In Red Bull GmbH vs Sun Mark Ltd and Sea Air & Land Forwarding, Chancery judge Richard Arnold considered whether an advertising slogan could infringe a registered trade mark. Also in play was whether it was bad faith to apply to register a trade mark without having a concrete intention to use it. Thomas Spanyol reports.
Topic: Brands
Who: Red Bull GMBH vs Sun Mark Ltd and Sea Air & Land Forwarding Ltd
Where: Chancery division of the High Court
When: 24 July 2012
Law stated as at: 1 August 2012
What happened:
Energy drink manufacturer Red Bull GmbH ("Red Bull") has recently been in court policing its brands.
A rival energy drink produced by Sun Mark Ltd and distributed by Sea Air & Land Forwarding Limited (the "defendants") named "Bullet" was the metaphorical red rag which prompted Red Bull's charge of IP infringement.
- The initial trade mark proceedings concluded that the opposition's use of its sign "BULLET" had infringed two of Red Bull's Community trademarks (or "CTMs") for the word "BULLIT". No real surprises here. The marks were clearly similar visually, aurally and conceptually and the goods in question were identical. In the circumstances it was held that there was a real likelihood of confusion, ergo infringement.
- Red Bull's Community trademark "RED BULL" had been infringed by the use of the strapline "NO BULL IN THIS CAN". The "RED BULL" brand had a substantial reputation in the UK and use of "BULL" as part of the strapline would call the RED BULL brand to the mind of the average consumer. In view of this linkage, unfair advantage was being taken of the RED BULL brand which was therefore infringed
- The defendants claimed that Red Bull had acted in bad faith by applying to register the BULLIT mark without any genuine intention of using it.On this point the Court also held for Red Bull. An applicant for a trade mark registration should be presumed to file in good faith unless the contrary was proven, the Court found. Here there was far from sufficient evidence to displace this presumption. Although the Court found that at the time of filing their application (the relevant time for assessing whether the required "good faith" was present) Red Bull may not have had a concrete intention to use the brand, it had on the evidence clearly contemplated such use at some time in the future.
- Red Bull accordingly obtained an injunction restraining infringement of their trademarks throughout the EU by advertising and sale of the energy drink "Bullet".
Consideration of the order
Following this, the parties locked horns in the High Court over the following:
The defendants sought permission to appeal against the dismissal of its counterclaim that Red Bull's CTMs were in fact invalid. As such, the defendant argued for a stay of the injunction and order for delivery up in relation to the CTMs.
(1) pending this appeal, and
(2) pending determination of its application to revoke the ITMs for non-use.
- Red Bull had resisted a stay of proceedings and offered a cross-undertaking in damages if an injunction and delivery up were ordered.
- The defendants submitted that the cross-undertaking did not fully mitigate the prejudice it would suffer if the injunction and order for delivery up were to take effect immediately, but if ultimately the appeal against the dismissal of its counterclaim succeeded.
- In the same proceedings Red Bull also submitted.
(3) that the defendants should be made to display on its website and at its premises for six months a statement that it had infringed the ITMs.
Arnold J's decision
Arnold J held that the defendants were not entitled to a stay of the injunction and order for delivery up, either for situation (1) or (2).
Defendants lose on a stay pending the appeal to allow the counterclaim
Regarding (1), the general principle when deciding whether to grant a stay is the "balance of convenience" test, established by Minnesota Mining & Manufacturing Co v Johnson & Johnson Ltd (No.3) [1976] F.S.R. 139 and Virgin Atlantic Airways Ltd v Premium Aircraft Interiors Group [2009] EWCA Civ 1513.
In this case the balance of convenience was in Red Bull's favour. The harm to Red Bull from not being able to exploit its trademarks outweighed any detriment to the defendant because:
- the defendant's sales of their "Bullet" drink were primarily in export markets, so an injunction preventing UK sales would not constitute "irreparable harm";
- the defendants would have to change their marketing materials in any event, as they were not appealing the finding of infringement regarding the Community Trademark "RED BULL"; and
- the defendants had at least one other established trade mark it could use in the UK.
Defendants lose on a stay pending a hypothetical decision on the counterclaim by the Court of Appeal
Regarding (2), Arnold J felt that the defendant's conduct also ruled out a stay during the period of the counterclaim regarding the non-use of the CTMs (if this appeal were permitted). The defendants could have amended the counterclaim to attack Red Bull's non-use of the CTM one year earlier than it did, and both sides could have prepared for trial on that basis. The defendants had failed to do this and its subsequent exposure to an injunction was therefore "largely of its own making".
But defendant doesn't need to announce the decision at their premises (only across the world wide web)
On Red Bull's submission ((3), above), Arnold J decided that the defendant's obligation to publicise the decision turned on the interpretation of the policy underlying Directive 2004/48 (Directive on the on the enforcement of intellectual property rights) Article 15. This reads as follows:
"Member States shall ensure that, in legal proceedings instituted for infringement of an intellectual property right, the judicial authorities may order, at the request of the applicant and at the expense of the infringer, appropriate measures for the dissemination of the information concerning the decision, including displaying the decision and publishing it in full or in part. Member States may provide for other additional publicity measures which are appropriate to the particular circumstances, including prominent advertising."
Arnold J felt that a correct interpretation of this dictated that the defendant was required to display a statement regarding infringement of the CTMs on all the websites under its control with a hyperlink to the judgement. However, this Directive did not extend to the publication of a statement at the defendant's premises.
Despite this moment of leniency, given the relative public impact of a website post as opposed to a sign in the window, this must have been cold comfort to the defendant.
Why this matters:
- A reminder that stays will be granted on a balance of convenience basis.
- In cases of IP infringement, if an injunction only blocks use of IP in a jurisdiction where the affected party has limited commercial exposure, this is likely to count against the affected party in the balance of convenience test.
- Clear confirmation that a five word marketing strapline which incorporates just one word of a two word registered trade mark may be capable of infringing the registration.
- The presumption that a brand owner applies to register his trade mark with a good faith intention to use it means that those challenging the validity of the registration for bad faith face a daunting prospect. They have to prove a negative in the form of a clear lack of intention to use. Finally, the penalty for a party of having to announce that it has infringed someone else's IP under Directive 2004/48/EC does not extend to displaying a statement to that effect at the party's premises.
