Early is often best when it comes to protecting new brands. But this advice, intended to protect against new conflicting brands, takes on a new resonance when trademark-squatters come on the scene. A recent UK-IPO decision flags up a case where the nebulous practice of cybersquatting, the registration of known third-party trademarks as domain names with the intention of selling them on for profit, moved into the realm of the trademark register (JUICED UP, O-355-11). The cost to businesses who fall victim to such practices can be high, but prompt and savvy trademark protection can obviate the risk.
All Juiced Up and Nowhere to Go
The seeds of this case were sown in or around 2005, when an individual called Jonathan Oag started a business in the UK selling juices, smoothies and a range of other beverages and snacks, under the name JUICED UP.
In August 2007, an English company, Never Give Up Ltd., run by an individual called John Blanchard, filed an application to register a series of marks comprising JUICED UP in various forms in relation to restaurant, café, bar and catering services.
It was common ground that shortly after filing the application, Mr Blanchard had telephoned Mr Oag to inform him that he and his company owned the JUICED UP trademark and that Mr Oag could no longer use it. The words actually exchanged were in dispute, but Mr Oag claimed that Mr Blanchard had told him that he, Mr Oag, would have to pay a license fee or buy the mark from Mr Blanchard’s company for “tens of thousands of pounds”, failing which Mr Oag would face court action if he continued to use the mark. Mr Oag filed opposition to Never Give Up Ltd.’s application on the basis of prior rights acquired through use, and bad faith.
At first instance, the hearing officer was satisfied that Mr Oag had a business under the name JUICED UP prior to the filing of Never Give Up Ltd.’s application, and that the business had given rise to protectable goodwill such that Mr Oag would have been able to prevent the use of the JUICED UP series marks applied for by Never Give Up Ltd. in an action for passing off at the time the application had been filed.
In considering the claim under bad faith, the hearing officer preferred Mr Oag’s account of Mr Blanchard’s call. Although Mr Blanchard denied that he had ever “tried to extort money from companies”, this was not the same as saying that he had not demanded money from Mr Oag in order for the latter to continue his business under its existing name. Moreover, Mr Blanchard had given evidence that he had himself checked the UK-IPO website before filing his own application and had learned thereby that a company controlled by Mr Oag, Juiced Up (Scotland) Ltd., had made an application for JUICED UP in respect of “fruit juice and smoothies” in Class 32.
There was therefore evidence that Mr Blanchard was aware of Mr Oag’s business under, or at least his interest in, the JUICED UP trademark before he had filed his own application. That he went on to do so anyway and then contacted Mr Oag with what the hearing officer accepted had essentially been a demand for payment in return for the right to continue use of the JUICED UP name strongly pointed, in the hearing officer’s view, to bad faith.
The hearing officer was particularly struck by evidence that Mr Blanchard had approached another businessman, Callum Johnson, who was operating under the name JUICELING, claiming that he represented a company that owned the JUICELING trademark and threatening to sue for infringement unless Mr Johnson paid for a license or purchased the mark. An undercover reporter followed up with Mr Blanchard on Mr Johnson’s behalf, and, in communicating with him, Mr Blanchard was said to have demanded some £65,000 for transfer of the JUICELING trademark registration, failing which he was said to have threatened to sue Mr Johnson for “millions in damages”. The hearing officer considered that this evidence gave an indication of the type of conduct in which Mr Blanchard was prepared to engage and lent support to Mr Oag’s version of events. The hearing officer was satisfied that Mr Blanchard’s conduct fell short of the standards of acceptable commercial behaviour observed by reasonable and experienced businesspeople, and found that Never Give Up Ltd. had filed its application for the series of JUICED UP marks in bad faith.
On appeal, the Appointed Person reviewed the facts and the hearing officer’s decision and found no error. In her view, there was sufficient evidence to support, on the balance of probabilities, both the findings in relation to passing off and bad faith.
This decision is specific to its facts, as bad faith cases often are. However, it does highlight that businesses who begin trading but do not protect their marks promptly, or adequately, can find themselves on a sticky wicket if an opportunist files first and seeks to make hay out of the rights thus acquired.
In such cases, as in this case, an earlier user may have a basis for opposing the grant of the rights or applying to invalidate them on the basis of rights acquired through use or on the basis of bad faith. However, the onus of proof is on the challenger, and the costs awarded by the UK-IPO to successful parties are not designed to reimburse but rather only to contribute to a portion of a party’s costs. Thus trademark-squatters, although fortunately not common, have the potential to wield a very menacing stick. Had Mr Oag applied to register his mark at the outset in both Classes 32 and 43, there would have been no room for Mr Blanchard’s later filing and financial demand.
The same might be said of the owner of the JUICELING business referred to in evidence. For most businesses of any size, early trademark protection is already firmly on the radar screen. The risks posed simply by legitimate competitors are too great to risk to justify waiting when so much rides on the launch of a preferred new brand. For businesses of all sizes though, the risks highlighted in this case show there is always good reason to ensure that brands are protected early, and properly. Essentially, businesses whose value rests on their brands cannot afford to wait.