What’s the time Mr Wolff?

This article considers the Court of Appeal decision in Combe v Wolff^[1] .  In particular - what stops the clock running for statutory acquiescence in trade mark infringement proceedings? And, what use is sufficient in the relevant territory to satisfy Budvar?

UK and EU trade mark law provides a statutory defence to trade mark infringement and registry-based cancellation actions where a brand owner is said to have knowledge of use of another mark (and a related registration) for more than 5 years - without having pursued “formal steps” to challenge that use (“5 Years’ Acquiescence”). 

This decision identifies what these “formal steps” might, or might not, include.  Indeed, many UK practitioners have taken to view to date that removing a registration by way of invalidity stops the clock ticking as one of the conditions set out in Budvar (see further below) is not then met – the effect of the invalidity being that the trade mark was deemed never to have been registered at all.  Alongside this sits EU case law (Fédération Cynologique Internationale) which says that a trade mark does not need to be invalidated before a formal court claim was pursued.  The UK courts had even gone as far as suggesting that an invalidity or infringement claim might not need to be filed at all to stop the clock ticking – as long as the pursuant party has made claims which “amounted to serious, detailed and credible threats”.  But change is afoot.

So…when and how do you stop that clock? Read on!

Background

The Claimants’, Combe International LLC and Combe International Limited (“Combe”) relied on its UK registered trade marks for the word mark VAGISIL including in Classes 3 and 5 for a range of personal hygiene and medicated related goods (IYKYK).

The Defendants’, Dr August Wolff GmbH and Acdodo Ltd (together “Wolff”) sell goods under the sign “VAGISAN” for similar products targeting the same consumer market as VAGISIL.

Combe claimed trade mark infringement of its VAGISIL marks as a result of Wolff’s use and registration of VAGISAN.  For the purposes of this case analysis, we focus solely on Wollf’s defence, namely that Combe had acquiesced to Wolff’s use of the VAGISAN sign within the UK for a period of 5 years in accordance with Section 48 Trade Mark Act 1994 (the “Act”).

The current UK law

Section 48(1) of the Act states that the earlier rights holder is unable to invalidate or oppose the use of a later mark in the UK where:

“..the proprietor of an earlier trade mark or other earlier right has acquiesced for a continuous period of five years in the use of a registered trade mark in the United Kingdom, being aware of that use, there shall cease to be any entitlement on the basis of that earlier trade mark or other right”

The High Court’s application of s48 of the Act

The case law has been relatively consistent in how to assess the defence of acquiescence, both under s48 of the Act and under equivalent provisions within the European Union. Indeed, as with many cases before it, the High Court in this instance referred to the four-step test applied in Budejovicky Budvar [2012] RPC 11, namely:

i) The later mark must have been registered;

ii) The application for the later mark must have been made in good faith;

iii) The later mark must have been used in the relevant territory;

iv) The proprietor of the earlier trade mark must be aware both of the registration and the use of the later mark.

Whilst a number of the above criteria were admitted by Combe or otherwise satisfied by Wolff, Combe challenged the following two particular points as to why Wolff was unable to claim that Combe had acquiesced.

Continuous use - the later mark must have been used in the relevant territory

In the first instance decision, the High Court emphasised that use of the later mark must be continuous in the relevant territory for the 5-year period. In the present case, the acquiescence period (i.e. Combe was deemed to have knowledge of VAGISAN) commenced around January 2014.  Combe claimed that during the period mid-2015 to December 2016, Wolff’s use and marketing of the VAGISAN sign within the UK essentially ceased.  Combe submitted evidence, claiming it had been closely monitoring through a number of standard industry resources, commercial activity of competitors / infringers - the VAGISAN product was not identified during this period as being available or indeed marketed within the UK.

ff claimed that whilst there was only “modest” use during the period mid-2015 to December 2016, such use was still enough to satisfy the requirement of continual use of the VAGISAN sign within the UK for the 5 year-period. The High Court disagreed, holding that such use was not sufficient in the context of an acquiescence claim, stating that commercial use should be on a “meaningful or commercial scale”.

However, the Court of Appeal disagreed with the High Court and considered it unworkable to place a requirement on the trade mark owner that use of the mark must be for a continuous 5-year period.  The Court of Appeal went on to hold that even the limited use by Wolff at certain points in time, was still sufficient for the purpose of continuous use.  That said, the limited use by Wolff during that period, coupled with Combe’s inability to identify such use, as mentioned above, meant that Combe did not acquiesce during the 2015 and 2016 period.

Whilst it is not possible to quantify the scale of “meaningful or commercial” use of a mark, it will clearly turn on the facts of each case. We expect that the competent authority in such instances would take a pragmatic approach and consider all relevant factors on balance, such as the size of the market in question and current market conditions, to name but two examples.  This approach was neatly summarised by the Court of Appeal:

“In my judgment the answer to this conundrum is that there must be continued, but not necessarily continuous, use of the later trade mark throughout the five year period. What amounts to continued use for this purpose will be a fact-sensitive question which depends on the nature of the goods or services and on the characteristics of the average consumer of those goods or services. Thus fewer instances of use may suffice for expensive or specialised goods that are only bought occasionally than for low-cost everyday items which are purchased regularly. Even in the case of inexpensive commonplace goods, periodic use over five years may well suffice.”

When does the clock stop running?

In December 2017, Combe filed an invalidity action against Wolff’s EUTM registration for VAGISAN with reliance on its UK registrations. At this time, the EUTM was also valid in the UK. Combe claimed that the filing of invalidity proceedings to be a direct and hostile act against the use and registration of VAGISAN in the UK, which stopped the clock running.

However, Wolff claimed that a registry-based action was not a sufficient act to stop the clock running. Wolff claimed that any actions by Combe must amount to an objection to its actual “use”. That is, Wolff claims that Combe was required to file an infringement claim and pursue a permanent injunction. In the first instance decision, the High Court disagreed with Wolff, and applied a broad interpretation of the Budvar decision as to what actions would amount to stopping the clock running.

The High Court pointed out that the filing of an invalidity action by the prior rights holder was a claim that there had never been a valid registration and therefore there was no basis upon which it could rely on s48 of the Act. Put another way, the prior rights holder cannot be said to be acquiescing to such use, when it has based a claim on the fact that the registration should be declared as never being registered.

It was also interesting that the High Court felt it necessary to cite Arnold J’s High Court Judgment in W3 v Easygroup [2018] FSR. In that case, it was accepted by all parties involved that in the context of stopping the clock running, there was no material difference between initiating infringement or invalidity proceedings.  Arnold J also suggested (obiter) that for the purpose of s48 of the Act, if a party had instructed solicitors to write a letter before action (and in this case also with draft particulars of claim) then it “amounted to serious, detailed and credible threats” which could in turn stop the clock running.

However, the Court of Appeal once against disagreed with the High Court on its findings and rationale that an invalidity action would stop the clock running. The Court of Appeal considered the practical impact on use of a trade mark in the event of a successful invalidity action, pointing out that the invalidity of a trade mark registration does not prohibit use of the mark in question:

“As is common ground, a declaration that the registration of the later trade mark is invalid has no impact at all on the use of that trade mark: the proprietor of the later trade mark remains free to continue to use it. This is because registration confers no positive right to use a trade mark, rather it is an exclusionary right to prevent others from using it.”

The Court of Appeal aligned itself with the General Court decision in Heitec (see our earlier case summary here: 5 Years’ Acquiescence – do not leave it too late! Recent case law developments and a reminder of the relevant tests (cms-lawnow.com)) and concluded that even serious, detailed and credible threats of infringement proceedings are not enough to preclude acquiescence unless they are followed by administrative or court action (or action with equally legally binding effect).

So the take home, as always, is this.  Delay if you must, but challenge if you can, and don’t let time run away from you. 

If you want to know more about trade marks, infringement or statutory acquiescence (!) get in touch with Paul Sweeden or Kelly Saliger.

^[1] Combe International LLC & Anor v Dr August Wolff GmbH & Co KG Arzneimittel & Anor [2022] EWCA Civ 1562 (30 November 2022)