IPEC's Continuing Jurisdiction in EU Trade Mark Disputes after Brexit - Crafts Group LLC v Indeutsch International
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Intellectual Property Enterprise Court (HH Judge Hacon) Crafts Group LLC v Indeutsch International and another [2023] EWHC 1455 (IPEC) (16 June 2023)
This was an application by Indeutsch International and Knitpro International for a stay of claims that had been brought against them in the Intellectual Property Enterprise Court by the Crafts Group LLC to abide the outcome of cancellation proceedings in the EU Intellectual Property Office. The application was based on art 132 (1) of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (codification)(Text with EEA relevance. ) OJ L 154, 16.6.2017, p. 1–99 ("the EU Trade Mark Regulation") and CPR 3.1 (2) (f).
The Litigation
On 11 Dec 2020 Crafts Group LLC issued proceedings against Indeutsch International and Knitpro International for groundless threats in respect of one of their EU trade marks. At the time the claim form was issued the United Kingdon had left the European Union but EU law continued to apply in the UK pursuant to art 127 (1) of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the EuropeanUnion and the European Atomic Energy Community ("the withdrawal agreement"). EU law ceased to apply on 31 Dec 2020 pursuant to art 126 of the withdrawal agreement. On 8 Jan 2021 Crafts Group LLC amended its claim form to allege unjustified threats in respect of two of the defendants' UK trade marks. Between 9 Sept 2021 and 29 Sept 2022, Indeutsch and Knitpro attempted unsuccessfully to set aside service. Upon the failure of their attempt, they served a defence and counterclaimed for trade mark infringement and passing off. Crafts Group responded with a reply and defence to counterclaim and an additional claim for invalidation of the EU and UK marks or, alternatively. their revocation for non-use.
The Issue
Art 132 (1) of the EU Trade Mark Regulation provides:
"An EU trade mark court hearing an action referred to in Article 124 other than an action for a declaration of non-infringement shall, unless there are special grounds for continuing the hearing, of its own motion after hearing the parties or at the request of one of the parties and after hearing the other parties, stay the proceedings where the validity of the EU trade mark is already in issue before another EU trade mark court on account of a counterclaim or where an application for revocation or for a declaration of invalidity has already been filed at the Office."
The question for the court was whether that article remained in force after 31 Dec 2020 when EU law ceased to apply to the UK.
The UK Legislation
Reg 2 of The Trade Marks (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019 No 269) and para 3 of Sched 1 to the Regulations inserted a new Sched 2A into the Trade Marks Act 1994. Para 20 (1) of Sched 2A to the Act provided:
The Intellectual Property Enterprise Court had been an "EU trade mark court" when the action began and subparagraph (2) of para 20 continued its jurisdiction to resolve cases relating to EU trade marks after 31 Dec 2020 subject to certain exceptions. One of those exceptions was art 132 of the EU Trade Mark Regulation.
The Withdrawal Agreement
However, para 20 (2) of Sched 2A to the Act was incompatible with art 67 (1) of the withdrawal agreement:
"In the United Kingdom, as well as in the Member States in situations involving the United Kingdom, in respect of legal proceedings instituted before the end of the transition period and in respect of proceedings or actions that are related to such legal proceedings pursuant to Articles 29, 30 and 31 of Regulation (EU) No 1215/2012 of the European Parliament and of the Council, Article 19 of Regulation (EC) No 2201/2003 or Articles 12 and 13 of Council Regulation (EC) No 4/2009, the following acts or provisions shall apply:
....................................
(b) the provisions regarding jurisdiction of Regulation (EU) 2017/1001,........;"
Art 67 was incorporated into the laws of England and Wales, Scotland and Northern Ireland by s.5 of the European Union (Withdrawal Agreement) Act 2020 which inserted a new s.7A into the European Union (Withdrawal) Act 2018.
However, para 20 (2) of Sched 2A to the Act was incompatible with art 67 (1) of the withdrawal agreement:
"In the United Kingdom, as well as in the Member States in situations involving the United Kingdom, in respect of legal proceedings instituted before the end of the transition period and in respect of proceedings or actions that are related to such legal proceedings pursuant to Articles 29, 30 and 31 of Regulation (EU) No 1215/2012 of the European Parliament and of the Council, Article 19 of Regulation (EC) No 2201/2003 or Articles 12 and 13 of Council Regulation (EC) No 4/2009, the following acts or provisions shall apply:
....................................
(b) the provisions regarding jurisdiction of Regulation (EU) 2017/1001,........;"
Art 67 was incorporated into the laws of England and Wales, Scotland and Northern Ireland by s.5 of the European Union (Withdrawal Agreement) Act 2020 which inserted a new s.7A into the European Union (Withdrawal) Act 2018.
The Anomaly
The conflict between para 20 (2) of the Trade Marks Act 1994 as amended which excluded art 132 of the EU Trade Mark Regulation and art 67 which seemed to preserve it from proceedings relating to EU trade marks that had begun before 31 Dec 2020 was noted by Sir Julian Flaux, Chancellor at para [54] of his judgment in Easygroup Ltd v Beauty Perfectionists Ltd and another [2022] Bus LR 146, [2021] EWHC 3385 (Ch), [2022] WLR(D) 7:
"[54] … the exclusions of Articles 128 and 132 are not relevant to the issue which the Court has to decide. ......... As [the claimant] pointed out, it does appear that these exclusions from Articles 128 and 132 are inconsistent with Article 67.1 of the Withdrawal Agreement which provides that in pending proceedings the jurisdiction provisions in Chapter X of EU Regulation 2017/1001 will continue to apply without there being any such exclusions. However, that issue does not arise for determination in the present case so I need say no more about it."
"[54] … the exclusions of Articles 128 and 132 are not relevant to the issue which the Court has to decide. ......... As [the claimant] pointed out, it does appear that these exclusions from Articles 128 and 132 are inconsistent with Article 67.1 of the Withdrawal Agreement which provides that in pending proceedings the jurisdiction provisions in Chapter X of EU Regulation 2017/1001 will continue to apply without there being any such exclusions. However, that issue does not arise for determination in the present case so I need say no more about it."
In Simon v Taché and others [2022] 3 WLR 835, [2022] WLR(D) 297, [2022] QB 917, [2022] EWHC 1674 (Comm), HH Judge Cawsom had to consider the analogous issue of whether to stay proceedings that had started in England after 31 Dec 2020 in accordance with Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) OJ L 351, 20.12.2012, p. 1–32 on the ground that similar proceedings had been brought in Belgium before 31 Dec 2020.
The Hearing
The application came on before HH Judge Hacon on 22 May 2023. By para [74] of his judgment in Crafts Group LLC v Indeutsch International and another [2023] EWHC 1455 (IPEC) which he handed done on 16 June 2023, the learned judge stayed all claims relating to the EU and UK marks until after the final resolution of the application made in the EUIPO for cancellation of the EU trade mark under art 132 of the EU Trade Mark Regulation and on case management grounds.
Art 132
Crafts Group had argued that art 132 no longer applied because IPEC had ceased to be an "EU trade mark court" within the meaning of the article. In Easygroup the Chancellor had to decide whether he could grant an EU-wide injunction in respect of proceedings relating to an EU trade mark that had begun before 31 Dec 2020. He held at paras [49] and [50] that the High Court retained its jurisdiction in respect of pending proceedings after that date:
"[49] Mr Abrahams sought to answer this point by submitting that, after IP completion day, this court was no longer an EU trade mark court, because even though the repeals in Schedule 5 of the 2019 Regulations did not include the 2006 Regulations, by repealing the 2008 and 2016 Regulations that Schedule had necessarily by implication repealed the underlying 2006 Regulations. However, I do not consider that it is possible to say that the 2006 Regulations have somehow been impliedly repealed by Schedule 5 to the 2019 Regulations. Whilst the legislation giving effect to Brexit is not exactly clearly and coherently drafted, it would be surprising to say the least if the 2006 Regulations had been impliedly repealed by a statutory instrument made on 13 February 2019, when the 2018 Regulations, which had come into force a month earlier on 14 January 2019, had made detailed, albeit minor, amendments to the 2006 Regulations to ensure that they cross-referred to EU Regulation 2017/1001, hardly consistent with the 2006 Regulations being about to be repealed.
[50] In any event, even if the 2006 Regulations have somehow been impliedly repealed, I consider the submission that this court is no longer an EU trade mark court as regards pending proceedings is misconceived. It ignores the position as regards pending proceedings in circumstances where, when the 2019 Regulations came into force on IP completion day, 31 December 2020, the Withdrawal Agreement and the EU Withdrawal Acts 2018 and 2020 were all in force. Immediately prior to IP completion day, these proceedings were pending before this court, which was an EU trade mark court. Mr Abrahams' submission did not really address how it was that this court ceased to have that status when paragraph 20 of Schedule 2A makes it clear that, as regards proceedings already pending before this court as an EU trade mark court on IP completion day, this court continues to be an EU trade mark court. Thus, paragraphs 20(3) and (4), even if they were limiting jurisdiction as Mr Abrahams contends, are obviously forward looking, in the sense that they are dealing with jurisdiction in pending proceedings after IP completion day and yet they refer to the relevant court in the United Kingdom as 'the EU trade mark court' not 'the former EU trade mark court'. On the basis that this court remains an EU trade mark court for the purposes of pending proceedings, the clear intention of article 67 of the Withdrawal Agreement, which has full legal effect, is that this court should retain the same jurisdiction under EU Regulation 2017/1011 as it had before IP completion day."
Judge Hacon rejected the claimant's argument that para 20 (2) of Sched 2A ri the Trade Marks Act 1994 should override art 67 of the withdrawal agreement because para 20 (2) was a specialist provision whereas art 67 was general. Art 67 (1) (b) was just as much a specialist provision as para 20 (2) of Sched 2A as it addressed the EU Trade Mark Regulation. He agreed with the defendants that s.8B of the European Union (Withdrawal) Act 2018 indicated an intent on the part of Parliament that the direct effect of the withdrawal agreement could not be limited by regulations made by a minister even if the regulations had the effect of amending a statute,
In His Honour's view, para 20 (2) and art 67 could be reconciled. He said at para [55]:
"The two provisions overlap. The overlap does not of itself create a difficulty. Art.67(1)(b) provides for the continuing effect of art 132 as retained EU law in respect of proceedings instituted before the end of the IP completion day; paragraph 20 of schedule 2A does not. The net result is that art.132 has continuing effect."
As the judge had noted at para [38] that it was common ground that if pursuant to art.67 (1) (b), art.132(1) was engaged, there were no "special grounds" within the meaning of art.132 (1). Accordingly, the court had to stay the proceedings insofar as they applied to the EU trade mark. At para [56] he said he would stay the counterclaim for infringement of the EU mark, the claim for threats in relation to the EU mark and the claims for revocation and a declaration of invalidity in relation to the EU mark under art 132.
Case Management
There remained the threats actions relating to the UK marks, the counterclaim for infringement of those marks, the counterclaim for passing off and the additional claims for invalidation or revocation. The defendants sought a stay of those actions under s.49 (3) of the Senior Courts Act 1981 and CPR 3.1(2) (f).
The judge observed that the validity of UK marks that corresponded to EU marks would be invalidated or revoked automatically under para 21A (2) of Sched 2A to the Trade Marks Act 1993. It was common ground that neither the if the EU mark was declared invalid by the EUIPO, the corresponding UK mark would be declared invalid too. However, a finding of validity by the EUIPO did not prevent an English court from invalidating or revoking the UK registrations on other grounds.
There were objections from Crafts Group that it could lose money if there were a stay but the judge observed that any losses could be compensated in damages. He said at [71]:
"If there is no stay, there will be a trial in several months' time and a second trial after the judgment of the CJEU to deal with the claims this court is required to stay under art.132(1) of the Trade Mark Regulation."
He added that a judgment in IPEC would at least in part be subsequently overtaken by the CJEU's judgment, possibly in substantial part, so the cost of dealing with such claims in this court would be wasted. As far as the remaining trade mark claims and passing off were concerned the balance of justice favoured staying those as well.
"[49] Mr Abrahams sought to answer this point by submitting that, after IP completion day, this court was no longer an EU trade mark court, because even though the repeals in Schedule 5 of the 2019 Regulations did not include the 2006 Regulations, by repealing the 2008 and 2016 Regulations that Schedule had necessarily by implication repealed the underlying 2006 Regulations. However, I do not consider that it is possible to say that the 2006 Regulations have somehow been impliedly repealed by Schedule 5 to the 2019 Regulations. Whilst the legislation giving effect to Brexit is not exactly clearly and coherently drafted, it would be surprising to say the least if the 2006 Regulations had been impliedly repealed by a statutory instrument made on 13 February 2019, when the 2018 Regulations, which had come into force a month earlier on 14 January 2019, had made detailed, albeit minor, amendments to the 2006 Regulations to ensure that they cross-referred to EU Regulation 2017/1001, hardly consistent with the 2006 Regulations being about to be repealed.
[50] In any event, even if the 2006 Regulations have somehow been impliedly repealed, I consider the submission that this court is no longer an EU trade mark court as regards pending proceedings is misconceived. It ignores the position as regards pending proceedings in circumstances where, when the 2019 Regulations came into force on IP completion day, 31 December 2020, the Withdrawal Agreement and the EU Withdrawal Acts 2018 and 2020 were all in force. Immediately prior to IP completion day, these proceedings were pending before this court, which was an EU trade mark court. Mr Abrahams' submission did not really address how it was that this court ceased to have that status when paragraph 20 of Schedule 2A makes it clear that, as regards proceedings already pending before this court as an EU trade mark court on IP completion day, this court continues to be an EU trade mark court. Thus, paragraphs 20(3) and (4), even if they were limiting jurisdiction as Mr Abrahams contends, are obviously forward looking, in the sense that they are dealing with jurisdiction in pending proceedings after IP completion day and yet they refer to the relevant court in the United Kingdom as 'the EU trade mark court' not 'the former EU trade mark court'. On the basis that this court remains an EU trade mark court for the purposes of pending proceedings, the clear intention of article 67 of the Withdrawal Agreement, which has full legal effect, is that this court should retain the same jurisdiction under EU Regulation 2017/1011 as it had before IP completion day."
Judge Hacon rejected the claimant's argument that para 20 (2) of Sched 2A ri the Trade Marks Act 1994 should override art 67 of the withdrawal agreement because para 20 (2) was a specialist provision whereas art 67 was general. Art 67 (1) (b) was just as much a specialist provision as para 20 (2) of Sched 2A as it addressed the EU Trade Mark Regulation. He agreed with the defendants that s.8B of the European Union (Withdrawal) Act 2018 indicated an intent on the part of Parliament that the direct effect of the withdrawal agreement could not be limited by regulations made by a minister even if the regulations had the effect of amending a statute,
In His Honour's view, para 20 (2) and art 67 could be reconciled. He said at para [55]:
"The two provisions overlap. The overlap does not of itself create a difficulty. Art.67(1)(b) provides for the continuing effect of art 132 as retained EU law in respect of proceedings instituted before the end of the IP completion day; paragraph 20 of schedule 2A does not. The net result is that art.132 has continuing effect."
As the judge had noted at para [38] that it was common ground that if pursuant to art.67 (1) (b), art.132(1) was engaged, there were no "special grounds" within the meaning of art.132 (1). Accordingly, the court had to stay the proceedings insofar as they applied to the EU trade mark. At para [56] he said he would stay the counterclaim for infringement of the EU mark, the claim for threats in relation to the EU mark and the claims for revocation and a declaration of invalidity in relation to the EU mark under art 132.
Case Management
There remained the threats actions relating to the UK marks, the counterclaim for infringement of those marks, the counterclaim for passing off and the additional claims for invalidation or revocation. The defendants sought a stay of those actions under s.49 (3) of the Senior Courts Act 1981 and CPR 3.1(2) (f).
The judge observed that the validity of UK marks that corresponded to EU marks would be invalidated or revoked automatically under para 21A (2) of Sched 2A to the Trade Marks Act 1993. It was common ground that neither the if the EU mark was declared invalid by the EUIPO, the corresponding UK mark would be declared invalid too. However, a finding of validity by the EUIPO did not prevent an English court from invalidating or revoking the UK registrations on other grounds.
There were objections from Crafts Group that it could lose money if there were a stay but the judge observed that any losses could be compensated in damages. He said at [71]:
"If there is no stay, there will be a trial in several months' time and a second trial after the judgment of the CJEU to deal with the claims this court is required to stay under art.132(1) of the Trade Mark Regulation."
He added that a judgment in IPEC would at least in part be subsequently overtaken by the CJEU's judgment, possibly in substantial part, so the cost of dealing with such claims in this court would be wasted. As far as the remaining trade mark claims and passing off were concerned the balance of justice favoured staying those as well.
Comment
Anyone interested in the transitional provisions relating to EU trade marks after Brexit may wish to read my presentation How Brexit has changed IP Law of 24 Jan 2021 which can be downloaded from Slideshare and my article How Brexit has changed IP Law of 17 Jan 2021 in IP After Brexit. I can also be contacted by phone on +44 (0)20 7404 5252 during office hours or through my message form should anyone wish to discuss this article.
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