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Filing a trade mark application can amount to passing off

Posted on 23 September 2021

The Intellectual Property Enterprise Court has handed down a judgment in an appeal which is thought to be the first confirmation (in a reported case at least) that merely filing a trade mark application could constitute a misrepresentation to the public for the purposes of passing off.

Litecoin is a cryptocurrency, launched in 2011 by Charles Lee, a computer scientist formerly of Google, and developed and promoted by his company Litecoin Foundation Limited. It is one of the many cryptocurrencies which followed in the wake of the launch of Bitcoin in 2009.

In 2017, Mr John Pepin, applied to register various trade marks for the word mark “LITECOIN” in the UK, covering services such as "financial services" and "virtual currency". He also subsequently changed the name of one of his companies to “Litecoin Exchange Limited”. These activities led to Litecoin Foundation bringing proceedings seeking injunctive relief to prevent passing off in relation to its goodwill in 'Litecoin'.

District Judge Hart in the IPEC Small Claims Court granted that relief ordering an injunction prohibiting the Defendants from using the trade name Litecoin or any other similar name. She decided that:

  • Litecoin Foundation had goodwill in the LITECOIN name.
  • Trade mark applications appear in a publicly accessible journal. Therefore, the filing of the Litecoin trade mark application was a public announcement to the world of a purported connection between the Defendants and the Litecoin trade name. In other words, by filing the trade mark application, the Defendants had misrepresented that they had a bona fide intention to use the Litecoin mark in respect of the goods and services applied for, and this would cause the public to think that the Defendants had goodwill in the name and were connected or associated with Litecoin Foundation.
  • Simply changing a company name was not sufficient to constitute a misrepresentation.
  • However, in any event, the evidence showed that the Defendants had a history of making systematic and opportunistic registrations of domain names and trade names. Accordingly, the District Judge was persuaded that the LITECOIN trade mark application and change of company name was made in bad faith with the intention of extracting money from Litecoin Foundation and that the application itself was an "instrument of fraud".
  • As a result, Litecoin Foundation had suffered damage.

District Judge Hart herself gave permission to appeal, recognising that her decision had relied heavily on the well-known case of One in a Million. She accepted that the case had been discussed by authors and commentators for some time and the precise boundaries of the reasoning in that decision were unclear.

However, on appeal, John Kimbell QC sitting as an Enterprise judge upheld the decision. He commented that the situation in this case fell squarely within One in a Million. Although that case concerned the registration of a domain name, the reasoning applied equally to a trade mark and company name.

As mentioned, this is the first reported case to confirm that the mere filing of a trade mark application can constitute a misrepresentation for the purposes of passing off. It also confirms that, where a party has equipped themselves with an instrument of fraud such as a trade mark or company name, the court has jurisdiction to grant relief to the owner of the goodwill in that name.

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