Friday 10 May 2024

M-SParc's Finance and Innovation Conference

MIT Lobby
By Madcoverboy at the English Wikipedia, CC BY-SA 3.0,
https://commons.wikimedia.org/w/index.php?curid=20701447










































I returned to the Menai Science Park yesterday for its Finance and Innovation Conference.  I nearly missed it because I noticed a flat tyre just as I was about to set off early in the morning.   I managed to get it fixed by 11:30 which was when the conference was due to start.   After checking whether I could attend the afternoon session, I hit the motorway and arrived at M-SParc just as Gwenllian Owen was chairing what appeared to be a discussion between business angels.

Happily, that meant I arrived in good time for a lecture by Phil Budden from Massachusetts Institute of Technology by video link.  Dr Budden is the Senior Lecturer in Technological Innovation, Entrepreneurship, and Strategic Management at the Sloan School.  His talk focussed on innovation-driven entities ("IDE"), a type of startup in a new technology that makes a loss at the start but then rapidly generates revenue.  He contrasted those businesses with other small and medium enterprises which tend to generate profits steadily,  The revenue curve of an IDE starts with a "U" representing a dip below the break-even line followed by an almost vertical upward curve.  The typical SME generates profits from the start and its curve is a steady 45 degrees.  The SME were the backbone of advanced economies but it was the IDE that generated growth.

As Dr Budden was speaking I thought of Amazon which had begun as an online bookseller reporting loss after loss in the early days and its Chinese equivalent Alibaba.  It prompted me to ask why it was only America and China that were producing tech giants like Alphabet and Baidu.  Where was the European or for that matter any other nation's equivalent?  In his reply, Dr Budden referred to the massive size of the US and Chinese economies.  They operate on a continental scale.  The UK, by contrast, was erecting impediments to transcontinental trade.  He invited me to respond and I referred to the US government's massive investment in defence that I had noticed as a graduate student in Los Angeles in the early 1970s.

A man in a dark green shirt asked for advice on setting up in the USA.  Dr Budden recommended among other things incorporation in Delaware.  He was right to say that many of America's leading companies are incorporated in that state.  That is because of its very flexible rules on incorporation known as "blue sky laws" and the strict regulation of corporations by its Court of Chancery.  Wales and England used to have a similar court until 1873 when the courts of equity and common law merged into one Supreme Court of Judicature albeit with separate divisions, procedural rules and practices which still exist today.

I tried to attract the attention of the man in the green shirt to introduce him to a US contact with a very similar practice to mine who should be able to help him but there were too many distractions for both of us.  Instead, I suggested to Gwenllian and Lois Bevan Shaw a seminar on expansion into the US market with a video link to my contact and others in the USA.  They seemed receptive to the idea and I have already started work on a proposal for such an event to be staged on Wales Enterprise Day in November.

Although Dr Budden's talk was the main attraction for me there were plenty of other good talks:
  • 11:30 - 12:00  Registration and brunch
  • 12:00 - 12:05  Welcome by Gwenllian and Lois
  • 12:05 - 12:25  Business Wales & Big Ideas Wales
  • 12:25 - 12:45 Samantha Williams and Ann Sudder Welsh Government Innovation Team
  • 12:45 - 13:00 Louise Jones InnovateUK
  • 13:00 - 13:30 Hannah Williams in conversation with Pryderi ap Rhisiart 
  • 13:40 - 13:50 Gwenllian Owen and Sean King and other angels 
  • 13:55 - 14:10 Anna Roberts of Explorage on her founder's journey
  • 14:10 - 14:50 Edward Thomas with Steven Livingston of IP Taxation and representatives of several funding institutions
  • 15:00 - 16:00 Dr Phil Buddon on IDEs
  • 16:00 - 16:15  Bangor University's voucher scheme for local businesses
  • 16:15 - 16:45 Case studies and flash grants
  • 16:45 - 17:15  Sundry grants
  • 17:15 - 18:30  Barbecue
One of my compatriots who works for the Department of Transport delivered part of his presentation in Welsh which was welcomed with well-deserved applause. It has inspired me to make more time to study the language.

The event took place in glorious sunshine.  The mountains across the strait have never looked lovelier.   Tim Powell posted a picture of that view on LinkedIn.   As he said in his post it is remarkable that anyone ever does any work when surrounded by such beauty.  The science park has hosted some great events in the 6 years that I have known them but this was one of the best.  Hearty congratulations to Pryderi, Gwenllian, Lois and everyone else who was involved in the conference.

Anyone wishing to discuss this article can call me on 020 7404 5252 during normal office hours or send me a message through my contact form.

Wednesday 8 May 2024

M-SParc's World IP Day Celebrations 2024













Jane Lambert

World Intellectual Property Day is an international festival of creativity and innovation which takes place on or around 26 April of every year. It celebrates the entry into force of the international agreement that established the World Intellectual Property Organization ("WIPO"), the UN specialist agency that assists governments to protect investment in creativity, enterprise and innovation ("intellectual assets") through a bundle of laws known collectively as "intellectual property".

Every year World IP Day revolves around a different theme. The theme for 2024 was "IP and the Sustainable Development Goals".  As I said in Perhaps the Most Complex World IP Day Theme Ever in NIPC News on 15 April 2024, this was challenging because it was so broad.  There are 17 goals which I have grouped into 4 categories: economic, environmental, political and social.  

I noted in IP and the Sustainable Development Goals in Wales on 14 Jan 2024 that Wales has gone further than most countries in implementing the Sustainable Development Goals by enacting the Well-being of Future Generations (Wales) Act 2015. That Act establishes 7 Well-being Goals that are compatible with but not identical to the Sustainable Development Goals.  The relationship between the Well-being and Sustainable Development Goals is illustrated in the following table.

Categories

Sustainable Development Goals

Wellbeing Goals


Economic

Affordable and Clean Energy

A Prosperous Wales

Decent Work and Economic Growth

Industry, Innovation and Infrastructure

No Poverty

Zero Hunger

Environmental

Clean Water and Sanitation

A Resilient Wales

Climate Action

Life below Water

Life on Land

Responsible Consumption and Production


Political

Partnership for the Goals

A Globally Responsible Wales

Peace Justice and Strong Institutions

Social

Good health and well-being

A Healthier Wales

Quality Education

A Wales of vibrant culture and thriving Welsh language

Gender Equality


A More Equal Wales

Reduced Inequalities

Sustainable Cities and Communities

A Wales of Cohesive Communities: 


Wales has no shortage of creative, enterprising and innovative men and women who can advance the above goals but they will need investment and Welsh and UK government cooperation.  For that reason, Gwenllian Owen and I  invited representatives of all those interests to our World IP Day Seminar.

Our keynote speaker was Mr Derek Walker, the Future Generations Commissioner for Wales.  He was our representative from the Welsh government in that his office was established by s.17 (1) of the Well-Being of Future Generations (Wales) Act 2015 to perform the functions set out in s.19 of the Act.  He was appointed by the Welsh Government under s.17 (2) in consultation with the Senedd.  In his short video address, Mr Walker summed up the aims of the legislation and his statutory responsibilities and how innovation and creativity will further them.

Dr Jonathan Tudpr, Investment Partner of the Clean Growth Fund represented investors. He had been sitting next to me on Gwenllian Owen's table at the St David's Day Celebrations at the Guildhall and it was then that I invited him to address our seminar on World Intellectual Property Day.  In his succinct but comprehensive presentation, he introduced the audience to the Fund and outlined some of the projects in which it had invested and the Fund's criteria for investment.  Despite its strong connections with Wales the Fund had not yet made an investment in Wales. That prompted me to observe that there were many companies in M-SParc and Aberinnovation that might well meet the Fund's criteria.  Dr Tudor invited them to contact him through the Fund's website.  

One of the innovative entrepreneurs whom I had in mind when speaking to Dr Tudor was Tom Burke. He had helped to launch Animated Technologies and Haia and he was now working with M-SParc as its Digital Innovation Manager in which capacity he had delivered Hac Iaith.  He could thus cover the "Prosperous Wales" and "Vibrant Culture and Thriving Welsh Language" goals of the Welsh legislation as well as many of the UN's Sustainable Development Goals.  In his presentation, he discussed how Haia had evolved from a video conferencing to an events platform, how he had used technology to facilitate language training and the intellectual property rights that protected his companies' investment in technology and creativity.  He briefly touched on software-implemented inventions for which he had been told that patents were very difficult to obtain.  This will be a topic for a seminar in the near future.

In her capacity as Regional Policy Advisor at the Intellectual Property Office  Emma Richards represented the UK government.  As her mission extends to the devolved nations she had a crucial role in assisting Welsh creatives, entrepreneurs and innovators to achieve the Well-Being Goals.  Ms Richards outlined the work of the IPO and its relationship with the central government, the services it provided, the IP attaché network and the help that it could offer to startups and SMEs as they begin to expand and the IPO's commitment to use the Welsh language in all its services.  I asked whether the hearing officers and examiners could speak the language and was assured that anyone who wishes to submit a patent, trade mark or design application in Welsh or give evidence or present arguments in that language before a tribunal could do so.

Our last speaker, Elinor Cavil of DLA Piper gave her whole presentation in Weksh.  She had the difficult task of gathering all the strands of the seminar together which she did admirably.  She introduced herself, her firm and its services, gave a quick overview of intellectual property law and discussed how different intellectual property rights advanced different aspects of the Welsh Well-Being and the UN's Sustainable Development Goals.  Ms Cavil attended last year's IP Law Summer School in Cambridge and she impressed me and my fellow faculty member, Tim Powell, with her knowledge of, and enthusiasm for, intellectual property law.

During the time that I have known Tim Powell, he has shown considerable interest in my work in  M-SParc.  His previous professional commitments had always coincided with M-SParc activities but he has now set up a new practice with an office in Chester that should enable him to spend more time in Wales  In the panel discussion at the end of the seminar, I invited him to introduce himself and his practice to the audience.  He also made several pertinent observations and asked some interesting questions at various stages of the seminar for which I was very grateful. He has recently posted this very kind comment to Linkedin.

This was not only the most ambitious and challenging theme for World IP Day it was also the most interesting and satisfying.   I am grateful to all the speakers and everyone who worked on the project.   I need to acknowledge in particular the contributions of Emily Roberts in the early planning stages for this event and Gwenllian Owen in the latter stages and on the day.  Without their resourcefulness and ingenuity, this event could not have taken place.

Anyone wishing to discuss this article may call me on 020 7404 5252 during normal office hours or send me a message through my contact page,

Tuesday 2 April 2024

Fiduciary Duties and Trade Marks - The Appeal in Quantum Advisory Ltd. v Quantum Actuarial LLP.

UK Trade Mark 3320701

 








Jane Lambert

Court of Appeal (Lord Justices Newey and Nugee and Sir Christopher Floyd) Quantum Advisory Ltd v Quantum Actuarial LLP [2024] EWCA Civ 247 (14 March 2024)

In Quantum Advisory Ltd v Quantum Actuarial LLP [2024] EWCA Civ 247 (14 March 2024), the Court of Appeal heard appeals by both the claimant and defendant against orders made by His Honour Judge Keyser KC sitting as a judge of the High Court in Quantum Advisory Ltd v Quantum Actuarial LLP [2023] EWHC 47 (Ch). The defendant, Quantum Actuarial LLP ("LLP") appealed against His Honour's finding that it could use the QUANTUM ADVISORY brand only for so long as it had an agreement with the claimant, Quantum Advisory Ltd ("Quad"), to provide services to Quad's clients.  It also appealed against the judge's order to substitute Quad's name for LLP's as the proprietor of three QUANTUM ADVISORY trade marks under s.10B of the Trade Marks Act 1994 that LLP had registered in its own name.  Quad appealed against the judge's refusal to substitute its name as the proprietor of the stylized "Q" mark appearing above under s.10B 

The Parties

LLP was incorporated in 2007 to provide services that had previously been supplied by a company then known as Quantum Advisory Ltd. which the judge and Lord Justices called "Old Quad".  An agreement was concluded between LLP and Old Quad on 1 Nov 2007 whereby LLP would employ Quad's staff and use its offices and the QUANTUM ADVISORY branding but Old Quad would retain its clients and goodwill.  Fees for services to Quad's clients would be divided 57% to LLP and 43% to Old Quad.  LLP would be free to develop its own business using the same branding and keep the revenues from that business for itself.  This was referred to as "the Services Agreement".  Shortly after the signing of the Services Agreement Old Quad's undertaking was transferred to a company called Pascal Company Solutions Ltd. That company swapped names with Old Quad. The new Quantum Advisory Ltd is the company referred to above as "Quad".  The Services Agreement was novated from Old Quad to Quad.

The Dispute

Even though Old Quad had generated considerable goodwill in the QUANTUM ADVISORY brand and both LLP and Quad had used it in their advising and business stationery, LLP registered the following trade marks without Quad's knowledge or consent:

Filing Date

Mark

Number

27 June 2018

UK00003320701

27 June 2018

UK00003320709


27 June 2018

UK00003320706 

5 Nov 2018

QUANTUM ADVISORY

UK00003350849


By letters dated 9 July and 7 Aug 2020 LLP asked Quad to stop using those marks.  It appears from para [19] of Judge Keyser's judgment that Quad issued proceedings claiming that it was entitled to the trade mark registrations in equity or, alternatively, rectification of the register under s.10B. 

Trial

A trial took place before Judge Keyser between 1 and 3 Nov 2022.  His Honour handed down judgment on 18 Jan 2023.  By para [124] of his judgment, he held that LLP was a fiduciary to Quad in respect of the conduct of Quad’s business. In the next paragraph, he held that LLP was licensed to the use of the QUANTUM ADVISORY brand only during the subsistence of the Services Agreement. Upon termination of that agreement, LLP would no longer be licensed to use the brand and would be liable to a claim for passing off if it materially misrepresented its business as being associated with Quad so long as the other requirements of the tort were met.  Between para [126] and [128] he held that Quad was entitled to substitute its name for that of LLP as proprietor of UK00003320709, UK00003320706 and UK00003350849 but not UK00003320701 pursuant to s.10B, but not to an order for rectification, assignment or transfer in respect of any of the registered trade marks in equity.

The Appeals

The appeals were heard by Lord Justices Newey and Nugee and by Sir Christopher Floyd on 6 and 7 Feb 2024.  Their lordships handed done judgment on 14 March 2024.  Lord Justice Newey and Sir Christopher Floyd delivered the lead judgment with which Lord Justice Nugee agreed.

Whether LLP was a Fiduciary

Their lordships began with LLP's appeal.  They analysed the Services Agreement by which LLP agreed to supply consulting, actuarial, administrative and investment services for the fees mentioned above.  They considered Judge Keyser's reasons for finding that LLP was in a fiduciary relationship at [29].  They referred to Lord Justice Millett's description of a fiduciary in Bristol and West Building Society v Mothew [1998] Ch 1 on page 18 as "someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence". They noted that the concept of a duty of loyalty was defined by the Privy Council in Arklow Investments Ltd v Maclean [2000] 1 WLR 594 as one:
"encaptur[ing] a situation where one person is in a relationship with another which gives rise to a legitimate expectation, which equity will recognise, that the fiduciary will not utilise his or her position in such a way which is adverse to the interests of the principal"

They recalled that  Lady Arden had quoted with apparent approval the following passage from the judgment of Mr Justice Finn  sitting in the Federal Court of Australia, in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296, at para 177 in Children's Investment Fund (UK) v Attorney General [2020] UKSC 33, [2022] AC 155, at para 47:

"a person will be in a fiduciary relationship with another when and in so far as that person has undertaken to perform such a function for, or has assumed such a responsibility to, another as would thereby reasonably entitle that other to expect that he or she will act in that other's interest to the exclusion of his or her own or a third party's interest".

However, they also noted that she had added in para [48] that "[r]easonable expectation may not be appropriate in every case". Lord Justice Newey and Sir Christopher considered the position of trustees, partners, company directors, solicitors and agents.  They also discussed writings on the topic including Paul B Miller's in Philosophical Foundations of Fiduciary Law, ed. Gold and Miller, 2014 at 69.  He defined a fiduciary relationship as "one in which one party (the fiduciary) exercises discretionary power over the significant practical interests of another (the beneficiary)."

Their lordships quoted Lady Justice Asplin's observation in Eze v Conway [2019] EWCA Civ 88 that 

"[a]lthough the relationship of principal and agent is a fiduciary one, not every person described as an 'agent' is the subject of fiduciary duties and a person described as an agent may owe fiduciary duties in relation to some of his activities and not others".
They remarked that "[i]n general at least, an 'agent' with the ability to alter the principal's legal relations with third parties will have fiduciary obligations."

After considering LLP's arguments as to why it might not be a fiduciary, they concluded at [36]:

"In the present case, the Judge was, in our view, amply justified in concluding that there is a fiduciary relationship between LLP and Quad. Under the Services Agreement, LLP was appointed to be 'solely responsible' for the provision of the 'Services' as regards legacy clients and granted 'such power and authority as is necessary or desirable for providing the Services.' Quad still had a board of directors, but it no longer had any staff and had made available to LLP the assets which it had been using for the provision of services to legacy clients."

They added in the next paragraph:

"In the circumstances, LLP is plainly, we think, an 'agent' of such a kind as to be a fiduciary. LLP can fairly be said to have 'undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence', and, as regards the legacy business, the circumstances are such as 'reasonably [to] entitle [Quad] to expect that [LLP] will act in [Quad's] interest to the exclusion of his or her own or a third party's interest' (to adapt words of Finn J). Again, the relationship between LLP and Quad is one in which LLP 'exercises discretionary power over the significant practical interests of' Quad (to echo Paul B Miller's formulation)."

That was not the end of the story because the duties that a fiduciary owes can be shaped to an extent by the particular context in which the relationship arises.  

Any modification to LLP's fiduciary relationship would have to lie in the Services Agreement.  The clause that allowed LLP to use Quad's assets stated that they had been made available to enable LLP to provide the specified services.  That same clause contained a proviso that consent to use those assets would be terminated immediately upon the termination or expiration of the Services Agreement. Moreover, as Wadlow explained in para 3-311 of The Law of Passing Off, 6th. ed. the goodwill in a business carried on using a mark under a licence is presumed to accrue to the licensor:

"If the commercial purpose of an agreement is to license the use of a distinctive name or mark in respect of which the licensor has (or is agreed to have) goodwill, to a licensee who has (or is agreed to have) no such goodwill, and in circumstances where the licensee's use would otherwise be actionable as passing-off, then in the absence of agreement to the contrary or other supervening factors, the goodwill in the business so carried on by the licensee under the licensed name or mark will accrue to the licensor rather than the licensee. The licence may be express or implied, provided always that it does not offend against the prohibition on transactions in gross. The licensee acquires no interest in the licensed name or mark and must cease using it on termination of the licence. Examples are to be found in Coles v Need [[1934] AC 82], Roberts v Davis [(1935) 53 RPC 79], Manus v Fullwood & Bland [(1949) 66 RPC 71], Bostitch [[1963] RPC 183 and [1964] RPC 173], and Dawnay Day v Cantor Fitzgerald [[2000] RPC 669]. It is irrelevant whether the goodwill in the licensed business would otherwise have accrued to the licensee, the licensor, or both. It is the parties' contractual agreement, and not some extrinsic legal fiction or equitable doctrine, which operates to vest the goodwill in the licensor, unless otherwise agreed, because no other outcome is consistent with the ordinary licensor-licensee relationship."

It followed that there was nothing in the Services Agreement that modified LLP's fiduciary duty.

Whether LLP was a Licensee

After hearing evidence from both sides, the trial judge concluded that the right to use the QUANTUM ADVISORY brand was coterminous with the Services Agreement.  Lord Justice Newey and Sir Christopher Floyd observed at [58] that there are only limited circumstances in which an appellate Court is entitled to interfere with a finding of fact made by a trial judge. They referred to para [67] of Lord Reed's judgment in Henderson v Foxworth Investments Ltd [2014] UKSC 41, [2014] 1 WLR 2600:

"in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trial judge only if it is satisfied that his decision cannot reasonably be explained or justified".
In their lordships' view, there was no question of their being entitled to interfere with the Judge's finding of fact that the express basis on which the use of the QUANTUM ADVISORY mark as agreed in 2007' was that "the licence granted to LLP to use the Mark was coterminous with the Services Agreement." The finding was rooted in the judge's assessment of the relevant evidence and was the subject of a full explanation. It also accorded with common sense, since it was very difficult to see how it could be satisfactory (or how the parties could have thought that it could be satisfactory) for LLP and Quad both to trade using the QUANTUM ADVISORY branding once the Services Agreement had come to an end.

Rectification of the Register

Reg 11 of the Trade Marks Regulations 2018 (SI 2018 No 825) inserted a new s.10B into the Trade Marks Act 1994:
"(1) Subsection (2) applies where a trade mark is registered in the name of an agent or representative of a person ('P') who is the proprietor of the trade mark, without P's consent.
(2) Unless the agent or representative justifies the action mentioned in subsection (1), P may do either or both of the following—
(a) prevent the use of the trade mark by the agent or representative (notwithstanding the rights conferred by this Act in relation to a registered trade mark);
(b) apply for the rectification of the register so as to substitute P's name as the proprietor of the registered trade mark."
This regulation implemented art 13 of Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trade marks (recast) (Text with EEA relevance) OJ L 336, 23.12.2015, p. 1–26 which itself implements art 6septies of the Paris Convention for the Protection of Industrial Property 1883.

Lord Justice Newey and Sir Christopher noted that s.10B referred to "P" as the proprietor of the mark.  It was clear that P's mark did not have to be registered or registered in the same jurisdiction.  Referring to para [91] of the Court of Justice of the European Union's judgment in Case C-809/18P EUIPO v John Mills Ltd. [2021] Bus LR 123, they observed that the equivalent article of Council Regulation (EC) No 207/2009 (the Community Trade Marks Regulation) applied to similar as well as identical marks.

They mentioned in para [68] that Judge Keyser had identified 5  requirements for a successful application under s.10B that neither the parties nor the Court of Appeal criticized:
"i. LLP must have been the agent or representative of Quad.
ii. Quad must have been the proprietor of a trade mark that (a) is identical with or similar to the registered trade mark and (b) subsisted in goods or services identical or similar to those for which the registered trade mark was registered.
iii. LLP must have applied for registration of the trade mark in its own name.
iv. LLP must have applied for registration without Quad's consent.
v. LLP fails to establish that its actions in applying for registration of the trade mark was justified."

There was no dispute that the first, third and fourth requirements had been satisfied for all the marks.  As for the second, it was agreed that all the marks except UK00003320701 met that requirement.  With regard to the fifth, LLP argued that it had an independent and concurrent right to use the marks which it had registered in respect of its own business.  The judge decided the first issue in LLP's favour:

"Accordingly, Quad's case under section 10B in respect of the Q Device Trade Mark fails. Such a case would have had to assert not that the Hero Q was similar to or associated with the Mark but that it was itself identical to a mark of which Quad was the proprietor. No such assertion was made … in the particulars of claim (cf. paragraphs 3, 6 and 16) and that is not the basis on which the case was put before me."
He decided the second in favour of Quad:

"In my judgment, that is not an adequate justification under section 10B. It still amounts to reliance on the self-interest of the agent in preference to that of the principal. Mr Hill's submission mischaracterises the position as between the parties, which I have explained at sufficient length. Quad, not LLP, was the proprietor of the Mark and had a goodwill associated with it. It remained the proprietor of the Mark and continued to use it. LLP had only a permissive right by licence to use the Mark during the subsistence of the relationship between the parties. It had its own goodwill in its own business, but it never acquired more than a licence to use the Mark. When the relationship ends, it will have to use a different trading name or risk laying itself open to an action for passing off. While the relationship subsists, although it may use the Mark for its own business, it is a fiduciary of Quad and is not permitted to prefer its own interests to those of Quad or to act in a manner that compromises Quad's interests. In seeking to register trade marks that incorporate the Mark, it has clearly done just that."
LLP challenged that finding on the basis that the Judge had been wrong to: 
  • find the existence of a fiduciary relationship between Quad and LLP, and 
  • reject the existence of concurrent goodwill in the QUANTUM ADVISORY mark.
Having dealt with both issues, Lord Justice Newey and Sir Christopher upheld the above finding in para [74].

Quad's Appeal

Quad argued that the Court should have regard to the use of the stylized "Q" in UK00003320701 together with the words QUANTUM ADVISORY in the overall assessment of similarity for the purposes of s.10 much in the way that the Court of Justice of the European Union had done in Case C-252/12 Specsavers International Healthcare Ltd v Asda Stores Ltd ECLI: EUC:2013:497.  The Court was not convinced,  Lord Newey and Sir Christopher said at [77]:
"We are not persuaded by this argument. Specsavers is about establishing likelihood of confusion between a mark and a sign which are similar, and the issue is whether that similarity is sufficient to cause confusion. Matter extraneous to the registered mark may assist, in certain circumstances, in that determination. In the present case the marks being compared are not similar: their only common feature being a letter of the alphabet. No one would say that the marks MCDONALDS and BMW were similar because they both include the letter M, however prominently the proprietors of the former may have stressed the initial letter in their advertising. No amount of extraneous matter can create similarity where none existed before."

If Quad was to win its appeal it would have to be on some other basis.  They said at [106]:

"The only available claim for rectification in respect of the Q Device Mark is that, despite the fact that Quad is not the proprietor of an earlier mark identical or similar to the Q Device Trade Mark, it was applied for and registered in breach of LLP's fiduciary duty to Quad."

Judge Keyser had rejected that argument on the basis that art 13 of Directive 2015/2436 was intended to be a complete code which had excluded arguments based on national law.  His Honour formed that view in reliance on Mr Justice Males's judgment in Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd [2016] EWHC 809 (Ch), [2016] Bus LR 808 who had held that where a defence of consent had been recognized and defined by the Community Trade Mark Regulation, there was no room for the application of more elaborate, home-grown principles of consent, such as acquiescence and estoppel.  A defence either fell within the defence of consent as defined by the European legislation or it did not. Lord Justice Newey and Sir Christopher considered Ball v The Eden Project [2001] ETMR 96, Ennis v Lovell (The Swinging Blue Jeans Trade Mark) [2014] RPC 32 and Case C-381/16 Salvador Benjumea Bravo de Laguna v Esteban Torras Ferrazzuolo ECLI:EU: C:2017:889.  They concluded at [96]: 

"In our judgment, a claim by a principal, based on a national law rule, that the registration by an agent or representative of a mark which is not identical or similar to any earlier mark owned by the principal was a breach of fiduciary duty, is not precluded by the Marussia principle."

They agreed with His Honour that registration of marks which are identical with or similar to the QUANTUM ADVISORY mark was an obvious breach of fiduciary duty.  It was similarly a breach of such duty for LLP to register in its own right some part of the branding under which Quad's services were marketed, even if it could not give rise to an action for passing off.  The registration of UK00003320701 in LLP's name was in LLP's interests and contrary to those of Quad.   They concluded at [117] that the registration of UK00003320701 was a breach of the fiduciary duty that LLP owed to Quad.  They decided in the next paragraph that the appropriate remedy was rectification of the register to substitute Quad for LLP as the registered proprietor of UK00003320701.

Further Information

Anyone requiring further information may call me on +44 (0)20 7404 5252 or send me a message through my contact page,

Tuesday 19 March 2024

Practice - Welsh Ministers v Price

Statue of Dylan Thomas in Swansea
Author Ham II  Licence CC BY-SA 4.0 Deed  Source  Wikimedia Commons


































Court of Appeal (Sir Terence Etherton MR, Lords Justices Longmore and Irwin) The Welsh Ministers v Price and another (Rev 1) [[2017] WLR(D) 749, [2018] BCC 93, [2017] EWCA Civ 1768, [2018] 1 All ER (Comm) 1108, [2018] 1 WLR 738, [2018] 2 All ER 860, [2018] 1 BCLC 1, [2018] WLR 738

This is not a recent case but I chose to discuss it because it was referred to by the Court of Appeal in Flitcraft Ltd and others v Price and another [2024] EWCA Civ 136 on 27 Feb 2024 and by Ms Pat Treacy sitting as a deputy judge of the High Court in Wise Payments Ltd v With Wise Ltd and others [2024] EWHC 234 (IPEC) on 9 Feb 2024.  It is about the circumstances in which it is permissible and, where permissible, appropriate to join a third party to proceedings for restoration of a dissolved company to the register of companies.  It also relates to the copyright in a photo of Dylan Thomas and Caitlin Macnamara after their wedding on 11 July 1937 by Vernon Watkins ("Mr Watkins") and an action for infringement of copyright in that photo by Pablo Star Media Ltd which I discussed in n Copyright in Photographs - Pablo Star Media Ltd v Bowen on 15 Oct 2017 in NIPC Law.

The Copyright

A copy of the photo appears between paras [2] and [3] of His Honour Judge Hacon's judgment in Pablo Star Media Ltd v Bowen [2017] EWHC 2541 (IPEC) (13 Oct 2017). Mr Watkins died in 1967 and his copyrights in that and another photo of Dylan Thomas and his bride passed to Mr Watkins's widow Gwendolyn.  Mrs Walkins sold her copyrights in those photos to Pablo Star Ltd. for £350.  On 21 May 2014 Pablo Star Lrd. purported to assign the copyrights to Pablo Star Media Ltd.

The Company

Pablo Star Ltd was incorporated on 13 Aug 2003 with objects that included "intellectual property consultancy".  Hadyn Price ("Mr Price") was its only shareholder and director.  On 4 Feb 2013, Mr Price applied for the company to be struck off the register.  His application was granted on 18 Feb 2014.  On 14 April 2024, he applied for the company to be restored so that it could sue New Directions Publishing Inc. the Welsh Ministers and Nancy Galbraith for infringing copyright in the photo.  His application was granted by Registrar Derrett on 13 June 2014 subject to certain undertakings. Registrar Derrett varied his order to enable the company to sue more defendants on 18 June 2015. Mr Price undertook to transfer all his copyrights and trade marks to Pablo Star Media Ltd which he had incorporated on 14 May 2014.

The Application

As they were about to be sued, the Welsh Ministers applied to be joined to the proceedings to restore Pablo Star Ltd to the register.  They did so in order to argue that Registrar Derrett's orders of 13 June 2014 and 18 June 2015 should be declared invalid.  Registrar Barber granted their application on 2 March 2016.   

Judge Behrens

Mr Price appealed to the judge in chambers, His appeal was heard by His Honour Judge Behrens QC sitting as a judge of the High Court on 14 Oct 2016.   In Price v The Registrar of Companies and another  [2017] WLR 299, [2016] WLR(D) 563, [2016] EWHC 2640 (Ch), [2017] 1 WLR 299 Judge Behrens allowed the appeal and set aside the registrar's order.  He was referred to the judgments of the Court of Appeal in Stanhope Pension Trust v Registrar of Companies [1994] BCC 84 and Re Blenheim Leisure (Restaurants) Ltd [2000] BCC 554 and the of Lord Glennie in Spring Salmon & Seafood Ltd v A-G of Scotland [2010] CSOH 82

Judge Behrens noted at para [33] of his judgment that in Stanhope Lord Justice Hoffmann (as he then was) had distinguished between a case where a third party had rights that were directly affected by an order to restore a company to the register and a case where the third party merely wanted to say that the proposed proceedings by the revived Company have no prospects of success.  He concluded that the court should allow joinder in the first case but not in the second.  In Re Blenheim, landlords who had re-entered premises that had been let to a company which had been struck off the register were entitled to join the proceedings to restore the company because they had an interest that was threatened by the company's restoration. In Spring Salmon & Seafood, Lord Glennie refused to allow officers of a company that HMRC wished to restore to the register to investigate its tax affairs to join the proceedings because the restoration would only have placed the officers in the position they would have been had the company not been struck off in the first place.

His Honour accepted that an appeal court should not normally interfere with a case management decision of the court below but he believed that the registrar had erred in principle,  He said at para [49]:
"I accept that joinder of [the Welsh Nibisters] may assist the court in determining whether the court was misled. I do not, however accept that a desire by a third party to assist the court in this way is a proper basis for joinder. It could give rise to a multitude of claims from anyone with a grudge against or who wanted to complain about the Company. It is quite clear from the authorities that the right to be joined into restoration proceedings is an exception to the ordinary practice of the Companies Court. Furthermore, as is clear from the passages from the judgments on Aldous LJ and Tucker LJ to which I have referred it is a limited exception which will not result in large numbers of proceedings being turned into major litigation."

He continued in the next paragraph that the Registrar of Companies and not concerned third parties was responsible for ensuring compliance with the restoration proceedings of the Companies Act 2006 and not third parties:

"Parliament has entrusted the policing of restoration applications to the Registrar of Companies. It is thus for the Registrar to raise with the court issues of breach of an undertaking and/or misleading witness statements if he chooses to do so. If he does not do so, it is not in my view for anyone else to raise it with the court. All that a disappointed third party can do is to challenge the decision of the Registrar in judicial review proceedings."
The Court of Appeal

The Welsh Ministers appealed to the Court of Appeal. Their appeal was heard by Sir Terence Ethertoon, Master of the Rolls and Lords Justice Longmore and Irving on 17 Oct 2017. Their lordships handed down judgment on 16 Nov 2017 in The Welsh Ministers v Price and another [2017] WLR(D) 749, [2018] BCC 93, [2017] EWCA Civ 1768, [2018] 1 All ER (Comm) 1108, [2018] 1 WLR 738, [2018] 2 All ER 860, [2018] 1 BCLC 1, [2018] WLR 738). They dismissed the appeal and upheld the decision of Judge Behrens.

Their lordships' starting point was CPR 19.2 (2):
"The court may order a person to be added as a new party if –
(a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or
(b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue."

Their lordships reasoned that CPR 19.2 confers a discretion on the court to join a party if the conditions in 19.2 (2) (a) or (b) are satisfied. Those conditions are that:
(1) the new party can assist the court to resolve all the matters in dispute in the proceedings, and
(2) it is desirable to add the new party to achieve that end.
They considered that CPR 19.2 (2) ought to be given a wide interpretation.  The words "in dispute" should be read as "in issue".  Referring to Dunwoody Sports Marketing v Prescott [2007] EWCA Civ 461 the Court opined that it can add a party even after judgment.

As the issue was whether Pablo Star should be restored to the register, the Court of Appeal thought that  Registrar Barber had been right to consider the application of the Welsh Ministers was capable of falling within CPR 19.2 (2) (a).   Their lordships did not, however, consider it desirable for the Welsh Ministers to be party to the proceedings.  The reason why the Welsh Ministers' application was capable of falling within CPR 19,2 (2) (b) was that the issue of the validity of the assignment, which they wished to challenge in connection with claims for copyright infringement against them, was connected to the making and revocation of Registrar Derrett's orders. In considering whether or not it would be desirable to add a new party pursuant to CPR 19.2 (2) the two lodestars were the policy objective of enabling parties to be heard if their rights might be affected by a decision in the case and the overriding objective in CPR Part 1.

Sir Terence Etherton, who delivered the lead judgment, said between paras [60] and [62]:

[60] ....... There are important practical considerations for strictly limiting the circumstances in which third parties are joined to applications to restore a company to the register, and they apply equally to applications to set aside an order for restoration. There may be many third parties who perceive that their interests may be indirectly affected by restoration and who may wish to advance all manner of reasons for seeking to prevent or reverse an order for restoration rather than wait to face and, where appropriate, resist actions of the company against them or others which the company perceives to be in its best interests. That is particularly true, in a case like the present, when it is sought to restore a company to the register of companies in order to resurrect an asset in the form of a cause of action against third parties.
[61] In such a case, it is well established that the court will not allow the intervention in proceedings for restoration by a third party who merely wishes to argue that the proceedings which the revived company proposes to bring against the third party have no prospect of success: Stanhope [1994] BCC 84 at 90D.
[62] By contrast, the court will allow intervention by a third party whose interests will be directly affected by the restoration and who would otherwise have no opportunity to be heard on the issue of whether, in the light of that direct effect, restoration is just: Blenheim at 574B."

The Court of Appeal agreed with Judge Behrens that the Welsh Ministers' rights were not affected by the copyright assignment in the photo of Dylan Thomas and his bride to Pablo Star Media Ltd. If they had infringed that copyright the only difference was that they would be liable to a different claimant.   They contrasted the position of the Welsh Ministers to that of the landlord in Blenheim.

Their lordships disagreed with Judge Behrens that Parliament had entrusted the policing of restoration applications to the Registrar of Companies and that it was for the Registrar alone to raise breaches of undertakings or misleading witness statements. No statutory authority had been offered to support that proposition.  The Registrar's functions are largely administrative and he or she lacks the resources to police compliance with the Companies Act 2006.  

In an appropriate case, the Registrar would favour the joinder of a third party to bring before the court a complaint that it had been misled or an undertaking had been broken and the court had power under CPR 19.2 (2) to allow such joinder in an appropriate case.   This was not an appropriate case.  In their lordships' view, this was not an appropriate case. The Welsh Ministers would have no real prospect of persuading the court that the order to restore Pabli Star Ltd. should be revoked.

The Claim against Mr Bowen

I have already referred to Pablo Star Media's action against Richard Bowen who had cropped the image of Dylan Thomas's face from Mr Watkins's photograph which had been reproduced on the Visit Wales website and inserted it onto a website to advertise holiday lets in Wales,  The Visit Wales website was operated by a department of the Welsh government for which the Ministers were responsible.  It was that website which had featured in the appeals to Judge Behrens and the Court of Appeal.  Mr Bowen admitted infringement and at a damages only hearing on the IPEC small claims track District Judge Cary awarded Panlo Star Media £250 plus £3 interest.  However, the district judge also ordered the claimant to pay Mr Bowen's travelling expenses of £164.10 leaving a balance of £88,90 to the company,  The company appealed to the Enterprise Judge but Judge Hacon declined to interfere with the district judge's order.

Comment

Although the appeal focused on the joinder of parties to proceedings to restore a company to the register it does have some lessons which is why the Court of Appeal and Ms Treacy referred to it.  First, CPR 19.2 is to be given a wide interpretation.  The court has the power to join a party to proceedings even after it has given judgment,  Two conditions have to be satisfied.  The first is that the new party can assist the court to resolve all the matters in dispute in the proceedings.  The second is that it should be desirable to add the new party to achieve that end.  In Wise Payments Ms Treacy equated that analysis as follows in para [37] of her judgment:
"(i) does the case against the party to be joined have a real, as opposed to fanciful, prospect of success. This is to be assessed by testing: (i) whether the pleaded case carries a degree of conviction; (ii) whether it is coherent and properly particularised; and (iii) whether there is evidential material which establishes a sufficiently arguable case against the party in question; and
(ii) does the likely benefit of granting the application to join another party and the inevitable related application to permit consequential amendments satisfy the IPEC costs benefit test as well as the requirements of the relevant parts of the CPR."
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