Court allows stay of proceedings in EU trademark case

The Court allowed a stay of proceedings to allow the EU’s Office of Harmonisation of the Internal Market to decide on a trademark issue between two competing companies. This was decided on 5 October 2015 by Mr Justice Mark Chetcuti in King.com Ltd –v- Avukat Dottor Louis Cassar Pullicino for TeamLava LLC.

The plaintiff company held that it developed and markets the famous game Candy Crush and with a great deal of investment, the game has acquired a tremendous reputation. The trademark Candy Crush and Candy Crush Saga have been registered in 2012. It has evidence that the defendant company has also an online and downloadable game called Candy Blast Mania and Candy Blast, since August 2013.

This runs counter to Council Regulation EC 207/2009 on Community Trademarks. These Regulations provide for remedies in such cases, which may be enforced throughout the EU and in fact Article 9(1) of the Regulations states that an owner of a trademark “shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is ... similar to, the Community trademark, ... where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trademark.”.

The plaintiff company accused the defendants of free riding from their reputation and also tarnishing their reputation. Both Candy Crush and Candy Blast Mania are Match 3 games, and therefore are identical. The plaintiffs have filed another action before the Community Trademark Court. The plaintiffs then asked the court to declare that the defendants are responsible for contravening their rights as trademark owners and award them damages.

The defendant company filed their statement of defence stating that once there are proceedings before the Office of Harmonisation of the Internal Market, then the proceedings before the Maltese courts should be suspended. The defendant company denied that they compromised any right of the plaintiff in terms of the EU Regulation.

The Court in its judgement held that the defendant company has already stated that there are pending proceedings before the Office of Harmonisation of the Internal Market to decide on the validity of the workmark “Candy” and therefore it is invoking Article 104(1) which states:

“A Community trademark court hearing an action referred to in Article 96, other than an action for a declaration of non-infringement shall, unless there are special grounds for continuing the hearing, of its own motion after hearing the parties or at the request of one of the parties and after hearing the other parties, stay the proceedings where the validity of the Community trademark is already in issue before another Community trademark court on account of a counterclaim or where an application for revocation or for a declaration of invalidity has already been filed at the Office.”

Mr Justice Chetcuti commented that although the plea makes reference to one of 5 trademark, the defendant company had filed a counter claim challenging the validity of all the trademarks registered in the name of King.com Limited. Article 96(a) of the EU Regulations stipulates:

“The Community trademark courts shall have exclusive jurisdiction: 

for all infringement actions and – if they are permitted under national law – actions in respect of threatened infringement relating to Community trademarks;” The Community Trademarks Court are the Maltese courts and therefore, it has the discretion whether to stay the proceedings or not, however, the Article 104(1) binds the court to suspend the proceedings where there have been proceedings instituted before the OHIM. This may be done away with only if there exists special grounds. The English High Court in its judgement Nokia Corp –v- Joacim Wardell held: 

“Although not concerned with tis Article of the CTMR, the ECJ has considered the meaning of “special reasons” in the context of what is now Article102 of the CTMR. The case in question is case C316/05 Nokia Corporation v. Wardell. The court held, first, that special reasons must be given an autonomous and uniform interpretation through the EU; and second, that special reasons must relate to factual circumstances specific to a given case. In addition in that case Advocate General Sharpston said that since special reasons were a derogation from a general mandatory rule, a derogation is to be narrowly construed. In my judgment, the same approach applies to Article 104, although the phrase in Article 104 is “special grounds” as opposed to “special reasons”. There is the staying of proceedings should not be given in exceptional circumstances. If the counter claim is successful in that the trademarks’ registration were invalid, then, it would have a direct impact of the merits of this case.

Mr Justice Chetcuti then ordered the case to be suspended until the OHIM deliver its final judgement.