19 June 2023TrademarksSarah Speight

UK court unpicks global knitcraft firms’ trademarks dispute

India-headquartered firms have infringement claim by Canadian competitor stayed | Case heard in UK since case began pre-Brexit | Judge Hacon stated that evidence supplied by claimant was ‘hard to follow’ but stayed proceedings pending an EU mark decision.

A pair of global knitcraft companies have successfully convinced a UK judge to stay a claim to have one of its EU trademarks cancelled.

KnitPro and its parent company  Indeutsch Industries, both headquartered in India, applied to the EU Intellectual Property Office ( EUIPO) late last year to halt proceedings for a claim of infringement by a Canadian competitor.

Crafts Group owns four direct-to-consumer e-commerce knitcraft brands—Connecting Threads, Knit Picks, Superior Threads, and WeCrochet—which sell knitting needles, quilting cotton, yarn, fabric, craft books, thread, and crochet hooks online.

Following a tangled dispute that began in January 2013, KnitPro’s application to have Crafts’s claims stayed was granted in a judgment handed down on June 16 at the UK’s Intellectual Property Enterprise Court (IPEC).

During the proceedings the court outlined how the High Court of England Wales still had the authority to decide on this matter, as the dispute was in motion before the UK withdrew from the EU in January 2020.

A tale of two chevrons

Indeutsch Industries supplied Crafts Group’s predecessor Crafts Americana from 2007 with wooden knitting needles and crochet hooks that bore a decorative chevron pattern in two styles.

A few months later, KnitPro filed two applications at the EUIPO for trademarks, in order to protect its position outside the US, according to the judgment. Both marks, which are in the form of a chevron, were registered in class 26 for knitting needles and crochet hooks.

KnitPro’s first mark was named simply ‘the Chevron Mark’, and the second named ‘the EU Symfonie Mark’, more figuratively.

Following Brexit, KnitPro obtained similar UK trademarks named the ‘UK Chevron Mark’ and the ‘UK Symfonie Mark’.

In May 2010, KnitPro and Crafts signed a ‘Trade Dress Rights Agreement’, with the intention of geographically delimiting their respective uses of two types of chevron signs used on their products.

Unravelling relationship

But the relationship subsequently broke down and Crafts allegedly began to sell knitting needles and crochet hooks in competition with those made by KnitPro. In January 2013, Crafts applied to the EUIPO seeking cancellation of KnitPro's EU Chevron mark.

In 2015 KnitPro learned that Crafts was selling knitting needles and crochet hooks through Amazon in the UK and Germany, with both products bearing a sign which KnitPro believed to infringe its EU Chevron mark.

Crafts’ product listings, which were branded ‘Caspian’ in the UK, were removed by Amazon in June 2015 following a takedown request by KnitPro.

Crafts wrote to KnitPro alleging that KnitPro had made “unjustified” threats of infringement of the EU Chevron mark in its communications with Amazon, which KnitPro denied.

In November 2015, Amazon removed another line of Crafts’ needles, branded ‘Sunstruck’, following KnitPro’s complaint that they infringed the EU Chevron mark.

KnitPro claims that Crafts took no further action with respect to its infringement allegations for more than five years, until November 2020 when Crafts wrote to KnitPro alleging that KnitPro's communications with Amazon UK had constituted unjustified threats of infringement of the EU Chevron and Symfonie marks.

Crafts submitted a claim at the CJEU in December 2020. KnitPro’s application to stay that  claim was refused a year later, and an appeal was also refused in September 2022.

The next month, KnitPro served a defence and counterclaim, alleging infringement by Crafts of the EU Chevron and Symfonie marks and the two comparable UK marks. They also accused Crafts of passing off its goods for those of KnitPro.

Crafts responded by arguing that the Trade Dress Rights Agreement provides a defence, and that the EU Chevron and UK Chevron marks were invalidly registered and therefore stand to be revoked on grounds of non-use.

‘Hard-to-follow’ evidence

In considering his decision, Judge Hacon referred to evidence supplied by Crafts with respect to potential damage that it would suffer if the proceedings were stayed. Crafts’ CEO Matthew Petkun had claimed that the company is currently prevented from selling its Caspian and Sunstruck product lines on Amazon.

Petkun believed that if Crafts sought to market three other lines on Amazon, KnitPro would seek further takedown notices because of alleged infringements of KnitPro's EU marks and that Amazon would remove the products from its websites.

Petkun estimated that Crafts would make direct annual sales of $72,000 in the UK but for the takedown notices, a sum arrived at by estimating that UK sales would be consistently 10% of US sales in 2022. In addition, Crafts is losing sales through distributors (which Judge Hacon said were “unquantified”) which would sell on Amazon, Petkun said

Petkun suggested that over the course of five years, Crafts’ losses would exceed the IPEC cap and the amount (more than £500,000 or $640,000) would be irrecoverable, a claim that Judge Hacon said “is hard to follow”.

“Taking his figures at face value and assuming that Crafts were to win at trial in its claim for unjustified threats, Crafts would be entitled to its lost profits between June 2015 and around June 2029, about 17 years,” the judge explained.

He added that “no other relevant damage to Crafts has been identified.”

Judge Hacon said that “if Crafts had been seriously concerned by irreparable damage due to the takedown notices, it seems to me that it would have issued a claim form in 2015 and would have either sought interim relief or moved the case forward to a trial some months later.

“Its behaviour is more consistent with a willingness to live with any loss of sales and to claim compensation in due course.”

EU chevron mark pending

Judge Hacon granted KnitPro’s request to stay all of Crafts’ claims pending final resolution of its application to cancel the EU Chevron mark at the EUIPO.

He said of the EU and UK Chevron marks, “if there is no stay, there will be a trial in several months' time and a second trial after the judgment of the CJEU to deal with the claims this court is required to stay...

“A judgment in relation to Chevron claims in this court will at least in part be subsequently overtaken by [a] CJEU's judgment, possibly in substantial part, so the cost of dealing with such claims in this court would be wasted.”

In relation to the Symfonie mark, he reasoned that “the potential damage to Crafts remains the same, none of it irreparable. The difference is that there would be one trial, not two. Self-evidently that would save costs, which is what KnitPro wants to do.”

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