Should trade mark proceedings be stayed pending EUTM decision?
His Honour Judge Hacon in the IP Enterprise Court (IPEC) has stayed all the claims in a trade mark case concerning knitting needles and crochet hooks, pending the outcome of cancellation proceedings at the EUIPO. The judgment is the latest to consider the impact of Brexit on trade mark matters.
The dispute is between KnitPro, which owns two EU trade marks and two comparable UK trade marks obtained post-Brexit depicting a decorative chevron pattern, and Crafts, which owns a US trade mark for the chevron pattern. In 2013, Crafts applied to the EUIPO seeking cancellation of one of KnitPro’s EU marks under Articles 7(1)(a) and (b).
After it discovered that Crafts was making sales via Amazon in the UK and Germany in 2015, KnitPro made takedown requests to Amazon. Crafts subsequently alleged that KnitPro had made unjustified threats of infringement and KnitPro retaliated with claims of trade mark infringement and passing off.
KnitPro then argued that the IPEC proceedings should be stayed until the EU trade mark proceedings are fully resolved, based on article 132(1) of the Trade Mark Regulation.
HHJ Hacon noted that, following Brexit, there is an inconsistency between paragraph 20 of schedule 2A of the Trade Marks Act 1994 and article 67(1)(b) of the Withdrawal Agreement regarding the application of article 132 of the Trade Mark Regulation to pending proceedings. But he said they can be reconciled:
“The two provisions overlap. The overlap does not of itself create a difficulty. Art.67(1)(b) provides for the continuing effect of art.132 as retained EU law in respect of proceedings instituted before the end of the IP completion day; paragraph 20 of schedule 2A does not. The net result is that art.132 has continuing effect.”
This meant that the counterclaim for infringement of the EU mark, and the other claims related to that mark, should be stayed.
The judge analysed the case for a stay of the claims relating to the other marks and for passing off on case management grounds, noting that the effect of the Withdrawal Agreement is that if the EU mark is declared invalid, the comparable UK mark will also be declared invalid (though the reverse is not necessarily the case). He concluded that the balance of justice favoured a stay of all claims relating to the EU and UK marks:
“if the claims in this court relating to the EU and UK Chevron Marks are stayed pending the outcome of the European proceedings and Crafts succeeds in those claims, it will be compensated for the loss caused by the takedown notices if and to the extent it is entitled to such compensation. No other relevant damage to Crafts has been identified.
If there is no stay, there will be a trial in several months’ time and a second trial after the judgment of the CJEU to deal with the claims this court is required to stay under art.132(1) of the Trade Mark Regulation. A judgment in relation to Chevron claims in this court will at least in part be subsequently overtaken by the CJEU's judgment, possibly in substantial part, so the cost of dealing with such claims in this court would be wasted.”
The other claims should also be stayed, as there would be no irreparable damage to Crafts and having one trial rather than two would save costs.
What does this mean?
This case illustrates that, despite the comprehensive provisions in the Withdrawal Agreement, there are still questions that have to be resolved regarding proceedings that were underway before Brexit.
In any dispute that has both a UK and EU dimension, it is therefore important to understand the full picture. We can advise on the impact of proceedings in both jurisdictions, so please don’t hesitate to contact us with any questions.