The following post was originally composed by Rebecca Gulbul for the IPKat weblog, Rebecca being one of the new crop of guest Kats. However, just before she could post it, another Kat -- David Brophy, to be precise -- beat her to the draw by posting this. It would be such a pity if all Rebecca's hard work went to waste, so I've posted it here. Rebecca thinks the decision is a good one; David coyly doesn't say, and I'm left puzzled and uncomfortable with the reasoning. Writes Rebecca:
Earlier this week Judge Hacon (Intellectual Property
Enterprise Court, England and Wales) gave judgment in Wilko Retail Limited v Buyology Limited [2014] EWHC 2221 (IPEC), an
action where a request for a Norwich
Pharmacal order [note to non-Brits: this is an order that a party disclose
details of a person who is not a party to the proceedings] was sought. Using
the test of ”balance of irreparable harm”, Judge Hacon refused the request.
The claimant, Wilko, was a retail business offering consumer
products in about 370 stores in the United Kingdom and registered proprietor of
the WILKO trade mark. The defendant, Buyology, ran 8 stores in the South West
of England and in Wales, offering end-of-line products and discontinued stock
at a discounted price. As part of its business, Buyology offered WILKO branded
products for sale in its stores. Wilko alleged trade mark infringement and
passing off. Buyology did not deny selling these products, but said that their
suppliers assured them that they could do so.
Since Buyology did not contest infringement, the sole purpose
of the hearing was to determine whether a Norwich
Pharmacal order should be made by the court, thus compelling Buyology to
disclose the names of the suppliers who had provided them with the WILKO
branded products.
Timeline
Wilko sent its first letter of complaint to Buyology on 20
October 2012, asking it to remove WILKO branded products from sale and to
disclose name and address of supplier. Being particularly concerned about
discovering who Buyology’s suppliers were, Wilko then made two further requests
for disclosure – but to no avail.
When Wilko commenced trade mark infringement proceedings in
August 2013, it particularised the alleged infringements but made no request
for the disclosure of the identity of Buyology’s suppliers. Buyology admitted
having sold goods bearing the trade mark in question and undertook to stop
doing so unless they received Wilko’s consent to sell the branded products.
However, Buyology did sell some further items bearing the WILKO trade mark,
which they said were very few in number and accidental. Wilko did not contest
this, but said that Buyology’s conduct was ‘excessively casual’.
In November 2013, Wilko sent a further letter to Buyology,
complaining about the sales of WILKO branded products in three stores and
proposing that the matter be resolved by agreeing to an order, which would then
be included in their application to Court. Wilko then provided a draft court
order that ontained the relief it sought in its particulars of claim, but which
again did not include any requirement to disclose the names of suppliers.
Buyology agreed to the terms of the draft order and to an
account of profits, suggesting that they reach an agreement on the amount rather
than going through an inquiry. They also told Wilko that, after they filed
their defence, they had been offered WILKO products to sell in their stores,
without any requirement to debrand the products.
Was there a binding agreement?
Judge Hacon first had to decide whether there was a binding
agreement between the parties. Buyology’s counsel argued that the November 2013
correspondence amounted to an offer by Wilko which had been accepted, the draft
order laying out the terms of their agreement. No, said Wilko: there had been
an offer, and then a counter offer (comprising the additional information that Wilko
would collect the goods themselves and that they could agree on quantum for the
accounts of profit), which proposed to amend the initial order but which had
not been accepted.
Judge Hacon disagreed with Wilko: both letters of November 2013 stated
unequivocally that the proceedings should be settled as per the draft order. He
saw no counter offer: clarifying that
the alternative method of collecting the goods did not change the substance of
the agreement, while the agreement as to the amount to be paid was a matter of convenience.
He therefore found that there was a binding agreement, which had been fulfilled
by the parties coming to court and agreeing to the terms of the draft order.
Did the agreement stop Wilko seeking Norwich Pharmacal
disclosure?
Having found that there had been a binding agreement, Judge
Hacon considered whether the agreement precluded WRL from asking for a Norwich Pharmacal disclosure in order to
find the identity of Buyology’s suppliers. Wilko’s counsel submitted that a Norwich Pharmacal order was independent
of the finding of an agreement and could be made at any point of the
proceedings, and was thus unaffected by the finding of an agreement to settle.
No, said Buyology’s counsel: by agreeing to the
draft order, it was understood that it would put an end to Wilko’s claims. Disclosure
of the suppliers’ names was beyond the scope of what the parties agreed and the
application amounted to an abuse of process. What’s more, it would be contrary
to the rule of finality in litigation in Henderson
v Henderson (1843) 3 Hare 100, reiterated by Lord Bingham in Johnson v Gore Wood & Co [2002] 2 AC 1.
Despite understanding Buyology’s perspective,
Judge Hacon said that it was unlikely that Wilko would be barred from seeking a
Norwich Pharmacal order: the
Particulars of Claim did not include anything regarding disclosure and Buyology’s
letter agreeing to Wilko’s offer did say that they would not disclose the names
of their suppliers. Nevertheless, since the request for disclosure had been
made as part of the proceedings and not as a separate application after the
current proceedings, he found that Henderson
v Henderson did not apply, and that Wilko was entitled to seek a Norwich Pharmacal order.
Should there be an order for disclosure?
Having found that Wilko was not barred from seeking the
order, should that order be made? Wilko argued that the court had the
jurisdiction to do so on two bases: first under Jade Engineering (Coventry) Limited v Antiference Window Systems
Limited [1996] FSR 461 and under Article 8 of Directive 2004/48 on the
enforcement of intellectual property rights. However, Article 8 was only
implemented in Scotland: the reason for this was explained in the Explanatory
Notes of The Intellectual Property (Enforcement, etc.) Regulations 2006:
“By
reason of the House of Lords decision in Norwich
Pharmacal v Customs and Excise Commissioners [1974] AC 133 no provision is
necessary to implement this obligation in England and Wales or Northern
Ireland.”
While not seeking to rely directly on Article
8, CounseWilko said that its provisions could provide guidance as to how the
law in Norwich Pharmacal disclosure
should be interpreted. Buyology’s counsel cited Lord Kerr JSC in Rugby Football Union v Consolidated
Information Services Ltd (formerly Viagogo Ltd) [2012] UKSC 55, where he
said that the purpose of Norwich
Pharmacal orders is to do justice. This involved the exercise of discretion
by a careful and fair weighing of all relevant factors, which he then cited.
In this case, Buyology relied on factor (iv) in particular, which
is “whether the information could be obtained from another source”. However, in
Judge Hacon’s opinion, what mattered in deciding whether the order should be
granted was “the balance of irreparable harm, analogous to the balance applied
in the context of an application for an interim injunction” as in Eli Lilly & Co Ltd v Neolab Ltd
[2008] EWHC 415 (Ch) which applied the judgment of the Court of Appeal in Sega Enterprises Ltd v Alca Electronics [1982]
FSR 516.
Wilko’s case was that, if they could not identify the
suppliers, they would be unable to protect their trade marks adequately and to
prevent a secondary market in their branded goods. Judge Hacon said that, since
Buyology was now subject to an injunction if it sold WILKO-branded goods, it
could be assumed that there would be no further infringing goods reaching the
market through them. There had been no assessment as to whether, or the extent
to which, there may be other chains of supply and, if there were, whether these
would cause irreparable harm to Wilko to a negligible or serious amount.
Buyology explained that the retail industry was a small
close-knit community and that, if they were ordered to disclose the names of
their suppliers, it would result in a lack of trust towards them, undermining
their reputation and resulting in suppliers being worried about future
disclosure actions. Judge Hacon concluded that Buyology’s business would suffer
irreparable harm.
Judge Hacon pointed out that Buyology readily accepted its wrongdoing
in its defence and that it also accepted all the other relief sought by Wilko,
who would be adequately compensated for the damage caused by the sale of these
goods by Buyology —and that the damage would not recur. He therefore concluded
that, on the balance of irreparable harm, no Norwich Pharmacal order should be granted.
Comments
This blogger agrees with the decision. Considering the size
of Buyology’s business and the way the retail industry works, the decision
seems fair as ordering the disclosure of their suppliers’ names may have indeed
caused Buyology to suffer irreparable harm.
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