Hearst Holdings Inc & Anor v A.V.E.L.A. Inc & Ors

Under the Community Trade Mark Regulation, the requirement for the same cause of action adopts the autonomous EU-law test of the same facts, the same rule of law and the same end in view. Similar commercial activity and overlapping relief do not suffice where the transactions, defendants, goods or images differ.

The strong presumption in favour of a stay where validity is already in issue may be displaced by rare and exceptional circumstances. A stay sought only after judgment would defeat the purpose of avoiding irreconcilable judgments and may be refused where the proceedings are effectively complete.

Summary judgment is appropriate where the pleaded case has no real prospect of success. A late alternative case which amounts to a collateral attack on an existing judgment should not be permitted.

The claimants had obtained judgment finding the defendants liable for trade mark infringement and passing off in relation to Betty Boop merchandise. The present judgment concerned consequential applications after the main judgment.

The defendants relied on earlier proceedings in Italy and sought declining of jurisdiction or a stay under Articles 109 and 104 of the Community Trade Mark Regulation and Article 28 of the Brussels I Regulation. They also sought to preserve a pleaded bad-faith invalidity challenge to the claimants’ trade marks.

The court had to decide whether the English and Italian proceedings involved the same cause of action or related actions, whether special grounds justified continuing the English proceedings, and whether the bad-faith claim had any real prospect of success.

1. Jurisdiction and stays. Article 109 of the Community Trade Mark Regulation did not apply. The expression “same cause of action” had the same autonomous EU-law meaning as in Article 27 of the Brussels I Regulation. The requirements were cumulative: the proceedings had to be based on the same facts, depend on the same rule of law and have the same end in view. The English and Italian claims concerned different acts, transactions, defendants, images and licence relationships. Their ends in view were also directed to relief arising from the acts proved in each country. The applications under Article 109 were therefore refused (paras [17]–[37]).
2. Article 104 applied because the validity of the Community trade marks was already in issue in Italy. The presumption in favour of a stay was strong, and special grounds would ordinarily be rare and exceptional. However, raising the issue only after judgment was wholly unprecedented. Staying proceedings which had effectively finished could not reduce the risk of irreconcilable judgments and would defeat the policy of the provision. The stay was refused (paras [38]–[43]).
3. The court also refused a stay under Article 28 of the Brussels I Regulation. Having refused relief under Article 104, and for the same reasons, the discretion under Article 28 did not justify a stay (para [44]).
4. Bad faith. The pleaded allegation under section 3(6) of the Trade Marks Act 1994 and Article 52(1)(b) of the Community Trade Mark Regulation was that the claimants had no rights in the Betty Boop character. Even assuming the defendants’ copyright allegations, the existing findings established that the marks were distinctive and that the claimants and their licensees had built goodwill and reputation before registration. The pleaded case was therefore hopeless and had no real prospect of success.
5. An alternative allegation that the goodwill was founded on misrepresentation was not permitted. It was unpleaded, constituted a collateral attack on the judgment already given, and was raised too late having regard to the earlier case-management order. Summary judgment was entered for the claimants and the bad-faith invalidity application was dismissed (paras [45]–[65]).
6. The court declined to stay the bad-faith issue pending the Italian proceedings. The summary judgment application was ripe for determination, the pleaded case had no real prospect of success, and the conclusion followed from the findings in the main judgment (paras [66]–[67]).

First-instance decision. The judgment records an earlier main judgment in the same proceedings, [2014] EWHC 439 (Ch) , finding liability for trade mark infringement and passing off.