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||Neutral Citation Number:  EWHC 2941 (Ch)
||Case No: HC 13 C 04421
IN THE HIGH COURT OF JUSTICE
||The Rolls Building
7 Rolls Buildings
London EC4A 1NL
||25th July 2014
B e f o r e :
MR. RICHARD SPEARMAN QC
(Sitting as a Deputy Judge of the High Court)
Digital Transcription by Marten Walsh Cherer Ltd.,
1st Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP
Telephone: 020 7067 2900 Fax: 020 7831 6864 DX: 410 LDE
MR. MICHAEL HICKS (instructed by Messrs. Wragge Lawrence Graham & Co. LLP ) for the Claimants
MR. CHRIS PEARSON (instructed by Mirrorkool Limited) for the Defendants
HTML VERSION OF JUDGMENT
Crown Copyright ©
MR. RICHARD SPEARMAN QC:
- I will give my rulings straightaway. Because this judgment is being given ex tempore and at the end of the court day and although I have had quite a lot of material from the parties and quite a lot of submissions they may be rather briefer than would otherwise be the case. If the parties require expanded reasons, I will endeavour to give them in due course.
- In this case there are three applications before the court. The first in time is the defendants' application dated 13th October 2013 to strike out the particulars of claim. That is on the grounds that are set out in CPR rule 3.4(2)(a) that the statement of case discloses no reasonable grounds for bringing the claim or CPR rule 3.4(2)(b) that the claim is an abuse of process. The defendants also have an application for summary judgment pursuant to CPR rule 24.2 on the grounds that the claimants have no real prospect of succeeding on the claim, and there is no other compelling reason for a trial.
- The second in time is the claimants' application dated 4th April 2014 for summary judgment on various aspects of the claim that the claimants bring, and for an order that the defendants should provide further information, which is a matter that I will deal with separately after I have given these rulings.
- The third in time is the defendants' application dated 16th April 2014 to strike out the claimants' application notice, essentially on the same grounds as the defendants' application to strike out the particulars of claim. In my view, the third of those applications probably adds nothing to the issues that are already raised by the first two applications.
- As the arguments have unfolded, the central issues that I have to decide are the following five issues:
(i) First of all, there is the question of whether the defendants have made threats against the claimants in accordance with section 26 of the Registered Designs Act 1949 as amended and section 253 of the Copyright, Designs and Patents Act 1988. Those threats are said to arise in a notice that was sent by the first defendant (and I will come to the details in a moment) to eBay and in a letter that was sent to the claimants. The notice was in a form used by eBay called "Notice of Claimed Infringement Statutory Declaration", or "NOCI" for short, and was sent pursuant to eBay's Verified Rights Owner ("VeRO") system. (In fact, I think there may have been two notices, relating to two different registered designs, but they were sent on the same date and were in all other material respects in identical form, and so it is convenient to refer to one alone).
(ii) The second issue, if there were threats, is whether those threats were groundless. In this regard, the claimants seek summary judgment in respect of the notice (which related to registered designs), but in respect of the letter (which related to unregistered designs) the claimants do not seek summary judgment, and contend instead that it cannot be said that their claim of an unjustified threat of infringement of design rights should be struck out on the basis that the threat is clearly and unarguably justified.
(iii) The third issue is whether the first defendant, Mr. Blackmore, is jointly liable with the second defendant company, Mirrorkool Limited, in respect of the sending of the notice to eBay and in respect of the sending of the letter; those matters to be considered separately.
(iv) The fourth issue is whether the defendants are able to avail themselves of the benefit of the protection conferred by section 26(2A) of the Registered Designs Act 1949 as amended and the equivalent protection in section 253(3) of the Copyright, Designs and Patents Act 1988.
(v) The fifth issue is one as to whether these proceedings ought to be stayed or struck out on the grounds that they are disproportionate and an abuse of process: the short answer being, on the defendants' case, that the game is not worth the candle in light of the value of the claims that are made.
- The background to the case which I hope I can do justice to by stating it very shortly is that both parties market cake stands and indeed do so primarily, if not exclusively, on eBay. The claimants were a relatively new start-up venture when the events in issue arose and they started marketing cake stands on eBay. What happened, in short, is that the defendants sent a notice to eBay complaining that the claimants' cake stands infringed the defendants' registered designs in their cake stands and, in consequence of that, eBay sent Design Right Violation Notices to the claimants and required the claimants to desist from marketing on eBay a long list of acrylic cupcake cake stands with very many model numbers. It would appear that list was based upon a Word document attached to the notice of claimed infringement which the defendants had sent to eBay on 13th March 2013.
- Matters then moved forward. The claimants did not feel, it is said by them, in a position to challenge those Design Right Violation Notices from eBay directly. They sought to enter into a dialogue with the second defendant company and also with eBay with a view to getting their products re-admitted to listing on eBay. In short, on their evidence, they did not succeed in doing that for some time. The notice to eBay I have already referred to. The letter to the claimants is a letter dated 7th May 2013 from the defendants' solicitors to the claimants' patent and trade mark attorneys.
- Dealing briefly with the history of the claimants' attempts to resolve this matter, I was confronted in this case with two full Lever Arch files of authorities, five full Lever Arch files of documents and two skeleton arguments each of 16 pages in length for a case that was listed for one day's duration. I raised that last matter with both counsel, and they said and they were right that it was possible to deal with it in the course of a day. But that has been on the basis that very few of the documents have been looked at other than key contemporary documents and the witness statements. So what I am about to say is really just a brief snapshot.
- Some guidance as to the claimants' efforts, on the contemporary documents, can be gleaned from an e-mail of 22nd March 2013 from Mr. Adlington of the claimants' team to the VeRO Department raising the question of the removal of his company's products listings. One then has a reply from Emma Jones of the eBay VeRO Team dated 13th June 2013 which I will not read out, but it appears to record that as the claimants had not got a reply from the second defendant company Mirrorkool Limited that she (Ms. Jones) had e-mailed Mirrorkool Limited to ask them to reply and effectively that if the two of them (that is Mirrorkool Limited and the claimants' company Cassie Creations Limited) were not able to communicate with each other, then eBay would not be able to facilitate matters any further. It would appear that the reinstatement of the claimants' listing did not occur until some time around about July 2013 when I think I am right in saying Mr. Adlington took the view (on his evidence) that eBay's memory would have lapsed about all this and he thought that at that stage it would be safe to re-apply for listings.
- A concern on the evidence that the claimants say they had is that the notice from the defendants to eBay had triggered two Design Right Violation Notifications from eBay to the claimants, and the claimants were apprehensive that if they ended up in a position where they had more than two notices against them, they could be regarded by eBay as a serial and repeat infringer and lose their opportunity to have eBay listings permanently. So on their evidence, as I understand it, that caused them to approach the whole matter of getting re-listed with caution. As I say, that is just a snapshot of the documents relating to what was happening at the time.
- One other document I will mention briefly is a letter of 3rd July 2013. This is from the defendants' solicitors. It would appear that at that stage some endeavours had been made to resolve the differences between the two companies that are in front of me, but it appears to be apparent from that letter that the defendants were not going to write to eBay to withdraw the VeRO notices. Their position seemed to be that this did not serve any purpose. The defendants were not prepared to undertake not to make or repeat any registered design right infringement threats, and they said they could not undertake not to repeat the threats concerning unregistered design rights without having more information about the claimants' products. The details of all of that do not, in my judgment, matter centrally for present purposes. The fact is that difficulties were going on well into July 2013 as far as I can see, and settlement discussions were not reaching fruition for those types of reasons.
- There is also a narrative in a letter from the claimants' solicitors, Wragge & Co. LLP on 26th July 2013 which again sets out some of the history on the second page of that letter, and why the claimants took the position they did. At all events, it does not appear, whatever the understanding between eBay and the defendants may have been as to how the eBay system operated, that eBay was prepared to reinstate the claimants' designs after several days or anything of that sort. That simply does not appear to be what happened.
- So with that brief factual introduction I come to deal with the five issues that I identified, starting with that of threat. There is a quantity of jurisprudence as to what amounts to a threat for this purpose. For the purposes of this judgment I think it is sufficient to refer to the case of L'Orιal (UK) Limited v. Johnson & Johnson  FSR 686 ( a judgment of Lightman J dealing with the Trade Marks Act 1994 provisions, but there is no material difference between those and the legislation in front of me) and in particular at paragraph 12 where he said:
"In summary, the term 'threat' covers any intimation that would convey to a reasonable man that some person has trade mark rights" as it was in that case "and intends to enforce them against another." He carried on "It matters not that the threat may be veiled or covert, conditional or future. Nor does it matter that the threat is made in response to an enquiry from the party threatened."
- He referred to a case of Bowden Controls Ltd. v. Acco Cable Controls Ltd.  RPC 427 where Aldous J said at page 432:
I believe that the purpose of the letter was to give [the recipient] information and a warning. That requires the answer: a warning as to what?"
Lightman J continued:
"The test is whether the communication would be understood by the ordinary recipient in the position of the claimant as constituting a threat of proceedings for infringement."
- It was common ground between the parties that the test as to whether something is a threat for these purposes is an entirely objective test. The only other authority I refer to at any length is that of Skinner v. Perry (1893) 10 RPC 1. In that case the Court of Appeal seems to me to make clear that it did not matter whether the threat (if that is what it is) is addressed to the claimant or is addressed to another party. Bowen LJ said:
"Using language in its ordinary sense, it is difficult to see that an intimation ceases to be a threat because it is addressed to a third party in response to an inquiry, or because it is addressed to the person himself.
If I threaten a man that I will bring an action against him, I threaten him nonetheless because I address that intimation to himself, and I threaten him nonetheless because I address the intimation to a third person."
I believe I am right in saying that what informed the decision of the Court of Appeal in that case is the use of the word "otherwise" in the relevant section and, of course, that word is repeated, for example, in section 26(1) of the Registered Designs Act 1949 as amended.
- I think that the width of the concept of what can amount to a threat for these circumstances is also apparent from the Court of Appeal judgment in Jaybeam Limited v. Abru Aluminium Limited  RPC 308. I say no more about the matter than that.
- So the question is: is this notice a threat for these purposes? What has been submitted by Mr. Hicks is that it plainly is. It is plainly a notice of claimed infringement. It contains an assertion of ownership of registered design rights. It contains an assertion of a belief that both rights have been infringed. It includes a claim under the final paragraph, numbered 6.1 that the (as I infer) long list of the claimants' designs infringe the defendants' two UK registered designs numbered 4018781 and 4018782. So Mr. Hicks' submission is that it is really very clear that it is a threat.
- Mr. Pearson, who has appeared for the defendants, says that that is not really the right approach; you have to look at this, even applying an objective test, having regard to the position as between eBay and the person sending the notice. His submission, in the round, is that the understanding between those using this system and eBay is that it is no more than a form of notification which will result in an investigation by eBay of the position, who will then produce, at their discretion, a result that they consider is appropriate.
- In terms of the contemporary documents, Mr. Pearson referred to an eBay document which includes a section headed "Abusing eBay". I will not read all of that out, but in summary it says that eBay endeavours to keep its operation working properly to ensure that listed items do not infringe intellectual property rights of third parties, and invites people who consider that their intellectual property rights have been infringed to notify the VeRO Team and "we will investigate". It then says "without limiting other remedies, eBay may in its sole discretion" do a number of things. They include taking steps to keep people off the eBay sites if "we think that you are infringing the rights of third parties". The explanation for that use of the word "you" is that both the provider of the notice and potentially the recipient of the notice may sign up to this system, so it is both inviting people to send in notifications and telling people who are signed up what the result of a notification may be.
- So, says Mr. Pearson, this is not viewed by people operating the system as a threat of anything; it is viewed as giving notice (I think he accepts) asserting intellectual property rights, but not showing that there is any intention to enforce those rights against another. On the contrary, Mr. Pearson submits, it is asking eBay to investigate. That is said to be the understanding of the second defendant company in the annexure to the defendants' application notice of the 16th April 2014, which is verified by a statement of truth signed by Mrs. Samantha Blackmore who is the Managing Director of the second defendant company. It may not matter whether that is a witness statement or part of the application notice. I have taken it as part of the application notice. Mr. Pearson says it is a witness statement. But at all events, it is verified by a statement of truth from Mrs. Samantha Blackmore at the end, and this particular aspect is dealt with in paragraphs 31 to 35 of that document.
- As it happens, this issue has been the subject of consideration by the court on a previous occasion in a case called Quads 4 Kids v. Campbell  EWHC 2482 (Ch). That was a case which came before Pumfrey J (as he then was) on 13th October 2006 and it involved consideration of this very system of VeRO notices. Pumfrey J explains the system at paragraph 11. I will not read that out. He then explains what happened in that case: a notice was sent in and eBay VeRO did not check the allegations. He recites how they are not in a position to do so because they are not a judicial body and effectively, summarising, that they took (in those days) the line of least resistance and just complied with the notice. Pumfrey J considered the legal framework at paragraphs 23 and 24, and in the context of that case considering whether there as an actual threat, he said this:
"23. A working definition of an actionable threat is a statement from which a reasonable man in the position of a person to whom the statement is made understands is a statement that might well be the subject of infringement proceedings at some point in the future. The threat is of course in the legal proceedings, and these proceedings have a long and slightly confused history. No doubt they have their emotional roots in the well-known statement of Lord Esher in Ungar v Sugg  2 RPC 113 that 'better a man have anything happen to him except all his children die of the influenza than that he be involved in a patent action'. Although they have their roots in patent proceedings, they have spread out into many forms of intellectual property, and the reason is very straightforward.
24. It is entirely wrong for owners of intellectual property rights to attempt to assert them without litigation, or without the threat of litigation, in reply. If somebody goes around saying, 'I will sue you for infringement of patent unless you stop buying your goods from X', then the natural response of anybody to whom that statement is made was to stop buying the goods of X. The statement may be entirely truthful and it may also be made with the complete belief in its truth. In those circumstances, the action of malicious falsehood is not available. The action for threats was therefore invented to cover precisely the case where a bona fide statement which is untrue as to infringement was made and has caused the claimant loss. It enabled the claimant, and it enables the claimant, to start proceedings once somebody starts asserting infringement, but refuses to bring proceedings in which that assertion can be tested."
- He then said this at paragraph 26:
"The representation that was made to eBay is, it might said, consensual in this sense, that eBay offer a service whose purpose is to avoid eBay being involved in disputes with right owners. eBay take the line of least resistance. They insist upon a proper notification but, once the proper notification is made, they remove the listing. They do not themselves check the bona fides or accuracy of the notification. They rely upon the notifying person for that, but they say if we get a well-constituted notification, then we will remove the listing."
- It was then said that counsel had argued, as Pumfrey J says,
I believe with considerable force, that what can be described as an institutionalised avoidance of litigation is a response in fact to a threat. After all, he says, if there were no threat implicit in the statement that was made to eBay, why would they withdraw the listing even by way of a standard response to any notification of this description. On the other hand, it might well be argued, if you went to eBay and said 'do you really fear being sued in relation to all these notifications?', they would have to say no."
- Pumfrey J went on to say that he found it "a remarkably difficult question" but he had come to the conclusion that there was a "seriously triable point". He considered that "unsupported and unchallengeable allegations of infringement of registered rights of this description are potentially an exceedingly damaging abuse of registered rights" and that he was satisfied "there is arguably a threat in the notification to eBay". He went on, on the facts of that case, to grant an interim injunction. That was the only matter that was in front of him. It was not a trial of any sort, just a decision as to whether to grant an injunction.
- Mr. Hicks has submitted, in light of the document that he handed up in the course of the hearing, that really the eBay system has not changed. This is something I think Mr. Hicks downloaded from the internet about the VeRO programme. Again, in light of the time, I am not going to read out all of that document, but one paragraph, numbered 6, is headed "Why didn't eBay contact me first". This is, I should say, a "Frequently Asked Questions" document relating to the VeRO programme. The answer to this particular "Frequently Asked Question" is as follows:
"When eBay is notified by intellectual property rights owners of items that infringe their intellectual property rights such as copyright or trade mark, we are obliged to remove the listings as soon as possible"
- Mr. Hicks submits that this is the reality, and that, I think he would submit, this is happening as much today as it did in the time of Pumfrey J. Mr. Pearson says, as I have already foreshadowed, that things have changed. He says eBay these days do investigate. That is not just the understanding, Mr. Pearson says, of his clients, it is what the eBay material says (that I have referred to previously) and it is what the contemporary e-mails show when this dispute arose and the defendants started corresponding with eBay. As to the eBay statement about how the system works, I have already read out the relevant bit. The relevant e-mails are summarised, and the bits which are best for the defendants are set out, in paragraphs 9.1 and 9.2 of Mr. Pearson's skeleton argument as follows:
"9.1 D2 asked eBay to confirm that 'if Mirrorkool files a NOCI to report a member for possible Infringement, that eBay in no way, shape or form views that NOCI (use of the VeRO system) as a threat of proceedings against eBay' (see email dated 13/4/14 [C/637]. The reply was, 'The VeRO programme is specifically designed for Right Owners to report their intellectual property rights through, and we will in no instance take it as an offense if you wish to do so. Please be assured we always wish to make a well researched judgment, so we will ask you to send any and all details of your intellectual property rights so the removals we will make in your name are fair and legally correct.' (see email dated 14/4/14 [C/637]);
9.2. D2 further asked eBay to clarify if they view a NOCI under the VeRO Programme as a threat of proceedings against eBay (see email dated 14/4/14 [C/638]). The reply was an emphatic 'No, we certainly don't' (see email dated 14/4/14 from Marieke Timmerman of the eBay VeRO Team [C/639]. Ms Timmerman goes on to say: 'We are actually quite happy when Right Owners are helping us keeping our site safe from infringing material. That is why we always encourage right owners to join our programme. A Verified Right Owner may send us as many NOCI's (sic) as he or she can fill with infringing material and we will be glad to take action if the claim is valid.'"
- So, Mr. Pearson says, if you look at it in reality, it does not operate as a threat. It is not just a subjective question of whether eBay treated it as a threat, the fact is this: it is an investigation process. It is in the light of that material that he invites me to decide this issue at this stage, and necessarily on the evidence at present before me, in favour of the defendants.
- I think the last thing that I ought to mention on this subject is that Mr. Hicks submitted, and, in my judgment, rightly, that what a particular employee of eBay may say, particularly somebody who does not seem to be in the Legal Department and may not even be senior, as to whether a receipt of the document is a threat or not is not really of any help. There is a legal test as to what is a threat. Whether that person regards eBay as having been threatened or the indication in the notice as being a threat is not really the right approach.
- So the question I think is really this. Is it so clear that the notice is a threat that the claimants, ought to have summary judgment on that point? Is it so clear that it is not a threat that the defendants should have relief either by way of striking out or summary judgment on that point? Or is it a point that is not clear, and that each side has a real prospect of success in succeeding upon, such that the matter should be tried in the usual way? Not without some hesitation, I have come to the conclusion that the third position is the correct one, namely, that this is a matter which, in my judgment, requires to be tried.
- I will not shy away from saying that, provisionally at least, I consider Mr. Hicks' submissions much more persuasive than those of Mr. Pearson. But there are two particular matters that have caused me to stay my hand in saying that the claimants should have summary judgment. The first matter is that Pumfrey J expressed himself as he did. I totally accept that he did not have to decide anything more than that the point was arguable, because that was the only issue in front of him on an injunction hearing. I do not consider his judgment precludes another court of first instance (including a Deputy Judge such as myself) from taking a different view. But I do note that he approached the matter with some hesitation. He regarded it as a remarkably difficult question, and he only said that it was arguable. It does trouble me that one should take a different view from that, even though I accept the nature of the arguments in front of me is different. I am required to look at not just whether the point is arguable, but whether it is so obviously unarguable one way or the other that either side should prevail summarily at this stage.
- I am not persuaded that much has changed at eBay, by the evidence I have seen, so I do not rest my decision to leave this matter to trial on that basis. But the second matter that does make me reach that decision is that while I am not persuaded things have changed, I am equally not persuaded that I have got all the material that it would be desirable to have to make an assessment of the validity of the defendants' counter-arguments that this, on the particular facts of how the VeRO system operated, is not in fact a threat for these purposes.
- So for those reasons my decision on the first issue is that neither party succeeds in their knock-out blow, and that the question of the threat in the notice will need to go to trial.
- The question of threat in the letter I believe I am right in saying is much more straightforward, because it is accepted (if I have understood it correctly) by the defendants that that is a threat. This is in relation to the unregistered design rights. A point was taken that the protections in section 26(2A) of the Registered Designs Act 1949 and section 253(3) of the Copyright, Designs and Patents Act 1988 are available, and I will return to that in a moment. But otherwise, if I have understood it correctly, it is accepted that that is a threat.
- I move on to the second question, which is whether, if there is a threat, it is groundless. As the issue of threat is going to be tried I do not think it is necessary to spend much time on that. I think at the moment the claimants have much the better part of the argument on this. Certainly if one goes on visual comparison it appears to me very, very unlikely that it will be shown that the claimants' designs may have infringed the defendants' two registered designs. But Mr. Pearson has made a number of submissions about the incomplete state of the evidence, mainly about the lack of evidence about the design corpus, and he submitted that that is all a matter for trial.
- I think that that may well have caused me to hesitate before granting summary judgment on that point in favour of the claimants in any event. But, as I say, I do not think one needs to spend a lot of time on that, because if the question of whether the notice is a threat is going to trial, I do not think it is really right even if I was minded to go into the matter in more detail to try and bite off the question of whether, if it was a threat, it was groundless or not. That, in my judgment, is something that needs to go to trial as well. So far as concerns the letter, I did not understand Mr. Pearson to contend that the threat was clearly and unarguably justified his arguments that the defendants were entitled to summary judgment or to the remedy of strike out in respect of this aspect of the claimants' claim rested on wider grounds, like proportionality.
- I come to the third issue, which is the issue of the joint liability of the first defendant for, first of all, the notice and, secondly, the letter. In my judgment it is clear that the first defendant is jointly liable with the second defendant company for the notice. He is the person who signed it. He is the person who made the declarations in it. He is the person who claimed that he was the rights owner within it. His contact details were given for communication with eBay in it, although the email address provided for communication with sellers was email@example.com which I am told is Mrs. Blackmore's e-mail address. As it happens, the claim to design right and ownership that was made, i.e. that it was the first defendant's rights that were owned by him, was correct, at least so far as registration with the Intellectual Property Office is concerned. The documents that I have include a certificate of registration granted on 17th March 2011. The date on which the design is registered in 9th February 2011. The relevant registered designs are the subject of that document. They show Mr. Simon Blackmore, the first defendant, as the owner of those rights. So whatever the position may be internally by assignment or whatever, it looks as though he was the first owner, he was the registered owner, and at the time that he signed the notice on the 13th March 2013 addressed to eBay he was rightly claiming to be the rights owner, at least as far as registration with the Intellectual Property Office is concerned.
- The law on joint liability has recently been reviewed by Barling J in Twentieth Century Fox Film Corporation v. Harris  EWHC 1568 (Ch) at paragraphs 135 to 137. The relevant extract is contained at paragraph 24 of Mr. Hicks' skeleton argument. I do not propose to read it out. In my judgment, apart from the contents of the notice, the relevant facts are that this was a small company. Mr. Blackmore and Mrs. Blackmore each owned 40% of the shares. The other 20% of the shares were owned by other people. He was a director, and not just an employee, although he may say he sent this notice in his capacity as an employee. In agreement with Mr. Hicks, I do not think it particularly matters whether he sent it in his capacity as an employee or as a director. I do not consider that any of the defendants' evidence before me provides, or that any further evidence that might be available at trial could provide, an answer to the incontrovertible facts summarised above. It is quite obvious that he was involved in the sending of the notice to such an extent as to make the act of sending it his own. That is a paraphrase of the language used by Kitchin J in Twentieth Century Fox Film Corporation v Newzbin Limited  EWHC 608 (Ch), which is quoted internally by Barling J in Twentieth Century Fox Film Corporation v. Harris. So in my judgment, as far as that is concerned, it is clear that Mr. Blackmore is jointly liable, if there is any liability at all for the sending of the notice.
- As far as the letter is concerned, the debate there is whether it is arguable that he is also liable (that is Mr. Blackmore) personally for the sending of the letter. The points made on behalf of him in that regard are that the letter sent in May of 2013 is sent on behalf of a client, namely the second defendant company Mirrorkool Limited, and that Mr. Blackmore, although mentioned in it, is not suggested to be the author of the letter in any shape or form, or otherwise involved in it. He is mentioned as being the person who created the design rights and so forth, but nothing to do with him authorising the letter is said in it. The evidence of Mrs. Blackmore (and I think perhaps Mr. Blackmore) is that he had nothing whatever to do with it.
- In my judgment, the claimants' claim in relation to this is not strong but, equally, in my judgment, it is not so weak or so palpably lacking in any real prospect of success that it would be right to strike it out. The context is that the letter followed the notice. It was part of some correspondence which began with correspondence about the notice. The fact that it is a small company, and that Mr. Blackmore is a director and a substantial shareholder are relevant in this context also. There is a sufficiently reasonable prospect of success to allow the claim to go forward that he was also directly involved in the authorisation for sending the letter in such a way as to be jointly liable. Mr. Hicks does not suggest for a moment this is a situation where the claimants are entitled to summary judgment, but I reject Mr. Pearson's submissions that this claim is unarguable, or does not enjoy a real prospect of success such that it should be struck out.
- It is perfectly fair to say that the particulars of claim are pretty exiguous on this. The paragraphs that matter, I think, really are paragraphs 2, 3 and perhaps 4, and 19. Paragraph 19 is just a case of inference. But I do not believe that it is an abusive or unreasonable inference, or one that has no real prospect of success, that Mr. Blackmore authorised and approved the sending of the letter. I understand the defendants' evidence to the contrary, but it would seem to me, in the running of a small family company like this, that there is a very real chance that he would have been involved in that way.
- In the course of approving this judgment, I have reminded myself of other instances in which the court has been alert to the difficulties of claimants in producing concrete evidence of the role of defendants in activities to which the claimants were not privy, particularly before disclosure, which, in my view, provide helpful guidance in the present case. In Toshiba Carrier UK Limited v KME Yorkshire Limited,  EWHC 2665 (Ch), Morrit C, whose judgment was upheld in the Court of Appeal at  EWCA Civ 1190, said:
"There is no evidence from the claimants in response to that of [the defendants' witnesses who deny involvement]. But there has been no disclosure. As the Court of Appeal pointed out in [Cooper Tire & Rubber Company Europe Limited v Shell Chemicals UK Limited,  EWCA Civ 864 at para 43] the strength of the claimants' case cannot be assessed, let alone particularised, until after disclosure of documents. The fact that the claimants do not now have evidence to refute that of [the defendants' witnesses] does not enable me to conduct a mini-trial, let alone, predict the outcome of the actual trial."
- Lastly, I just say this. I do not think that the question of retaining that claim is going to add significantly to the costs of the litigation. Nor do I see it as being something which is going to be, or should be, of any major personal concern to Mr. Blackmore. If he has a good answer he will succeed at trial. If the litigation is going on he will have worries in that regard anyway, and I do not see that in so far as there are nice questions of balance to be struck here that leaving that claim alive is or should be of significant detriment to him, while the uncertainty of its success carries on.
- The fourth issue is whether the defendants are able to avail themselves of the protection of either section 26(2A) of the Registered Designs Act 1949 or section 253(3) of the Copyright, Designs and Patents Act 1988. I hope I am right in saying that the argument on this front really came down to this. It is quite clear that the threats, if that is what they were, related to the activity of selling and not just that of manufacturing and importing. I hope I am right in saying that; it is certainly my present understanding. The argument presented to me attractively by Mr. Pearson, albeit in my view expressed at the time without much prospect of success, is that because the Law Commission has considered the position of amendments to the patents legislation which had extended this protection in the patent context to sellers as well, and because the Law Commission as recently I think as April of this year has recommended that the position with regard to design rights should be brought in line with that of the patent legislation, that it was open to me to read the current legislation with which I am concerned as extending also to a protection for threats or intimation of proceedings in relation to selling as well as to making and importing.
- The relevant section (I will only read the wording of section 26(2A) of the 1949 Act) is:
"Proceedings may not be brought under this section [that section provides a remedy for groundless threats of proceedings for infringement of the rights in registered designs] in respect of a threat to bring proceedings for an infringement alleged to consist of the making or importing of anything."
The like words are used in section 253(3) of the Copyright, Designs and Patents Act 1988 in respect of proceedings for infringement of design rights.
- In my judgment, as I indicated in the course of argument, and with all due deference to Mr. Pearson, that is a hopeless submission. The legislation means what it says. It is not just me who takes that view. The matter has been considered by the Court of Appeal in Cavity Trays Limited v. RMC Panel Products Limited  RPC 361. It is simply not a permissible exercise for any first instance Judge to embark upon construing existing legislation where the wording is clear and has been ruled to be clear by the Court of Appeal so as to read in prospective amendments which have not yet, I think, even been approved by Parliament albeit they may have been recommended by the Law Commission. I do not feel able to embark upon that exercise in any shape or form. So I am afraid I must reject that particular submission.
- Lastly, I come to the fifth matter that seems to me to be central to these applications, the issues of proportionality and abuse of process. On the financial side, Mr. Pearson has submitted that the sums at stake are very modest indeed. He has set out the arithmetic in paragraph 30 of his skeleton argument. Without rehearsing all of that, he says the cut off liability for the defendants is one of seven days and the quantum of the claim is of the order of a few hundred pounds at most. He says if one looks at that in comparison to the cost of litigation the game is not worth the candle. He says to the extent that the de-listing is continuing on after seven days it is either down to eBay (which I do not think I am persuaded of) or it is really a matter of election by the claimants as to how they dealt with de-listing, and that cannot be laid at the door of the defendants. So his submissions in short are that the whole thing is curtailed at seven days' liability and a few hundred pounds.
- Mr. Hicks says that that is not the ambit of the claim. First of all, on the financial side it was not seven days, it took until July 2013 to have the products re-listed, as I have already gone over. Secondly, he says, what is wanted here are declarations and injunctions which are of importance to the claimants. They are faced with the situation where the defendants will not agree not to issue further threats and have not withdrawn their current complaints as far as his clients understand it, and they need to seek those remedies.
- Dealing with this matter briefly, I am wholly unpersuaded about the seven-day cut-off argument on the material I presently have. No document has actually been produced which reflects exactly why that argument is said to be soundly based, although Mr. Pearson believes that a copy exists. It cannot be found in the present bundles. I do not read the UK regime as really importing that type of limitation. At the moment it seems to me that if somebody issues a notice to eBay, whether it is a threat or not, and eBay reacts to it causing damage, and that damage is actionable, while anything done or not done by eBay (or, for that matter, the person(s) affected by the notice) might be a new intervening act the better view is that the consequences of the notice will not be determined within seven days. It all seems to me at least arguably to flow from the notice. So I am not persuaded by the seven-day cut-off point. I do not think it is right, certainly on the material I have, to suggest that the claimants went about reacting in this case in the wrong way. It seems to me, from what I have seen at the moment, that their approach was perfectly understandable and reasonable, but I obviously make no final finding on that.
- The claims for the injunction and/or declaration seem to me to be entirely understandable and reasonably pursued. I just say very briefly that the regime under the relevant Directive considered in some detail by Arnold J in L'Orιal SA v. eBay International AG  EWHC 1094 (Ch),  RPC 21 and then by the Court of Justice of the European Union on the questions referred up, seems to me to reflect what my present understanding of the facts of this case is, namely, that if an intermediary like eBay is put on notice that its operation is being used for purposes of infringing activity, its general response is going to be to protect itself against becoming liable for infringements, as it would risk doing by not desisting from the complained of activity once it is put on notice. I personally at the moment think that any appraisal of the effect of the notice has to be viewed in that way. The likely consequence, it seems to me at the moment concerning the notice, is that eBay will react to it by taking down or by causing the de-listing of the material.
- I do not make any finding about the investigation situation in this case and so forth. I have said enough about that. But in the real world, a body like eBay is not in a position, as Pumfrey J said, to act as a judicial body, and in other areas of the law such as defamation and misuse of private information, the general position is that internet service providers and intermediaries tend to say that they are not in a position to get into the rights and wrongs of the matter; it has to be left between the various private parties who are arguing. That may lead them to continue to make material available, or to take steps to prevent or limit access to material, depending on the circumstances of any particular case; but where there is any significant risk that they will be exposed to substantive liability if they do not take steps with regard to dissemination after they have been put on notice of an alleged basis of claim, I consider that it is to be expected that they may choose to avoid the risk of liability by taking such steps.
- So I am not persuaded that this claim is disproportionate or an abuse of process at all. The cases on this subject that my attention was drawn to are noted in the Supreme Court Practice at pages 88 and 89 of Volume 1 and also at page 6 of the Supplement. It is obvious that the jurisdiction extends beyond libel actions, and that is illustrated most particularly by the recent decision in Lilley v DMG Events Limited  EWHC 601 (IPEC) of His Honour Judge Hacon. But while there is no doubt that the jurisdiction extends beyond this, I do notice that, as far as I can see, almost all the other cases cited in the notes are libel actions, and there are particular considerations relating to that. Forum shopping is one of them, and the fact that claimants very often have remedies in other jurisdictions is another (so that where their claims are struck out or stayed in this jurisdiction they are not necessarily denied altogether the right to seek vindication and damages). Obviously, I accept that there is a jurisdiction to do what Mr. Pearson asks. I just do not accept that it is appropriate to exercise it in this case.
- So on that basis I do not agree, on that final ground, that the defendants should have the relief that they seek by way of strike out or summary judgment.
(Discussion re orders followed)
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