UK diverges from EU on 'acquiescence' in trademark dispute

A dispute between cleaning companies saw the Court of Appeal depart from CJEU jurisprudence to clarify when acquiescence starts to run, say Andrea Carrera and Jennifer Bryant of Fieldfisher.

In a trademark dispute between rival users of the acronym ‘ICE’ (Industrial Cleaning Equipment v Intelligent Cleaning Equipment [2023] EWCA Civ 1451), the Court of Appeal (CoA) held that statutory acquiescence starts to run from when an earlier trademark holder becomes aware of the use of a later registered trademark, whether or not it is aware of the later registration.

This is a departure from both the first instance decision by the Intellectual Property Enterprise Court (IPEC) and the decision of the Court of Justice of the European Union (CJEU) in Budějovický Budvar, národní podnik v Anheuser-Busch (Case C-482/09) (Budvar).

What do you need for acquiescence to start to run?

Statutory acquiescence under section 48(1) Trade Marks Act 1994 (TMA) provides a defence to trademark infringement where “the proprietor of an earlier trademark or other earlier right has acquiesced for a continuous period of five years in the use of a registered trademark in the UK, being aware of that use”.

Budvar held that for acquiescence to start to run, the proprietor of an earlier mark had to have knowledge of both the use of a later registered mark and of its registration. IPEC had been bound by that, because it was retained EU case law, falling into s6(3) European Union (Withdrawal) Act 2018.

However, that act allowed the Court of Appeal and Supreme Court to depart from CJEU judgments under certain circumstances—"where it appears right to do so" —which was “a power to be exercised with great caution”. That power was exercised here for various reasons including:

● Budvar was (according to Arnold LJ, giving the leading judgment) “unpersuasive because neither the Advocate General’s Opinion nor the Court [of Justice]’s judgment contained any analysis of the issue, but simply stated a bald conclusion”;

● The CJEU in Budvar had not been addressed on nor considered other relevant cases (such as Cristianini v Ghibli, Case R 1299/2007-2 and Marchi Italiani (Case T-133/09));

● Budvar is an isolated judgment and has not been followed by the CJEU itself, the General Court or the European Union Intellectual Property Office (EUIPO);

● Departing from Budvar would not cause legal uncertainty, because it was already established that the EU institutions took varying approaches to the issue; and

● Upholding Budvar unduly restricted the proper development of the law. Several recent cases had showed that delay in bringing trademark disputes can cause complexity; statutory acquiescence is “a key tool for dealing [with] this problem... It is therefore important that the courts of this jurisdiction are able to apply the legislation in the manner which best serves its objectives”.

The CoA recognised that until recently, it could have referred the questions in this case to the CJEU for guidance. It could no longer do that but, while it felt that attempting to predict the CJEU’s decision would have been presumptuous, it believed that there was a real possibility that the CJEU would endorse the approach taken by the EUIPO and the General Court, diverging from its previous ruling.

The defendants had argued for this departure from Budvar, but it did not help them; they had no statutory acquiescence defence to infringement as the proprietor's 5-year period for acquiescence had not yet expired.

From which date does acquiescence start to run?

The dates in this case were key.

The defendant had applied for two international trademarks via the Madrid Protocol route. These were registered at WIPO on June 18, 2015, designating the EU. The EUIPO received one application on July 23, 2015, accepted it on May 24, 2016 and published it on May 25, 2016. It received the second application on August 13, 2015, accepted it on June 14, 2016 and published it on June 15, 2016.

On July 2, 2019 the Claimant’s solicitors sent a letter before claim alleging trademark infringement and passing off. Responses from the defendant followed on July 26, 2019 denying infringement and passing off, relying partly on the defendant’s EU trademarks, at which point the Claimant became aware of the defendant’s registrations. The claim form was issued on May 24, 2021 and served on September 21, 2021.

The CoA was clear that in the case of a UK or EU mark, acquiescence starts to run from the registration date of the defendant’s mark, not the application date (there is no cause of action before registration).

However, for an international/Madrid mark designating the EU, as here, there was debate over which date equated to the “registration date” between the various acceptance/publication/republication dates which result from the way this application route is administered.

Ultimately, Arnold LJ held that the registration dates “were either May 24 or 25, 2016 and either June 14 or 15, 2016”, and it was “not necessary to decide whether the correct date is the date of acceptance … or the second republication date … because it makes no difference on the facts of this case”.

Even if the relevant date was May 24, 2016, when the earliest of the defendant’s marks was registered, the claim form was issued on May 24, 2021. That was the last day of the five-year period and therefore just in time to stop a full five years’ acquiescence accruing.

In interpreting s48(1) TMA, the CoA considered the wording of the TMA and its predecessors, the relevant Directives and Regulations and general principles of interpretation. It found that “the more natural reading of the operative words in the Directives and Regulations is that the proprietor of the earlier trademark must be aware of the use of the later trademark, but not the registration of the later trademark”.

The CoA explained that use and registration are two different things; “use affects the market, while registration does not”. The purpose of the legislation is to sanction proprietors of earlier trademarks who are insufficiently vigilant to stop use of later trademarks.

Therefore, provided the later trademark is in fact registered, time should run from the date on which the proprietor of the earlier trademark becomes aware of use of the later trademark, not from some later date.

Requiring knowledge of registration of the later trademark would give the owner of the earlier trademark a “perverse incentive” not to consult the register to delay time running, and knowledge of the mere fact of registration of the later trademark cannot be sufficient.

Further considerations

The CoA considered two other issues:

● when did acquiescence cease? The CoA held that simply sending a warning letter is not enough to stop acquiescence, unless a claim form or other legal action is issued shortly thereafter.

Here, it had been two years between the warning letters and the issuing of the claim form, which was considered by the CoA not to be a reasonable period, and therefore the letter before claim did not operate to stop acquiescence; and

● passing off: the CoA held that if acquiescence had applied, it would also have barred the Claimant’s claims for passing off.

UK Court’s departure from EU precedent

This case marks one of the first instances where a senior court in the UK has departed from the jurisprudence of the CJEU regarding a provision of retained or EU-derived legislation related to intellectual property.

The ruling emphasises the need for trademark owners to monitor diligently the marketplace and registration databases and take substantive action (beyond mere letters before action) promptly when they become aware of potential infringements.

Andrea Carrera is a solicitor apprentice at Fieldfisher. He can be contacted at andrea.carrera@fieldfisher.com.

Jennifer Bryant is a professional support lawyer at Fieldfisher. She can be contacted at jennifer.bryant@fieldfisher.com.