In a recent decision of the IP Enterprise Court (IPEC) (Wirex Ltd v Cryptocarbon Global Ltd and others  EWHC 617 (IPEC)) Hacon J considered whether a neologism (a newly coined word) could be descriptive despite being an invented word, and whether sufficient goodwill was owned in that neologism to support a trade mark invalidity claim.
In 2018, Wirex launched a credit card reward scheme, under which rewards were paid to customers in bitcoin. Wirex called the scheme CRYPTOBACK and applied for and registered a trade mark for CRYPTOBACK in the UK in relation to financial and software services.
The defendants also offered a cryptocurrency cashback service using the word "cryptoback". Wirex commenced proceedings for trade mark infringement, and the defendants counterclaimed that Wirex's trade mark was invalidly registered and that Wirex had committed passing off. The claim for invalidity was based on two grounds (1) that the defendants had acquired goodwill in the CRYPTOBACK brand before the filing date of Wirex's trade mark and therefore the trade mark was invalid pursuant to sections 5(4)(a) and 5(4A) of the Trade Marks Act 1994 ("TMA"), and (2) Wirex's trade mark application was filed in bad faith pursuant to section 3(6) TMA. The defendants admitted that their activities would infringe Wirex's trade mark if it were valid.
The case turned on whether the defendants owned goodwill associated with CRYPTOBACK as a trading name at the filing date.
The CYPTOBACK trade mark is a neologism – a newly coined word, in this case created by combining and contracting two existing words (cryptocurrency and cashback).
Hacon J acknowledged that there is a potential difficulty facing a business seeking to rely on goodwill associated with a newly coined word which is used in relation to a particular product or service. Such a word may be taken by the public to be a new word for that type of product or service, rather than a trade mark. A related question is whether the public would consider such a word descriptive of the services being offered under it. The more descriptive it is, the more use is liable to be required in order for it become distinctive of a single entity's goods or services.
Evidence of goodwill unreliable and insufficient
Hacon J found that some of the defendants' evidence regarding prior use of and goodwill in the CRYPTOBACK name was unreliable, mainly because of inconsistencies and lack of evidence to support claims made in the witness statements.
Hacon J also held that the evidence filed did not establish that the defendants owned goodwill which was associated with a trade name "cryptoback" at the filing date of Wirex's trade mark. Of the documentary evidence of use filed, only the account summaries provided possible proof that the word "cryptoback" was presented to the public in the UK. Of the remaining admissible evidence, there was an article and a webpage which showed how the word "cryptoback" was presented to the public, however it was not established that the article or webpage had been seen by anyone in the UK. In addition, the webpage was not dated. Hacon J found that in both cases it was more likely than not that "cryptoback" would have been taken to be the word for a new type of service, not a trade name.
It followed that the defendants had not been able to demonstrate that they enjoyed sufficient goodwill at the filing date to support the invalidity claim, and the trade mark was therefore found to be valid.
Trade mark infringement
As the allegation of trade mark invalidity failed, it followed that the trade mark had been infringed by the defendants.
The case raised some interesting questions about descriptiveness when coining new trade marks from existing words, and whether such neologisms are likely to be understood and recognised as trade marks by consumers. It also serves as a useful reminder that evidence of unregistered rights needs to be robust (clearly dated, with accurate records kept regarding dates, times and territories for dissemination of any marketing and promotional material) in order to be taken into account.
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