Appeal partially allowed in battle over BUDWEISER

United Kingdom

In Budejovicky Budvar Narodni Podnik v Anheuser-Busch Inc ([2008] EWHC 263 (Ch), February 19 2008), the Chancery Division of the High Court of England and Wales has partially allowed Budejovicky Budvar Narodni Podnik's appeal in the ongoing dispute between Budvar and Anheuser-Busch Inc over the use of the BUDWEISER and BUD marks.

In November 1976 Budvar applied to register the trademark BUD for goods in Class 32 of the Nice Classification. Anheuser opposed the application. After protracted litigation (which found, among other things, that there was honest concurrent use by the two parties which each had valid claims, neither being exclusively entitled to the goodwill attaching to BUDWEISER or BUD), Anheuser successfully registered BUD as well.

On June 28 1989 Budvar applied to register the mark BUDWEISER for "beer, ale, porter and malt beverages". Anheuser opposed the application based on an earlier application of December 11 1979 for "beer, ale and porter". However, both marks were entered on the UK Trademarks Register on May 19 2000.

During the course of these events, the Trademarks Act 1938 was replaced by the Trademarks Act 1994. Section 48 of the new act includes a form of statutory limitation which provides, among other things, that where the proprietor of an earlier mark acquiesces for a continuous period of five years in the use of a registered trademark in the United Kingdom, "there shall cease to be any entitlement on the basis of the earlier mark to apply for a declaration that the registration of the later trademark is invalid". Section 6(1) of the new act defines an 'earlier trademark' as "a registered trademark… which has a date of application for registration earlier than that of the trademark in question". Accordingly, Anheuser's registration of BUDWEISER was an earlier trademark in comparison with that of Budvar for the purposes of the act, even though both were actually registered on the same day.

On May 18 2005 (four years and 364 days after registration of BUDWEISER by Budvar), Anheuser applied for Budvar's registration to be declared invalid. The timing of the application was such that, although it was issued within the five-year time limit, it was not served on Budvar until after the five-year period had expired. Budvar was therefore barred from making its own cross-application (under Section 42 of the act) seeking a declaration of invalidity of Anheuser's registration based on Budvar's earlier trademark BUD.

The decision came on appeal before the Chancery Division of the High Court. The court made it clear that the appeal was not about whether Anheuser could prevent Budvar from using the BUDWEISER mark to sell beer (although it stated that such a dispute would no doubt be heard another day). Rather, the court stated that the appeal was purely concerned with the issue of the registration of Budvar's mark.

Budvar accepted Anheuser's argument in essence, but claimed that it has certain defences. First, it stated that there had been no statutory acquiescence under Section 48 because Anheuser had acquiesced in Budvar's use for a continuous period of five years (that use not being confined simply to the period from registration, but being "use in the marketplace" itself). The court rejected this defence on the grounds that 'use' in this context relates to acquiescence in the use of a registered mark (see Sunrider Corporation v Vitasoy International Holdings Ltd [2007] EWHC 37 (Ch)).

Budvar also argued that there had been 'common law acquiescence' - namely, that Anheuser's conduct gave rise to an estoppel in Budvar's favour. Budvar argued that Anheuser waiting until the latest moment to serve its application (so that Budvar was out of time to make a cross-application) was tantamount to a representation that the right to apply for a declaration of invalidity would not be exercised. The court disagreed. It reasoned that estoppel by acquiescence preventing Anheuser from asserting its rights under the act (to which it had become entitled in May 2000) had not been established. The court also held that there had been no abuse of process.

However, the court had some sympathy for Budvar. Anheuser's application for a declaration of invalidity extended to the whole of Budvar's registration in respect of "beer, ale, porter and malt beverages" (even though its own registration related only to "beer, ale and porter"). The court held that the specification of Anheuser's earlier marks did not cover all of the specification of the mark in suit. It stated that "malt beverages" are not identical to "beer, ale and porter" and that one is not simply an alternative description of the other. The case thus fell within Section 5(2) of the act (which deals with relative grounds for refusing a registration), so that questions of similarity and confusion had to be determined. As Anheuser had filed no evidence directed to these questions, the court found that neither similarity nor confusion had been established on the evidence and that the case for declaring Budvar's registration of BUDWEISER invalid in relation to malt beverages had not been made out. The court thus allowed the appeal in part, only insofar as the declaration of invalidity extended to malt beverages.

It remains to be seen what the next instalment in this saga will be. As foreshadowed by the court itself, there will no doubt be further argument on the rights to use BUDWEISER and BUD in the United Kingdom.

Mark A Lubbock, Ashurst LLP, London

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