Guccio Gucci SpA v Shipton & Heneage Ltd

Gucci is the proprietor of both Community trade marks (CTMs) and national trade marks. One of its marks is a miniature horsebit or snaffle which is the subject of a CTM. Another of its marks is the green-red-green device which is protected both by a CTM and a national trade mark. By its amended particulars of claim Gucci alleges that the defendant (Shipton & Heneage Ltd) has infringed both the CTMs and the national trade mark; and it also alleges passing off. The defendant applied to OHIM for cancellation of the CTMs and applies for a stay of the national proceedings pending a decision by OHIM.

The background is as follows. Gucci is the very well-known Italian fashion house. It was founded by Guccio Gucci in Florence in 1921 as a family-run saddlery and leather goods retailer, and it is now well known for making and selling, amongst other things, shoes and handbags.

The defendant runs a number of shops, one in Battersea, one in Paris and one in Geneva. , It seems that it arranged for the manufacture or import of seven styles of shoe which, according to Gucci, amount to infringement of its marks and/or passing off. It has now stopped selling the allegedly infringing goods and is willing to undertake not to do so pending a decision by OHIM.

Gucci first alleged infringement and passing off in a letter of 10th September 2009. The defendant through its solicitors gave a substantive response to that letter on 24th September. It denied that the marks were valid marks; and in paragraphs 24 and 25 of their letter they said this:

Some months went by and on 16th December Gucci sent the defendant draft particulars of claim. Those draft particulars of claim alleged infringements of the CTMs but not the national mark, and did not allege passing off. On 22nd December 2009, as foreshadowed by the letter of 24th September, the defendant applied to OHIM for cancellation or revocation of the CTMs, and on the following day it offered certain undertakings relating to not selling the infringing goods.

Gucci did not issue its claim form until 10th March 2010, again some three months later. The accompanying particulars of claim alleged infringements of the CTMs only. On 9th April the defendant applied for a stay of the proceedings which still at that stage contained claims for infringement of the CTMs only. On 19th April Gucci served amended particulars of claim raising allegations of infringement of the national trade mark and passing off. The defendant has consented to those amendments being made.

CTMs are the creature of Council Regulation (EC) No. 207/2009 known as the Community Trade Mark Regulation or CTMR. The rationale behind the regulation is explained in the recitals. Recital (3) says:

The nature of a CTM is explained in Article 1.2 of the CTMR. It says explicitly (as the recitals lead one to suppose) that a Community trade mark has a unitary character and has equal effect throughout the Community. In that respect, therefore, it differs markedly from a patent granted by the European Patent Office under the European Patent Convention which takes effect as a bundle of national patents.

Title 10 of the CTMR deals with jurisdiction and procedure. By Article 96 Community trade mark courts (of which the High Court is one) have exclusive jurisdiction over, amongst other things, all infringement actions and counterclaims for revocation or declarations of invalidity of a CTM. Article 97 requires proceedings to be brought in the courts of the Member State in which the defendant is domiciled, and Article 98 gives the CTM court jurisdiction across the whole of the European Union.

Thus, the CTMR envisages that only one court will deal with questions concerning infringement of CTMs even where acts of infringement take place in a multiplicity of Member States. That is different from the case of patents granted by the European Patent Office where national courts have jurisdiction only within their own territories.

Article 100 deals with counterclaims for revocation or declarations of invalidity. Both must be based only on the grounds of invalidity contained in the CTMR itself. If a CTM court declares a CTM to be invalid, then the invalidity must be recorded by OHIM.

Article 109 deals with cases where actions are brought in different Member States between the same parties, one for infringement of a CTM and another for infringement of a national trade mark. The basic rule is that the court other than the court first seised must decline jurisdiction and must follow the decision of the court first seised. This appears to be the case even if the court first seised is dealing with a national trade mark alone. Again, therefore, the CTMR envisages that only one court will deal with a dispute on the merits whether the dispute concerns a CTM or a national trade mark.

OHIM, as set up by the CTMR, has a cancellation division. This division is responsible under Article 134 for taking decisions on applications for revocation or declarations of invalidity of CTMs. Article 104 deals with the division of labour as between the courts on the one hand and OHIM on the other. It says:

The current position, therefore, is that there is a claim for infringement of the CTMs in this court and an application for revocation or a declaration of invalidity in OHIM. This duplication or overlap is directly referred to in Article 104(1). Next there is a claim for infringement of a national trade mark which is outside the scope of the CTMR. Lastly, there is a claim for passing off which is likewise outside the scope of the CTMR.

As regards the second and third claims, it is common ground that Article 104 does not apply. The application for a stay as regards those claims is therefore governed by section 49 (3) of the Senior Courts Act 1981. In Glaxo Group Limited v. Genetech Inc. [2008] FSR 459 Mummery LJ pointed out that section 49 (3) gave the court "the widest possible discretion". Later in his judgment Mummery LJ, having summarised a number of factors, said this at paragraph 62:

The answer to the question, said Mummery LJ, lies in the analysis of the context of the discretion. The context usually provides a clear pointer to the factor or factors carrying more weight than any other in steering the discretion. So I must begin by asking myself: where am I on the map? The presumption in Article 104 is that the CTM will stay its proceedings where there is an application on foot in OHIM. This is clear from the mandatory language of the paragraph which says the court "shall" stay its proceedings. The only circumstance in which it may decline stays is if there are “special” grounds.

Although not concerned with this Article of the CTMR, the ECJ has considered the meaning of "special reasons" in the context of what is now Article 102 of the CTMR. The case in question is case C316/05 Nokia Corporation v. Wardell. The court held, first, that special reasons must be given an autonomous and uniform interpretation throughout the EU; and second, that special reasons must relate to factual circumstances specific to a given case. In addition in that case Advocate General Sharpston said that since special reasons were a derogation from a general mandatory rule, a derogation is to be narrowly construed. In my judgment, the same approach applies to Article 104, although the phrase in Article 104 is "special grounds" as opposed to "special reasons".

In the only English case to have considered Article 104 Kitfix Swallow Group v. Great Gizmos Limited [2008] FSR 9. Mann J. said the presumption in favour of a stay in Article 104 was a strong one. I agree. This differs from the EPC which did not make any provision for the stay of national proceedings. Thus, the starting point for the exercise of a discretion in the present case is very different. Unlike the EPC, the CTMR has consciously tried to avoid conflict and duplication. The general principle is that the court first seised decides the dispute on the merits and any other court defers to that court. This applies even where the court first seised is dealing with a national trade mark as opposed to a CTM. So the general principle is that the first in time prevails.

In a case where there is potential duplication between a CTM court and OHIM the same principle applies in the absence of special reasons, that is to say, special factual circumstances peculiar to the individual case. "Special" to my mind connotes something out of the ordinary run of cases. The fact that the CTMR specifically contemplates a stay where there are concurrent proceedings relating both to a CTM and a national trade mark, indicates to my mind that the mere fact that there are concurrent claims cannot be regarded as a special reason. In my judgment, the same must be true where there is a passing off claim tacked on which arises out of substantially the same facts. As the court said in Nokia, the general national law cannot be regarded as a special reason.

Gucci say that the application to OHIM by the defendant is a cynical attempt at delay and is an abuse of the right to apply to OHIM. It certainly does appear to be the case that a dispute about the validity of the CTM will take far longer to resolve in OHIM than it will if the action proceeded to trial. In addition, unlike the position in the national courts, there is at least one, and possibly two, unrestricted rights of appeal. On the other hand, the application to OHIM will be considered only on the papers and will be considerably cheaper than a full-blown High Court action. In the case of a party with limited means, that may be a powerful consideration.

In my judgment, this is not a case in which the application to OHIM is obviously abusive. Moreover, in cases concerning the Judgment Regulation the ECJ held in Turner v. Grovit that even where a national court considered that an action in another Member State was an abuse of process, it was still required to apply the mechanistic rules of the Judgment Regulation and leave it to that other Member State to decide whether the proceedings were truly abusive. I am doubtful, therefore, whether an allegation that the application is abusive can carry much weight in an application of this kind; and, as Mr. Alkin says, if the application is truly abusive then OHIM itself may well have power to dismiss it on that ground.

Gucci also relies on the proposition that business needs to know where it stands. This will very often be a factor of considerable importance. However, first, it is a general proposition applicable to all business disputes and cannot therefore be considered to be a special ground applicable to this individual case. Second, the delay in question is one inherent in OHIM's own procedures and workload which also cannot be a special ground applicable to this individual case. Third, in the present case the defendant has stopped importing and selling the infringing goods and has offered undertakings not to do so until OHIM has determined its application. So there is no actual prejudice to Gucci and, in any event, in staying proceedings the court can impose provisional protective measures. Thus, even if there are others who might infringe the CTMs in the future as to which there is no real evidence, Gucci can protect its position by interim injunction.

Gucci also says that the claims relating to the national trade marks and passing off claim will proceed to trial irrespective of any decision by OHIM, and that that in itself constitutes a special ground. I take this claim with a pinch of salt since these claims were only introduced by amendment after the defendant had made its application for a stay, but, in any event, as I have said, I do not consider that the existence of the claim based on the national trade marks which are expressly contemplated by the CTMR can amount to a special reason.

In my judgment, therefore, Gucci has not shown that there are special grounds justifying the refusal of a stay of the claims for infringement of the CTMs. What then of the national claims? The defendant says that all claims must be tried together and that if I stay the claims based on the CTMs (as I will) I should also stay the national claims. Gucci on the other hand, argues that in considering whether to stay the national claims I have the wide discretion given to me by section 49 (3) and that although it is generally desirable to try all disputes together, there are considerations which outweigh that general desirability.

Mr. Vanhegan QC for Gucci says that in fact there is little overlap between the issues that OHIM will be asked to determine and the issues that the national court will be asked to determine. In particular, so far as the national trade mark is concerned, it raises questions relating to a different date, different goods and a different market to the issues raised in OHIM. The passing off claim relates to quite different considerations, and in at least one case involves the use of two signs resembling Gucci's marks but used in combination. The passing off claim, he says, is fact sensitive and depends on the defendant's particular methods of marketing. Gucci has a prima facie right to choose the forum in which to litigate its claims and in the case of claims relating to the national trade mark and passing off that forum is the national court.

Mr. Alkin accepts that this is so, since he submitted that if Gucci wants to litigate its national claims it is free to do so, provided it discontinues the claims based on the CTMs. The suggestion of discontinuance seems to me, with respect, to be pointless; but it does underline the fact that there is no serious reason to prevent Gucci from enforcing its national rights.

Again, Mr. Vanhegan relies on the fact that the national proceedings will be determined much more quickly than the application to OHIM, and relies further on the fact that in the national court the right of appeal is strictly curtailed, whereas in OHIM there are two potential appeals as of right. He says there is no real prejudice to the defendant in parallel proceedings. The proceedings in OHIM take place on the papers, so there is little duplication in terms of trial preparation and, in any event, the defendant has already put its case on paper before OHIM. Further legal and other written material may well be common to both. Moreover, Mr. Vanhegan says that a decision of the national court on the validity of the national mark will help to resolve the application in OHIM. Although the costs of a trial are likely to be substantial, there is no real evidence that the defendant cannot afford to litigate.

Mr. Alkin's main point is that the CTMR has a policy that one court should hear all disputes. In my judgment, that policy is more powerful where there is in fact one court that can hear all disputes. In the present case that is not OHIM. In the Glaxo case Mummery LJ said that the question of delay was likely to be amongst the most weighty factors that the court should consider in deciding whether to grant a stay or not under section 49 (3). In the present case, it seems to me that the factors in favour of a stay of the national claims are outweighed by the factors against and, in particular, the factor of delay.

In sum, therefore, I will stay the claims based on alleged infringement of the CTMs and otherwise will allow the action to proceed to trial.