Nvidia Group Companies v Hardware Labs Performance Systems Inc. [2016] EWHC 3135 (Ch)

binary board 2

In Nvidia Corporation & Others v Hardware Labs Performance Systems Inc. the High Court has granted a defendant’s application for summary judgment by ruling that, to be actionable, a ‘threat’ must be a threat of trade mark infringement proceedings in the UK. However, applications for the stay, transfer and/or reallocation of proceedings were refused by Mr Justice Mann.

Summary judgment and unjustified threats

The defendant, Hardware Labs Performance Systems Inc. (Hardware Labs) is the registered proprietor of EU Trade Mark registrations for the marks ‘GTX’, ‘GTS’ and GTR registered in respect of its computer water cooling goods and services. In January 2016 it sent a letter before action to Nvidia Corporation at its California address complaining of the Nvidia Group’s use of the marks ‘GTX’ and ‘GTS’ in connection with the sale of graphic processing units (the ‘LBA’). The LBA was written in English, cited the Defendant’s EU trade mark registrations and referred to the Claimant’s use of the marks on its German website “by way of example”.
In February 2016 the Claimants brought EUIPO invalidity and revocation proceedings in respect of Hardware Labs’ registered marks. Additionally, an action was commenced for the unjustified threat of trade mark proceedings under section 21 of the Trade Marks Act 1994 (‘TMA 1994’). The Defendant sought summary judgment and/or the strike out of these proceedings on the basis that the claim had no real prospect of succeeding at trail and there was no other compelling reason why the case should proceed . Mr Justice Mann analysed the lengthy LBA and quickly concluded that the content constituted a threat in the ordinary sense of the word. However, what needed to be determined was whether or not the LBA contained a threat of trade mark infringement proceedings in the UK. The Claimants argued it did – for the following reasons:

• The LBA was written in English and was addressed to a US parent company of a group including 3 UK companies;
• Reference to infringements in Germany were solely “by way of example”;
• An undertaking not to infringe in the course of trade in the EU” was sought - non German activities were intended to be caught;
• Compensation was sought for all acts committed throughout EU; and
• The LBA was sent in the context of various international trade mark disputes including an allegation of invalidity at the EUIPO based on an earlier unregistered right in the UK.

By contrast, the defendant argued that the LBA did not contain a threat to sue in the UK for the following reasons:

• The LBA was written in English because it was addressed to an American company;
• The LBA only reference activities carried out by US and German group companies;
• All of the activities, of which examples were given, were activated which were confined to Germany and the Claimant’s German website;
• The LBA cited German legislation; and
• A pan-EU injunction was sought – under the EU Trade Mark Regulation such relief was only available in proceedings against the German company in Germany.
The Judge determined that the correct approach to take in relation to the LBA was to consider what a reasonable person, in the position of the recipient of the letter, with its knowledge of all the relevant circumstances as at the date the letter was written, would have understood the writer to have intended (Best Buy applied). Interestingly, Mr Justice Mann commented that, in an appropriate case, a threats letter could additionally be treated as though viewed through the benefit of legal advice.

The Judge concluded that a reasonable person would not consider the LBA to contain a threat of trade mark infringement proceedings in the UK. In finding for the Defendant, he highlighted the key fact that the LBA contained neither an express or implicit reference to the UK. Summary judgment was therefore granted in favour of the Defendant.
It seems there has been a sea change in the attitude of to threats, perhaps due to discussions of reform. It is worth noting that the Intellectual Property (Unjustified Threats) Bill is currently making its way through parliament. If this Bill is passed as legislation, section 21 of TMA 1994 will be amended and, under the new provision, a communication will contain a “threat of infringement proceedings” if “a reasonable person in the position of the recipient would understand from the communication that (a) a registered trade mark exists; and (b) a person intends to bring proceedings (whether in a court in the UK or elsewhere) against another person for infringement of the registered trade mark by an act done in the UK or an act, which if done, would be done in the UK”.
This proposed new wording appears to acknowledge that in some circumstances, a threats action can be bought in relation to a threat to sue in a non-UK court (i.e. “elsewhere). This seems contradictory to this judgment; however, the new legislation would require a threat to relate to an act done or intended to be done in the UK.
In the Nvidia case there were no acts done in the UK or threatened to be done in the UK so the outcome would be the same under the new legislation (if passed). However, it is possible there will be a slightly different approach to similar cases moving forward with the focus shifting to determine whether a threat relates to acts done or intended to be done in the UK as opposed to determining whether there is a threat to sue in a UK court.

The Claimant’s application to stay its own proceedings

In the second application before Mr Justice Mann the claimants sought to stay their own proceedings pending the outcome of the EUIPO proceedings – this was against the intentions of the Defendant). The judge refused such an application on the basis that the claimants, having started their proceedings and having let them run as far as they have, should not be allowed to have them stated and hanging over the defendant if the defendant does not wish for this to happen. Further, he noted that the unjustified threats proceedings were issued two weeks after the EUIPO proceedings and, if the proceedings were issued sensibly and justifiably at this time (which had to be presumed), the same must be said now.

Transfer of proceedings

In dealing with the third and final application, Mr Justice Mann refused the Defendants’ request for the proceedings to be transferred to the Intellectual Property Enterprise Court (IPEC). It was ruled that the current proceedings, which were substantial, involved a lot of money and were likely to take several days to hear, were not suitable for the IPEC. For the same reasons, the Defendants application for re-allocation of the proceedings to the shorter trial scheme was refused.

Link to Judgment

Judgment Date: 06 DECEMBER 2016

UNJUSTIFIED THREATS: A ‘threat’ must concern UK infringement proceedings to be actionable