Omega saga: opposition proceedings in breach of co-existence agreement

United Kingdom

In Omega Engineering Inc v Omega SA (Omega AG) (Omega Ltd) ([2012] EWHC 3440 (Ch), November 30 2012), the High Court has upheld a decision of the UK Intellectual Property Office (IPO) that Omega SA was in breach of a 1984 co-existence agreement by opposing Omega Engineering Inc’s figurative OMEGA UK trademark application. The court also allowed in part Omega Engineering’s application for summary judgment for breach of contract, finding that its claim would succeed in respect of 11 of 18 trademarks applied for or registered by Omega SA.

Omega SA was a Swiss watch manufacturer founded in 1848. Omega Engineering, founded in 1962, manufactured products for the measurement and control of temperature. Although the businesses of the two companies were different, their respective products were somewhat similar. 

The parties entered into various co-existence agreements. Under a 1984 agreement, Omega SA undertook not to use, register or attempt to register any trademark or object to the use or registration of trademarks by Omega Engineering consisting, comprising or containing the word 'Omega' or the Greek letter Ω in respect of:

"…instruments and apparatus intended for a scientific or industrial application in measuring, signalling, checking, displaying or recording heat or temperature (including such having provision to record heat or temperature over a period of time and/or to display the time of day)."

Omega Engineering filed a UK application for a figurative OMEGA mark covering a number of goods in Class 9 of the Nice Classification, including “period timers… all for industrial and/or scientific purposes”. Following lengthy opposition proceedings by Omega SA, Omega Engineering applied to divide the application to segregate “period timers” from the remainder of the specification. In light of an earlier judgment regarding Omega SA’s oppositions relating to period timers, Omega Engineering amended the specification to read:

"period timers intended for a scientific or industrial application in measuring, signalling, checking, displaying, or recording heat or temperature (including such having provision to record heat or temperature over a period of time and/or display the time of day)."

Omega Engineering filed a revised counterstatement arguing that the goods were excluded goods under the 1984 agreement and that Omega SA was contractually precluded from opposing the application. 

The UK IPO allowed the amendment and found that Omega SA was precluded from opposing the application in relation to these goods under the 1984 agreement. On appeal, Omega SA argued that the amendment to the specification was impermissible because its effect was to cover goods not previously included and because it purported to restrict the specification of goods by reference to whether they possessed particular characteristics. In response, Omega Engineering commenced proceedings against Omega SA for breach of the 1984 agreement.

The court noted that the key difference between the parties was the proper interpretation of the term 'period timers'. Referring to Omega Engineering’s product model PTC1632 described as a “timer/temperature controller”, the court agreed with the hearing officer that such products could be described as “period timers” even though they had other functions. It did not accept that “period timers” were limited to products which measure only time, therefore Omega Engineering’s amendment did not constitute impermissible broadening of the specification but rather narrowed the specification down from single purpose goods and multipurpose goods to multipurpose goods only.

The court went on to consider whether it was acceptable to restrict the goods by reference to the absence of a “specific quality”. In this case, the limitation was expressed in positive terms whereas previous cases concerned limitations being expressed in negative terms. More importantly, the court did not consider that the limitation referred to whether the goods possessed particular characteristics. Rather, the limitation referred to the functions of the goods and was acceptable. 

The court held that, by opposing the application in relation to period timers and appealing against the decision, Omega SA was in breach of the 1984 agreement rejecting Omega SA’s argument that “the goods were not a true subset of the ‘excluded goods’  because ‘period timers’ measure time and time alone”.

Considering Omega Engineering’s claims that Omega SA had breached the 1984 agreement by applying for and registering various trademarks, the court concluded that Omega Engineering’s summary judgment application succeeded in relation to 11 out of 18 marks. However, it noted that Omega SA had a real prospect of successfully defending the claim in respect of the remaining marks concerned.

Various issues remain outstanding which were not disposed of at summary judgment, suggesting that the Omega saga is far from over. The message is clear: to avoid future costly and lengthy legal disputes, parties must ensure at the outset that co-existence agreements are clearly drafted to delineate each party’s respective rights and expectations and contemplate, as far as possible, the shape of things to come. 

Désirée Fields, McDermott Will & Emery UK LLP, London

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