Kitfix Swallow Group Ltd v Great Gizmos Ltd

Where national trade mark proceedings and proceedings before OHIM overlap, the court should not assume that the OHIM proceedings take priority. Article 100 of Council Regulation 40/94 establishes the relevant procedural framework, but the national court must decide any stay application justly by weighing all relevant circumstances. Those circumstances include the claimant’s legitimate interest in its chosen forum, the likely timing and finality of each process, the viability of the OHIM proceedings, the risk of inconsistent decisions, related claims, delay, costs and undertakings not to trade. A lower cost in OHIM does not by itself justify a stay.

Kitfix, proprietor of a Community trade mark for “Sequin Art”, brought English proceedings against Great Gizmos, an English distributor, for trade mark infringement and passing off. Great Gizmos counterclaimed for invalidity under Articles 7(1)(b) and (c) of Council Regulation 40/94.

After the English proceedings began, the manufacturer commenced invalidity proceedings at OHIM, relying on wider grounds. Great Gizmos applied to stay the English proceedings pending the OHIM outcome. OHIM had initially stayed its proceedings, then purported to resume them, and later reimposed the stay. The issue was whether the English proceedings should nevertheless be stayed.

1. Application dismissed. The English proceedings were not stayed.
2. The analogy with European patent proceedings was rejected. Although patent and trade mark systems both create potential concurrent proceedings, the patent practice of presuming a stay in favour of the European Patent Office could not be assumed to apply to Community trade marks.
3. Article 100(1) of Council Regulation 40/94 expressly addresses circumstances in which validity is already in issue before another Community trade mark court or OHIM. Article 100(2) provides that OHIM should ordinarily stay proceedings where validity is already in issue by counterclaim before a Community trade mark court, unless there are special grounds for continuing. It does not create a presumption that the national court should stay its proceedings in favour of OHIM.
4. Where the national court is asked to stay its proceedings, the correct approach is to reach a just decision by weighing all relevant factors. Relevant considerations included the substantial cost advantage of OHIM proceedings, the possible binding effect of an OHIM revocation decision, the risk of inconsistent decisions, the parties’ undertakings, the relationship with the passing off claim, and the manufacturer’s position.
5. The factors favouring continuation were decisive. The English trial was likely to precede the OHIM decision by three to six months. Finality was also likely to be achieved earlier because appeals from OHIM were more extensive and available as of right. The continuation of the OHIM proceedings was itself uncertain, the claimant was entitled to sue the English distributor in England, the passing off claim remained live, and the manufacturer had delayed commencing the OHIM proceedings.
6. The additional cost of continuing in England, although significant, did not outweigh the claimant’s legitimate interest in proceeding in its chosen jurisdiction and the other factors favouring continuation.

OHIM’s later reimposition of its stay confirmed the court’s concerns but did not affect the decision, except to make the conclusion against a stay in England clearer.

not stated in the judgment.