Court refuses to stay UK “unjustified threats” claim pending the outcome of EUIPO proceedings

In Crafts Group LLC V M/S Indeutsch International (2021, EWHC 3505, IPEC) the Intellectual Property Enterprise Court (IPEC) has refused a request to stay an “unjustified threats” claim in the United Kingdom pending the determination of the validity of one of the trademarks in dispute (which may have formed the basis of a defence to the action) by the EUIPO. The case clarifies that proceedings for unjustified threats in the United Kingdom fall outside the remit of the Article 132 of the EU Trademark Regulation (2017/1001) and is a reminder of the significance of the threats provisions in the United Kingdom. 

Background

The action concerned a long-running dispute relating to knitting needles between the claimant, Crafts, and two defendant Indian entities, together KnitPro. Crafts’ claim related to Amazon UK takedown notices issued by KnitPro against Crafts' Caspian wooden knitting needles in 2015. While it was not clear upon which of its registered trademarks KnitPro had relied (it had yet to submit its defence), it owned two registered trademarks including EU trademark 8884264 which was the subject of invalidity proceedings (commenced by Crafts’ predecessor) at the EUIPO.

In December 2021, shortly before the expiry of limitation, Crafts issued proceedings against KnitPro for unjustified threats of infringement of registered trademarks alleging, among other things, that KnitPro’s takedown notices had caused it substantial damage as Amazon UK had refused to relist Crafts' products. Unlike other jurisdictions, in the United Kingdom, a threat of infringement proceedings may be actionable by any person aggrieved by the threat under Section 21A of the Trademarks Act 1994.

In January and May 2021, Judge Hacon had given Crafts permission to serve the proceedings – and subsequently amended proceedings – out of the jurisdiction. In August 2021, KnitPro were served in India with re-amended versions of the claim form and particulars of claim and a response pack.  However, Crafts failed to include the applications for service out of the jurisdiction and the supporting witness statements. KnitPro acknowledged service and indicated their intention to contest jurisdiction.

KnitPro’s application

KnitPro subsequently applied to the court for an order setting aside the order for service out of the jurisdiction and/or a stay of the IPEC proceedings pending determination of the validity of the disputed Chevron mark by the EUIPO.

In respect of the first request, KnitPro argued that there had been “significant failures” in Crafts’ service (in particular, its failure to provide the applications and supporting statements), with the effect that the order should be set aside and Crafts’ claims be time-barred. However, Deputy High Court Judge Ian Karet gave the request short thrift, choosing instead to exercise the court’s powers to remedy Crafts’ error on the basis that it was the result of an accident, was neither serious nor significant, and had not caused KnitPro any disadvantage (it had been given copies prior to the hearing).

The court also rejected KnitPro’s arguments that Crafts’ failure to provide “full and frank disclosure” in relation to that application – due, in part, to some omissions in its recount of the history between the parties – should lead to the same conclusion. Although he recognised the evidence in support of service may have “mis-described matters”, this was by mistake and it was not relevant to the question of whether permission should be given to serve out of the jurisdiction.

In respect of its second request, Knit-Pro argued that, as (at least a portion of) the unjustified threats claims were issued before the United Kingdom’s exit from the European Union, they were "pending proceedings" within the meaning of the UK-EU Withdrawal Agreement (2019/C 384 I/01). KnitPro argued that they therefore fell to be decided in accordance with the regime governing related actions set out in Articles 124 and 132 of the EU Trademark Regulation. This warranted an automatic stay of the proceedings, which should be extended to the claims in their entirety pursuant to the court’s inherent case management powers.

Again, the court disagreed with KnitPro’s position. The unjustified threats action was not one of the actions listed under Article 124, which related to infringement and validity. As a result, Article 132 was not engaged and KnitPro’s application failed.

This conclusion avoided the court having to consider the thornier issue as to whether Schedule 2A(20) of the Trademarks Act, which relates to pending proceedings involving EU trademarks post-Brexit, disapplied Article 132 in circumstances where that exclusion appeared to be inconsistent with Article 67 of the Withdrawal Agreement in relation to jurisdiction, recognition and enforcement of judicial decisions. KnitPro had argued that the effect of Article 67 was that the provisions regarding jurisdiction of the EU Trademark Regulation continued in force and applied to the EUIPO invalidity proceedings, notwithstanding the wording of the Trademarks Act.

Comment

The case is helpful in clarifying that proceedings for unjustified threats in the United Kingdom fall outside the remit of the Article 132 of the EU Trademark Regulation. It also serves as a useful reminder to rights holders that takedown notices can have serious consequences for those against whom they are filed and result in costly litigation. Caution should be exercised when taking any action that may amount to a threat in the United Kingdom and local advice should be sought.


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