Strand, London, WC2A 2LL
B e f o r e :
| SPECIAL EFFECTS LTD
||Claimant and First Part 20 Defendant
|- and -
L'ORÉAL (UK) LTD
Defendant and Part 20 Claimants
|- and -
|SPECIAL EFFECTS (A FIRM)
(a partnership of JENIFER ANN JONES and DAVID CHARLES JONES)
|Second Part 20 Defendants
Mr Henry Carr QC and Miss Jacqueline Reid (instructed by Baker & McKenzie) for the Defendants
Hearing dates: 28th February, 1st and 2nd March 2006
Crown Copyright ©
The Chancellor :
(1) Whether either or both Defendant(s) is/are precluded by cause of action estoppel, issue estoppel, or abuse of process from challenging the validity of the Claimant's registered trade mark No. 2,237,923 on some or all of the grounds relied upon by them;
(2) Whether either or both Defendant(s) is/are precluded by cause of action estoppel, issue estoppel, or abuse of process from alleging use of the marks complained of herein before the application for the said registered trade mark (a) as part of the basis for a defence under section 11(3) of the Trade Marks Act 1994; (b) as part of the basis for a counterclaim for passing off;
(3) Whether the United Kingdom or England and Wales is capable of being a particular locality for the purposes of section 11(3) of the Trade Marks Act 1994;
(4) Whether, in the event that the Claimant is successful on the preliminary issues above (excluding (3) above), paragraph 14 of the Defence and Counterclaim must necessarily be struck out in consequence; and
(5) On the assumption (for the purpose of this issue only) that the Defendants can establish the facts to establish a case in passing off (as pleaded in the Defence and Counterclaim herein), should the claim under paragraph 14 of the Defence be struck out/summary judgment given in relation thereto due to the fact that the period of five years following the date of completion of the registration procedures of United Kingdom Trade Mark No 2 237 923 has not yet lapsed.
In addition Peter Smith J ordered that there be determined at the same time the claimant's application that:
(6) the Defendants' defence under Article 6(1) of the European Convention on Human Rights be struck out as having no reasonable prospect of success, or alternatively that summary judgement against the Defendants be given in relation to the said allegation.
(a) the sign is not capable of distinguishing goods or services of one undertaking from those of another (s.3(1)(a)),
(b) the mark is devoid of any distinctive character (s.3(1)(b)),
(c) the mark consists exclusively of signs which serve, in trade, to designate characteristics of the relevant goods or services, such as kind, quantity, purpose, value or geographical origin (s.3(1)(c)),
(d) customary signs (s.3(1)(d)).
Though these grounds overlap they are treated separately. S.3(2) excludes shapes of various descriptions. S.3(3)(b) prohibits registration of a mark "of such a nature as to deceive the public" and s.3(4) excludes marks the use of which is prohibited in the UK by any rule of law.
(1) The words SPECIAL EFFECTS when used in connection with cosmetics would be recognised by the public as connoting make-up which produced a special effect - as in films and television. As such it would not be capable of distinguishing the goods of one undertaking from those of another and would offend against s.3(1)(a).
(2) The mark applied for suggests that the products to which it is to be applied will produce a special effect. Accordingly the mark is laudatory and not distinctive. Further if the products do not produce such an effect the public will be deceived as to the purpose of the product. For these reasons registration would be contrary to s.3(1)(a) and s.3(3)(b).
(3) Since September 1995 the Defendants use in the UK of the letters FX in connection with their hair products has generated substantial reputation and goodwill in the letters FX. They have also used their trade mark in the form SPECIAL FX. Accordingly registration of SPECIAL EFFECTS is precluded by s.5(4)(a) because the use of such mark is liable to be prevented by the Defendants passing off claims based on its reputation in the letters FX.
(4) The Defendants' marks and the goods to which they are applied and the mark for which the Claimant sought registration and the goods and services to which it was to be applied are similar. Consequently the mark SPECIAL EFFECTS if registered would be likely to cause confusion. Such registration is therefore precluded by s.5(2)(b).
"In the absence of evidence showing that special effects is a generic term for a category of cosmetics or cosmetic services used in television, films etc the first of the opponents objections under s.3(1)(c) must be rejected."
In paragraph 21 he added:
"...on the basis of the sparse material before me, my judgment is that the trade mark SPECIAL EFFECTS is not an indication which may serve, in trade, to designate the quality or intended purpose or other characteristics of the goods or services. The opponent's second objection under s.3(1)(c) therefore also fails."
"The likelihood of confusion must be assessed through a global comparison of all relevant factors. As I have already noted, it is common ground that there is no visual similarity between the trade marks. There is a limited degree of aural resemblance between the marks, but there is no evidence that aural similarity is exceptionally significant in this market. In these circumstances, my conclusion that any conceptual similarity between the trade marks would not be immediately apparent to the average consumer of cosmetics must inevitably lead to the conclusion that there is no likelihood of confusion between the respective trade marks, even when they are used for identical goods."
"I conclude that there is no established use of the trade mark SPECIAL FX prior to the relevant date. It follows that the ground of opposition under s.5(4)(a) must fail..."
"However, the additional evidence that your clients have produced to date is completely unsatisfactory. Our client requires your clients to properly substantiate their claim to a protectable right in SPECIAL FX sign."
The Claimant's solicitors then demanded disclosure of 9 categories of document. Correspondence in relation to those matters continued for some weeks. On 13th December 2004 the claimant's solicitors wrote contending that:
"Your client has failed to provide any meaningful new evidence or arguments (beyond those already rejected by the registry in opposition proceedings) in defence to our client's claim."
On 10th March 2005 the claimant's solicitors indicated that the Claimant had decided to issue proceedings. They reiterated that the Defendants had wholly failed to adduce any evidence in support of their contention that the Defendants had used the sign SPECIAL FX before the Joneses applied to register their mark. They repeated their contention that the proper forum for the determination of questions of registrability was the Registrar in opposition proceedings and that it would be an abuse of the process to seek to relitigate any such question in infringement proceedings. They relied on the then recently reported decision of Mr Richard Arnold QC sitting as a deputy High Court judge of the Chancery Division in Hormel Foods Corporation v Antilles Landscape Investments NV  EWHC 13 (Ch).
"13. In the premises the First Defendant is precluded from challenging the validity of the Claimant's said registered trade mark by virtue of:
(a) Cause of action estoppel arising from the said opposition proceedings.
(b) Issue estoppel arising from the said opposition proceedings.
(c) The doctrine of abuse of process. In all the circumstances it would be an abuse of process for the First Defendant to attack the validity of the Claimant's said registered trade mark again, on the same grounds as in the said opposition proceedings, or on related grounds, or on grounds available to the First Defendant at the time but not advanced.
14. The Second Defendant is also precluded from challenging the validity of the Claimant's said registered trade mark. The reasons applicable to the First Defendant set out above are binding on the Second Defendant because its interest in the SPECIAL FX range of products is the same or very similar to the First Defendant's, and because of the close corporate relationship between the Defendants. In all the circumstances, the aforesaid estoppels are binding on the conscience of the Second Defendant, and the Second Defendant is a privy of the First Defendant for these purposes."
(1) the causes of action are not identical,
(2) the decision in the opposition proceedings was not final,
(3) there was no issue in the opposition proceedings relating to the validity of the claimant's mark nor any final decision thereon,
(4) the context in which comparable issues were raised in the opposition proceedings is materially different,
(5) the practice and procedure of opposition proceedings is materially different so that it is not an abuse of the process to seek to relitigate similar issues in defence of a claim of infringement.
In addition the Defendants claim that the Second Defendant was not a party to the opposition proceedings and is not a 'privy' of the first defendant. The Defendants contend that the attempt to preclude the Second Defendant from reliance on the invalidity of the Claimant's mark as a defence to infringement proceedings is contrary to Article 6 ECHR.
Are either or both Defendants precluded by cause of action estoppel, issue estoppel, or abuse of process from challenging the validity of the Claimant's mark SPECIAL EFFECTS on some or all of the grounds relied upon by them?
(a) "It is appropriate to commence by noticing the distinction between cause of action estoppel and issue estoppel. Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment. The discovery of new factual material which could not have been found out by reasonable diligence for use in the earlier proceedings does not, according to the law of England, permit the latter to be reopened." [p.104D-E]
(b) "Cause of action estoppel extend also to points which might have been but were not raised and decided in the earlier proceedings for the purpose of establishing or negativing the existence of a cause of action." [p.104F-G]
(c) "Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to reopen that issue." [p.105D-E]
(d) "Issue estoppel, too, has been extended to cover not only the case where a particular point has been raised and specifically determined in the earlier proceedings, but also that where in the subsequent proceedings it is sought to raise a point which might have been but was not raised in the earlier." [p.106B]
(e) "There may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided being material which could not by reasonable diligence have been adduced in those proceedings." [p.109B]
"But Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in early proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice."
"Second, it seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase 'privity of interest . . . .'"
Lord Bingham of Cornhill observed that Mr Johnson made decisions and gave instructions on behalf of the claimant in the first action and could have, had he wished, joined his personal claim with that of his company.
"However this may be, the difference to which I have drawn attention is of critical importance. It is one thing to refuse to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which has not previously been adjudicated upon. This latter (though not the former) is prima facie a denial of the citizen's right of access to the court conferred by the common law and guaranteed by Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (Rome, 4th. November 1950). While, therefore, the doctrine of res judicata in all its branches may properly be regarded as a rule of substantive law, applicable in all save exceptional circumstances, the doctrine now under consideration can be no more than a procedural rule based on the need to protect the process of the Court from abuse and the defendant from oppression. In Brisbane City Council v. A.-G. for Queensland  AC 411 at p. 425 Lord Wilberforce, giving the advice of the Judicial Committee of the Privy Council, explained that the true basis of the rule in Henderson v Henderson is abuse of process and observed that it
". . . ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation.""
"Opposition proceedings are not true inter partes proceedings as Article 114 makes clear. The Opposition Division can examine facts of its own motion and is not restricted to the facts, evidence and arguments provided by the parties."
Later he noted
"Once granted, the patent becomes a patent of the chosen contracting state. It is the courts of that contracting state that have to decide infringement and revocation and any decision of the European Patent Office does not preclude the courts of the contracting state from deciding all issues of infringement and revocation."
"The decision of the Opposition Division, relied on as giving rise to an estoppel, concluded the opposition and once the appeal period had expired there was no possibility of the parties continuing with it. In that sense it was final. But as pointed out by Lord Herschell in Nouvion v Freeman (1890) l5 AC l that can be said of some interlocutory judgments. He said at page 9:
"It is obvious, therefore, that the mere fact that the judgment puts an end to and finally settles the controversy which arose in the particular proceedings, is not of itself sufficient to make it a final and conclusive judgment upon which an action may be maintained in the Courts of this country ...."
For an estoppel to arise the judgment of the earlier Court, in this case the decision of the Opposition Division of the European Patent Office, must finally and conclusively decide the validity of the patent. That it did not do. Validity is finally decided in revocation proceedings by the Courts of the Contracting States. It follows that no cause of action estoppel arises from the decision of the Opposition Division of the European Patent Office.
Issue estoppel can arise where a plea of res judicata cannot be established because the causes of action are not the same (see Thoday v Thoday (1964) P 181). But it cannot arise unless the judgment relied upon as giving rise to the estoppel was a final judgment. That being so, for the reasons already stated, no issue estoppel arises in this case."
I shall return to this case later in connection with the submission of the Defendants that the decision of the Registrar in this case was not final in the relevant sense either.
"Counsel for the Claimant accepted that a decision of the Registrar was capable of founding a plea of res judicata since it was a decision of a court of competent jurisdiction. In my judgment he was right to do so: see Spencer Bower, Turner & Handley, The Doctrine of Res Judicata (3rd ed.) at paragraphs 21-25. It may be noted that section 72(5) of the Patents Act 1977 provides that a decision of the Comptroller-General of Patents does not estop any party to civil proceedings in which infringement of a patent is alleged from alleging invalidity of the patent, whether or not any of the issues involved were decided in the decision. This provision would be unnecessary if such a decision was not capable of giving rise to a plea of res judicata. There is no equivalent provision in the 1994 Act."
"where invalidity is put in issue by way of defence, the defendant is asserting invalidity of the patent and in that sense advancing a cause of action."
He then referred again to the decision of the Court of Appeal in Coflexip SA v Stolt Offshore MS Ltd  FSR 34 and continued:
"In any event, the distinction adopted by the majority judgment in Coflexip v Stolt between cause of action estoppel and issue estoppel with regard to the other instances of infringement does not undermine the general point which emerges from this line of authority that, where a party has unsuccessfully challenged the validity of a patent or registered design, the judgment (or perhaps, more strictly, the order consequent on the judgment) creates a cause of action estoppel which prevents that party from subsequently challenging the validity of that patent or registered design again even upon different grounds (except, possibly, in the circumstances considered by Pumfrey J in Agilent v Waters)."
"(i) a person who attacks the validity of a patent or registered design is under a duty to put his full case in support of that attack at trial; and (ii) if he is unsuccessful, he will be barred by cause of action estoppel from attacking the validity of the patent or registered design in subsequent proceedings whether on the same or different grounds (except, possibly, in the circumstances identified by Pumfrey J). It appears that this is so even if he could not have discovered those different grounds by the exercise of reasonable diligence before the first trial, which may be thought somewhat harsh."
"95. As a matter of principle, however, I cannot see any reason why the law with regard to cause of action estoppel as it has been developed in the patents and registered design cases should not apply to trade marks. I am encouraged in this view by paragraph 168 of The Doctrine of Res Judicata, which treats Poulton v Adjustable Cover as being applicable to trade mark infringement actions. (For the avoidance of doubt, I should make it clear that I am not considering the position where a person who has unsuccessfully opposed the registration of a trade mark then applies for a declaration of invalidity.)
96. In the present case, the Claimant is attacking the validity of the Defendant's Mark after having unsuccessfully attacked the validity of the Defendant's Mark in the Registry proceedings. For the reasons given above, I consider that the Claimant is barred from doing so by cause of action estoppel notwithstanding the fact that it now relies upon different grounds."
"28.....The First Defendant carries on no business in the United Kingdom connected with the relevant goods at issue in these proceedings. The first defendant is the proprietor of various registered and unregistered trade marks which are relevant to the counterclaim in these proceedings.
29....The Second Defendant carries on business in the UK only. It is responsible for the distribution, marketing and sale of a wide range of beauty products in the UK. In carrying out these activities, the second defendant's only substantive business connection with the first defendant is that it is permitted to use certain trade marks owned by the first defendant in relation to the beauty products it trades in."
He goes on in paragraph 30 to emphasise that the two Defendants are distinct legal and economic entities such that the Second Defendant would not be obliged to comply with any directive from the First Defendant.
|Section 3||Paras 7 to 19||Paras 27(1)-(3)|
|Section 5(2)||Paras 25 to 39||Para 27(5)|
|Section 5(4)- FX||Para 43||Para 27(6)(a)-(d)|
|Section 5(4)- SPECIAL EFFECTS||Paras 44 to 52||Paras 27(6)(e)-(h)|
For the sake of completeness I note that the allegation made in paragraph 27(4) of the defence and counterclaim was abandoned by the Defendants in a letter from their solicitors dated 14th September 2005. As will be seen these conclusions largely dispose of the remaining preliminary or other issues.
Are either or both Defendants precluded by cause of action estoppel, issue estoppel, or abuse of process from alleging use of the marks complained of herein before the application for the said registered trade mark (a) as part of the basis for a defence under section 11(3) of the Trade Marks Act 1994; (b) as part of the basis for a counterclaim for passing off?
Are either or both Defendants precluded by cause of action estoppel, issue estoppel, or abuse of process from alleging use by them of SPECIAL FX before 30th June 2000 for the purpose of a defence under s.11(3) TMA or a counterclaim for passing off?
Is the United Kingdom or England and Wales capable of being a particular locality for the purposes of section 11(3) of the Trade Marks Act 1994?
"The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade an earlier right which only applies in a particular locality if that right is recognised by the laws of the member state in question and within the limits of the territory in which it is recognised."
This provision was given effect by s.11(3) TMA in the following form:
"A registered trade mark is not infringed by the use in the course of trade in a particular locality of an earlier right which applies only in that locality."
The section goes on to define an "earlier right".
If the Claimant is successful on the first and second preliminary issues, should paragraph 14 of the Defence and Counterclaim be struck out?
"46.(1) The registration of a trade mark may be revoked on any of the following grounds-
(a) that within the period of five years following the date of completion of the registration procedure it has not been put to genuine use in the United Kingdom, by the proprietor or with his consent, in relation to the goods or services for which it is registered and there are no proper reasons for non-use;"
"the claimant has not made any genuine use of the Mark in relation to goods....under class 3...and cannot lawfully do so within a period of five years from [25th October 2002]..."
If the Defendants can establish the facts to establish a case in passing off (as pleaded in the Defence and Counterclaim herein), should the claim under paragraph 14 of the Defence be struck out/summary judgment given in relation thereto due to the fact that the period of five years following the date of completion of the registration procedures of United Kingdom Trade Mark No 2 237 923 has not yet lapsed?
Should the Defendants' defence under Article 6(1) of the European Convention on Human Rights be struck out as having no reasonable prospect of success, or alternatively that summary judgement against the Defendants be given in relation to the said allegation?
"..the attempt by the claimant to preclude the Second Defendant from relying on invalidity of of the claimant's mark by way of defence to infringement proceedings is contrary to Article 6(1) European Convention on Human Rights."
I have dealt with and rejected this submission in paragraphs 51 and 56 above. As counsel for the Defendants submitted it is not a question of striking out a defence which would otherwise go to trial.
(1) both Defendants are precluded by cause of action estoppel and issue estoppel from relying on the allegations made by them in paragraphs 27(1)-(3), 27(5) and 27(6)(a)-(h) of their defence and counterclaim;
(2) both Defendants are precluded by issue estoppel from asserting use of the mark SPECIAL FX before 30th June 2000 whether for the purpose of their defence under s.11(3) or their counterclaim for passing off;
(3) paragraph 14 of the defence and counterclaim should be struck out on the ground of prematurity.