News & Publications

Publications

1 May 2008

Token use does not demonstrate genuine use

In the last 12 months the Irish Trademarks Act 1996 has been amended for the first time and the Irish courts have issued an exceptional number of decisions – all of which translates into a more sophisticated legal environment for brand owners Ireland may be one of the smallest markets in the European Union, but it is also one of the most dynamic, leading many international companies to relocate their European headquarters there. But while the thriving Irish economy has been offering brand owners exciting opportunities for over a decade, the legal framework for trademarks appeared rather less sophisticated. Things have changed dramatically over the past 12 months.

Changes to trademark legislation

Major amendments to the Trademarks Act 1996 were brought in by the implementation, for the main part on December 11 2006, of the Patents (Amendment) Act 2006. Sections 37 to 45 of the act deal with the following issues:

Appeal period

The appeal period for decisions of the Irish Patents Office has been clarified. A conflict between the wording of the Trademarks Act and the general rules of court has been resolved in the wake of a High Court decision which considered the issue (*Procter & Gamble Company v Controller of Patents, Designs and Trademarks* [2003] IESC 35). The appeal deadline is now three months from the date of the decision or, where a written statement of the grounds for the decision has been sought, three months from the date on which the written statement is furnished.

Trademarks that have a reputation

Section 10(3) of the Trademarks Act, which deals with relative grounds for refusal of an application on the basis of an earlier mark that has a reputation in Ireland, has been amended to remove any reference to the type of goods or services. This brings Irish law into line with the ruling in *Davidoff v Gofkid* (Case C- 292/00), in which the European Court of Justice (ECJ) held that the same provision of the EU First Trademarks Directive (89/104/EEC) on which the Trademarks Act is based must be interpreted so as to include both identical or similar goods or services and dissimilar goods or services. This section can be invoked by the Irish Patents Office in an objection to an application or by a third party in an opposition. Section 14 of the Trademarks Act, dealing with infringements of registered trademarks where the earlier mark has a reputation in Ireland, has been amended in the same manner to delete any reference to the dissimilarity of the goods or services.

Powers of search and seizure regarding infringing goods

Section 25, dealing with the powers of entry and seizure of the *Garda Síochána* (the Irish police force), has been amended to bring it into line with the powers available under Irish copyright legislation. The power has been widened to cover open-air markets and the like, the powers of entry and seizure have been supplemented by a power of search, and the degree of force which can be used has been defined as “reasonable force where necessary”. The powers have been extended from merely seizing goods, materials or articles to:

• making an inventory or preparing other evidence of infringement or potential infringement;
• seizing anything which the police believes on reasonable grounds may be required to be used in evidence; and
• requiring any person found there to give his or her name and address.

The registered proprietor of the trademark or a designated representative may be included in the warrant and may be entitled to accompany and assist the police.

Registration of mergers

The definition of ‘registrable transactions’ has been expanded to include mergers which have been dealt with in recent years (arguably incorrectly) as a change of name of the proprietor. This amendment requires a separate commencement order and is not yet in force.

Priority

The right to claim priority has been extended to a successor in title of the original applicant.

TRIPs

Various amendments to the Trademarks Act have been made to implement parts of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). These principally relate to well-known trademarks, which now include trademarks for services and protection in respect of dissimilar goods or services which were not previously amenable to this protection. The protection provided to emblems, abbreviations and names of international organizations now extends to member states of the World Trade Organization, as well as those of the Paris Convention for the Protection of Industrial Property.

Misleading practices under the Consumer Protection Act 2007

The Consumer Protection Act 2007 has also been passed. It deals with misleading practices, including those likely to cause the average consumer to confuse a competitor’s product with the trader’s product or trademark.

The Consumer Protection Act 2007 prohibits misleading practices, which include those involving marketing or advertising and which are likely to cause the average consumer:

• to confuse a competitor’s product with the trader’s product, or a competitor’s trade name, trademark or other distinguishing feature or mark with that of the trader; and

• to make a transactional decision that the average consumer would not otherwise make (Sections 42(1) and 44).

Any person can seek a court order prohibiting the practice (Sections 67 and 71), while only an aggrieved consumer may file an action for damages, including exemplary damages. The aggrieved consumer’s action for damages is particularly far-reaching as it can be directed against any director, manager, secretary or other officer of the trader who authorized or consented to the practice. There is a presumption that directors and employees whose duties included making decisions that, to a significant extent, could have affected the management of the trader consented to the practice (Section 71(5)). The Consumer Protection Act 2007 also includes many measures that do not deal directly with trademarks, but could have an effect on trademark owners, such as a prohibition on misleading information which includes details of the nature of the product, or its geographical or commercial origin.

All provisions of the Consumer Protection Act 2007 came into effect on May 1 2007. The old Merchandise Marks Act and the Consumer Information Act 1978 were repealed.

Significant court decisions

Due to the high costs of litigation and the relatively small marketplace, Irish courts do not often play host to trademark battles. Therefore, to have had three decisions in the last 12 months or so dealing with important issues for trademarks is extraordinary.

*1-800-FLOWERS Case*

*Zockoll Group Ltd v Controller of Patents Designs and Trademarks* ([2006] IEHC 300, 17/10/2006, High Court, O’Sullivan J) concerned spill-over reputation and bad faith. Zockoll Group Ltd acquired rights to and licensed alpha-numeric telephone numbers that correspond to the names of products or services (eg, 0800 7586237, which corresponds on an alpha numeric telephone pad to 0800 PLUMBER). Zockoll obtained the numbers 1800 FLOWERS and 1800 FLORIST, and filed applications to register the marks 800 FLOWERS and 800 FLORIST. 1-800-Flowers.com Inc, which runs a large business in the United States under the mark 1-800-FLOWERS, filed an opposition on the basis of its US mark. It also claimed reputation in Ireland in the mark among Irish people (who made up a significant portion of its overseas sales) and the thousands of US citizens either resident in Ireland or on holiday there.

The case was decided under the now-repealed Trademarks Act 1963, the relevant section of which concerned whether there was a reasonable likelihood of causing deception or confusion among a substantial number of persons. The judge agreed with the Patents Office that tourists are not part of the resident population and should not be taken into account. The court also rejected references to the mark 1-800-FLOWERS in US television shows or the US media circulating in Ireland as irrelevant; the court held that such references would be perceived by Irish residents as being directed to someone else.

The court did take into account US citizens resident in Ireland, but found that even when combined with the small numbers of sales to Irish billing addresses, they were insufficient to constitute a significant number of persons. Thus, the Irish courts have still not endorsed the principle of spill-over reputation unless there is more than a *de minimis* level of customers in this jurisdiction.

1-800-Flowers also based its opposition on the contention that Zockoll did not have a present and definite intention to use the mark because at the time of filing, it was embroiled in a dispute with the Irish telephone system operator wherein its subscription to the numbers was discontinued. The judge noted that Zockoll had taken legal action to recover its rights to the numbers and that this supported an intention to use the marks. The Patents Office upheld the last ground of opposition – namely, the allegation that Zockoll must have known that there was a likelihood that:

• 1-800-Flowers would expand its operations into Ireland; and
• the application was intended to frustrate this legitimate business expansion in an unjustifiable manner.

In contrast, the court held that prior negotiations between the parties were irrelevant or at best cut both ways, as each party would have been alerted to the other’s intentions. The court concluded that Zockoll’s knowledge of 1-800-Flowers’s intention to enter the neighbouring UK market did not mean that Zockoll should have reasonably assumed an intention to expand into Ireland too or that it should have refrained from filing its application. Given that there was no evidence of an intention, imminent or otherwise, of 1-800-Flowers to enter the Irish market, the judge overturned the decision of the Patents Office on this point and rejected the opposition in its entirety.

Perhaps one of the most significant practical points to be taken from this decision relates to opposition practice as regards assertions of bad faith: “an allegation suggesting fraud or bad faith is one which should only be dealt with if fully and formally pleaded, and particularized and notified to the applicant in advance.” This is a departure from the general practice of including broad grounds of opposition in the notice of opposition, often including general allegations of bad faith and expanding on them only during the evidence or even at the oral hearing at the end of the proceedings. In light of this decision, Irish trademark practitioners would be well advised to provide full and detailed allegations of any bad faith at the earliest stages, perhaps even in the notice of opposition itself.

*ESSENSIS Case*

This case (*Compagnie Gervais Danone v Glanbia Foods Society Ltd* ([2007] IEHC 126, April 20 2007, High Court (Commercial), Finlay Geoghegan J)) involved a trademark infringement action against Glanbia Foods Society Ltd filed by Compagnie Gervais Danone. Danone objected to Glanbia’s used of the mark ESSENCE for fermented milk products on the basis of an Irish trademark registration for ESSENSIS in respect of the same goods. In its defence, Glanbia attacked Danone’s trademark registration on the basis of non-use. The mark ESSENSIS had been used in the relevant period, but the parties disputed the proper interpretation of that use. Danone produced a yoghurt product under the marks DANONE and BIO ACTIVIA (later changed to ACTIVIA). The mark ESSENSIS was used:

• on the packaging as part of the phrase “with BIFIDUS ESSENSIS® cultures”; and
• in a description of the product, as part of the statement that it was “the only product containing the natural culture BIFIDUS ESSENSIS®”.

At a later stage ESSENSIS was referred to as a culture unique to the product. Danone’s evidence asserted that BIFIDUS ESSENSIS was a brand name composed of the generic descriptor ‘BIFIDUS’ and the word ‘ESSENSIS’, which was registered as a trademark and which was used for a unique probiotic culture identified by Danone’s scientists for its unique benefits for digestive health.

The judge held as a matter of fact that the mark ESSENSIS was always used to designate an ingredient of the yoghurt – namely, a probiotic culture. The mark was registered not in respect of cultures, but only yoghurts and similar goods. The judge held that this was not genuine use “in relation to” yoghurts (the wording specified by the Irish Trademarks Act 1996). Although the use was not negligible, token or contrived, the court held that Danone’s use was not use in accordance with the essential function of a trademark – namely, use as a trademark in respect of the goods covered by the registration. The use of the mark to refer to the ingredient did not guarantee the identification of the origin of the yoghurt. This was because the use was unequivocally confined to referring to the ingredient rather than the yoghurt, either by the specific wording of the reference or by use of the word ‘with’ to indicate that it was an ingredient. The judge stated that the use must at a minimum be capable of being understood as referring to that product if it is to identify the origin of the product. The way the mark was used to identify the ingredient precluded it from being considered as use in relation to the yoghurt product itself. The judge distinguished the ECJ’s *Ansul Case* (C-40/01) on the basis that it dealt with spare parts that were integral to the fire extinguishers and after-sales services and that there was no indication that the use of the mark was precluded from being understood as referring to the fire extinguishers previously sold. This distinction would seem to be based on the specific wording used by Danone to indicate that ESSENSIS was a culture or ingredient, whereas the *Ansul Case* presumably involved no such specific wording. This could be seen as a fine distinction, given that the marks were actually used for ingredients and spare parts/after-sales services respectively and not on the products covered by the registration. Nonetheless, the judge is to be commended for resisting the urge to extend the approach in *Ansul* further into the nebulous area of genuine use as regards products that are outside the scope of the registration.

*AIRCOACH Case* The case of *Bus Eireann/Irish Bus v Controller of Patents Designs and Trademarks* ([2007] IEHC 221, 13/06/2007 High Court, Laffoy J) concerned a procedural matter. In an Irish opposition, the opponent has the first opportunity to file evidence; the applicant next has an opportunity to file further evidence and the opponent then has an opportunity to file evidence in reply. Any further evidence is at the discretion of the Patents Office. Applicant Bus Eireann/Irish Bus applied for permission to file further evidence on the basis that the last set of evidence filed by opponent Last Passive Ltd raised new issues of fact. The Patents Office allowed Bus Eireann to file two further statutory declarations, but refused Bus Eireann permission to file a third. Bus Eireann appealed this decision. Bus Eireann argued that Last Passive’s last set of evidence contained very serious allegations of unfair business practice (bad faith), which repeated and highlighted allegations made in earlier evidence. Bus Eireann submitted that it had assumed that Last Passive would withdraw these allegations once Bus Eireann’s evidence of pre-filing use of the mark AIR COACH had been submitted. As Last Passive had not withdrawn the allegations in this last set of evidence, Bus Eireann argued that it was imperative for it to submit further evidence to refute the allegations. The judge distinguished the position in this case, which concerned evidence at first instance, from cases where parties seek to introduce new evidence on appeal. She declined to formulate a rule of general application, but put forward some propositions as to relevant factors:

As the appeal concerned an alleged error in principle regarding the procedural rules, the court did not have to show the same level of deference to the decision of the Patents Office as would be the case where the decision concerned the substantive issue in the proceedings.

• An opponent, when filing its initial evidence in support of its opposition, cannot hold in reserve part of the factual material on which it intends to rely with a view to including it in its later evidence in reply. Otherwise, this could give the opponent a tactical advantage and could be unfair to the applicant. The same principle applies to the applicant. The judge endorsed the view of the Patents Office that an opposition is not a tactical battle between the parties in the evidence filing phase, with each side revealing just so much of its case as may be sufficient to cause the other to withdraw, keeping in reserve a trump card to play later in the game.
• The Trademark Rules must be given an interpretation that is consistent with the Irish Constitution, and they must be applied and the relevant procedures conducted in accordance with the principles of constitutional justice, including the right of a person whose good name is impugned to have a reasonable means of defending himself or herself, including the right to give rebutting evidence. Where there is a charge of bad faith, when considering a request to file further evidence, the primary consideration must be to ensure that the maligned person or legal entity is not deprived of the opportunity of filing evidence in response to this charge.
• The Trademark Rules on filing evidence are concerned with the filing of statements of fact before the controller, not statements of lay opinion, argument, comment, advocacy or submissions on the law. If an opponent files evidence in reply which strays beyond factual matters into areas such as comment, identification of gaps in the applicant’s evidence, repetition of elements of its earlier evidence, adding emphasis, using different language or raising rhetorical questions, a question may arise as to whether the balance of fairness could be tilted against the applicant if it is refused the opportunity to file further evidence on these points. The applicant’s entitlement to make submissions on the hearing or, where permitted, to cross-examine the opponent may not sufficiently redress this imbalance. The judge cautioned that allowing either side to stray beyond the parameters of filing evidence of fact may give rise to either a risk of unfairness or a difficulty in determining whether a particular statement is a mere comment or constitutes a new fact. The judge acknowledged that this may be at variance with the current practice of the Patents Office.

The Patents Office is entitled to take into account:

• whether the evidence could have been filed earlier;
• the explanation proffered for not doing so; and
• the nature of the objection to the mark.

Where the objection is grounded on an allegation of bad faith, the primary consideration should be whether the applicant for leave is afforded at least the minimum protection to defend his or her good name. The Patents Office should not attempt to assess the potential significance of the proposed evidence as this would constitute prejudgment.

This decision requires a new perspective on drafting evidence for Irish oppositions. Such evidence has often gone beyond strict statements of fact to include statements of opinion as to the similarity of marks, conjecture as to the motives of the applicant or discussion of the evidence of the other party. Following this decision, practitioners will have to take a strict approach to the drafting of evidence for fear of permitting scope for appeal.

Conclusion

The past year has seen the Irish legislature and the Irish courts refining the country’s trademark laws in line with the ‘state of the art’ internationally, to borrow a phrase from patents law. Innovative legislation has also been introduced in the context of consumer protection and misleading practices. At the same time, trademark practice and procedure have been considered in light of the country’s unique constitutional legal framework. The level of sophistication in the analysis of the issues in the court decisions is at least equal to that of courts in older jurisdictions, which often have the benefit of an extensive backcatalogue of precedent on the issues. Trademark law in Ireland is coming of age.

Niamh Hall, FRKelly

First Published in World Trademark Review November/December 2007