UK COURT DIARY

AVOIDING THE Acquiescence Trap

Where a right holder fails to challenge another’s breach promptly, he may eventually lose the right to challenge it at all. Principles of estoppel, laches or waiver may deprive a right-owner of the power to assert rights, and further special provisions may apply where the issue arises between owners of registered marks. The interpretation of those provisions was debated recently in Sunrider Corporation t/a Sunrider International v Vitasoy International Holdings Ltd. [2007] EWHC 37 (Ch).

 

BACKGROUND

In Sunrider, Vitasoy applied to register VITA in the U.K. in May 1991 for a range of non-alcoholic beverages. Registration was only granted, however, in November 2000.

In the interim, Sunrider itself applied to register VITALITE in September 1993 as a trade mark for herbal and nutritional foods and supplements in the U.K. Its registration was granted in December 1999. It had therefore applied after Vitasoy, but achieved registration sooner.

Four years after its own registration was granted, Vitasoy attempted to rely on it in an application to invalidate Sunrider’s U.K. registration for VITALITE.

 

TIME OF THE ESSENCE

Sunrider claimed that Vitasoy’s challenge was blocked by Section 48 of the Trade Marks Act 1994, which provides that:

 

“The proprietor of the earlier registered mark may no longer apply to invalidate a later registered mark where he has acquiesced in its use for a continuous period of 5 years in its use, unless the registeration of the later trade mark was applied for in bad faith.”

 

In Sunrider’s submission, Vitasoy was the proprietor of an earlier registered mark because the VITA mark bore an earlier application date than VITALITE. Sunrider claimed that Vitasoy had taken no action to stop the use of VITALITE for more than 5 continuous years. Consequently, Sunrider argued that Vitasoy was barred by S. 48 from applying to invalidate the VITALITE registration now.

The VITALITE application had been pending for more than 5 years at the time the earlier application for VITA was registered, but had actually been registered for less than that at the time the declaration for invalidity was sought. The case therefore turned on whether under S. 48 the 5-year period of acquiescence starts to run from the date of application of the later mark, or only from its date of its registration. Sunrider, defending, championed the former; Vitasoy, the challenger, the latter.

 

AN ARGUABLE POINT

The point was eminently arguable. Although on first glance it seemed clear that acquiescence “in the use of a later registered mark” must begin after the later mark was registered, S. 40 (3) TMA 1994 provided that “a trade mark when registered shall be registered as of the date of filing of the application for registration.” Moreover, under S. 9 (3), registration afforded protection against infringing acts dating back to a registration’s filing date. These points supported Sunrider’s case that the term for acquiescence began to run from the application date, regardless of when registration was granted.

Although attracted by Sunrider’s arguments, however, the High Court upheld Vitasoy.

In the Court’s view, S. 48 had to be construed within the larger context of trade mark legislation in the Community. That legislation allowed the owners of earlier applications to oppose the registration of later applications without limitation, even where an earlier applicant had acquiesced in the use of the later mark for 5 years or more. It would be strange, the Court held, if an earlier applicant in that situation, who inadvertently missed the opposition deadline, were to lose the right to challenge the later mark for invalidity simply by virtue of the fact that its earlier application was subsequently registered.

The Court held that Vitasoy was not blocked by S. 48 from pursuing its action.

 

COMMENT

The strength of the competing arguments made the outcome of this case anything but certain, and Vitasoy’s challenge narrowly avoided being scuppered.

The judgment highlights the importance of prompt action where a registered trade mark is infringed by the use of a later mark, whether registered or not. Where a later mark is not registered, common law or equitable principles such as acquiescence or laches can deprive the right owner of the ability to mount a challenge later. Where both marks are registered, S. 48 may also protect the later mark from invalidity attack. An earlier mark owner may find his hands tied against both registration and use despite the existence of a clear conflict with the earlier right.

The key importance of timely action is heightened by the abolition of pre-opposition refusals based on relative rights in the U.K. leaving the onus on earlier mark owners to oppose creates even greater scope for the registration of conflicting rights. Upon registration, the acquiescence clock may begin to run.

The decision in Sunrider leaves many questions unanswered. Is it also necessary for the earlier mark, as opposed to the later mark, to be registered before the acquiescence clock begins to tick? What knowledge of a later mark’s use is required? Is anything other than knowledge necessary, such as an indication that the rights will not be enforced? What is the relationship between common law or equitable acquiescence and acquiescence under S. 48? How would the existence of one affect a case under the other?

 

These questions were not central to the case in Sunrider and the court did not consider it necessary to answer them. It did, however, remark that acquiescence was unlikely to bear the same meaning in S. 48 as under domestic law principles such as estoppel or waiver. What this means in practice will have to await examination by a later court.

Until further guidance is handed down, one take-home principle is clear. Where a reasonable case for infringement of rights can be raised, that case should be brought without delay. Waiting too long may open a Pandora’s box of costly legal issues and may ultimately prevent any effective action at all.