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3 June 2024

UK Court of Appeal cleans up the Budweiser: divergence from the EUIPO on the law of acquiescence

The doctrine of acquiescence

The doctrine of acquiescence is a general equitable legal principle whereby a party that knowingly delays bringing a claim may later lose their right to bring the said claim. Specifically in relation to trade mark law, the doctrine has been incorporated into statute under section 48(1) of the Trade Marks Act 1994, which states that:

“Where the proprietor of an earlier trade mark or other earlier right has acquiesced for a continuous period of five years in the use of a registered trade mark in the United Kingdom, being aware of that use, there shall cease to be any entitlement on the basis of that earlier trade mark or other right—

(a) to apply for a declaration that the registration of the later trade mark is invalid, or

(b) to oppose the use of the later trade mark in relation to the goods or services in relation to which it has been so used, unless the registration of the later trade mark was applied for in bad faith.

Effectively, the above statute fixes the delayed period (the acquiesced act) to 5 years. Should the owner of an earlier registered trade mark delay taking action for 5 years, it will be barred from bringing a cancellation action against a later registered trade mark, or bringing a claim of trade mark infringement against the use of this later registered trade mark.

The leading case on acquiescence is the Court of Justice of the European Union (CJEU) Budvar[1] 2011 decision, which related to a dispute between competing beers using the same Budweiser trade mark. The ruling provided clear guidance on when the 5-year period should start: a 2-pronged test of when the claimant has knowledge that the later mark is in use and knowledge that the trade mark has been registered.

Brexit

Being a 2011 decision, at a time when the UK was still part of the EU, the above decision was binding on all the UK national courts. Fast forward a decade or so, soon after the UK’s departure from the EU, provisions from the European Union (Withdrawal) Act 2018 allowed for EU law and CJEU precedents from the UK’s time within the EU to be put on the UK statute books as “retained EU law” and afforded some senior courts the powers[2] to depart from the retained EU law.

The recent Court of Appeal case of Industrial Cleaning Equipment v Intelligent Clean Equipment[3] is an example of a senior UK court utilising the Withdrawal Act to depart from EU IP case law.

Background of the case

The dispute related to Industrial Cleaning Equipment (the claimant) suing Intelligent Cleaning Equipment Holdings Co (the defendant) for trade mark infringement.

The matter of trade mark infringement was first tried in front of HHJ Melissa Clarke at the Intellectual Property Enterprise Court (IPEC). With the marks being very similar, the case turned on whether the claimant had acquiesced to the defendant’s mark.

The claimant had had knowledge of the defendant’s use since 2014 but was unaware that the defendant had also registered its mark in 2016 – the claimant only learned of this fact in 2019, during pre-action communications between the parties. The court, applying the 2-pronged conditions for the 5-year acquiescence period to begin, as obligated to do so under the Withdrawal Act 2018, concluded that the relevant 5-year period had only began in 2019. Accordingly, by the time the claimant started proceedings in 2021, the required 5-year period had not yet lapsed and the defence of acquiescence was therefore rejected.

The defendant went on to appeal the decision, with one of the issues being the conditions for the 5-year period to begin. The defendant recognised that this point of appeal would require the appellant court to depart from Budvar and encouraged the court to do so.

The Court of Appeal’s decision

On this point of issue, Arnold LJ noted that there were instances of differing opinions of Budvar from within the EU itself, in the form of European Union Intellectual Property Office (EUIPO) and General Court decisions that appear contrary to the Budvar decision. Indeed, as a result of one of these decisions[1], the EUIPO guidelines do not align with the Budvar CJEU decision. Arnold LJ went on to make a more natural reading of the EU Regulation wording and commented that if knowledge of registration was required, the wording would say as such.

In the Withdrawal Act 2018, only the more senior courts were given the powers to depart from EU retained law when it was “right to do so” (which is the threshold currently applied by the Supreme Court to depart from a lower court decision). Thus, unlike at the IPEC, the Court of Appeal did have the powers and exercised them accordingly for the noted reasons above.

In departing from Budvar, Arnold LJ concluded:

“the 5 year period starts to run when the proprietor of the earlier trade mark becomes aware of the use of the later trade mark and the later trade mark is in fact registered, whether or not the proprietor of the earlier trade mark is aware of the registration of the later trade mark”

Effectively, the above remarks by Arnold LJ mean that awareness of actual registration of a trade mark is no longer relevant. Consequently, the 2-pronged conditions for the 5-year acquiescence period to begin as set by Budvar no longer applies to the UK going forward.

In the case itself, applying the new test meant that 2016 (the date of registration of the defendant’s mark) and not 2019 (the date the claimant learnt of registration of the defendant’s mark) was now the correct date for the start of the 5-year period. In practice, this did not help the defendant; when the claimant issued its claim form in 2021, it was within the last few days of the available 5-year period, meaning that the acquiescence defence was still rejected.

Conclusion

The Court of Appeal’s decision is interesting on two fronts. Firstly, it shows the Court’s willingness to depart from EU retained law. Multi-jurisdictional trade mark owners need to be aware of the subtle differences now at play between the legal regimes operating across the EU and the UK. It is interesting to note that one of the reasons the Court of Appeal departed from EU retained law was the inconsistent acquiescence decisions already in the EU. It may be the case that the CJEU will also reconsider its position and re-aligns itself with the UK’s conditions.

Secondly, the decision shows that UK trade mark owners can no longer rely on their lack of awareness of the registration of a trade mark in use to argue that the 5-year period for acquiescence has not yet started. Again, it is interesting to note that Arnold LJ cited this situation as one of the reasons for departing from Budvar, as opined in paragraph 75 of the judgement:

“requiring knowledge of the registration of the later trade mark would give the proprietor of the earlier trade mark a perverse incentive not to consult the register in order to delay time running.”

Unnecessary delays in bringing a claim have historically been frowned upon by the courts. This is understandable since such delays further entrench each parties contested positions and damages end up being exacerbated when the claim is finally issued. The recent Court of Appeal’s decision is consistent with this line of thinking and sends a clear signal that the courts want trade mark owners to be proactive and diligent where there are instances of possible infringement; especially when one considers that the Trade Mark Register can be easily monitored. This decision shows how important it is that trade mark owners have a trade mark watch in place, allowing them to be notified as soon as a third party applies for the registration of a conflicting mark.

On a final note, which may be of more interest to legal practitioners, the Retained EU Law (Revocation and Reform) Act 2023 is now in force and was brought in to distance itself from the Withdrawal Act 2018. As a result, “Retained” EU law is now “assimilated” EU law, and the Act gives wider powers for some of the UK senior courts to depart from EU case law.  If this Act were in place at the time of the first instance IPEC case, the IPEC would still not have had the powers to depart from EU law, but it is interesting to note that there is a provision in the Act for a fast-track procedure whereby a lower court (such as the IPEC) could have referred the matter to a more senior court without the need for appeal.

[1] Cristanini v Ghibli SpA Case R 1299/2007-2

[1] Budějovický Budvar v Anheuser-Busch 2011 C 482/09

[2] s6(4) European Union (Withdrawal) Act 2018

[3] Industrial Cleaning Equipment (Southampton) Ltd v Intelligent Cleaning Equipment Holdings Co Ltd 2023 EWCA

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