Trade-mark threats made by US company stopped by UK ruling

Ex parte applications are seldom the stuff of legal commentary. But on 11 July an application in the High Court's Chancery Division before Mr Justice Jacob created what is believed to be a legal first.

It is a first that members of the Nabarro Nathanson intellectual property department believe has considerable significance in the increasingly international arena of trade-marks, patents and copyright.

Andrew Inglis who with Stephen Cottrill headed up the Nabarros team that masterminded the application, says he believes it is the first occasion since the introduction of the Trade Marks Act 1994 that Section 21 – which provides a legal weapon to combat groundless threats being made over alleged trade-mark infringement – has been used. And, says Inglis, the use of the section illustrates its potency and shows how it cuts across international boundaries.

The action leaves no doubt that threats to copyright need not emanate from within this country for them to come within the jurisdiction of our courts. If a threat involves a threat to take action in the UK then it is caught by Section 21.

The case in question, which is still to be fully aired, involves a trade-mark row between Big Smith Global and Caterpillar. Caterpillar, whose name has become used as a designer label, granted a licence to Big Smith Global for use of its name on clothing.

However, the two companies are now at loggerheads over whether the licence agreement has been terminated or not. Caterpillar say it has been. Big Smith say it hasn't.

As part of the dispute, Caterpillar faxed a letter from the US to one of Big Smith's UK distributors threatening them with action over an alleged trade-mark infringement.

As a result, Big Smith went to court and won an injunction banning Caterpillar from making more threats, which Big Smith claims are groundless, against it directly or through customers or distributors. Although the ban was obtained ex parte, it will remain in force until the final hearing of the full action or settlement of the case, unless Caterpillar successfully applies to vary it.

"The fact that an injunction has been granted under the provisions of the act is an important development because it illustrates the potency of the act to deter companies using unwarranted threats in relation to possible trade-mark infringement proceedings," said Inglis.

Stephen Cottrill said: "I think one of the most significant points emphasised by the case is that Section 21 is not restricted to threats or parties physically within the UK.

"In this case the letter containing the threat was written in the US and faxed to this country. However, the judge decided that the important factor was not the origin of the letter but the fact that it was a threat of action in the UK."

Quite apart from clarifying the situation over action relating to threats made from outside the UK, the judge's ruling also made it clear that there is a right of action even where the threat is made not directly to the aggrieved party but to those such as customers or, as in this case, distributors.