Trade Mark Squatting, Blackmail and Prior Use Defence: High Court Ruling in Clips Kenya v Brands Imports Africa

hoshan clips kenya trademark case brands imports limited 2016

Recently, Kenya Law reported the case of Clips Limited v Brands Imports (Africa) Limited formerly named Brand Imports Limited [2015] eKLR which involved three disputed trade marks: ATLAS, FANTASTIC and ALPHA registered in class 16 in Bahrain, Saudi Arabia, Yemen and Kuwait by Clips Kenya’s parent company, Hoshan. From 2010 to-date, Clips Kenya has been trading in goods bearing Hoshan’s marks under a Royalty Agreement in existence from 2009. However, in 2013, Brands Imports registered all three disputed marks in Kenya which led to Hoshan commencing expungement proceedings before the Registrar of Trade Marks.

In the intervening period, Brands Imports, the registered proprietor of the disputed marks in Kenya, wrote a letter to Clips Kenya demanding a 5% payment of royalty. In the letter, Brands Imports threatened to lodge complaints with government authorities to prevent Clips Kenya from continuing to import and sell in Kenya the goods bearing the disputed marks. According to Clips Kenya, Brands Imports’ actions amount to unlawful interference of it’s business and that it could rely on the ‘prior use defence’ provided in section 10 of the Kenya Trade Marks Act.

Among the issues identified for determination by the court, the following two were listed:

i) Whether the Plaintiff/Applicant is protected under Section 10 of the Trade Marks Act.

ii) Whether the Plaintiff’s application is premature in the light of the expungement of proceedings pending before the Registrar of Trade Marks.

The court found against Brands Imports in favour of Clips Kenya. The court held that section 10 of the Trade Marks Act contains two requirements: firstly, the Plaintiff used the mark prior to registration by the Defendant and secondly there must have been continuous and bona fide use of the mark by the Plaintiff. The court found that based on the evidence presented before it, Clips Kenya had satisfied both requirements.

According to the court, the purpose of section 10 of the Trade Marks Act was to protect common law rights arising from continuous and bona fide use of an unregistered trademark prior to either the use or registration of the mark in issue. In this regard, the court dismissed Brands Imports’ contention that there was a requirement for a person claiming under section 10 of the Act to be the proprietor of the mark in order to gain the protection of said statutory provision.

The court cited with approval the rulings in the Webtribe  and Solpia Kenya cases (discussed here and here respectively) to the extent that registration of a trade mark does not confer an absolute and exclusive right on the proprietor of the trademarks and the fact of registration of trade mark per se does not entitle the proprietor of trade mark to an automatic injunction to restrain use of the trade mark by a person who had continuously used the trade mark prior to, during and after the registration of trade mark. As the courts have previously found, in the face of a claim of prior user of trade mark, and absent other strong and cogent evidence, the fact of registration of trade mark did not invariably constitute a prima facie case with a probability of success in the sense of the case of Giella vs. Cassman Brown. As such, where section 10 was called into play, the courts should be careful not to use the fact of registration of trade mark as the sole basis of restraining the use of the trade mark by the person claiming prior use of the trade mark(s). Finally, the court held that pursuant to section 35 of the Trade Marks Act, the Registrar of Trademarks had jurisdiction to only expunge marks from the register but not to issue any injunctive orders.

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