This article was written by Andrew McWhirter from Brodies.
A brand is one of the most important and valuable assets of any business. It attracts customers to that business or product line, acts as an indicator of trustworthiness or quality and ultimately is a key touch point for creating customer experiences and loyalty. Any damage to that brand, through copycat products or association with another discredited brand, advertiser or social media influencer, could have a significant negative impact on customer behaviour and, if not dealt with swiftly, could ultimately devalue the brand. That is why it is crucial to choose the right strategy to protect your brand.
Brand protection strategy
A brand can be protected by registering a trade mark, including for the brand name and/or logo - and the names of sub brands and product lines too, if necessary. Over recent years we have seen the scope of trade mark protection expanded to include three dimensional shapes, colours, slogans and sounds, provided that they are distinctive of a particular brand. Protection can also be achieved by the law of passing off in the UK, which does not require any registration but instead relies on the goodwill generated in the UK. It is possible to sue for passing off where a third party misrepresents themselves as a particular brand or having a connection to it. Most commonly, that involves the use of a name, logo or packaging that is similar enough to create confusion.
If there is any infringement, the ideal position for the brand owner is to reach a swift resolution that ensures their brand is safeguarded. Commonly, that means signed contractual undertakings that the infringement will stop and not be repeated, sometimes coupled with a payment of damages and costs and the delivery up or destruction of all infringing items. In some cases it is also possible to obtain a printed apology. However, this kind of settlement is not always achievable and in some cases swift court action including interim interdict may be needed to avoid irreparable brand damage.
There is a perception that intellectual property disputes should always be litigated in England and Wales rather than in Scotland. Certainly, the specialist Intellectual Property and Enterprise Court (IPEC) has become very successful due to the damages and costs caps of £500,000 and £50,000 respectively, the availability of early non-binding rulings and the expertise of the judges who preside over the cases. However, IPEC has, to an extent, become a victim of its own success in attracting a very high number of claims meaning that there can be a longer wait for hearings than can be the case in Scotland.
Even where a case is not appropriate for IPEC, perhaps because a higher level of damages is sought, the High Court is usually the court of choice for IP. While consideration should always be given to which court would provide the best strategic advantage, the Scottish option should absolutely be on a brand owner’s (and their adviser’s) radar.
The law in relation to trade marks and passing off is essentially the same north and south of the border. The Court of Session, which deals with the vast majority of IP disputes in Scotland, has jurisdiction for trade mark and passing off cases where the infringer is based in Scotland, such as a Scottish registered company, or where the infringing activity is taking place or is threatened in Scotland. The Court of Session also has jurisdiction to hear validity challenges to EU and UK trade marks. Local Sheriff Courts may also deal with UK trade mark and passing off cases, but do not have specialist IP judges.
Without notice interim interdict
In Scotland, it is possible to apply to the court for an interim interdict (the Scottish term for an interim injunction). To get an interim interdict, the brand owner must show that they have an arguable case and the balance of convenience favours the grant of the order. That usually means pointing to the potential irreparable damage that could be caused by allowing the infringement to continue.
A hearing on an interim interdict, whether opposed or unopposed, can happen within a day or so of the court papers being filed and the hearings, which do not involve the leading of evidence or witness statements, are usually relatively short. In certain circumstances, interim interdicts can be granted without notice to the infringer; meaning that the first they may know of the interim interdict is when they are served with it and have to immediately stop the infringement. However, if the alleged infringer has a court document known as a “caveat” filed, they will be given an opportunity to address the court on why the order should not be granted. A quick interim interdict can be a key weapon in the fight against IP infringers and usually leads to a swift settlement.
This process is in contrast with England, where notice will be required in the vast majority of cases and the courts usually require detailed witness statements in advance of a hearing. This takes time and will significantly increase legal costs for a business. In addition, the Scottish courts do not order ‘‘speedy trials’’ as an alternative to an interim interdict, which can potentially be very costly.
It is considerably cheaper to start an action north of the Border. The issue fee in England can be up to £10,000 due to the English courts front loading a large proportion of the court fees. In Scotland court fees are around £300 to start the court process, with higher fees incurred should the matter proceed to a trial. The costs of litigating in Scotland also compare favourably to England and other European countries.
Specialist IP Court
The Court of Session has designated IP judges who have built up broad experience in resolving all forms of IP disputes. There are also specific case management rules which are used at an early stage to encourage parties to focus on the issues in dispute and make the litigation as swift and as cost efficient as possible.
In Scotland, parties file documentation that they intend to rely on; the onus is then on the other side to apply to the court for any other documentation relevant to their case. As a result, the scope of any disclosure is usually much narrower than in England, where all relevant documentation must be disclosed. This means litigants in Scotland can save significant time and cost associated with disclosure.
Why the Scottish option should be considered
The ideal position for any IP dispute is a quick and relatively inexpensive commercial compromise that does not involve utilising the court system at all. However, where the valuable brand or good reputation of a business is at risk, court action may be necessary.
Where a business is considering raising court proceedings it is important to consider a number of factors including cost of the process, speed of decisions, the expertise of the court, the available remedies and the location of witnesses. While no court system is perfect, Scotland can offer a number of tactical advantages to brand owners seeking to protect their brand.