FIRECRAFT decision - two remedies for the price of one?

United Kingdom

In Evans v Focal Point Fires Plc ([2009] EWHC 2784 (Ch), November 10 2009), the Chancery Division of the High Court of England and Wales has issued a decision that could fundamentally alter the relationship between proceedings before the UK Intellectual Property Office (IPO) and those before the courts.

The claimants had used the mark FIRECRAFT since 1991 in relation to fireplaces and fire surrounds. In 2000 the defendant, Focal Point Fires Plc, filed an application to register the mark FIRECRAFT in the United Kingdom. The mark was registered later that year and Focal Point began trading under the name Firecraft in relation to gas and electric fires in 2001.

The claimants filed an invalidity action under Section 5(4)(a) of the Trademarks Act 1994 on the basis of their passing off rights. Allan James, one of the IPO’s most senior hearing officers, heard the matter and concluded that the claimants had a valid claim for passing off at the time of application. Focal Point's mark was held to be invalid and the proceedings concluded. Critically, Focal Point did not elect to appeal this decision.

The claimants also brought passing off proceedings in the High Court and applied for summary judgment, claiming that since they had already proved passing off in the IPO proceedings, they did not need to prove it again - only the question of remedies was outstanding.

The court agreed. It considered that when a tribunal’s decision has become final, an issue estoppel arises “as regards not merely the matter which it was required to adjudicate on, but every other matter which it was necessary for it to decide in order to make the decision”. Furthermore, since the basis of the invalidity action was whether there was a valid claim for passing off at the time of filing, the hearing officer had decided on a cause of action and also given rise to a cause of action estoppel. Finally, since the claimants had already been put to unrecoverable costs in fighting the invalidity action, it would be an abuse of process to force the claimants to incur the same costs again in the passing off action.

Controversially, the court distinguished the Court of Appeal's judgment in Special Effects Ltd v L'Oréal SA ([2007] EWCA Civ 1), in which it was found that no estoppel was created by a final opposition decision, on the grounds that Special Effects Ltd had dealt with opposition rather than invalidity proceedings.

If this decision is an accurate representation of the law, there will be far-reaching consequences. Businesses cannot afford to take a ‘low priority’ approach to IPO proceedings, since allowing an adverse decision to stand can effectively tie the parties’ hands in later infringement or passing off proceedings. Conversely, the decision might suggest that substantive issues relating to passing off or likelihood of confusion can be dealt with more swiftly and economically in IPO proceedings, reserving more expensive court actions for shorter proceedings relating solely to remedies. However, given that the PO examines issues with an eye to validity - and not use, which a court will generally examine in more depth - this would be a dangerous tactic.

By opposing applications before registration, rights owners can avoid risk of an estoppel altogether. The dispute in these proceedings could have been avoided if the claimants had opposed Focal Point's application in 2000, and thus discouraged the rebranding before Focal Point started using the mark.

It will be interesting to see whether Focal Point appeals this summary judgment and what the Court of Appeal has to say on the issue. Unless appealed, the decision remains persuasive but not binding; how far the courts will be prepared to follow the High Court's lead is a question for future cases.

Hastings Guise, Field Fisher Waterhouse LLP, London

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