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EMI and Starbucks gets frothy over their NOW trade marks

Oct 19, 2012

A recent Court of Appeal decision is good for infringers and lawyers (and infringing lawyers), but bad for business.   Starbucks (actually not the coffee people but part of a substantial Hong Kong-based group of broadcasting, media and telecommunications companies - and we wont let that get in the way of some coffee puns) sued BskyB for infringement of its registered trade mark NOW in relation to BskyB’s new television service under the name NOW TV.  EMI  also joined in the fun, by suing BSkyB for infringement of its separate NOW trade mark registration.     Both Starbucks and EMI’s trade mark registrations were community-wide; they were Community Trade Marks (CTMs) covering the whole of the EU.   The question of a stay   In both cases, BskyB cunningly managed to lodge actions at the European Trade Mark Office (OHIM) alleging invalidity of both CTMs before either Starbucks or EMI could start proceedings in the High Court of England and Wales.  This raised the issue that both court actions could be stayed until the OHIM proceedings had reached their conclusion.  This was a significant issue, because OHIM proceedings can take as much as 5-10 years to reach their conclusion.   Starbucks and EMI could overcome a stay if they could prove there were “special grounds” for such a stay not to apply.  However, exactly what was meant by special grounds was not clear from the European Trade Mark Regulation.   The Court of Appeal has now provided some clearer guidelines as to what the test of “special grounds” means in practice.   In essence, the Court of Appeal held that it will be very difficult to argue that special grounds apply (and therefore that a stay should not apply if the application for invalidity comes before the start of infringement proceedings).  The Court of Appeal said that the fact that OHIM cases can take up to around 10 years to conclude themselves did not constitute special grounds.  However, in the BskyB aspect of the proceedings, the Court of Appeal did hold that there was sufficient commercial urgency in this particular case to allow the claim to proceed. In other words, this commercial urgency outweighed the other concerns the Court had (such as allowing an infringement claim to reach an inconsistent decision with that of OHIM).   How urgent is urgent enough?   As is normally the case, these types of cases ultimately turn on their specific facts.  Indeed, what the Court leaves open is the level of urgency in any particular case that will be enough to constitute “special grounds”.  The Court stated that the urgency should be “exceptional”.   However, the rather uneasy feeling one is left with after reading the Court’s judgment is that everything, bar exceptionally urgent cases involving large blue-chip companies, will struggle to be seen as sufficiently urgent. This leaves many valid CTM infringement cases vulnerable to up to 10 year delays.   In our view, such a situation is far from ideal.  For many companies, having to wait 5-10 years to deal with an infringement will defeat the object of trade mark protection in the first place, as many brands have a shelf life of less than 10 years.   How can businesses protect themselves against this decision?   For the vigilant and well-prepared, the pernicious effects of this decision upon CTMs can potentially be avoided by the following actions:  
  1. Consider applying for national trade marks for your key brands, in additional or as an alternative to CTMs, rather than just relying on a CTM.  National trade mark registrations may well be safer from being stayed when you come to try and enforce them.
  2. Consider issuing a protective claim form before warning an infringer.  This may prevent the issue arising at all.  This is somewhat counter-intuitive for many litigators, who are now taught to try and talk settlement before running to court, but in circumstances such as these, early court action may well be a good idea.
  Specialist advice should be taken to make sure that either or both of the above potentially protective actions are effective.  Unfortunately, both of the above suggested actions will add an additional layer of cost to protecting trade marks on a European level.  However, the alternative may be much more painful.   As we say, this development is good for lawyers and infringers, bad for brand-owning businesses...   If you would like advice on any aspect of trade mark law, then please get in touch with one of our intellectual property specialists on 020 7234 0200, contact@waterfront.law or via Twitter @uklaw.