Trade Marks: Wirex Ltd v Cryptocarbon Global Ltd

Author Martin E Walder Licence CC BY-SA  3.0 Source Cryptocurrency

 

Jane Lambert

Intellectual Property Enterprise Court (HH Judge Hacon) Wirex Ltd v Cryptocarbon Global Ltd and others [2021] EWHC 617 (IPEC) (16 March 2021)

This was an action for trade mark infringement and a counterclaim for a declaration that the registration of that mark was invalid and passing off.  The action and counterclaim came on for trial before His Honour Judge Hacon on 26 Jan 2021.  His Honour dismissed the counterclaim and gave judgment to the claimant on 16 March 2021 (see Wirex Ltd v Cryptocarbon Global Ltd and others [2021] EWHC 617 (IPEC) (16 March 2021).

The Mark

The mark in suit was CRYPTOBACK which the claimant Wirex Ltd, had registered for a large range of goods and services in classes 9, 36 and 42 under registration number UK00003307327 with effect from 28 April 2018.  Wirex used that mark in relation to a credit card incentive scheme in which users receive their rewards in bitcoin.

The Counterclaim

The defendants, Cryptocarbon Global, Cryptocarbon UK Ltd and Bee-One UK Ltd., ran a cryptocurrency cashback scheme called "cryptoback". They alleged that their scheme predated the claimant's.  They sought the invalidation of the claimant's mark under s.47 (1) and (2) of the Trade Marks Act 1994.

In respect of s.47 (2) they argued that they would have been entitled to oppose the registration pursuant to s,5 (4) (a) and s.5 (4A):

"A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented- 

(a) by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade, where the condition in subsection (4A) is met."

That condition is "that the rights to the unregistered trade mark or other sign were acquired prior to the date of application for registration of the trade mark or date of the priority claimed for that application." 

As for s.47 (1), they contended that Wirex must have been aware of their rights when it applied to register the CRYPTOBACK mark. If that was the case the application would have been made in bad faith enabling the defendants to oppose the registration under s.3 (4).

The Issues

As the companies had admitted that they would have infringed the claimant's trade mark if the registration was valid and that one Subash George Manuel would be jointly liable with Cryptocarbon Global and Cryptocarbon UK but not Bee-One UK Ltd. in that circumstance, the issues to be tried were whether the companies could have brought an action for passing off against Wirex before 28 April 2018 and whether Mr Manuel was jointly liable with Bee-One for any wrongdoing by that party.

Passing off

The evidence in support of the counterclaim consisted of Mr Manuel's testimony and contemporaneous documentation.  Judge Hacon found Mr Manuel to be an unsatisfactory witness for the reasons set out in paras [13] to [17] of his judgment.  He concluded at [18] that he could not accept any evidence from Mr Manuel concerning the use of "cryptoback" by Global before 28 April 2018 except where it was clearly supported by documentary evidence.

Such evidence included an email campaign which the judge discussed in paras [31] to [34]. In his witness statement, Mr Manuel had said that the email campaigns had focused primarily on building recognition of the new cryptocurrency CCRB but he referred to two emails, one dated 12 Jan and 12 Feb 2018 that he said, expressly referred to the "cryptoback" service.  The problem with that statement was that it did not indicate who if anyone in the UK had seen those emails.  The judge observed that it was not possible to know how the word "cryptoback" had been presented in any of the emails to which Mr Manuel had referred and therefore how it would probably have been interpreted by recipients.

Another document was an article published by Cryptocarbon Global entitled  "Shopping is Mining – How CCRB is redefining the cryptocurrency model with 'Cryptoback'". Mr  Manuel said it was published on 12 Jan 2018 and that he shared it with 10,000 contacts on Linkedin. He relied on the following passage:

"But of course the key difference is that we have set up a reward program where you receive 25% of the value of whatever you purchase on the affiliate site in CCRB cryptocurrency, according to the High Internet Value – and this is what we like to term 'Cryptoback' – the rewards for the consumer are that they get immediate and risk-free entry into a sure-fire way to mine cryptocurrency, without any equipment or technical knowledge required whatsoever – they simply shop and mine."

The judge's impression was that a reasonable reader would on balance interpret this to mean that "Cryptoback" was a term for a new type of cashback service, now being offered where the cashback rewards are paid in CCRB cryptocurrency.  He was prepared to accept that some members of the public may have read it before Wirex applied for its trade mark but there was no way of knowing how many of them (if any) were in the UK.

After the trial the defendants tried to lodge a webpage that mentioned "Cryptoback" in a list of frequently asked questions about CCRB which they had found on the Wayback Machine,  The claimant objected to the document and the judge refused to admit it.  However, he added that had he admitted it he would not have regarded it as providing sufficient evidence that the word would be seen as anything more than a word for a new type of service. Further, there was no way of knowing how many paid attention to the Cryptoback section and of those, how many were in the UK.

There were records of payments in a column marked "Cryptoback $".  His Honouir said at para [53]:

"They prove nothing about whether and if so how, the word "cryptoback" was presented to the customers at the relevant time. Still less do they show that such use would have been perceived by the customers as a badge of origin."

He said much the same about an invoice dated 9 April 2018 from Global to Bee-One recording "cryptoback sales". It showed nothing about how the term was presented to the public.    Similarly, a web page called "CCRB – CryptoCarbon – Shop & Mine" referred to businesses who were said to use the cryptoback scheme.  There was a link to a business called "Active Wills" which had links marked "Get Cryptoback" and a section headed "How Does Cryptoback work?".  The learned judge said: "the use of the word cryptoback on the Active Wills page was, on balance, probably taken to have been a name for a new type of service, here offered using CCRB cryptocurrency."

There was some evidence that the cashback service was sometimes called "CcrbBack".  Judge Hacon said at [52]:

"If, as seems likely, the Defendants were using both 'cryptoback' and 'CcrbBack' in relation to their new cashback service before the Filing Date, of the two "CcrbBack" is the more likely to have been perceived as referring to the service where payment is in CCRB, which would tend to relegate "cryptoback" to the status of a generic term for the new service."

In his view, that evidence at [55] did not establish that at the filing date Global owned goodwill which was associated with a trade name "cryptoback". The counterclaim for passing off and invalidity of the trade mark registration failed.  As the mark was valid it followed that it had been infringed.

Mr Manuel's Liability for Bee-One's Wrongdoing

Judge Hacon referred to paras [37] and [53] of Lord Justice Chadwick's judgment in MCA Records Inc another r v Charly Records Ltd and others [2001] EWCA Civ 1441, [2003] 1 BCLC 93, [2002] FSR 26, [2002] EMLR 1, [2002] ECDR 37, [2002] BCC 650. The learned lord justice had noted that in order to hold a director liable as a joint tortfeasor it was necessary and sufficient to find that the director procured or induced wrongdoing or that, in some other way, he and the company had joined together in concerted action to secure that such wrongdoing was done.

Judge Hacon noted that Mr Manuel was the sole shareholder of Bee-One and one of its directors but that was not enough to render him liable for the company's torts.  In his witness statement, which had not been challenged in cross-examination, Mr Manuel denied that he was the controlling mind of the company.  In the absence of any evidence to the contrary, the judge was not satisfied that Mr Manuel has been shown to have been personally involved in the acts of trade mark infringement by Bee-One to an extent sufficient to render him liable as a joint tortfeasor. It had not been shown that he either procured or induced those acts to be done or that, in some other way, he and Bee-One joined together in concerted action to secure that those acts were done.

Further Information

I hope to get a chance to mention this case at a seminar run by the Intellectual Property Awareness Network and Nottingham Trent University on IP Strategy for FinTech Startups and SME on 26 April 2021. I am already speaking about Judge Melissa Clarke's judgment in Communisis Plc v The Tall Group of Companies Ltd and others [2020] EWHC 3089 (IPEC) (17 Nov 2020) which is another recent fintech case.  Anyone wishing to discuss this article or IP and fintech generally should call me on 020 7404 5252 or send me a message through my contact form.