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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Apple Corps Ltd v Apple Computer Inc  EWHC 768 (Ch) (07 April 2004)
Cite as:  EWHC 768 (Ch)
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Strand, London, WC2A 2LL
B e f o r e :
| APPLE CORPS LIMITED
|- and -
|APPLE COMPUTER, INC
Anthony Grabiner Q.C., Daniel Toledano (instructed by Linklaters) for the Defendant
Hearing dates: 25-27 February 2004
Crown Copyright ©
Mr Justice Mann :
a. Was the contract made in England?
b. Was the contract governed by English law?
c. Is there a threatened breach of contract within the jurisdiction?
d. If any of those heads are made out, is England the proper place in which to bring the claim?
" a claim form may be served out of the jurisdiction with the permission of the court if -
(2) a claim is made for an injunction ordering the defendant to do or refrain from doing an act within the jurisdiction.
(5) a claim is made in respect of a contract where the contract
(a) was made within the jurisdiction;
(c) is governed by English law;
(6) a claim is made in respect of a breach of contract committed within the jurisdiction."
CPR 6.21(2A) provides that:
"The court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim."
a. In relation to (a), the burden is on Corps, and it has to establish a good arguable case.
b. In relation to (b) and (c) the burden is on Corps and it has to be actually decided.
c. In relation to (d) the burden is on Corps to establish the fact.
The key terms of the agreement
" . Whereas, the context in which this Agreement arises in the parties' desire to reserve for Apple Corps' field of use for its Trade Marks, the record business, The Beatles, Apple Corps' catalog and artists and related material all as set forth in section 1.3 herein and to reserve for Apple Computers field of use for its Trade Marks, the computer, data processing and telecommunications business as set forth in section 1.2 herein and to coordinate the use of their respective Trade Marks in such fields of use as set forth in section 4 herein.
"Accordingly, the parties agree as follows:
1. DEFINITIONS2. "Apple Computer Field of Use" means (i) electronic good,s including but not limited to computers, microprocessors and microprocessor controlled devices, telecommunications equipment, data processing equipment, ancillary and peripheral equipment, and computer software of any kind on any medium; (ii) data processing services, data transmission services, broadcasting services, telecommunications services; (iii) ancillary services relating to any of the foregoing, including without limitation, training, education, maintenance, repair, financing and distribution; (iv) printed matter relating to any of the foregoing goods or services; and (v) promotional merchandising relating to the foregoing.3. "Apple Corps Field of Use" means (i) the Apple Musical Artists; the Apple Catalog; personalities or characters which appear in or are derived from the Apple Catalog; the names likenesses, voices or musical sounds of the Apple Musical Artists; any musical works or performances of the Apple Musical Artists; (ii) any current or future creative works whose principal content is music and/or musical performances; regardless of the means by which those works are recorded, or communicated, whether tangible or intangible; (iii) promotional merchandise relating to any of the foregoing; (iv) merchandising relating to the Apple Musical Artists and the Apple Catalog and the related subject matter set forth in subsection (i), including, without limitation, the commercial exploitation of personalities, characters, names, designs, images, words, photographs, drawings, or other materials through articles such as posters, toys, games (including computer games), novelties, figures, figurines and clothing; and (v) printed matter relating to any of the foregoing goods or services.4. "Apple Computer Marks" means (i) any design, reproduction or other depiction of an apple, in whole or in part, except for a whole green apple or a half apple (of any color(s)); and (ii) the word "Apple".5. "Apple Corps Marks" means (i) any design, reproduction or other depiction of an apple, in whole or in part, except a "rainbow" or multicolour striped apple (in whole or in part) or any apple (of any color(s)) with a "bite" removed; and (ii) the words "Apple", and "Zapple".
"Apple Computer shall pay to Apple Corps the sum of One Hundred Thousand Dollars ($100,000) (exclusive of VAT), the receipt of which is hereby acknowledged by Apple Corps. Apple Computer shall be responsible for any VAT that may be levied as a consequence of such payment and will indemnify and hold harmless Apple Corps if any VAT is due but not paid and any attempt is made by the relevant authority to levy such upon Apple Corps, Apple Corps shall be responsible for any income or similar tax payable by Apple Corps as a consequence of the receipt of such payment and will indemnify and hold harmless Apple Computer if such tax is not paid and any attempt is made by the relevant fiscal authority to levy such upon Apple Computer. If there is any attempt to levy any VAT or income tax on the payment set forth herein, the indemnified party shall cooperate fully with the indemnifying party and the indemnifying party shall have the right to contest or control any proceeding arising in connection thereto.
4. RIGHTS TO USE TRADE MARKS1. "Apple Computer shall have the exclusive worldwide right, as between the parties, to use and authorise others to use the Apple Computer Marks on or in connection with goods and services within the Apple Computer Field of Use.2. "Apple Corps shall have the exclusive worldwide right, as between the parties, to use and authorise others to use the Apple Corps Marks on or in connection with goods and services within the Apple Corps Field of Use.3. "The parties acknowledge that certain goods and services within the Apple Computer Field of Use are capable of delivering content within the Apple Corps Field of Use. In such case, even though Apple Corps shall have the exclusive right to use or authorise others to use the Apple Corps Marks on or in connection with content within subsection 1.3(i) or (ii), Apple Computer shall have the exclusive right to use or authorise others to use the Apple Computer Marks on or in connection with goods or services within subsection 1.2 (such as software, hardware or broadcasting services) used to reproduce, run, play or otherwise deliver such content provided it shall not use or authorise others to use the Apple Computer Marks on or in connection with physical media delivering pre-recorded content within subsection 1.3(i) or (ii) (such as a compact disc of the Rolling Stones music).4. "Except as provided in subsection 4.4, neither party shall use or authorise others to use their respective Marks on or in connection wit the other party's exclusive field of use hereunder.
6. NO CHALLENGE; LIMITS ON USE/RESTRICTIONS IN EEC1. "Neither party shall challenge the other party's Trade Mark registrations or applications for registration in any part of the world with respect to that other party's Field of Use.2. Apple Corps' rights of use and the restrictions on Apple Computer's rights of use of their respective trade marks (including the restrictions on challenging Apple Corps' trade mark registrations and applications for registration) hereunder shall cease in relation to the European Economic Community if within ninety (90) days of a reasonably grounded request from Apple Computer, Apple Corps fails to satisfy the following test of use. Apple Corps shall satisfy the test of use if Apple corps or its authorised licensees has used the Apple Corps Marks or any of them on or in relation to goods or services within the Apple Corps Field of Use anywhere within the European Economic Community at any time during the five (5) year period ending with the date of the request.
7. NO LICENSE
"This Agreement does not constitute a license.
"If any part or parts of this Agreement shall be determined to be void, invalid or unenforceable by any court or competent authority in any jurisdiction, such determination shall not affect the validity or enforceability of any other part or parts of this Agreement all of which shall remain in full force and effect. The part or parts of this Agreement rendered or declared void, invalid or unenforceable shall be void, invalid or unenforceable as the case may be in that jurisdiction only, and this Agreement shall remain in full force and effect in all other jurisdictions.
13. NOTIFICATION1. The parties shall as soon as possible after execution hereof jointly notify this Agreement to The Commission of the European Communities for negative clearance and/or exemption under Council Regulation 17 of 6th February 1962, and shall jointly take all reasonably necessary steps and cooperate with each other with a view to obtaining such clearance and/or exemption.2. No provision of this Agreement (including any agreement or arrangement of which it forms part) being a restriction by virtue of which this Agreement is subject to registration under Section 35 of the Restrictive Trade Practices Act 1976 shall take effect until the day after particulars of this Agreement have been furnished to the Director General of Fair Trading under that Act. Both parties shall use all reasonable endeavors to procure that the said particulars are so furnished as soon as possible after execution of this Agreement and, in any event, within three (3) months thereafter.
Clause 5 is headed Registrations. It is a long clause which sets out, first, the steps to be taken by Corps if any Corps registrations are cited by any Trade Mark authority against any application by Computer, and then similar provisions applying the other way round. They provide for cascading steps involving cancellation, consents, amendments and assignments. They apply worldwide, though specific provisions are made for Spain, Sweden, Portugal and Brazil. It is unnecessary to set out its terms in full; that description is sufficient.
Clause 6.3 is a counterpart to 6.2, switching the parties round.
The agreement is signed by Mr Aspinall on behalf of Corps, and Mr Graziano on behalf of Computer.
The alleged breaches
Where the contract was made
"Computer's representatives and I were aware that the determination of governing law and jurisdiction could be influenced by the location(s) where the parties signed the agreements and where the agreements were formed. As a result, we took precautions to ensure that neither party could claim priority for its preferred jurisdiction based on the place where the agreements were signed and formed.
Those precautions included a mechanism for closing [and he goes on to describe a procedure set out in a letter of 7th October, to which I will refer, in which engrossments executed by each party in their respective jurisdictions would be held "in escrow" pending a telephone conversation in which their release would be ordered; this procedure was not precisely followed].
This procedure ensured that an agreement was not concluded in England earlier than it was made in California, and vice versa. Because the Settlement Agreement and the Trade Mark Agreement would become simultaneously binding in England and California, those agreements would have no greater connection, in terms of their place of making, with either jurisdiction."
Mr Zeffman, the English solicitor/negotiator for Corps at the end of the negotiation process, does not agree that the purpose of the mechanism was to achieve neutrality in terms of where the agreements would be deemed subsequently to be made, and does not recall that the intention was that the agreements should become binding and effective at both places at the same instant.
I mention these points because it is apparent that at least one party was sensitive to the place of the making of the agreement, and because the evidence might go to the proposition that the contract was made in two places.
"I have been thinking a bit more about the closing arrangements (on the assumption that we manage to finalise the drafting). I suggest the following procedure. Each of the two agreements will be in two parts. I will prepare engrossments of the Settlement Agreement and you will prepare engrossments of the Trade Mark Agreement. We will each get our clients to sign both parts of the Agreement that we have each prepared and I will send you both copies of the signed Settlement Agreement at the same time as you send me both of the signed copies of the Trade Mark Agreement. We will both then get our clients to sign both copies of the other Agreement so that all four documents have been signed by both parties'. We will then send to each other one fully signed copy of the Agreement that we are holding, so that we both end up with full-executed Settlement and Trade Mark Agreements. We will each hold these in escrow until Neil receives the money and I will let you know as soon as he has received it."
"Enclosed please find a revised Trade Mark Agreement which reflects the changes we discussed yesterday. I am pleased to state that, assuming all changes we discussed are made to the Settlement Agreement, that this Trade Mark Agreement is ready for execution by the parties'. Please give me a call to discuss how we go about closing this case."
"As far as closing is concerned I suggest the following:
1.The Apple Computer signatory will sign the two Agreements (which, in the case of the Settlement Agreement, will be a faxed copy) in the presence of an Apple Corp representative such as Wayne Cooper. The Apple Corp representative will then take away the signed agreements and hold them to your order.
2. At around the same time, Neil will sign the two agreements (which, in the case of the Trade Mark Agreement will be a faxed copy) in the presence of an Apple Computer representative such as a Clifford Chance person. The Apple Computer representative will take away the two signed agreements held to my order.
3. The signed agreements will remain held in escrow until Neil receives the banker's draft. I will inform you as soon as it is received and the signed agreements will then be released from escrow.
4. I look forward to hearing from you later today."
"I look forward to working out the closing arrangements on Monday. For your information, I plan to meet with Graziano at 6:00am on Monday to get his signature, as he will be going out of town later that morning. You can have Wayne Cooper (or whoever Apple Corps' representative will be) contact me Monday morning to arrange to pick up the signed agreements. (I assume he will not be interested in meeting us at 6.00pm to witness the signing). Please give me a call so we can confirm the logistics.
"As discussed on Saturday, I attach copies of those pages of the Trade Mark Agreement on which I have marked typos or other minor word changes".
"As far as closing, the procedure is to be as follows:
1. Joe Graziano will sign the two Agreements (which in the case of the Settlement Agreement will be a faxed copy) at 6:00 am your time today. We agreed that there was no need for Wayne Cooper to attend as a witness and indeed I suggest that you courier the signed agreement to me together with the banker's draft and I will hold both the Agreement and the draft to your order.
2. Some time today I will arrange for Neil to sign the two Agreements (which in the case of the Trade Mark Agreement will be a faxed copy). I will courier these to you and you will hold them to my order. (I do not know if you require Vanessa to be present as a witness. If that is what you prefer then Vanessa can take away the agreements and courier them to you). [I interpose that the reference to Vanessa was a reference to Vanessa Marsland, a partner at Clifford Chance, solicitors to Apple Computer.]
3. When you courier the Agreements and draft to me under 1 above, it would probably be preferable if you had already substituted the corrected pages of the Trade Mark Agreement. Similarly, when you receive the Agreement signed by Neil you can then substitute the corrected pages.
4. When we each receive the two Agreements signed by the other party we will get our own clients also to sign those Agreements so that we each end up with full, executed copies.
5. When we both have fully executed copies in our possession we will have a telephone conversation and agree that the Agreement and the draft may be released from escrow and we will date all the agreements.
Can you also please fax me today a copy of the banker's draft and give me all other relevant details, concerning the draft so that we can tee up Apple Corps' bank. As we discussed, when the agreement refers to "banker's draft" we are talking about an instrument which will represent immediately available cleared funds when presented to Apple Corps' bank and I want to make sure there are no problems otherwise all the agreements will not be released from escrow until the draft has cleared"
"Wednesday 9th October 1991.
At around 5.00 pm I received a couriered letter from Marti Lagod enclosing the Trade Mark and Settlement Agreements signed by Apple Computer together with the banker's draft. I gave the bankers draft and signed agreements to Sarah Moore (a trainee solicitor employed by Frere Cholmley) who took them over to Apple at around 5.45 pm for signature by Neil Aspinall.
I tried to speak to Marty Lagod at various times during the evening and eventually spoke to him from home at around 11.30 pm. He had received from Vanessa Marsland the agreements which Neil had signed on Monday and although he had not yet obtained Apple Computer's counter signature of those agreements, we agreed that we were in a position to close.
I told him that I had checked through the Trade Mark Agreement to see if he had incorporated the various minor wording changes I had sent to him and that the one point he had not changed is that the Agreement had 7th October typed in as its date whereas we would not be completing until that evening i.e. 9th October. We had a debate about this and it became clear that US and UK practice differed in that he was not used to writing in dates and I was not used to having typed in a date earlier than that on which the agreement became effective. Finally, we agreed to close then (at around 11.45 pm) on the basis that both agreements would have 9th October typed in as the relevant date and we would therefore each send each other substitute front pages on which 9th October had been typed in.
I then telephoned Neil Aspinall to inform him that we had closed."
"Even though Mr Graziano had not signed Apple Computer's part of the agreement, which were by then in California, nevertheless we would close then on the basis that (a) Mr Aspinall had by then signed both the agreements (those copies had been previously signed by Mr Graziano), and that (b) Mr Aspinall had by then received the funds. "
He goes on to disagree with an interpretation that Mr Lagod seeks to put on the attendance note (to which I will come) and says that they were not forced to deviate from the previously agreed procedure.
"We agreed to deviate because we clearly had a deal Mr Aspinall had signed on the same copies as Mr Graziano had previously signed and the money had been safely received by Mr Aspinall and there was no need or point in waiting for Mr Graziano subsequently to sign Apple Computer's copies of the two agreements."
"When Mr Zeffman and I agreed on 9th October 1991, by telephone, that we were in a position to close. Mr Zeffman's telephone attendance note confirms this fact. That attendance note is consistent with my recollection of the events of 9th October 1991 and states ["and he then quotes the sentence beginning "finally"]
He then goes on to make a comment about the word "although" in the sentence beginning "he had received from the Vanessa Marsland". He says that:
"In my opinion, the word "although" confirms that the parties viewed the closing procedure as binding, but that they were forced to deviate from that procedure. The deviation resulted because the counterparts held by me did not include Computer's signatures. It was therefore necessary for me to waive the need for those signatures before the Agreements became binding. I made that plain that in the closing telephone call and Mr Zeffman agreed that we could close the deal."
He ends this section of his witness statement by saying that the parties had not agreed to any closing procedure that tipped the scales on governing law and jurisdiction in favour of either party.
"As a result, as set forth in Mr Zeffman's 7th October 1991 letter, we agreed to and followed a procedure that ensured that the Agreements became binding and effective at the same instant in both England and California".
"I made that waiver in the closing telephone call, and Mr Zeffman agreed that we could close the deal."
That is said to amount to an offer to complete, accepted by Mr Zeffman.
"Why should not an acceptance or a repudiation communicated over a distance have a spatially continuing existence, so that the contract is made for jurisdictional purposes, albeit not for the purpose of fixing the moment the contract assumed binding force, at both points, the place for sending the message and the place of its receipt Unfortunately, this is a type of lateral thinking with which the precise and literal analysis of the common law intellect has neither familiarity nor sympathy."
"My Lords, there may be certain types of contract, although I think they are exceptional, which do not fit easily into the normal analysis of a contract as being constituted by offer and acceptance "
"Exchange can also take place by telephone, in which case it will be simultaneous."
That, however, merely deals with timing and mechanism; it does not deal with place and does not assist one way or the other. BP Exploration Limited v- Hunt  1 WLR 788 contains a debate as to where a contract was made, and it deals with a contention that a contract was made partly in London and partly in Texas, because a London contract was amended in Texas. That contention was rejected in favour of a finding that the contract was made in London and amended in Dallas rather being made partly in one jurisdiction and partly in the other. So that does not assist me. The last case which Mr Vos relied on as containing pointers was IRC v- Muller  AC 217. That was a stamp duty case where an agreement for the sale of a business, including goodwill, was executed by the vendor abroad and by the purchaser in England. One of the issues was whether the agreement was "made" in England for the purposes of section 59 (1) of the Stamp Act 1891. At page 223 Lord MacNaghten said:
"I think the agreement was made in England, and none the less so because it may also be described with equal propriety as being made abroad."
However, the context of that quotation makes it quite clear that he is considering the very limited question of where the agreement should be treated as having been "made" for the limited purposes of the legislation before him. None of the other members of the committee expressed a view which assists one way or the other.
"No universal rule can cover all such cases: they must be resolved by reference to the intentions of the parties, by sound business practice and in some cases by a judgment where the risk should lie."
While that does not suggest that he was supporting the notion that in some cases it might be possible to find that a contract is made in two places at once, he is certainly pointing against any general rule applicable to all circumstances, and I think it is fair to say that it recognises the need to be appropriately flexible in reflecting the needs and practices of commerce. Both Lord Fraser and Lord Brandon (at pages 44 and 50 respectively) expressed the view that the general rule would have to give way to particular circumstances. In the circumstances, and while Brinkibon clearly lays down a general rule which is very helpful and desirable in terms of creating certainty, I do not take it as inevitably standing in the way of the concept that a contract can be made in two places at once in the sense that it forces a court always to find a single jurisdiction in which the contract should be taken to have been made.
The Governing Law of the Contract
"1. To the extent that the law applicable to the contract has not been chosen in accordance with Article 3, the contract shall be governed by the law of the country with which it is most closely connected
2. Subject to the provisions of paragraph 5 of this article, it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, is habitual residence or, in the case of a body corporate or unincorporated, its central administration. However, if the contract his entered into in the course of that parties' trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other than the principal place of business, the country in which that other place of business is situated.
5. Paragraph 2 shall not apply if the characteristic performance cannot be determined, and the presumptions in paragraphs 2, 3 and 4 shall be disregarded if it fears from the circumstances as a whole that the contract is more closely connected with another country."
a. I have to identify, if possible, the characteristic performance due under the Trade Mark Agreement.
b. If I can do that, I then have to identify the party who effects that performance.
c. Once that party is identified (if possible) then I have to identify the place of the central administration of that party. That gives rise to a presumption that that is the jurisdiction with which the contract is most closely connected, and that close connection provides the governing law.
d. However, having identified that party and that performance (if I can), I have to consider whether or not the contract is in fact, and in the circumstances, more closely connected with another country (article 4(5); if so, then that other country provides the governing law.
e. If I cannot identify the characteristic performance due under the contract, then again I have to decide with which country the contract is most closely connected, and that country again provides the governing law (articles 4(5) and (4(1)).
"the submission of the contract to the law appropriate to the characteristic performance defines the connecting factor of the contract from the inside, and not from the outside by elements unrelated to the essence of the obligation such as the nationality of the contracting parties or the place where the contract was concluded" (p 20).
The test "greatly simplifies the problem of determining the law applicable to the contract in default of choice by the parties Seeking the place of performance or the different places of performance becomes superfluous." (p 21)
"The global picture must be assessed ".
It is true, as Mr Vos observed, that that was a case in which the court had to define the contract and its nature first, because the contract was oral and the court had first to determine what its terms were, but having determined the terms and the thrust of the contract the Court of Appeal did not confine itself to those terms it looked at the "global picture" in order to ascertain the "characteristic performance". It also described the process as trying to find the "real meat" of the arrangement (adopting that description from an academic article); that concept does not suggest a narrow contract-bound inquiry. More compellingly, in Iran Continental Shelf v IRI International Corporation  EWCA 1034 Clarke LJ, in connection with this test, said:
"24. It seems to me that in order to resolve this issue it is important to identify the terms of the contract. However, it is not in my judgment appropriate to look only at the purchase order and its acceptance. As in the case of any contract, it is important to view its terms against its surrounding circumstances or factual matrix. In this case the background to the contract is, I think, of particular importance because the contractual documents did not come out of the blue. On the contrary, they can be traced back to 1990."
"applies a criterion which takes into account the performance of the contract and a geographical location It is a criterion which seeks to identify the country in which the party providing the significant performance is located. It is also to be observed that just as it is not a test directed to ascertaining intention so it is not directed to identifying a legal system with respect to which the intention to enter into contractual relations must be taken to refer."
He then considered the circumstances in which the presumption in Article 4(2) might be rebutted, in accordance with Article 4(5), and referred to:
"the guidance that [Article 4(2)] gives as to what is meant by "the country with which it is most closely connected" and pointed out that the presumption "does not detract from the need to look for a geographical connection."
Having then returned to the provisions with which he was concerned, he embarked on a consideration of which country the contract was most closely connected with. In that context he said:
"Consistent with the policy of the directive one must look for links with the subject-matter and performance of the contract and their connection with a particular country
"There is no element of performance that is geographically connected with France references to French francs and the provisions of the French penal code do not themselves relate to the location of the performance of the contract nor to the location of either of the performing parties"
From this Lord Grabiner derived his submissions that the connecting factors had to be performance related and geographical, or to relate to the location of the parties. He said that this analysis was supported by Samcrete Egypt Engineers and Contractors SAW v Land Rover Experts Ltd  CLC 533, which cited extensively from Credit Lyonnais and applied what it said.
a. While Hobhouse LJ is clearly drawing a distinction, he is in my view drawing a distinction between geographical links on the one hand and legal system links or matters relating to intention on the other. He points out that it is the first that is now determinative under the Convention; the old law had been otherwise. When he says that "one must look for links with the subject-matter and performance of the contract and their connection with a particular country" he is not, in my view, intending to impose restraints as to the sort of features that one takes into account in that process by reference to performance and subject matter he is emphasising the geographical element (though obviously performance and subject matter will be important factors in the assessment).
b. The label "performance" is not going to be an easy one to deploy in some contracts. The same is true if one adds "subject-matter" as one of the tests. In some cases it might involve an artificial and ultimately profitless debate in ascertaining whether a given factor does or does not fall within one or other of those descriptions. Such a debate is not required by the wording of the Convention, which uses the broader words "contract" and "connected".
c. The limit suggested by Lord Grabiner is not reflected in the Giuliano-Lagarde report. That report refers to the "flexibility" of the general principal embodied in Article 4(1) (though it also uses the expression "vague concept" as well). There is no suggestion in the report of some sub-classification of relevant factors.
d. The authorities on Article 4 do not support Lord Grabiner's line.i. Samcrete Egypt Engineers and Contractors SAW v Land Rover Experts Ltd  CLC 533 was a case of a guarantee provided by a parent company of the obligations of a subsidiary under a distribution agreement. That was a case where the Article 4(2) presumption was held to be rebutted. Credit Lyonnais was cited, but the Court of Appeal did not draw from it the point now relied on by Lord Grabiner. The fact that the contract was written in English was said to be of "little consequence", not of "no consequence" which it ought to have been if Lord Grabiner were right. The presence of the creditor in England as a factor was said to "lack substance" because the purpose of the Article was to resolve questions of governing law precisely where two parties were of different domicile; but it was not rejected because it was not performance-related. The place of payment under the guarantee was held to be significant (which is consistent with Lord Grabiner's thesis). In addition, Potter LJ relied on the place where Land Rover had to deliver the vehicles under the guaranteed contract, which was England. In relation to this delivery, Potter LJ relied on delivery as being "the consideration stated in the guarantee". Performance in the sense of delivery was due under the distributorship agreement, which was made with the subsidiary. Delivery was not really performance due under the guarantee (there was apparently no promise to deliver under the guarantee); yet Potter LJ relied on it. He was therefore relying on performance under another contract as a relevant connecting factor. That is inconsistent with Lord Grabiner's thesis. Last, Potter LJ did not rely on the English choice of law clause in the underlying distributorship agreement, and declined to express a view as to whether it was relevant. He did, however, say that it was probably not, citing a passage in Credit Lyonnais in which Hobhouse LJ excluded inferred choice of law materials from that which the court could consider. While that is consistent with Lord Grabiner's line, it is significant that Potter LJ did not reject the submission as not being a "performance related" matter. Accordingly, looking at how Samcrete was decided, and despite the fact that it cited extensively from Credit Lyonnais, it did not articulate the distinction relied on by Lord Grabiner, and its reasoning is actually inconsistent with it in parts.ii. Bank of Scotland v Butcher is an unreported Court of Appeal case decided on 28th July 1998. In it the Court of Appeal was faced with a guarantee given to a Scottish bank by an English resident and a Scottish resident. The Article 4(2) presumption was held not to apply, and in determining the place of closest connection the Court of Appeal had regard to "all the circumstances", without identifying any limit to the categories of circumstances which could be taken into account. One must be a little cautious in taking this too far because Credit Lyonnais is not referred to in the judgment, and one does not know whether it was cited, and there are reasons for believing it may not have been because one of the factors taken into account by Aldous LJ was an inference as to the intentions of the parties as to governing law, which Hobhouse LJ expressly excluded; but nevertheless it does not provide any support for limiting the inquiry as to connection in the manner suggested by Lord Grabiner.iii. Definitely Maybe Ltd v Lieberburg GmBH  1 WLR 1745 was a case which concerned the rebuttal of the presumption provided by Article 4(2). In considering with which country (England or Germany) the contract was more closely connected, Morison J relied on the place of performance (which supports Lord Grabiner), and "for what it is worth", the fact that the defendant company was German, payment had to be made in Deutschmarks and payment was subject to deduction for German tax. Those last factors, albeit qualified by the judge, are not consistent with Lord Grabiner's line, and nothing in the judgment suggests Lord Grabiner's refinement of the test. Credit Lyonnais is referred to by the judge, and it was clearly cited to him.iv. Ennstone Ltd v Stanger Ltd  1 WLR 3059 was another case involving the rebuttal of the Article 4(2) presumption. The factors relied on by the Court of Appeal in its consideration of connection were all performance related apart from the reference to the domicile of the companies involved. To that extent it is consistent with Lord Grabiner's thesis. However, despite the fact that Credit Lyonnais was again referred to and relied on, Lord Grabiner's refinement was not articulated.v. The decision in Iran Contintental (see above) is consistent with Lord Grabiner's thesis but does not articulate his distinction.
a. While both parties are performing in their respective jurisdictions, greater weight should be given to Computer's performance in its jurisdiction because the Trade Mark Agreement was directed at its performance because it was being given a new liberty. Substantial compliance would therefore take place in California. This is, in effect, the argument referred to above (under characteristic performance). I have already rejected this analysis in that context, and I reject it here too. I do, however, accept that Computer would be performing, to a certain extent, by controlling activities from California, and that that gives a California connection. However, this is neutralised by the same factor operating for Apple in England.
b. Computer relies on the fact that the contract was made in California. It may have been see above. However, I cannot find that it was, unless it was also made in England again, see above. Accordingly, this factor either does not operate at all, or it is neutral if the contract falls to be treated as having been made in two places at once. In any event, even if the contract were made in California alone, then that would be purely as a result of the accident as to who uttered the penultimate and who uttered the last words in the offer/acceptance analysis. That chance happening is too random to allow this factor (in the circumstances) to be of any weight.
c. Negotiations took place in New York and California, as well as in England. Negotiations in New York do not help to establish a California connection, but in truth the place of negotiations does not establish much of a connection anyway. The place of negotiation was essentially a matter of business convenience, not a contractual connection.
d. The sums paid under the Settlement Agreement and the Trade Mark Agreement were expressed in US dollars. This is true, and might be some sort of connecting factor, though Credit Lyonnais and Samcrete show that it is not strong. In the circumstances of the present cases it is not really of any material weight as a factor connoting the necessary geographical connection between the contract and California.
e. Under clause 4.1 of the Trade Mark Agreement Computer has the right to use its mark "on or in connection with" its goods and services. The same wording is used in clause 4.2 in relation to Corps' right to use its mark. The 1981 agreement, and early drafts of the Trade Mark Agreement, used the words "in relation to" instead. Ms Riola, a US trade mark attorney employed by Computer, says that the different specific wording was used in order to correspond with wording in the US federal Lanham Act, which is the main source of trade mark law in the US. She says, in a witness statement, that the phrase would be well known to trade mark attorneys and others seeking to register marks in the US. Mr Valner, who was heavily involved in the drafting of the 1991 agreements for Corps, says that he did not know, and there is no contemporaneous evidence, that the wording was changed for that purpose. Mr Zeffman did not know the reason for the change of wording either, so I infer that it was no part of the purpose of those acting for Corps at the time. In the light of that, and in the light of the oblique nature of the cross-reference, I regard this factor as being of no real weight. A clearer reference to legislation, even if not appreciated by one party, might import a connection, but this seems to me to be too obscure in the absence of a shared intention as to the drafting.
f. Clause 7.3 of the Settlement Agreement expressly excludes the effect of Section 1542 of the California Civil Code (which limits the effect of a general release). This reference is said import to import a connection to California (contrary to Lord Grabiner's main point that this would actually show a connection with a legal system, not a geographical connection). I agree that this is capable of demonstrating a connection.
g. The worldwide nature of the proceedings settled by the Settlement Agreement. I assume this means the worldwide nature of the disputes that were being litigated in 1991. I do not see how this can demonstrate a connection with California any more than any other country. If the proceedings had a worldwide nature, then this factor connects the agreement to every country in the world. While that includes California, it also includes England. It therefore might be said to be a connecting factor with California, but it does not particularly connect with California and is of no weight in demonstrating connection with that state.
h. Computer's principal place of business was in California. That is true and might be said to be some sort of connection, but not much, as appears from Samcrete. Since Corps' principal place of business was England, this factor is essentially neutral.
a. The history of the Trade Mark Agreement. The combined purpose of this agreement and the Settlement Agreement was to settle existing litigation in England, as well as disputes in the Commission. This is true, and is a connecting factor.
b. The litigation concerned a preceding agreement (the 1981 agreement) which was expressly governed by English law, and the 1991 agreement follows the form of the 1981 agreement. This is true but I do not think that this imports a real geographical connection for the reasons referred to in Samcrete at p 545H.
c. Corps says that the 1991 agreement had, as a matter of fact, been operated and implemented in England, both parties having used English trade mark agents to co-ordinate the world-wide activities that resulted. Computer dispute that so far as they are concerned it says that co-ordination was achieved by Computer from California, using English trade mark agents as and when appropriate but not to co-ordinate the world-wide activities of Computer in relation to the agreement. Looking at the evidence, it does appear that very many aspects of implementation of the agreement took place in London, but they also took place elsewhere. This seems to me to be neutral on the facts. However, I do not think that this sort of conduct assists in determining closest connection. While it is true that the Giuliano-Lagarde report anticipates that subsequent performance can be taken into account, I think it can only do so by way of shedding light on the connection between contract and country at the time the contract was formed. Otherwise shifting performance giving rise to shifting connection could change the governing law, and that cannot be right. In the light of that, too, I do not think that this sort of evidential factor forges a connection. The parties happened to use London agents to deal with each other in order to implement the agreement, but that was not in any sense of the essence of the contract. They might have instructed agents anywhere.
d. Clause 13.2, which I have set out above, refers to delivery of particulars under the Restrictive Trade Practices Act 1976, and clause 14.2 made it clear that implementation of the agreement was conditional on fulfilment of that condition. Particulars were duly delivered, and the Office of Fair Trading decided that the 1976 Act did not in fact apply to it. This provision undoubtedly gives rise to some connection with England even though the delivery was ultimately not required by law. It seems to me, though, that this connection point is again weak. The agreement was intended to have worldwide operation, and this was just a specific provision referring to its operation in one specific jurisdiction.
e. The agreement was made in England. This point is neutral for the reasons given in relation to Computer's submissions.
Is England the proper place for this claim?
a. Governing law. Computer submitted that this was a key issue and that if California law governs the Trade Mark Agreement. I agree that it is an important, though not determinative, point, but since I have decided that English law is the governing law then this points towards England.
b. The location of documents, evidence and witnesses. Computer says that it would be the party which had the principal burden of disclosure of documents, and those documents are in California. The documents and other evidence will go to the use, marketing, operation and circumstances surrounding the iTunes Music Store, and a number of witnesses would be called by Computer a greater number than would be called by Corps, probably. I accept much of this, though some of the evidence and witnesses will depend on the scope of the admissible evidence. Apparently California courts will admit parol evidence of such matters as negotiation on the question of construction of the contract, and while it is not absolutely clear whether this is a case in which they would do so there seems to me to be a substantial possibility that they will in this case. If they did, then presumably more evidence and perhaps more witnesses would be adduced and produced by Computer, though Corps would itself presumably expand its evidence too.
c. Corps submits that the disruption to its business arising from a trial in California would be greater than the disruption to Computer's business by a trial in London. This is because Corps' Mr Aspinall would have to be heavily involved in the trial and in events leading up to trial. He is Corps' only executive officer (albeit he has 9 junior employees) and there would be no-one to fulfil his role in his absence. While Computer's officers would have to be involved in a trial in England, Computer's size and managerial structures is such that the disruption to its business would be less.
d. Computer points out that the activities complained of (operating the iTunes Music Store) take place in and from California, and that the music is only available in the US at present. I do not regard this as a significant point.
e. It is said by Corps that a trial in England will take less time and will be available more speedily. Corps says an English trial would take about 3 days, whereas a California trial would take 10 days (or 12 with a jury, though Computer has said it will not seek a jury trial). There is a dispute about these estimates Computer's witnesses put the time for a trial in California as being shorter (not significantly different from Corps' estimates as to English trial lengths), unless one adds in time for assessement of damages (which Corps' estimate does not). For my part I cannot see why like for like trials in each jurisdiction should differ significantly in length. A California trial will inevitably be longer if parol evidence of such matters as negotiations is given.
f. Pre-trial preparation will be more costly and disruptive in Californian proceedings because witnesses will have to be deposed, either in California or in London, in addition to their attendance at trial. This seems to me to be correct as a matter of fact and of some weight.
g. Corps submitted that an earlier trial date could be obtained in London than in California. There was some equivocation as to quite when a trial in California would be obtainable, but I am satisfied that it would certainly be no earlier than a trial in London, and quite possibly later.
h. There was debate about the location of the parties. Corps pointed out that Computer had a trading subsidiary in England whereas Corps did not carry on business in California. Computer pointed out that this statement by Corps had to be qualified by the fact that it has a representative providing business services there (Mr Tenenbaum), its goods were sold there and it had litigated there in the past. I do not think that those factors mean that Corps has the same sort of presence in California as Computer has in England, but at the end of the day I do not think that this factor has any real weight in determining the point with which I am concerned. Although Corps is a smaller scale operation, it is still a sophisticated business operation benefiting from international connections and trade, and able to conduct litigation in California if it has to. The same applies to Computer, and would still apply even if it did not have its English trading subsidiary.
Alternative bases of jurisdiction