Special Effects Ltd v L'Oreal

On 12 January 2007 The Court of Appeal handed down its decision in Special Effects Ltd v L'Oreal.

The appeal arose following a decision by The Chancellor of the High Court, Sir Andrew Morritt, in Special Effects LTD V L’Oreal SA, L’Oreal UK Ltd (2006) EWHC 481.

The proprietor of the mark SPECIAL EFFECTS, registered in Class 3 and Class 44 is Special Effects Ltd. This mark, was unsuccessfully opposed by L’Oreal, then registered by Special Effects Ltd.

The mark became the subject of infringement action against L’Oreal. Special Effects Ltd claimed infringement of their mark SPECIAL EFFECTS by L’Oreal’s use of the mark SPECIAL FX.

L’Oreal counterclaimed denying any infringement and claiming that the mark SPECIAL EFFECTS was invalid. Special Effects Ltd argued L’Oreal couldn’t launch any invalidation action of the mark on grounds of cause of action estoppel, issue estoppel and abuse of process.

At a preliminary hearing, the Chancellor held that the practices and procedures underlying opposition and invalidation proceedings before the Registry were identical. L’Oreal were estopped as the grounds for invalidation were similar to those used when they unsuccessfully opposed the application for registration.

L’Oreal appealed to The Court of Appeal who reversed the decision because there is no cause of action before the Registry in opposition proceedings.

Where the validity of the mark is raised as part of infringement proceedings before the High Court, even after unsuccessful oppositions, issue estoppel doesn’t apply. This is because, in the Trade Marks Act, there are provisions for both oppositions and for a declaration of invalidity.

The Court of Appeal also held that there was no abuse of process by L’Oreal using grounds relied on in opposition proceedings in their invalidity action, and, that L’Oreal were making use of the opportunity allowed by the Act.