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A recent judgement by Justice Barrett of the High Court in GLAXO GROUP LIMITED and GLAXO SMITHKLINE (IRELAND) LIMITED and ROWEX LIMITED  IEHC 368 deals with Article 104 of the CTM, raising some interesting issues surrounding the granting of a stay.
Under Article 104(1), a CTM court hearing an infringement claim is required to stay those proceedings where an application for revocation or a declaration of invalidity has already been filed at OHIM, unless there are “special grounds” to continue the proceedings.
The wording of Article 104(1) is mandatory in its nature stating, “A Community trade mark court hearing an action referred to in Article 96, other than an action for a declaration of non-infringement, shall, unless there are special grounds for continuing the hearing, of its own motion after hearing the parties, or at the request of one of the parties and after hearing the other parties, stay the proceedings where the validity of the Community trade mark is already in issue, before another Community trade mark court on account of a counterclaim or where an application for revocation or for a declaration of invalidity has already been filed at the Office.”
The High Court identified three general principles with respect to Article 104 derived from the courts of England and Wales. With respect to the “special grounds” it was noted that these grounds should relate to the factual circumstances of the case. Secondly, in terms of granting a stay, the presumption for granting a stay is strong. Thirdly, it was noted that the rationale of Article 104 should be recognised, which is to avoid inconsistent decisions.
Article 104 has significant implications as this rule has the potential to be a stumbling block to the enforceability of Community trade marks, as swiftly filed cancellation actions could effectively prevent threatened Community trade mark infringement claims.
In the Glaxo case, the Court had to decide whether there were in this instance “special grounds” for continuing the Hearing and refusing a stay. In deliberating the request, the Court considered a number of reasons that mitigated against the granting of the stay and in particular the following:-
- Neither of the parties to the proceedings sought a stay;
- The proceedings before OHIM and the German Court in Hamburg could last many years;
- While the challenge to the Community trade mark before OHIM predated the counter-claim in the German proceedings, the District Court in Hamburg had not taken any steps to stay those proceedings pursuant to Article 104(1) and the parties did not request that this be done. In this regard, granting a stay would have little purpose bearing in mind the rationale of Article 104(1) as there are already parallel proceedings before OHIM and the Courts in Germany;
- The chances of inconsistent decisions between the Irish and Germany courts are not particularly great;
- The invalidity proceedings were not confined to infringement and that Glaxo had chosen to include a claim in passing-off. The comments regarding passing off in the context of refusing to grant a stay are rather interesting. Justice Barrett noted that in the case Starbucks (UK) Ltd v. British Sky Broadcasting Group Plc  EWHC 1842 (Ch.) case, and Enterprise Holding Inc. v. Europe Car U.K. Limited  EWHC 17(Ch), the addition of passing-off to the grounds of the claim was treated as a factor justifying the refusal of the stay. However, with respect to the Starbucks case in the Court of Appeal, Etehrton E.J rejected the argument that the inclusion of a claim of passing off was a “special ground.” Interestingly, Mr. Justice Barrett preferred the approach of Etherton in the Starbucks case stating that at best, “the presence of a common law or other local law dimension to a claim that also features a Community Trade Mark claim is a factor to be considered but always within the context of the strong presumption as regards granting a stay….”. Mr. Justice Barrett noted, “if a stay under Article 104 is continuously to be refused on the basis that a passing-off dimension presents or a particular national Courts procedures are to be preferred in the grander scheme of proceedings presenting, one could quickly arrive at a position in which stays under Article 104 are never granted and the harmonising effect of the CTMR in the field of Intellectual Property is considerably weakened and the Member States acting through the medium of the European Union clearly consider that such harmonisation is a desirable end.”
Glaxo also requested the refusal of the stay based on Article 47 of the Charter of Fundamental Rights of the European Union to a fair and reasonable hearing within a reasonable time and the like right arising under Article 6(1) of the European Convention of Human Rights. Although the Court did not consider it necessary, nor did it rule on whether there was any breach of the EU Charter or the European Convention on Human Rights, this factor was taken into consideration in refusing the stay.
In refusing to grant the stay, the Court felt that the cumulative strength of the various factors referred to above were sufficient to constitute “special grounds” under Article 104. In particular this decision is interesting in relation to the comments regarding passing off, which differ with some recent High court decisions in the UK on the same point. Although the Court ultimately refused to grant the stay, the passing off claim was not a major factor in arriving at this decision. Indeed, Justice Barrett stated that this was, “a factor to be considered but always within the context of a strong presumption as regards granting a stay.”