Welsh Vodka Litigation- AU Vodka v NE10 Vodka

Jane Lambert

Chancery Division (Mr Justice Mellor) AU Vodka Ltd v NE10 Vodka Ltd and another [2022] EWHC 2371 (Ch) (21 Sept 2022)

Whisky Galore is the title of a novel by Sir Compton Mackenzie about the shipwreck of a cargo vessel off the Hebrides in the Second World War. The ship had been carrying whisky and the story is about a battle of wits between islanders who had salvaged the freight and hidden and the authorities who were doing their best to stop them.  I was reminded of that novel by the passing-off action that AU Vodka Ltd has brought against NE10 Vodka Ltd.

AU distils and distributes the vodka in the gold bottle and NE10 the vodka in the metallic blue.  Both companies are incorporated in Wales and carry on business in Swansea.  The action has been brought in the Intellectual Property List of the Chancery Division in London even though it could have been brought in the Business and Property Courts of Wales in Cardiff or the Intellectual Property Enterprise Court.

The first round of the proceedings was an application for an interim injunction to restrain NT10 from marketing and selling its products until judgment or further order.   It was heard by Mr Justice Mellor who delivered judgment in AU Vodka Ltd v NE10 Vodka Ltd and another [2022] EWHC 2371 (Ch) on 21 Sept 2022. The judge dismissed the application because he found that there would be a  greater risk of injustice to NE10 were he to grant the order than there would be to AU in refusing it.  I analysed his judgment in Passing-off: AU Vodka v NW10 Vodka in NIPC Law on 9 Oct 2022.

The next stage of the litigation will be a trial which the judge directed to take place in January,  In that hearing the court will consider the substantial issues.  The judge did not have to consider the merits of the case for the interim injunction application.  All he had to do was decide whether AU could win.   Mr Justice Mellor said at para [80] of his judgment that there was "a serious issue to be tried" but the case was "finely balanced."

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

Welsh IP Cases - Happy Camper Productions Ltd. v BBC

Author Resprinter123
Licence CC BY 3.0 
Source Wikipedia BBC Cymru Wales

Jane Lambert

Chancery Division (HH Judge Keyser QC) Happy Camper Productions Ltd v British Broadcasting Corporation  [2019] EWHC 558 (Ch) (11 Feb  2019)

I am grateful to Mr Iain Connor of Pinsent Masons for bringing this case to my attention in his presentation to the International Copyright Law Conference entitled Key Case Law Update, Critical Developments in  2019 on 3 Dec 2019.

This was an application for an interim injunction to restrain the BBC from broadcasting the first episode of Pitching In.  It was a drama about the owner of a caravan park in North Wales.  The applicant alleged that it infringed copyright in the script for a TV programme (or alternatively a film based on the script) about the owners of a holiday camp in West Wales that had been written by the directors of the claimant production company.  The application was made the day before Pitching In was due to be broadcast.  Cancelling the transmission could have cost the BBC £130,000 in rescheduling costs and a great deal more in reputational damage.

An injunction is an order of the court to do or refrain from doing something.  In Scotland, such an order is known as an interdict.  In the United Kingdom, disobeying an injunction or interdict is a contempt of court which can be punished by a fine or imprisonment.  In Wales and England, an injunction can be awarded after a trial when the parties' rights and obligations have been determined to prevent further infringement of the successful party's rights. That is known as a "final injunction".  But an injunction can also be granted at the beginning of the court proceedings before those rights and obligations have been determined to prevent irreparable harm to one or more parties in the period between the issue of proceedings and the trial of the action.  Injunctions of that kind are known as "interim injunctions."

As the court does not know for sure how an action will end, an applications judge in Wales or England will grant an interim injunction only if he or she is satisfied that the applicant could win and that the respondent could not compensate the applicant adequately by paying damages.  That may be for many reasons.  Possibly the respondent would not have the means to pay any damages.  Alternatively, it may be impossible to assess the full extent of the loss because records might not be kept or evidence would be missing.   There are also some kinds of loss for which no amount of money would be adequate recompense.

If damages will not be an adequate remedy for the applicant, the court will consider the position of the respondent if it grants an injunction and the order turns out not to have been justified. In most cases, the respondent would simply be delayed for the period between the start of the proceedings and their resolution which can be compensated by the applicant.   In nearly every case an applicant will be required to promise to pay damages to the respondent if the injunction turns out not to have been justified.  That promise is known as a "cross-undertaking in damages,"  In those circumstances, the court has to consider whether the applicant could afford to pay such damages if ordered to do so and whether those damages would be adequate compensation for the respondent.  All of those factors were considered by the House of Lords in American Cyanamid Co. v Ethicon Ltd   [1977] FSR 593, [1975] 1 All ER 504, [1975] 2 WLR 316, [1975] UKHL 1, [1975] AC 396.

His Honour Judge Keyser QC, who heard Happy Camper Productions Ltd.'s application against the BBC, referred to that case at paragraph [17] of his judgment (see  Happy Camper Productions Ltd v British Broadcasting Corporation (BBC) [2019] EWHC 558 (Ch) (11 Feb 2019)).  He said:

"The test to be applied is accordingly the familiar test in American Cyanamid Co (No 1) v Ethicon Ltd [1975] AC 396. In very broad terms, the purpose of the exercise, without adjudicating on the case, is to seek to ensure that if one makes a mistake it is the least bad mistake one can make, in this sense: one is concerned with the question, Is it worse to have granted an injunction on an interim basis if ultimately it should be found that there is no entitlement to an injunction, or to have refused an injunction if ultimately it should be found that there is an entitlement to an injunction? That is the broad idea behind the test."

His Honour appears to have concluded that the "least bad mistake" would be to refuse Happy Camper Production's request for an interim injunction and his reasons were as follows.

First, he had serious doubts as to whether the claimant could win.  The production company was formed after the script for the claimant's show had been written which meant that the authors did not write it in the course of their employment and there was no evidence that any copyrights had been assigned to it.  More seriously there was not much evidence of copying.  The producer of the BBC's programme had been given a copy of the claimant's script but there was little evidence that she had actually read it. There was even less that she, the BBC or its programme makers had copied it.  The setting of both works in a caravan park in Wales was the main common feature but the plots and characters were very different.  Moreover, although the learned judge did not mention these cases, it is not easy to protect the format of a TV show (see  Green v Broadcasting Corporation of New Zealand [1989] UKPC 26 (18 July 1989), Fraser v Thames Television [1984] QB 44 and Banner Universal Motion Pictures Ltd v Endemol Shine Group Ltd and another [2017] EWHC 2600 (Ch) (19 Oct 2017)).

Secondly, Judge Keyser thought that the claimant could be compensated adequately by an award of damages were its directors to prevail. Those authors had submitted their manuscript to the BBC in the hope of licensing it.  Am award of damages could be based on the licence fee that would have been negotiated by the parties had the script been accepted.

Thirdly, pulling the programme the day before its first transmission of Pitching In would have been very damaging to the BBC and there was a serious question mark as to whether the claimant could even meet the immediate cost of rescheduling its programmes.  Injunctions are an equitable remedy and there is a maxim that delay defeats equity.  The claimant knew about the corporation's plans to broadcast Pitching In for 6 months but had held back until the very last moment before launching this application. As the judge remarked, that was "dreadfully late".

Anyone wishing to discuss this article, copyright or interim injunctions generally may call me on 020 7404 5252 during office hours or send me a message through my contact form.

Trade secrets and Non-Disclosure Agreements

Glass of Chartreuse

Author Ospalh 

Licence Creative Commons Attribution-Share Alike 3.0 unported
Source Wikipedia Chartreuse

Jane Lambert

If you have acquired business or technical information that is either secret or not generally known the unauthorized use or disclosure of which would either harm you or benefit a competitor, you have what is known as a "trade secret".

For many years, the common law (that is to say, law made by judges and not by Parliament) has obliged those who receive trade secrets in confidence ("confidantes") to use such information only for the purpose for which it was imparted and not to make further use of it or disclosure it further.  Such obligation is known as "the obligation of confidence" and the law that imposes it is known as "the law of confidence,"

Since 9 June 2018, the law of confidence has been supplemented by Directive 2016/943 ("the Trade Secrets Directive") which has harmonized trade secrecy law across the European Union.  Art 2 (1) of that Directive defines a trade secret as:

"'......... information which meets all of the following requirements:
(a) it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
(b) it has commercial value because it is secret;
(c) it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret,"

Both the law of confidence and the Directive require those who own or control such information to keep it secret.  Once it enters the public domain otherwise than through an unauthorized disclosure the obligation of confidence and the Directive cease to apply.

Although there are other circumstances in which an obligation of confidence can arise, the usual way is to require the confidante to sign a confidentiality or non-disclosure agreement ("NDA") before you give him or her the information.  NDA can be stand-alone agreements or they can form part of some other agreement such as a contract of employment or a consultancy, distribution, franchise, joint venture, licence, technical transfer or other commercial agreement. Lawyers and patent and trade mark attorneys are often asked to draft general purpose agreements but that is very hard to do and sometimes dangerous as an agreement that is drawn too broadly may not be enforceable.

The best sort of confidentiality agreements specify the information to be disclosed very precisely.  They will state whether the information is to be disclosed in writing, in which case the agreement will identify the document or data file, or orally, in which case it will state the date, time and place of the conversation, the persons present and so on.  The confidante will acknowledge that the information is secret and that he or she will receive it in confidence.  Should there be any possibility that the information may already be known to the confidante there should be a procedure for him or her to say so within a limited time and for some method of expert determination, arbitration or other ADR to resolve disputes.  The reason for, and purpose of, the disclosure should be made clear.  If the confidante can copy a file or document or consult another person his or her permission to do so and any conditions, such as obtaining further confidentiality undertakings, should appear in the agreement.  The confidante must promise to make no further use or disclosure of the information and to hand back any documents, files or copies by a certain date and time.  Finally, the confidante should agree to submit to the courts of Wales and agree that any disputes will be determined in accordance with Welsh and English law.

The agreement must be policed rigorously.  If documents have to be returned by a certain day you should chase them as soon as the deadline arrives.  If third parties are to receive the information in confidence you must make sure that they have signed confidentiality agreements.   If you have any reason to fear that your agreement has been breached you should raise it with the confidante at once. If you are not satisfied with his or her explanation then you must consult solicitors.  If the confidante still does not satisfy you then your solicitors must apply to the court for an order known as an "injunction" requiring the confidante to honour his or her promises with the threat of a fine or imprisonment if he or she disobeys.

All inventions start off life as trade secrets otherwise they will have ceased to be "new" by the time the inventor applies for a patent.   There are, however, many technical advances that remain trade secrets forever.   That may be because the law makes it difficult to patent them such as the source code for computer software which is specifically excluded from the definition of patentable invention as such or because the law of confidence provides better protection than patents for the asset in question.   A good example would be beverages since recipes cannot easily be reverse engineered.  The recipe for Chartreuse, for instance, has been kept secret for hundreds of years because it is known only to two monks at any one time. Many attempts have been made to replicate the liqueur but none has come close.

Should you wish to discuss this article or trade secrecy in general, call me on 020 7404 5252 during office hours or send me a message through my contact form.