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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> SC Johnson & Son Inc v Hillshire Brands Company & Anor [2013] EWHC 3080 (Ch) (16 October 2013) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2013/3080.html Cite as: [2013] EWHC 3080 (Ch) |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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SC JOHNSON & SON INC |
Claimant |
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- and - |
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(1) HILLSHIRE BRANDS COMPANY (formerly known as SARA LEE CORPORATION) (2) DE MASTER BLENDERS 1753 NV |
Defendants |
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Hugo Cuddigan (instructed by Freshfields Bruckhaus Deringer LLP) for the Defendants
Hearing date: 16 May 2013
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Crown Copyright ©
Mr Justice Roth :
INTRODUCTION
The Parties
The Agreements
"7. In relation to any Owned IP registered in the name of or otherwise owned by Zetra, the Seller (through the assignor(s) identified in the IP Assignment) shall:
(a) on Closing, sell to the Purchaser (through the assignee(s) identified in the IP Assignment) such right, title and interest as the Seller Group owns in that Owned IP; and
(b) not later than the date falling twelve (12) months after the Closing Date, procure the transfer by Zetra of its rights in that Owned IP (which shall include, for the purpose of this paragraph 7(b) of Part A of Schedule 11, any Intellectual Property Rights used exclusively in or that relate exclusively to the Shoe Care Business in each case that are subsisting on, and registered (or applied for) by Zetra prior to, the date of transfer by Zetra of its rights in that Owned IP as contemplated by this paragraph 7(b)) (the Zetra Rights) to the assignee(s) to whom the rights described in paragraph 7(a) of this Part A of Schedule 11 are sold, provided that the Purchaser shall, and shall procure that the relevant assignee(s) shall, take all steps reasonably required by the Seller to assist the Seller and Zetra in relation to the transfer of the Zetra Rights."
I shall refer to this as "the para 7 obligation". The Owned IP which is subject to the para 7 obligation is referred to as the "Zetra Rights".
i) provides an exclusive licence to Zetra to 31 December 2015 to manufacture the products at its manufacturing site in Lebanon and to distribute the products under the trademarks, whether manufactured by it or by Sara Lee[1], in the territory in consideration of the payment of royalties;
ii) acknowledges that Sara Lee is the "sole owner" of the IP rights, which Zetra may use only in accordance with the terms of the LAMA;
iii) by clause 11.4 provides:
"In case Sara Lee should transfer any registration of any of the Trademarks or any other Intellectual Property in the Territory to Zetra, Zetra shall fully and timely comply with the instructions of the Trademark Department of Sara Lee. Zetra shall not assign the registrations of the Trademarks or any other Intellectual Property in its name to any third party without the prior written approval of Sara Lee…"
"We hereby guarantee that Zetra BV shall, upon first request of Sara Lee, assign and transfer the Intellectual Property which it holds from time to time and has registered from time to time in its name on behalf and for the benefit of Sara lee, to Sara Lee without delay."
The Proceedings
"the defendants do all things necessary to effect [such performance], including, but not limited to, entering into negotiations and commencing and prosecuting legal or arbitral proceedings in order to achieve [such performance]."
"The defendants do all things necessary to effect [performance of the para 7 obligation], including, but not limited to, (a) entering into negotiations and commencing and prosecuting legal or arbitral proceedings in order to achieve [such performance] with reasonable expedition; and (b) providing updates to the claimant at monthly intervals as to the progress of such proceedings."
"Plainly, an unconditional order for specific performance would be inappropriate at this stage because there is the logical possibility that Sara Lee/DEMB may lose the ICC arbitration."
And further it is conceded that there is little point in making any assessment of damages until the result of the arbitration is known. As the skeleton argument states:
"If it becomes possible to recover the Zetra Rights, damages will be limited to loss in the period from 4 April 2012 until their recovery, plus interest. If it does not become possible to recover them, then damages will need to be assessed on the basis of the value of the rights not transferred. The nature of the enquiry as to damages differs according to what happens."
"a) Declare that damages are not an adequate remedy;
.b) Stand over the issue of the grant of specific performance until the conclusion of the arbitration;
c) Require your clients to use their best endeavours to prosecute the arbitration with expedition;
d) Require your clients to provide regular updates as to the progress of the arbitration; and
e) Grant liberty to apply."
Accordingly, despite the form of draft order served by it less than a week before, SCJ is not now seeking either specific performance or an immediate enquiry as to damages.
i) that Sara Lee provides SCJ with regular updates on the course of the arbitration proceedings;
ii) that Sara Lee will prosecute the arbitration with reasonable expedition;
iii) that Sara Lee will not settle the arbitration on the terms that the Zetra Rights are not transferred to either Sara Lee or DEMB, without the consent of SCJ or permission of the court.
Interim relief
i) Regular updates on the arbitration
(ii) Best endeavours to prosecute the arbitration with reasonable expedition
"One such objection, which applies to orders to achieve a result and a fortiori to orders to carry on an activity, is imprecision in the terms of the order. If the terms of the court's order, reflecting the terms of the obligation, cannot be precisely drawn, the possibility of wasteful litigation over compliance is increased. So is the oppression caused by the defendant having to do things under threat of proceedings for contempt. The less precise the order, the fewer the signposts to the forensic minefield which he has to traverse. The fact that the terms of a contractual obligation are sufficiently definite to escape being void for uncertainty, or to found a claim for damages, or to permit compliance to be made a condition of relief against forfeiture, does not necessarily mean that they will be sufficiently precise to be capable of being specifically enforced."
Lord Hoffmann quoted the statement of general principle regarding the grant of mandatory injunctions by Lord Upjohn in Morris v Redland Bricks Ltd [1970] AC 652, 666:
"The court must be careful to see that the defendant knows exactly in fact what he has to do and this means not as a matter of law but as a matter of fact, …"
And continued:
"Precision is of course a question of degree and the courts have shown themselves willing to cope with a certain degree of imprecision in cases of orders requiring the achievement of a result in which the plaintiffs' merits appeared strong; like all the reasons which I have been discussing, it is, taken alone, merely a discretionary matter to be taken into account: see Spry, Equitable Remedies, 4th ed. (1990), p. 112. It is, however, a very important one."
"…one still has to ask what exactly is the form of order which the plaintiff seeks. Specific performance in the event that the defendant does secure possession? But one has to ask for how long is one to wait to see if that event occurs. Is it to the conclusion of the County Court trial; or to the conclusion of any and all appeals; or to 2005 when the defendant's lease expires? I pose those questions to indicate that such an order, the precise terms of which were not made explicit by [counsel for the plaintiff] in his notice of appeal and which he has difficulty formulating in his submissions to us today, is one which is so vague and so uncertain in its effect that the court simply ought not to make it."
See also Bower v Bantam Investments Ltd [1972] 1 WLR 1120 (refusal to grant interim injunction to enforce a "best endeavours" obligation on the grounds, inter alia, that it was too uncertain).
(iii) Restraint on terms on which the arbitration can be settled
Conclusion
Note 1 “Sara Lee” as referred to in the LAMA is the former Sara Lee/DE NV, but nothing turns on that distinction for present purposes. [Back] Note 2 Formerly Sara Lee/DE NV, ie the other party to the LAMA: see fn 1 above [Back]