Facts

In May 2018, Wirex Ltd launched a credit card rewards scheme where the rewards, commensurate with the scale of purchases on the card, were in bitcoin. Wirex called this its “cryptoback” rewards scheme. Wirex applied to register the word CRYPTOBACK as a UK trade mark for, amongst other things, financial and software services on 28 April 2018 (the Filing Date). The mark was registered on 27 July 2018 (the Trade Mark).

Wirex issued proceedings for trade mark infringement against Cryptocarbon Global Ltd, which had launched a new cryptocurrency called “CCRB” in 2016 and also offered a cryptocurrency cashback service using the word “cryptoback”. Cryptocarbon counterclaimed that the Trade Mark was invalidly registered, but admitted that it would infringe the Trade Mark if it were valid. It also counterclaimed for passing off.

In its invalidity counterclaim, Cryptocarbon argued that it had acquired goodwill associated with the mark “cryptoback” before the Filing Date and had thereby acquired the right to prevent use of the Trade Mark at that date. The Trade Mark was consequently invalidly registered pursuant to ss 5(4)(a) and 5(4A) of the Trade Marks Act 1994. Cryptocarbon also argued that Wirex knew this when it applied for the Trade Mark so the application was made in bad faith pursuant to s 3(6) of the 1994 Act.

Decision

The central question was whether Cryptocarbon owned goodwill at the Filing Date associated with “cryptoback” as a trading name.

His Honour Judge Hacon found that, on the evidence, “cryptoback” was a neologism and, as such, raised an evidential point all of its own. Referring to Linoleum Manufacturing Company v Nairn [1878] 7 Ch D 834, he noted that it has long been recognised that there is a potential difficulty facing a claimant who seeks to rely on goodwill associated with a newly coined word that is used in relation to a particular product or service. In Linoleum, Mr Justice Fry said, “In my opinion, it would be extremely difficult for a person who has been by right of some monopoly the sole manufacturer of a new article, and has given a new name to the new article, meaning that new article and nothing more, to claim that the name is to be attributed to his manufacture alone after his competitors are at liberty to make the same article”. Therefore, HHJ Hacon had to consider the question whether the public regarded “cryptoback” as descriptive of a type of service.

“Cryptoback” is a contraction of “cryptocurrency cashback” and is thereby potentially descriptive, he said. The crucial question for establishing goodwill was, therefore, whether “cryptoback” was distinctive of Cryptocarbon’s services as at the Filing Date.

The bulk of the witness evidence for Cryptocarbon was given by Mr Manuel, who was also the third defendant and had been responsible for setting up Cryptocarbon and related companies. Mr Manuel described a variety of uses of “cryptoback” in the UK before the Filing Date in his witness statement, but in cross-examination some of this evidence was shown to be unreliable. Therefore, HHJ Hacon was unable to accept his evidence, save where it was clearly supported by documentary evidence.

Of the documentary evidence submitted, only the summaries of accounts held by customers of Cryptocarbon, which possibly showed cryptoback payments in dollars on dates preceding the Filing Date and the name of the trader from whom the account holder had made a purchase, but which were difficult to read, provided possible proof that the word “cryptoback” was presented to the public in the UK. The payments made by the customer were recorded and showed that some had been paid in sterling. However, the evidence was weak and HHJ Hacon decided that they merely established that in the autumn of 2019 the payments were recorded under a column marked “Cryptoback $”. They proved nothing about whether and, if so, how the word “cryptoback” was presented to the customers at the relevant time. Still less did they show that such use would have been perceived by the customers as a badge of origin.

Of the other admissible documentary evidence only one article and a webpage showed how the word “cryptoback” was presented to the public. In neither case was it established that they had been seen by anyone in the UK. The article was published by Cryptocarbon in January 2018 and republished by a cryptocurrency website in March 2018. It was entitled “Shopping is Mining – How CCRB is redefining the cryptocurrency model with ‘Cryptoback’”. HHJ Hacon said that, notwithstanding the upper case C, a reasonable reader would probably interpret this to mean that “Cryptoback” was a term for a new type of cashback service, now being offered where the cashback rewards were paid in CCRB cryptocurrency. It was safe to assume that some people read the article before the Filing Date but there was no way of knowing how many, if any, were in the UK.

As for the webpage, this was headed “CCRB – CryptoCarbon – Shop & Mine”. It included links marked “Get Cryptoback” and a section headed “How Does Cryptoback Work?”. It was not dated. In HHJ Hacon’s view the use of the word “cryptoback” was probably taken to have been a name for a new type of service, here offered using Cryptocarbon’s CCRB cryptocurrency.

In both cases, HHJ concluded that 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. Further, in the few months of use before the Filing Date, that service was also presented by Cryptocarbon as “CcrbBack”. This increased the likelihood that “cryptoback” was seen as the generic word for a new type of service, in contrast to “CcrbBack”, which was the CCRB version of that service.

HHJ therefore held that the evidence did not establish that, at the Filing Date, Cryptocarbon owned goodwill which was associated with a trade name “cryptoback”. Accordingly, the allegation of invalidity of the Trade Mark pursuant to s 5(4)(a) of the 1994 Act failed. Cryptocarbon accepted that if that allegation failed, the allegation of bad faith under s 3(6) could not succeed. Accordingly, HHJ Hacon concluded that the Trade Mark was valid and infringed by Cryptocarbon.

(Wirex Ltd v Cryptocarbon Global Ltd [201] EWHC 617 (IPEC) (16 March 2021) — to read the judgment in full, click here).