Last month, the court refused an application for summary judgment relating to declaratory relief. Although the court recognised the claimant's right to summary judgment, it refused to grant the declarations sought as the application was one-sided and unopposed. Indeed, while declaratory relief would have primarily affected the absent defendant, it could also have been used inappropriately by the claimant against unrepresented third parties.
Juul Labs owned several EU trade marks in relation to the word JUUL and multiple EU registered designs for various vaporisers and pods. Smoke Nation was selling nicotine and CBD vapor pods online, and marketing them as "compatible with Juul devices". Juul Labs issued proceedings for infringement of these rights and passing off, and sought declaratory or injunctive relief and damages.
In relation to the trade mark infringement claim, the declarations sought included a declaration that Smoke Nation's use of Juul Labs' mark to describe their vapor pods as "compatible with Juul devices" did not benefit from the exemption from infringement under Article 14 of the EU Trade Marks Regulation 2017/1001.
The relevant provisions of Article 14 provide that:
"An EU trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade:
(b) signs or indications which are not distinctive or which concern the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of the goods or services;
(c) the EU trade mark for the purpose of identifying or referring to goods or services as those of the proprietor of that trade mark, in particular, where the use of that trade mark is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts.
Paragraph 1 shall only apply where the use made by the third party is in accordance with honest practices in industrial or commercial matters."
Juul Labs claimed that Smoke Nation's use of their mark was not honest in industrial or commercial matters, and, in order to establish dishonesty, submitted evidence that Smoke Nation's offer for sale contravened several UK and EU Regulations.
Crucially, Juul Labs did not seek the declarations solely for the purposes of their claim against Smoke Nation. Rather, their avowed intended use of the declarations was to dissuade other brands from using similar compatibility assertions in the future (regardless of individual circumstances), and possibly to persuade HMRC to either seize, or prevent from entering the UK, goods infringing their mark.
Subsequently, Smoke Nation did not file a defence or acknowledge service of the Particulars of Claim. As a result, Juul Labs applied for judgment in default.
Juul Labs' application was granted in part. The court granted judgment in default on the claims for injunctive relief and damages, but not on the claim for declaratory relief. Close, but no... vape?
The court highlighted that the grant of declarations is a discretionary remedy and one that is heavily guarded. Considering Marcus Smith J's approach in Bank of New York Mellon, London Branch v Essar Steel India Ltd , the court refused to grant declaratory relief on four main grounds.
First, as there was no active dispute between the parties and Smoke Nation never engaged in the proceedings, the Article 14 exemption had not actually been raised. Therefore, the court could not grant a declaration going to an issue it had not been invited to determine.
Second, as the court had not heard Smoke Nation's arguments in favour of the application of the Article 14 exemption, there was insufficient information before it to enable the grant of declarations. Even without an opposing argument, the court found that at least some of the declarations sought were likely to fail.
Third, as Juul Labs had already received sufficient remedy on the default judgment and the Article 14 exemption had not in fact been raised by Smoke Nation, the declarations would be purely academic.
Finally, the declarations were likely to affect third parties who were not before the court. While this is obviously the primary purpose of declaratory relief, the court held that this factor was particularly important in this case and required serious consideration.
Effect of declaratory relief
As stated previously, what Juul Labs sought to achieve with the declarations was to determine similar disputes with unidentified third parties before they even occurred. Indeed, Juul Labs intended to use the declarations to convince others not to use similar compatibility assertions, and that any challenge to their position would be futile as (prima facie) the matter had already been determined by the courts.
Although third parties would be free to ignore the declarations, the court held that they would nonetheless provide Juul Labs with a powerful defensive weapon and could not justify granting them as the Article 14 exemption had not been properly argued.
Nevertheless, the court recognised that it is commonplace for cases to intentionally affect parties that are not before the court, such as cases of public interest or test cases. However, in such cases, the issues between parties are clearly defined and arguments from each side are submitted. Moreover, any relief granted is usually specific to the facts and does not relate to generic infringement scenarios.
If nothing else, this case evidences the issues brands face in policing the use of their marks online, especially in the context of compatibility assertions and the Article 14 exemption.
Declarations are an effective warning to would-be infringers. However, this case is a reminder that courts are unlikely to grant them when the evidence is one-sided and arguments go unchallenged.
"When one analyses what the claimants are seeking in this case it is almost the determination of disputes with unidentified third parties before those disputes are actually raised by anyone, determined by reference to broadly stated facts which may apply in other cases and without reference to other facts which may be applicable. (...) I do not think it right to place such a weapon in the hands of the claimants when the point has not been argued."