Patents County Court reminds businesses not to turn blind eye to competitors’ earlier rights

In Frost Products Ltd v F C Frost Ltd ([2013] EWPCC 34, July 26 2013), the Patents County Court has rejected a claim for infringement of a Community trademark (CTM). The court held that the mark was invalid, finding that the claimant had acted in bad faith when filing the application and that the defendant had rights to sue the claimant for passing off.

In 2008 Frost Products Ltd (a Canadian corporation that began trading in 1929) filed a CTM application for the word mark FROST for washroom products. Frost Products had been trying to enter the UK market since the 1970s, but its actual sales in the United Kingdom to date were modest. In 2009 FC Frost Ltd (a UK family firm established in 1971) filed a total of eight UK trademark applications incorporating the word 'frost'. Like Frost Products, FC Frost also sells washroom products.

Frost Products contended that FC Frost infringed its FROST mark by using an identical mark for identical goods and, in the event that the goods or marks were not identical, that there was a likelihood of confusion amongst relevant consumers.

FC Frost contested the validity of the mark pursuant to Article 8(4) of the Community Trademark Regulation (207/2009). FC Frost claimed it could have prohibited the use of the name Frost in relation to the sale of washroom products on the basis of passing off in October 2008 (when Frost Products filed the application). The company also claimed under Article 51(1)(b) that the application had been filed in bad faith, given that Frost Products knew that FC Frost was an established trader in the United Kingdom.

The judge found that FC Frost had been trading in washroom products since 1971 and had built up substantial goodwill. Its use of the FROST sign was therefore of more than mere local significance within the meaning of Article 8(4); it was not restricted to the confines of Essex, where FC Frost was based. Many of the products sold by FC Frost had been used in iconic buildings, such as the Millennium Dome, the British Library and the Houses of Parliament. The judge held that FC Frost could have undoubtedly obtained a passing-off injunction against Frost Products in October 2008 to prohibit its use of the FROST sign in the course of trade of washroom products, which would cover at least the whole of the jurisdiction of England and Wales. Accordingly, Frost Products’ FROST mark was declared invalid under Article 8(4).

With regard to whether or not the registration of the mark was invalid for bad faith, the judge explained that bad faith generally implied or involved, but was not limited to, actual or constructive fraud. It could also include unfair practices involving a lack of any honest intention.  The factors that could be taken into account included:

• knowledge that a third party was using the sign in a member state, which could be inferred from length of use;
• the applicant’s intention, when the application was made, including the intention to prevent a third-party marketing a product, and the lack of intention to use the mark for itself; and
• the extent of the reputation enjoyed by a third party’s sign at the time of the application.

The judge found that Frost Products did not genuinely believe that it had a UK or European trade that it wanted to protect in 2008 when it applied to register FROST. He was quite sure that Frost Products had known about the washroom product business of FC Frost from “regular looks at their website over many years or deliberately turned a blind eye to it”, concluding that Frost Products had intended to try and prevent FC Frost from using its Frost trading name. Had Frost Products acted in good faith, it would have drawn the business of FC Frost to the attention of its trademark attorneys, who would have no doubt advised the company to seek trademark protection that did not include the United Kingdom. In the opinion of the judge, the failure to do so was down to the intention of Frost Products to have a platform to “aggressively” promote its business in the United Kingdom. Accordingly, the judge also declared the FROST mark invalid on the ground that Frost Products had filed the application in bad faith.

Even if the mark had been found valid, the judge would have rejected the claims that Frost Products was entitled to prevent FC Frost from using the name Frost under Article 12(a), on the ground that it had used its own name, Frost, in the course of its trade in washroom products prior to the date of Frost Products filing the application. He added that, had Frost Products’ mark been valid, he would not have found FC Frost guilty of Article 9(1)(b) infringement, as “the possibility of confusion both ways was absolutely clear on the evidence, and from a cursory inspection of the two companies’ websites”.

This judgment acts as a reminder for anyone contemplating making UK or CTM applications to not “turn a blind eye” to competitors, otherwise the applicant may later face a bad-faith claim. In this particular case, although Frost Products had been first in terms of filing and obtaining registered trademark rights, their claims of infringement lacked substance because they failed to pay proper attention to the pre-existing rights of FC Frost. 

Désirée Fields, McDermott Will & Emery UK LLP, London