Bargain Busting Limited v Shenzhen SKE Technology Co Ltd & Ors

Applications for interim injunctions against allegedly unjustified trade mark threats may fall within the exceptional category recognised under [2005] 1 AC 253. The applicant need not always show that it is more likely than not to succeed at trial. The court must ask whether the prospects of success are sufficiently favourable to justify relief in the particular circumstances.

The court must assess the competing risks of injustice. Relevant considerations include the potentially rapid and difficult-to-quantify harm caused by threats to secondary distributors or retailers, the availability of lawful permitted communications, and the extent to which an injunction restricts freedom of expression. The order should preserve the statutory exceptions and be no wider than necessary.

The claimant owned or applied for trade marks involving the word CRYSTAL and had threatened distributors and retailers of the first defendant’s vaping products with trade mark infringement proceedings. The threats sought undertakings to stop distribution or sale.

The first defendant applied under sections 21 to 21F of the Trade Marks Act 1994 for an interim injunction restraining further threats and for information about the recipients. The parties agreed that the communications were threats within section 21, that the first defendant was a person aggrieved, and that threatening to join a party to existing proceedings constituted a threat. The central issues were the applicable merits threshold, the balance of risks, and the proper scope of any injunction.

1. Interim injunction granted. The order was to restrain further threats of trade mark infringement proceedings, subject to substantial amendment to preserve the statutory exceptions and genuinely without prejudice communications. The parties were directed to seek agreement on the draft order.

2. Because the injunction might affect the claimant’s freedom of expression, section 12(3) of the Human Rights Act 1998 applied. Following the approach in Cream Holdings, the court had to decide whether the applicant’s prospects of success at trial were sufficiently favourable to justify relief in the particular circumstances. A rigid requirement of a greater-than-even chance of success was inappropriate.

3. Applications concerning allegedly unjustified threats to secondary parties will often be exceptional cases for section 12(3). The statutory regime protects trade mark proprietors while restricting threats against secondary distributors and retailers. Proprietors remain able to threaten primary infringing activities, make permitted communications, and bring infringement proceedings.

4. The court also had to minimise the risks of injustice from granting or refusing relief, applying the approach in Olint. Further threats could cause sudden and serious commercial harm, and damages would be difficult to assess because the causal link between threats and lost sales might be difficult to prove. The claimant’s potential loss from being unable to send letters before commencing proceedings was comparatively limited and compensable in costs.

5. The first defendant showed a serious issue concerning the CRYSTAL BAR application, but not a better-than-even chance of success on that issue. It nevertheless established a realistically arguable and potentially successful non-use case concerning the 344 Mark, and at least a serious issue concerning the 551 Mark. The commercial purpose and scatter-gun character of the threats, together with the selection of only some threatened parties for joinder, supported the risk of further unjustified threats.

6. The claimant confirmed the identity of the recipients of the December letters. No further witness statement or disclosure was required at that stage. The application for disclosure concerning indemnity arrangements was not pressed.