WALTON INTERNATIONAL LTD v VERWEIJ FASHION BV

[2018] R.P.C. 19 689 WALTON INTERNATIONAL LTD v VERWEIJ FASHION BV CHANCERY DIVISION [2018] EWHC 1608 (Ch); [2018] R.P.C. 19 H1 Trade Marks – European trade marks – GIORDANO – Infringement – Invalidity – Revocation – Procedure – Discontinuance of infringement claims shortly before trial – Effect on counterclaims – Whether abuse of process – Whether consistent with the overriding objective – Application to set aside notice of discontinuance – Non-use – Online stores – Targeting – Genuine use – Token use – Bad faith – Earlier mark – Goodwill – Honest concurrent use – Passing off H2 This was the trial of an action for infringement of various UK and EU registered trade marks and a counterclaim for invalidity and/or the revocation of the registrations relied upon and for passing off. Five days before the commencement of the trial of the action the first claimant (“Walton”) had served a notice of discontinuance in respect of the EU registrations relied upon. The defendant (“Verweij”) applied to set that notice aside and the hearing of that application was heard on the first day of the trial. The judgment reported here addresses both that application (which was successful) and the issues arising at the trial. Walton was a company incorporated in the Cayman Islands and was the registered proprietor of five UK and four EU registered trade marks all comprising or including the word GIORDANO and registered for various goods and services in classes 14, 18, 25 and 35 of the register. Fuller details of these registrations are set out at [2] and [3] of the judgment reported here. The second claimant (“Giordano UK”), which had been incorporated in October 2015, was licensed to use the trade marks in the UK. The claimants were part of the Giordano Group of companies, which was engaged in the manufacture and retailing of clothing. The business had been founded in Hong Kong in 1981 and had been very successful. An online shop was first established in the late 1990s and in December 2010 the Giordano Group had launched a global e-shop. In January 2014 it also began selling its goods via an online store on the AliExpress platform. By the time of the trial the Giordano Group had a network of 2,414 GIORDANO retail stores, largely in Asia-Pacific and the Middle East, and for the year ending 31 December 2017 its global sales were over £520 million. There was no doubt that the GIORDANO brand was well known in its core markets and, in particular, in Hong Kong, China and Taiwan. There had also been pop-up stores in the UK and Spain in 2016. However, there was no suggestion that they had an established market for GIORDANO clothing in either the UK or the EU. Verweij was a family run business based in the Netherlands which had been founded in 1955 and incorporated in 1986. The business had started with a single retail shop in Rotterdam selling quality menswear imported from Italy. It had started selling menswear branded GIORDANO in the Netherlands in 1989 and this had expanded to other EU countries over the years. Verweij sold its first order to a UK H3 H4 [2018] R.P.C., Issue 10 ß Crown copyright 2019. This article contains public sector information licensed under the Open Government Licence v3.0 (http://www. nationalarchives.gov.uk/doc/open-government-licence/version/3/) Arnold J.: 11-15 and 28 June 2018 690 H6 H7 customer in 2000. By 2015 about 150 different companies were stocking its GIORDANO menswear in independent retail stores and boutiques in the UK and it had developed a loyal customer base. In 2016 Verweij sold items in the UK with a wholesale value of nearly £750,000 (corresponding to a retail value of around £2 million). A significant proportion of its sales were made via sales agents but it also generated business via trade shows in the UK and elsewhere in the EU including the IMC Menswear Show in Northampton and Moda at the National Exhibition Centre in Birmingham. Verweij was also the exclusive licensee of a Benelux registration of the mark GIORDANO in classes 18 and 25 and, based on that registration, an international registration had been obtained designating Austria, France, Germany, Italy, Portugal, Spain (class 18 only) and Switzerland (see [108] of the judgment). On 8 October 2015 Verweij had filed applications to revoke three of Walton’s UK registrations for non-use, the remaining UK registration (“UK297”) not have been on the register for long enough to be vulnerable to such an attack. Those applications had later been referred to the High Court and were continued by the counterclaim in this action. On 12 October 2015 and 9 February 2016, proceedings had been commenced in the European Union Intellectual Property Office (“EUIPO”) by Albanicos Ltd, another company under the control of a member of the Verweij family, for the revocation of two of Walton’s EU trade marks on grounds of non-use. The present proceedings commenced only later – on 25 August 2016. After service of the Verweij’s counterclaim for the revocation of all of the UK and EU trade marks relied upon by the claimants in this action, an order had been made, with the consent of both parties as set out in a joint letter dated 11 May 2017 (“the Joint Letter”), permitting the present proceedings to continue in respect of the EU marks already in issue before the EUIPO as there were “special grounds” within the meaning of what is now art.132(1) of Regulation 2017/1001/EU (“the Regulation”). The key passage of the Joint Letter is set out at [5] of the judgment reported here. The EUIPO thereafter suspended the revocation proceedings before it pending a final decision in the present proceedings. It was Verweij’s concern that discontinuance by Walton of its EU trade mark claims would deprive the court of jurisdiction over the counterclaim in so far as it related to the EU trade marks. The claimants contended that their objective in discontinuing the EU trade marks claims was to simplify and streamline the issues for trial. However they accepted that it was an inevitable consequence of discontinuance that the court was deprived of jurisdiction to determine Verweij’s counterclaims for the revocation of the EU trade marks. On the first day of the trial Verweij argued that the court should proceed to determine the counterclaims and was not precluded from doing so because (i) what mattered was whether the court had jurisdiction when the counterclaim was served, not later; (ii) if the notice of discontinuance was set aside, the parties would simply be returned to the position they were in the day before the notice was served; alternatively (iii) the Joint Letter represented an agreement on jurisdiction falling within art.25 of European Parliament and Council Regulation 1215/2012/EU (the Brussels I Regulation”) to which the court was required to give effect. The claimants submitted that a question of the interpretation of the Regulation arose and that it should be referred to the Court of Justice. As to the trial (...truncated)