IN THE UK OFFICE

The “White Stuff”: The Milk Link Guidance on Arguable Defence in Non-Use Proceedings

United Kingdom trade mark owners have two chances to file evidence of use in a non-use revocation. To reach the second stage, however, they need to have used the first to establish an arguable defence.

Despite this seeming clarity, experience shows that the concept of arguable defence is not always completely clear. What evidence, then, and how much, is needed to achieve it?

 

No MOO

The issue most recently came under the High Court’s microscope in Almighty Marketing Ltd. v Milk Link Ltd ([2005] EWHC 2584 (Ch)).

Most non-use revocations not forming part of counterclaims are launched before the Patent Office, but this one landed before the bench when the registered proprietor, Almighty Marketing Ltd., appealed. At the heart of the case was the MOO JUICE trade mark, registered for milk and milk beverages in Class 29. Milk Link applied to revoke the registration, pleading non-use by Almighty since registration, or alternatively in the 5 years preceding the application to revoke.

In U.K. non-use actions, as before OHIM, the burden of proving use is on the proprietor. He must file evidence of use or proper reasons for non-use within an initial 3-month term, failing which he may be deemed not to oppose the revocation. The applicant then has 3 months to file any evidence in reply, following which the proprietor may file any further evidence of use.

Almighty duly filed its evidence within the initial 3-month term. The evidence consisted of a brief witness statement from Almighty’s managing director stating that MOO JUICE had been used on a daily basis in respect of milk until 31 March 2001. He exhibited sample labels (but without use-by dates), and a letter from his accountants, dated after the relevant period, confirming that the use had been made.

At first the Patent Office regarded this evidence as enough to establish Almighty’s opposition to the claim. It sent the evidence to Milk Link and set a new term for the latter to file evidence. Milk Link, however, assailed the evidence as paltry and containing no evidence of actual use of the mark from within the relevant period. The sample labels bore no use-by dates and had clearly never been used, and the accountants’ letter did no more than support with a bare assertion the witness statement of Almighty’s MD.

Upon reconsideration the Patent Office accepted these arguments and deemed Almighty not to have established an arguable defence.

 

MOO on Appeal

Almighty appealed to the High Court, arguing that its evidence had been sufficient to allow the proceedings to continue. Alternatively, it argued that the Registrar should in any event have allowed the proceedings to continue in his discretion.

The main submission advanced by Almighty was roundly rejected by the Court. Almighty had pleaded that the rules required only that some evidence of use be filed within the initial term, and that it mattered not whether that evidence was corroborated or persuasive. It would be enough, it advanced, for the proprietor simply to say that he had made use of the mark.

The Court drew from relevant legislative discussions in ruling that a bare assertion of use is not enough to satisfy the initial burden on a registered proprietor in non-use proceedings. The purpose of the first round of evidence is to “provide a sufficient explanation of how the mark has been used for the tribunal to conclude that the proprietor has an arguable defence…,” so that the Registrar may order revocation immediately if no arguable defence appears to exist. A bare assertion of use would not achieve this.

 

MOO Successful

A more successful tack was Almighty’s claim that its evidence had been enough to establish an arguable defence.

At Patent Office level, the hearing officer had been influenced by the remarks in an earlier Office-level case, Carte Bleue Trade Marks ([2002] RPC 31). In that case, the hearing officer had observed that “the sort of evidence that one would normally hope to see [during the first round of evidence] is copies of brochures, catalogues, pamphlets, advertisements, etc. all of which show use of the trade mark in question together with some indication of the sales of goods, or the provision of services during the relevant periods.”

Almighty had filed no such items or information, and in their absence the hearing officer had concluded that Almighty had not “shown” relevant use, as opposed to merely asserting it.

The Court disagreed. The hearing officer, it found, had been lured into error by treating the Carte Bleue guidance as though it was a code for the sort of evidence required in the first round, rather than a guide. The information and materials listed in Carte Bleue were no doubt desirable and, if filed, might serve even to shorten the proceedings. However, the rules themselves did not require them, and if a proprietor was able to prove an arguable defence without them, then it should be entitled to move on to the next stage.

In this case, the Court was persuaded that Almighty had established an arguable defence. The MD’s witness statement had been independently corroborated by his accountants, and the labels exhibited to the witness statement bore the trade mark and identified the source of the milk as an English farm. That they had not actually been used themselves and did not bear use-by dates was not surprising; the Court was sceptical that any such business should be expected to keep old, used milk cartons. The proprietor’s evidence was that the labels were the same as those actually used. Taking into account the nature of Almighty’s business, the Court considered that this had been enough to establish an arguable defence.

 

Comment

Identifying how much (or how little) evidence will establish an arguable defence is a judgment call.

There are no significant tactical gains from withholding available evidence of use in the first round. What does often prevent proprietors from putting their best case forward early, however, is the non-extendible 3-month term within which to file it. There may be a further 6 months before the second round of evidence is due, and that period is extendible. Moreover, the consequences of not filing a second round of evidence are less draconian; the matter merely proceeds to a decision based on the evidence already filed. In contrast, if the first round of evidence is not good enough, the proprietor may lose by default.

Often the evidence put forward in the first round is all that can be gathered within a short, unextendible statutory term by busy executives and delegated staff who may regard the action as nothing more than an annoyance. The very real risk of losing a registration, however, and the possible consequential risks to use mean that such actions need to be taken seriously from an early stage where important brands are concerned.

The Carte Bleue guidance forms a useful checklist for first (and second) round evidence preparation. However, where such evidence is not available, the Milk Link decision shows that creative thinking about corroboration can help a case live to fight another day. A single bare assertion to use made by an interested party may not be enough, but it may be perceived as stronger if corroborated by sample (albeit unused) labels and an independent party confirming the use in a separate letter or witness statement. Where evidence is otherwise meager, this strategy is worth considering.

The nature of the business is also relevant. Where, as in this case, old labels will have been attached to perishable foods and were therefore not kept, an appropriate explanation in a witness statement may satisfy a hearing officer that there is nothing untoward in the failure to produce used labels. A convincing explanation may be harder to find, however, in the case of non-perishable consumer goods such as clothing, where labels can more easily be kept.

Whether a proprietor has cleared the hurdle of arguable defence will depend on the facts of each case. What was enough for Almighty might not have sufficed for a company in a different line of business. Although this case offers hope to those who have little evidence early on, it remains strongly advisable for brand owners to keep readily accessible archives (whether in-house or with their advisors) of sample labels, invoices, brochures, catalogues and other examples of use, so that they do not need to scramble to defend against non-use actions and their potentially serious fall-out.

This is particularly so where use in a market is small, but the brand is nonetheless important or expected to grow; the fewer the instances of use, the heavier the burden to prove it convincingly.

Brand owners can work with their advisors to create an appropriate “brand archive” which takes account of commercial importance. The effort may seem like unnecessary precaution now, but it could pay substantial dividends later.