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Pliteq Inc v iKoustic Ltd: “Bait and Switch” claim fails against former distributor

Date: 30 March 2021

In Pliteq Inc v iKoustic Ltd [2020] EWHC 2564 (IPEC), Miss Recorder Amanda Michaels, sitting as an IPEC judge, found that iKoustic, a former distributor of Pliteq’s products, was not liable for infringement by “bait and switch” selling.

 

Link to judgement: Pliteq Inc v iKoustic Ltd

 

Pliteq sell a range of acoustic damping and sound control products, including clip and bracket products under its GENIECLIP mark, and acoustic rubber mat products under its GENIEMAT mark. Pliteq’s products had been distributed in the UK by iKoustic between 2012 and 2018.

 

At some point in 2017, the relationship between the parties started to break down and, in 2018, iKoustic began to make and sell its own competing products under the names MuteMat and MuteClip, whilst still placing orders for Pliteq products.

 

For a period of around a year (from late 2018 to December 2019), iKoustic was selling both parties’ products and, from February 2019 onwards, such sales were made without Pliteq’s consent because Pliteq took the view that iKoustic was engaging in “bait and switch” selling, which amounted to trade mark infringement, i.e. iKoustic was luring customers by using Pliteq’s GENIECLIP and GENIEMAT marks on their website and in sponsored advertisements on Google to attract custom, which was then diverted to iKoustic’s own Muteclip and MuteMat products.

 

However, Miss Recorder Michaels dismissed the claim for trade mark infringement save in respect of a single webpage use.

 

“There was no bait, and no switch, but a transparent offer of both parties’ goods”.

 

In the judge’s view, the present case could be distinguished on the facts from the types of bait and switch infringements found in Cosmetic Warriors Ltd v Amazon.co.uk Ltd [2014] EWHC 1316 (Ch). In that particular case, Amazon had no Lush goods at all to sell, and had never stocked them. It was not using the mark in relation to the claimant’s goods, but rather just to stimulate interest in its competing products. Furthermore, the fact that Amazon did not have genuine Lush goods to sell would not have been apparent to the average consumer.

 

In contrast, iKoustic did have a stock of genuine goods bearing the marks used in most of its dynamic ads (the exception being where the ads had not kept up with changes made to the website when products were out of stock) and on its website, and relied on the exhaustion defence.

 

Further, the judge was satisfied that the average consumer would have understood from the various communications from iKoustic that they were offering an alternative product to Pliteq’s goods.

 

The exhaustion defences

 

iKoustic claimed that all of their uses of the marks were made in relation to Pliteq’s goods, the trade mark rights in which had been exhausted by their sale to iKoustic.

 

However, the judge held that the use of the marks to announce that a product was out of stock and to advertise the availability of an alternative product did not amount to use in relation to goods in relation to which Pliteq’s rights had been exhausted.

 

That meant that iKoustic’s exhaustion defence did not apply to the use of a webpage which invited customers to choose iKoustic’s product instead of GENIECLIPS. That therefore means that one webpage constituted use of Pliteq’s mark in relation to iKoustic’s product.

 

Comment

 

This decision highlights the circumstances in which it is acceptable for distributors to use a competitor’s mark when marketing competing products, and also underlines the importance of drafting a distribution agreement at the start of a commercial relationship.

 

In this particular case, no written terms had been agreed between the parties. Had a properly drafted commercial agreement been in place, both time and money could have been saved.

 

In such circumstances, the case therefore also highlights the difficulties and issues a trade mark proprietor may face when bringing an infringement action against a former authorised distributor.

 

Our full article on this case will appear in Entertainment Law Review.

 

More information on our work in the area of Trade Marks and product brandking protection can be found here: Trade Marks 

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