01 July 2011

Practice: Wuxi Suntech Power Co. Ltd. v Tittmann Solar GmbH

This is not something they teach in law schools. Much less is it advertised to clients. But in my experience and I daresay that of most other intellectual property practitioners many if not most disputes are resolved on procedural points rather than lofty principles of substantive law.

Judge Birss QC's decision in Wuxi Suntech Power Co. Ltd. v Tittmann Solar GmbH [2011] EWPCC 17 (3 May 2011) is a case in point. This was an application under CPR 13.3 (1) to set aside or vary a default judgment entered by His Hon. Judge Fysh QC on 5 Aug 2010. That rule confers a discretion upon the court to set aside a default judgment if "the defendant has a real prospect of successfully defending the claim" or it appears to the court that there is some other good reason why the judgment should be set aside or varied or the defendant should be allowed to defend the claim. CPR 13.3 (2) further provides that in exercising its discretion "the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly." A note in parenthesis reminds judges and practitioners that the court has power under CPR3.1 (3) to attach conditions when it makes an order.

CPR 13.3 (2) is new. As the Court of Appeal noted in Standard Bank Plc and Another v Agrinvest International Inc and Others [2010] EWCA Civ 1400 (8 Dec 2010), O13 r9 RSC gave the courts an unfettered discretion:
"Without prejudice to rule 7 (3) and (4) the Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order."
Delay in making an application to set aside rarely appears to have been decisive so long as the defendant could show that it had a real prospect of successfully defending the claim. In J.H. Rayner (Mincing Lane) Ltd v Cafenorte S.A. Importadora e Exportadora S.A. [1999] EWCA Civ 2015 (29 July 1999), for example, judgment was set aside after 7½ years because the applicants'could show that they had a real prospect of success.

The Civil Procedure Rules changed all that. As Lord Justice Moore-Bick noted at paragraph [22] of Agrinvest:
"The Civil Procedure Rules were intended to introduce a new era in civil litigation, in which both the parties and the courts were expected to pay more attention to promoting efficiency and avoiding delay. The overriding objective expressly recognised for the first time the importance of ensuring that cases are dealt with expeditiously and fairly and it is in that context that one finds for the first time in rule 13.3(2) an explicit requirement for the court to have regard on an application of this kind to whether the application was made promptly. No other factor is specifically identified for consideration, which suggests that promptness now carries much greater weight than before. It is not a condition that must be satisfied before the court can grant relief, because other factors may carry sufficient weight to persuade the court that relief should be granted, even though the application was not made promptly. The strength of the defence may well be one. However, promptness will always be a factor of considerable significance, as the judge recognised in paragraph 27 of his judgment, and if there has been a marked failure to make the application promptly, the court may well be justified in refusing relief, notwithstanding the possibility that the defendant might succeed at trial."
In Wuxi judgment had been entered on 5 Aug 2010 but the application to set aside the order was made on 17 Feb 2011. The defence to an action for trade mark infringement was that a bill of lading that consigned a quantity of counterfeit goods to the defendant company (which goods had been intercepted by customs) was a forgery. The learned judge described that defence as "weak". There was an explanation for the delay between August and November 2010 but His Honour described the delay between November and February as "troubling."

The judge's solution was to order the defendant to pay £20,000 into court as a condition for granting it permission to defend. Hos Honour acknowledged that this was an unusual approach but considered it to be right when the defence was weak. Some would regard Judge Birss QC's order as exceptionally generous to the defendant in view of his assessment of the defence and lack of explanation for the delay. The clue to this indulgence probably lies in the value of the goods. Each solar panel sells for around £500 and there were several tons of this kit. The parties had spent £50,000 on this application alone. The consequences of injustice to the defendant if by some chance it prevailed would have been catastrophic. That alone would explain why Judge Birss QC felt that he had to offer Tittmann a bone.

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