How to reduce the risk of a claim for Groundless Threats of trade mark infringement
There’s rarely been a better example of the risks of launching litigation without careful consideration than the recent IPEC decision in Fox Group International Ltd v Teleta Pharma Ltd  EWHC 1714 (IPEC), a case concerning the brand REVOLAX.
As HHJ Melissa Clarke summarised it in the opening paragraph of her judgment:
“This case is a cautionary tale to potential claimants who are considering trade mark infringement proceedings against a potential defendant they suspect of trading in infringing goods… A potential claimant should, before issuing a letter before claim or a claim alleging trade mark infringement: (i) check that the suspect goods are, in fact, infringing and not legitimate branded goods; and (ii) check it had the legitimate right to register the trade mark it alleges has been infringed.”
Failing to take those steps meant the claimant, a UK-based supplier of aesthetic and cosmetic products, had to discontinue its trade mark infringement claim. It has also had its trade mark declared invalid on the ground of bad faith, and has been found to have made actionable unjustified threats. The company is now facing a damages and costs award.
The sorry tale started in 2017 when Fox (the claimant) became a distributor of a dermal filler product branded as REVOLAX, which is manufactured by a Korean company called Across. Fox registered a UK trade mark for REVOLAX (and subsequently applied for an EUTM). In December 2018 it issued an infringement claim against Teleta, the defendant, regarding sales of REVOLAX products in the UK. However, Teleta’s product was obtained from an authorised distributor in Poland and legally imported into the UK. Fox discontinued the infringement claim in February 2019.
The judge had to decide essentially (i) whether the UK trade mark had been applied for in bad faith and (ii) whether Fox’s solicitors letter before claim to Teleta constituted an actionable unjustified threat.
On (i) she found that Fox did not have the consent of Across when it made the UK trade mark application, it was not reasonable for Fox to believe that it had such consent, and that Fox made the application to block other companies’ legitimate sales of TELETA products.
She said: “I find that, judged by the ordinary standards of honest people, Fox’s intention in applying for the mark was dishonest. In my judgment these actions are not consistent with good faith.”
Moreover: “Fox also sought to distort competition by intending to prevent even legitimate sales of Revolax in the UK by third party sellers seeking to benefit from the free movement of goods across the EU.”
On (ii) it was accepted that the unjustified threats had been made, and that Teleta was a person aggrieved, but not that the threats were actionable. However, the judge found that the actual importer of the products was BR Pharma, a company associated with Teleta, and not Teleta itself. The letter to Teleta therefore contained actionable unjustified threats.
Fox appears to have learned a hard lesson about the importance of fully understanding your legal position, and that of your competitors, before threatening action for trade mark infringement. While the company had sought advice from a trade mark attorney, the judge found it had not sought specific advice on the relevant part of the agreement with Across, and had not shared that agreement with its trade mark firm when instructing it to file the UK application.