25 November 2015

Parallel Imports - Flynn Pharma Ltd v Drugsrus Ltd

One of the fundamental principles of the European Union is that it "shall comprise a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries" (art 28 (1) of the Treaty on the Functioning of the European Union ("TFEU"). Art 34 of the TFEU further provides:
"Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States."
However, this is subject to the following exception provided by art 36:
"The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States."
These articles have been considered by the Court of Justice of the European Union and its predecessor the European Court of Justice in numerous cases.

In conjoined Cases C-427-93, C-429/93 and C-436/93 Bristol-Myers Squibb v Paranova A/S [1996] ETMR 1, [1997] 1 CMLR 1151, [1996] ECR I-3457, [1996] EUECJ C-427/93, [2003] Ch 75, [1997] FSR 102, [2002] 3 WLR 1746, (1997) 34 BMLR 59, [1996] CEC 716, the Court held:
"it is established that reliance on trade mark rights by the owner in order to oppose the marketing of repackaged products under that trade mark would contribute to the artificial partitioning of the markets between Member States; such is the case, in particular, where the owner has put an identical pharmaceutical product on the market in several Member States in various forms of packaging, and the repackaging carried out by the importer is necessary in order to market the product in the Member State of importation, and is carried out in such conditions that the original condition of the product cannot be affected by it; that condition does not, however, imply that it must be established that the trade mark owner deliberately sought to partition the markets between Member States; "
So far so good. But what happens when the Medicines and Healthcare Products Regulatory Agency ('MHRA'), the medicines licensing authority for the United Kingdom, insists on the use of a brand name as a condition the sale of a generic pharmaceutical product in the UK even though the product is sold in the rest of the European Union under a different name? That was the issue that Mrs Justice Rose had to decide in Flynn Pharma Ltd v Drugsrus Ltd and another [2015] EWHC 2759 (Ch) (6 Oct 2015).

In that action the claimant Flynn Pharma Ltd. ("Flynn") sought an injunction to restrain Drugsrus Ltd. ("Drugsrus") and Tenolol Ltd. ("Tenelol") from importing from Ireland a drug used in the treatment of epilepsy and other disorders that had previously been marketed by Pfizer in the UK under the mark Epanutin and was still marketed in the rest of the EU under that sign and selling it in the UK under the mark 'Phenytoin Sodium Flynn' which was the sign that the MHRA required Flynn to use as a condition of its licence to sell Epanutin in the UK. Flynn's cause of action was infringement of the trade mark FLYNN which that company applied to register for pharmaceutical and medical preparations and substances etc. on 3 Aug 2012 - approximately the time that Flynn was concluding negotiations with Pfizer and the MHRA for the right to sell Epanutin in the UK.

To understand this case it is necessary to know that Flynn is a speciality pharmaceutical company trading in both generic medicines and speciality brands that has never operated as a research-based pharmaceutical company but works at the 'mature end' of the market, selling branded products once the patent on the product has expired. It acquires the rights to branded products from research-based pharmaceutical companies and promotes and sells them under the Flynn brand. One of its directors described its business as follows:
"Flynn has traditionally looked to 'rescue' such product lines. They are the tail end products that the major pharmaceutical companies no longer have in their focus; they are not core to their business. There is still a role for these products though and doctors and patients will still be relying on them. They do not want that product to disappear from the market, so that is really our role. We look for products that we can acquire the rights to, or enter into some kind of commercial deal, to ensure continuity of supply into the market. Obviously as part of that we make a margin."
One of these tail end products was Epanutin (also known as phenytoin sodium). It was described by one of the claimant's witnesses as
"never the drug of choice for all epilepsies but it was a preferred agent for some epilepsies in the past. However, as newer agents have come to the market with improved efficacy, fewer contra-indications (side effects) and/or better safety profiles, the place for Phenytoin Sodium in therapy has declined such that it is no longer the drug of first choice for any seizure type - it is not even the drug of second choice. It is considered as a tertiary or an adjunctive agent in some patients in whom perhaps the initial first approach and backup approach do not provide adequate control. One can look at the sales data by volume over the last five or ten years and generally you will see a decline in the sales of phenytoin sodium of approximately 5% per year."
Because of an agreement between The Association of the British Pharmaceutical Industry and the Department of Health there are limits to the price at which branded products can be sold in the UK. However, there are no controls on the price of generic products.  Because of that agreement Pfizer could not make much money out of selling Epanutin in the UK. One of the bizarre consequences of the expiry of the patent was that the price of the drug rocketed from £3 per bottle of 84 100 mg capsules to £66.50. After a lot of complaints and adverse comment Flynn eventually agreed to reduce the price of the bottle to £54.

In 2012 Flynn obtained a licence from Pfizer to sell such capsules in 2012 and applied to the MHRA for the right to sell them as phenytoin sodium. The MHRA refused to allow Flynn to use that description but offered to let that company sell the product as Phenytoin Sodium Flynn. The reason for the MHRA's insistence on the insertion of the word FLYNN was that phenytoin sodium is available in several forms. The addition of that word was intended to ensure precision in the writing of prescriptions by doctors and the supply of the right version  of the medicine by pharmacists.

The defendants were established in about 1997 by one Naresh Shah and his wife to trade in parallel imported pharmaceutical products. Tenelol applies for, holds and maintains product licences for parallel imports. Drugsrus is as a wholesaler of pharmaceutical products which imports and sells parallel imported drugs using licences held by Tenolol. Drugsrus has a wholesale dealer's licence and has satisfied the stringent criteria applicable in relation to the storage, distribution, tracking and management of pharmaceutical products. The defendants employ about 80 people including four pharmacists and three regulatory staff responsible for parallel import licence applications and for maintaining the product licences. Tenelol holds about 900 licences making it one of the bigger parallel import licence holders in the UK market. Parallel imports account about 80 per cent of the defendants' turnover.

Drugsrus and Tenelol found a supply of Epautin that had been manufactured by Pfizer in Ireland but the decision of the MHRA to require Flynn to market phenytoin sodium capsules as Phenytoin Sodium Flynn presented them with two problems which the judge acknowledged at paragraph [32] of her judgment:
"The first was that pharmacists would not be able to use that product to fulfil prescriptions written for 'Phenytoin Sodium Flynn' but only where prescriptions were written for 'Epanutin' or for the INN 'phenytoin sodium'. The second problem was that the Defendants could not, as parallel importers, guarantee the continued supply of Epanutin capsules. If customers were to source Epanutin from them (or Epanutin described by some other brand name of their choosing) there would be a danger that on any given day they would not have any available. Apart from other parallel importers (who may also have no supply on any particular day), there is no source of Epanutin capsules in the UK. That is why they want to be able to label their product Phenytoin Sodium Flynn when they import it into the UK."
Flynn responded by bringing these proceedings.

Flynn sued Drugsrus and Tenelol for trade mark infringement under s.10 (1) of the Trade Marks Act 1994. The defendants relied on s.11 (2) (b) and art 34 of the TFEU citing Bristol-Myers-Squibb in support. Her Ladyship held that neither defence availed the defendants and found for the claimants.

In her view, the problem with the s.11 (2) (b) defence was that:
"The use of the word 'FLYNN' is not a description of the goods. It is not a word associated with medicines or ingredients or otherwise denoting the qualities or characteristics of the medicine. It will be perceived by consumers as a mark of origin because there is no evidence that consumers will interpret the sign in the way the Defendants suggest, namely as an indication of the source of the API or the site of the manufacture of the product. They will interpret it as being an indication of the holder of the marketing authorisation of the product and therefore as indicating that the product originates with Flynn Pharma as being the entity responsible for the quality of the goods. That is clearly a trade mark use of the sign."
She continued that the difficulty could not be cured by a disclaimer partly because the disclaimer was not strictly accurate but also because the European Court had rejected that defence in  Case 206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10099.

As for the art 34 point the judge analysed Bristol-Myers-Squibb and subsequent cases on parallel imports in considerable detail and concluded that the exhaustion of rights defence is available only when the same or a connected entity markets the same goods under the same or similar trade mark in different member states of the EU. She said at paragraph [78]:
"Having considered the agreements between Pfizer and Flynn Pharma, it would not be right to say that the owner of the right in the importing State is, directly or indirectly, able to determine the products to which the trade mark may be affixed in the exporting State and to control their quality. I therefore hold that Flynn Pharma's trade mark rights in the name Phenytoin Sodium Flynn are not exhausted in respect of packages of Epanutin placed on the market in other Member States. Flynn Pharma is therefore entitled to prevent the relabelling of the parallel imported product by the Defendants."
The upshot of Mrs Justice Rose's decision is that a distributor of generic medicines now enjoys  a tighter monopoly in perpetuity of the supply of a "tertiary or an adjunctive agent" than was ever enjoyed by the patentee which developed the drug in the first place. Moreover, because the drug is treated as a generic rather than a branded product Flynn can now sell that product at 18 times the price that Pfizer could have sold it. The decision may well be right but intellectual property and competition law were never intended to work like that. Perhaps there will be an appeal. Perhaps not. But whatever the happens there needs to be a change in the law whether brought about by the courts or legislature.

Should anyone wish to discuss this fascinating case with me or trade mark law, competition law or parallel imports in general, he or she should call me on 020 7404 5252 during office hours or send me a message through my contact form.

24 November 2015

"No Woman No Cry" BSI and another v Blue Mountain Music Appeal

Bob Marley
Author Eddie Marlin
Source Wikipedia
Creative Commons Licence

Between 1973 and 1976 Bob Marley wrote the words and composed the music for 13 songs of which the most famous was No Woman No Cry. At that time Marley was under contract to a New York company called Cayman Music Inc. ("CMI") which should have acquired the copyrights in those songs and the resulting royalties. To get round that contract Marley pretended that those works had been written by other individuals who collected those revenues and may possibly have shared them with him. Marley died in 1981.

After his death CMI sued Marley's estate in the New York courts for the moneys that it should have received under the contract and Marley's personal representative counterclaimed for rescission of Marley's contract with CMI. CMI's claim was found to be statute barred in New York but no decision was ever made on the counterclaim.

On 20 March 1992 Island Logic Ltd., one of the subsidiaries of Island Records, agreed to buy certain copyrights from CMI. The agreement did not make clear which works were included in the sale but Island Records believed that they included No Woman No Cry and the other songs. For over 20 years one of its other subsidiaries, Blue Mountain Music Ltd. ("Blue Mountain"), collected revenues from collecting societies in respect of those sums.

In 2008  BSI Enterprises Ltd. ("BSI") agreed to but whatever copyrights in Marley's works CMI still owned and granted an exclusive licence to Cayman Music Inc. ("Cayman"), a company that had no connection with CMI.  BSI and Cayman sued Blue Mountain for a declaration that Cayman was entitled to the copyrights in No Woman No Cry and Marley's other wrongly attributed works and for an account of the moneys that it had received in respect of those works from collecting societies.

The action came on before Richard Meade QC sitting as a judge of the High Court in BSI Enterprises Ltd and another v Blue Mountain Music Ltd [2014] EWHC 1690 (Ch). The parties agreed that CMI owned the copyrights in the works in question despite Marley's ploy and that the case turned on whether those copyrights passed to Island Logic Ltd. in 1992. It was common ground that the 1992 agreement had to be interpreted in accordance with Lord Hoffmann's speech in Investors Compensation Scheme v. West Bromwich Building Society [1997] UKHL 28; [1998] 1 All ER 98; [1998] 1 WLR 896 (19 June, 1997):
'(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 2 WLR 945
(5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in The Antaios Compania Neviera SA v Salen Rederierna AB [1985] 1 AC 191, 201:
"... if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense."'
In interpreting that agreement Mr Meade referred to the following agreed chronology.
    DateEvent/DocumentBundle Ref
    14 June 1968Publishing Agreement between Johnny Nash Music Inc and Bob Marley4.1/3/121
    11 Oct 1973Publishing Agreement between CMI and Bob Marley1/2/13
    11 Oct 1973 to 11 Oct 1976Works in issue composed by Bob Marley
    11 May 1981Bob Marley dies intestate
    15 October 1984Complaint in New York Action issued by CMI v Rita Marley (as administratrix of the Estate of Bob Marley), BMML and Island Records Inc & Ors4.1/1/95
    14 January 1988Judgment dismissing New York Action on limitation grounds4.1/2A/120.1
    27 April 1988Conditional Agreement between Mutual Security Merchant Bank and Trust Co Ltd (as administrator of the Estate of Bob Marley) and Island Logic Inc4.1/4/131
    20 March 1992Asset Purchase Agreement between Island Logic Ltd and Cayman Music Inc & Ors4.1/5/185
    Ancillary Agreement between Vanguard Films and Cayman Music Inc4.1/5/431
    10 September 1992Sale agreement between Mutual Security Merchant Bank and Trust Co Ltd (as administrator of the Estate of Bob Marley) and Island Logic Ltd & Ors4.2/6/484
    15 May 2006Judgment in the matter of Aston Barrett and Universal-Island Records Ltd & Ors6/19/1420
    20 May 2008Agreement between BSI Enterprises Ltd and Cayman Music Inc & Ors4.2/12/676
    1 October 2011Licence between BSI Enterprises Ltd and Cayman Music Ltd4.3/16/844
    13 April 2012Claim Form Issued1/1/1
    20 July 2012Amended Claim Form Issued1/1/1

Applying Lord Hoffmann's principles Mr Meade held that the copyrights did indeed pass to Island Logic Ltd under the 1992 agreement and dismissed the claim for a declaration and account. He added that if he was wrong Blue Mountain was entitled to a gratuitous licence to exploit those works by reason of the claimants' delay in asserting their rights.

BSI and Cayman appealed against Mr Meade's decision with the permission of the deputy judge which came on before Lady Justice Arden and Lord Justices Kitchin and Lloyd Jones (see BSI Enterprises Ltd and another v Blue Mountain Music Ltd. [2015] EWCA Civ 1151). On appeal the appellants abandoned the case that they had run at trial and argued that the 1992 agreement could not have conveyed the copyrights in No Woman No Cry because the ownership of those copyrights was uncertain because the claim and counterlaim in the New York litigation had never been resolved. In their submission the copyrights remained with CMI until it sold them to the appellants in 2008.

The Court of Appeal rejected those submissions and in particular the appellants' contention that Mr Meade fell into error in that he sought to identify and ascertain the parties' intentions and the scope of their agreement from the surrounding circumstances and then made the language of the 1992 agreement yield to them, and that he ought rather to have discerned the scope of the agreement and the intentions of the parties from the language of the agreement itself. Delivering the judgment of the Court, Lord Justice Kitchin said that the deputy judge's reasoning was unimpeachable and entirely in accordance with established principles for the construction of contracts. He said at paragraph [69] that Mr Meade 
"properly had regard to the fact that Island wanted to buy everything it could and that CMI's best opportunity to maximise its potential claim over the Misattribution Ploy was with Island. Indeed I am not surprised that the deputy judge said that for the parties to leave out the Works without saying so in terms and so maximise future uncertainty seemed little short of ridiculous."
    His Lordship concluded that No Woman No Cry and the copyrights in the other works passed to Island Logic and dismissed the appeal. Lady Justice Arden and Lord Justice Lloyd Jones agreed with him.

    The most important authority cited in this appeal is Investors Compensation Scheme v West Bromwich Building Society and it is a useful example of the application of Lord Hoffmann's principles to a copyright assignment. I have had to refer to Lord Hoffmann's principles twice in the last few weeks, once in a skeleton argument and the other time in an advice in respect of a trade mark assignment from an administrator. I think I shall add this appeal in future because Lord Justice Kitchin summarized the proper approach in one short proposition at paragraph [38]:
    "The object is to determine what the parties meant by the language they used in the contract. This involves ascertaining the meaning which the language would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, that is to say the matrix of fact. The admissible background includes everything which would have affected the way in which the language of the contract would have been understood by a reasonable person but it excludes the previous negotiations of the parties and their declarations of subjective intent."
    Should anyone wish to discuss this case he or she should call me on 020 7404 5252 during office hours or send me a message on my contact form.

    23 November 2015

    How to complete a Complaint form for the UDRP

    Partial View of the Internet
    Author The Opte Project
    Source Wikipedia
    Creative Commons Licence

    I have been a member of the World Intellectual Property Organization's domain name dispute resolution panel since 2003 and I have seen a fair number of complaints in domain name disputes in that time. I have also settled a few of my own as counsel to trade mark proprietors or business owners who object to the registration of a domain name that is the same or similar to their trade mark or business name. The complaint is an important document as it is usually the only source of evidence and argument that a panellist can rely upon, yet it is rarely prepared well. More often and not I receive screeds of irrelevant matter, bad points, repetition of the same point and disjointed argument all presented in a tone of exaggerated indignation backed up by lengthy annexes all of which have to be read and most of which are next to useless. This short article is intended to be a guide for those contemplating a complaint under the Uniform Domain-Name Dispute-Resolution Policy ("UDRP").

    Is your Case suitable for the UDRP?

    As I said in my Introduction to Domain Name Dispute Resolution 21 Nov 2015 not every domain name dispute is suitable for the UDRP or similar alternative dispute resolution scheme. The UDRP and similar schemes were intended to tackle cyber-squatting, a practice prevalent in the early days of the internet whereby speculators registered domain names similar to the trade marks or corporate names of well known businesses or institutions and ransomed them to the business owner for a substantial sum of money that was nevertheless lower than the costs of recovering the domain name by a trade mark infringement or passing off action in the civil courts. Such schemes were never intended to outlaw domaining, a practice whereby businesses register domain names that are not the same as or similar to trade marks or corporate names in the expectation that their value will appreciate or to disputes where more than one business has a legitimate interest in the domain name as in Prince Plc v Prince Sports Group Inc [1998] FSR 21. The UDRP and similar schemes are suitable for clear cases where there is no real defence to a request for the transfer or cancellation of the disputed domain name.

    The second point to consider is that the UDRP is only one of several ADR schemes.  It is used for most generic top level and some country code top level domain disputes but by no means all. Claims for the transfer of domain names ending in ".uk", for example, should be made under Nominet's Dispute Resolution Service ("DRS") and claims for the transfer of domain names ending in "eu" should be addressed to the Czech Court of Arbitration's Arbitration Center for .EU Disputes. The World Intellectual Property Organization publishes very useful guidance to the sort of disputes that are suitable for the UDRP on its Domain Name Dispute Resolution Service for Generic Top-Level Domains page. Incidentally, if you are unsure what is meant by the terms "generic top level domain", "country code top level domain", the abbreviations "gTLD" and "ccTLD" or any other term of art then you should read my article of 21 Nov 2015.

    Reading List

    If you have never filed a complaint under the UDRP before then you should read the following documents carefully:

    As I explained in my article there are five domain name dispute resolution service providers to which you can take your dispute and they all have their own rules of procedure which supplement the UDRP and the Rules. Those supplemental rules may well be a factor in choosing a service provider so it is a good idea to download them all and read them first. Whichever service provider you choose, you should also read the WIPO Guide to the Uniform Domain Name Dispute Resolution Policy (UDRP), its Domain Name Dispute Resolution Resources and in particular its Overview of WIPO Panel Views on Selected UDRP Questions, Second Edition ("WIPO Overview 2.0").

    The Jurisdiction

    The right to apply for the transfer or cancellation of a disputed domain name derives from the following provision of the UDRP which is transposed into every agreement to register a domain name:
    "You are required to submit to a mandatory administrative proceeding in the event that a third party (a "complainant") asserts to the applicable Provider, in compliance with the Rules of Procedure, that
    (i) your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and
    (ii) you have no rights or legitimate interests in respect of the domain name; and
    (iii) your domain name has been registered and is being used in bad faith.
    In the administrative proceeding, the complainant must prove that each of these three elements are present."
    Note the last line of the provision. The onus is on the complainant to prove his or her case and he or she must prove all the elements in sub-paragraphs (i) to (iii).

    The Complaint

    The document in which you must prove your case is called the complaint and its form and content are prescribed by the UDRP and the Rules. Each service provider has its own form which can be completed on-line or downloaded from its website. For instance, you will find the WIPO on-line form here. Each form is accompanied by copious notes on how to complete it most of which are self-explanatory. The section that gives most difficulty is the factual and legal grounds upon which a complaint is made (Section VI of the WIPO form). This is where my article is intended to help.

    The Domain Name is identical or confusingly similar to a Trade Mark or Service Mark in which the Complainant has Rights

    All that is necessary for this element is something like this:
    "The Complainant has registered the word ............ as a trade mark in [the United Kingdom] under registration number ...................... for [specified goods and services] in classes ................... which mark is identical to the disputed domain name if the suffix ".com" is disregarded.  A copy of the particulars of registration that have been downloaded from the British Intellectual Property Office website is attached as annexe ...."
    More often than not panellists are confronted with vast tables and bundles of trade mark registrations from every corner of the globe most of which are very far removed from the domain name in suit.  The panellist has to read all that verbiage and it is a complete waste of his or her time. Panellists are not salaried judges but busy intellectual property lawyers and patent and trade mark attorneys who are paid about US$1,000 (£659.59 at current rates of exchange) for each case however long it takes to decide. That is not a lot of money after all overheads and expenses are deducted. Nothing riles a panellist more than a complaint that wastes his or her time.

    Sub-paragraph (i) above requires a complainant to prove only one trade mark or service mark in which he or she has rights.  He or she can do that quite satisfactorily by referring to the registered trade mark in any jurisdiction that is closest to the disputed domain name.  Proving that the complainant owns other trade marks in other jurisdictions adds absolutely nothing to the case. Complainants and their lawyers must resist the temptation to throw in the kitchen sink.

    Sub-paragraph (i) does not require the trade mark to be registered. It is enough to be able to bring an action for passing off or some other cause of action.  Of course the complainant has to prove all the ingredients of an action for passing off, that is to say reputation, misrepresentation and damage. As the complaint has to be made on paper and all the facts and matters on which the complainant relies has to be set out in the complaint some guidance may be derived from Mr Geoffrey Hobbs QC's judgment in Re Wild Child [1998]  RPC 455.

    Another thing that exasperates panellists is unnecessary citation of authority. Whether a trade mark is the same or confusingly similar to a domain name is a matter of impression and previous cases where another domain name was held to be similar or indeed dissimilar to a trade mark are rarely of any assistance to the panel whatsoever. Nor are cases that decide obvious points such as the suffix "com" does not distinguish an otherwise identical domain name.

    The Respondent has no Rights or Legitimate Interests in Respect of the Domain Name

    It is impossible to prove a negative and complainants are not required to do so.  On the other hand they do have a duty to assist the panel to reach a just decision which probably connotes an obligation to disclose any facts or matters that might disclose a right or legitimate interest in the domain name and then address it.  The reason I say that is that the panel has power under rule 15 (e) of the Rules to declare that a complaint was brought in bad faith and constitutes an abuse of the administrative proceeding. Deliberate or even negligent non-disclosure would certainly constitute bad faith in my book.

    Paragraph 4 (c) of the UDRP lists a number of circumstances which if found to be present may demonstrate that the respondent has rights or legitimate interests in the disputed domain name:
    "(i) before any notice to you of the dispute, your use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; or
    (ii) you (as an individual, business, or other organization) have been commonly known by the domain name, even if you have acquired no trademark or service mark rights; or
    (iii) you are making a legitimate non-commercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue."
    It should be noted that these are examples and the list is not exhaustive.

    Probably the best way to deal with the second element is to say that the Complainant has never licensed or consented to the registration or use of the disputed domain name and to the best of its knowledge and belief none of the circumstances listed in paragraph 4 (c) of the UDRP applies and that there are no other circumstances that justify the respondent's registration or use of the disputed domain name.

    The Domain Name has been registered and is being used in Bad Faith

    This is the most difficult element because the complainant must prove both registration and use in bad faith. Happily paragraph 4 (b) of the UDRP provides the following assistance:
    "Evidence of Registration and Use in Bad Faith. For the purposes of Paragraph 4 (a) (iii), the following circumstances, in particular but without limitation, if found by the Panel to be present, shall be evidence of the registration and use of a domain name in bad faith:
    (i) circumstances indicating that you have registered or you have acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of your documented out-of-pocket costs directly related to the domain name; or
    (ii) you have registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that you have engaged in a pattern of such conduct; or
    (iii) you have registered the domain name primarily for the purpose of disrupting the business of a competitor; or
    (iv) by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your web site or other on-line location, by creating a likelihood of confusion with the complainant's mark as to the source, sponsorship, affiliation, or endorsement of your web site or location or of a product or service on your web site or location."
    It should be noted that these circumstances are only evidence and not conclusive proof of registration and use in bad faith but if the complainant can prove that one of them applies it will be the only evidence available to the panel and he or she will be bound to accept it unless the respondent can rebut it or explain it away. It is nowadays rare to find an example of classic cyber-squatting that would fall within sub-paragraph (i). In most of the cases that come before me the respondent parks the disputed domain on a holding page with plenty of pay-by-click links and sponsored searches and that is usually enough to invoke sub-paragraph (iv) as the panel will already have found the domain name to be identical or confusingly similar and pay-by-click revenue is commercial gain.

    It should be noted that the circumstances in paragraph 4 (b) are not exhaustive and that other circumstances of the same nature will suffice.  Some panels have held that the mere act of registering a name that is similar to the complainant's trade mark or corporate name, failing to respond to a letter before claim or even using a privacy service suffice as evidence of registration and use in bad faith but I am more sceptical. To take an obvious example, Lloyds is the name of a large London clearing bank, a corporation of insurers and a well-known pharmacy chain in the UK and each of them is entitled to register a generic top level domain name that includes the word "Lloyds". There are very good reasons why domain name holders use privacy services and there can be all sorts of reasons why a respondent in country A might not even receive let alone take seriously a letter before claim from some law firm in country B. As a rule of thumb most cases that are suitable for the UDRP fall within one or more of the circumstances in paragraph 4 (b) and if a case does not fit it is probably not suitable for this summary procedure.

    It should be remembered that the word "registration" in 4 (a) (iii) applies to renewals and transfers as well as original registrations so it is possible that a domain name which was originally registered in good faith may not be renewed in good faith because of changing circumstances.


    Should anyone wish to discuss this article or domain name disputes generally, he or she should call me on +44 (0)20 7404 5252 during office hours or message me through my contact form.

    21 November 2015

    Introduction to Domain Name Dispute Resolution

    World Intellectual Property Organization
    Author Melaatron
    Creative Commons licence

    This is the first of  series of articles on domain name disputes. Schemes for the rapid resolution of domain name disputes such as ICANN's UDRP (Uniform Domain Name Dispute Resolution Policy), Nominet's Dispute Resolution Service ("DRS") and the Czech Court of Arbitration's ".euADR" are probably the most successful use of alternative dispute resolution ("ADR") on the planet and the topic is important for that reason alone. It is also important because such schemes are probably indispensable for the rapid development of the Internet.  It is inconceivable that businesses would have invested anything that the that they have on the development of on-line platforms for the delivery of many sorts of services without a quick and cheap method of domain name dispute resolution.

    My Qualifications and Experience

    I have been interested in this topic for nearly 20 years.  My interest was sparked by instructions that I received in the early days of the Internet to advise what if anything could be done when someone registered a domain name that was the same as or similar to a trade mark or the name of a company. I followed the cases in this country and abroad and noticed that they were not always decided in favour of the trade mark owner. I also followed the negotiations between the US government and the Internet community to privatize the domain name system and wrote about them at the time. I was in one of the first barristers to settle a complaint under the UDRP. I was invited by the WIPO (World Intellectual Property Organization) to become a domain name panellist in 2003 and have decided a large number of domain name disputes either as a sole panellist or as a member of a panel of three. As counsel I have advised on and challenged a number of domain name decisions in the English courts.

    What is a Domain Name?

    At the risk of over-simplification, a domain name is a mnemonic for a string of numbers that identify a website or other resource on the Internet. Domain names typically split into three parts:
    • a top level domain ("TLD") such as ".com" or ".uk" which appears at the far right;
    • a second level domain ("SLD") such as "4-5" or "nipclaw" in the middle; and 
    • the server designator such as "www" for a web server at the far left.
     TLDs fall into two groups:
    • generic top level domains ("gTLD") such as ".com", ",org" or ",net" which are not associated with any particular country or group of countries, and 
    • country code top level domains ("ccTLD") such as ".uk", ".fr", ".de", ".cn" and so on.

    By a memorandum of understanding dated 25 Nov 1998 the management of the domain name system has been delegated to a California company known as ICANN (Internet Corporation for Assigned Names and Numbers). ICANN supervises the gTLD space directly and collaborates with national domain name authorities such as Nominet in the management of the ccTLD spaces. The terms upon which ICANN collaborates with Nominet are set out in an exchange of letters dated 2 May 2006 between Paul Twomey of ICANN and Lesley Cowley of Nominet.  ICANN has exchanged similar correspondence with other national domain name authorities.


    Neither ICANN nor Nominet registers domain names directly. That task is undertaken by businesses called "registrars".  Each registrar that wishes to register domain names in the gTLD space must obtain accreditation from ICANN and each registrar which wishes to register domain names in the ".uk" ccTLD space must obtain accreditation from Nominet. Other ccTLD authorities have established their own registration policies.

    Registrar Accreditation Agreements

    ICANN accredits registrars under its standard registrar accreditation agreement ("RAA"). Clause 3.8 of RAA provides:
    "Domain-Name Dispute Resolution. During the Term of this Agreement, Registrar shall have in place a policy and procedures for resolution of disputes concerning Registered Names. Until ICANNadopts an alternative Consensus Policy or other Specification or Policy with respect to the resolution of disputes concerning Registered Names, Registrar shall comply with the Uniform Domain NameDispute Resolution Policy ("UDRP") identified on ICANN's website (www.icann.org/general/consensus-policies.htm), as may be modified from time to time. Registrar shall also comply with the Uniform Rapid Suspension ("URS") procedure or its replacement, as well as with any other applicable dispute resolution procedure as required by a Registry Operator for which Registrar is providing Registrar Services."
    That provision requires every accredited registrar to incorporate the UDRP into its domain name registration agreements. Thus every agreement to register a domain name requires the person seeking registration ("the registrant") to submit any dispute with a trade mark owner over whether he or she is entitled to the domain name to a type of ADR known as a "mandatory administrative proceeding." If a registrar fails to incorporate the UDRP into its registration agreements or to comply with an order made in a mandatory administrative proceeding for the transfer or cancellation of a domain name, ICANN can suspend or revoke the registrar's accreditation.

    It is those RAA that make the UDRP and similar country code domain name dispute resolution schemes so effective.  They enable a dispute between a trade mark owner and a registrant to be resolved at least as effectively but in a fraction of the time and cost of the resolution of the same dispute in the courts.

    Nominet has a similar accreditation agreement with its registrars (see "the Registrar Agreement" page).  So do the domain name authorities of several other countries.  Many of those authorities incorporate the UDRP into their registrar accreditation agreements.  Nominet, however, has its own Dispute Resolution Service Policy which resembles the UDRP in essentials but differs from it in a number of important respects.

    Relationship with the Courts

    Neither the UDRP nor the DRS seeks to oust the jurisdiction of the civil courts.

    Paragraph 4 (k) of the UDRP provides:
    "The mandatory administrative proceeding requirements set forth in Paragraph 4 shall not prevent either you or the complainant from submitting the dispute to a court of competent jurisdiction for independent resolution before such mandatory administrative proceeding is commenced or after such proceeding is concluded."
    The vast majority of domain name disputes are decided without recourse to the courts.  Very few decisions are challenged.  However, ICANN accredited registrars are bound to wait for 10 business days to allow a challenge to be mounted before they can transfer or cancel a domain name registration.

    Paragraph 4 (k) continues:
    "If an Administrative Panel decides that your domain name registration should be canceled or transferred, we will wait ten (10) business days (as observed in the location of our principal office) after we are informed by the applicable Provider of the Administrative Panel's decision before implementing that decision. We will then implement the decision unless we have received from you during that ten (10) business day period official documentation (such as a copy of a complaint, file-stamped by the clerk of the court) that you have commenced a lawsuit against the complainant in a jurisdiction to which the complainant has submitted under Paragraph 3(b)(xiii) of the Rules of Procedure. (In general, that jurisdiction is either the location of our principal office or of your address as shown in our Whois database. See Paragraphs 1 and 3(b)(xiii) of the Rules of Procedure for details.) If we receive such documentation within the ten (10) business day period, we will not implement the Administrative Panel's decision, and we will take no further action, until we receive (i) evidence satisfactory to us of a resolution between the parties; (ii) evidence satisfactory to us that your lawsuit has been dismissed or withdrawn; or (iii) a copy of an order from such court dismissing your lawsuit or ordering that you do not have the right to continue to use your domain name."
    I discussed the procedure for challenging UDRP decisions in the English courts in How to challenge a UDRP Decision 25 Oct 2015 4-5 IP.

    Paragraphs 10 (d) and 13 (a) (ii) of the DRS Policy make similar provision in respect of disputes in the ".uk" domain name space.

    It would not be wrong to characterize UDRP and DRS proceedings as analogous to interim injunction proceedings in civil litigation as their purpose is also to preserve the status quo.   As I noted elsewhere, the UDRP has been described aptly as an interim custody arrangement for domain names.

    What sort of Domain Names Disputes are suitable for this Procedure? 

    It is important to note that not all domain name disputes are suitable for resolution under the UDRP, DRS or similar scheme.

    Paragraph 4 (a) of the UDRP provides:
    "You are required to submit to a mandatory administrative proceeding in the event that a third party (a "complainant") asserts to the applicable Provider, in compliance with the Rules of Procedure, that
    (i) your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and
    (ii) you have no rights or legitimate interests in respect of the domain name; and
    (iii) your domain name has been registered and is being used in bad faith.
    In the administrative proceeding, the complainant must prove that each of these three elements are present."
    For the purposes of the UDRP  a "trade mark" or "service mark" includes a registered trade mark in any jurisdiction or an action for passing off in any country.

    It is worth emphasizing that the complainant must prove that all three elements are present and that the third is proved only if the domain name was registered and is used in bad faith. Moreover,  paragraph 15 (e) of the Rules for Uniform Domain Name Dispute Resolution Policy (the "Rules") enables a panellist to  declare that a complaint was brought in bad faith and constitutes an abuse of the administrative proceeding. Incidentally, the equivalent provision in paragraph 16 (d) of the DRS Procedure actually carries a sanction of exclusion from the DRS for up to 2 years if there are three or more such declarations within 2 years.

    The jurisdiction to bring a complaint under the DRS is slightly wider than the UDRP as paragraph 2 (a) (i) requires a complainant to prove that he or she has Rights.  "Rights" is defined as
    "rights enforceable by the Complainant, whether under English law or otherwise, and may include rights in descriptive terms which have acquired a secondary meaning."
    A complainant must also prove that the domain name in the hands of the respondent was an "Abusive Registration", that is to say one that
    "i. was registered or otherwise acquired in a manner which, at the time when the registration or acquisition took place, took unfair advantage of or was unfairly detrimental to the Complainant’s Rights; or
    ii. has been used in a manner which has taken unfair advantage of or has been unfairly detrimental to the Complainant’s Rights;"
    It follows that the UDRP, DRS and similar schemes should be invoked only in clear cases.   If a complainant is in any doubt as to whether a case is suitable for the UDRP, DRS or an equivalent scheme he or she should seek specialist legal advice first.

    Dispute Resolution Service Providers

    Applications for the transfer or cancellation of a generic top level domain name can be made to any one of the following dispute resolution service providers:
    Nominet has its own panel of experts for the resolution of disputes in the ".uk" ccTLD space. The Czech Court of Arbitration Center for Internet Disputes resolves disputes in the ".eu" domain. Other countries have their own schemes many of which incorporate the UDRP.  The WIPhttps://nipclaw.wufoo.com/forms/nipc-law-contact-jane-lambert/O keeps a database of national domain name authorities, registration agreements and dispute resolution policies.

    How Domain Name Dispute Resolution Works

    Although there are many variations between different TLDs and different dispute resolution service providers most schemes work as follows:

    1. A trade mark owner files a complaint either on-line or by email on  a form downloaded from the service provider's website and pays a prescribed non-refundable and irrecoverable fee of around US$1,500.
    2. The service provider checks whether the complaint is in order. If it is, it sends it to the person who registered the disputed domain name ("the respondent") and invites him or her to respond within a specified time.
    3. The respondent may respond on-line or on a prescribed form.  If he or she wants the case to be determined by a three member panel, he or she will pay a non-refundable and irrecoverable fee of around US$1,500.
    4. Once the time for responding expires, the service provider appoints a panel.
    5. The panel considers the complaint and response (if any) and delivers his or her (or in the case of a three person panel their) decision within a few days.
    6. The service provider waits a number of days for a court challenge to be mounted.   If there is none, it orders the registrar to implement the panel's decision.

    Should anyone wish to discuss this article or domain name disputes in general, he or she should call me on 020 7404 5252 during office hours or email me through my contact form.

    12 October 2015

    Civil Restraint Orders in IPEC: Perry v Brundle

    CPR 3.11 provides:
    "A practice direction may set out –
    (a) the circumstances in which the court has the power to make a civil restraint order against a party to proceedings;
    (b) the procedure where a party applies for a civil restraint order against another party; and
    (c) the consequences of the court making a civil restraint order."
    Neither the rule nor the glossary defines "civil restraint orders" but para 1 of Practice Direction 3C - Civil Restraint Orders refers to limited civil restraint orders, extended civil restraint orders and general civil restraint orders. Those orders restrict the proceedings that can be issued, and the applications that can be made, by the person against whom they are issued without the permission of the court.

    Para 3.2 (1) of the Practice Direction provides:
    "Unless the court otherwise orders, where the court makes an extended civil restraint order, the party against whom the order is made –
    (1) will be restrained from issuing claims or making applications in –
    (a) any court if the order has been made by a judge of the Court of Appeal;
    (b) the High Court or the County Court if the order has been made by a judge of the High Court; or
    (c) the County Court identified in the order if the order has been made by a designated civil judge or their appointed deputy, concerning any matter involving or relating to or touching upon or leading to the proceedings in which the order is made without first obtaining the permission of a judge identified in the order;"
    This case note discusses the power of a judge of the Intellectual Property Enterprise Court to make an extended civil restraint order under para 3.2 (1) (b).

    In FH Brundle (A Private Unlimited Company) v Perry [2014] EWHC 475 (IPEC) one Richard Perry was sued for groundless threats. Mr. Perry counterclaimed for patent infringemenet. The action and counterlaim came on before His Honour Judge Hacon who concluded at paragraphs [81] and [82] that Mr Perry had no defence to the threats action and that his claim for infringement failed.  In FH Brundle (A Private Unlimited Company) v Perry (No 2) [2014] EWHC 979 (IPEC), [2014] 4 Costs LO 576 the judge awarded costs of £49,645 against Mr Perry. Mr Perry was unable to pay that sum and was adjudged bankrupt on 30 April 2015. He appealed unsuccessfully against his bankruptcy and also applied for permission to remain a company director notwithstanding his bankruptcy. Both of those proceedings failed

    In Perry v F H Brundle and Others [2015] EWHC 2737 (IPEC) (2 Oct 2015) Mr Perry sued the claimant and the defendants to his counterclaim in the previous litigation for patent infringement notwithstanding his bankruptcy. The defendants applied for Mr Perry's claim to be struck out.  At the hearing of the defendants' application, Mr Perry made the following additional applications:
    "The first was to add two defendants and a further complaint of "theft" of UK Patent No. 2 401 616 and a complaint of fraud. The second was to amend the (already lengthy) Particulars of Claim "based on new evidence, criminal activity of the defendants and legal advice". The third was to lift the damages cap in these proceedings. The fourth was to add the Defendants' solicitors, Collyer Bristow LLP, as a defendant "for colluding to conceal criminal activity and breach of their practice licence in bringing malicious prosecutions to help other defendants conceal criminal activity."
    Not surprisingly, the judge dismissed the applications and struck out the action on the ground that Mr Perry's the right to bring proceedings vested in his trustee in bankrutcy and that in any case the action was res judicata.  

    It is worth noting that in all those proceedings Mr Perry acted in person. His opponents on the other hand were represented throughout by patent counsel.

    Having succeeded in striking out Mr Perry's claim the defendants applied for an extended or, in the alternative, limited civil restraint order. As para 2.1 of the Practice Direction provides that a judge of any court may make a limited civil restraint order which has the effect of limiting the applications that the litigant against whom the order is made can bring in the proceedings in respect of which the application is made without the leave of the court it was clear that Judge Hacon could make a limited civil restraint order. However it was less clear whether he had jurisdiction to make an extended order as a s.9 judge sitting in IPEC. The learned judge decided that he did as extended civil restraint orders had previously been made by deputy judges and IPEC had been designed as a specialist list of the High Court in 2013 (see para 1 of my article What does the Intellectual Property Enterprise Court mean for Litigants in the North West? of 12 Oct 2013 in IP North West).

    The law on extended civil restrain orders had been considered by Edward Bartley Jones QC in  Courtman v Ludlam and Another [2009] EWHC 2067 (Ch), [2010] BPIR 98 where he had considered the previous case law. From those cases, Judge Hacon drew the following principles at para [27]:
    "(1) When considering the appropriate order in relation to an application for a CRO, the court should engage in a graduated and proportionate response to the identified abuse.
    (2) Where the application is for an extended CRO, the litigant against whom the order is sought must have made a minimum of three claims or applications which were totally without merit in order to be taken to have 'persistently' issued such claims or applications within the meaning of paragraph 3.1 of PD3C.
    (3) Subject to that minimum, the persistence of the litigant in issuing such claims, in particular the likelihood that such persistence will be maintained in the future, is to be assessed by reference to his conduct as a whole.
    (4) The categorisation of a claim or application as being totally without merit need not have been done at the time they were made; the court hearing the application for the CRO is entitled retrospectively to adjudge a claim or application to be totally without merit."
    Taking Mr Perry's bankruptcy appeal and company application into account as well as his unsuccessful patent action there was no doubt that the second criterion had been met. The only question was Mr Perry's persistence in making claims and whether he was likely to renew such claims in the future. Apparently Mr Perry had appeared "reassuringly restrained" in court but had behaved quite differently outside. The judge concluded at para [34]:
    "In my view there is a very real prospect that notwithstanding Mr Perry's calm and measured submissions in court, his sense of injustice will shortly be rekindled and that this will lead to further hopeless claims and/or applications. A limited CRO would not be sufficient because such claims and applications will probably be made wholly or in part outside these proceedings. I also accept Mr Baran's submission that Mr Perry's applications have necessitated the expenditure of considerable sums by the Defendants which are unlikely to be recovered and that if Mr Perry is left alone the pattern of wasted expenditure will continue."
    He therefore made an extended civil restraint order against Mr Perry.

    Although everything that Judge Hacon said at para [34] was no doubt true it is hard not to feel sorry for Mr Perry. Everybody who practises intellectual property law has met inventors with a keen sense of injustice who are driven to do very imprudent things. Mr Perry's troubles started when he sent a threatening letter to FH Brundle and the other fencing manufacturers. Had he consulted specialist solicitors, patent attorney litigators or counsel under the public access rules he would have been warned against such action. This all arises from the abolition of civil legal aid for business disputes by the so called Access to Justice Act 1999. It is good that the Agreement on a Unified Patent Court provides for legal aid in proceedings before the Unified Patent Court under art 71.

    Should anyone wish to discuss this case note or patent litigation in general, he or she should call me on 020 7404 5252 during office hours or send me a message through my contact form.

    08 October 2015

    Summary Judgment in Patent Cases: Fontem Holdings 1BV and Another v Ten Motives Ltd and Others

    In Fontem Holdings 1BV and Another v Ten Motives Ltd and Others [2015] EWHC 2752 (Pat) Mr Justice Norris set out his reasons for dismissing on 21 July 2015 the defendants' application under CPR Part 24 to dismiss the claims against them for patent infringement or, alternatively, a stay in the proceedings pending the disposal of opposition proceedings in the European Patent Office in respect of the patent under art 99 of the European Parent Convention.

    The patent in suit was European Patent (UK) No. 2 022 349 B1 for an aerosol electronic cigarette.  Claim 1 of the patent was for
    "An aerosol electronic cigarette comprising a battery assembly, an atomizer assembly, a liquid storage component (9) and a hollow shell (a, b) having one or more through-air-inlets (al); wherein the battery assembly connects electrically with the atomizer assembly, and both are located in the shell (a, b); the atomizer assembly includes a porous component (81) and a heating body in the form of a heating wire (83); characterised in that the atomizer assembly includes a support member (82) having a run-through hole (821); the porous component (81) is mounted on the support member (82) and is wound with the heating wire (83) in a part that is on the side in the axial direction of the run-through hole (821); and the liquid storage component fits with the porous component of the atomizer assembly and is located in one end of the shell (b) which is detachable."
    The claimants complained that the defendants' Cirro and V2 Rechargeable products infringed that claim.

    The defendants submitted:
    "a) That neither the Cirro nor the V2 products infringed Claim 1 because they divided into a battery assembly on the one hand and an atomiser and liquid storage assembly on the other, whereas Claim 1 contemplated a different sort of "detachability" ("the detachability point");
    b) That the Cirro products did not infringe Claim 1 because they did not utilise a shell with a liquid storage part within the shell ("the liquid storage point"), it being accepted for the purposes of the application that it was arguable that the wadding in the brown barrel of the V2 "cartomiser" was a method of liquid storage located in a shell."
    The judge was unconvinced. In his view the claim was capable of more than one construction and the claimants indicated that they intended to adduce expert evidence as to how the specification would be read by a skilled addressee.

    In considering whether there should be a stay his lordship referred to IPcom GmbH & Co Kg v HTC Europe Co Ltd and Othes [2013] EWCA Civ 1496, [2014] Bus LR 187, [2013] WLR(D) 456, [2014] RPC 12 where the Court of Appeal decided that a judge's "discretion to grant a stay must be exercised to achieve a balance of justice between the parties having regard to all the relevant circumstances of the particular case." Having regard to such factors as the delay and the likely commercial disadvantage to the claimants if a stay were allowed Mr Justice Norris decided not to grant the application.

    There are two interesting points from this case. The first is that the judge approved Mr Justice Lewison's dicta in  Easyair Ltd (t/a Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch) that
    "it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it."
    but was mindful of Lord Justice Floyd's observation in  Nampak Plastics Europe Ltd v Alpla UK Ltd [2014] EWCA Civ 1293 that patent claims have to be construed from the perspective of the skilled addressee upon which the judge may require expert evidence. The second point is that Mr Justice Norris took account of very much the same factors he would have considered in determining the balance of convenience in an interim injunction application.

    Should anyone wish to discuss this case he or she should call me on 020 7404 5252 or use my contact form.

      05 October 2015

      Cross Border Litigation: Tech 21 UK Ltd v Logitech Europe SA

      Logitech Europe SA is a Swiss company which makes a protective case for iPads called "Big Bang". This YouTube video shows how it works. Tech21 is a British company on Eel Pie Island which is not far from where I grew up which makes something very similar called an "Impact Folio". Here's their video. Spot the difference if you can.

      Between Jan 2013 and Jan 2014 the two companies tried to work together to develop a range of cases to be sold by Logitech but they fell out. Shortly afterwards Logitech started to sell Big Bangs and Tech21 Impact Folios. On 10 Sept 2014 Tech21 received the following letter from Jonas Rechtsanwaltsgesellschaft mbH of Cologne in the Federal Republic of Germany:
      "We are representing our client Logitech Europe S.A., Daniel Borel Innovation Center, CH-1015 Lausanne, Switzerland in matters of Intellectual Property.
      We have been informed that you entered into a manufacturing and sales agreement with our client dated October 11, 2013 that covers inter alia the development, manufacturing and sale of tablet products for and to our client. You were asked to develop for manufacturing the products based on our client's designs that were presented to you by Logitech and by Design Partners, a partner company of our client. Furthermore it was agreed that our client will maintain exclusive ownership rights to the design and product intellectual property. Moreover, you have undertaken not to take our client's designs, IP and/or discussions and reproduce a Tech21 or other branded version of the product and that such rights will survive termination (see Schedule G, "IP Rights").
      Therefore, our client is the exclusive owner of all IP rights including design rights that have been implemented in its protective Pad Air/ Ipad mini cases "Big Bang" which is based on the design of our client and has been put on the European market some months ago. Moreover, considering the innovative and unique design of the Big Bang products our client has become the owner of an unregistered Community Design accordingly.
      Our client noticed recently that you are distributing a protective case for iPad Air/ Ipad Mini named "IMPACT FOLIO" in Germany through various Apple stores. Your products are nearly identical to the product of our client and give the same overall impression. Hence, your products are a clear infringement of our client's unregistered Community Design. Our client therefore asserts claims for injunction, rendering of accounts and damages. Moreover, you are obliged to compensate our client for any legal costs so far accrued from our services.
      With its request to sign a cease and desist declaration, our client hereby gives you the opportunity to avoid a legal dispute. In the name and on behalf of our client we hereby ask you to sign the enclosed cease and desist declaration we have already prepared or sign a cease and desist declaration that covers the claims cited above. We look forward to receiving the enclosed cease and desist declaration — duly signed — at the latest until 15 September 2014.
      The receipt of the signed declaration via fax by this time will be deemed in due time if the original document is then received without further notice.
      If you do not comply with the before-signed claims not fully or not in due course our client will reserve its rights to take legal action against you which would cause further costs."
      The letter was accompanied by a draft undertaking that had been settled by the German lawyers.

      Tech21's solicitors asked the Germans for an extension of time which was granted until the 17 Sept. In the meantime the solicitors issued a claim form seeking declarations that
      • Tech21 had not infringed and would not infringe any unregistered Community unregistered design owned by Logitech by making, processing, offering, putting on the market, importing, exporting or using protective iPad Air and/or iPad mini cases sold under the name "Impact Folio" within the European Community, nor any UK unregistered design right or other rights subsisting in the same designs; and 
      • Logitech has made unjustifiable threats to bring proceedings for infringement of an unregistered Community design right in respect of Tech21's possessing, offering, putting on the market, and/or using such cases. 
      Tech21 also claimed an injunction to restrain further such threats, dissemination of the judgment and costs.

      The German lawyers responded by applying to the Düsseldorf district court  for an interim injunction to restrain further infringement of their client's designs. Tech21 lodged evidence that it had designed the Impact Folio which was accepted by the court. The presiding judge refused Logitech's application and advised that company to withdraw its claim which it did. Immediately after it discontinued the German proceedings Logitech applied to set aside Tech21's claim form and a declaration that the court had no jurisdiction to grant the relief that had Tech21 sought.

      Logitech's application came on before Mr Stephen Jourdan QC sitting as a deputy judge of the High Court. At paragraph [124] of his judgment in Tech 21 UK Ltd v Logitech Europe SA [2015] WLR(D) 389, [2015] EWHC 2614 (Ch) Mr Jourdan concluded that:
      "(a) This Court has no jurisdiction to hear the claim for a declaration of non-infringement of any Community unregistered design right vested in Logitech.
      (b) This Court has jurisdiction to hear the claim under regulation 2 of the UK Regulations in respect of the threat made by the Letter to bring infringement proceedings in the UK courts.
      (c) This Court has no jurisdiction to hear the claim for a declaration of non-infringement of any UK unregistered design right vested in Logitech."
      The learned deputy judge decided that the court had no jurisdiction to hear a claim for a declaration of non-infringement because art 82 (1) of the Community design regulation (Council Regulation (EC) No 6/2002of 12 December 2001 on Community designs (OJ EC No L 3 of 5.1.2002, p. 1)) provides:
      "Subject to the provisions of this Regulation and to any provisions of the Convention on Jurisdiction and Enforcement applicable by virtue of Article 79, proceedings in respect of the actions and claims referred to in Article 81 shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in any Member State in which he has an establishment."
      Actions for declarations of non-infringement are referred to in paragraph (b) of art 81.

      Reg. 2 (1) of the Community Designs Regulations 2005 provides:
      "Where any person (whether entitled to or interested in a Community design or not) by circulars, advertisements or otherwise threatens any other person with proceedings for infringement of a Community design, any person aggrieved thereby may bring an action against him for any such relief as is mentioned in paragraph (2)."
      The remedies provided by paragraph (2) include declarations that the threats are unjustifiable, injunctions against the continuance of the threats and damages. Paragraph (5) provides:
      "Proceedings may not be brought under this regulation in respect of a threat to bring proceedings for an infringement alleged to consist of the making or importing of anything."
      Tech 21 argued that
      • Jonas's letter made a threat to sue in the UK which is a statutory tort under art under reg. 2 of the Community Design Regulations 2005; and
      • art 5 (3) of the Lugano Convention entitles Tech21 to sue Logitech in "the place where the harmful event occurred or may occur";  and 
      • that place was the UK as Logitech threatened to sue in the UK, the threat was received in the UK, and if the threat had been carried out, the litigation would have taken place in the UK. 
      Logitech contended that:
      "First, the Letter did not make a threat to sue in the UK courts. Second, in any event, the Lugano Convention does not apply at all, because it is implicitly excluded by the terms of the EC Designs Regulation. Third, even if the Lugano Convention applies, it is subject to the specific jurisdiction provisions in the EC Designs Regulation, and this claim is within article 81(b), as an action for a declaration of non-infringement of Community designs."
      It also argued that it was within the exception provided by reg. 2 (5) since Tecg21 was a primary infringer.

      Mr Jourdan considered and dismissed each of those contentions in turn. As to the first, he said at paragraph [81] of his judgment:
      "Accordingly, in my view a reasonable reader of the Letter in Tech21's position would clearly have understood it to indicate that proceedings in the UK were likely or, at the very least, that there was a realistic possibility of UK proceedings in respect of alleged infringement of Logitech's claimed Community design right, either immediately or in the future."
      As to the second, he said at paragraph [85]:
      "The Lugano Convention is a treaty binding on the EU and on the UK and its jurisdiction rules will apply to proceedings relating to a Community design, save to the extent that those jurisdiction rules are inconsistent with specific provisions of the EC Designs Regulation."
       As to the argument that Tech21 was a primary infringer, Mr Jourdan relied on the Court of Appeal's decision in Cavity Trays v RMC Panel Products [1996] R.P.C. 361. Finally, the deputy judge decided that a threats action was altogether different from an application for a declaration of non-infringement and therefore fell outside the scope of art 82 (1) and art 81 (b) of the Community Design regulation.

      Mr Jourdan held that he had no jurisdiction to grant a declaration of non-infringement of national unregistered design right because Logitech had never complained of infringement of such right.

      Should anyone wish to discuss this case or registered design law in general he or she should call me during office hours on 020 7404 5252 or send me a message through my contact form.