Manor Grand Prix Racing Limited has recently learned this lesson the hard way in Marussia Communications v Manor Grand Prix Racing and others  EWHC 809.
A bit of background
Manor was accused of infringing the European Union Trade Mark registration for MARUSSIA by the claimant, following the expiry of a licence agreement on 31 December 2014. Marussia had sponsored the Manor Formula 1 team between 2011 and 2014, which included a royalty free non-exclusive licence to use its trade mark. Manor was one of the ‘minnows’ of the F1 circuit, usually finishing races towards the rear. The 2014 season was the first season in which they won any points and this entitled them to prize money of around $90 million, payable in future seasons on condition that the team continued to race.
The sponsorship agreement and the licence agreement ended following the conclusion of the 2014 season. Marussia indicated that it was no longer prepared to sponsor Manor’s costly participation in Formula 1. At this stage, Manor was heavily in debt (owing Marussia £13.5 million) and as a result, entered in to administration.
Manor was rescued by Stephen Fitzpatrick (the man behind Ovo Energy). The viability of the purchase was predicated on access to the prize money Manor was entitled to, should it continue to race in 2015. After some toing and froing, Mr Fitzpatrick came to an agreement with Manor’s creditors and Manor exited administration on 19 February 2015.
A few days later, Marussia became aware of Manor’s intention to race in the 2015 season under the ‘Marussia’ name and indicated that Manor had no right to do this, as the licence agreement had already expired. Manor were, however, forced to race under this name as Bernie Ecclestone refused to sanction a team name change so close to the start of the 2015 season. Manor proceeded to race in the 2015 season under the name ‘Manor Marussia’.
Marussia sued for infringement of its EU trade mark. Manor sought to defend the legal action and put forward five defences, namely:
- Marussia had impliedly consented to the use of the trade mark.
- Marussia was estopped from asserting its rights as owner of the trade mark.
- The use of the trade mark did not give rise to a “likelihood of confusion” on the part of the relevant public.
- The trade mark did not have “a reputation in the community”.
- The use of the trade mark constituted use of its own name “in accordance with honest practices” for the purpose of Article 12 of the Regulation.
Marussia sought summary judgment, without a full trial on the merits of the case, on the basis that Manor had no real prospect of defending the action and therefore, if it wanted to do so, Manor must provide security of costs to Marussia. Marussia claimed a sum of £1.75 million in security of costs.
Males J dismissed all of the Manor’s defences and agreed with Marussia that it was entitled to security of costs, if Manor wished to continue the action to a full trial.
Manor’s first defence failed because the evidence did not show that Marussia had impliedly consented to the use of its trade mark. Implied consent under EU law requires the facts and circumstances to unequivocally demonstrate a renunciation of rights by the trade mark proprietor (Zino Davidoff). The facts of this case did not indicate such an unequivocal renunciation.
Manor’s estoppel defence was dismissed, as it was not available as a matter of law. The English legal principle of estoppel is a rule of national law which is a kind of ‘deemed’ consent. This was considered to be incompatible with the principle of consent under Community law. To allow such a defence would be outside of the terms of the Community Trade Mark Regulation as it would go against the fundamental objective to establish “the same protection under the legal systems of all member states”. Males J stated:
“…to allow the possibility of such a defence would undoubtedly mean that protection would be subject to issues outside the terms of the regulation and would vary according to the legal system concerned.”
The remaining defences were swiftly dismissed by Males J as improbable of succeeding.
The court found wholly in favour of Marussia in this case and ordered security of costs of £1.75 million if Manor wanted to proceed to a full trial. While the facts and circumstances of this case are unique, it acts as a reminder of the importance of undertaking thorough due diligence before completing a transaction or starting a new venture, to ensure that all necessary licences are in place.