Is ‘evergreening’ abuse of the trade mark system?

About the authors: 

Robert Cumming: Robert is a partner, dual-qualified trade mark attorney and solicitor, and manages large international portfolios and complex multi-jurisdictional disputes for market-leading businesses.

Robert’s expertise lies in the strategic positioning of a brand. His experience managing international trade mark portfolios and complex cross-border litigation, complements his background working on large corporate transactions. 

Lisa Thomson is a trainee trade mark attorney. Lisa works with a wide range of clients, from start-ups to SMEs, all the way through to large household names in a number of different sectors.

 

Bad faith

What constitutes bad faith in the context of filing a trade mark application has been the subject of many legal cases over the last twenty years. The latest to explore the outer limits of the law is Lidl v Tesco ([2022] EWHC 1434 (Ch) and [2022] EWCA Civ 1433).

The dispute between the supermarket giants began when Lidl alleged trade mark infringement, passing off and copyright and infringement by Tesco for the use of a yellow circle on a blue background (shown below).

It is not in dispute that Tesco has not used the sign on its own, it has only used the sign with the words Clubcard Prices within a yellow circle. It is common ground that Lidl has never used the wordless mark in the UK in the form in which it is registered i.e. on its own and without the word LIDL, and has filed repeat filings for the same mark. 

Tesco’s signs:

Lidl’s trade marks: 

Tesco counterclaimed for invalidity on the grounds of bad faith. It argued:

  1. The wordless mark has never been used in the UK in the 27 years since it was first registered i.e. without the Lidl logo and, therefore, it was a “legal artifice” merely registered to be used as a “weapon” rather than to indicate origin;
  2. Lidl has sought to “evergreen” its rights in the wordless mark by filing duplicate applications to refresh the grace period in an attempt to avoid the obligation to demonstrate genuine use.

 

Lidl sought to strike out Tesco’s allegations of bad faith on the grounds that it was “hopeless”.

The question was therefore whether Tesco’s allegations had a real prospect of success. The High Court found that it did not[1]. Tesco appealed.

 

 

The law on bad faith

The law of bad faith has been explored in myriad cases over the last 12 years or so, leading to Sky plc v SkyKick UK Ltd[2] and Hasbro Inc. v European Union Intellectual Property Office[3] (the latter being acknowledged as persuasive authority despite being non-binding as it was after IP Completion Day[4]).

The Court of Appeal, led by Lord Justice Arnold disagreed with the High Court and held[5] that Tesco’s argument had a “real prospect of success” and that it should be allowed to form part of the trial which is due to take place in February 2023.

Arnold LJ found that one purpose of the law on bad faith was to prevent abuse of the trade mark registration system, and so it should not be restrictively interpreted. He noted that Lidl is presumed to have acted in good faith unless proven otherwise and that an allegation is serious and so must be distinctly pleaded.

The key question to be decided at trial is whether Lidl’s use of the Mark with Text constitutes use of the Wordless Mark in a form which does not alter the distinctive character of the Wordless Mark[6].

 

 

Comment

Evergreening is in the spotlight at the moment. This case will not be the last to explore an allegation of abuse of the trade mark system. Businesses should be alive to the risks of relying on repeat registrations in infringement proceedings unless there is strong commercial justification for the overlap.

[1] [2022] EWHC 1434 (Ch)

[2] [2021] EWCA Civ 1121 and Case C-371/18

[3] Case T-663/19

[4] Brexit for IP law basically. IP Completion Day occurred on 31 December 2020.

[5] [2022] EWCA Civ 1433

[6] as per Specsavers International Healthcare Ltd v Asda Stores Ltd and Specsavers International Healthcare Ltd v Asda Stores Ltd [2014] EWCA Civ 1294, Case C-252/12

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