EU address, phone number or email address. Further, while data showed that there had been UK and EU visits to the website, there were reasons to believe many of these visits were from people from countries in the Claimant’s core markets who were temporarily in the UK/EU. Considering these and other factors, Arnold J concluded the online offer was not targeted at the UK or any country in the EU. The websites did not “push” advertisements to the UK/EU, but rather were “pulled” into these jurisdictions by users who had encountered the Claimant’s mark while in the Claimant’s core markets.
Specific online sales
While the advertisements and offers for sale were not targeted at the UK or EU, and therefore did not represent use of GIORDANO in three jurisdictions, the Court considered that specific sales to customers did represent use of GIORDANO in relation to clothing in the UK and the EU. However, the Court considered the number of sales to be commercially insignificant in the context of the Claimant’s own business, and also in comparison to the enormous fashion market in the UK/EU more generally. Due to the de minimis nature of the sales, while there had been use, there had been no genuine use of the marks.
Bad faith
Verweij’s claim that Walton’s most recent UK trade mark application had been in bad faith because (inter alia) it was an illegitimate attempt to bolster its position in negotiations was dismissed. Although the parties were already in discussions and Walton did not inform Verweij of the filing, the “trade mark war” had already started. It was clear to both parties that the other side would take steps it considered appropriate to protect its interests.
Instructive case
The setting aside of the discontinuance and the revocation of EU marks despite the pending EUIPO proceedings is instructive of the high level of discretion the English courts have in conducting trade mark proceedings. This case also provides a good summary of the law on targeting in relation to online offers and whether use is de minimis. Further, it shows that the English courts will be slow to classify applications as bad faith when they are tactical moves within a genuine trade mark dispute.
Jade MacIntyre is a Chartered Trade Mark Attorney at Allen & Overy LLP
Andrzej O’Leary, Trainee Solicitor, assisted.