Uneasy Ruling - W3 Ltd v EasyGroup Ltd & Anor [2018] EWHC 7 (Ch)

1. Introduction

“A case of considerable complexity” with 44 issues to consider, over 20 years of correspondence and evidence to wade through, an analysis of numerous trade marks owned by both parties and a judgment spanning 102 pages. The recent High Court judgment handed down by Mr Justice Arnold was always going to be substantial, but does it contain useful analyses of trade mark legislation, application and practice, or was it a record of easyGroup’s failed attempt to monopolise and exploit the formula, “easy” prefix and ‘descriptive word’ suffix?

2. The background

easyGroup

The easyGroup business stemmed from Sir Stelios Haji-Ioannou, the “serial entrepreneur and philanthropist”, and his founding of the first of the ‘easy’ businesses, budget airline easyJet, in 1995. Since inception easyJet (and almost all subsequent ‘easy’ businesses) have used a distinctive get-up: (i) white lettering on an orange background (pantone 021C); and (i) in Cooper Black font (not bold, italics, outline nor underlined) the word ‘easy’ in lowercase followed (without space) by another word, the initial letter only being capitalised.

easyGroup was incorporated in 2000 and in November of that year it entered a brand consolidation exercise. The agreement, signed by 37 ‘easy’ companies, transferred all registered and unregistered intellectual property to easyGroup, who in turn licensed the relevant rights back to each party. The agreement included a brand manual of the “easy brand” and get-up, to be used by all easyGroup businesses and licensees.

easyGroup first became aware of EasyRoommate in June 2003 and correspondence between the two parties, regarding use of their respective brands, continued sporadically from July of that year for over 10 years, before these proceedings commenced.

EasyRoommate

The history of Mr Pons and W3’s ‘EasyRoommate’ brand began with the founding of the US business ‘Easy Rent’ in 1995 which put landlords and tenants in direct contact. Whilst the Easy Rent business was sold in 2004, Mr Pons had developed a sister business, ‘EasyRoommate’, which created a link to Easy Rent via the use of the prefix “Easy”. In 1999 it developed into a European online business for room rental under the brand ‘EasyRoommate’, continuing to trade under the same sign to the present day.

The two businesses, arguably, overlapped in the field of accommodation services: easyJet sold advertising for hotels in the UK and, from at least 2010, accommodation was available to book via the easyJet website.

During the dispute, two attempts (in 2011 and 2012) by W3 to sell the EasyRoommate business fell through, a key factor for these collapses being the threat posed by the dispute with easyGroup.

Three cease and desist letters were sent by easyGroup’s lawyers to W3 (12 April 2011, 25 November 2011 and 12 September 2014), and these became the foundation for W3’s claim against easyGroup for groundless threats, a tactical move by W3 in forcing the issue by having the court resolve the dispute once and for all.

3. Some implications of the case

Waiting too long to bring a claim

Whilst it was determined that W3 need not rely on its acquiescence defence because the judge found there was no infringement, Justice Arnold considered that W3 would (in the absence of clarification from the Court of Justice of the European Union (“CJEU”)) have been unsuccessful in its acquiescence defence.

Statutory acquiescence requires a successive five-year period, during which time the owner of an earlier trade mark must acquiesce to the use of a later, identical or similar, trade mark. In this instance, the relevant period ran from 30 January 2009, when the EasyRoommate trade mark was registered, to 31 January 2014.

In letters to W3, easyGroup objected to its use of the later marks, arguing that it had ‘stopped the clock’ on the five-year period. These letters included a formal letter before action and a letter enclosing draft Particulars.  W3 submitted that until the owner of an earlier mark commenced proceedings against the owner of the later mark, the clock would continue to run.

In the absence of a judgment from the CJEU, Justice Arnold concluded that easyGroup’s letters in 2011 were sufficient to ‘stop the clock’, as they had demonstrated a clear objection to the use by W3 of an earlier mark, even though easyGroup did not follow-through by issuing proceedings.

Until clarified, businesses should send cease and desist letters out early, even when there is little appetite for going to court, as this will be sufficient to bar owners of a later mark from relying on the acquiescence defence. The caveat being that such letters must object to the use of a mark. Justice Arnold distinguished easyGroup’s own letters to W3 in 2009 (which did not stop the clock) from the letters from easyGroup’s solicitors in 2011 (which did stop the clock). Therefore, instructing a firm of solicitors to send a letter clearly communicating objections to the use of a mark is likely to ‘stop the clock’ for acquiescence purposes.

Be careful sending threatening letters

easyGroup’s letters to W3 did not contain any actionable threats. Justice Arnold concluded that the letters fell within the exception regarding the threat being in relation to the supply of services under the alleged infringing sign (in this case, EASYROOMMATE).

Senders of cease and desist letters need to be clear on the law (as recently modified by the Intellectual Property (Unjustified Threats) Act 2017 relating to unjustified threats.

Here easyGroup were fortunate in our view that Justice Arnold dismissed W3’s argument that broad undertakings contained in annexures to the threatening correspondence and incidental references to ‘goods’ by easyGroup resulted in the threats extending beyond the services exception. He stated that a reasonable recipient, with knowledge of all the relevant circumstances, would have understood the letters complained of to be threats of trade mark proceedings by the supply of services under the sign ’EasyRoommate’.

Equally businesses seeking to bring unjustified threats actions should not rely heavily on the small details of a letter as a means of justifying whether they have a claim, but look objectively at the communication as a whole, considering the relevant circumstances.

Trade marks always at risk of cancellation

Part of the case focused on whether easyGroup’s EASY trade mark had been validly registered. Justice Arnold declared that the EASY mark was invalid for some of the services for which it was registered, “advertising and temporary accommodation”. Advertising its business to easyJet passengers in its inflight magazine, its licensing opportunities on London taxis, and its portal services through the easy.com website, was not deemed evidence of use in relation to these services.

The EASY trade mark had been invalidly registered in relation to these services, as easyGroup failed to prove its defence that the mark had acquired distinctive character. Justice Arnold stated that genuine use does not mean token use but commercial exploitation in relation to those goods or services that a trade mark is registered for.

However, W3’s trade marks did not remain unscathed. It was decided that non-core services of W3’s EASYROOMMATE mark should be deleted, which W3 accepted at trial, resulting in the amendment of its specification.

This highlights a key message for businesses; registered trade mark specifications should be for the core services that the mark is to be used for, without broadening specifications too widely and leaving a trade mark vulnerable to attack. Businesses considering trade mark litigation should be aware that during proceedings, a portfolio of trade marks will be scrutinised for any opportunities of counterattack.

Trade marks do not grant monopoly rights

Due to the continued evolution of the EasyRoommate business and marks, Justice Arnold considered the relevant date for the assessment of easyGroup’s infringement claims. The parties had very different interpretations; W3 argued the relevant date was when the business launched in the UK (August 2000) whereas easyGroup argued the latest possible date (April 2011) to reflect the fact that the EasyRoommate logo changed over time.

For easyGroup, the later the date the better for strengthening its case, so that its trade marks had acquired a greater degree of reputation and distinctive character. However, Justice Arnold concluded the earlier date was correct (15 August 2000), finding that easyGroup’s family of marks had not at that time acquired a distinctive character. Other ‘easy’ marks were in use at the time, namely easyEverything and easyRentacar, but there had been relatively little use of these.

easyGroup’s family of marks at this date was evaluated by Justice Arnold, in particular, its EASY EU trade mark, which was not considered the distinctive or dominant component. It was only in 2009 that easyGroup was considered by the judge to be in a position “at least to some extent” to rely on a family of marks.

4. Final thoughts

Despite having its claim for unjustified threats dismissed, we think W3 came out on top in this case and succeeded on the main points. easyGroup failed to prove that the EasyRoommate marks infringed their ‘family’ of trade marks and W3 were successful in proving that, in respect of “advertising” and “temporary accommodation”, easyGroup’s EASY mark was invalid.

By issuing proceedings, W3 brought a long and bitter dispute to its final conclusion. The two sides are reported to have each incurred well over a £1million in legal fees. It is impossible to gauge the cost to both businesses in terms of the distraction the litigation created, not least in wasted management time, not only in financial terms.

The key point for any business which owns registered trade mark rights, is ‘use it or lose it’. easyGroup lost on this point as they were unable to prove that the EASY mark had acquired distinctiveness in the relevant market. Indeed, easyGroup owns a vast number of registered trade marks, a great number of which do not appear to be in use, whether for the whole ranges of goods and services included in the specification, or at all.

This case should also serve as a warning for other businesses dealing with troublesome IP disputes. In this case, despite easyGroup never actually issuing proceedings, the litigation risk for the potential buyers of the EasyRoommate business in 2011 and 2012 precluded any effective deal. Businesses in this scenario should be minded that leaving these disputes unresolved could have costly repercussions.

Written by solicitors
Alice Anderson; and
Tim Watkins
of
Hansel Henson Limited

This article first appeared in the March 2018 edition of the Intellectual Property Magazine.

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