Background

Rights holders seeking to assert their IP rights in the United Kingdom should be aware of the threats provisions, which apply to patents, registered trademarks and registered and unregistered designs.

Section 21 of the Trademarks Act 1994 provides that “any person aggrieved” by a threat to issue proceedings for infringement of a registered trademark may bring an action for threats and seek:  

damages  

a declaration from the trademark owner that the threats lack justifi cation  

an injunction to prevent further threats.  

There are limited statutory exemptions to these provisions. The threats provisions in Section 21 of the act were extended to apply to Community trademarks under Paragraph 6(1) of the Community Trademark Regulations 2006.

A recent High Court case, Best Buy Co Inc v Worldwide Sales Corp España SL,1 is thought to be the fi rst to have considered the application of UK threats provisions to an EU-wide right.

Facts

Following the success of the business in the United States, Best Buy Inc and its UK subsidiary planned to launch their consumer electronics business in the United Kingdom under their ‘Best Buy’ name. The companies had applied for a number of Community trademarks which were opposed by the defendant, a Spanish corporation that owned a number of fi gurative Community trademarks and national registered trademarks featuring the words ‘Best Buy’.

In August 2008 the claimants’ lawyers wrote to the defendant’s trademark attorney about the oppositions. They maintained that the claimants had a signifi cant reputation in the words ‘Best Buy’ for retail services, and that as the defendant’s use of its marks was thought to be mostly in Spain, there was scope for coexistence.

In response, the defendant’s Spanish lawyers claimed that the defendant’s various Best Buy marks had been used in Spain and in other European markets; therefore, the defendant had a reputation in the brand. The letter noted that the claimants’ stated intention to expand into the “European market, including the Spanish one” represented a confl ict of rights, and that such confl ict might “cause confusion and lead to an unacceptable association with the defendant’s products, causing irreparable and irreversible damage which would undoubtedly entail the cessation of its activity”. The defendant was therefore “entitle[d] to take the appropriate legal action to defend its interests”.

Settlement discussions were unsuccessful. The claimants issued proceedings for unlawful threats on the basis of the defendant’s fi rst letter.

Decision

The court explained that the applicability of the UK threats provisions to Community trademarks is limited to proceedings threatened in the United Kingdom and does not extend to other jurisdictions.

Justice Floyd dismissed the claim, noting that the defendant’s letter had to be read as a whole and in the context of all that had preceded it; thus, it was to be interpreted as it would be understood by a reasonable businessperson who had received the defendant’s letter and was aware of the background.

The judge concluded that the recipient would understand from the defendant’s letter that proceedings for trademark infringement were being threatened. Although the threat was conditional on the claimant refusing to negotiate and continuing its use of the mark, conditionality is not a defence. Furthermore, a recipient would consider that the defendant was not simply referring to proceedings in Spain. The defendant had a range of options and if a major UK launch were to take place, the United Kingdom would be a likely choice of jurisdiction for proceedings.

The judge noted that Section 21 of the act excludes certain types of infringement action from the threats provisions - for example, the supply of services under a trademark or the import of goods to which the trademark has been applied. However, the defendant’s letter did not fall within the limited statutory exemptions. Although the defendant argued that the letter related to the supply of services only, the judge disagreed, noting that the letter sought undertakings in respect of any use of the mark.

Nevertheless, the claim was dismissed. Although the letter made clear threats, it was a “comprehensive negotiating response” to the claimant’s proposal. It was noted that it is reasonable, in the course of negotiations, to assert an initial position of strength before indicating where a compromise might be reached.

Therefore, in its context the letter attracted the protection of ‘without prejudice’ privilege, even though these words did not appear in the letter.

Comment

This case reinforces the established rule that even if a communication does not explicitly threaten infringement proceedings in the United Kingdom, a court may fi nd that a threat is implied in context. This analysis applies equally to letters, emails and conversations between parties.

For non-UK lawyers, the case highlights the risks associated with UK threats provisions. Although limited statutory exemptions exist, a communication must be carefully composed to take advantage of them. The defendant in this case was relatively lucky and the communication was held to be without prejudice, even though this had not been the lawyers’ intention. Advice should always be sought from English lawyers before seeking to assert IP rights in relation to the United Kingdom, as care must be taken when deciding on the content and recipient of a communication.