Poor conduct adversely affects claim for off-the-scale costs in infringement case

Parkit Systems Ltd (PSL) filed a UK trademark registration (3474705) on 12 March 2020 and registered for a logo covering “access control apparatus (Automatic-)” in Class 9 on 30 October 2020.

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Caption: Parkit Systems Ltd UK trademark

Park IT Solutions Limited (Park IT) applied to invalidate PSL’s trademark based on its earlier UK trademark registration for the word mark PARKIT, which it had registered in 2015 for goods and services in classes 9 and 39. Park IT sought to rely on:

  • a similarity between the marks and goods/services resulting in a likelihood of (and actual) confusion pursuant to Section 5(2)(b) of the UK Trademarks Act 1994;
  • unfair advantage of, and detriment to, the reputation and distinctive character of the PARKIT trademark under Section 5(3) of the act, as Park IT had been using the PARKIT mark since 2007 and the same had acquired a reputation;
  • passing off pursuant to Section 5(4)(a) of the act, as a result of goodwill in the PARKIT mark; and
  • bad faith pursuant to Section 3(6) of the act on the basis that PSL had, at the time of registering the mark: applied for an overly broad range of goods (Sky v Skykick relied on); had no intention (or means) of using it; ought to have known about the applicant and its PARKIT mark; and filed the contested mark in a manner inconsistent with honest practices because, having been contacted by the applicant, it failed to engage with it.   

PSL denied all grounds, and countered with evidence of use of its mark since 2015. It also claimed that, because Park IT supplies technology to allow management and parking at airports, and PSL manufactures and installs barriers, there was no possible likelihood of confusion. PSL filed a counterstatement putting Park IT to proof of use.  

The UKIPO’s decision

Dealing with proof of use first, the hearing officer concluded that Park IT’s evidence was sufficient to prove its use (as well as use by its parent and sister companies) of the PARKIT mark since 2005 in connection with its goods and services, including those relating to “the software, systems and services related to providing, managing and operating secure storage of vehicles, parking systems, parking equipment and facilities”.

For the same reasons, the hearing officer considered that the evidence submitted by Park IT, which showed significant annual revenue and promotion spend figures across its group of companies, was sufficient for a finding of enhanced distinctiveness, reputation and goodwill in the PARKIT mark in respect of the same goods.

The hearing officer concluded that the marks were similar to a moderate to high degree, with the dominant element of the PARKIT mark common to both registrations. She also deemed the goods and services similar to a high degree, as “software” was potentially required to enable PSL’s goods to work and “hardware” (being defined as “mechanical equipment, components etc.”) would, in the context of airport access control apparatus, include PSL’s registered goods. The hearing officer disagreed with PSL’s assessment that the segment of the market that each party had so far decided to operate in was relevant to her analysis, and confirmed that the assessment of a likelihood of confusion must consider notional use of the competing specifications as they are applied for and/or registered.

For the reasons outlined above, Park IT succeeded in respect of its 5(2)(b) likelihood of confusion ground. Further, as Park IT had proven reputation, and a likelihood of confusion was established, unfair advantage was considered to be inevitable and Park IT also succeeded on the 5(3) reputation and unfair advantage ground. With goodwill established, given the hearing officer’s finding about likelihood of confusion, there was “no hesitation” in concluding that there would be misrepresentation and damage in relation to identical goods, and its 5(4)(a) passing off ground for invalidation was also successful.

However, Park IT had failed to satisfy the requirements of showing a “dishonest state of mind or intention” and “conduct which departs from accepted standards of ethical behaviour or honest commercial and business practices” for the purpose of the Section 3(6) bad faith ground. The hearing officer considered that PSL had been pursuing a legitimate objective in seeking to protect the mark that it had used for a number of years. Good faith is presumed until the contrary is proven, and in this case, Park IT had failed to overcome that burden of proof. The hearing officer also considered the bad faith claim to have been undermined by a lack of evidence of PSL trying to extrapolate financial payment from Park IT in exchange of the contested mark.

Comment

The hearing officer’s analysis serves as a useful reminder that, if reputation, goodwill and a likelihood of confusion are successfully made out, an applicant will have good grounds to succeed in an invalidation/opposition action based on the Section 5(2), 5(3) and 5(4)(a) grounds, because unfair advantage and misrepresentation can be argued to naturally follow from confusion between marks, where the earlier mark has an attached reputation and goodwill.

The case also serves as a warning for those attempting to recover costs on an indemnity basis rather than according to the UKIPO’s usual set scale. The hearing officer rejected Park IT’s request for off-the-scale costs based on, among other reasons, its conduct in the proceedings.  Pointing to Park IT’s “very lengthy and repetitive” submissions, the hearing officer held that “if these submissions have unnecessarily increased the overall costs of these proceedings for the applicant [Park IT], I do not think the proprietor [PSL] should be held to be responsible (and pay) for it”, a warning to all that a party’s own conduct can adversely affect the ability to claim off-the-scale costs.


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