In Best Buy Co. Inc v Worldwide Sales Corporation España S.L. [2010] EWHC 1666 (Ch), the High Court of Justice (UK) had to consider whether a statement made in the course of negotiations constituted a “threat of legal proceedings” under section 21 of the Trade Marks Act 1994 (UK) (“the Act”). This section provides that, in certain circumstances, a party may seek relief from the court where a person “threatens another with proceedings for infringement of a registered trade mark”. There are similar such provisions in Australia.
Here, the Claimants (“Best Buy Co.”) had applied for a Community Trade Mark including the words “Best Buy”, the brand having already been used in the USA. Best Buy Co. is well known in the USA as an electronics retailer. The Defendant (“España”), which also used the name “Best Buy” in Spain and Europe, opposed registration of this mark. In the course of these opposition proceedings, España’s lawyers wrote to Best Buy Co. (“Reply Letter”) stating that España’s rights “would entitle it to take the appropriate legal action to defend its interests”. Best Buy Co. considered that this constituted a “threat of proceedings” and commenced proceedings against España under section 21 of the Act.
To determine whether the Reply Letter included a “threat of proceedings”, the court considered this letter from the perspective of a “reasonable businessman” with background knowledge to the facts of the dispute so far. But who is the “reasonable businessman” (or woman)? We suggest that such a person may be different from, as it is known in Australia, “the ordinary person on the Bondi bus”.
The reference to “businessman” implies a level of commercial savvy which may not exist in many occupants of a bus heading down to the beach…That said, in Australia such a hypothetical person has been “assumed to have the knowledge and experience of the ‘average business person’ but certainly not the skills and experience of an expert financial analyst or someone with legal training or any other kind of tertiary education” (Cussen & Anor v Commissioner of Taxation [2003] NSWSC 841 at [64]). In any event, this standard appears designed to impose a reasonably high threshold of what will constitute an unjustified threat, allowing for the cut and thrust of typical commercial dealings which can be quite robust.
After then putting himself in the shoes of the “reasonable businessman”, Floyd J found that “the recipient would understand from the…letter in the clearest terms that proceedings for infringement of trade mark were being threatened.” However, whilst a threat was found to exist, the court determined that the Reply Letter was inadmissible under the “without prejudice rule”, as it was a communication made between parties in the course of negotiations to settle a dispute. Best Buy Co. accordingly failed in its action.
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