Red Bull GmbH v Sun Mark Ltd & Anor [2012] EWHC 2046 (Ch)

[2012] EWHC 2046 (Ch)Case No HC10C01732
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Rolls Building, Fetter Lane, London, EC4A 1NLDate 24 July 2012
Before
THE HON MR JUSTICE ARNOLD
Between
RED BULL GMBHClaimant(1) SUN MARK LIMITEDDefendants(2) SEA AIR & LAND FORWARDING LIMITEDDefendant
Jacqueline Reid (instructed by Shoosmiths) for ClaimantAnna Edwards-Stuart (instructed by Ipulse) for DefendantsHearing Hearing date: 17 July 2012
Judgment

Introduction

[1]On 17 July 2012 I handed down judgment in these proceedings ( [2012] EWHC 1929 (Ch) ) (“the main judgment”). For the reasons given in the main judgment, I concluded that: i) the Defendants have infringed IR 389 and IR 548 by use of the sign BULLET; ii) the Defendants have infringed the CTM by use of the strapline NO BULL IN THIS CAN; and iii) the Defendants have not established that Red Bull acted in bad faith when it requested protection in the UK for IR 389 or IR 548.[2]After handing down the main judgment, I heard argument as to a number of issues concerning the order to be made in consequence. This is my judgment on those issues.

Declarations

[3]Red Bull seeks declarations that IR 389, IR 548 and the CTM have been infringed by the Defendants. The Defendants do not resist the making of declarations, but contend that the declarations should reflect the findings of the Court i.e. there should be declarations that the Defendants have infringed IR 389 and IR 548 by use of the sign BULLET in relation to an energy drink and have infringed the CTM by use of the slogan NO BULL IN THIS CAN. I agree with the Defendants on this point.[4]In addition, the Defendants contend that the order should recite the fact that Red Bull withdrew its allegation that the sign BULLET infringed the CTM. The reason for this is to ensure that no impression is conveyed that the injunction to restrain infringement of the CTM (as to which, see below) prevents the Defendants from using the sign BULLET in countries other than the UK. While I am somewhat dubious about the rationale, I am prepared to include such a recital.

Certificate of contested validity

[5]Red Bull seeks a certificate of contested validity in relation to IR 389 and IR 548 pursuant to section 73 of the Trade Marks Act 1994. I did not understand the Defendants in the end to resist this, but in any event I consider that it is appropriate to grant such a certificate.

Territorial scope of the injunction to restrain infringement of the CTM

[6]Red Bull seeks an injunction to restrain infringement of the CTM throughout the European Union. In support of this Red Bull relies on the following:(i) this court is a Community Trade Mark Court which has jurisdiction under Articles 97(1) and 98(1) of the Regulation;(ii) the general rule stated in Article 1(2) of the Regulation is that use of a Community trade mark shall not be prohibited, save in respect of the whole Community;(iii) it is conceded that RED BULL has a reputation throughout the Community;(iv) there is evidence that the Defendants have used the offending strapline in many countries; and(v) English is widely understood throughout the European Union, in particular in the context of use on the internet. In these circumstances Red Bull contends that neither of the exceptions to the general rule recognised by the CJEU in its judgment in Case C-235/09 DHL Express France SAS v Chronopost SA [2011] ECR I-0000 at [46]-[48] applies in the present case.[7]Counsel for the Defendants did not in the end resist the grant of an EU-wide injunction if the recital discussed above was included in the order. I will therefore grant such an injunction.

Stay pending appeal

[8]The Defendants sought permission to appeal against the dismissal of their counterclaim seeking a declaration of invalidity of IR 389 and IR 548. I granted permission to appeal on one of the two main proposed grounds of appeal, although not the other. If the appeal is successful, it will provide the Defendants with a complete defence to Red Bull’s claims for infringement of IR 389 and IR 548. Accordingly, the Defendants seek a stay of the injunction and order for delivery up in relation to IR 389 and IR 548 pending appeal. (For the avoidance of doubt, no stay is sought in relation to the CTM.) The Defendants offer to undertake to prosecute the appeal with due diligence.[9]Red Bull resists a stay, and offers a cross-undertaking in damages if an injunction and delivery up is ordered.[10]The general principle to be applied in such circumstances is to consider the balance of convenience: see Minnesota Mining & Manufacturing Co v Johnson & Johnson Ltd [1976] RPC 671 at 676 and Virgin Atlantic Airways Ltd v Premium Aircraft Interiors Ltd [2009] EWCA Civ 1513, [2010] FSR 15 at [22]-[23] (both patent cases, but the principle is the same in a trade mark case). As Jacob LJ explained in the latter case, in general the claimant will be granted an injunction if it gives a cross-undertaking, but this is not an automatic rule: the court has a discretion to exercise which depends on the circumstances of the case.[11]Counsel for the Defendants acknowledged that the cross-undertaking offered by Red Bull went a considerable way to neutralising the prejudice to the Defendants if an injunction and delivery up were to be ordered now, but the Defendants’ appeal were to succeed. She submitted, however, that it did not go all the way. She pointed out that the current commercial status quo was that the Defendants had been selling their BULLET energy drink since August 2006, whereas Red Bull had only been selling its BULLIT energy drink (to the extent that it had done so at all) on a small scale since February 2010, and submitted that the status quo should be preserved pending the Defendants’ appeal.[12]While that argument has some attraction, I am not persuaded by it. The Defendants’ UK sales of BULLET in the UK in 2006-2008 were very modest (see the main judgment at [54]). While the Defendants’ UK sales of BULLET have grown since then, the Defendants’ main sales are in export markets. The injunction will not prevent the Defendants from using BULLET in other countries, albeit that it will prevent export of goods from the UK under the sign. Furthermore, the Defendants will have to make some changes to their marketing materials anyway given that they do not seek to appeal against the finding of infringement of the CTM. In addition, they have at least one other established trade mark they can use in the UK, namely ROBUST (see the main judgment at [63]).[13]In these circumstances, I do not consider that the Defendants will suffer substantial irreparable harm if an injunction is granted now, but subsequently discharged by the Court of Appeal. To the extent that the Defendants may suffer irreparable harm, I consider that this is outweighed by the irreparable harm that Red Bull will suffer in not being able to exploit the trade mark rights it has now vindicated. Accordingly, I refuse to grant a stay of the injunction and order for delivery up pending appeal. I would add that it will be open to the Defendants to apply to the Court of Appeal for expedition of the appeal if they are concerned about the effect of the injunction.

Stay pending determination of the revocation applications

[14]The Defendants also seek a stay of the injunction and order for delivery up pending determination of Sun Mark’s applications to revoke IR 389 and IR 548 for non-use (as to which, see the main judgment at [69]-[70]). Since the trial, the second application has also been suspended. Counsel for Red Bull informed me that Red Bull would now consent to the suspensions being lifted. Even so, given that the second application has not yet progressed very far, I think that it is possible that these two applications may not be determined until after the determination of the Defendants’ appeal against the dismissal of their counterclaim in these proceedings, particularly if the appeal is expedited. Furthermore, I need to cater for the possibility that the appeal is dismissed, but the applications for revocation are successful. Accordingly, it is necessary to consider whether the revocation proceedings provide an independent basis for a stay.[15]Red Bull again resists a stay, and again offers a cross-undertaking in damages if an injunction and delivery up is ordered.[16]In Second Sight Ltd v Novell UK Ltd [1995] RPC 423 at 434-435 Lightman J said this:
“When a plaintiff has a prima facie right to damages and an injunction restraining infringement, but the defendant has an outstanding application for registration which will give rise to a backdated defence if successful, what course should the court adopt? The authorities show that the court may adopt any of three alternatives: (1) the court may grant a stay of the proceedings for infringement pending the outcome of the application for registration (as in James & Sons v. Wafer Razor Co. Ltd.); (2) the court may allow the case to proceed to trial and after judgment consider the grant of a suspension of any order made pending the outcome of the application (as in the Electrolux case); or (3) grant full relief at the time, but add a proviso to any injunction to the effect that nothing therein shall prejudice the right of the applicant to proceed with his application for registration and (if successful) to exercise any rights conferred by such registration (as in Berlei (UK Ltd) v Bali Brasserie Co. Inc [1970] R.P.C. 469 (Megarry J.) and [1972] R.P.C. 568 (Pennycuick J.)) Prima facie the plaintiff in such a situation is entitled to proceed with his action … and on judgment to obtain and exercise any remedies available to him. The grant of a stay is a discretionary remedy and may be on terms. It can only be appropriate to require a stay if the applicant for registration has a seriously maintainable claim to registration and undertakes to proceed with the application with all due diligence. A stay will only be granted if after considering the interests of the parties the court concludes that to grant a stay would best serve the interests of justice: see Berlei v Bali [1970] R.P.C. 469 at 477. In the balancing exercise required of the interests of the parties, in the ordinary case the grave injustice of depriving a defendant of the opportunity to secure and invoke an absolute defence by a successful application for registration will be decisive: see James v. Wafer Razor Co. Ltd. (1932) 49 R.P.C. 597. But this will not be so in all cases, e.g. where the applicant cannot show that prior to the application for the stay he has done everything reasonable to speed the application: see Berlei v Bali [1970] R.P.C. 469. The court may take into account the availability of an interlocutory injunction to protect the plaintiff in the interim period.”
[17]This guidance was applied by Warren J in a somewhat different context in Rousellon Frères et Cie v Horwood Homeswares Ltd (No 2) [2008] EWHC 1660 (Ch), [2008] RPC 31. The present case is closer to the situation considered by Lightman J in Second Sight than the situation which confronted Warren J in Rousselon: Red Bull has established its prima facie right to an injunction, but the Defendants have outstanding applications for revocation which, if successful, will mean that Red Bull will lose its entitlement to an injunction (although it will still be entitled to damages or profits in respect of infringements committed prior to the date on which revocation takes effect).[18]Counsel for the Defendants advanced essentially the same argument as the argument she advanced in support of the application for a stay pending appeal. Having regard to the cross-undertaking offered by Red Bull, my conclusion is the same.[19]It is right to say, however, that even if I had been prepared to grant a stay pending appeal, I would still refuse to grant a stay pending determination of the revocation applications for the following reasons.[20]Protection of IR 389 in the UK was conferred with effect from 8 January 2006 (not 25 January 2006 as stated in the main judgment at [43], although the latter was the date of the IPO’s notification of withdrawal of provisional refusal). Accordingly, IR 389 became open to revocation for non-use pursuant to section 46(1)(a) of the 1994 Act on 9 January 2011. The Defendants did not apply to amend their counterclaim in these proceedings, as they could easily have done at that stage. Instead, Sun Mark filed an application at the IPO on 6 April 2011. There appears to have been some defect in the application form, and so it was re-filed on 24 May 2011 (not 16 June 2011 as stated in the main judgment at [69], the latter being the date on which the IPO served the proceedings on Red Bull). When Red Bull sought a suspension of the application pending the determination of these proceedings, Dr Ranger’s response in a letter dated 4 November 2011 was to resist the application on the ground that Red Bull’s infringement claim was “a separate matter” and that the revocation application “must be decided separately and apart from the infringement action being dealt with in the High Courts [sic]”.[21]Protection of IR 548 in the UK was conferred with effect from 19 January 2007 (not 13 February 2007 as stated in the main judgment at [43], although the latter was the date of the IPO’s notification of withdrawal of provisional refusal). Accordingly, IR 548 became open to revocation for non-use pursuant to section 46(1)(a) of the 1994 Act on 20 January 2012. The Defendants did not apply to amend their counterclaim in these proceedings. Instead, Sun Mark filed an application at the IPO on 22 February 2012 (not 14 March 2012 as stated in the main judgment at [69], the latter being the date on which the IPO initially attempted to serve the proceedings on Red Bull, although it appears that the IPO sent the proceedings to the wrong address). The Form TM26(N) filed by Sun Mark wrongly stated that there were no related proceedings before the Registry or the courts.[22]Counsel for the Defendants argued that there would have been no point in the Defendants counterclaiming for revocation of IR 389 until IR 548 was open to attack for non-use, and that by the time IR 548 was open to attack for non-use it was too late for any counterclaim in these proceedings. I do not accept either of these arguments. So far as the first point is concerned, Sun Mark did not in fact wait until IR 548 was open to attack before attacking IR 389. As counsel for Red Bull submitted, the Defendants could have applied to amend their counterclaim to attack IR 389 in January 2011 and notified Red Bull that they intended to attack IR 548 as soon as the five year period expired (as would have been obvious anyway), so that both sides could prepare for trial on that basis. In any event, there is a substantial overlap between the non-use attacks on IR 389 and IR 548: in essence the latter just adds another year to the enquiry. In my view there would have been no difficulty in the Defendants amending their counterclaim to add the attack on IR 548 in January 2012. This is particularly so given that the Defendants had been by then already served Mr Burgess’ witness statement, which was essentially directed to the question of whether Red Bull had made any genuine use of BULLIT in the UK.[23]It follows that the Defendants’ exposure to an injunction during the period between judgment in these proceedings and determination of the revocation proceedings is largely of the Defendants’ own making. It is true to say that the period has been slightly lengthened as a result of Red Bull’s application for a suspension of the second application (not the first application, since the Defendants need to revoke both IR 389 and IR 548 in order to have a defence to Red Bull’s infringement claims); but in the circumstances that was an understandable response on the part of Red Bull and in any event the period had not been significantly lengthened as a result. Accordingly, given Red Bull’s offer of a cross-undertaking, I would not grant a stay on this ground.

IR 259

[24]For completeness, I should also mention another matter which counsel for Red Bull initially sought to rely upon as militating against a stay, but did not in the end press. In addition to IR 389 and IR 548, Red Bull is the proprietor of International Registration No. 969259 for the word BULLIT in Classes 32 and 33 (but not Class 43 as stated in the main judgment at [62]) designated in respect of the UK on 11 April 2008 (“IR 259”). Counsel for Red Bull submitted that it followed from the court’s conclusions in the main judgment that(i) the Defendants were also infringing IR 259 and(ii) any claim by the Defendants that Red Bull had applied to protect IR 259 in the UK in bad faith would be bound to fail. She explained that Red Bull had not seen any need to bring proceedings for infringement of IR 259 to date, but reserved the right to do so if it became necessary, and in particular if Sun Mark succeeded in its applications to revoke IR 389 and IR 548 (since IR 259 is not yet open to attack for non-use).[25]Counsel for the Defendants accepted that, in the light of the findings of fact in the main judgment, it would be more difficult for the Defendants to contend that Red Bull had applied to protect IR 259 in bad faith than IR 389 and IR 548. She submitted, however, that, if IR 389 and IR 548 were declared invalid, then the Defendants would be in a position to apply for a declaration that IR 259 was invalidly registered under section 5(4)(a) of the 1994 Act (Article 4(4)(b) of the Directive) by virtue of the goodwill which the Defendants had built up in BULLET.[26]While I note these arguments, the present position is that no claim has been brought for infringement of, or a declaration of invalidity in respect of, IR 259. Accordingly, I have not taken these matters into account in considering either of the Defendants’ applications for a stay.

Disclosure of sources and supplies

[27]Red Bull seeks an order for disclosure on affidavit by the Defendants of the names and addresses of all persons who either have supplied (or offered to supply) infringing materials to the Defendants or to whom the Defendants have supplied (or offered to supply) infringing materials, exhibiting all relevant documents. Although the Defendants resist any such order being made, counsel for the Defendants made it clear that their main concern was over(i) the references to offers to supply,(ii) the territorial ambit of the order and(iii) the requirement for all relevant documents to be supplied. In my judgment it would be disproportionate to require the order to extend to offers to supply or to persons outside the European Union. Equally, given that the information is to be supplied on affidavit, I see no need for documents to be exhibited at this stage.

Island v Tring order

[28]It is common ground that there should be an Island v Tring order. Red Bull seeks compliance within 4 weeks, while the Defendants proposed 8 weeks. I will order compliance within 6 weeks.

Publicity

[29]Recital (27) and Article 15 of European Parliament and Council Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights (“the Enforcement Directive”) provide as follows:
“(27) To act as a supplementary deterrent to future infringers and to contribute to the awareness of the public at large, it is useful to publicise decisions in intellectual property infringement cases. Article 15 Publication of judicial decisions Member States shall ensure that, in legal proceedings instituted for infringement of an intellectual property right, the judicial authorities may order, at the request of the applicant and at the expense of the infringer, appropriate measures for the dissemination of the information concerning the decision, including displaying the decision and publishing it in full or in part. Member States may provide for other additional publicity measures which are appropriate to the particular circumstances, including prominent advertising.”
Article 15 Publication of judicial decisions Member States shall ensure that, in legal proceedings instituted for infringement of an intellectual property right, the judicial authorities may order, at the request of the applicant and at the expense of the infringer, appropriate measures for the dissemination of the information concerning the decision, including displaying the decision and publishing it in full or in part. Member States may provide for other additional publicity measures which are appropriate to the particular circumstances, including prominent advertising.”[30]In 32Red plc v WHG (International) Ltd (No 2) [2011] EWHC 655 (Ch), [2011] FSR 33 at [32] Henderson J identified four reasons which had been advanced by the successful claimant in an earlier case for making an order for publicising the judgment and said that these reflected the underlying policy in recital (27):
“first, such orders ought to become standard practice; secondly, such an order would remind the defendant to be more careful about the nature of the products which it sold; thirdly, because the publication by the defendant of the result of the decision against it would be a deterrent to other infringers and counterfeiters; and, fourthly, whenever infringement is established there ought to be a policy of granting a full range of remedies, given the difficulties which owners of IP rights face in identifying and successfully pursuing infringers.”
[31]Counsel for Red Bull submitted that in the light of these considerations the Defendants should be required for a period of 6 months to display a statement that this court had held that IR 389, IR 548 and the CTM had been infringed by the Defendants(i) on the homepages of their websites together with a hyperlink to the main judgment on BAILII and(ii) at their premises.[32]Counsel for the Defendants did not resist an order that such a statement be placed on the home pages of the Defendants’ websites in principle, but raised a number of points of detail. First, she submitted that the wording of the statement should be modified so as more accurately to reflect the court’s conclusions. I am prepared to accept the amendments she proposed except that the words “in the United Kingdom” at the end should read “in the European Union”. Secondly, she submitted that the order should only apply to two specific identified websites, whereas counsel for the Red Bull submitted that it should apply to all websites under the Defendants’ control. I agree with counsel for Red Bull on this point. Thirdly, she submitted that it should either not include a hyperlink to the judgment at all or the hyperlink should only be to the key parts of the judgment. She was candid that the Defendants’ concern was that the link should not include the part of the main judgment containing my assessment of the witnesses, and submitted that this was not material to the conclusions. I do not accept this. In my view the link should be to the complete judgment, so that any reader can understand my reasoning in full. Furthermore, my assessment of the witnesses was material both to some of my findings of background fact and to the specific conclusions reached at [107]-[108].[33]Counsel for the Defendants resisted any order that the statement be displayed at the Defendants’ premises. She pointed out that Red Bull’s proposed order required that the statement be displayed “prominently” at the premises, and submitted that this was a recipe for future disputes. This point is somewhat undermined by the fact Red Bull’s proposed order also requires that the statement be displayed “prominently” on the home pages of the websites, and no objection is taken to that. Nevertheless, I agree that there is more scope of dispute in the case of the premises than in the case of the home pages. More generally, in the circumstances of the present case, I consider that the policy underlying Article 15 of the Enforcement Directive will be adequately served by the display of the statement on the websites together with the hyperlink to the main judgment as discussed above.

Costs

[34]It is common ground that the starting point in considering costs is that Red Bull has been the winner and therefore prima facie should be entitled to an order for its costs to be paid by the Defendants.[35]Red Bull seeks an order that the costs of, occasioned by and thrown away by the Defendants’ estoppel defence, which was abandoned during the course of trial, should be assessed on the indemnity basis. In support of this, counsel for Red Bull submitted that the defence was hopeless and that the Defendants should have appreciated this. I agree that it was always unlikely to succeed, but I am not satisfied that this takes the matter sufficiently away from the norm to justify an order for indemnity costs.[36]The Defendants seek an order that Red Bull should only be entitled to recover 85% of its costs on the ground that it unreasonably refused to engage in “meaningful” settlement discussions unless the Defendants would agree to cease using BULLET throughout the world including in countries where the Defendants have prior rights. In support of this, counsel for the Defendants relied upon correspondence between parties marked without prejudice save as to costs between 18 October 2010 and 27 February 2012. I have considered that correspondence. It does not demonstrate any unreasonable conduct on the part of Red Bull. On the contrary, Red Bull was prepared to negotiate, including attending an (unsuccessful) settlement meeting. It is true that it is clear that Red Bull was looking for a global settlement, but in return it was prepared to forego its claims to damages/profits, interest and costs as well as allowing a reasonable sell-off period. I see nothing unreasonable in that. Accordingly, I decline to make any deduction from Red Bull’s recoverable costs.[37]Finally, Red Bull seeks an order for an interim payment of costs in the sum of £140,000 against a total bill of £292,725. Counsel for the Defendants submitted that the bill was on the high side and proposed an interim payment of £100,000 within 28 days. Counsel for Red Bull riposted that many of the costs were attributable to the abandoned estoppel defence. Having considered the bill, I agree with counsel for Red Bull that £140,000 is reasonable figure for an interim payment. I will accede to the Defendants’ request that it be payable within 28 days.

Cited in 1 later judgment