Injunction refused due to greater risk of injustice to defendants

United Kingdom
In Cowshed Products Ltd v Island Origins Ltd ([2010] EWHC 3357 (Ch), December 17 2010), the Chancery Division of the High Court of England and Wales has refused to grant an injunction restraining the defendants from using the brand Jersey Cow for a range of beauty and other products.

The court, applying the American Cyanamid ([1975] AC 513) principles, found that there was a triable issue, and that either party could suffer unquantifiable harm. As the position on the status quo was in dispute and unclear, the court followed the approach in John Walker & Sons v Rothmans International ([1978] FSR 357) and Management Publications v Blenheim Exhibitions ([1991] FSR 348), and considered the probability of the harm occurring, as well as the result on both the claimant and the defendants. The court found that there would be a real risk that the defendants’ business would be destroyed if an injunction was granted, but that the claimant would by no means be defeated without an injunction.

In 1998 a former cow shed at a hotel in Somerset was turned into a spa. A range of beauty products such as soap, shampoo, shower gel, lip balm, candles and fragrances later followed and were marketed under the umbrella mark COWSHED. A series of subsidiary 'cow plus' marks were then used for specific types of product. These subsidiary marks included LIPPY COW (for lip balm), KNACKERED COW (for products designed to uplift a tired user) and CHEEKY COW (for moisturiser). Claimant Cowshed Products Ltd now has around 30 marks registered in Class 3 of the Nice Classification (soaps, perfumery, essential oils, cosmetics and hair lotions), including CHEEKY COW, COW PAT, CURVY COW, DIRTY COW, DOZY COW, KNACKERED COW and LIPPY COW. Cowshed also registered the mark COW in Class 3. However, direct images of cows rarely feature in the Cowshed branding, save on their website. 

The court found that Cowshed was a very successful brand of luxury beauty and skin products.

The second and third defendants set up the company Island Origins Limited around March 2010, which trades as The Jersey Cow Company. Its products include toiletry products of a similar type as Cowshed’s, but include other items such as pottery. The range is intended to consist of Jersey products, and the Jersey Cow Company’s marketing was found to place a considerable emphasis on the Jersey element. Cows were also found to play an important part in their marketing efforts.

In July 2010 Island Origins registered the UK trademark THE JERSEY COW COMPANY in Class 3 and, in August of that year, it registered the domain name 'thejerseycowcompany.com', at which point it began trading over the internet. It is of relevance to the matter that the second and third defendants used to have a web design company and, in 2008, they worked successfully with Cowshed to redesign the Cowshed website. Cowshed placed strong reliance upon this.

Cowshed took the view that the defendants' activities amounted to trademark infringement under Sections 10(1), 10(2) and 10(3) of the Trademarks Act 1994, as well as passing off, and launched proceedings shortly after November 16 2010. Interim relief was sought because, according to Cowshed, the damage it would incur would be irreparable were the defendants to be allowed to continue to trade, and because the defendants would not be able to pay damages even if a financial assessment was made. Cowshed relied heavily on the argument that the defendants had deliberately set out to cause Cowshed harm and referred to the previous relationship between the parties, which, the court noted, amounted to an allegation of fraud. 

The defendants denied these allegations, arguing that:
  • the product ranges were in different sectors of a crowded market;
  • Jersey was the key concept behind their brand; and
  • were an injunction to be ordered, their business would be destroyed. 
In response to the claimant's reliance on its registered trademark COW, the defendants sought to revoke the mark for non-use under Section 46 of the act. As the court noted, while there was undoubtedly a bovine theme to the claimant's products, the word 'cow' did not appear in isolation.

The court first noted that one of the difficulties in applications for interim injunctions in cases of passing off and trademark infringement is that, in assessing the risk of damage pending trial, the court often has to assess the same likelihood of confusion question that goes to the merits of the underlying case. In this instance, the court found that both sides were making submissions which elided the merits of the underlying causes of action and risk of irreparable harm. As a result, the court suggested that it could decide the case on its merits there and then, but only if both parties agreed. The defendants were prepared to take this step as they said the most important matter for them was certainty; the claimant was not.

The court found that both sides had a good arguable case and that the case raised a triable issue on both sides. For the claimant, it found that a key part of the defendants’ brand was the element 'Jersey Cow' and, as such, there was a real possibility that a customer who encountered 'Jersey Cow' might think that it was an extension of the Cowshed range. However, it put its analysis specifically in terms of passing off, as a case of trademark infringement in relation to the various ‘cow plus’ marks was “potentially difficult territory”.

For the defendants, the court found that there was an arguable defence. The 'cow' referred to in the Cowshed products was found to be an allusion to the person who is going to use the product, whereas it was arguable that 'Jersey Cow' and the use of the image of a cow by the defendants did not have the same reference.

Further, the court found unquantifiable harm on both sides, but that the claimant’s case on the balance of this harm was weak. It found that it was very unlikely that the claimant would suffer serious irreparable harm before the matter came to trial (April/May 2011). It found that any dilution would be minor and temporary. In coming to this finding, the fact that the claimant appears to have been able to live with another toiletry brand The Pink Cow since 2009 was, according to the court, “telling”. 

The court, however, found that an injunction was likely to put the defendants out of business altogether.

Having found irreparable harm on both sides, the court noted that one approach to take would be to preserve the status quo. There was dispute over the status quo, and the court was not inclined to enter a mini-trial to resolve this. Following John Walker and Management Publications, it found that the course of action that would appear to involve the least risk of injustice was to refuse the injunction. In coming to this decision, the court relied upon its findings in relation to the balance of irreparable harm and that there was a real risk that the defendants’ business would be destroyed if it granted the injunction

This case shows the difficulty in applying the American Cyanamid principles to trademark and passing off cases. Such applications are not supposed to be a mini-trial, yet the court was assessing the merits of the case. The application for interim relief could have turned into a final hearing, had the claimant agreed to this proposal.

One should also note the importance that the court placed on the course of action that would involve the least risk of injustice. There was a real risk that an injunction would destroy the defendants’ business, but a low risk of harm to the claimant pending trial. Irrespective of the uncertainty in status quo, once it was found that both parties had a good arguable case, the decision not to grant the injunction would appear to flow naturally from the court’s finding on harm.

Robert Lundie Smith, McDermott Will & Emery UK LLP, London

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