When Mr Patel complained to Unite about the postings, Unite took the forum offline and released a statement that the allegations against Mr Patel were unfounded; but Unite failed to respond to Mr Patel’s request for the identification of those responsible.

The BASSA website was subject to terms of use, which warned users that their personal data might be disclosed subject to data protection and privacy law.

Mr Patel successfully applied to the High Court for a “Norwich Pharmacal” order, which required Unite to provide the identities, addresses and Internet Protocol addresses of the users responsible. Instead, Unite provided an expert’s report to show that the information requested had in fact been deleted. Mr Patel and his solicitors pushed Unite to make further efforts to recover the information, without success. Mr Patel therefore sought a further Norwich Pharmacal order for an independent expert to be given access to Unite’s database on the grounds that the continued failure to provide the information must be, at best, as a result of incompetence or technical ignorance. Unite objected to a further order on data protection grounds.

The High Court ruled that Unite had not provided sufficient evidence that it had carried out the reasonable search required by the first Norwich Pharmacal order, and Unite had not shown that it had actually followed up the information provided by Mr Patel in order to carry out that search. The High Court noted that the additional order that Mr Patel was asking for was intrusive, but that it was proportionate and necessary to give the order so that Unite would comply with Mr Patel’s information request. The High Court considered the fact that the website terms of use warned users that Unite might disclose a user’s identity, subject to data protection and privacy law, and that, without the order, those responsible would not be identified. Whilst the order was given by the High Court, it was strictly limited to an expert appointed jointly by both parties and only to the disclosure of the information which would identify those responsible, or which explained why identification was not possible.

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.

Under the E-Commerce Regulations, web service providers can be liable for material that they host if they have actual knowledge of unlawful activity, but they can avoid liability if they expeditiously remove the unlawful material.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “Despite this ruling, the best advice for any website service provider to avoid the risk of liability would be to have clear terms and conditions that allow it to take down material, and then to do so at the first suggestion that it is going to get caught in any cross fire.”

Details of the case can be found here: http://www.bailii.org/ew/cases/EWHC/QB/2011/3031.html.

1. the oral agreement had been breached when Graham sought to exploit the sauce for his own commercial gain; or, alternatively
2. the information given to Graham when Bailey demonstrated the recipe to him attracted a duty of confidence which had been breached when Graham commercialised the sauce.

Graham argued that he had arrived at the recipe through his own hard work and experimentation, and that the claims were an attempt to take advantage of his commercial success when marketing the sauce.

The High Court ruled that there was no breach of contract and no breach of a duty of confidence on the grounds that:

-          the evidence established that Graham had developed the source himself and that there had been no agreement between the parties. The agreement that Bailey and Williams alleged existed made no sense as there was no reason for Bailey to enter into such an agreement to reveal his secret recipe in order for Graham to take it to market. The burden of proof was on Bailey and Williams to prove that the agreement existed – they had failed to do so and therefore no breach of contract was possible; and

-          Bailey had failed to prove that the sauce recipe had been imparted to Graham in circumstances that gave rise to a duty of confidence. In any case, the recipe that was the subject of Bailey’s claim was not sufficiently certain to have a duty of confidentiality attached to it.

The dragons’ investment was well protected and just as well that Graham did not need to face their fire…

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 High Court ruled that, based on Foxtons’ terms and conditions, all Foxtons had to do to receive commission was for there to be an unconditional exchange of contract with the purchaser. As that had happened, it was entitled to commission, even though completion did not take place.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “Following this case, estate agents should check their terms and conditions to make sure that they are entitled to commission should there be exchange of contracts but no completion.”

1. the meaning of a “communication to the public” for the purposes of the Copyright Designs and Patents Act 1988 (the “Act”); and
2. the meaning of “reproduction in part” (whether individual frames amounted to a substantial part of the copyright work and whether the display of a broadcast on screen amounted to reproduction) for the purposes of the Act.

The High Court has now ruled that the first question should be amended for reference to the ECJ, as to whether the right to authorise or prohibit broadcasts extends to broadcasters of free-to-air programmes online to users who could lawfully receive those broadcasts on their televisions.

The High Court has also stated that the second question above has been answered by the ruling of the ECJ in the case of the FA Premier League v QC Leisure & Karen Murphy, which stated that copyright owners do have the “exclusive right to authorise or prohibit direct or indirect” reproduction of their content in the form of “transient fragments of the works within the memory of a satellite decoder and on a television screen, provided that those fragments contain elements which are the expression of the authors’ own intellectual creation, and the unit composed of the fragments reproduced simultaneously must be examined in order to determine whether it contains such elements”.

One of CCWY’s officers had created a similar PM Absolute list with accompanying software, and received several PM Absolutes from a security operative who used FTS’s software. That officer then posted those PM Absolutes on an Internet forum for other officers to add to the list, and also used them to develop his own list and software.

FTS issued proceedings, claiming that its list was copyright protected (as it was a table or compilation that was not a database that was its own intellectual creation) and that CCWY and the officer in question had reproduced that list and infringed the copyright. FTS also claimed that the list was protected by database rights that had also been infringed and that its confidence had been breached by the publishing of the list on the Internet forum.

The High Court ruled that:

1. there was no copyright in the list under the Copyright, Designs and Patents Act 1988 as the list had been put together by trial and error and not by the type of intellectual creation of the author that was necessary to be protected by copyright. The list was not planned and had no set design, was not the author’s own intellectual creation due to the way it was arranged and selected, and had no structure that warranted copyright protection; rather, it was simply a list of data compiled over time;
2. the list was a database that FTS had made a substantial investment in obtaining and verifying that data contained in it, which did require skill and effort; it was therefore protected by database right. CCWY and the officer had extracted and reutilised a substantial part of the database, both in terms of the number of PM Absolutes and the detail contained in each, and had breached the database right; and
3. CCWY and the officer had breached FTS’s confidential information by posting the list on the website forum.

CCWY was held to be vicariously liable for the officer’s actions.

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.”

BT’s initial response has been that it would need to be ordered by a court before taking action, in the same way that a court order was needed before Newzbin2 was blocked. Those downloading copyright content illegally may not be paying for the service they receive, but it is certainly costing the ISPs and industry bodies huge amounts in legal fees to try to prevent it.

BT estimated that the cost of implementing the court order was approximately £5,000, so it is unlikely that it would be worth the ISPs putting up a legal fight against any forthcoming court order. Indeed, the ISPs seem to have indicated that they would comply with any court order they receive. However, there is some doubt as to whether they have agreed to the width of the MPA’s requests for their consent to a court order. The move will only add fuel to the fire stoked up by critics of website blocking – the speed with which the pressure to block Newzbin2 has spread to other ISPs may also spread to other websites (such as The Pirate Bay) and lead to more argument, perhaps in court.

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.

UK patent applications can be refused on various grounds, one of which is if the patent subject matter falls within an excluded type, such as pure business methods, a method for performing a mental act or computer programs that do not have a technical effect.

The High Court has allowed the appeal, and has referred the application back to the IPO for reconsideration.  The ruling was made on the basis that the application made a significant contribution with a relevant technical effect, such that the software should not be considered wholly within the computer program exclusion from patentability.

This ruling is further evidence of the alleged ‘over strict’ interpretation of the exclusions from patentability by the IPO.

The High Court has sided with the previous owners of the pharma business. Applying the principles from landlord and tenant cases in relation to interpretation of the phrase “not to be unreasonably withheld”, it said:

• The burden had been on 3M UK to prove that the refusal of consent was unreasonable.
• The sellers did not have to show that their consent was justified – only what someone in his position would reasonably have done in the circumstances. It was no surprise that the sellers had viewed 3M UK’s statements and profit projections with scepticism and it was reasonable for them to expect far clearer evidence of future figures.
• In deciding what was reasonable, the sellers only had to consider their own interests in earning as large a payment as possible. This was the case unless the benefit to one party was so disproportionate to the detriment of the other.
• The sellers did not have to balance their interests with anyone else’s in coming to that conclusion.

A hearing officer at the Intellectual Property Office has allowed Hewlett-Packard’s appeal against the rejection. The appeal was allowed following the consideration of previous cases, in particular the High Court’s ruling in Halliburton, which concluded that mental acts could be patented where mathematical calculations with software and are technical enough to be patentable, and that the exclusion of patentability for mental acts should be interpreted narrowly. The application was sent for further examination by the IPO following the decision.

Following a failed claim by DDC in the High Court to have the contract rectified for mistake, the Court of Appeal upheld DDC’s appeal. The Court of Appeal’s ruling ordered the rectification of the agreement, based largely on the behaviour of DDH’s chief negotiator – it seems that, if DDH had been unaware of DDC’s mistake in their understanding of the final agreement, and had never sought to rely on that mistake, the Court of Appeal would have denied the appeal and not ordered for the contract to be rectified. Rectification is the discretionary remedy of correcting mistakes made in recording agreements.

The ruling can be considered from two points of view. On the one hand, DDC were extremely lucky to get away with rectification when they did not understand the consequences of a contract that they were entering into – this case should be a reminder to parties to a contract to make sure they get legal advice in good time to properly understand its terms before signing it. On the other hand, DDH’s chief negotiator should have made it absolutely clear to DDC that the agreement did not reflect the commercial understanding – his knowledge of the mistake and his failure to inform DDC resulted in his organisation being liable to pay DDC the £2.4m that a correctly worded contact would have required plus the costs of the litigation. This case shows the danger in relying on the terms of an agreement when you know it is interpreted differently by the other side.

The High Court rejected Plentyoffish’s argument under section 5(4)(a) of the Trade Marks Act 1994, on the basis that Plentyoffish had no goodwill in the UK at the time when the application was made and had not shown that any UK residents had become members of its website. As it had no UK customers, the registration of the trade mark in the UK did not constitute passing off. There was a difference between having a reputation and acquiring goodwill. It may be that people in the UK knew of Plentyoffish because UK users had visited the site and so it had a reputation; however, goodwill required it to have customers, which was not the case here. Customers would mean that they actually received the goods or services (whether or not it was provided for free).

It may not be much consolation for the loser, but at least there are plenty more fish in the sea.

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 initial ruling was given in favour of the film studios (whose copyright material had been copied) under section 97A of the Copyright, Designs and Patents Act 1988 (the Act), which provides that an injunction may be granted against an Internet service provider (ISP) that has “actual knowledge” of the use of its service to infringe copyright. The case will be of interest to ISPs and rights-holders, particularly since this is believed to be the first time that an order under section 97A has been made against an ISP.

BT has been ordered to use its Cleanfeed filtering system, which is currently used to block access to websites featuring images of child abuse, to block the website. Controversially, BT was also told to pay for the cost of implementing the court order. The judge said that since BT made money out of its users, it was right that it should foot the bill as part of the cost of doing business, and in any event the costs were proportionate. It left open the possibility of whether the costs would always be paid for by the ISP but in this case it would make sense.

BT and the film studios agreed that as software had been developed and was likely to be circulated by copyright infringers that could circumvent BT’s Cleanfeed system, BT’s blocking measures may have limited effect. However, the High Court judge said that the court order would still be justified if it meant that access to Newzbin 2 was prevented for only a minority of users.

This is the first time an order has been granted against an ISP under section 97A of the Act, but it is also interesting to note that the judge stated that he thought it unlikely that, following the implementation of the block, a BT user would be able to bring a claim against BT for breach of their Internet service contract with the ISP. However, that might be little consolation for BT, which merely thanked the High Court for providing ‘clarity’ on the issue.

No doubt, BT would have felt a bit aggrieved that the Court had refused to accept its argument that the order should be set aside or varied if the film studios did not apply within a reasonable time for the same injunction against other UK ISPs. The Court said that there was nothing in the law that made the injunction conditional on this action being taken. It was for the studios to decide on which remedies they would pursue and against whom.

BT would also no doubt have been unhappy at the refusal of the judge to give it permission to shut down Cleanfeed temporarily if it needed to. The judge said that it would only do that if the studios consented or BT obtained a court order.

So, all in all, a great result for the creative industries, but not a particularly good day in court for innocent ISPs.

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 ECJ has ruled that:

-       national legislation that restricts the sale or use of foreign decoder cards is in breach of Article 56 of the Treaty on the Functioning of the European Union (“Treaty”) and it infringes the freedom to provide services; and

-       exclusive licence agreements that restrict the supply of decoder cards to TV viewers who want to watch those broadcasts outside of the Member State for which the licence is granted are in breach of Article 101 of the Treaty, which prohibits agreements that have as their object or effect the distortion of trade between Member States.

The ECJ ruled that a breach of Article 56 cannot be justified either by the intention to protect the intellectual property rights in the broadcasts or in an attempt to encourage more people to actually attend the football matches being broadcast.

The ECH also considered Article 3(1) of the Copyright Directive, which allows copyright owners to restrict any “communication to the public” of their works. The ECJ ruled that the transmission in a pub of broadcasts containing copyright protected works – in this case the opening video sequence of Premier League matches that contains the Premier League anthem – is a “communication to the public” under the Copyright Directive, and the consent of the copyright owner is required for such a communication.

The ECJ’s ruling is largely in line with the opinion of Juliane Kokott, one of the eight Advocates General to the ECJ whose opinions, whilst not binding, are usually followed in the ECJ’s ruling. It remains to be seen how the High Court applies the ECJ’s ruling to the facts of the case of Karen Murphy and other similar cases before it. It would seem that pubs cannot be prevented from obtaining foreign decoders to show Premier League matches shown by foreign broadcasters.

However, the part of the ruling relating to the Premier League’s anthem and opening video sequence may take the edge off the ruling for rights holders. It would seem that, if the Premier League can continue to include certain copyrighted content in the broadcasts, such as its anthem and opening sequence, commercial institutions such as pubs will not be able to show broadcasts from foreign broadcasters without the consent of the Premier League. However, this seems unlikely to impact on an individual’s rights under the ruling, who may be able to show such copyrighted material in their own homes as it would not then be a “communication to the public”.

Others have argued that the Premier League will find it hard to protect this copyright and enforce its rights against commercial venues if the High court agrees with this interpretation. Still, we may yet see increased amounts of copyrighted content in each Premier League broadcast which would further prevent commercial venues showing the broadcasts, and attempts by commercial venues to split the copyrighted content from the match itself, which the ECJ confirmed is not the copyright of the Premier League as it cannot be considered the Premier League’s own “intellectual creation”.

The ECJ’s ruling seems to have implications on how the Premier League, and possibly other rights holders in relation to films and music, sell their rights within the European Union. The ruling may result in a single EU-wide market for rights as the Premier League tries to mitigate the effect of the ruling; this would avoid the domestic price being undercut from overseas. This may impact on domestic broadcasters, such as Sky, who would then need to buy the rights on an EU-wide basis rather than domestically. But at least it would protect the value of their investment.

It sounds like there’s music left to write on this one.

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 High Court has ruled that the information contained in the article published was, in principle, protected by article 8. However, the High Court also ruled that there was a public interest in the publication of the article, based on:

1. an objective consideration of the public interest and what was significant to modern society, in particular that Ferdinand had occupied a high-profile position and the article published called into question his suitability for that position;
2. previous case law which suggested that the position of captain of the England football team was a role from which a higher standard of behaviour from the occupant was needed. This was particularly true at a time when the previous captain of the England football team, John Terry, had lost the position to Ferdinand for an extra-marital affair with the partner of a teammate; and
3. the fact that Ferdinand had, for some years, professed to be faithful to his wife – the article published had additional public interest if it proved that public claim to be false.

The High Court ruled that the article had not excessively infringed Ferdinand’s private life, and that the publisher’s right to freedom of expression outweighed Ferdinand’s right to privacy, with the justification based on public interest. The High Court has previously ruled in favour of people who have had their private lives exposed in many previous cases, so it is interesting to see a successful use of the public interest argument in practice.

It seems that Ferdinand’s own goal in seeking to project a particular public image may have cost him victory this time.

Interflora, a flower delivery network, operated under CTM and UK-registered trade marks of “INTERFLORA”. Marks & Spencer sold products online, including flowers. Marks & Spencer bought a number of keywords containing the word “INTERFLORA”, and other variations, on Google AdWords – a service provided by the search engine operator Google, where specific adverts appear against certain search terms. When users searched for “INTERFLORA”, a link to Marks & Spencer’s online flower delivery network appeared. Interflora issued proceedings in the High Court against Marks & Spencer for infringement of the Trade Marks Directive.

The High Court adjourned proceedings and referred a number of questions to the European Court of Justice (ECJ). These questions covered what constituted “use” of a registered trade mark by a competitor, what goods and services were considered “identical” for the purposes of the Trade Marks Directive and the Community Trade Mark Regulation, whether such use might lead a consumer to believe the trade mark owner and competitor are part of the same commercial network, and whether Google’s lack of restriction on the use of the trade mark by the competitor affected the application of the Trade Marks Director and the Community Trade Mark Regulation.

The ECJ has now ruled that:

-      A trade mark owner can prevent competitors using the registered mark as a keyword for goods and services identical with those covered by the registration if that use might adversely affect one of the functions of the mark. The ECJ identified three functions. In terms of the original function, use of the registered mark will have an adverse affect on the trade mark’s function of indicating origin if the keyword does not enable a reasonably well-informed and observant Internet user to recognise the identity of the service provider as against the trade mark owner’s identity. As regards the advertising function, the ECJ said that use of the keyword by a third party would not be relevant, even if it caused the trade mark owner to have to spend more advertising money in enhancing its exposure in response to search requests for the trade mark term. The third function was the investment function, which allowed trade mark owners to acquire and preserve a reputation to attract consumers and retain their loyalty; the ECJ ruled that the mere fact that a keyword leads consumers to switch to a competitor does not mean that the investment function is adversely affected.

-      A trade mark owner that has a particular reputation can prevent competitors using the registered mark as a keyword if such use takes unfair advantage of the character or reputation of the mark (known as “free-riding”) or causes detriment to the character (“dilution”) or reputation (“tarnishment”) of the mark. Use of the registered mark as a keyword cannot be prevented by the owner where the advertising offers an alternative to the owner’s goods or services, provided that the alternative is not an imitation of the owner’s goods or services, does not cause dilution or tarnishment and does not adversely affect the functions of the trade mark.

The ECJ’s ruling has added little to the existing jurisprudence. However, one aspect of the ruling might offer new hope to those seeking to prove infringement – the ECJ ruled that a “substantial interference” with the “investment function” of a trade mark (which is seen as the purpose of acquiring and preserving a commercial reputation) is an infringement of that trade mark.

The proceedings will now move back to the High Court for judgment, and it will not be until that judgment is issued that the full effect of the ECJ’s ruling will be seen. The “investment function” aspect may give Interflora an additional argument when the proceedings come back before High Court. However, it seems that the national courts will have to consider the ECJ’s ruling on a case by case basis based on the facts. In addition, given how widespread the use of keywords has become, it may become harder for a trade mark owner to argue that infringement has taken place through use of keywords – most Internet users are aware of the process and know what product they are looking for when they perform a search.

We await the ruling of the High Court to pollenate our thoughts…

The High Court agreed with Playup’s claim. Givemefootball’s failure to deliver to the number of opted-in recipients amounted to a repudiatory (or fundamental) breach of contract. Playup was entitled to walk away from the contract. Buying in data did not satisfy the requirement to supply “opted-in” recipients. Although the agreement did not specify what a user should have opted-in to, it must have meant that they would have opted-in via the PFA website. The whole point of the agreement was to give Playup football access to the avid fans who were involved with the PFA Fans Awards rather than anyone who liked sport and could have come from another source, in order to maximise the chances of getting a positive response. Otherwise, Playup could have used its marketing budget for a cheaper and less targeted advertising campaign, such as through Google. “Targeted” had to mean just that and the other wording used in the contract reflected that purpose. The inclusion of the words “owned or controlled” by Givemefootball in relation to the databases was the result of careful drafting and did not infer bought in data.

The High Court added that the contractual requirement for data subjects to have provided prior consent to Givemefootball to receive direct marketing from Playup meant that the consent would have had to be made to Givemefootball rather than a third party data seller and the individual would have consented to receive the direct marketing from Playup or a class of which Playup was a member.

A lot of business is done in relation to marketing and promotional campaigns. Where one party agrees with another to run a targeted campaign, this decision makes clear that the campaign must be just that: targeted. That does not allow for buying in data from third parties to supplement the numbers, unless this still makes the campaign just as targeted.

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.

Amanda Smith issued proceedings against Headline Publishing alleging fraud, breach of contract, misrepresentation and negligence on the grounds that Headline Publishing had deliberately attempted to get a negative report from a barrister that would allow it to refuse to publish the book. She alleged that there had been a breach of contract because the book had not been published.

The High Court ruled that Headline Publishing had not committed any fraud, misrepresentation, breach of contract or negligence by failing to publish the book. Due to the privacy and libel issues the book contained, Headline Publishing was entitled not to publish the book.

So all’s well that ends well – as far as the publisher is concerned anyway.

The Government commissioned Ofcom to produce a report on how effectively the website-blocking provisions of the DEA could be enforced. The report considered:

-          the technical means available of blocking websites, which it concluded could not be 100% effective and could be widely avoided; and

-          how effective the DEA could be when compared to section 97A of the Copyright Designs and Patents Act 1988 (CDPA), under which an ISP’s actual knowledge of copyright infringement using its network could be grounds for the granting of an injunction by the courts. The report concluded that the DEA method would be slow, expensive and uncertain when compared to the CDPA route.

The Ofcom report concludes that any DEA system would be ineffective, and that website blocking should be only one of a number of alternatives to reducing copyright infringement online. The Government’s announcement follows a recent case considered by the High Court in which BT was ordered to block a copyright infringing website known as Newzbin 2 under the provisions of section 97A of the CDPA. Following the ruling, some questioned whether the relevant sections of the DEA are actually necessary – the courts seem capable of dealing with the issue of blocking on a case-by-case basis under the CDPA.

Whilst the section 97A method can also be long and expensive, the Newzbin ruling shows that the method is a realistic option. When compared with the DEA, its requirements are also much easier to understand and invoke – the CDPA requires the demonstration of actual knowledge on the part of an ISP that its network is being used for copyright infringing activities. The DEA, on the other hand, has a number of requirements, including having evidence of the amount and type of material available, as well as the need to show that, before a website can be blocked, the operator of the website as well as the ISP has been warned of the possible consequences of the infringing activity.

ITV Broadcasting, together with Channel 4 Television and other broadcasters, issued proceedings against TVC for infringement of copyright. The case came to trial with the broadcasters arguing that the copyright in the broadcasts and films was infringed by (i) TVC communicating them to the public, and (ii) TVC making transient copies of the broadcasts and films in its own servers and on the screens of its users.

TVC based its defence on the following arguments:

(a)                 section 20 (1)(c) of the Copyright Designs and Patents Act 1988 (CDPA) states that communicating a copyright work to the public by broadcast constitutes infringement of copyright, but this section went beyond the powers of the Secretary of State granted to it under section 2(2) of the European Communities Act 1972 (which grants powers for the implementation of European law in the UK) and the scope of the Copyright Directive, making section 20 (1)(c) “ultra vires” and therefore invalid;

(b)                 even if section 20 (1)(c) was validly enacted, TVC was not communicating the broadcasts and films within the meaning of that section and thus not infringing copyright;

(c)                 any copies of the broadcasts and films made on TVC’s servers were not copies of substantial parts, and therefore copyright was not infringed;

(d)                 TVC had a defence under section 28A of the CDPA in that it was making temporary incidental copies as an integral part of a technological process to allow it to transmit the work between third parties, and that, in doing so, the transmission had no independent economic significance to TVC; and

(e)                 TVC had a defence under section 73 of the CDPA in that it was streaming regional channels only in the area for which those channels were made for reception and the re-transmission was re-transmitted through the Internet by cable from its servers.

The Ruling

The High Court ruled as follows:

(a)                 section 20 (1)(c) of the CDPA was not “ultra vires” – the powers of the Secretary of State under section 2(2) of the European Communities Act 1972 were not to be interpreted narrowly and allowed for legislation to be enacted by the UK Government which was not specifically required for the implementation of an EU Directive such as the Copyright Directive. Rather, section 20 (1)(c) was closely related to the Copyright Directive’s subject matter and was thus validly enacted;

(b)                 TVC was, in the view of the High Court, communicating films and broadcasts to the public, but this issue was referred to the European Court of Justice (ECJ) for a preliminary ruling. This was because case law reviewed by the High Court did not deal with the specific issue considered in this case – whether or not there was a communication to the public when an intermediary entity, acting for its own profit, intervened in full knowledge of the consequence of its actions and in order to expand its own audience to its transmissions and adverts, and communicated broadcast signals to the public who could access that signal using their own television or computer at home;

(c)                 TVC was not, in the view of the High Court, reproducing a substantial part of the films or broadcasts in its servers or on a user’s screen, but this issue was also referred to the ECJ. This was because the meaning of ‘reproduction in part’ (whether individual frames amounted to a substantial part of the copyright work and whether the display of a broadcast on screen amounted to reproduction) had already been referred to the ECJ in another case – Football Association Premier League v QC Leisure – and the ECJ’s decision in that case was outstanding;

(d)                 TVC did not need the protection of section 28A of the CDPA if the High Court’s view in (iii) above was correct, as no defence would be needed if there was no reproduction of broadcasts; however, the High Court noted that this issue depended on the ECJ’s decision in the Football Association Premier League v QC Leisure case; and

(e)                 the High Court ruled that the defence under section 73 of the CDPA did apply to the channels streamed by TVC but only where (a) there was actually a cable involved in the re-transmission at the user’s end i.e. the streaming to a computer was covered by the defence, but not streaming to a mobile phone, and (b) the re-transmission was within the intended regional area for service of that channel.

Comment

Copyright seems to be a major issue in the courts at the moment, and the decision of the ECJ in relation to those issues referred, both in this case and the Football Association Premier League v QC Leisure case will have a huge impact on the streaming of broadcasts on the Internet. The High Court’s view seemed to be that the streaming for commercial purposes was an infringement of broadcast copyright, but it remains to be seen whether the ECJ’s decision differs fro the High Court’s initial view.

Stevenage Borough Council’s expansion plans, which were part of the East of England Plan, were rejected because its housing targets were dependant on housing growth by North Hertfordshire District Council. However, following the Government’s announcement that it intended to abolish the Regional Strategies, North Hertfordshire District Council suspended work on the joint project. Further details are here.

During the inquiry into Stevenage Borough Council’s housing plans, North Hertfordshire District Council informed the planning inspector that its new plans would not provide for Stevenage’s planned growth, meaning that the growth of the town would be undeliverable.

However, in the long-running Cala Homes case, the Court of Appeal ruled that local councils cannot take into account the Government’s intention to abolish the Regional Strategies when formulating planning policies (although abolition was capable of being a “material consideration” on certain occasions.) This has formed the basis for Stevenage Borough Council’s legal challenge to the planning inspector’s decision.

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.

The ECJ has now delivered a dramatic ruling as follows:

• Where goods are advertised from outside of the European Economic Area and they have not been put on the market within the EEA with the brand owner’s consent, there is trade mark infringement even where the goods are just targeted as being offered or advertised for sale within the EEA without having to show further that they were actually put on the market in the EEA.
• It would be for a national court to rule on what was meant by “targeted”, but the mere fact that a website was accessible from a particular country would not be enough to satisfy that. The national court would need to consider the context of the offer, such as whether the territory was included in a list of countries to which the seller was willing to send the goods.
• Consumers do not “use” the brand in a trade mark sense when they use the eBay service. However, in this particular case, the people using eBay were deemed to be businesses as they were selling goods in the course of a trade, so they were “using” in a trade mark sense.
• The operator of an online marketplace like eBay does not generally “use” a third party’s trade marks (like L’Oréal’s) when its users advertise goods under those marks.
• However, its exemption from liability for its users’ actions under the E-Commerce Directive is removed when, as in eBay’s case, the operator of an online marketplace buys advertising keywords that are identical to the trade marks in order to optimise the presentation of the online offers. In that case, it is playing an “active role”.
• For the “active role” to apply and the operator to have liability, the trade marks have to be used on the site itself rather than in a sponsored link.
• Where an Internet service provider does not play an “active role”, such that it does not have knowledge or control of the unlawful advert, it is exempt from liability under the E-Commerce Directive, assuming it acts expeditiously in taking down the offending material as soon as it discovers the offending material.
• An online marketplace is not deprived of the exemption from liability merely because it stores offers for sale on its servers, sets terms of service, is paid for the service or provides general information to its users. However, the line is crossed if the online operator helps its customers in other ways such as by promoting or optimising its customers’ adverts. It was then no longer taking a neutral position and had taken an active role.
• Member States must ensure that trade mark owners can obtain an effective, proportionate, dissuasive injunction to stop infringers. This means ensuring effective protection for intellectual property rights. To do this, national courts should have the power to require online service providers to take steps not only to prevent a current infringement but also further infringement. It could be too much to expect ISPs to actively monitor all the data of its customers, but if it is aware of a particular problematic customer, it should not be able to wait until it is told again but there may, for example, be the need for an injunction ordering the ISP to suspend the account of the infringer so as to prevent further infringements by that user.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “This case creates two interesting developments. Firstly, taking an active role by optimising the material on its site could leave an ISP open to liability. Online intermediaries should therefore reduce their active involvement where they may be at risk of having liability for that content. Previously, they had assumed that they were not liable for their users’ activity unless they were informed otherwise.

“The second major impact is the wider-ranging injunctions mentioned by the ECJ. This could lead to actions by rights holders to try to get an injunction against ISPs to require them to shut down serial infringers’ accounts.”

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.

Newzbin has now threatened to break BT’s Cleanfeed filtering system if BT attempts to block the site. BT has hit back and said that it would be appalled if that happened as Cleanfeed helped protect innocent from highly offensive and illegal content such as child pornography.

In 2009, the High Court ruled in Internet Broadcasting Corporation (t/a NetTV) v Mar LLC (t/a MARHedge) that there is a rebuttable presumption that an exclusion clause should not apply to a deliberate personal repudiatory breach of a contract. In that case, the High Court ruled that extremely clear drafting would be needed for a court to rule that the parties intended an exclusion clause to cover a deliberate personal repudiatory breach. The Court had said that there was a presumption that a party would not intend to limit their liability for really serious deliberate breaches (such as deliberately walking away from a binding contract).

What happened in this case?

In this case, AstraZeneca (AZ) and Albemarle International (AI) entered into an agreement for AI to supply a product called DIP to AZ that AZ then distilled to produce propofol. AZ foresaw that it might, at some point in the future, be more beneficial to be supplied with propofol rather than DIP, and the agreement contained a provision that, if AZ did want to make such a change to its process, it would give AI first refusal on the supply of propofol.

AZ later told AI of its intention to enter into an agreement with a third party (“S”) for the supply of propofol. AI objected as it wanted to continue to supply and cited the first refusal provision in the agreement. Negotiations ensued, but, despite AI matching the third party offer of supply, no agreement was reached, and AI served notice to terminate for AZ’s breach of the first refusal provision which had not been remedied on demand. During the negotiations, AZ attempted to stockpile the goods, whilst AI refused to supply two additional orders made by AZ under the agreement, although this did not affect AZ’s operations. Things got rather messy as allegations were thrown around about who was breaching the agreement.

AZ issued proceedings against AI for breach of contract as AI had failed to supply the two additional orders. AZ argued this was a repudiatory breach entitling AZ to terminate the agreement and claim damages. AI denied the claim, and further argued that any liability it might have was, in any case, limited by an exclusion clause in the agreement. AZ argued that AI could not rely on the exclusion clause because (following the ruling in the NetTV case) the breach was deliberate and repudiatory. AI then counter-claimed for breach of contract due to the alleged failure to give it first refusal on the right to supply propofol, but AZ denied liability.

The ruling

The High Court ruled that AI was, on the facts, in breach to AZ for its failure to fulfil one of the two additional orders and was liable in damages for that breach. However, it went on to rule that failure in respect of one or two orders did not amount to a repudiatory breach of a minimum three year contract.

Meanwhile, AZ was also liable for failing to honour the first refusal provision and AI was entitled to terminate the contract as a result of that breach. However, despite that liability, the High Court had to decide whether the exclusion clause excluded or limited the liability of either party and in particular whether AI could claim for its loss of profits despite an apparent provision excluding liability for lost profits. Meanwhile, although AI’s failure to supply was not serious enough to be repudiatory and although the breach was not deliberate (as AI had had legal advice that suggested that it would not be breaching the agreement in the circumstances by failing to supply), the court went on to consider the issue of deliberate repudiatory breach anyway.

Right of first refusal

Where AZ had decided to move to buying propofol rather than DIP and it was considering an offer to supply from a third party, AZ was under an obligation to provide AI with full details so that AI could match the opportunity. Of course, issues may arise in the course of negotiating that could mean that AI would not supply on the terms offered by S, but if AI was willing to match the terms that AZ was minded to accept from a third party (as happened here) then AZ was obliged to accept AI’s offer. The right of first refusal clause had to mean something. AZ was obliged to provide full disclosure of the terms of the proposed deal with S and act in good faith to AI. The only sensible construction of a right of first opportunity was to give AI sufficient opportunity and right to match the offer and not just as AZ was about to award the contract to S. AZ was in breach of the right of first refusal clause, and AI had rightly given AZ 30 days to remedy the breach and then rightly terminated the contract when the breach was not remedied.

Waiver

The court added that AI’s willingness to continue negotiating after that 30 day period had expired did not amount to a waiver of its rights. It could still terminate despite not exercising that termination right immediately.

Deliberate Repudiatory Breach

The High Court ruled that, if there had been a repudiatory breach by AI, it had not been deliberate as AI had followed legal advice that it was acting within its contractual rights (albeit the legal advice had been incorrect). As such, there was no question that the exclusion clause applied and limited AI’s liability. However, the Court went on to consider what would have been the position had the breach been deliberate and repudiatory. It said that the decision in NetTV had in fact been misguided, and that deliberate repudiatory breaches should not be treated any differently from any other breach. The High Court said that, although it was not necessary to consider whether or not an exclusion clause applied to a deliberate personal repudiatory breach, it would be inclined not to follow the NetTV ruling if it did.

Limited “Contra Proferentem” interpretation of exclusion clause in relation to breach of right of first refusal provision

The exclusion clause said “No claims by AZ of any kind whether as to the products delivered or for non-delivery of the products, or otherwise, shall be greater in amount than the purchase price of the product…; and failure to give written notice of claim within 60 days from the date of delivery, or in the case of non-delivery, from the date fixed for delivery, shall constitute a waiver by AZ of all claims with respect thereto. In no case shall AZ or Albermarle be liable for loss of profits or incidental or consequential damages.”

AZ argued that it was not liable for AI’s lost profits arising out of its breach of the right of first refusal provision. However, the Court ruled that, in line with English law rules of interpretation on liability clauses, the exclusion clause had to be construed against the party seeking to rely on it if there was the slightest bit of doubt in the meaning (a rule known as “contra proferentem”). AZ’s interpretation would have meant that the first refusal provision would have been no more than a statement of intent, leaving AZ with no incentive to comply with it, which a court would always seek to do everything to avoid if there is no alternative construction.

In this case, the alternative construction was that the second sentence in the exclusion clause (ie the exclusion of lost profits) had to be read in the same light as the first sentence within the same paragraph – ie applying to late or non-delivery of DIP products. On that interpretation, it was not intended to deal with loss of profits arising out of not giving AI the opportunity to supply propofol.

Comment

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments, “This ruling is important because it deals with four important issues relating to commercial contracts – deliberate repudiatory breach, the meaning of rights of first refusal, waiver during contract negotiations and contra proferentem.

 ”The ruling in NetTV stated that deliberate repudiatory breaches can, in some circumstances, be covered by an exclusion clause but only if express words are used. This ruling suggests the opposite, in that liability would be restricted or excluded for deliberate repudiatory breach just as much as with other forms of liability. Those comments are not strictly binding on future cases, as the High Court did not need to make a ruling on that issue, as it had already ruled that the breach was not deliberate or repudiatory anyway. This uncertainty is not particularly helpful for businesses that need to know how to draft contracts going forward, but the best advice would be to draft appropriate wording to reflect the level of risk the parties are willing to take and not leave it to the courts to decide.

“The part of the ruling dealing with the narrow interpretation of an exclusion clause against the party seeking to rely on it – the ‘contra-proferentem rule’ – which meant that breach of the right of first refusal provision in the agreement was not covered by the exclusion clause is actually just a very useful reminder of existing rules. Exclusion clauses should be professionally drafted by specialist lawyers. A party to a contract should play devil’s advocate when drafting an exclusion clause and try to understand what a court might see from the outside looking in, rather than just looking on what might be beneficial for the business itself.

“The interpretation of the phrase “right of first refusal” was also extremely useful. That phrase is sometimes used in a contract but this ruling gives real insight into what that actually means.

“Finally, the decision that one party had not waived its rights of termination when it continued to negotiate for a few weeks in good faith was also helpful.

“All in all, this is a major judgment that affects all commercial dealings. We will have to see, though, whether the ruling will be appealed.”

Delta replaced Shütz’s bottles with new bottles produced by different manufacturers and sold the containers on. Delta included various disclaimers on the containers once the bottles had been replaced relating to the bottles themselves, but Shütz issued proceedings for infringement of trade marks and passing off.

The High Court ruled that passing off had been established, and that the replacement of bottles by the defendant infringed the claimant’s trade marks, both in relation to the bottles and the container as a whole, as an end user would see the Shütz name on the cage and presume that the bottles were also manufactured by Shütz. The High Court rejected Delta’s argument that the relevant consumers were the bottle fillers rather than the end users. The High Court considered that the disclaimers included on the containers by Delta were not sufficient to inform an end user that only the cage was from Shütz as they were not positioned prominently, were worded ambiguously and could come off as they were not well attached.

The High Court ruled in favour of the claimant under section 10(2) of the Trade Marks Act 1994, as the marks and services were similar and there was a likelihood that the average consumer would be confused or make a connection between the claimant’s website and the defendant’s business. The High Court rejected a claim for trade mark infringement under section 10(1) – which protects trade mark owners against identical marks for identical services. The telephone recordings did not show that Client Connection had no real prospect of success of showing that it was using a different name, but in any event the services were not identical. The High Court added that, if a claim under section 10(2) had failed, the ruling would have been in favour of the claimant under section 10(3) as the claimant’s business of cold-calling under its trading name might tarnish the claimant’s reputation whilst using the claimant’s reputation for its benefit.

The defendant had issued a counter-claim that the trade marks lacked distinctiveness and were too descriptive and were thus invalid, but the High Court rejected the counter-claim on the grounds that the trade mark was highly distinctive due to its use over a number of years.

• the service of the claim form was valid;
• its standard terms and conditions had been incorporated by the purchase order; and
• section 52 of the Sale of Goods Act 1979 applied, allowing SSL to apply for injunctive relief.

The High Court ruled that service on the director in England was valid, as the director was senior enough in TTK’s company to be served with proceedings. However, SSL’s terms and conditions had not been incorporated into the joint venture agreement by the purchase order as TTK had never seen the terms and conditions, and therefore could not be bound by them. As a result, section 52 of the Sale of Goods Act 1979 could not apply as the applicable law was Indian law, and the High Court could not grant interim relief. TTK’s business and property were all based in India, and it had no English presence, such that any order of the English court would have to be enforced only in India. The High Court saw no reason why its jurisdiction could extend to this case. It stated that the action should have been brought in India.

Particularly when dealing with foreign-based companies, businesses should make every effort to ensure that the governing law and jurisdiction of any agreement is English law, if that is your preferred route. It must be remembered that terms and conditions can only apply if they are properly incorporated, which means that all parties must have actually seen them and had a chance to read them. In this case, the claimant seemed to forget these two points and spent time and money trying to obtain a judgment when an English court had no jurisdiction over the case at all. It proved a costly mistake. It is one thing to pay for a law firm to draw up decent terms and conditions, but that is only half the battle. The other thing to make sure that the terms and conditions actually apply.

FP issued proceedings for alleged breach of contract, infringement of copyright and passing off, claiming that the defendants had breached the trading agreement by adopting a logo that was a replica of the ‘Edge’ title logo used on the cover of the gaming magazine. The defendants were also accused of making statements that FP and the defendants were associated.

The High Court has ruled that the use of the obvious replica logo by the defendants had fundamentally breached the agreement, which allowed FP to terminate. In addition, their actions were considered by the High Court to be passing off (as FP had goodwill, there had been a misrepresentation and customers would be confused), as well as copyright in the logo having been infringed.  Furthermore, despite the fact that there had been passing off due to statements being made on the defendants’ website, their trade mark was also held to be revoked for non-use as the US-based defendants did not conduct any genuine business in the UK – despite having infringing statements on their website that were directed at UK customers.

The High Court has ruled that AP did have design rights. When the intermediary showed the design to NC, NC took that on board in designing its new carton. Some designs were inevitably similar not because they were copied but because they shared some common functional requirements. The particular combination of all features of AP’s design was not commonplace and so it would have design right protection. NC had been provided with that and NC’s design had not been produced independently of AP’s carton. However, that did not necessarily mean that AP’s design had been infringed as the article could still derive from multiple sources. Indeed, that was the case here. NC’s design was not made exactly to AP’s design and any similarities were actually derived from another independent design. NC’s design did not owe a substantial part of its design to AP’s. Therefore, there was no design right infringement in this case.