Legal Updates

Intellectual Property Law – Trade Mark – Landmark Ruling – Test for Invalidity - – Opposition Proceedings - Disputes proceeding in the Trade Mark Registry can be heard in the Courts

In Special Effects Limited v L’Oreal & International Trademark Association (Intervener) [2007] EWCA Civ 1, the Court of Appeal overturned the decision of the Chancery Division of the High Court. The case concerned an opposition to a trade mark registration. The Court in the first instance held that there was no relevant difference between the practice and procedure of the Trade Mark Registry in opposition proceedings under s 38(2) of the Trade Marks Act 1994 and invalidity proceedings under s 47(1) of the Act. The issues in dispute in the two sets of proceedings were identical.

First Instance Decision

The claimant company, Special Effects Limited, owned the mark SPECIAL EFFECTS which was obtained by way of an assignment. The trade mark was registered pursuant to s 40(1) of the Trade Marks Act 1994 (‘the Act’) in respect of goods in class 3 (conditioners and hair lotions, and services) and class 44 (beauty and cosmetic therapies).

Before the trade mark was registered, the first defendant opposed the trade mark application on the grounds set out in ss 3(1)(a), 3(3)(b), 5(2)(b) and 5(4)(a) of the Act. The opposition was dismissed by the hearing officer.

The claimant then commenced infringement proceedings against the first defendant and its UK subsidiary (the second defendant), alleging that they had infringed the trade mark SPECIAL EFFECTS by using its brand SPECIAL FX and that the defendants were precluded from challenging the validity of the trade mark SPECIAL EFFECTS on grounds of:-

Estoppel;
Issue estoppel; and
Abuse of process.

The defendants opposed these infringement proceedings on the basis that the registration of the trade mark SPECIAL EFFECTS was invalid.

The Court in the first instance had to establish the following:-

whether either or both of the defendants was/were precluded by cause of action estoppel, issue estoppel or abuse of process from challenging the validity of the trade mark SPECIAL EFFECTS; and
whether either or both of the defendants was/were precluded by cause of action estoppel, issue estoppel or abuse of process from alleging use of the marks complained of before the application for registration as part of the basis for a defence under s 11(3) of the Act or as part of the basis for a counterclaim for passing off.

According to Section 38 of the Act:

‘…(2) Any person may, within the prescribed time from the date of the publication of the application, give notice to the registrar of opposition to the registration.’

According to Section 47 of the Act:

‘…(1) The registration of a trade mark may be declared invalid on the ground that the trade mark was registered in breach of section 3 or any of the provisions referred to in that section (absolute grounds for refusal of registration). Where the trade mark was registered in breach of subsection (1)(b), (c) or (d) of that section, it shall not be declared invalid if, in consequence of the use which has been made of it, it has after registration acquired a distinctive character in relation to the goods or services for which it is registered.’

The High Court held:

There was no relevant difference between the practice and procedure of the Registry in opposition proceedings under s 38(2) of the Act and invalidity proceedings under s 47(1).
The former took place before registration and the latter afterwards, but in each case the issues were whether any objection to registration could be made out under ss 3 and 5 of the Act.

Therefore, the issues underlying the two sets of proceedings in the instant case were identical.
It was established that cause of action estoppel applied where a cause of action in the second action was identical to a cause of action in the first.
Accordingly, the defendants were subject to both cause of action estoppel and issue estoppel arising from the opposition proceedings.

‘…The defendants were precluded from alleging use by them of the SPECIAL FX brand prior to the application for registration for the purpose of a defence under s 11(3) of the 1994 Act or a counterclaim for passing off, as that issue had been expressly raised in the opposition proceedings and had been concluded against the first defendant.’
The defendants were precluded from re-litigating that issue on the grounds of issue estoppel.

Overturning of Landmark Trade Mark Ruling

The Court of Appeal has overturned this landmark ruling which, from last year until now, had transformed trade mark practice. This means that disputes already heard in proceedings before a hearing officer in the Trade Mark Registry (for example in an opposition proceedings) can be reheard in the High Court.

In the initial dispute between L’Oreal and Special Effects, the High Court did not allow L’Oreal to invalidate Special Effects’ SPECIAL FX trade mark registration because L’Oreal had already failed in an opposition against registering the same trade mark and was therefore estopped from attacking the mark again once it had been registered.

However, in Special Effects Limited v L’Oreal & International Trademark Association (Intervener) [2007] EWCA Civ 1, the Court of Appeal held that neither cause of action nor issue estoppel would prevent L’Oreal from bringing invalidity proceedings against the Special Effects trade mark registration to render this trade mark invalid.

The Court of Appeal held that there was no cause of action involved in opposition proceedings which could estop a trade mark owner from bringing invalidity proceedings for the same trade mark registration. Also, the co-existence of provisions in the Act now enabled both opposition and invalidation actions to be brought in relation to the same trade mark.

Comment: What this means is that an unsuccessful opponent to a trade mark opposition action could now attack the trade mark registration for invalidity (once the trade mark in question is registered) and that such an action cannot be prevented by principles of estoppel or abuse of process.

The decision in this case means that there is now room for a competitor to attack a trade mark application (during the opposition period) and again when the trade mark is registered on grounds of invalidity.

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© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.