Out-Law News | 14 Jul 2021 | 11:21 am | 5 min. read
Businesses that knowingly launch using signs or brand names similar to registered trade marks must bear responsibility for the consequences of a right holder's entitlement to take action to protect its rights, the High Court in Ireland has held.
The court issued a preliminary injunction in a ruling that builds on the Supreme Court decision in the case of Merck and Clonmel and which has endorsed the presumptive validity of registered trade marks as property rights, legal experts have said.
Dublin-based Michael Finn and Erika O’Donnell of Pinsent Masons (Ireland) were commenting after the High Court granted a pan-EU preliminary injunction against Global Closing Room Limited (GCRL) at the request of Aviareto Limited. Aviareto is a joint venture company that operates the International Registry of Mobile Assets – an electronic register for securities in aircrafts and other mobile assets and supervised by the International Civil Aviation Authority. Pinsent Masons acted for Aviareto in the case.
In fulfilling its role with the registry, Aviareto operates an online facility called the Closing Room. The name 'Closing Room' has been in use since 2015 and was registered as an EU trade mark in August 2019, as well as in several other jurisdictions, in respect of six classes of goods and services.
GCRL has been a registered company in Ireland since August 2019 and, like Aviareto, provides services to facilitate major transactions in respect of aircrafts. In September 2019 GCRL applied for an EU trade mark for ‘Global Closing Room’ covering the same six classes as those for which Aviareto's trade mark 'Closing Room' had been registered. Aviareto filed an opposition to this application in October 2019 which was largely successful, with the EU Intellectual Property Office (EUIPO) ruling earlier this year in favour of the opposition in all but one class.
Before the Irish High Court and in the substantive proceedings, Aviareto has argued that GCRL is responsible for infringing its trade mark and unregistered rights in the ‘Closing Room’ brand which it said is to the detriment of the goodwill it has built up in the brand and its reputation. Aviareto is claiming damages. Aviareto also sought an injunction to prevent GCRL using and trading under a name similar to its trade mark. GCRL in return has raised a counterclaim in which it is challenging the validity of Aviareto’s trade mark. The High Court said that it will rule on those issues following a full trial, but in the interim considered whether to grant a preliminary injunction against GCRL.
The legal test for determining whether preliminary injunctions should be granted in Ireland was set by the Irish Supreme Court in 2019 in a case involving pharmaceuticals giant Merck and rival medicines manufacturer Clonmel. If the preliminary hurdles within the legal test are satisfied, the court must evaluate whether the balance of justice favours issuing the preliminary injunction or not. In this case there was no dispute between the parties that there was a fair issue to be tried and the court had to accordingly adjudicate whether to grant a preliminary injunction based upon the balance of convenience. A range of factors are relevant to that balancing exercise, but of primary importance in most cases is determining whether an award of damages, as opposed the issuing of an injunction, would be an adequate remedy for any alleged infringement.
There were two other main factors the High Court deemed relevant to the balance of justice in the context of Aviareto’s preliminary injunction application. Those factors were the fact that GCRL took a deliberate commercial risk in launching its business under a name similar to the Closing Room trade mark, and Aviareto’s delay in seeking the injunction.
The court considered it relevant to the assessment of the adequacy of damages, and gave weight to the fact, that Aviareto was asserting a presumed-to-be-valid property right with its EU trade mark, and that those rights were granted to it in compliance with prescribed legal processes and presumed to be valid for the purposes of the company’s application.
The court considered Aviareto’s damages claim to be primarily motivated by a desire to preserve its reputation and attached weight to evidence provided by independent IT experts concerning the security of GCRL’s website which the court considered relevant to Aviareto’s concerns about damage to its reputation. The court was satisfied that Aviareto had established legitimate concerns regarding the security of GCRL's website "which, if they were to materialise, would be capable of adversely affecting [Aviareto’s] reputation and goodwill".
Based largely on the nature of the rights Aviareto seeks to protect and the circumstances of the alleged infringement, the court held that damages would not be an adequate remedy for Aviareto in this case.
In raising its case as to where the balance of justice lay in this case, Aviareto made novel arguments claiming that if GCRL wished to launch a business using a trade mark similar to its, it should have challenged the validity of the Closing Room mark in advance of doing so. This is known colloquially as ‘clearing the path’ and has developed as a legal concept in the field of patent law. However, the court accepted GCRL’s argument that the concept of clearing the path does not apply in trade mark litigation. Michael Finn of Pinsent Masons said, however, that the court had made it clear that that was not the end of the matter.
Finn said: “The court held that the rationale underlying the concept of clearing the path is that of commercial common sense. Where a person sets up a business knowing that it is likely to interfere with the intellectual property rights of another, the weight to be attached to complaints made of expense already incurred when the inevitable litigation ensues will necessarily be reduced. In this case, the dispute between the parties did not arise as a result of ignorance or oversight on the defendant’s part: GCRL knew of the existence of the Closing Room trade mark.”
“Therefore, whilst there was no particular obligation on GCRL to have sought the revocation of Aviareto's trade mark before launching its business, unlike with a generic medicines manufacturer in pharmaceuticals, the mere launching of its business did not have to result in a clash over intellectual property rights. The principles of commercial common sense applied and meant that as GCRL knowingly commenced a business under a mark bearing a striking similarity to Aviareto's it should have anticipated and must bear responsibility for the consequences for it of the action Aviareto has taken to protect its mark,” Finn said.
At the centre of GCRL’s case was its claim that Aviareto had delayed too long in filing its application for an injunction against it, and it argued that this factor should sway the balance of justice in its favour. Rather than categorising the delay complained of as a discrete issue which could bar an applicant from obtaining court-granted relief no matter how meritorious the claim might be, the court considered it as an element of the balance of convenience. The court considered this to be in line with the case law developed by the Supreme Court in the case of Merck and Clonmel. While the court agreed that Aviareto was responsible for some delay, it said this was not to the extent as was argued by GCRL.
Erika O’Donnell of Pinsent Masons said: “Ms Justice Butler stated that the factor of delay weighed against the grant of interlocutory relief but that to a very large extent the costs associated with said delay were off-set by GCRL's deliberate decision to start using a name similar to Aviareto's registered mark without any prior attempt to clear the way. Consequently, the High Court granted Aviareto an interlocutory injunction restraining the infringement of its registered trade mark and the use by GCRL of the name or sign 'Global Closing Room' pending the full trial.”