Overview

The Court of Appeal has indicated that referring to infringing acts other than affixing, importing or supplying services under the trademark, during without-prejudice negotiations to settle a trademark infringement dispute, may constitute an actionable threat.

The claimants (Best Buy) brought a groundless threats action against Worldwide, the owner of several Community Trade Marks (CTMs) including the words “BEST BUY”. Best Buy, which operates its stores under the name BEST BUY in the US, was seeking to expand into Europe (via the UK) under the same name. In September 2008, Worldwide wrote (the “September letter”) to a subsidiary of Best Buy (BBES) that BBES’s use of the BEST BUY trademark “in Europe, and in particular in Spain, as well as in advertising and in the media, as at present... would entitle [Worldwide] to take the appropriate legal action to defend its interests”.

To avoid such action, the letter asked Best Buy, within 15 days, to either enter into settlement negotiations or undertake not to use the BEST BUY trademark in Europe. When negotiations failed, Worldwide brought threats proceedings on the basis of the September letter. At first instance, Floyd J held that the letter, despite not being headed “without prejudice” was, in fact, “without prejudice” and therefore could not be used to found a threats action.

Lord Neuberger identified the following issues to be resolved on appeal:
1. Does the September letter contain a threat? If so,
2. Is it a threat of such proceedings in the English courts? If so,
3. Does the threat of proceedings fall outside the exclusions in paragraphs (a) to (c) of section 21(1)? If so,
4. Is the September letter precluded from being an actionable threat by virtue of containing settlement proposals? If not,
5. Are the claimants “persons aggrieved” and therefore entitled to relief under section 21?

Lord Neuberger’s judgment contains several stark warnings about the scope of the current threats legislation relating to trademarks. First, it illustrates that the extent of the threats of proceedings in respect of the “supply of services under the mark” exclusion is narrow. It does not extend to use in advertising for the supply of those services. Threatening proceedings based on European rights and activity “in Europe” may easily be construed as threatening proceedings in the UK. This is particularly so if evidence of use, or intended use, of the sign is objected to in the UK and would be the case even if proceedings were subsequently commenced outside the UK.

Read the full briefing to find out more about the judgment.