Practitioners in civil law jurisdictions are often surprised to learn that appeals in commercial law matters in common law systems are generally, but not always, limited to an appeal of the evidence and law heard by the lower court and are not appeals by way of re-hearing. The rationale for this approach is for finality of litigation and to incentivise the parties to make out their best case at the first opportunity. This principle was tested in the context of trade mark law and one party’s application to submit further evidence in the long running herculean battle for exclusive rights to the DIESEL mark in Ireland.
Since 1992 Diesel SPA and Montex have been involved in protracted litigation over the ownership and use of the DIESEL mark in Ireland. Both companies use the DIESEL mark in trade. The Controller of Patents, Designs and Trademarks (“the Controller”) refused Montex’s 1992 trade mark application to register DIESEL stating that there would be confusion on the part of the public if the mark was registered. This decision was subsequently upheld by both the High Court and the Supreme Court (“the Montex proceedings”).
The present proceedings Diesel SPA and The Controller of Patents, Designs and Trademarks and Montex Holdings Limited [2020] IESC 7 arise from Diesel’s application to register DIESEL in 1994. Montex opposed the application on the basis of prior ownership and confusion and deception. The hearing in this second matter did not take place until 2012, in part because the parties were awaiting the outcome of the Montex proceedings. Eventually the Controller held in favour of Montex on the basis that Diesel failed to provide evidence concerning the extent of sales of its goods in Ireland.
Diesel appealed the Controller’s decision to the High Court. The relevant legislation, s.25(7) of the former Trade Marks Act 1963 provides that when an appeal of a decision of the Controller is heard under s.57 of the Act then any party may as prescribed by statute or with special leave of the Court admit further material for consideration by the Court.
High Court decision
In the High Court, the Controller submitted that the test from Murphy v. Minister for Defence [1991] 2 I.R. 161 applied:
“1. The evidence sought to be adduced must have been in existence at the time of the trial and must have been such that it could not have been obtained with reasonable diligence for use at the trial;
- The evidence must be such that if given it would probably have an important influence on the result of the case, though it need not be decisive;
- The evidence must be such as is presumably to be believed or, in other words, it must be apparently credible, though it need not be incontrovertible.”
In 2016 the High Court judge had found that s. 57 of the 1963 Act mandated a “full rehearing” and that as a result the rules of admissibility of evidence should be more liberal. Applying the more flexible test set out by Laddie J in Hunt-Wesson Inc.’s Trademark Application [1996] R.P.C. 233 the judge concluded that certain new evidence sought to be admitted by Diesel, such as new advertisements, would help in clarifying the extent of usage of the DIESEL mark but refused other evidence on the basis that it was prejudicial.
The Controller appealed to the Court of Appeal and Diesel filed a cross appeal in respect of the evidence that was refused by the High Court Judge.
Court of Appeal decision
On 2 October 2018, delivering judgment on behalf of the Court of Appeal, Hogan J. held that the High Court judge erred in acceding to any aspect of Diesel’s application to admit fresh evidence. Hogan J. focussed on S. 25 (7) of the 1963 Act, he noted that on a reading of this section it is clear that an appeal from the Controller to the High Court will be based on material that was before the Controller in the first instance and the admission of new evidence is only permissible on leave of the High Court. He referred to the rational of O’Donnell J. in Emerald Meats Ltd. v. Minister for Agriculture [2012] IESC, that any discretion exercised with respect to the admission of new evidence must be considered in light of “the public policy objectives associated with the finality of litigation and the desirability that the parties advance their entire case when given the appropriate opportunity to do so.”
Accordingly, Hogan J. held that the test set out in Murphy was more appropriate to the proposed application. Applying the test, he noted that the application failed as the evidence sought to be introduced on appeal was available to Diesel at the time of the hearing before the Controller. Diesel did not supply any explanation regarding the delay in submitting that evidence. Moreover, the evidence had only been disclosed in response to the Controller’s determination. The appeal was allowed, and the cross-appeal was dismissed.
Supreme Court decision
Diesel appealed to the Supreme Court on the basis that the Court of Appeal had mischaracterised the scope of the appeal right. Diesel argued that the policy considerations were not those that ordinarily apply in appeals as the aim of the trade mark system is to maintain an accurate register and not simply to reach a final and just decision. Therefore, Diesel argued that the test to admit new evidence should be less restrictive than the Murphy test.
In the alternative, if the Supreme Court decided that the Murphy test should apply, Diesel submitted that in accordance with O’Donnell J’s decision in Emerald Meats, the test in Murphy permits the admission of further evidence where “the trial takes an unexpected turn”. Diesel argued that the “unexpected turn” arose as it had provided the new evidence in the Montex proceedings and therefore should be able to do so in these proceedings. In response, the Controller argued that no unexpected turn of events had taken place in that he had simply commented on the lack of evidence provided by Diesel in terms of its DIESEL trade mark and then Diesel with the benefit of his determination had sought to augment its evidence in order to make out a stronger case.
The Supreme Court found that relevant legislation allowed for the admission of new evidence” either in the manner prescribed” or “by special leave of the Court”. As there was no “manner prescribed”, the Court focussed on whether it should give special leave or not.
The Supreme Court judge found that the scope of the appeal under section 57 differed from an ordinary appeal to the High Court and categorised it as an “appeal on the record”. She noted that this type of appeal is broader than an ordinary appeal as the court can come to its own conclusions on the facts and the first instance decision maker may seek to participate in the appeal.
Confirming the importance of policy objectives that apply in the Murphy test and rejecting the Hunt -Wesson test, the Supreme Court noted that finality in litigation is just as important in trade mark appeals as in any other type of appeal.
Rejecting Diesel’s “unexpected turn” argument, Irvine J. submitted that there was no “unexpected turn” in this case of the type anticipated in Emerald Meats. She surmised that the type of turn envisaged by O’Donnell J. might be the discovery of a surprise witness or of evidence not already flagged in the proceedings. She noted that it would be difficult in the present case for either party to establish the surprise required to succeed in this argument where so much evidence was exchanged in advanced of the Controller’s hearing. Irvine J. also noted that the facts relied on by Diesel did not support an “unexpected turn” claim as they did not emerge from the trial but were based on the decision in the Montex hearing and the Controller’s decision in the present case.
Finally, Irvine J. notes that even if Diesel was successful in arguing that the Controller’s decisions amounted to an “unexpected turn”, the Controller’s decisions were consistent and the facts simply did not support the kind of unexpected surprise contended for by Diesel.
Conclusion
The Supreme Court upheld the Court of Appeal’s decision that the Murphy test was equally appropriate to trade mark appeals and should be applied in this case, rather than a less rigorous Hunt -Wesson type test. In circumstances that there was no “unexpected turn” of the kind described in Emerald Meats, the Court concluded that Diesel had failed the first leg of the Murphy test and accordingly dismissed Diesel’s appeal.
This decision is a useful demonstration of the absolute necessity to admit all evidence possible in first instance trade mark proceedings before the Controller as there is very little scope to admit evidence later on in Irish appeal proceedings. For Diesel SPA and Montex, the result is effectively a “stalemate”, with neither party ultimately obtaining an Irish registration for the DIESEL mark in class 25.
