A Very Expensive Point Of Principle…

Nutrimedical B.V. and Aymes International Limited   v.  Nualtra Limited [ 2017] IEHC 253;

As we all know principles can be very expensive, particularly when it comes to common law based trade mark litigation. This trade mark infringement case in the Commercial Court division of the High Court in Ireland is a classic example of the genre and is instructive rather for this reason and for its very unusual circumstances, than for any cutting-edge interpretation of European trade mark law.

Nutrimedical B.V. (as trade mark owner) and Aymes International Limited (as subsequent assigness) (“the Plaintiffs”) brought trade mark infringement proceedings in May 2015 against Nualtra Limited (“Nualtra”) on the basis that there was a likelihood of confusion between Nualtra’s use of the NUTRIPLEN mark for oral nutritional supplements and the Plaintiffs’ European trade mark registration for NUTRIPLETE in class 5 for diatetic preparations and nutritional supplements.

Prior to commencing proceedings, Nutrimedical had successfully opposed Nualtra’s 2013 European trade mark applications for NUTRIPLEIN, NUTRIPLEIN PROTEIN and NUTRIPLEIN SMOOTHIE (“the NUTRIPLEN Marks”) in the same categories as the NUTRIPLETE mark was registered (5 and 32).  OHIM found that the NUTRIPLEN marks were confusingly similar to Nutrimedical’s trade mark registration for NUTRIPLETE and on appeal, OHIM’s decision was upheld by the Board of Appeal.

At that point Nutrimedical demanded an undertaking from Nualtra that it that it would withdraw and would not sell any products that infringed the NUTRIPLEN mark in the EU. Nualtra refused, but in September 2015 started a re-branding programme to “Altrapen”.  Nualtra’s decision to re-brand appears to have been in part because the Plaintiffs had disupted Nualtra’s business by threatening to bring trade mark infringement proceedings against its bottler/manufacturer which company had then ceased to supply Nualtra.  It may also have been because Aymes had sent a series of “poison pen” letters to 848 general medical practitioners in the UK about Nutriplen products, in which it made false and defamatory statements about Nualtra and had then denied doing so, both to Nualtra and to its own solicitors. In prior proceedings between the parties in 2016 this conduct had been censured by the High Court as being “reprehensible “and in the course of that dispute Nualtra had also ended up having to go to the expense of obtaining Norwich Pharmcal orders in the UK.

Even after re-branding, Nualtra still refused to give an undertaking in relation to NUTRIPLEN. Interestingly, by the date of the trial the Plaintiffs appear to have never used their NUTRIPLETE mark and at trial the Chairman of Aymes gave evidence that they would not do so until they had received the relevant undertakings from Nualtra.

After a ten day trial, Twomey. J delivered judgment in which he made a classical analysis of trade mark infringement and confusing similarity between the respective marks. In summary he found that there was a high degree of visual and aural similarity between the marks but limited conceptual similarity. On the basis that Nualtra’s products were oral nutrition supplements and identical to the goods covered by the Plaintiff’s trade mark registration and even though the evidence indicated that Nualtra’s products were prescribed or were sold by pharmacies “over-the-counter” but were not available otherwise, the judge found that there was a high likelihood of confusion for end users.

The Court noted that Nualtra’s CEO had given evidence that after re-branding and jumping through regulatory hoops there was no chance of the company changing back to the NUTRIPLEN mark and that it had continued to defend the proceedings at a cost of €1.3 million in legal fees because the CEO believed “100%” that there was no infringement of the NUTRIPLETE mark. Twomey J. came to the conclusion that the only rationale for Nualtra to defend a case in these circumstances on a basis that was far from a foregone conclusion, was on a point of principle.

In terms of a remedy, the plaintiffs had reserved their position on requesting an “account of profits” instead of damages, on the basis that this could be heard at a subsequent hearing. However, as Nualtra had given evidence that it had made no profit from the sale of NUTRIPLEN products, as the Court felt that an equitable account of profits remedy was not justified in view of Ayme’s conduct in the issuing the “poison pen” letters and because it did not want to put Nualtra to the additional expense of a further damages hearing, or waste further court time, the Court exercised its discretion to refuse an account of profits.

The Court then turned to damages. The plaintiffs had not used their mark and had given no evidence of having suffered any actual loss, but they had provided expert evidence concerning the value of an estimated trade mark licence fee of €260,000. However, considering the factors discussed above and also that Nutrimedical had assigned the NUTRIPLETE mark to Aymes in 2015 for the equivalent of almost €70,000, the judge assessed damages for the relevant 3.5 year period as being a notional licence fee of €35,000.

In refusing a separate damages hearing together with any request for an account of profits (which is very unusual), Twomey J. noted that the legal costs of the litigation must have already been more than €2 million, but that based on the relevant rules that “costs follow the event” the Court could have very little influence over the Plaintiffs’ right to recover its costs. In practice this means that the Plaintiffs will be able to recover somewhere between 60-80% of the €1.3 million that they expended on legal costs, in addition to the €35,000 damages award. For Nualtra, who has re-branded and has no further use for the NUTRIPLEN mark, this translates to a very expensive point of principle indeed.

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