Evans and another (t/a Firecraft) v Focal Point Fires plc  EWHC 2784 (Ch), 10 November 2009
Citation: Journal of Intellectual Property Law & Practice, doi:10.1093/jiplp/jpp237
The High Court granted summary judgment to the claimants in a passing off case because an earlier Intellectual Property Office (IPO) decision that the same claimants had an actionable claim for passing off against the same defendant, a decision which resulted in the invalidation of the defendant's trade mark under section 5(4)(a) of the Trade Marks Act 1994.
By section 5(4)(a) of the Trade Marks Act 1994 (‘TMA’), a trade mark shall not be registered if its use in the UK is ‘liable to be prevented by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade’.
The elements that must be proved to demonstrate passing off are:
* Goodwill attached to the relevant goods or services;Cause of action estoppel applies where litigation has occurred previously in respect of the same subject matter, and was subject to a final and conclusive judgment. It prevents a party to that previous litigation from re-litigating the same claim.
* A misrepresentation by the defendant to the public (whether or not intentional), for example one that leads, or is likely to lead, the public to believe that the goods or services offered by him were those of the claimant; and
* Damage to the claimant, for example, arising from the erroneous belief (caused by the defendant's misrepresentation) that the source of the defendant's goods or services is the same as the source of those offered by the claimant.
Issue estoppel applies where a particular issue has previously been litigated and decided by a court as a necessary issue. If that same issue is relevant to subsequent proceedings between the same parties, it cannot subsequently be reopened for judgment.
Hormel Foods Corporation v Antilles Landscape Investments NV  EWHC 13 (Ch) established that a person is barred by cause of action estoppel from attacking the validity of a trade mark in the High Court where that person had previously unsuccessfully attacked the mark before the IPO.
However, the Court of Appeal in Special Effects Limited v L'Oréal SA and L'Oréal (UK) Limited  EWCA Civ 1 allowed a defendant to counterclaim for the invalidity of a trade mark in infringement proceedings despite having been unsuccessful in opposition proceedings in the registry, on the basis that there was no cause of action or issue estoppel.
Since 1991 the claimants had traded throughout England and Scotland in the manufacture, sale, and installation of stone fireplaces under the name ‘Firecraft’.
The defendant, Focal Point Fires plc, was a leading manufacturer of gas fires in the UK, making gas and electric fires since 1993. Around 2000, the defendant started to supply its fire range under the brand name ‘Firecraft’, having first instructed trade mark attorneys to establish whether it could use the name. The trade mark search came back clear and the defendant applied to register ‘Firecraft’ for various goods in class 11 including ‘gas fires; electric fires; fires simulating fuel effect’ in February 2000. The mark was registered on 1 September 2000.
The claimants claimed that they were not aware of the defendant's use of ‘Firecraft’ until May 2006. A request for invalidation of the defendant's trade mark was filed with the UK Intellectual Property Office (‘IPO’) in May 2007.
In November 2008 the claimants' invalidation application (on the basis of section 5(4)(a) of the TMA) came before an IPO hearing officer. The claimants successfully argued that they had an actionable claim for passing off against the defendants in relation to the ‘Firecraft’ mark as at the trade mark application date. As a result, the IPO held that the defendant's trade mark was invalid under section 5(4)(a). While the defendant did not appeal, neither did it stop trading under the ‘Firecraft’ name.
In March 2009 the claimants applied to the High Court for summary judgment on a claim for passing off against the defendant. The claimants argued that they were entitled to summary judgment as the IPO decision had established the defendant's primary liability for passing off. The claimants also argued that the defendant could not challenge the decision due to issue estoppel, cause of action estoppel, and/or abuse of process. As a result, the claimants submitted that all that the High Court needed to determine was the remedy to be granted (as the IPO hearing officer did not have the power to do so).
The judge, Peter Smith J, agreed with the claimants' arguments that they were entitled to summary judgment on the basis of the IPO hearing officer's decision. He also agreed that the defendant was not able to challenge the decision due to cause of action and issue estoppel and because it would be an abuse of process.
As the judge noted, the claimants could choose to challenge the validity of the trade mark either before the IPO or in the High Court. However, the claimants' reliance on the IPO decision limited its choice of remedy as the IPO did not have the jurisdiction to grant an injunction or award damages. Consequently, the claimants only sought a declaration from the Court, rather than an injunction or damages. The judge noted that these matters remained open.
Even though the IPO decision concerned the existence of a cause of action for passing off 9 years earlier, at the time of the trade mark application, it did not follow that the claimants did not still have such a cause of action. Indeed, if there had been a sustainable argument on this point at the time of the IPO hearing, the defendant would have run it. The IPO would not have found the mark to be invalid if there was no continuing breach.
Cause of action estoppel
The judge rejected the defendant's argument that the IPO had only come to a decision on the validity of the trade mark and not in relation to establishing a cause of action in passing off. Clearly, the IPO could not have found that the trade mark was invalid under section 5(4)(a) without also establishing that a cause of action for passing off subsisted. In order to demonstrate this, the claimants would have had to adduce satisfactory evidence to demonstrate each of the three elements of passing off.
The defendant argued that the IPO was not a court of competent jurisdiction in relation to the relevant issues: its role was to manage the trade mark register and to adjudicate on any disputes arising from it. This being so, the defendant was not estopped from arguing passing off before the High Court. The judge disagreed. The IPO had determined whether the trade mark registration was invalid. To do so, it had to establish a subsisting cause of action for passing off as at the trade mark registration date. This was central to the IPO proceedings.
The defendant also argued that there could be no res judicata in a changing situation. Again the judge disagreed. The IPO had had to decide whether damage was likely to be caused to the claimants by passing off, which was akin to a quia timet test (a quia timet injunction restrains wrongful acts which are threatened or imminent but have not yet commenced). The IPO not only supported quia timet but also found damage to the claimants' goodwill at the trade mark application date. If the defendant had been able to demonstrate in the subsequent action that the circumstances had changed (eg the claimants had ceased trading), that would have been relevant. However, it appeared that they had not.
Abuse of process
The judge stated that the defendant's decision to provide limited evidence in relation to the IPO invalidity proceedings with a view to producing ‘better evidence’ in the High Court should be categorized as an abuse of process. Costs recovery in successful IPO proceedings was limited and the claimants had incurred substantial costs in establishing a passing off claim that they would not recover. The claimants should not incur further costs to demonstrate this again before the High Court. Further, it was open to the defendant to appeal the IPO decision in order to adduce further evidence, but it chose not to do so.
While the IPO registrar was powerless to prevent the further use of the mark by the defendant or to make an order for damages, the declaration as to invalidity meant that the defendant no longer had a mark which it could enforce against others. The defendant had underplayed the significance of the IPO decision.
The judge considered the two authorities on this area, Hormel and Special Effects. Special Effects made the position clear regarding opposition proceedings, but that did not arise here. Hormel dealt with an unsuccessful challenge to validity. The judge held that the converse of that judgment was equally true. It could not be right to allow a defendant to seek to re-run a successful adverse decision on validity against it.
This decision highlights the possibility that, if a claimant succeeds in invalidity proceedings before the IPO, it can use that invalidity declaration to obtain relief in the High Court without the need for further evidence. In other words, it can opt for the cheaper route to establish passing off and obtain relief. However, it should be borne in mind that these claimants only obtained a declaration. While the option to seek an injunction and damages remained open to them, they would need to establish before the court that they should be awarded in the circumstances.
It is understandable that the defendant in this case believed the IPO proceedings dealt with the issue of invalidity only and so decided not to adduce extensive evidence on the passing off point. However, this case is a warning not to underestimate IPO proceedings and to submit all relevant evidence in support of your case as courts will ensure that parties that have had the opportunity to put their case before the IPO do not get a ‘second bite of the cherry’ in court. The case of Hormel suggests that this approach is not limited to passing off cases but may also apply in other circumstances where, having brought proceedings before the IPO, parties then look to bring a court action.