A recent series of cases has led to a
change in practice when seeking to
enforce European Union wide registered
rights. Previously, a letter before action
was usual, prior to commencing
proceedings. That has now shifted, with
practitioners filing (but not serving)
proceedings before contacting the alleged
infringer, to prevent a 10 year stay of the
infringement proceedings.
So what is the "Alicante Torpedo" and will
it apply in the pharmaceutical industry?
Background
Where invalidity proceedings have already
been commenced before the Office for
the Harmonization of the Internal Market
(OHIM) or another Community court,
article 104(1) of the Community Trade
Mark Regulation (CTMR) and its sister
provision article 91(1) of the Designs
Regulation require a stay of any
Community Trade Mark (CTM) or
Registered Community Design (RCD)
infringement proceedings in order to avoid
inconsistent decisions on the validity of
EU-wide rights. However, the infringement
court, even if second-seized, may continue
to hear the action if there are "special
grounds" for doing so. These provisions
only apply if the invalidity action has been
filed before the infringement action. If a
defendant wishes to challenge the validity
of an EU-wide right after it has been sued
for infringement, the appropriate venue is
the infringement court by way of a coun-
terclaim for invalidity.
BSkyB
The Court of Appeal of England and Wales
considered the issue of special grounds in
relation to article 104(1) of the CTM
Regulation in the joined cases of EMI and
Starbucks v BSkyB. The cases arose as a
result of BSkyB's proposed launch of an
online TV service under the name NOW
TV. Having received cease and desist let-
ters from both EMI and Starbucks, BSkyB
commenced proceedings before OHIM to
invalidate the CTMs relied on by EMI and
Starbucks. When EMI and Starbucks then
sued for trade mark infringement and
passing off before the High Court in
London (sitting as a Community trade
mark court), BskyB sought a stay of the
infringement proceedings on the basis that
OHIM was first-seized, and there were no
special grounds. The Court of Appeal
espoused the following principles
regarding special grounds, applicable to
both CTMs and RCDs:
· The presumption in favour of a stay is
a strong one;
· It will be "a rare and exceptional case"
where special grounds are established;
· It is irrelevant that the parties have
reached agreement between
themselves;
· Special grounds must relate to factual
circumstances specific to the case;
· It is irrelevant that OHIM proceedings
take up to 10 years. Specific facts
giving rise to particular urgency may,
depending on the circumstances,
constitute special grounds, but the
urgency must be so great as to over
come the heavy presumption in favour
of the stay "[t]he general need of
business to know where it stands is
plainly not sufficient";
· The fact that the defendant ran to
OHIM after receiving a cease and
desist letter is irrelevant in
establishing special grounds; and
· It is irrelevant that there is a passing
off claim that may continue regardless
of a stay.
Practical impact
Whilst some aspects of the Court of
Appeal's reasoning can be criticised, the
effect on practice in the UK was
immediate. The court held that a reactive
invalidity finding (i.e. in response to a
cease and desist letter) does not
constitute special grounds. To avoid the
Alicante Torpedo, practitioners
immediately started to file first and write
later.
This was no doubt an unintended
outcome of the court's reasoning. To
avoid a 10 year stay, EU-wide rights
owners are now filing a claim form (a
reasonably simple and inexpensive
exercise) in order to obtain a filing date,
and then notifying the alleged infringer. If
the matter can be resolved, the claim form
is never served, and lapses. If the alleged
infringement continues, the claim form can
be served.
Pharmaceuticals
There has not yet been a reported English
case discussing the stay provisions in the
context of pharmaceutical trade marks or
designs. However the principles gleaned
from the existing case law give some
guidance as to how such a case may be
treated. Urgency was the central tenet of
the Court of Appeal's decision in BSkyB:
the damage caused by delay was the key
factor in proving special grounds. However
there are two characteristics of the
pharmaceutical industry which could
contribute to the urgency of a claim and
mean that "special grounds" may apply.
The first is the fixed-term nature of
patents. For example, there may be a claim
that a brand name or logo for a patented
pharmaceutical product infringes another
company's CTM or RCD. The alleged
infringer will have invested heavily in the
marketing and launch of that product so is
unwilling to abandon the name, but
substantial delay (up to 10 years at OHIM)
will result in erosion of the valuable
monopoly afforded by the underlying
patent. In such a case an infringement
claim may be deemed sufficiently urgent to
constitute special grounds.
The second relates to the nature of
pharmaceutical products. In a similar
scenario to the above, there may be no
patent issues, but a CTM or RCD dispute
could lead to drugs or treatments being
kept off the market. The public interest in
the availability of medicinal products could
mean that a resolution was sufficiently
urgent to constitute special grounds. Such
public interest arguments were considered
by the UK's (then) Patents County Court
in Regent University v Regent's University
London in relation to adverse effects on
prospective university students. The court
acknowledged that these arguments had
the potential to constitute special grounds,
but on the facts found that they did not.
Comment
Whilst owners of CTMs and RCDs in the
pharmaceutical sector may have arguments
to constitute the special grounds needed
to avoid the Alicante Torpedo, it may be
prudent to file first (perhaps using the
lower cost Intellectual Property Enterprise
Court). Of course, these issues don't
arise if only national rights are relied upon.
It should also be noted that other EU
member states have not applied such a
strict interpretation to "special grounds"
and/or have been more ready to grant
interim relief against infringement than the
English courts have been.
The Alicante Torpedo: change in practice when
enforcing CTMs and RCDs
David Stone and James Fox, Simmons & Simmons
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