In a landmark recent decision (Industrial Cleaning Equipment v Intelligent Cleaning Equipment), the Court of Appeal decided, for the first time in an IP case, to depart from retained EU case law. The case concerned the defence of statutory acquiescence which prevents the owner of an earlier trade mark from challenging a later registered trade mark after five years' acquiescence in its use. Departing from the Court of Justice's decision in the Budvar case, the Court of Appeal concluded that the five-year term of the acquiescence clock should start to run when the owner of the earlier trade mark becomes aware of the use of the later trade mark, rather than from the date of their knowledge of its registration. This decision serves as a useful reminder to trade mark owners of the importance of closely monitoring the trade mark register to avoid inadvertently acquiescing to a third party's use of a mark.
Background
The Claimant, Industrial Cleaning Equipment, sued Intelligent Cleaning Equipment and an associated company (the Defendants) for registered trade mark infringement in relation to the following logos.
The Claimant's logo
Used since 2007
Registered as a UK trade mark on 22 January 2016
The Defendants' logo
2015 – the defendants applied for international trade marks for the logo
EU trade marks then registered
The Claimant had become aware of the Defendants' use of its logo in July 2014. However, it was not until July 2019 that the Claimant sent a letter before claim alleging infringement of its trade mark and passing off. In their response on 26 July 2019, denying infringement, the Defendants drew the Claimant's attention to the fact that its logo had been registered. Just under 5 years after registration of the Defendants' IR (EU) marks, the Claimant issued proceedings for trade mark infringement and passing off.
The Defendants sought to rely on the statutory 'acquiescence' defence in section 48 of the Trade Marks Act 1994 – this defence operates where the owner of the trade mark said to have been infringed has "acquiesced" for a period of five successive years in the use of a later registered trade mark.
The trial judge applied the principles laid down by the CJEU in its judgment in Budvar, as she was required to do as the decision was binding upon her. She concluded that, since the Claimant first became aware of the Defendants' trade mark registrations on receipt of the 26 July 2019 letter, its claim had been issued and served well before the expiry of the five year period required for acquiescence, and the defence therefore failed.
The Defendants appealed to the Court of Appeal.
Court of Appeal
There were two main points on appeal:
- Whether the earlier right owner needs to know about both the use and registration of the later trade mark for the statutory acquiescence period to start running; and
- For IR (EU) marks, whether the period of acquiescence ran from the date that the Defendants' marks were registered (June 2015), or from the date of grant of protection at the EUIPO (25 May 2016 and 15 June 2016)?
On the first question, and departing from the Budvar decision, the Court of Appeal held that knowledge of use of the later trade mark was all that was required to start time running in relation to statutory acquiescence, provided that the later mark has been registered for five years. In reaching this conclusion, Arnold LJ made some useful observations on the factors the higher courts may take into account when determining whether to depart from retained EU case law:
- Whilst the power to depart was one to be exercised with 'great caution' a key factor in the Court's decision was the difference in approach adopted by the CJEU in Budvar, compared with that adopted by the General Court and the Boards of Appeal of the EU's Intellectual Property Office (EUIPO) in a series of other cases; and
- The question of legal certainty. Whilst this had been a key factor in the Court of Appeal deciding not to depart from retained EU case law in the TuneIn case, and the Courts are mindful of departing from their own precedents to avoid undermining legal certainty, this was given little weight here. The Court's view was that few trade mark owners would have based their commercial strategies on the approach of the CJEU in Budvar and a well-advised party would be told of the conflict in the case law.
However, despite agreeing with the Defendants on this point, the appeal was still dismissed. This was because, in answer to the second question, the Court of Appeal held that the relevant starting point for calculating the five years of acquiescence was either the date on which the EU international registrations were accepted by the EUIPO, or from the second republication date by the EUIPO – and not, the earlier WIPO registration date. This meant that the claim was issued in time to stop a full five years' statutory acquiescence accruing.
Concluding remarks
For the first time in an intellectual property context, a senior court in the UK has departed from retained EU case law, and the decision therefore offers useful guidance on how and when a departure may occur.
There is a new test for statutory acquiescence in the UK. The owner of an earlier right only needs to be aware of the use of a registration (as opposed to its registration) for the five-year period to start running. This decision serves as a useful reminder to rightsholders to ensure that they do not inadvertently acquiesce. When alive to potentially infringing third party use therefore, they should regularly check whether any registrations have been filed.