A stealthy avoidance of summary judgment at the UK High Court

In November 2020, ABP Technology issued proceedings against tech brand, Turtle Beach for trademark infringement (ABP Technology Ltd v Voyetra Turtle Beach, Inc [2021] EWHC 3096 (Ch)). In what turned out to be a complex case, the judge took the view that the court should be given the opportunity to hear the full evidence at trial. 

Background

The claimant, ABP owns two UK trademarks for STEALTH (word mark) and STEALTH VR (stylised font), for goods in Class 9 including “audio headsets for playing video games”. The trademarks were registered on 6 February 2017 and 24 March 2020 respectively. ABP’s predecessor had used the sign STEALTH from mid-2014.

The defendants, Voyetra Turtle Beach Inc and Turtle Beach Europe Limited (collectively TB) have, since August/October 2014, also used the sign STEALTH in the United Kingdom in relation to gaming headsets. In March 2018, they had attempted to register STEALTH as a trademark in respect of, “headsets for use with computers; headphones”, among other things. ABP successfully opposed the application in a dispute between the parties at the UKIPO later that year. 

In November 2020, ABP issued proceedings against TB for trademark infringement contrary to Section 10(1) and (2) of the Trademarks Act 1994 (the “Act”). In its defence, TB pleaded honest concurrent use of the STEALTH mark (ie, where two traders have co-existed, using identical or similar trademarks).

The parties’ applications

ABP applied for summary judgment on the basis that TB did not have a realistic prospect of successfully defending the claim. In particular, it argued that TB’s defence of honest concurrent use lacked reality or conviction. The present case was a straightforward trademark dispute which, by virtue of the UKIPO proceedings, ABP had won. Even if there had been a period of co-existence, it was short lived and insufficient to support a claim for honest concurrent use. 

During the course of the proceedings, in January 2021, TB acquired ownership of a trademark for the word STEALTH, which had been registered in Class 9 for goods including “[h]i-fi apparatus, instruments and loudspeakers” in May 1996. The acquisition involved a third-party agent purchasing (and then subsequently licensing) the 1996 mark to TB for the three months preceding the transfer of ownership to TB. TB subsequently sought to amend its pleadings to deploy the 1996 mark defensively and offensively (ie, as a defence to the infringement claim, but also to invalidate ABP’s marks and seek to counterclaim ABP’s infringement of the 1996 mark).

ABP argued that the licence (and subsequent assignment) had been a deliberate strategy to avoid revocation of the mark under Section 46 of the Act (ie, for five years’ non-use) by allowing TB to side-step the three-month limitation in Section 46(3). In response, TB argued that it had acted lawfully within the terms of the Act and had no obligation to disclose its commercial plans to license and/or acquire the 1996 mark.

The decision

Dealing with the defence of honest concurrent use first, the presiding judge, Mr Justice Miles, was not satisfied that TB lacked a realistic prospect of successfully defending the claim. In considering the various arguments and, in particular, the principles set out by Lewison J in Easyair, he considered that the court would benefit from fuller evidence (including evidence regarding the perception of consumers and the full history of the parties’ businesses/relationship) before this point was decided. However, he agreed with TB that there was no minimum period before honest co-existence may be found.

In relation to TB’s application to amend its defence and counterclaim, the judge made the following findings.

ABP’s argument that TB’s defence and counterclaim (as amended) had no realistic prospect of success because TB’s use of the sign STEALTH was not within the specification of the 1996 mark (ie, gaming headsets were not within the scope of “hi-fi apparatus”) was not one that could be appropriately assessed summarily, and a presiding court should have the benefit of further evidence in this regard.

In response to ABP’s argument that TB’s proposed amendments would be prejudicial to it (both in terms of timing and in denying it the ability to apply to invalidate the 1996 mark upon acquisition), the judge held that TB’s actions in acquiring the 1996 mark were lawful and did not amount to an abuse of process. He agreed with TB that it was not obliged to disclose its commercial plans to license and/or acquire the 1996 mark to ABP. The judge commented that it was open to ABP (or indeed any other third party) to have acquired the 1996 mark or to have applied to have it invalidated.

Contrary to ABP’s assertions, based on its findings in relation to the 1996 mark, the judge held that the acquisition of this may provide TB with an arguable defence to trademark infringement and, as such, the related amendment to its defence was permissible.

However, the judge did not agree with TB’s arguments to the effect that the acquisition of the 1996 mark merely regularised the existing de facto state of affairs and supported its defence of honest concurrent use and its invalidation action (ie, of ABP’s trademarks). This line of arguments was untenable given the wording of the Act and the associated amendments were not permitted.

Commentary

It is always difficult to obtain early relief through summary judgment and in this quite complex case it is perhaps not surprising that the judge took the view that the court should be given the opportunity to hear the full evidence at trial. The facts of the case are somewhat unusual, in that it involves two separate entities, launching the same or similar products, with the same or similar brand names, at the same or similar time. However, with increased globalisation and the rise of e-commerce, this scenario is not uncommon and demonstrates the need to obtain clearance advice and secure trademark protection before entering a new market. It remains to be seen how the court will decide the case at trial, but the acquisition of an earlier right by TB for the purposes defensive and offensive action is a strategy that has certainly paid off so far.


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