Background
In November 2020, ABP Technology issued proceedings against tech brand, Turtle Beach for trade mark infringement (ABP Technology Ltd v Voyetra Turtle Beach, Inc [2021] EWHC 3096 (Ch)).
The claimant, ABP owns two UK trade marks for STEALTH (word mark) and STEALTH VR (stylised font), for goods in Class 9 including “audio headsets for playing video games”. The trade marks 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 trade mark 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 trade mark infringement contrary to Section 10(1) and (2) of the Trade Marks Act 1994 (the “Act”). In its defence, TB pleaded honest concurrent use of the STEALTH mark (i.e. where two traders have co-existed, using identical or similar trade marks).
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 trade mark 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 trade mark 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 (i.e. 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 (i.e. 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 High Court
Dealing with the defence of honest concurrent use first, the presiding judge in the High Court, 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, Mr Justice Miles 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 (i.e. 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), Mr Justice Miles 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. He 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, Mr Justice Miles held that the acquisition of this may provide TB with an arguable defence to trade mark infringement and, as such, the related amendment to its defence was permissible.
However, he 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 (i.e. of ABP’s trade marks). This line of arguments was untenable given the wording of the Act and the associated amendments were not permitted.
The Court of Appeal
ABP appealed the High Court’s decision to allow the amendments on the basis that the application was deliberately brought late, without justification, in order to deprive ABP of the ability to apply to revoke the 1996 mark for non-use within the required three-month period and therefore had caused “irremediable prejudice”.
In response, TB argued that it acted appropriately because its amendments would be meaningless if ABP had the opportunity to revoke the 1996 mark. TB also noted that checking the trade mark register would have been a straightforward task for ABP to do which would have uncovered the 1996 mark.
The Court of Appeal noted that TB had attempted to take advantage of the process of civil justice itself. Upholding the decision to allow the amendments would be to endorse TB’s deliberate act of concealment. TB failed to explain or justify the lateness and in counsel submissions, TB accepted that the amendment was timed so that it would not “tip off” ABP to bring a revocation action.
It was decided that High Court had erred in its decision to allow the amendments as TB’s unjustified lateness in making the application to amend unduly prejudiced ABP. It was also held that it was irrelevant that ABP could have searched for and acquired the 1996 mark.
Commentary
It is always difficult to obtain early relief through summary judgment and in this case it is perhaps not surprising that the judge at first instance 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 trade mark protection before entering new markets.
While TB’s acquisition of an earlier right for the purposes defensive and offensive action appeared to be legitimate under the Trade Marks Act, the Court of Appeal’s decision to allow the appeal demonstrates that TB’s conduct was not compatible with the Civil Procedure Rules and, in particular, the overriding objective. It remains to be seen how the court will decide the case at trial. In the meantime, it serves as a useful reminder that, in the UK, litigation should be conducted with a “cards on the table – face up” approach.
The original article was written by Holly Webb and Chloe Perea Poole and first appeared on WTR Weekly, part of World Trade Mark Review, in December 2021. It has since been updated following the Court of Appeal’s decision to overturn the High Court.
For more information or if you have any questions, please contact Emily Roberts or Chloe Perea Poole, or your usual IP team contact.
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