No healthy profit in nutritional supplements trade mark case

This article first appeared on WTR Daily, part of World Trademark Review, on June 30th, 2017. For further information, please go to www.worldtrademarkreview.com.

No healthy profit in nutritional supplements trade mark case

In Nutrimedical BV v Nualtra Ltd ([2017] IEHC 253, May 2, 2017) the High Court highlighted the costs and risks of litigation, particularly where the decision has limited commercial effect as the contested trademark is no longer in use and where even in victory the plaintiff can be deprived of the election for an account of profits.

Complex case

In an unusually complex case, the plaintiff (essentially Aymes International Ltd as the assignee of the trademark) sued for infringement of EU trademark NUTRIPLETE (registered in May 2012, though not yet in use) in relation to use by the defendant of the trademark NUTRIPLEN from November 2012 to April 2016. The goods at issue were nutritional supplements. Shortly after the proceedings commenced on May 2015, the defendant commenced rebranding an unrelated trademark but refused to undertake not to use the mark NUTRIPLEN again. The defendant claimed that it had no intention of reviving the use of the trademark, but refused to give the undertaking as it was convinced that its mark did not infringe the earlier mark. This proved to be an expensive point of principle for both the defendant and the plaintiff, with their combined legal costs exceeding €2 million. Indeed, it could be seen as a pyrrhic victory for the plaintiff, given that the actual infringement ceased soon after proceedings commenced. It would be unusual in such circumstances for a plaintiff to continue proceedings where the alleged infringement had ceased and the only live issue was damages or an account of profits. However, this case is unusual and the plaintiff has left the impression that it will not stand idly by regarding any infringements of its rights.

Counterclaim

The case aired some very dirty laundry. In a counterclaim, the defendant claimed that the plaintiff defamed and unlawfully interfered with its business by sending anonymous and defamatory poison-pen letters and forged emails to customers containing false and defamatory allegations. The defendant obtained a Norwich Pharmacal order in the United Kingdom, which forced the plaintiff to admit, contrary to its previous denials, that it was the source of these defamatory letters and forged emails. The parties settled that aspect of the case, with over €100,000 and legal costs paid by the plaintiff to the defendant. However, this reprehensible conduct raised its head again at the end of the infringement decision.

Commercial Court

The Commercial Court division of the High Court held that the marks were in fact confusingly similar, relying on the similarity of the first elements ‘nutriple’ in visual, phonetic and conceptual terms, and notwithstanding that the products would be sold via prescription or over the counter without prescription but by a pharmacist, and thus with a high level of attentiveness. The court referenced the end users of the products, as they could pressure the healthcare professionals to take their preferences for certain branded products into account in their selection of products. The court maintained that a judge could put himself or herself in the shoes of an ordinary consumer of such products and that the expert evidence of doctors, pharmacists or dieticians was irrelevant to determining the critical issue of confusion. The court followed the UK landmark decision Origins Natural Resources v Origin ([1995] FSR 280), which held that the comparison of the marks for infringement was “mark for mark”, ignoring any extraneous material such as packaging design and lack of market presence of the earlier mark.

Damages versus an account of profits

One aspect of the case which will have lasting repercussions is the decision on damages versus an account of profits. The plaintiff reserved its position at the end of the trial on an election between an account of profits versus damages, but the court did not permit it. Instead, damages of €35,000 were awarded (much less than the €260,000 sum argued by the plaintiff on the basis of expert evidence). The judge held that more than enough of the court’s valuable time had been taken up in this 10-day trial and that the defendant should not be burdened with the costs of a further hearing to assess an account of profits, particularly where the uncontested evidence of the defendant was that no profits had been made in the relevant period. It was held that the election between an account of profits and damages was an equitable remedy and could thus be denied where the plaintiff did not have ‘clean hands’. Despite the fact that the issue with the poison-pen letters and forged emails had been settled, the judge considered it appropriate to bring it up in this context as evidence of lack of clean hands. This aspect of the decision is highly unusual. There have been cases before the courts in other countries where an election for an account of profits has been denied and damages awarded instead. The concept has been mentioned in Irish cases before, but this appears to be the first time in recent history that it has been implemented in an Irish decision.

Importance of descriptive elements

One disappointing aspect of the decision is that the judge did not apply the fact that the prefix ‘nutri’ is entirely descriptive to the assessment of likelihood of confusion. It has been well established at EU General Court level in Echinaid/Echinacin and RNAiFect/RNActive that descriptive prefixes should not be considered to be a distinctive or dominant element and that greater attention should be paid to the remainder of the marks (in this case ‘plen’ and ‘plete’). However, the importance of descriptive elements of trademarks is an issue which has troubled courts and trademark offices throughout Europe, and the Irish court is not alone in omitting to address it.

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Niamh Hall

Niamh Hall, European Trademark Attorney.

Click here to visit Niamh’s profile.

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