Joint Liability: BMW v Premier Alloy Wheels

Jane Lambert

Patents Court (Mr Recorder Campbell) Bayerische Motoren Werke AG v Premier Alloy Wheels (UK) Ltd and others [2020] EWHC 2094 (Pat) (30 July 2020)

This was an action by the motor manufacturer. Bayerische Motoren Werke AG ("BMW) for trade mark and registered Community design ("RCD") infringement, passing off and, in the case of one the defendants, Devon Thompson ("Devon"), breach of contract.  There was also a counterclaim for revocation of the RCD.  The main defendant was a company called DGT Wheels and Tyres Ltd ("DGT") the ordinary shares of which were owned by  Jerome Layzell ("JL") who was also its only director.   DGT had a warehouse on an industrial estate in Basildon as well as retail premises elsewhere in that town.   The warehouse was operated by another company called Premier Alloy Wheels (UK) Ltd ("Premier") which was owned and run by JL's stepfather, Devon. Devon was in prison when the trial took place. The fifth defendant was JL's maternal grandfather and Devon's father in law, David Layzell ("DL").

The proceedings began with a  search order.  The target was DGT 's warehouse where a "badging station" and over 1600 infringing wheel centre caps and other badges including those bearing BMW and MINI trade marks were found. There was also evidence that replica alloy wheel products (including some with the BMW roundels) had been purchased from a number of suppliers, including Euro Racing in China, as well as some replica BMW stickers from Ark Nova.  This had not been the first time that BMW had accused Devon and his father in law of infringing its intellectual property rights.  Proceedings had been threatened against Devon and a company that he used to own called the DGT Corporation. In consideration of a promise not to sue, Devon, his company and a number of others but not DT promised not to infringe BMW's IP rights.

The case came on for trial before Mr Recorder Campbell QC over Skype for Business on 6 and 7 July 2020.  Devon did not indicate that he would attend the trial until it was too late to arrange a video link for him.  The recorder entered judgment against Premier and Devon on the grounds that they had failed to attend trial under CPR 39.3 (1) (c). In his judgment in Bayerische Motoren Werke AG v Premier Alloy Wheels (UK) Ltd and others [2020] EWHC 2094 (Pat) which he handed down on 30 July 2020, the recorder found on BMW's largely undisputed evidence that DGT was liable for trade mark infringement and passing off.  There was a dispute over whether those RCD had been infringed but the main issue was whether JL and DL were jointly liable for those infringements with the two companies.

The learned recorder dealt with RCD validity and infringement briefly.  Most of the defendants' evidence of prior art was illegible but one example that was available was RCD was 002015602-0004 which is the top right-hand image below.  The design that was alleged to be invalid over that RCD was RCD  003299338-0009 which appears immediately below it.   Also in the picture are photos of items seized at DGT's warehouse.

Mr Campbell said at paragraph [49] of his judgment:

"In my judgment these illustrations show both why the '338 design is valid over the '602 design and also why the Defendants' products infringe both RCDs. It is easier to see the point than to explain it in words, but the difference in the appearance of the spokes in '338 (together with other smaller differences) is such that '338 produces a different overall impression on the informed user than does '602. It follows that the '338 design has individual character with respect to '602, although the scope of protection will be relatively narrow. However the Defendants' products do not produce a different overall impression on the informed user with respect to the Claimant's designs in each case. The latter conclusion is not surprising since the Defendants' products are sold as being replicas."

He also compared the 4 RCD in the right-hand column of the images at the top of this post with photos of items seized at the warehouse that appear in the left-hand column.  He found that none of the images in the left-hand column produced a different overall impression from the RCD and that all the RCD had been infringed.   Consequently, the counterclaim failed and the claim for RCD infringement succeeded.

Mr Campbell considered the involvement of JL and DL in DGT. The company was incorporated in 2012 when JL was 18. Between 2013 and 2016 JL attended university. Upon graduation, he developed some software for the company and worked occasionally as a tyre fitter. At all times he was the company's sole director and signatory on the bank account. He said that at all times he acted on the instructions of his stepfather. His evidence was unclear as to whether he had personally put any BMW caps or badges on to any wheels but the recorder found that he must have known that at least part of DGT's business involved selling replica BMW wheels to which BMW's trade marks had been attached. The company was a relatively small family business, the infringing activity was a significant part of that business, the presence of infringing BMW logos sorted into containers near the badging station was not disputed, and JL had no alternative explanation as to what they were doing there.  On 2 Sept 2017, JL went to China to pursue his education and played no further role in the company.

DL said that he had assisted Devon with "some clerical work within DGT", and that he had never been involved in procurement or actual sales of wheels. The learned recorder found that DL had been involved in procuring foreign exchange and invoicing and later operated the company's bank account.  He had been aware of the previous dispute with BMW even though he had not been party to the settlement agreement.   Mr Campbell concluded that although DL may not have been involved in the direct application of infringing BMW badges to wheels or any other acts of infringement, he must have known that the infringement was happening within DGT's business.  He also found that DL's involvement in the company's business had been much more extensive than that of his grandson.

Earlier in his judgment, Mr Campbell had referred to Fish & Fish Ltd v Sea Shepherd UK  [2015] 2 All ER (Comm) 867, [2015] 4 All ER 247, [2015] 2 WLR 694, [2015] 1 Lloyd's Rep 593, [2015] AC 1229, [2015] UKSC 10, [2015] 1 AC 1229, [2015] WLR(D) 102 which held that three conditions must be satisfied to establish accessory liability:

"a. The defendant must have assisted the primary tortfeasor to commit a tortious act (such assistance being more than trivial).
b. The assistance must have been provided pursuant to a common design between the defendant and the primary tortfeasor that the act be committed.
c. The act must constitute a tort as against the claimant."

The recorder also directed himself that:

• there is no need to show that the alleged accessory intended or knew that the act should be tortious (Unilever plc v Gillette (UK) Ltd [1989] RPC 583, 609);   
• if a defendant's assistance is minor but more than trivial, then the proper way of reflecting the defendant's relatively unimportant contribution to the tort is through the court's power to apportion liability, and then order contribution, as between the defendant and the primary tortfeasor (Sea Shepherd at [49], [57], [100]), and
• mere facilitation and/or knowledge of the tortious act is not enough: there must be assistance in committing it.

Although there was no clear evidence that JL had personally committed any of his company's infringing acts, or that he had directed and/or procured any of those acts, and that it was plain that his responsibility for its infringements was far less than Devon's, it appeared to the recorder that over the period leading up to 2 Sept 2017 he provided more than trivial assistance to the company to commit unlawful acts and that he did so pursuant to a common design.  He reached that conclusion not on the basis that he was the company's director and controlling shareholder but because he was the main signatory on the company's bank account, and worked in the business in several capacities knowing that at least part of its business involved selling replica BMW wheels to which BMW's trade marks had been attached. That amounted to more than trivial assistance as part of a common design.

Similarly, there was no clear evidence that DL personally committed any of the company's infringing acts or that he had directed and/or procured any of those acts. Again, his responsibility for DGR's infringement was less than that of Devon. However, it appeared to the recorder that DL had provided more than trivial assistance to the company to commit trade mark infringement, passing off, and RCD infringement, and that he did so pursuant to a common design. Mr Campbell rejected DL's evidence that his assistance was merely clerical.  His work included invoicing, making payments and refunds, chasing for payments, arranging shipping and supply, and payroll knowing that at least part of D3's business was infringing. The fact he did these tasks without payment did not matter.

At paragraph [64] Mr Recorder Campbell QC concluded that JL was jointly liable with DGT up to the time he left for China but not afterwards and that DL was jointly liable at all material times.

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