Nude/Strip cases bare all in the High Court

Topic: Brands

Who: Nude Brands Limited v Stella McCartney Limited & Ors/Strip Ltd v Strip Pte Ltd and Strip UK Ltd

When: August 2009

Where: High Court, England (Floyd J and Richards J)

Law stated as at: 30 September 2009

What happened:

The High Court has recently refused to grant Nude Brands Limited ("NBL") an interim injunction to prevent Stella McCartney Limited ("SML") from launching a perfume under the name STELLANUDE. Although NBL was able to persuade the Judge that its Community trade mark registration for the mark NUDE was prime facie valid, and that there was an arguable case of trade mark infringement, the injunction was not granted as the risk of irreparable harm to NBL's business or brand until trial was small. Equally, the likely damage to SML if an injunction were wrongly granted outweighed the damage to NBL if it were refused.

NBL's CTM registration for the mark NUDE covers various goods and services, including cosmetics and perfumery. NBL's product are marketed at high end consumers and, whilst it has yet to launch a perfume under the NUDE name, it intends to do so. SML, a fashion company, had been selling perfume products for sometime under the brand name STELLA (and variations thereof). NBL claimed that the marketing and sale of a perfume under the STELLANUDE name would infringe NBL's registered rights in the mark NUDE as the public would be confused and associate the later sign with the mark, contrary to Article 9(1)(b) of the CTM Regulation.

Aside from a brief discussion regarding SML's "lost" request to NBL for consent to use the STELLANUDE name, the Judge was asked to consider whether or not the CTM relied upon was prima facie valid (particularly in light of the mark's popularity in relation to beauty and perfumery products) and whether or not there was an infringement case to answer. In that regard NBL relied on the Medion v Thomson case, in which the European Court of Justice found that the composite sign THOMSON LIFE infringed the earlier mark LIFE as: "where the goods or services are identical there may be a likelihood of confusion on the part of the public where the contested sign is composed by just juxtaposing the company name of another party and a registered mark which has normal distinctiveness".

SML, on the other hand, argued that it was "inconceivable that anyone seeing STELLANUDE on the shelves as part of the SML range would be deceived into thinking that it is connected with NBL".

Judge considers both cases arguable and focuses on "balance of convenience"

The Judge found that the infringement argument and the defence were both arguable, the merits of the claim are not of themselves determinative and are a low hurdle to overcome at the interlocutory stage. It therefore fell to the Judge to consider the "balance of convenience" and consider (i) what harm NBL would suffer if the injunction were refused; and, (ii) the harm to SML if the injunction were granted. In particular he found that:

• there was only a small risk of confusion between the parties' respective products and therefore no evidence to suggest that there was a likelihood of association;
• the Claimant had no exclusivity over the mark NUDE – there were other products on the market under the NUDE name and the distinctiveness of NBL's brand probably owed more to the distinctive packaging and get-up than the name itself;
• NBL's plan to launch a perfume under the NUDE name was relatively distant and, if NBL were to be successful in obtaining an injunction, it would have removed SML from the market well in advance of that launch;
• it transpired that NBL had licensed Christian Dior to market a range of products under the NUDE name as part of a co-existence agreement. This indicated that NBL was unable to claim exclusivity over the mark in relation to those goods, or to prevent dilution as that co-existence agreement contained no quality control provisions; and
• there was no indication that SML would be unable to meet any damages award granted in NBL's favour.

Advocates wax lyrical in "Strip" case

Conversely, in a similar application for interim relief heard the very next day by David Richards J, an injunction was granted to prevent the launch of a "celebrity waxing and depilatory business" in London under the name STRIP.

The Claimant had applied to register a trade mark in respect of depilatory creams consisting of the word STRIP in stylised form but this was mired in opposition and invalidation proceedings started by the Defendants in this case. Therefore the Claimant relied on its passing off rights, having been able to demonstrate at least 4 years of trading under the name STRIP in London.

In contrast the Defendants, although they had a UK trade mark registered in respect of "depilatory hair removal services" in the form of a stylised form of STRIP CO-ED and had been operating under the names STRIP and STRIP CO-ED since 2002, their business had hitherto been confined to SE Asia and the Middle East, with its first UK business, slated to use the STRIP CO-ED brand in a London outlet, not yet trading.

The Defendants argued strenuously that no hair removal maker should be allowed to monopolise what was in context a thoroughly descriptive and non-distinctive mark. Richards J was not persuaded of this, however, and he accepted that there was a real prospect of damage to the Claimant if the injunction were not granted, and less so in respect of the Defendant if it were refused. Moreover, the fact that the Claimant was already trading in London under the name was critical in the Judge determining that more damage would be suffered by the Claimant should an injunction not be granted, than to allow the Defendant to launch and start trading, thereby generating confusion and its own goodwill, up to trial.

Why this matters:

The grant of an interim injunction is an entirely discretionary remedy and requires the Claimant to show that it has an arguable case on the facts, that it will be able to compensate the Defendant for any loss that it has suffered as a result of the injunction should the Claimant fail to succeed at trial, and that the "balance of convenience" favours a grant of the injunction.

In order to have a decent chance of preventing a competitor from launching a product under a similar or identical name, brand owners need to act quickly in seeking interim relief from the Court. As well as fulfilling the "expeditious" criterion of the American Cyanamid case, the damage caused to the Defendant by an interim injunction if the product has already launched will be far greater than if that product were prevented from being launched at all.

Merits rarely key in interim injunction cases

Normally when urgent injunctions are sought before trial, the Judge is rarely too concerned with the merits of the respective parties' cases, and more focussed on the damage each party will suffer as a result of the grant or not of the injunction.

However, in the NUDE case, the fact that customers were unlikely to be confused between SML's perfume products and the cosmetic and beauty products marketed by NBL was fundamental to Floyd J's decision not to grant the injunction. It is also clear that the widespread use of the word NUDE in respect of cosmetics and related products will undermine the distinctive nature of NBL's mark, but not necessarily its validity.

The NUDE case also demonstrates that brand owners need to be careful when settling trade mark opposition proceedings as any resulting settlement/co-existence agreement under which the parties agree to each other's use of the mark in question can be seen as allowing dilution, particularly in cases where quality control provisions are not included.

Potential Claimants seeking the Court's discretion in obtaining interim relief of this nature will need to provide compelling arguments that the balance of convenience favours the grant of an injunction. However, the STRIP case demonstrates that whatever the force of these arguments on both sides, taking action before your competitor's launch will often be key.