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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> L'Oreal (UK) Ltd & Anr v. Johnson & Johnson & Anr [2000] EWHC Ch 129 (7th March, 2000) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2000/129.html Cite as: [2000] FSR 686, [2000] EWHC Ch 129

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L'Oreal (UK) Ltd & Anr v. Johnson & Johnson & Anr [2000] EWHC Ch 129 (7th March, 2000)

 B e f o r e

BETWEEN:

(1) L'ORÉAL (UK) LIMITED
(2) GOLDEN LIMITED
Claimants

and

(1) JOHNSON & JOHNSON
(a corporation organised under the laws of the State of New Jersey, USA)
(2) JOHNSON & JOHNSON LIMITED
Defendants

__________________

Mr Richard Arnold (Instructed by Messrs White & Case, 7-11 Moorgate, London EC2R 6HH) appeared on behalf of the Claimants.
Miss Denise McFarland (Instructed by Messrs Ashurst Morris Crisp, Broadwalk House, 5 Appold Street, London EC2A 2HA) appeared on behalf of the Defendants.

Judgment Approved by the Court
Hearing: 24th February 2000
Judgment: 7th March 2000
__________

This is the official judgment of the Court and I direct that no further note or transcript be made.

INTRODUCTION

1. This is the Claimants' appeal from an Order of Master Bragge by which he struck out the Claimants' claims for unjustified threats of trade mark infringement proceedings and for a declaration of non-infringement of the Defendants' registered trade marks on the ground that there was no threat and no sufficient grounds for seeking the declaration. The issues raised are what is sufficient to constitute a threat and what are sufficient grounds for this purpose .

2. The First Defendant is the registered proprietor of three UK Registered Trade Marks consisting of the marks JOHNSON'S NO MORE TEARS and NO MORE TEARS registered in respect of baby shampoos. The First Defendant is also the registered proprietor of two Irish Registered Trade Marks consisting of the marks JOHNSON'S NO MORE TEARS and NO MORE TEARS registered in respect of baby shampoos. The Second Defendant is a United Kingdom subsidiary of the First Defendant and its licensee in the United Kingdom.

3. The Claimants manufacture and supply hair products in the United Kingdom and the Republic of Ireland. In April 1999 the Claimants launched a range of children's hair products in the UK and Ireland under the name L'ORÉAL KIDS. The range included L'ORÉAL KIDS Extra Gentle 2-in-1 shampoo and L'ORÉAL KIDS Extra Gentle Conditioner. The packaging of both products bears the statement "No Tears! No Knots!". The relevant part of the statement for the purpose of these proceedings is the words "No Tears" and I shall refer to them as "the Words".

4. On the 25th May 1999 Irish solicitors acting for the First Defendant wrote to the First Claimant alleging that the First Claimant's use of the Words on the L'ORÉAL KIDS Extra Gentle 2-in-1 Shampoo was an infringement of its Irish NO MORE TEARS registration. The letter threatened the First Claimant with proceedings for infringement unless the First Claimant agreed to cease use of the words and gave an undertaking not to do so in the future. On the 4th June 1999 the First Claimant by its Irish solicitors replied denying infringement and calling on the First Defendant to withdraw the allegation. On the 11th June 1999 the First Defendant and its Irish subsidiary Johnson & Johnson (Ireland) Ltd brought proceedings in the High Court of Ireland against the First Claimant alleging infringement of its Irish NO MORE TEARS registration. On the 15th June 1999 the Irish claimants launched an application for an interlocutory injunction. After the service of affidavit evidence the application for an interlocutory injunction came before the Irish High Court on the 13th October 1999. At that hearing the judge effectively stood over the application to trial and ordered a speedy trial. The matter is presently due to be tried on the 28th March 2000.

5. Meanwhile on the 4th June 1999 the Claimants' English solicitors wrote to the First Defendant referring to the allegation of infringement of the Irish registration and requesting confirmation that proceedings for infringement of the First Defendant's UK registrations would not be brought by reason of the sale in the United Kingdom of the L'ORÉAL KIDS range of products bearing the Words. In the absence of a reply, a chaser was sent on the 21st June 1999. The substantive reply to this letter was contained in a letter from the Defendants' English solicitors to the Claimants' English solicitors dated the 23rd June 1999 ("the Letter") which reads as follows:

The Claimants contend that the Letter constitutes a threat to bring infringement proceedings against them or at least an adverse assertion of right sufficient to found an application for a declaration of non-infringement.

6. On the 21st July 1999 the Claimants commenced these proceedings seeking (1) revocation of the Defendants' UK registration for NO MORE TEARS, (2) relief for unjustified threats of trade mark infringement proceedings pursuant to Section 21 of the Trade Marks Act 1994 and/or (3) a declaration of non-infringement of the First Defendant's UK registrations under the Court's inherent jurisdiction.

7. On the 2nd September 1999 the Defendants applied to strike out, alternatively for summary judgment in respect of, the claims for threats and a declaration of non-infringement. That application came before Master Bragge on the 19th October 1999. In a full and careful reserved decision dated the 15th November 1999 the Master ruled in favour of the Defendants. The Claimants now appeal.

8. Appeals from Masters continue to be governed by RSC Order 58 as part of Schedule 1 to the CPR. Accordingly the appeal is to be dealt with by way of actual rehearing as if the matter was coming before this Court for the first time: Civil Procedure (2nd ed) para R58.1.3. The application to strike out can be ignored since it adds nothing to the application for summary judgment under CPR Part 24. The correct test to be applied under CPR Part 24 is whether the Claimants have a realistic as opposed to a fanciful prospect of success. Furthermore the proper disposal of a Part 24 application does not involve the judge conducting a mini-trial: Swain v Hillman (The Times, 4th November 1999, CA). The Court should proceed upon the basis that all the facts pleaded in the Particulars of Claim are true.

9. The issue on this application by the Defendants focuses on the preconditions for commencing proceedings for declaratory relief, most particularly in relation to trade marks. There are two bases for this jurisdiction, namely the inherent and perfectly general jurisdiction of the Court to grant declarations to resolve disputes and questions, and the statutory jurisdiction conferred by Section 21 of the Trade Marks Act 1994 to grant relief in cases of groundless threats of infringement proceedings. It is important to bear in mind that, whilst the inherent jurisdiction is procedural only and enables the Court to declare what are the existing rights of the parties, Section 21 of the Trade Marks Act 1994 creates a new statutory tort and a new substantive cause of action, not merely for a declaration, but for an injunction and damages if the necessary ingredients of the tort specified in the section are present. Both in case of the inherent and the statutory jurisdiction, the grant of a declaration is at all times a discretionary remedy. It may be refused if the application is frivolous, unnecessary, futile, oppressive or otherwise objectionable. As a matter of discretion in a case where a declaration is granted under Section 21, the Court may decline to grant a wider declaration under the inherent jurisdiction on grounds that it is unnecessary or undesirable: see Prince PLC v. Prince Sports Group Inc [1998] FSR 21. But (contrary to the submission made to me by the Defendants) the fact that the circumstances in a particular trade mark case do not amount to the statutory tort and that accordingly there is no jurisdiction to grant a declaration under Section 21 does not mean nor is it indicative that a declaration will not be granted under the inherent jurisdiction. Whether such a declaration should be granted depends upon whether the separate and distinct conditions for exercise of the inherent jurisdiction are satisfied.

10. When deciding whether the preconditions for commencing proceedings for a declaration both under Section 21 and the inherent jurisdiction are satisfied in this case, attention must be concentrated on the Letter read in the context of the facts surrounding its writing. The following general comments may be made:

(a) proceedings had already been commenced in Ireland between the First Defendant and the First Claimant;

(b) (as the Claimants have pleaded and as must be accepted as correct for the purposes of this application) the law, products and market (for all material purposes) are the same in the United Kingdom and Ireland and accordingly the issues and prospects of success of infringement proceedings must be the same;

(c) in 1997 after a formal letter of complaint from the Defendants' Trade Mark Attorney about its use of the same words on its products Boots desisted from such use of the Words on its products and came to heel;

(d) the Letter was written in response to a request for assurances that proceedings for infringement of the trade mark would not be brought by reason of sales in the UK of the Claimants' range of products bearing the Words;

(e) the Letter contains the following messages:

(1) proceedings have been commenced in Ireland;

(2) the Defendants' local UK Management consider that the Claimants' use of the Words is an attempt to benefit unfairly from the enormous equity built up in "No More Tears", (a factor legally relevant to the strength and width of the Defendants' trade marks);

(3) no decision had been made whether to make a claim of trade mark infringement;

(4) others in the UK who had used the mark in the recent past had now agreed to respect the Claimants' position and stop their use;

(5) the Defendants were continuing their investigation of the UK market and English and European Law needed before a decision could sensibly be taken;

(6) the Defendants had six years to commence proceedings for infringement if so minded;

(7) the Claimants' threat of proceedings for a declaration of non-infringement was premature;

(8) the Defendants could not give the Claimants the comfort sought at that stage and reserved all their rights;

(f) the reference in the Letter to the need for further time to investigate the law and market before giving a substantive response rings hollow in view of the pleaded and accordingly (for the purpose of this application) agreed identity of law, market and products in Ireland and the United Kingdom and the evident sufficiency of the investigation already mounted to prosecute proceedings in Ireland. I may add that, in response to a question from me Counsel for the Defendants informed me that even now the investigation is incomplete.

11. Section 21 of the Trade Marks Act 1994 reads as follows:

12. The policy represented by the first statutory threats provision (section 32 of the Patents, Designs and Trade Marks Act 1883) was clearly to stop patentees who were (in Pope's words about Addison) "willing to wound but afraid to strike" from holding the sword of Damocles above another's head: see Simon Brown LJ in Unilever plc v Procter & Gamble Co [1999] IP&T 171 at 189. The law as to the meaning of the word "threat" is usefully summarised in the Encyclopaedia of UK and European Patent Law paras. 10-402/3. In summary, the term "threat" covers any intimation that would convey to a reasonable man that some person has trade mark rights and intends to enforce them against another. It matters not that the threat may be veiled or covert, conditional or future. Nor does it matter that the threat is made in response to an enquiry from the party threatened: Unilever plc v Proctor & Gamble Co [1999] FSR 849, 860 (Laddie J) citing Skinner v Shew [1893] 1 Ch 413. In Brain v Ingledew Brown Benison & Garrett [1996] FSR 341, 349 Aldous LJ stated:

In Bowden Controls Ltd v Acco Cable Controls Ltd [1990] RPC 427, 432 in the course of considering whether it was arguable that the letter complained of was a threat, after stating that a threat can be veiled or implied just as much as it can be explicit, Aldous J. said.:

The test is whether the communication would be understood by the ordinary recipient in the position of the claimant as constituting a threat of proceedings for infringement.

13. The power, and the limits on the power, of the Court to grant declarations is to be found in the inherent jurisdiction of the Court. RSC Order 15 r.16 merely provides that there is no procedural objection to an action being brought for a declaration whether any other kind of relief is asked for or available or not: see Lord Brandon in In re F [1990] 2 AC 1 at 63.

14. In Hanson v. Radcliffe Urban Council [1922] 2 Ch 490 at 507 Lord Sterndale MR said:

This statement was approved by Lord Wilberforce giving the judgment of the House of Lords in Camilla Cotton v. Granadex [1976] 2 Lloyds Rep 10 at 24:

The import of the statement of Lord Sterndale approved by Lord Wilberforce is that the constraints on the almost unlimited jurisdiction of the Court to grant declarations are not rules of law, but rules of practice which inform the exercise of the discretion whether to grant or withhold declarations.

15. The guiding principle which determines how the discretion is to be exercised whether to grant declarations is that the Court must do what is necessary to achieve justice: consider Patten v. Burke Publishing Ltd [1991] 1 WLR 527 at 544. In pursuance of this principle the Court of Appeal in In re Clay [1919] 1 Ch 66 laid down the general rule of practice that a claimant was not entitled to a declaration of non-liability where the defendant had neither asserted a contrary right nor made nor formulated an adverse claim. The rationale is that it is oppressive and unjust to subject a defendant to legal proceedings where he has given no reason to believe that he will assert a claim which is sufficiently formulated to be adjudicated upon: there has to be more than a belief on the part of the claimant that the defendant will probably make a claim in the future. The general rule was restated by Lord Goff in In re F [1990] 2 AC 1 at 82 in terms that the question raised before the Court must be real, and not merely, theoretical, hypothetical or academic and one which the claimant has a real interest in raising and the defendant has a real interest in opposing. The need for the existence of a real question in issue between the parties as to the legal consequences of existing facts has most recently been restated by Ferris J. in Wyko Group PLC v. Cooper Roller Bearings Co Ltd [1996] FSR 126 which refers to the stream of authorities to this effect up to that date. It is not relevant in this case to consider how far there may be actual or apparent exceptions to the general rule in public and private law, for none are applicable.

16. The Letter is the work of a master of Delphic utterances who uses all his skills to say everything and nothing and to convey an enigmatic message which has the same effect on the recipient as a threat or adverse claim whilst disclaiming to be either. He goes beyond merely reserving his clients' rights: he makes clear that no decision has yet been made to sue, but likewise makes clear that others who used the Words on their packaging after pressure from the Defendants succumbed to that pressure and desisted; that the Defendants thought that the Claimants had unfairly sought to benefit from the Defendants' goodwill; that the Defendants had six years to commence legal proceedings; and that the Defendants would afford no comfort in respect of the possibility of such proceedings. All this is said in the context of ongoing proceedings raising exactly the same issue in Ireland. In my judgment the thrust of the Letter is a warning of the possibility in the future of proceedings for infringement, perhaps contingent on success in the proceedings in Ireland. The threat may be veiled and muffled by protestations of a continuing state of indecision (which for the reasons I have stated do not ring true) but the threat remains sufficient (if not designed) to unsettle the Claimants and the threat is of trade mark infringement proceedings in respect of sales within the United Kingdom. The evidence before me establishes that that is how it was read and understood by the Claimants, and in my view reasonably so.

17. Having found that there was a threat sufficient to bring into play Section 21, it is sufficient to say in respect of the claim to a declaration based on the inherent jurisdiction that the Letter read in its context manifests a real issue, indeed an adverse claim, which is sufficiently formulated to be the subject matter of proceedings for a declaration and which the Claimants have a real interest in having determined. The Claimants need to know whether their marketing is unlawful, whether they are exposing themselves to an ever-increasing claim in damages and whether they should make provision for such potential liability in their accounts. The Defendants have a real interest in opposing the claim to the declaration. The policy of the law is to dispel such uncertainty when it impedes otherwise legitimate activities. In the circumstances the claim to this declaration has a realistic prospect of success and should be allowed to stand.

18. If I had not been able to reach the firm conclusion that the Letter manifested a threat, an adverse claim and a real question, I would have taken the view that the question was sufficiently arguable that it was appropriate for it to be answered in the light of the full factual background at trial: consider Brain v. Ingledew Brown Benison & Garrett [1996] FSR 341. For that reason also I would have ordered that the pleaded claims should stand and have allowed the appeal. I may add that where a person in the position of the Defendants sets out to write a clever letter designed to be close to the line between what is and what is not a threat or adverse claim, he should not be surprised if the Court holds that it is at least arguable that there is a threat or adverse claim.

19. I accordingly hold that the Claimants satisfy the necessary conditions to claim the declaration which they are seeking, and I accordingly allow this appeal.

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