Damages not an Adequate Remedy in Trade Mark Dispute
The Irish High Court has granted an interlocutory injunction restraining the infringement of a plaintiff’s registered trade mark, finding that damages would not be an adequate remedy in the circumstances.

The Irish High Court (Court) has granted an interlocutory injunction restraining the infringement of the plaintiff’s registered trade mark in the recent case of Aviareto Ltd v. Global Closing Room Ltd [2021] IEHC 377, holding that damages would not be an adequate remedy for the plaintiff in the circumstances.

Background

The services provided by both the plaintiff and the defendant are very specialised, and the underlying facts are quite complex. Therefore, this article is confined to the pertinent facts and key issues arising from the judgment. 

The plaintiff is a joint venture between SITA SC and the Irish Government and acts as registrar and operator of the International Registry of Mobile Assets in Aircraft Equipment. 

At considerable effort and expense, the plaintiff had developed a digital platform in relation to the registration of interests in aircraft and mobile assets. This digital platform was named "Closing Room", which the plaintiff registered as a trade mark in a number of jurisdictions, including as an EU trade mark in Classes 9, 35, 36, 38, 42 and 45 (plaintiff's EUTM). 

The defendant was incorporated in Ireland in August 2019 and is related to a US company, AIC Title Agency LLC (AIC), who provide "aircraft closing services" under the trade mark "Aircraft Closing Room". AIC and the plaintiff reached a settlement in respect of the use of the trade mark "Aircraft Closing Room" in August 2019.

In September 2019, the defendant filed an EU trade mark application for the name 'Global Closing Room' (Disputed Mark) in the same six Classes protected by the plaintiff's EUTM. The plaintiff opposed this  EUTM application.

There was considerable dispute between the parties regarding the extent of promotional and business activities carried out by the defendant under the Disputed Mark between late 2019 and mid-2020. The defendant alleged that considerable activity had taken place, whereas the plaintiff pointed to the lack of  evidence to support this. The extent of activity under the Disputed Mark was relevant to assess:

  1. whether the plaintiff had delayed in issuing the proceedings (Delay Issue), and 
  2. the "balance of convenience". In particular, whether the plaintiff had failed to take action while the defendant expended considerable time, effort and resources in promoting the Disputed Mark.

Proceedings were issued by the plaintiff in July 2020, claiming trade mark infringement and passing off. The interlocutory injunction application issued in September 2020. The defendant counterclaimed for invalidity of the plaintiff's EUTM on a number of grounds including lack of distinctiveness and descriptiveness. 

Adequacy of Damages & Presumption of Validity

Applying the Supreme Court's decision recalibrating the test for preliminary injunctions in Merck Sharp and Dohme Corporation v Clonmel Healthcare Ltd [2019] IESC 65 (Merck), the Court considered the adequacy of damages as part of its overall assessment of the "balance of convenience", rather than as a separate antecedent consideration. The Court recognised the often unquantifiable nature of any potential damage to property rights. While this was not determinative in itself, it was a factor relevant to the balance of convenience and one which favoured the plaintiff. 

Significant emphasis was placed on the fact that the plaintiff was asserting a property right based on an EU trade mark registration, granted in compliance with a prescribed legal process. In the Court's view, inherent in a property right is the entitlement to that property, not just to its value. In that sense, a court "should not lightly regard an award of damages as an adequate remedy" for the plaintiff for the deliberate infringement of such a right. Arguably, this point will almost always weigh in favour of an intellectual property right holder seeking an injunction where the defendant was aware of the earlier rights.  

The Court rejected the defendant's argument that if an injunction was granted and it subsequently succeeded at trial, damages would not be an adequate remedy for the losses it would sustain. The argument was premised on the fact that rebranding its business would be a significant financial and logistical undertaking. While the High Court acknowledged this inconvenience, it criticised the defendant's "overstated" claims, in particular the absence of any estimate of the costs involved in a rebranding exercise. On this basis, damages would be an adequate (albeit imperfect) remedy for the defendant.

The Court accepted that there were legitimate concerns regarding the security of the defendant's website, which would be capable of adversely affecting the plaintiff's reputation and goodwill in its mark if they were to materialise.

Delay Issue

The Court said that the delay should not be dealt with as a discreet issue but should be "more properly characterised as an element of the balance of convenience".

Possibility of No Trial 

The defendant argued that the grant of an interlocutory injunction would effectively afford the plaintiff substantive relief as the defendant would have to rebrand to continue trading pending the trial of the substantive proceedings. The plaintiff contested this, pointing to two other brands used across the defendant's promotional material under which the defendant could trade. The Court noted that whereas the grant or the refusal of an injunction may confer a tactical benefit to one side, the grant of the interlocutory injunction of itself should not result in the trial not proceeding. Whilst the grant of an interlocutory injunction would remove the urgency for the plaintiff, the defendant can push for the hearing of its counterclaim. 

Necessity for "Irreparable Harm"

The defendant argued that a plaintiff must establish that it will suffer "irreparable harm" in order to ground entitlement to an interlocutory injunction, and the plaintiff had failed to do so given the lack of evidence of actual confusion between the two marks. The Court rejected this proposition citing Merck, that the interests to which an interlocutory injunction may afford protection are not limited to the purely financial. To hold otherwise would require a court to sanction the prima facie infringement of a presumptively valid right in almost all cases. 

In concluding its analysis on this point, the Court stated:

"To allow the defendant to use a mark which is strikingly similar pending the trial of the action would necessarily mean that the plaintiff’s property rights would not be afforded protection until the plaintiff is successful in the substantive action."

Clearing the Path

The Court separately had regard to the issue of "clearing the path" (a concept familiar to patent litigation) and whether the defendant ought to have challenged the validity of the plaintiff’s mark before trading. Despite acknowledging that there was no positive obligation to "clear the path", the Court held that the rationale underlying the concept is that of “commercial common sense”. The defendant engaged in a "high-risk strategy" when it made a "deliberate choice" to launch its business under a brand that it knew incorporated the entirety of the plaintiff’s trade mark and as such, the defendant had to bear the consequences of the plaintiff taking action to protect its rights.

Judgment 

The Court noted three main factors of relevance to the balance of justice in this case:

  1. Adequacy of damages (bearing in mind that a trade mark is a property right);
  2. The defendant deliberately decided to take a commercial risk in launching under a similar name;
  3. Delay.

The Court held that the first two factors weighed in favour of granting the interlocutory injunction. Concerning the Delay Issue, the Court did not accept that delay of five months warranted a refusal of relief nor, more importantly, that such delay "caused the defendant to alter its position or incur expense more quickly". 

Comment

The judgment suggests that the protection of particular property rights in intellectual property disputes in circumstances such as in this case, means damages will often be an inadequate remedy for a plaintiff.  It also suggests that a court will have regard to a failure to clear the path in such disputes, and delay is a factor which the court will consider in deciding where the balance of justice lies. The judgment will be welcomed by rightsholders seeking to protect trade marks and other intellectual property rights in Ireland.

 

Contributed by Colette Brady and Darragh Larkin

Key Contacts

Laura Scott Partner

Colette Brady Partner