In a reminder of the dangers of an aggressive marketing campaigns aimed at the trade marks of competitors, the Court of Appeal has allowed part of Specsavers’ appeal against the High Court ruling. The Court of Appeal has ruled that:

-          Asda’s cross-appeal over the use of the strapline “be a real spec saver at Asda” should be rejected because it took unfair advantage (under Article 9(1)(c) of the Community Trade Marks Regulation) without due cause of the distinctive character and use of Specsavers’ registered Community Trade Marks (CTMs).

-          Specsavers’ appeal that the strapline “spec saving at Asda” infringed its CTM should be upheld, also on the basis that it took unfair advantage under Article 9(1)(c).

-          Specsavers’ appeal under Article 9(1)(b) that the straplines and bespectacled logo used by Asda infringed its word and logo marks should be dismissed. For the appeal under Article 9(1)(b) to have succeeded, Specsavers would have had to show that the average consumer would have been likely to have been confused. Here, the overall marks gave a different impression to the average consumer. There was a difference between what the judge described as “living dangerously” and one who intended to confuse customers. This was more of a case here of unfairly taking advantage of the reputation of the brand owner’s mark (for which Specsavers succeeded under Article 9(1)(c)) rather than customers being confused.

-          A further query about a wordless logo mark should be referred to the European Court of Justice for clarification.

This ruling should come as a relief to brand-owners, who argued that the High Court interpreted the definition of “unfair advantage” too restrictively in delivering its initial ruling. The ruling of the Court of Appeal emphasised the importance of the market position held by Specsavers due to its brand and the fact that Asda had intended to target that market position in its advertising campaign. A winning result for the brand, although not everything is seen totally clearly yet until we get the ruling back from the European Court of Justice.

The Court of Appeal has rejected an appeal against the decision of the High Court, on the grounds that the High Court’s findings were not based on any error of principle or perversity in factual findings, leaving no scope for a fresh evaluation by the Court of Appeal.

However, the Court of Appeal allowed a cross-appeal against the finding that the UK trade mark for the number 32 had not been infringed. The Court of Appeal ruled that the High Court had incorrectly assumed that, where a separate reputation had not been established by use of the trade mark, there could be no infringement under section 10(2) of the Trade Marks Act 1994; rather, the number 32 was a significant part of the trade marks that the High Court had ruled had been infringed, such that there was no basis for saying that the trade mark for the number 32 had not been infringed as well.

Viagogo – the website – had objected to the hand over, saying that to do so would be disproportionate and infringe its users’ data protection rights. The Court of Appeal disagreed. The rights had to be balanced and the RFU was entitled to know about who was infringing its contract terms. The Court of Appeal therefore ruled that it was right to grant the RFU a “Norwich Pharmacal Order” against Viagogo to reveal the data. Whether or not the England rugby body used that data to take action against the sellers or the people who had provided the tickets to the sellers was irrelevant to the ruling.

The relationship broke down in 2008 and was terminated in December 2009 by R and Stoneygate. P issued proceedings for breach of contract, suing Stoneygate for arrears of commission due under the agreement, both before and after termination. R argued that post-termination commission was not payable, and that the agreement was not enforceable in any case as it was an unreasonable restraint of trade.

The High Court ruled in favour of R, ruling that the agreement was invalid and unenforceable – it was a restraint of trade on the grounds that it imposed substantial restraints on R over a significant period of time, on terms that were uncommon in the industry, and had been agreed by inequitable negotiation between P and R when R was 17 and had not received legal advice. The High Court also ruled that, even if the agreement was enforceable, post-termination commission was not payable under the terms of the agreement. P appealed to the Court of Appeal on a number of points.

The Court of Appeal ruled that:

1. on construction of the agreement, post-termination commission was payable in relation to arrangements procured by P and for which Stoneygate received payment after completion; and
2. the agreement was a restraint of trade, despite the fact that R’s primary occupation was as a footballer and his primary earning potential was not through the image rights that were the subject of the agreement – the exploitation of image rights was almost always going to be ancillary to another occupation, and was just as capable of protection under the restraint of trade doctrine as any other occupation.

Due to the fact that the agreement was a restraint of trade, P could not recover accrued entitlements as the agreement was unenforceable in the first place.

Simon Weinberg, a solicitor in the Commercial/IP/IT team at Matthew Arnold & Baldwin LLP and assistant editor of Upload-IT, commented, “In this case, it was extremely difficult for the courts to see past the fact that, when the agreement was negotiated and entered into, one of the parties was a 17-year-old without legal representation; the bargaining powers of the parties were unequal from the start, undermining the basis for the agreement. The fact that its terms restricted Rooney’s own exploitation of his image rights until he was 25 was always likely to lead to arguments of restraint of trade once he did receive appropriate legal advice. This case serves as a useful reminder that, when negotiating a contract, it is important to ensure that the other party has legal representation; if they do not have that legal representation and the agreement seems to be one-sided, there is a risk that the foundations of that agreement will be challenged in future. If you convince the other side to sign without legal advice, and the terms of the agreement seem too good to be true, they probably are.”

The Supreme Court said that where there was ambiguous wording, it did not need to conclude that a particular interpretation would produce an absurd or irrational result before having regard to the commercial purpose of the agreement. Neither interpretation flouted business common sense here. It was still appropriate to prefer the interpretation which was most consistent with business common sense. It was important to look at what a reasonable person with all the background knowledge reasonably available to the parties at the time of the contract would have understood the contract words to mean. The bank’s interpretation would produce a surprising and uncommercial result. On the bank’s interpretation, guarantees would cover every situation other than the one in which the buyer would need it most – the insolvency of the shipbuilder. The bank had no commercial reason for why the buyer would have agreed to that and so the buyer’s interpretation made more business commercial sense as it was consistent with the commercial purpose of guarantees.

1. an offer;
2. acceptance of that offer;
3. consideration – ie something provided by each party to the other; and
4. an intention between the parties to create legal relations.

In this case, an oral contract was agreed for a fixed two year term, and this was not disputed. However, the parties ended up in court as they disagreed on whether it had been agreed that the contract could be terminated on three months’ notice. The County Court initially ruled that the three month notice period for termination had been agreed, but the decision was appealed to the Court of Appeal.

The Court of Appeal upheld the ruling and dismissed the appeal. On the evidence that had been provided, the Court of Appeal agreed that the County Court was entitled to conclude that a three month termination provision was part of the oral contract.

Simon Weinberg, solicitor at Matthew Arnold & Baldwin LLP and assistant editor of Upload-IT, commented, “This is not a ground-breaking ruling in itself. However, it is a useful reminder, if a reminder is needed, that relying on oral contracts is risky. Conversations can be interpreted in a number of ways – they rarely lead to any certainty and only increase the risk of relying on them in order to enter legal relations. Written agreements are safer, and the parties to proceedings such as these will, in hindsight, have preferred to spend money on the certainty of a written agreement in the first place rather than spend much more time and money on having a court decide what they had actually agreed.”

In this case, the Supreme Court ruled that it was sufficient to say that the protein was potentially useful for diagnosing, preventing or treating a large number of categories of disorders in the immune system, despite this assertion having been based on the protein’s membership of the TNF ligand superfamily of substances. This was because at the time of the patent application, the particular application of the individual protein was not known.

In following the EPO’s ruling, the Supreme Court said that it was important for UK patent law to be aligned as far as possible with EPO decisions. National courts could still come to its own rulings if it considers that the EPO has taken the law in an appropriate direction, misapplied a previous EPO ruling or not taken a particular argument into account. However, where the EPO had taken a consistent approach in several decisions, it would be unusual for the national court not to follow the EPO’s rulings.

On the type of patent application before the court in this case, the EPO had adopted a consistent approach, being:

• The patent had to disclose a practical application and profitable use which could be expected to lead to commercial benefit.
• The patent had to show a real possibility of exploitation.
• A skilled person had to be able to exploit the patent without undue burden.
• A concrete benefit had to be derived directly from the description and common general knowledge.
• Speculative use would not be sufficient, but plausible use could be.
• The plausible use could be assisted by later evidence.
• If all family or superfamily members of the protein had a role in controlling cells, it would be sufficient to assign a similar for the protein.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments, “This case should give businesses in the pharmaceutical industry certainty. It will also act as encouragement for innovating businesses that discover a protein where the protein is a member of a wider family or superfamily that has a clear role.”

In the first instance, the High Court ruled that the claim should be rejected, as the two designs in question were considered to give different impressions to an informed user. The ruling was based on the fact that, whilst there were several identical and similar features, the registered design had not been breached. Dyson appealed to the Court of Appeal.

The Court of Appeal ruled in line with the High Court, and confirmed that there had been no infringement. As with the High Court’s ruling, the decision was based around whether an informed user would be given a different overall impression by the two products – the ruling was that the overall impressions of the two products were different and no infringement had taken place.

Even though the Court of Appeal noted that Dyson’s registered design deserved a broad degree of protection, the overall impression that an informed user would obtain from the products would be different, sucking the life out of Dyson’s claims.

E accepted that, by a literal reading of the commission agreement, commission was not payable. Instead, he argued that the purpose of the share sale was to achieve the same result as was intended by the initially envisioned but aborted property sale, and the agreement should be read as such – that the share sale was the effective sale of the property. The High Court had initially rejected his claim.

The Court of Appeal has now agreed with the High Court’s ruling on the basis that, whatever the purchaser and L intended to achieve by the share sale agreement, it was not relevant to the construction of the commission agreement. The key to understanding the commission agreement was to look at its language, and by that interpretation, the literal meaning was clear – L did not need to pay any commission to E. Neither E nor L had considered the sale of the property by means of a share sale, so they cannot have intended the commission agreement to deal with such a situation.

Simon Weinberg, a solicitor at Matthew Arnold & Baldwin LLP and assistant editor of Upload-IT, comments: “When the High Court decision came out, we helped a number of estate agents update their terms and conditions to seek to avoid the effects of the Estafnous case. The appeal court’s decision to uphold the lower court’s ruling further emphasises the need for estate agents to make sure that their terms and conditions allow them to get commission if the shares in a company owning the property are sold rather than the property itself.”

The ISPs have now been granted permission to appeal by the Court of Appeal. It seemed that the Digital Economy Act was safe following the Court of Appeal’s initial decision to refuse permission to appeal, but this long-running saga now seems to have some more time left to run.

The High Court originally and now the Court Appeal have ruled in favour of Bombardier. Although Bombardier should not have been late, the contract provided for a clear procedure to deal with the material default. Gesner had not followed it. Accordingly, Gesner was the one in breach. 

This case shows the dangers of getting contract enforcement wrong. If you don’t follow the procedures set out in the contract, the victim can end up becoming the villain.

The case involved the provision of services by workers to Autoclenz, which in turn had a contract to provide valet services to British Car Auctions. In the contracts between Autoclenz and the individual workers, they were described as providing the services as subcontractors on a subcontract basis, they could provide a substitute worker (subject to complying with the standards set out in the agreement), there was no mutuality of obligation and the workers could refuse work. In addition, they wore BCA’s rather than Autoclenz’s overalls (as had been worn previously). Although Autoclenz provided the cleaning products and equipment and arranged insurance cover, Autoclenz deducted a fixed amount for the cleaning products and equipment and insurance cover from payments. The workers were responsible for paying tax and national insurance to HMRC. On the key relevant issues of control, mutuality of obligation and personal service, HMRC took the view that the workers were self-employed. Everything seemed to point in that direction.

The workers claimed to have been employees, though, and claimed employment rights. The matter ended up before the Supreme Court, which ruled that they were in fact employees. The workers were therefore entitled to minimum wage and statutory annual leave. Of most importance to businesses and service providers is the approach the Court took to considering whether to disregard the terms stated in the written contract. The Court said that those terms needed to reflect the reality of the position from inception and throughout, and the actual agreement of the parties – rather than the stated position in writing. The Court dismissed an argument that it could only set aside the stated position if there was an intention to mislead; an intention to mislead was not relevant. The Court said that all the evidence of the situation should be examined, including the written terms and how the parties conducted themselves in practice. The mere fact that a particular provision, such as a right of substitution, is not exercised does not mean that it is not genuine. But the evidence of how the parties conduct themselves can be so persuasive as to set aside what has been agreed in writing.

In this case, the following four key terms were what had really been agreed: (1) valet workers would perform services for Autoclenz within a reasonable time and in a good and workmanlike manner; (2) the workers would be paid for that work; (3) they were obliged to carry out the work offered to them and Autoclenz was obligated to give them that work; and (4) the workers must do the work personally and could not provide a substitute.

The Supreme Court argued that one critical difference between employment and ordinary commercial contracts is inequality between the parties. In an employment situation, the person obtaining the services often finds it easier to dictate terms. Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, questions that reasoning. He says: “There are many situations where there is inequality of bargaining power in a commercial contract context and that does not mean that they are really employees. It’s just the fact of the commercial matter that some commercial entities find themselves in a position that they have to accept terms imposed by the other party.”

Paul adds: “The case does, however, provide useful guidance on whether someone is an employee or self-employed. This can have important tax and employment rights consequences. Although the case provides guidelines, each case must be judged according to its own particular circumstances. As can be seen in this case, it is possible for HMRC and the courts to come to different conclusions as to the status of the service provider. MAB provides assistance in helping clients through this tricky area. Please contact me if you would like our help on this.”

The Office of Fair Trading (OFT) claimed that Purely Creative, which promoted various prize-draw scratch-cards breached the Regulations because consumers ended up paying a significant contribution towards the value of the prize in premium-rate telephone charges and costs of delivery and insurance. The OFT failed to obtain Purely Creative’s agreement to various undertakings relating to the promotions and applied for an injunction under the Enterprise Act 2002 which would prevent Purely Creative from continuing with the promotions. The High Court initially ruled that the promotions breached the Regulations and injunctions should be granted in principle. However, the High Court accepted undertakings from Purely Creative in lieu of injunctions, by which Purely Creative undertook, amongst other things, not to have any future promotions which created the false impression that a consumer had won or might win a prize where any effort made by the consumer in claiming that prize is subject to the consumer incurring a cost which would then cover either the cost of the prize or Purely Creative’s delivery and insurance costs.

Purely Creative appealed the ruling of the High Court. The OFT cross appealed with amended suggested undertakings and argued that, if those suggested undertakings could not be approved by the Court of Appeal, the interpretation of paragraph 31 of schedule 1 of the Regulations should be referred to the European Court of Justice (ECJ) for clarity.

The Court of Appeal stayed both the appeal and cross-appeal and referred a number of questions to the ECJ:

-          do the Regulations prohibit consumers from incurring any cost when claiming a prize?

-          if Purely Creative offers a number of methods of claiming a prize but only one of them incurs any cost (even a small cost), is that a breach of the Regulations?

-          if Purely Creative was allowed to run promotions where consumers incurred only a small cost in claiming a prize, how should a court decide whether that cost is sufficiently small, and should the court also consider whether such costs, even though small, are necessary?

-          does the use of the words “false impression” in paragraph 31 of the Regulations impose an additional consideration on courts on top of the consideration of whether a consumer can pay to receive a prize, and, if so, what is a “false impression” and how is it created?

The reference will hopefully provide some clarity in the interpretation of the Regulations. In the meantime, the Court of Appeal ruled that the undertakings given to the High Court remain in full force and effect until the ECJ decision is passed down.

Greyfort Properties (G) had submitted an application for a Certificate of Lawful Use or Development that would allow it to carry out the development of 19 flats on the site under a permission granted in 1974, without submitting a fresh planning application.

G had obtained planning permission in 1974 for the development. However, the planning permission included a condition that “before any work is commenced on the site, the ground floor levels of the building hereby permitted shall be agreed with the Local Planning Authority in writing.” The planning permission stipulated that work had to begin within five years. In 1978 – four years from the date of the permission – G carried out some access work, and argued that this work amounted to commencement of the development, meaning that the planning permission remained in force (and therefore a fresh application would not be needed.) However, the planning inspector said that the access works had been carried out in breach of the planning condition, and that the works did not amount to commencement of the development. The planning inspector’s decision was upheld by the High Court.

G appealed this ruling at the Court of Appeal.

The Court of Appeal held that, although preparatory works relating to access for the development were carried out on the site in 1978 within the five-year time limit, these works did not implement the planning permission because the ground levels’ condition had not been satisfied.

The usual rule is that development must commence within three years of the grant of planning permission. Typically, if a developer didn’t want to actively proceed with a development, but wanted to ensure that the planning permission did not expire, they would dig a few holes, maybe lay some foundations and ask the planning officer to write a letter stating that development had commenced.  They could then ‘mothball’ the site until there was a good commercial reason to proceed.

During the recession, I expect some developers have been delaying commencement of developments. This decision reminds us that it is not just a matter of physically commencing development before the end of the three-year period that is important, but that the pre-commencement conditions must also be dealt with before commencement of building works. It can take some months to have the pre-commencement conditions approved, so any developer sitting on a planning permission should not leave it until the last minute to look into this.

Andrew Ainsworth (AA) was hired in 1976 by Lucasfilm (L) to make ‘Stormtrooper’ helmets and armour for the film ‘Star Wars’ which was released in 1977 (later renamed ‘Star Wars: A New Hope’). In 2004, AA set up a website and sold helmets and armour produced using the same mould as had been used in 1976, some of which were sold and delivered to customers in the USA. L issued proceedings against AA in California for infringement of copyright and trade marks, and the US District Court in California ruled against AA to the tune of $10 million. However, since AA had no assets in the USA against which the judgement could be enforced and since the UK usually does not enforce US court judgements, the US proceedings were not taken any further.

Instead, proceedings were issued in England. AA admitted that he had used drawings provided to him in 1976 by L, and that he had used those drawings in producing the helmet and armour. Although AA admitted that L had had unregistered design rights in the helmets and armour which would have prohibited him from manufacturing identical objects (and such rights are totally different to copyright), he contended that these were the only rights L had had which AA could have otherwise infringed (as these unregistered design rights only last for 10-15 years from their creation and so had expired at the time he started recreating the helmets and armour). However, he said that to the extent the drawings and objects attracted protection under the Copyright, Designs and Patents Act 1988 (CDPA), they were not artistic works (and it should be noted that a sculpture is an Artistic work so he was arguing the objects were not sculptures, which would attract protection). He also argued that he was not infringing CDPA by making helmets and armour to the designs because, if for some reason the judges were to find that the original objects were sculptures (contrary to what he was arguing) then he was entitled to a defence under sections 51 and 52 of the CDPA which permits manufacture of an article to a design, without infringing copyright.

In the initial ruling, the High Court ruled that the defence under sections 51 and 52 of the CDPA did apply. Accordingly, there was no copyright infringement. The High Court also ruled that, whilst the US judgment could not be enforced in the English courts, the US copyright had been infringed and the claim was justicable in the English courts.

The Court of Appeal upheld the ruling of the High Court by saying that the helmet and armour were not artistic works under the CDPA. However, the Court of Appeal rejected the High Court’s reasoning in relation to the justicability of a claim in the English courts – a claim for infringement of US copyright should not be justicable in the English courts. As a result, L appealed to the Supreme Court on two issues:

1)       whether the helmets and amour were sculptures (which would attract copyright protection) and then whether the defences under sections 51 and 52 of the CDPA applied; and

2)       whether the English courts could consider a claim against a person domiciled in England for copyright infringement alleged to have happened, and was subject to a law, outside the EU.

Supreme Court Ruling

1) Copyright

The law relevant to the copyright infringement claim, as referred to above, is provided by the CDPA. Under section 1 of the CDPA, copyright exists in original artistic works. Under section 4 of the CDPA, artistic works can include graphic works or sculptures, which are defined as a cast or model made for the purposes of sculpture. Section 16 of the CDPA defines copyright infringement as being a person who copies all or part of a work, whether directly or indirectly, without the copyright owner’s permission.

The Supreme Court ruled that the helmet was not a sculpture. Rather, it was considered to be ‘a mixture of costume and prop’ for the effect of the film it was used in. The film itself was the work of art, rather than the helmet, which merely contributed to the success of the film. The Supreme Court referred to the helmet as ‘utilitarian’ in that it was merely an element of the production process of the film. Therefore the rulings of both the High Court and the Court of Appeal were upheld.

As such, the Supreme Court did not need to consider sections 51 and 52 of the CDPA and whether AA could rely on them as defences to the copyright infringement – the helmet was not an artistic work that was subject to copyright in the first place, and as such AA had not infringed any copyright under the CDPA for which he required a defence.

2) Justicability in England

The relevant law considered by the Supreme Court, in order to decide whether alleged copyright infringement abroad under the provisions of a foreign law was justicable in the English courts, was somewhat more complicated, in that the Supreme Court had to consider both the Brussels Regulation, an EU regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, and case law.

Under article 22(4) of the Brussels Regulation 2000, an exception is provided to the general rule that a defendant should be sued in the court where the defendant is domiciled. That exception is that, where proceedings relate to the registration or infringement of intellectual property rights, exclusive jurisdiction is given to the member state in which registration has taken place, been applied for or should have taken place. This exception takes effect irrespective of the domicile of the defendant.

The case law considered by the Supreme Court was extensive, and below is a brief summary only of the issues from the cases considered:

-          the Moçambique rule, resulting from a case in 1893, relates to the trespass of property, and states that the English courts will not exercise jurisdiction in relation to matters which were ‘local’ in their nature, compared to proceedings which were ‘transitory or personal’. Therefore the English courts would not accept jurisdiction on a claim over property outside of English territory unless it could be proved that the matter was a ‘transitory or personal’ rather than a ‘local’ issue;

-          the rule in Philips v Eyre 1870, which states that an act done abroad can only be the subject of proceedings in England if the act, if done in England, would have been a tort;

-          Tyburn Productions v Conan Doyle 1991, in which an infringement of US copyright was struck out by applying the Moçambique rule and the rule in Philips v Eyre;

-          Coin Controls v Suzo International 1999, which applied the Moçambique rule and the rule in Philips v Eyre as well as article 22 of the Brussels Regulation; and

-          Red Sea Insurance v Bouygues 1995, a Privy Council ruling which was applied by the Court of Appeal in Pearce v Ove 2000 in relation to hearing a claim for infringement of Dutch copyright, which stated that the rule in Philips v Eyre should be displaced if a country had a specific relationship to a particular act and the parties.

The Supreme Court ruled that the claim for infringement of US copyright was a claim over which the English courts could accept jurisdiction if there was a basis for that jurisdiction in relation to the defendant. The Supreme Court ruled that the Moçambique rule and the rule in Philips v Eyre were no longer relevant, having been pushed to the side by Red Sea Insurance v Bouygues 1995 and actually being abolished by the Private International Law (Miscellaneous Provisions) Act 1995. As such, there was nothing to prevent the English courts accepting jurisdiction over infringement of intellectual property rights abroad – L’s claim against AA for copyright infringement in the USA under US law could be heard in the English courts.

The Supreme Court also considered intellectual property policies relating to this issue, and referred to the fact that article 22(4) of the Brussels Regulation, which assigned exclusive jurisdiction to courts of the country where intellectual property rights originated (which would have prevented the English courts from accepting jurisdiction in this case) would apply to copyright only in rare cases. The Supreme Court made clear that article 22(4) does not apply to intellectual property outside the EU, but emphasised that it shows that there is a distinction between claims which involve registration or validity of intellectual property rights and those which do not, reiterating that this claim was for copyright infringement and not validity or registration issues.

The Supreme Court also considered Rome (II), the EU regulation on non-contractual obligations, which, whilst not applicable in this case as it came into force in 2009, shows that European policy is not against the litigation of foreign intellectual property rights. Rather, the Supreme Court stated that Rome (II) “… plainly envisages that actions may be brought in [EU members states] for infringement of foreign intellectual property rights, including copyright”.

As such, The Supreme Court ruled that the decision in Tyburn Productions v Conan Doyle was mistaken, and that the English courts could accept jurisdiction for the claim by L for breach of copyright by AA in the USA.

Comment

The importance of this ruling should not be underestimated. Many view this as a victory for Mr Ainsworth because he cannot be sued for his sales in the UK (because the original helmets and armour are not sculptures) and because he will not be sued in the UK for his sales in the US – even though he now could be sued (and the only reason Lucasfilm will not sue him is because his sales in the US were so low, he’s not worth suing)! But that is the narrow view of this case.

The wider significant issue ruled on by the Supreme Court is jurisdiction, and this is what affects everyone else in the future. The fact that a claim for foreign copyright infringement against a person domiciled in England falls within the jurisdiction of the English courts has wide-ranging implications.

The Court of Appeal has upheld the ruling of the High Court, such that end-users of the Meltwater service require a specific web end-user licence from the NLA. The Court of Appeal also agreed that headlines themselves are capable of constituting a copyright work.

The fact that the Court of Appeal agreed with the High Court’s ruling that headlines can be protected by copyright seems to go against previous decisions taken by courts in the UK. Reiterating the ruling of the European Court of Justice in Infopaq v Danske – that extracts of stories as short as 11 words could constitute a copyright work – the Court of Appeal stated that a newspaper headline being a copyright work is ‘plainly correct’. However, the full background reasoning for this element of the ruling was not disclosed by the Court of Appeal, meaning that, if Meltwater appeals to the Supreme Court, this issue is likely to be at the forefront of its argument.

This ruling is also of importance for businesses that use media monitoring services such as that provided by Meltwater. Many businesses use media monitoring services to keep up-to-date with news relating to a specific client and/or industry developments. Such businesses, as end-users of such a service, must also obtain a licence to receive that service. Whilst it is unlikely the NLA will enforce this ruling until it is clear both whether Meltwater will appeal the decision and what the outcome of that appeal is, if it takes place, there is a risk that the NLA will attempt to enforce the recovery of licence fees retrospectively as well as prospectively. Businesses who use such services should prepare, if they do not do so already, to pay licence fees to use the service, and even to pay licence fees for previous use. Whilst there is a widespread belief that newspaper content online should be available for nothing when used for non-commercial purposes, the ruling of the Court of Appeal in relation to media monitoring services, together with increasing tendencies by newspapers to charge non-commercial users to access content directly, further erodes how justified that belief is.

The Court of Appeal has dismissed the ex-employee’s appeal. Although Article 8 could be engaged, it did not follow that he had a reasonable expectation of privacy, particularly after his public quarrel. However, even if he had a right to privacy (which was borderline), it had to be balanced against NGN’s competing right to publication in the public interest and NGN’s Article 10 strong rights outweighed any privacy rights in this case. Of course, any allegations had to be proved and stand up to the law of defamation. In relation to any privacy rights, the Court emphasised that anyone conducting their arguments in public might find it harder to later distinguish between what was public and what was legitimately private, and this applied regardless of whether they were public figures or not.

The Court of Appeal ruled that there was a breach of contract and that the Lowes were entitled to reject the staircase. The reason for the Court of Appeal’s ruling was that, under section 14 of the Sale of Goods Act 1979, the staircase had to be fit for purpose and of a satisfactory quality. This section had been implied into the contract for the staircase as the Lowes had relied on the skill and judgement of WMJL as the seller of the goods in question. The High Court had ruled that WMJL should at least have warned the Lowes that the design requested would need the approval of a building control officer to ensure compliance with building regulations, and the Lowes had relied on receiving this advice from WMJL – the Court of Appeal agreed with the High Court’s interpretation but ruled that it entitled the Lowes to reject the staircase. WMJL knew that the staircase, when provided as specified in the contract, would breach building regulations, and should have warned the Lowes of this, such that the staircase could not therefore be considered reasonably fit for purpose and the claimants were entitled to recover the price paid.

Barclays disputed that it owed Nylon any money for expenses, and issued legal proceedings to obtain a declaration from the High Court that Barclays was under no obligation to pay Nylon those expenses. The High Court agreed with Barclays and ruled that it was under no obligation to pay the expenses that Nylon had claimed.

Barclays also asked the High Court to confirm that Barclays did not have to pay Nylon its profits on its original capital investment, which Nylon rejected, again arguing that Barclays was obliged to do so under the terms of the LLP agreement. Nylon applied for a stay to bring an end to the proceedings brought by Barclays, which was initially rejected but appealed to the Court of Appeal.

The Court of Appeal has now rejected that application for a stay, saying that a satisfactory outcome could only be obtained by a full trial with evidence, entitling Barclays to continue with proceedings. However, in giving its ruling, the Court of Appeal noted that the parties had reached a settlement and had asked the Court of Appeal not to actually give its judgment on Nylon’s appeal. The Court of Appeal decided, however, that there was no reason why the judgment should not be given, despite the settlement that had been agreed.

The main implication from this ruling is that, whilst the parties had reached a settlement, the Court of Appeal still issued the judgment. However, the case is also a useful reminder of the need for clarity and certainty in drafting commercial agreements, including those that define investment relationships.

The first development is the recent Court of Appeal decision C v D [2011] EWCA Civ 646.  The issue here was whether an offer made in accordance with Part 36 can be a time limited offer.  Part 36 does not contain an express exclusion of a time limited offer.  However, a Part 36 offer to have costs consequences, has to be an offer which has not been withdrawn, but has remained on the table.  The Court of Appeal held that the Part 36 regime does not accommodate a time limited offer.  The essence of a Part 36 offer is that it lies on the table unless formally withdrawn.  Therefore the scheme seeks to encourage offers which are not time limited.  Accordingly there is a necessary inconsistency between an offer being time limited and a Part 36 offer. 

It was common ground in this case that the offer was intended to be made as a Part 36 offer, but the offer itself stated that it was “open for 21 days”.  The precise meaning of “open for 21 days” was disputed.  The Claimant submitted that it meant that the offer lapsed after 21 days and it was not open for acceptance.  The Defendant submitted that the 21 days was an expression of the relevant period referred to in Part 36, but after 21 days could be withdrawn.

After considering various principles of construction, the Court of Appeal concluded that the words “open for 21 days” meant that the offer would not be withdrawn within those 21 days.  Such a construction meant that the offer would be a Part 36 offer and would leave the offeror entirely free to withdraw the offer immediately after the 21 day period. Ultimately the court noted that it was important for the security of the Part 36 scheme that it should be clearly understood that if a claimant wishes to make a time limited offer, in the sense that the offer should lapse after the end of a stipulated period, then this should not be made under the Part 36 regime. 

The second development is that the Civil Rules Committee will be amending the CPR to deal with the much criticised case of Carver v BAA [2008] EWCA Civ 412.  In that case, the Court of Appeal considered that whether other factors could be taken into account, such as the cost of litigation and stress where a judgment was greater than the defendant’s offer by £51.  In that case the Court of Appeal concluded that the defendant’s offer had not been beaten.  Many believed that this decision caused great uncertainty and made it difficult for parties to assess the risk of not accepting a Part 36 offer. It is likely that the rules will be amended later this year to implement a reversal of this case so that where a money offer is beaten at trial, by however small a margin, the costs sanction under Part 36 will apply.

Part 36 is an innovative regime with its own consequences and rules, which has led to the numerous decisions on its impact.  However,  these two developments will lead to greater certainty and therefore are to be welcomed.

The Court of Appeal has upheld the High Court’s decision to award summary judgment in favour of the US company. The purpose of the agreement had been to demarcate the field of goods rather than deal with the classes in which the goods could be registered. It was not necessary to imply a term dealing with this. The ruling will ensure certainty amongst contracts and in particular to give effect to coexistence agreements.

In this case, C and GC had been arrested on suspicion of offences and either no charges were pressed or they were acquitted without charge. They sought judicial review against the indefinite retention of their DNA, fingerprints and photographs.

The Supreme Court has made a declaration that the retention was unlawful and contrary to the Human Rights Act. The Court did not consider it was necessary to go further and order their destruction at this stage as Parliament was already looking into amending the law. The Court added that if Parliament did not produce revised guidelines in a reasonable time, the applicants could ask for judicial review again for destruction of the data, and their claims would be likely to succeed.

Having fought the battle to the highest court in the country, the decision would hardly give the applicants what they would have wanted now, but at least it should give them some comfort that the current data retention position will not last forever.

The Court of Appeal ruled that the contract set out the only circumstances in which a party could be excluded from a right to rescind, and the developer had breached another provision of the contract which did not exclude that right. As such, if a contract expressly qualifies a right to rescind, any other breach of the contract will not preclude that right, thereby making the rule that a party may not rely on their own breach (which has been reiterated in recent case law) irrelevant in such a case.

The Court of Appeal also considered whether the developer had waived the right to rescind by electing to affirm the contract. The Court of Appeal ruled that such decisions had to be made on a case by case basis but that, in this case, the developer was entitled to wait after the date for fulfilling the conditions had passed before serving notice to rescind, and in the meantime was entitled to continue to progress in other areas relating to the contract without waiving its right. It is important to note that the continued performance of a contract does not always mean that a party has waived its right. However, these areas must be handled very carefully and specialist legal advice sought to ensure that a contractual right is not deemed to have been waived.

In response, Espana’s Spanish representatives put forward a strong position defending Espana’s rights. They stated that Best Buy US’s use of the mark in Europe and particularly in Spain at the time created a conflict with its intellectual property rights, which would entitle it to take appropriate legal action to protect its interests. It added that its “Best Buy” brand had become distinctive and reputed. Use by the US group would cause confusion and lead to an unacceptable association with Espana’s products, causing irreparable and irreversible damage. Examples were given. The letter finished with three paragraphs that opened the door to a negotiated solution if there was sufficient compensation, but that the US group should refrain from using the mark until a negotiated solution was reached. The letter suggested a process to reach agreement.

An agreement was not reached and Best Buy US sued for unlawful threats, contrary to UK trade mark law. Under Section 21 of the Trade Marks Act, it is unlawful to threaten someone else with proceedings for registered trade mark infringement except for their application of the mark to goods or their packaging, their importing of the goods or the supply of services under the mark. The High Court threw out Best Buy US’s claim. However, on appeal, the Court of Appeal has sided with Best Buy US.

The Court of Appeal ruled that Espana’s response letter could amount to a threat. Despite the last three paragraphs of the letter that attempted to settle the matter amicably, the question to be answered was what a reasonable person receiving the letter with knowledge of all relevant circumstances at that time would have understood the writer of the letter to have intended. Following that test, a threat of proceedings had been made by Espana’s representatives, as it stated that the registered marks were distinctive and reputed and it would entitle Espana to take appropriate legal action to defend its interests. A reasonable recipient would have interpreted that to mean not just that Espana was asserting its legal rights but was intending to enforce those rights against Best Buy US. It was clear that the threat related to all of the EU and this included the UK. Accordingly, this threatened legal proceedings in the UK, thus bringing into play the UK’s unlawful threats provisions. The Court of Appeal added that although the letter related to use of the mark in connection with services (retail), it also referred to use of the mark in advertising and the media, which brought it outside of the exceptions to Section 21.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “This case illustrates the dangers of sending threats of trade mark infringement. Letters and emails need to be carefully written to come within the law. Otherwise, the person looking to strongly assert its own rights may end up being the wrong-doer. The particular facts of this case also show the dangers of non-UK lawyers communicating in a way that could impact on UK use of the rights, which could bring the UK Trade Mark law into play in a way that may not have been envisaged. This area is a minefield and specialist UK trade mark law advice should be sought when seeking to protect brands.”

Cala had claimed that the Government’s intention to revoke the Regional Strategies could not be a lawful material consideration for local authorities when making decisions on planning applications. The Court of Appeal has rejected this claim.

This ruling is the latest in the long-running legal dispute between Cala and the Government, which stretches back to last year. Click here for full details.

Although Cala lost the appeal, the Court of Appeal praised the clarification that the case has brought to this contentious issue. Also, whilst finding that it would be wrong to say that the intention to revoke the Regional Strategies could never be a lawful material consideration when considering planning applications, the Court of Appeal qualified this by saying that it would only be in extreme cases when the intention to revoke would constitute a material consideration.

The ruling, therefore, leaves the door open for housebuilders to launch appeals over some planning decisions.

The High Court agreed with Vestergaard. Although there had been no written agreement, Skovmand had breached an express term of the oral contract that he had had with Vestergaard to the effect that the consultant would keep information arising out of his work for them confidential. Even if there had been no express term, though, it was an implied term of the contract that he would keep the information confidential. Once Skovmand had stopped working for Vestergaard, the scope of the obligation of confidence only extended as far as ‘trade secrets’. This approach for consultants was analogous to the position of employees. After the relationship had terminated, the consultant could use information forming part of his own skill, knowledge and experience – whether for his own benefit or for third parties – even if it was learnt during the course of the relationship. The information used by Skovmand here – technical details kept in a database – had amounted to Vestergaard’s trade secrets.

• The judge said that the following factors would help to decide whether any particular information amounted to a trade secret:
• The nature of the work – here, the consultant was engaged in a role likely to produce inventions.
• The nature of the information – experiment results should be protected as trade secrets, just as are formulae and manufacturing processes.
• Engager’s attitude – Vestergaard regarded the information as confidential.
• Steps taken to protect the information – Vestergaard took lots of steps to protect the information.
• Separability of the information – the information could be separated from Skovmand’s general skill and knowledge.
• Commercial value of the information – the information was clearly regarded has commercially valuable here.
• Usage and practices of the trade – little evidence was available on this factor in this particular case.

The case has now gone to the Court of Appeal. The Court of Appeal largely upheld the High Court’s ruling, although it found that one of the employees had not breached the confidence on the particular facts of the case. As far as the consultant’s expertise was concerned, the Court of Appeal ruled that Skovmand could have scientifically reached the particular formulation from his own research, but that did not mean that he actually did so rather than take the short-cut of use of Vestergaard’s trade secrets. There was enough evidence relied upon by the High Court to justify its ruling that Vestergaard’s database had been relied on to create the competing product; it was not simply a matter of Skovmand’s general skill and knowledge.

Cala Homes is challenging the Government’s claim that its intention to abolish the Regional Strategies should be considered by local planning authorities when ruling on planning applications.

Cala Homes, which successfully won a judicial review back in November 2010, was defeated in the High Court in February 2011 (click here for full details), but given permission to appeal the ruling.

The appeal began on 5 May and was expected to conclude today (6 May), with the decision reserved until a later date. I will post full details of the ruling in due course.

Whilst the Court of Appeal did not disagree with the High Court’s conclusions on that, it said that the male celebrity’s teenage children’s privacy rights tipped the balance in favour of privacy rather than publication. Children’s rights would be a primary consideration, although would not always act as a trump card if there was sufficient public interest justifying publication. However, this was not such a case. The public interest in reading about the story would not be so great as to warrant the children’s embarrassment and playground bullying that would inevitably follow.

In this case, S supplied goods to J with a retention of title clause. That clause stated that in the event of J becoming the subject of a formal insolvency procedure, S could by notice prevent J from selling or parting with possession of any of those goods. In the meantime, as in most contracts, it was implicit that the buyer could deal with the goods. However, J did actually go into administration. S failed to serve notice to prevent further dealing with the goods. S claimed that J’s subsequent dealings amounted to wrongful interference with its goods.

The High Court initially, and now the Court of Appeal, disagreed with S. The contract did allow S to terminate J’s right to deal with the goods if J went into an insolvency procedure, but that express termination right – that had not been exercised – clearly showed that the parties did not intend that the right should terminate automatically in an insolvency event. The Court added that it was open for the supplier to state the basis on which the buyer could deal with the supplier’s goods. They could agree that the buyer’s right to deal with the goods in the ordinary course of its business would be limited by express contractual provision, but unless the parties expressly agreed to that the court would not imply such a term. The Court said that trading in an insolvency process was not in the ordinary course of business.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “This case shows that a court would be likely to uphold an automatic restriction in the supply contract on the buyer from dealing with the goods if the buyer goes into an insolvency type process. It is open for the supplier to agree the basis on which the buyer can deal with goods that remain owned by the supplier. Traders should look at their own standard terms and conditions and get them updated as necessary without delay.”

Schütz held a patent for a bulk container for liquids that contained a flexible bottle in a metal cage. Werit had taken the product and replaced damaged or worn bottles with bottles that it had developed. It then sold those bottles in the original caging. The High Court had ruled that Schütz’s patent had not been infringed by Werit’s actions.

The Court of Appeal decided that the High Court’s test had been incorrect. The Court of Appeal said that the patented product should be considered as a whole, of which the cage and the bottle were each parts. By putting a new bottle into the cage, Werit was effectively completing the patented product. In doing so without a licence, Werit had infringed Schütz’s patent.

To recap, FDL created data relating to professional football matches in England, and operated a database called ‘Football Live’, which provided an online service with up-to-date details while a match is being played. Sportradar provided a competing service from servers based in Germany and Austria, but had customers based in the UK. FDL claimed that its copyright and database rights had been infringed by Sportradar, which had allegedly copied FDL’s data. The High Court had ruled that the proceedings could take place in the English courts, but that infringement took place where the servers were based – in Germany and Austria. Both sides appealed the High Court’s decision.

The Court of Appeal ruled, firstly, that the English courts could hear the case. The Court of Appeal then ruled that Sportradar had not infringed FDL’s copyright, as, if anything had been copied, it was data only. This decision removed the copyright claim from before the English courts.

However, the Court of Appeal sent a reference to the ECJ in relation to the query of where the infringement of the database rights took place. The referral relates to the definition of ‘extraction’ and ‘re-utilisation’ under the Database Directive (which was implemented in the UK by the Copyright and Rights in Databases Regulations 1997). More specifically, it queried whether a party uploading data from a database in one Member State who then sends that data to a user in another Member State is considered to have taken part in ‘extraction’ or ‘re-utilisation’, and, in particular, asks for confirmation of where that ‘extraction’ or ‘re-utilisation’ should be considered to have occurred.

As previously suggested, if the ECJ rules in line with the High Court, thereby limiting a cause of action in relation to the database rights infringement to where the server was based, database owners will have little confidence in their ability to protect their rights in the UK.

Whatever the decision, no doubt both sides will blame the referee.

 In the recent Court of Appeal case of Sousa –v- Waltham Forest London Borough Council [2011] EWCA Civ 194, the Court considered whether a claimant was entitled to recover a success fee under a conditional fee agreement with his legal advisers despite being fully indemnified under an insurance policy.

 Conditional Fee Agreements

 A conditional fee agreement (“CFA”) is an agreement between a client and his solicitor whereby the solicitor agrees not to be paid unless they win the case.  Hence their more common name, ‘no win, no fee’.  The CFA usually incorporates a success fee, which is an uplift on the amount of costs the client would have paid had he engaged his solicitor on a usual retainer basis.

 It is also possible to enter into a collective CFA (“CCFA”).  This is a CFA made between a law firm and a purchaser of legal services, such as a bank, trade union or company.  A CCFA provides for fees to be payable on a common ground relating to a number of cases in a similar class.

 There is no longer a statutory reference to CCFAs as the Collective Conditional Fee Agreements Regulations 2000 (SI 2000/2988) were revoked on 1 November 2005.  This revocation was not retrospective so these regulations still apply to any cases brought under a CCFA that that pre-dates 1 November 2005.

 The Solicitor’s Code of Conduct 2007 refers to CCFAs and hence they are still a valid form of CFA.  There is therefore, no reason for parties not to enter into CCFAs where such a agreement of payment is deemed acceptable.

 Guidance on the recovery of costs

 A court has certain parameters it must give consideration to when making decisions about costs:

 -         it must regard all the circumstances (CPR 44.3(4))

-         it must not allow unreasonably incurred costs or those which are unreasonable in amount to be assessed (CPR 44.4(1))

-         when assessing costs on the standard basis only costs proportionate to the matters under consideration will be allowed.  The court will resolve any argument over reasonableness or proportionality in favour of the paying party (CPR 44.4(2))

-         the court must consider whether there were any other methods of funding available when deciding if a CFA’s success fee was reasonable (section 11.8(1), Practice Direction 44.5 (Costs Practice Direction)

 Background

In the case of Sousa –v- Waltham Forest London Borough Council, Sousa (“S”) incurred damage to his house as a result of the roots of a tree in the street.  S claimed on his own household insurance to repair the damage.

S’s insurance company brought a claim against Waltham Forest London Borough Council (“the Council”) as the trees that caused the damage were their responsibility.  S’s insurers instructed solicitors who acted for them under a CCFA with a success fee of 100%.

The claim was settled and the Council agreed to pay S’s costs on the standard basis.  Costs were agreed, save for whether the success fee was recoverable.

When conducting the assessment, the district judge decided that S was never at risk of having to pay costs, because he was covered by insurance, and therefore he refused to allow any success fee.

An appeal was allowed by Judge Behrens, he considered that the subrogation arrangement (that of the insurers to sue on S’s behalf) was irrelevant.

 The Council appealed.  Their position was that S was indemnified for costs and in accordance with section 11.8(c) of the Costs Practice Direction, this fact should be taken into consideration.  S was to be in no different a position from someone who had before the event insurance – they would not be entitled to a success fee.

S’s insurers position was that the court should disregard the insurance as it was “res inter alios acta” (behind the curtain).

Decision

The appeal was dismissed.  Its position was that S was entitled to recover his costs, including the success fee.  S’s insurers had the same right to enter into a CCFA and recover a success fee as S would have done, notwithstanding the subrogation arrangement.

The decision surrounding the recoverability of the success fee centred on whether the costs had been unreasonably incurred, or were unreasonable in amount.  If the indemnity was ignored then there was no reason why S should not be able to enter into a CFS with a success fee.

However, as already stated, the court had to consider all the circumstances.  As a result the indemnity was relevant.

Bearing in mind the case was as a result of a subrogated arrangement; S had no option by to do whatever his insurers requested in order to pursue the claim.  S could not remove the CCFA arrangement that his insurers had in place as he was not in control of the proceedings. 

The court held that it was reasonable for the insurers to enter into a CCFA.  The Council had also accepted this in accordance with the House of Lord’s earlier decision in Campbell –v- MGN (No 2) [2005] UKHL 61:

‘…the mere fact that a person is able to fund litigation without resorting to a conditional fee agreement does not make it unreasonable for him to do so.’

This decision stood, despite the later decision of the European Court of Human Rights (ECtHR) in MGN Ltd –v United Kingdom [2011] ECHR 66, that the order for MGN to pay the success fee was disproportionate bearing in mind the aims of the government and Article 10 of the European Convention on Human Rights.  The interference in this case was found to be part of a legitimate aim intended to widen the access to justice.

The Council made submissions to the Court that they should bear in mind the ECtHR result even though Article 10 did not feature in the case in question.  Their submissions were rejected as the Court found that it would be illogical if the means of a CFA party were taken into account on a reasonableness question in an Article 10 case only.

The Council put forward a second argument that success fees amounted to a denial of justice and had an impact on the freedom of access to the court.  The Court however was not convinced by this argument either.

Impact

This decision will have obvious benefits to those who use CCFA’s. The decision also enforces the court’s belief that MGN –v- United Kingdom has no immediate effect when it comes to the challenge to success fees.

The decision also demonstrates the court’s support for the Jackson reforms, and sanctioned Jackson LJ’s view that of the flaws in the current regime of recoverability, namely that any individual, rich or poor, human or corporate, may enter into a CFA, regardless of their means to fund litigation without it.

The Court of Appeal ruled as follows:

¨          The entire agreement clause excluded collateral warranties, but it did not exclude any liability for misrepresentations. The clause was interpreted narrowly so as only to reference terms, or even “representations” that would have become part of the contract but for the entire agreement clause. It did not stop a party from arguing that it had been induced into entering into the subsequent contract by a misrepresentation. The words “representations” and “supersede” were interpreted as talking about the terms of the contract itself rather than an inducement to enter the contract. Exclusion of liability for misrepresentation had to be clearly stated. Usual ways to do this would be to state that there had been no representations or that there had been no reliance on any representations in entering into the contract.

¨          The entire agreement clause did not stop terms from being implied into the contract to give it business efficacy.

¨          Having an entire agreement clause was reasonable and should not be struck out under the Unfair Contract Terms Act.

The seats had initially been designed for Virgin by Premium Aircraft Interiors UK Ltd (known as “Contour”) which subsequently supplied the seats to other airlines, including Delta, and were sued by Virgin. Virgin then brought proceedings against Delta on the basis of joint liability for acts of infringement of the patent by Contour.

Virgin appealed against the grant of summary judgment by the High Court, and queried whether a passenger seating system for an aircraft required assembly on the aircraft or not in order for the patent to be infringed.

The Court of Appeal applied the test outlined in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd which asked what a person skilled in the ‘art’ would have understood the patentee (Virgin) to be using the language of the claim to mean.

The Court of Appeal cited European Patent Office (“EPO”) guidelines and case law from the EPO Boards of Appeal in agreeing that the wording in the patent stating a ‘system for an aircraft’ in context would be understood by a skilled reader as meaning a ‘system suitable for an aircraft’. The Court of Appeal therefore ruled that the wording of the patent covered not only a seating system fitted into an aircraft but also a system capable of being fitted into an aircraft. The seating system itself was manufactured and sold in the United Kingdom, and as such the infringing action was not taking place outside the jurisdiction – which had been the basis of the High Court’s ruling to grant summary judgment.

The Court of Appeal ruled that summary judgment should not have been granted and that the case should proceed to trial.

Ainsworth produced the “stormtrooper” helmets and armour for the first Star Wars film “A New Hope” in 1977. He was sued in 2004 for over £10 million after he started to sell replica helmets, with Lucasfilm arguing that the helmets could not be reproduced due to the intellectual property in the helmets belonging to Lucasfilm.

The road to the Supreme Court started a long time ago in a country far (far) away. The case began in a court in the USA, with Lucasfilm claiming an infringement of copyright and trade mark for Ainsworth’s sales in the US, totalling £30,000. The U.S. District Court for the Central District of California ruled in favour of Lucasfilm, and Ainsworth was told to pay Lucasfilm more than US$20 million for the infringement, despite the low value of Ainsworth’s total sales. Lucasfilm was forced to enforce the judgment in the UK as Ainsworth had no assets in the US.

Lucasfilm argued that the judgment should be enforced due to Ainsworth’s market presence in the US – even though he was not there, the helmets were advertised there and he was clearly targeting the US market through his website. In addition, Lucasfilm argued that the helmets were sculptures, meaning that the copyright protection for the helmets would last for 70 years from the date of design – this would mean Ainsworth had clearly infringed the copyright.

Lucasfilm failed to convince the High Court, which ruled that Lucasfilm’s argument about Ainsworth’s “presence” in the USA did not stand up to scrutiny, and the court was not willing to set a new precedent for future cases. The High Court also ruled that the helmets were not sculptures, meaning they were subject to a shorter period of copyright protection of 15 years from the date that they were first marketed bythe operation of statutory defences. By the High Court’s ruling, Ainsworth was in the clear. The Court of Appeal then upheld the High Court ruling.

Now Lucasfilm has convinced the Supreme Court to hear the case, and it will review the two main points in the decisions of the High Court and the Court of Appeal – whether Ainsworth can be sued in the UK for actions in the US that infringed the copyright of Lucasfilm under US law whilst he was in the UK, and whether the helmets should be considered sculptures to allow for the longer 70 year protection period under copyright.

Given the decisions of the High Court and the Court of Appeal, it seems that Lucasfilm will need more than a ‘Jedi Mind Trick’ to convince the Supreme Court of its arguments, but a rejection of Lucasfilm’s case may impact the US film industry’s use of UK suppliers when times are hard enough.

The High Court originally and now the Court of Appeal decided that a contract had been formed between the parties. It was a question of construction as to whether the further contract to be executed was a condition of the contract being formed or a mere expression of the contract already agreed. The Court referred to D’s acceptance of the quotation with the statement that D “hereby accept the terms of your quotation subject to your Board approval” as showing that the only condition for the contract proceeding was C’s board agreeing to the deal. This was clearly done because C accepted D’s offer. Therefore, C’s statement that a formal contract would follow in due course was merely an indication that the parties’ contractual desires would be reflected in a further document.

This case could have been decided either way. On the facts, the courts decided that the parties had intended for a contract to have been formed. It was the change in circumstances to D that led to D’s claims. However, instead of the parties spending large legal cost, wasting management time and incurring aggravation and uncertainty in going to the Court of Appeal, the situation could have been avoided if the contract wording and processes had been clearer.

The High Court ruled against Amberley. The Court of Appeal (CA) has now dismissed Amberley’s appeal. The CA considered whether the parties intended to grant Amberley such a unilateral right, and noted that unilateral variation clauses are enforceable, even if they are detrimental to the other party. However, those clauses had to be clearly drafted in order to be enforceable. In this particular clause, the CA took a narrow interpretation as the wording was not clear enough for what Amberley had wanted. The CA ruled that Amberley only had the right to ‘review’ the rents as costs increased and not impose a unilateral increase. The contract gave no indication of what such a review would involve, who would perform it, how often or on what basis. The CA thought the contract meant that Amberley would conduct the review but if it wanted to increase rents following the review, it needed to get a resident’s approval before doing so.

This is an important case for businesses to be aware of. If a unilateral clause is intended, then the clause should state this specifically. Otherwise, there is a risk the courts will give the clause a narrow interpretation and rule that it is not unilateral.

The Mirror – which is owned by MGN – had published a story about the model’s treatment for a cocaine addiction. Ms Campbell had accepted that in light of her previous protestations against being a drug addict, the newspaper had been entitled to say that she was in fact a drug addict and was receiving treatment for her addiction. What she had objected to was the fact that she was receiving treatment at Narcotics Anonymous and details of where, when, how and how often her treatment was running, as well as intrusive photos of her taken with a long lens outside the clinic.

The House of Lords had agreed with her by a majority ruling of three to two. The majority had agreed that she would need considerable privacy in order to deal with her condition and this had been unnecessarily infringed with detail that added to readers’ curiosity but did not add anything to the story’s credibility. The minority, however, had found the disputed material to be unremarkable and the press could legitimately include extra detail.

The ECHR has now backed up the House of Lords’ ruling. Freedom of expression was an important democratic right and any interference with it had to be relevant and sufficient and proportionate to the legitimate aim pursued. Methods of objective and balanced reporting could vary significantly and it was not for courts to substitute their views for those of the press, but editorial discretion had its limits. Publishing the photos and details were solely intended to satisfy the readership’s curiosity as to a public figure and were not in the public interest. The way the photos were taken was also intrusive. It said that the three English courts culminating in the House of Lords had carefully considered the facts of the case and it would not interfere with the final decision. They had made compelling arguments that publication of the disputed material could be harmful to her treatment and was not necessary.

The ECHR added that MGN would not have to pay Ms Campbell’s solicitors’ extra success fee, however, as that was an interference with MGN’s freedom of expression rights.

Under UCTA, any terms restricting a seller’s liability for breach of contract, where the buyer is either a consumer or deals on the seller’s standard terms and conditions, must comply with a reasonableness test. In the initial ruling, the High Court had issued summary judgment in favour of the seller on the grounds that deciding whether the clauses were reasonable or not did not require a full trial.

The Court of Appeal agreed with the High Court’s ruling, pointing out that both of these BIFA clauses had been ruled to be reasonable in previous cases in the Court of Appeal. Whilst reasonableness claims under UCTA are considered by the courts on a case-by-case basis, the ruling suggests that any attempt to claim that these BIFA clauses are not reasonable in future will require unusual circumstances to be present, the lack of which will mean the same conclusion – the clauses are reasonable. In respect of the set-off clause in question, the Court of Appeal said that the exclusion of the right to set-off did not stop the buyer from refusing to pay any incorrectly charged sums as the exclusion only stopped setting off against sums due. The Court also said that the wording of the nine month limitation clause stopped the bringing of cases whether the cause of action had been known or not before expiry of that period.

It is also worth noting that the Court of Appeal commented that although the relative bargaining power is one of the criteria under UCTA for deciding reasonableness, the relative size of the parties was not likely to be important in deciding whether the clauses were reasonable if a small but commercially experienced buyer had a number of competing suppliers to choose from. That was the case here.

It remains to be seen whether the Supreme Court accepts Safeway’s application, although if it takes into account the unanimous decision of the Court of Appeal, it is unlikely to do so. If the Supreme Court does choose to review the case, directors and employees of an organisation will again be at risk of being ruled to be liable for breaches of competition law by that organisation.

The Office of Fair Trading (OFT) launched an investigation in January 2005 into allegations of collusion between producers of dairy products and supermarkets in relation to retail pricing. In September 2007 the OFT informed a number of businesses, including Tesco, Sainsbury, Asda, Morrisons and Safeway (which was bought by Morrisons in 2004), that the OFT had found evidence of their involvement in collusion that infringed Chapter I of the Competition Act 1998. Chapter I of the Competition Act 1998 prohibits an agreement, decision or concerted practice between undertakings which may affect trade in the UK (or part of the UK) and has as its object or effect the restriction, prevention or distortion of competition within the UK.

The OFT reached early resolution agreements with many of those accused, under which those businesses admitted that they had been involved in collusion, accepted liability and any fine imposed by the OFT, and agreed to assist the OFT in the continued investigation. Under the early resolution agreement, Safeway agreed to pay a fine of more than £10 million, which had been reduced from £16 million under the terms of the agreement.

A number of companies within the Safeway ‘group’ filed proceedings in order to recover damages from former directors and other former employees, and hoped to obtain an indemnity against the costs of the OFT investigation and fine. Safeway argued that those former employees had breached their contracts of employment, had breached fiduciary duties they owed to Safeway, and had been negligent.

The defendants applied to the court for a summary judgment or to have the claim struck out on the grounds that, firstly, the claim went against the principle of ‘ex turpi causa – that a claimant cannot pursue an action if it arises in connection with the claimant’s own wrongdoing, and a court will not assist a claimant seeking to recover a benefit from that wrongdoing – and, secondly, that the claim went against the Competition Act 1998 and accompanying competition regime.

The High Court ruled that the case should proceed to trial on the grounds that Safeway had a real prospect of defeating any defence brought by the defendants based on the ‘ex turpi causa’ principle as Safeway’s liability was arguably not personal, primary or direct, and it was possible that the defendants had been the ‘directing mind and will’ of Safeway at the time of the breach. The High Court also ruled that moving the fine from Safeway to the former employees at fault was consistent with the competition law regime under the Competition Act 1998. The High Court therefore ruled that the case should proceed to trial for a more thorough consideration of the facts. The defendants appealed the ruling.

The Court of Appeal ruled in December 2010 that the appeal should be allowed, and that the defendants were entitled to summary judgment such that Safeway’s claims were struck out. In a unanimous verdict, the Court of Appeal ruled that the ‘ex turpi causa’ principle did apply, such that Safeway could not recover the amount of the fine due to the OFT from its former employees alleged to be at fault for the breach of competition law. The Court of Appeal ruled that Safeway’s liability was personal and could not be passed to its employees, and that the aim of the Competition Act 1998 is to protect consumers, and the general public, from distorting trade practices, which would be undermined if a company could then pass on any liability to individual employees.

The High Court had arguably put directors at risk of huge financial liabilities if their companies infringed competition law. However, the ruling of the Court of Appeal ensured that directors are no longer at personal risk under competition law, and clearly states that the competition law regime imposed by the Competition Act 1998 places liability on companies themselves, and that such liability must remain personal to those companies and not passed on to employees past or present, even if those employees were at fault for the infringement.

The full text of the ruling can be found here.

The Court of Appeal said that C was entitled to his fee. There was no express term in the contract that had stipulated what would happen in that situation. The Court also found that on the facts no term could be implied by custom. For a term to be implied by custom, it had to be certain (ie clearly established), notorious (ie well-known in the market) and reasonable. That was not the case here.

The Court of Appeal, interestingly, said that even if a market practice was not certain, notorious or reasonable, courts could construe the meaning of an express or other term implied by the parties according to expert evidence of the market practice as part of the factual matrix, when ascertaining what the parties had intended the contract to say. In this case, that would not have helped matters, because the experts did not come to a common conclusion on what the market practice was as the experts said it had been rare to come across the situation at the heart of this case. There was no express term to interpret, and the uncertainty over market practice formed part of the background that led the court to decide that there was no implied term on the position between the parties either.

Football Dataco produces annual fixture lists for the English and Scottish professional football leagues. Football Dataco issued proceedings claiming that it owned the rights to the fixture lists and could charge for their reproduction under copyright law – that the fixture lists themselves are a database that is subject to copyright, and the information included in the fixture lists generally was also subject to copyright. Football Dataco also argued that the fixture lists were protected by database rights on the basis that it has invested a substantial investment in compiling the fixture lists. The defendants argues that the data could be published with payment.

The Court of Appeal followed a 2004 European Court of Justice (ECJ) ruling that there was no protection under database rights because the substantial investment is in the act of compiling the fixture lists, rather than selecting other data that had already been compiled. However, whether or not there was copyright protection in the database was another matter and provided the focal point for the main arguments.

The European Union’s Database Directive had sought to create a new database right (which did not apply in this case, as the Court of Appeal made clear) and copyright protection in databases. Copyright protection would apply if, by the selection or arrangement of their contents, it would constitute the author’s own intellectual creation. Under English copyright law, the threshold for obtaining copyright protection was traditionally low, in that the copyright owner just needed to show that their work was original. Having to show one’s ‘intellectual creation’ was a higher threshold.

However, the Court of Appeal said that there was uncertainty as to whether the intellectual creation in creating the data (for the purposes of copyright) should be excluded and that the intellectual creation should merely relate to the pre-arrangement of existing data (rather like the database rights). There was also a question over whether or not the Database Directive had replaced pre-existing national copyright in respect of databases – Football Dataco’s argument being that it could still benefit from a lower form of copyright protection under existing English copyright law.

The Court of Appeal therefore referred questions arising out of this case for the ECJ to rule on the basis that it needed clarification on European database copyright law.  We now await the replay in this encounter, but the date has not yet been arranged.

For the full text of the ruling, click here: http://www.bailii.org/ew/cases/EWCA/Civ/2010/1380.html.

The High Court had agreed with him, and now so has the Court of Appeal. The implied licence gave permission to go no further than was necessary to achieve what had been in the contemplation of the parties’ minds at the time the licence had been given. It had been in the contemplation of the minds of the parties that his photos would be used for printed newspapers at the time. However, the issue surrounded the new digital online medium, that had clearly not been considered. So could be said to have been in the parties’ minds? The Court of Appeal ruled that use in the form of continued availability in a new globally and permanently accessible online medium could not be said to have been within their contemplation. That use was not necessary to give effect to the original intentions of the parties, and would adversely affect his ability to exploit his copyright in the photos. The further use would be subject to the parties reaching further agreement with further licence fees being paid to him. Grisbrook was therefore within his rights to refuse permission for his photos to be used online by the newspaper in their back issues.

This result will cause a massive headache for newspaper publishers seeking to make available their publications online. If one contributor is able to stop them from supplying their photos in digital back copies, this could have the effect of preventing the whole back issue from being supplied again, unless the publisher incurs expense in re-jigging the original version. This shows why there should be clearly written legal agreements which envisage future technologies within the licence, rather than rely on unwritten implied licences.

That test for what constitutes an offer is whether a person with the parties’ knowledge of the background, acting reasonably, would have understood the document (or relevant part) in question to be an offer, by which the sender or producer of that document intended to be bound by it.

In this case a mistake was made in the initial offer letter. The Court of Appeal ruled that the mistake was obvious and clearly unintentional, and the recipient of such an offer would know it to be a mistake. As such, the recipient of the offer should not have considered it to be an offer, and should not have believed that they could issue an acceptance to it. Therefore, the relevant term of the contract referred to in the offer was yet to be agreed.

The full text of the judgment can be found here.

It remains to be seen how strictly the courts will construe this ruling. It shows that the Supreme Court is ensuring any relevant material is brought before a court in order that the court make an accurate decision, but may mean parties are increasingly concerned about the content of their without prejudice communications in attempting to agree a settlement agreement.

The advice has to be the same as when drafting any contract – clarity is key. When negotiating a settlement, make sure your communication is clear and in plain English to avoid any confusion.

For the full text of the judgment click here.

The Court of Appeal has ruled that the inventor employee is only entitled to be rewarded compensation based on the actual earnings of the employer. It should not be based on the open market if the invention had been fully exploited by licensing it better. There is no effective ‘best endeavours’ obligation on the employer to exploit the patent. In addition, there should not be the bizarre result where an employee could end up with greater compensation than the royalties earned by the employer. That was not the purpose of the legislation, which was intended to reward an employee by receiving part of the employer’s benefit.

The Court of Appeal has now decided that the injunction should continue as his privacy should be protected even if the details that were going to be revealed were not of a sexual nature. The High Court had correctly weighed up the competing interests of privacy including protecting the children involved, and freedom of expression. That decision should not be interfered with. However, the super-injunction should be lifted, so we are now able to know the parties involved, even if we do not know all the details of what was going to be discussed. Open justice determined that the minimum amount of restrictions should be imposed on court reporting. There was no need to prevent people knowing that there had been a case – just the details that Ms Ntuli had wanted to divulge.

On appeal, the Court of Appeal has overturned the strike-out. It said that there was a real prospect of CSE establishing at trial that the terms and conditions were incorporated into the contract. The ultimate question was whether a reasonable person in the parties’ position would have understood the words as referring to CSE’s contractual terms as being the basis for doing the work.  The Court of Appeal thought that CSE’s interpretation was a more likely interpretation of the words used. One judge added that the phrase ‘terms and conditions available upon request’ must have been intended to have had some meaning.

This was only a ruling over an interim issue. This case shows that the argument that the terms applies had a prospect of success. As to whether or not the terms and conditions were actually deemed to have been incorporated must be decided upon at the full trial. It will be interesting to see what is decided there, because the outcome of this case may impact on how clearly people need to refer to or attach their terms and conditions when they want them to apply to their contracts. It will also be interesting to see what the court says over the fact that the terms were referred to below, rather than above, the signature box. The cost and management time spent on fighting this issue could, of course, have been avoided if the supplier had had clearer processes.

If you want to obtain advice about ensuring your terms and conditions are incorporated into your contracts, please contact us.