Trade Marks - NXP BV v ID Management Systems

Royal Courts of Justice

Author David Castor
Reproduced pursuant to CCO 1.0
Source Wikipedia Royal Courts of Justice

Jane Lambert

Intellectual Property Enterprise Court (Mr Recorder Campbell QC) NXP BV v ID Management Systems [2019] EWHC 1902 (IPEC) (31 July 2019)

This was an action for trade mark infringement.  The claimant was the registered proprietor of several EU trade mark registrations of the word MIFARE for goods in class 9 either simpliciter as in  EU10920007 or in combination with a device as in WE1191506.  The claimant complained that the defendant company had infringed those trade marks by selling counterfeit smart cards on two occasions.

This action started in the small claims track of the Intellectual Property Enterprise Court.  The claimant had limited its claim to £10,000 and did not allege that the defendant had infringed its trade marks on any other occasion.  Nevertheless, on reviewing the papers the district judge transferred the case to the multitrack on his own initiative. Neither party appealed his decision.

The claim came on for trial before Mr Recorder Campbell QC on 4 July 2019 and he delivered judgment on 31.  He set out the issues in dispute at paragraph [15] of his judgment:

• Were the cards sold on the first occasion counterfeit?
• Were the cards sold on the second occasion counterfeit?
• Did the Claimant unequivocally consent to either set of cards being put on the market under its MIFARE trade marks in the European Economic Area?

Even though the case was in the multitrack, the learned recorder treated it as "a low-value one".

As this was a low-value case and the standard of proof was the balance of probabilities, the learned recorder treated the parties' statements of case as evidence in chief.  In respect of the cards sold on the first occasion, he claimant relied on a report produced by its in-house technical analysis department which concluded that the cards were counterfeit. There was no express denial of that allegation.  The recorder relied on that report for a finding that the cards were counterfeit setting out his reasons in paragraph [25].

The recorder applied the same approach to the cards sold on the second occasion but here he found ambiguities in the claimant's report.   Consequently, he could not find on the balance of probabilities that they were counterfeit.

Turning to the third issue, the recorder referred to the Court of Justice's decision in Case C-414/99 Zino Davidoff v A&G Imports [2001] EUECJ C-416/99, Case C-416/99, [2002] 2 WLR 321, [2002] RPC 20, [2001] ECR I-8691, [2002] ETMR 9, [2001] ETMR 67, [2002] Ch 109, [2002] All ER (EC) 55, [2002] CEC 154, [2002] 1 CMLR 1 and the Court of Appeal's in Mastercigars Direct v Hunters & Frankau [2007] EWCA Civ 176 the Court of Appeal and discerned the following principles:

"a) the consent (whether express or implied) must unequivocally demonstrate that the trade mark proprietor has renounced any intention to enforce his exclusive rights (Davidoff at [53]);
b) "unequivocal" does not refer to the standard of proof, but to the nature of the act – ie a proved act which is merely consistent with consent and also consistent with its absence is not enough (Mastercigars at [19])
c) it is for the trader alleging consent to prove it, not for the proprietor to disprove it (Davidoff at [54];
d) mere silence of the proprietor is not enough (Davidoff at [55])"

The defendants contended that the claimant had consented to the marketing of the cards in the EEA in the following terms:

"Fake MIFARE products pose a significant risk and can lead to lost revenue, security breaches, legal problems and loss of customer faith. The better choice is to avoid these risks and use genuine MIFARE products only sold via recommended NXP partners. Genuine products provide all the benefits of performance, interoperability, and seamless upgradability, and help ensure customer satisfaction".

Mr Recorder Cambell could find nothing in those words that amounted to consent to the defendant's activities.   It followed that the sale of cards on the second occasion infringed the claimant's trade marks.

This case will probably be referred to for the way in which the recorder determined the tricky issue of counterfeiting rather than for its analysis of the law.  It is not often that small IP claims appear in the law reports and it provides useful guidance to the professional advisors who have to prepare and present them.  If statements of case are to stand as evidence in chief, even greater care and thought than usual will be required in settling them. Anyone wishing to discuss this case or trade mark infringement generally is welcome to call me on 020 7404 5252 during office hours or send me a message through my contact form.