England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM THE REGISTRAR OF TRADE MARKS

		Royal Courts of Justice Strand, London, WC2A 2LL
		18 July 2008

Mr Justice Warren :

1. Following the handing-down of my judgment ( [2008] EWHC 881 (Ch) ), I have heard further argument on the form or order I should make, the timing of any application to the Court of Appeal for permission to appeal and costs.

Stay/suspension; jurisdiction

2. Prima facie, RF is entitled to declaratory relief to reflect my judgment, that is to say to a declaration that HH's Marks are invalid so far as concerns Class 8. It is accepted by Mr Arnold that there is no general discretion to refuse a declaration notwithstanding the use of the word "may" in section 47(1) TMA 1994 in the light of the reasoning of Neuberger J in Premier Brands UK Ltd v Typhoon Europe Ltd [2000] ETMR 1071. He nonetheless seeks suspension of the declaration pending decisions on the applications by HH to invalidate or revoke RF's own registrations of RF's Marks.
3. Mr Vanhegan accepts, that I have power to grant a stay, or at least to effect what amounts to a stay (for instance by delaying the grant of the declaration), of my decision pending appeal; but the power to do so is, according to him, to be found in CPR Part 52 concerning appeals. He submits that I have no other power to suspend the effect of my decision and, in particular, that I have no power to do so pending HH's invalidity/revocation applications. If he is wrong on that, he submits that I should decline to exercise that power. Mr Arnold submits both that I do have such a power and that I should exercise it by suspending the effect of the declaratory relief.
4. Mr Vanhegan draws a distinction between stay and suspension. In the present case, we are not concerned with a stay of proceedings in the sense of a postponement of the decision-making process. Rather, we are concerned with the postponement of the practical effect of any declaration, in particular the removal of HH's Marks from the register so far as concerns goods in class 8. There is a substantial and well-known body of case-law establishing the principles on which the court will grant a stay of an order pending appeal. I do not think I need to re-state the principles. But there can be no doubt that the court has a jurisdiction to order such a stay. Although Mr Vanhegan has referred me to CPR 52.7, that rule does not itself confer a jurisdiction to grant a stay but simply states that an appeal does not bring about an automatic stay. The jurisdiction to grant such a stay is, rather, part of the inherent jurisdiction of the court.
5. The court does not, however, have a general power to suspend the execution or enforcement of its judgments or orders. Mr Vanhegan relies on TC Trustees Ltd v JS Darwen (Successors) Ltd [1969] 2 QB 295 at 302 to establish the proposition that the court can stay execution only on grounds that are relevant to a stay; it does not extend to grounds which are properly matters of defence of law or relief in equity since these are matters which should be raised in the action itself. I do not consider that that case really assists Mr Vanhegan. In that case, summary judgment was obtained against the defendants. They had sought equitable relief in their affidavit for leave to defend but were unsuccessful. There was no ground or circumstance relevant to a stay of execution as distinct from the validity of the judgment. Indeed, the effect of the stay which had been granted by the judge was substantially to reverse the decision in favour of the plaintiff.
6. I will return to that decision in a moment. But before I do so, I mention the decision, relied on by Mr Arnold, of Lightman J in Second Sight Ltd v Novell UK Ltd [1995] RPC 423. In the section of his judgment under the heading "VI Stay" starting at p 434, Lightman J considered and answered a question:

"When a plaintiff has a prima facie right to damages and an injunction restraining infringement, but the defendant has an outstanding application for registration which will give rise to a backdated defence if successful, what course should the court adopt? The authorities show that the court may adopt any of three alternatives: (1) the court may grant a stay of the proceedings for infringement pending the outcome of the application for registration (as in James & Sons v. Wafer Razor Co. Ltd.); (2) the court may allow the case to proceed to trial and after judgment consider the grant of a suspension of any order made pending the outcome of the application (as in the Electrolux case); or (3) grant full relief at the time, but add a proviso to any injunction to the effect that nothing therein shall prejudice the right of the applicant to proceed with his application for registration and (if successful) to exercise any rights conferred by such registration (as in Berlei (UK Ltd) v Bali Brasserie Co. Inc [1970 ]R.P.C. 469 (Megarry J.) and [1972] R.P.C. 568 (Pennycuick J.))."

7. The second alternative (see further explaining Electrolux at lines 10 to 15 on p 434 of Lightman J's judgment) recognises the possibility of suspending any order made. It is true that on the facts of the case before him, Lightman J was actually concerned with a stay of proceedings and not with suspension of an order. But what he says there (see at lines 48 to 52 on p 434) rings equally true in relation to suspension:

"In the balancing exercise required of the interests of the parties, in the ordinary case the grave injustice of depriving a defendant of the opportunity to secure and invoke an absolute defence by a successful application for registration will be decisive: see James v. Wafer Razor Co. Ltd. (1932) 49 R.P.C. 597. But this will not be so in all cases, e.g. where the applicant cannot show that prior to the application for the stay he has done everything reasonable to speed the application: see Berlei (UK Ltd) v Bali Brasserie Co. Inc [1970] R.P.C. 469. The court may take into account the availability of an interlocutory injunction to protect the plaintiff in the interim period."

8. Returning to TC Trustees Ltd v JS Darwen (Successors) Ltd, the position there was entirely different from the position in the present case. In the present case, the issues of the invalidity and revocation of RF's Marks are subject to separate applications and did not form part of the subject matter of the application with which this appeal is concerned. Indeed, Registry practice effectively requires separate applications to be made. This is not, therefore, a case where invalidity should have been raised as a defence before Mr Foley.
9. HH did, however, attempt to protect its position. By the time the matter came before Mr Foley, HH had launched its invalidity/revocation applications and had applied for a stay of the application subject to this appeal pending the resolution of those other applications. The stay was sought on the basis that, if the invalidity/revocation applications succeeded, the ground of RF's own application to invalidate HH's Marks would fall away. That application was not dealt with by the Registry until the commencement of the hearing before Mr Foley. He refused the stay application. Everyone was present and prepared for the substantive hearing, which then proceeded. Mr Foley did not give his reasons for his decision in writing until the Decision.
10. If Mr Vanhegan is correct, what, then, should or could HH have done to protect its position? If it is suggested that HH should have insisted on appealing the refusal to grant a stay, that would have required certain procedural hoops to have been gone through which would all have taken time. Meanwhile, Mr Foley having refused the stay application in the first place, would have been unlikely to have granted a more limited stay pending appeal of his refusal to grant the stay sought. In case management terms, it would not have made sense for him to do so since everyone was ready to proceed. HH could have refused to participate, but it is difficult to see how that would have improved their position in any respect. It was obviously sensible to proceed.
11. Mr Vanhegan says that the present application to suspend declaratory relief is, in practical terms, the same application as was made to Mr Foley. I do not agree. Not only is it different in form (a suspension of an order in contrast with a stay of proceedings) it is different in its effect. Thus suppose that HH loses its invalidity/revocation applications. Subject to any appeal from my decision, RF will then know that HH's Marks are partially invalid. But if Mr Foley had granted a stay, RF's application to invalidate HH's Marks would still need to be heard, resulting in delay in a final decision.
12. He also says that HH has brought this problem on itself. If it had only made the application for stay of RF's applications earlier, as he says it should have done, the Registry would have given its decision much earlier. Quite possibly it would have granted a stay, but even if it would not have done so, an appeal could have been launched and a stay obtained pending appeal. The court should not strain to find a jurisdiction to suspend its declaration in order to dig HH out of hole which it has dug for itself. That may be so, but equally, if I find such a jurisdiction to exist without any strain, I should not decline to do so simply because HH might have been able to protect its position in a different way: that, if relevant at all, would go only to the exercise of the discretion.
13. Next, Mr Vanhegan submits that a declaration is complete in itself and requires no enforcement; I suppose that it should then follow that, since there is no need for enforcement, there is no scope for stay. In the case of a declaration having effect only between the parties, that may ordinarily be so. But even in such a case, the court must surely have, at least pending an appeal, a jurisdiction to prevent possibly irrevocable action being taken in reliance upon the declaration.
14. So far as concerns a declaration of invalidity or an order for revocation, it needs to be remembered that the declaration which RF is entitled to has an impact which goes far beyond the parties to this litigation. A registered trade mark is a property right enforceable against the world. A declaration of invalidity will result in an appropriate entry being made in the register which can be relied on by everyone and is effectively regarded as irreversible. It is not disputed that, pending an appeal, orders for revocation and declarations of invalidity are often suspended; certainly, there is a jurisdiction to do so. Thus, pending appeal against revocation or a declaration of invalidity, the mark can be left on the register and if the appeal is successful the successful appellant retains the same rights against the world as if the original order or declaration had not been made. In contrast, if the effect of the order were not suspended pending appeal, the appropriate entry would be made in the register and could be relied on by the world. If the appeal succeeded, the successful appellant might be able to obtain a new registration, but will, as a result of the declaration, have lost earlier property rights, a possibly lengthy period of filing time and, as Mr Arnold puts it, be exposed to reliance upon the declaration by third parties (in the present case both by RF and others).
15. Given that the jurisdiction exists pending appeal, I see no reason to doubt that the jurisdiction is available in other circumstances provided that it does not go beyond the boundaries explained in TC Trustees Ltd v JS Darwen (Successors) Ltd.
16. Mr Vanhegan suggests that RF's position could be protected by the Registrar being notified of the pending appeal/application for invalidity of RF's Marks coupled with a request not to make any entry in the meantime, thus, I suppose, making it unnecessary to invent a jurisdiction not previously thought to exist. I agree with Mr Arnold that that is a very unsatisfactory course. The Registrar would not be bound to agree with such request and, indeed, he might not know what to do when faced with a declaration by me that HH's Marks are (partially) invalid. Could he really ignore the order of the court simply because he is told of an appeal? An alternative course might be for me to make an order to the same effect, but that would be just the sort of suspension which Mr Vanhegan says I have no jurisdiction to make other than pending an appeal.
17. The upshot of all this is, in my judgment, the court does have the power to suspend the declaration to which RF is entitled in the manner contended for by Mr Arnold.

Stay/suspension; discretion

18. Should the power be exercised in the present case? Mr Vanhegan lists a number of factors which he says lead to the conclusion that there should not be a stay:

a. HH obtained the marks in 2000 knowing them to be invalid unless it established that the Sabatier mark was invalid or generic.

b. HH is guilty of gross delay in commencing its attack on the Sabatier marks until after the hearing of RF's application had been fixed (October 2006).

c. HH has failed to show the court that there is any merit in its attacks.

d. There is no material prejudice to HH in the HH Marks being invalidated as it has registration of its "Judge" and "Stellar" marks.

e. There is substantial material prejudice to RF in further delay – namely unjustified uncertainty in the market place leading to a risk of dilution of the distinctiveness of the Sabatier mark and inability to commence proceedings and recover damages for past acts of infringement committed by HH.

19. As to a., this is not an accurate summary of the position, nor is it the case that HH applied for the marks with its eyes wide open to the fact that they were confusingly similar to the Sabatier mark. HH submitted to the Registry that there was no likelihood of confusion because Sabatier was non-distinctive, an argument which was successful. But it could have argued that there was no likelihood of confusion in any case, for the reasons found by Mr Foley. It is true that I have held to the contrary, but it cannot be said that HH obtained its marks knowing that they were invalid unless it established the Sabatier mark was invalid or generic.
20. As to b., HH seeks to explain the delay by the time taken to gather evidence and says, in any case, that the Registry and RF were on notice of HH's intentions to apply to invalidate and seek a stay since 22 December 2005. I do not regard the delay in bringing these applications as so significant, by itself, as to justify refusing to grant a stay if I would otherwise do so. However, to the extent that this delay causes prejudice to RF, it falls to be taken into account in the balance. I do not overlook the comments of Lightman J which are included at the end of the citation set out in paragraph 7 above, commenting only that I do not consider that it was incumbent on HH to seek judicial review of the Registry's decisions in order to speed its applications.
21. While on the subject of delay, there are competing submissions about how long it will take for HH's applications to be heard. Mr Vanhegan worries about further delays of perhaps 2 ½ years; Mr Arnold sees no reason why a hearing should not take place this calendar year. There is no evidence before me about this although I should say I find Mr Vanhegan's estimate surprising. See also my observations in paragraph 30 at the end of this section of my judgment.
22. As to c., I am not in a position to form a view on the merits of HH's applications. I certainly am not prepared to decide that the applications are made other than bona fide that is to say with a genuine belief that there is a good arguable case for invalidity. As Mr Arnold points out, my own decision was based on the evidence before Mr Foley on RF's application; the evidence to be presented on HH's application is, I am told, significantly more extensive. It would be wholly disproportionate for HH to adduce all, or even significant parts of, that evidence on an application for a stay.
23. As to d., it does not follow that, because Sabatier is non-distinctive (on HH's case) that the composite Judge Sabatier and Stellar Sabatier gain their distinctiveness only from Judge and Stellar. The composite mark may have a distinctiveness of its own, a matter to be decided on the basis of evidence.
24. As to e., the first limb relates to uncertainty in the market place. There is no evidence to support the suggestion of uncertainty in the market place. It is not, in any case, easy to see why a suspension of the declaration would make damage more likely. Whether or not the declaration is suspended, there is uncertainty about the validity of the Sabatier mark. For reasons which I will come to, HH will not be restrained from continuing to use its marks until its own applications have been dealt with. There are other users of Sabatier marks. And there are separate applications by IVO to invalidate or revoke RF's Marks.
25. The second limb of e. relates to the inability to commence proceedings. This argument turned on section 11(1) which RF was concerned might provide a defence to any infringement proceedings. I do not propose to consider the competing arguments about the effect of that section since HH has expressly confirmed in open court that it will not rely on section 11(1) as a defence to any infringement proceedings. RF can issue its claim form safe in the knowledge that that section will not be relied on. It can therefore stop time running for limitation purposes.
26. In the context of delay, it is important to appreciate that RF has threatened infringement proceedings against HH. It has, however, accepted that such proceedings should be stayed pending the determination of HH's applications. This is important since it follows that RF will not be able to obtain injunctive relief against HH pending the course of HH's applications. RF must therefore either have recognised that the court would be likely to stay infringement proceedings pending the outcome of HH's applications or, alternatively, decided that it is not really concerned about delay.
27. Mr Arnold submits that HH will clearly suffer prejudice if the declaration is not suspended. The declaration will be irreversible in its effects in the way described above. Essentially there will a loss of property rights, a loss of 8 years of filing time and an exposure to reliance upon the declaration by RF and third parties even if the substratum for the declaration eventually disappears. I agree with Mr Arnold that these matters are prejudicial to HH.
28. Taking into account all these issues and having indicated how I view each of them, I have no doubt that I should exercise my discretion by suspending the declaration pending the resolution of HH's invalidity/revocation applications. I will hear further argument about the duration of that suspension eg until the decision of the hearing officer, or until exhaustion of the appeal process.
29. I should add that Mr Arnold also relies on the IVO applications. Even if, contrary to his case, HH has been guilty of delay in making its invalidity/revocation applications, the same cannot be said of IVO. Success by IVO would also remove the substratum of RF's application to invalidate HH's marks. Absent suspension of the declaration, success by IVO would, he says, avail HH nothing, citing Coflexip SA v Stolt Offshore MS Ltd (No.2) [2004] EWCA Civ 213, [2004] FSR 34. I rather doubt that it is proper to rely on this as a factor in the exercise of my discretion. It is one thing to suspend a declaration pending an application between RF and HH to determine the validity or otherwise of the Sabatier mark. It is quite another to suspend it pending an application between RF and IVO raising the same issue. Since I have reached a conclusion favourable to him without reliance on this factor, I do not propose to say anything more about it.
30. I express some hope as did Lightman J that, encouraged by the judgment of the Court, the Registrar will take all necessary steps to ensure that there are no further delays in the progress of HH's invalidity/ revocation applications, and that they will come on for hearing this year.