David and Goliath Intellectual Property Disputes – A way forward for SMEs

Intellectual property rights are valuable assets of your business and it is important that you take steps to protect them. You can do this by registering your rights and ensuring that anyone infringing those rights is stopped as soon as possible.

One of the main concerns for smaller businesses when faced with an infringement of their intellectual property rights is how much it will cost in terms of time and money in pursuing an infringer through the Courts. A larger opponent with deeper pockets to fight a claim for infringement may deter smaller businesses from pursuing claims, particularly when faced with the risk of losing at Trial and being ordered to pay the opponent’s costs.

The Intellectual Property Enterprise Courts (‘IPEC’), a part of the High Court which hears cases only concerning intellectual property, is designed in such a way to ensure that parties are not discouraged from taking action against infringers because of high costs. The IPEC offers litigants a procedure which is quicker and less costly than the rest of the High Court. One of the main benefits of the IPEC is that it limits a party’s exposure to an adverse costs order should they lose at Trial. Usually, the losing party will not be ordered to pay more than £50,000 and each stage of the proceedings has its own costs cap. This provides the parties with some certainty that the costs of the litigation will not become disproportionate. The IPEC can deal with high value claims up to £500,000. Equally, it can deal with small claims where the damages are not likely to exceed £10,000. Claims which are allocated to the IPEC Small Claims Track are not subject to the costs regime which means the losing party will be ordered to pay little or no costs.

There will be occasions when the IPEC will not be the appropriate forum, e.g., when the costs of pursuing a claim are likely to far exceed £50,000 and a Claimant does not wish to be limited to the cap of £50,000 when seeking to recover those costs from the opponent. We recommend that you take legal advice from one of Bermans’ IP specialists at an early stage. Bermans will be able to advise you on the pros and cons of pursuing a claim against an infringer and the appropriate forum in which to bring a claim.

A recent Bermans success in the IPEC

Bermans recently acted for an SME client in relation to infringement of a UK registered trademark and passing off. Our client, Equisafety Limited (‘Equisafety’), was successful at a Trial in the IPEC against a much larger competitor, Battle, Hayward and Bower Limited (‘Battle’).

Equisafety designs, manufactures and sells high visibility products which help promote the safety of horses and their riders when on the road. In 2015, Equisafety began promoting and selling a high visibility jacket under the mark ‘Mercury’ and later expanded the Mercury range to include leg boots and rugs. In 2019, Equisafety became aware that Battle was selling products, which included high visibility products for horse riders, under the label ‘HyVIZ Silva Mercury Reflective’ or ‘Silva Mercury’. As this was likely to cause confusion, Equisafety sent a cease-and-desist letter to Battle and registered the word ‘Mercury’ as a UK Trade Mark (‘the Trade Mark’). A response was not received and so Equisafety issued a claim against Battle. The claim was initially issued in the small claims Court by the Director of Equisafety acting as a litigant in person. The claim was subsequently transferred to the IPEC and Bermans were instructed to act on behalf of Equisafety.

The claim was brought for infringements of the Trade Mark under section 10(1), 10(2) and 10(3) of the Trade Marks Act 1994 and for passing off. The Defendants denied this and counterclaimed for a declaration that the Trade Mark was invalid under s.47(1) of the Trade Marks Act 1994 because it had been registered in breach of s.3(1)(b), s.3(1)(c), s.3(1)(d) and/or s.3(6) of that Act i.e. that the word “Mercury” was devoid of distinctiveness, was descriptive, had become customary and/or had been registered in bad faith.

Nicholas Caddick QC, sitting as Deputy High Court Judge, found that Battle had infringed the Trade Mark and that there was passing off. Battle’s use of the sign was confusingly similar to the Trade Mark. Further, its use was detrimental to the distinctive character of and took unfair advantage of the Trade Mark. The Judge held that the Counterclaim was dismissed on the basis that the Trade Mark was not descriptive as the average consumer would not consider use of the word ‘mercury’ to be descriptive of the goods. The Judge also found that the Trade Mark had not been applied for in bad faith as Equisafety was clearly making use of the mark ‘Mercury’ and had goodwill.

The full judgment can be read here:  www.bailii.org/ew/cases/EWHC/IPEC/2021/3296.

Get in touch

Our Litigation Team has experience of advising clients on intellectual property disputes. If you would like to discuss your intellectual property rights and see how we can help, please get in touch with us.