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UNITARY PATENT

In 2012 Member States and the European Parliament agreed on the "patent package" - a legislative initiative consisting of two...

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To Stay or Not to Stay

Legal proceedings in IP matters are sometimes brought in order that parties have some form of commercial certainty that they are free to operate without attack from a third party. In particular, parties may well "clear" the trade mark register of problematic marks prior to using a later mark, perhaps by way of invalidity or nonuse cancellation actions.

This process is entirely normal, and works well in isolation. However, when invalidity or non-use cancellation actions are brought as part of a defence against potential infringement proceedings, then difficult decisions may need to be taken by the courts as to the order in which the various actions will be considered.

Here, in addition to the desire to have commercial certainty regarding freedom to operate, the courts have to consider whether to stay one action in order to allow another to be considered (thus potentially delaying the second action, but perhaps ensuring legal consistency between the decisions), or whether to allow both actions to proceed at the same time (thus potentially allowing both actions to proceed quickly, but at the risk of conflicting decisions in the cases).

The question of when to stay CTM infringement proceedings was considered recently by the Court of Appeal in the case of Starbucks (HK) Ltd v British Sky Broadcasting Group plc & Ors (1) and EMI (IP) Limited & Ors v British Sky Broadcasting Group plc and Anor (2) [2012] EWCA Civ 1201. In both cases, the claimant (Starbucks and EMI) had taken issue with Sky’s announcement that it was intending to launch a catch-up television service called NOW TV. Starbucks and EMI both felt that this mark infringed their respective marks either consisting of or containing the element NOW, and threatened infringement proceedings.

Sky countered by applying before OHIM to cancel or invalidate the marks upon which the infringement proceedings were threatened.

The initial question to be answered in each of the infringement proceedings, which were brought in the English High Court, was whether the infringement proceedings should be stayed pending the outcome of each of the invalidity and cancellation proceedings launched by Sky at OHIM.

Interestingly, the High Court reached different decisions in the two cases. In the proceedings in the EMI case, a stay was granted, and in the Starbucks proceedings, the stay was refused.

On appeal, the Court of Appeal was therefore required to decide on the scope of Article 104(1) of the CTMR and, in particular, the circumstances in which infringement proceedings should be allowed to proceed notwithstanding the fact that this could result in inconsistent legal decisions.

Article 104(1) has a clear policy objective of the avoidance of inconsistent decisions by OHIM and the national courts. This is particularly important, bearing in mind the fact that OHIM is able to adjudicate on invalidity and cancellation actions, but is not able to give decisions in infringement actions. By contrast, Community Trade Mark Courts are able to adjudicate on infringement and invalidity/cancellation actions, but can only hear the latter two counterclaims in infringement proceedings. The presumption in favour of a stay is a strong one, and the factors which may be taken into consideration when deciding whether to proceed with a stay are limited.

Circumstances Where a Stay Will Not Be Ordered

The Court of Appeal confirmed that the factors influencing whether or not a stay will be ordered only concern the factual circumstances specific to the given case.

This may include particular urgency (although not a "general need of business to know where it stands"). The fact that an invalidity application before OHIM may have been made on a reactive basis is not considered sufficiently relevant. The question of whether there is "particular urgency" was relevant in the Starbucks decision. Here, the judge found that the speed with which Sky was intending to its catch-up television service was a relevant consideration, and the stay was therefore refused. A similar reasoning was considered in the EMI case where it was found that, due to EMI’s slowness in launching its own television channel, there was no urgency, and so the stay could be maintained.

Comment

There are no hard and fast rules relating to the factors which will persuade a national court not to grant a stay of proceedings, and even the question of "urgency" is not concrete – as we have seen from these two cases, the relative facts of each case and the activities of the parties will all have to be taken into consideration when deciding whether a stay is possible.

In view of the strong presumption in favour of a stay of infringement proceedings where related proceedings are pending before OHIM, it does, however, appear that on receiving a threat of infringement proceedings based on CTMs, the alleged infringer should always consider filing invalidity or cancellation actions at OHIM against the marks upon which the infringement proceedings are to be based. The filing of the OHIM actions may delay the progress of any infringement proceedings that are then issued and create leverage for the defendant in settlement negotiations. How then should a potential claimant act? It appears that if the claimant follows all relevant requirements of the CPR as it relates to pre-action correspondence, then he or she may well find an invalidity or cancellation action filed against its marks, and any laterfiled infringement proceedings are likely to be stayed. Bearing in mind the delays which can occur in OHIM contentious proceedings and the length of the appeal route, this could mean that infringement proceedings could be delayed for some five to ten years while the invalidity or cancellation action is decided.

Perhaps then a potential claimant should consider issuing proceedings, but not serving them on a potential defendant, and then writing an initial letter before claim to the alleged infringer. This would mean that the English courts would be considered to have been initially seised of the proceedings, and any cancellation or invalidity actions brought at OHIM would not take priority.