Best Buy Co Inc & Anor v Worldwide Sales Corp. Espana SL

A communication amounts to a threat of trade mark infringement proceedings if, viewed in its factual context, a reasonable recipient would understand it as conveying an intention to enforce trade mark rights. Conditional language does not prevent a threat unless the condition makes proceedings unrealistically hypothetical. The court considers the impact of the communication on the reasonable recipient, both when identifying a threat and when deciding whether it is limited to excluded acts under Trade Marks Act 1994, section 21(1). A threat concerning a Community trade mark is within section 21 only if it concerns proceedings in the courts of the United Kingdom. Correspondence forming part of bona fide settlement negotiations may be protected by the without prejudice rule, even if it is not expressly marked without prejudice.

The claimants, intending to expand their Best Buy retail business in Europe, alleged that a letter from the defendant’s Spanish lawyers threatened proceedings for infringement of the defendant’s Spanish and Community trade marks. The letter requested undertakings not to use the Best Buy mark or publicise the proposed European activities, while offering a negotiated solution involving compensation.

The claim raised whether the letter threatened infringement proceedings in the United Kingdom, whether any threat concerned excluded acts, and whether the correspondence was inadmissible under the without prejudice rule. The court also identified issues concerning standing and relief, but those issues did not require determination.

1. The action was dismissed. The letter would be understood by a reasonable businessman, in context, as threatening trade mark infringement proceedings. Its references to legal action, protection of registered rights and requested undertakings conveyed an intention to enforce the defendant’s rights. Its conditional nature did not prevent it being a threat: conditionality is immaterial where the condition is realistically capable of being met.
2. Section 21 of the Trade Marks Act 1994, as extended to Community trade marks by paragraph 6(1) of the Community Trade Mark Regulations 2006, concerns threatened proceedings in the courts of the United Kingdom. The extension to Community trade marks did not give the provision extra-territorial effect.
3. The question whether a communication is limited to excluded acts under section 21(1) is determined by its impact on the reasonable recipient. A person seeking the benefit of an exclusion must frame the communication so that the threat is clearly limited to proceedings concerning the excluded act. The letter here sought restraints extending beyond the supply of services, including use of the mark and publicity, and therefore was not limited to an excluded act.
4. The letter was nevertheless protected by the without prejudice rule. It formed part of bona fide negotiations arising from existing trade mark opposition and revocation proceedings. The fact that it also set out the defendant’s rights and the consequences of failed negotiations did not turn it into an open letter before action. The correspondence had to be viewed as a whole, and could not be divided notionally into admissible and privileged parts.
5. Because the alleged threat was inadmissible, it was unnecessary to decide whether the claimants were persons aggrieved or what relief would otherwise have been available.

First-instance decision. No prior appellate decision is stated in the judgment.