NEWSFLASH

OPPOSITION IS NO BAR TO INVALIDATION OF TRADE MARK

COURT OF APPEAL HANDS DOWN JUDGMENT IN SPECIAL EFFECTS V. L'OREAL


The English Court of Appeal has overturned the decision of the Chancellor of the High Court in Special Effects v. L'Oreal [2007] EWCA Civ 1, 12 January 2007, and has held that decisions of the UK Trade Marks Registry in oppositions do not have res judicata (binding) effect.

L'Oreal is therefore not precluded from relying on its alleged earlier rights by way of defence to infringement proceedings brought against it by Special Effects Limited or from counterclaiming for invalidation of the SPECIAL EFFECTS trade mark on absolute and relative grounds or for passing off (despite having unsuccessfully opposed registration of the trade mark).

The International Trademark Association considered the point of such importance that it intervened for the result arrived at by the Court of Appeal.

The Chancellor had held at first instance that L'Oreal's unsuccessful opposition barred the raising of similar arguments in the later infringement action through cause of action and issue estoppel.

Cause of action estoppel arises where the cause in subsequent proceedings is identical to that in earlier proceedings and the parties and the subject matter are the same. The Court of Appeal said that it could not apply in this case because opposition does not involve a cause of action - merely the right to oppose the registration of a trade mark.

Issue estoppel means that the same issue has been decided in previous litigation between the parties. Issue estoppel requires finality, which the Court of Appeal held is not present in opposition proceedings since section 47 of the Trade Marks Act 1994 contemplates that a trade mark can be declared invalid after it has been registered.

The Court of Appeal noted in particular that the Registry is intended to be a low cost tribunal for all litigants, especially those who are unrepresented, and for small and medium enterprises. Disclosure and cross-examination are relatively uncommon in the Registry although both are available if good reason is given. Indeed the Registry has made significant efforts in recent years to streamline its procedures, notably on opposition through the giving of preliminary indications.

In view of the different nature of opposition proceedings, the Court of Appeal said that it would rarely be an abuse of process for an unsuccessful opponent subsequently to seek a declaration of invalidity from the Registry or the court. Nevertheless, the Court of Appeal observed that abuse might be found to exist where an opposition was fought in a similar way to High Court proceedings. In the present case, L'Oreal's counterclaim for invalidity was not abusive.

Decisions of the OHIM in CTM oppositions do not have res judicata effect. The Court of Appeal's decision ensures that there is a synergy between the procedures of the Community and UK Offices.

The decision is a welcome one for trade mark owners. Nevertheless, it is important for any opponent to put forward its best case at the time since abuse of process is an open-ended danger.

The Court of Appeal did not decide the question that was raised in the previous case of Hormel whether a party is barred from applying for a declaration of invalidity before the court when it has already unsuccessfully sought invalidation in the Registry. The decision in Hormel indicated that estoppels would apply but the decision was later overturned with the consent of the parties by the Court of Appeal. That question therefore remains to be fought on another day! Special Effects Limited has signified that it will not appeal to the House of Lords.


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