Patents, Copyright and Passing off - Price v Flitcraft Ltd.
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Patents Court (Nicholas Caddick KC) Price and others v Flitcraft Ltd and others [2022] EWHC 3381 (Pat) (20 Dec 2022)
This was an action for patent and copyright infringement and passing off.
The patents in suit were GB2415714C and GB2436989B. The first claimant, Philip Price ("Mr Price"), claimed to own the patents. He contended that he had assigned the patents to one Fred Bridge ("Mr Bridge") shortly before he was adjudged bankrupt and that Mr Bridge had reassigned them back to him upon his discharge from bankruptcy. The second claimant, Supawall Ltd. ("Supawall") claimed to be Mr Price's exclusive licensee. Mr Price and Supawall alleged that the first and second defendants, Flitcraft Ltd ("Flitcraft") and Flitcraft Timber Frame Ltd., had infringed the patents by marketing and supplying a product known as "Injectawall". The third and fourth defendants, Garry and Thomas Flticraft, were Flitcraft's directors. The claimants alleged that they were liable as joint tortfeasors.
The patents in suit were GB2415714C and GB2436989B. The first claimant, Philip Price ("Mr Price"), claimed to own the patents. He contended that he had assigned the patents to one Fred Bridge ("Mr Bridge") shortly before he was adjudged bankrupt and that Mr Bridge had reassigned them back to him upon his discharge from bankruptcy. The second claimant, Supawall Ltd. ("Supawall") claimed to be Mr Price's exclusive licensee. Mr Price and Supawall alleged that the first and second defendants, Flitcraft Ltd ("Flitcraft") and Flitcraft Timber Frame Ltd., had infringed the patents by marketing and supplying a product known as "Injectawall". The third and fourth defendants, Garry and Thomas Flticraft, were Flitcraft's directors. The claimants alleged that they were liable as joint tortfeasors.
Mr Price and Supawall also complained that Flitcraft had infringed the copyrights in photographs that had been taken by Mr Price's father and a drawing by Mr Price by posting copies of those works to Flitcraft's website.
Finally, they contended that Flitcraft's registration of the domain names <mapletimberframe.org>, <mapletimberframe.info> and <mapletimberframe.co.uk> amounted to passing off.
The action came on for trial before Nicholas Caddick KC sitting as a deputy judge of the High Court in Manchester between 11 and 17 Oct 2022. Mr Caddick handed down judgment on 20 Dec 2022 (Price and others v Flitcraft Ltd and others [2022] EWHC 3381 (Pat) (20 Dec 2022)).
The Defence
The defendants did not challenge the validity of the patents and admitted that a Flitcraft product which was referred to as the "Old Injectawall Product" at trial would infringe the patents if those patents were held by the claimants but they denied that Mr Price owned the patents and contended that Supawall's exclusive licence had been terminated. Their primary case was that Mr Price had held the patents on trust for a partnership known as Maple Timber Frame of Langley ("the MTF Partnership") whose assets (including its beneficial interest in the patents) now vested in Flitcraft. Alternatively, they argued that Mr Price's interest in the Patents had been assigned to a company called Lightpeak Limited ("Lightpeak") and Supawall's exclusive licence had been terminated. In the further alternative, they contended that even if the assignment to Lightpeak had been ineffective, any interest that Mr Price had in the patents would have vested in his trustee in bankruptcy after he was adjudged bankrupt on 27 July 2011. The defendants denied that the claimants were entitled to the copyrights in the photographs and drawings. They also denied that they had ever used or intended to use the <mapletimberframe> domain names. They submitted that if they were liable for patent or copyright infringement any sums that might be recoverable would be caught by a charge to North West Transitional Investment Fund LLP ("NWTIF") the benefit of which had been assigned to Garry Flitcroft.
The Issues
At para [79] of his judgment, Mr Caddick said that he would deal with the issues in the following order:
(1) the patent issues
(2) the copyright issues
(3) the passing off issues
(4) whether Garry Flitcroft and Thomas Flitcroft were liable with Flitcroft as directors of that company; and
(5) whether any sums recoverable from the defendants for patent or copyright infringement and passing off fell within the terms of a charge over intellectual property rights that Mr Price had given to the NWTIF.
Patent Issues
The deputy judge set out the patent issues in the next paragraph:
(a) Whether Mr Price held the patents on trust for the MTF Partnership;
(b) Whether his dealings with Mr Rich-Jones resulted in an assignment of the patents to Lightpeak and in the termination of Supawall's exclusive licence;
(c) What was the effect (if any) of Mr Price's dealings with Mr Bridge?
(d) Assuming Mr Price or Supawall had title to the patents, whether the defendants had infringed those patents?
(a) Whether Mr Price held the patents on trust for the MTF Partnership;
(b) Whether his dealings with Mr Rich-Jones resulted in an assignment of the patents to Lightpeak and in the termination of Supawall's exclusive licence;
(c) What was the effect (if any) of Mr Price's dealings with Mr Bridge?
(d) Assuming Mr Price or Supawall had title to the patents, whether the defendants had infringed those patents?
Whether Mr Price held the patents on trust for the MTF Partnership
At para [88] Mr Caddick directed himself as follows:
The defendants made the following points in support of their contention that Mr Price held the patents on trust for the MTF partnership. First, Mr Price made the invention while he was trading through the MTF Partnership. Secondly, the inventions were only used by the MTF Partnership. Thirdly, the patents were used as security for the debt that the MTF Partnership owed to NWTIF. Fourthly, Mr Price's trustee in bankruptcy gave unchallenged evidence that the MTF Partnership had met various costs associated with the patents (such as their renewal costs) and that it had not paid Mr Price any royalties for its use of the patents. Fifthly, the trustee also gave evidence that he had been told by Mr Price and Mr Middleton that the patents were held "on behalf of" the MTF Partnership.
Mr Caddick was not persuaded by those submissions. As to the first, he said at [91] that inventors often keep ownership of their inventions away from the companies exploiting them in case those companies fail. The patent applications had been in Mr Price's name and both Mr Price and Mr Middleton (two of the partners of the MTF Partnership) testified that the patents belonged to Mr Price. The deputy judge did not think the second submission added much to the first. He said in para [92] that mere use of property by a partnership is not usually sufficient to raise an inference that the partners intended that that property would be owned by the partnership. Such a contention would be inconsistent with the grant of an exclusive licence to Supawall and Supawall's sub-licences to Scotframe, Flight Timber Stricyures and the MTF Partnership, The learned deputy did not see the charge to NWTIF as particularly significant. He observed that it is frequently the case that property belonging to an individual partner is used as security for partnership debts. Indeed, other assets belonging to Mr Price had been charged to NWTIF for that purpose. On the fourth point, Mr Caddick acknowledged that the use of partnership money can be a significant factor but in this case, there was evidence that the MTF partners did not intend the patents to be partnership property. He accepted that Mr Price's trustee in bankruptcy believed the patents were held on trust for MTF but that was against the weight of the evidence. He concluded in para [97] that whether taken individually or in any combination, the points relied on by the defendants did not prove the existence of a trust in favour of the MTF Partnership and rejected their case in that regard.
Whether Mr Price's Dealings with Mr Rich-Jones resulted in an Assignment of the Patents to Lightpeak and the Termination of Supawall's Exclusive Licence
Mr Caddick considered first whether there had been a valid assignment to Lightspeak and secondly whether Supawall's exclusive licence has been terminated.
As to whether there had been a valid assignment, he accepted that Mr Price and Mr Rich-Jones had signed an instrument that satisfied the requirements of s.30 (6) of the Patents Act 1977 but held that the agreement to assign was subject to certain conditions which were never fulfilled. The assignment was therefore in escrow.
As to whether there had been a valid assignment, he accepted that Mr Price and Mr Rich-Jones had signed an instrument that satisfied the requirements of s.30 (6) of the Patents Act 1977 but held that the agreement to assign was subject to certain conditions which were never fulfilled. The assignment was therefore in escrow.
Turning to Supawall's exclusive licence, a termination agreement had been drawn up but remained undated. In the deputy judge's view, the reason why the agreement had not been dated was that it was also subject to conditions that had never been fulfilled. Consequently, Supawall's exclusive licence had not been terminated and remained in force.
- Effect of Mr Price's Dealings with Mr Bridge
Mr Caddick had determined at para [57] that there had been no assignment of the patents to Mr Bridge before Mr Price's bankruptcy. As Mr Price had not assigned the patents to Mr Bridge, it followed that Mr Bridge could not have re-assigned them back to Mr Price upon Mr Price's discharge from bankruptcy. The patents would have vested in the trustee in bankruptcy. Since Mr Price had lost the patents he could bring infringement proceedings. The deputy judge dismissed Mr Price's claim against the defendants. However, he also concluded that Supawall's exclusive licence which had been granted before Mr Price's bankruptcy had not been affected by Mr Price's dealings with Mr Bridge.- Whether Supawall could bring Proceedings
S.67 (1) of the Patents Act 1977 provides:
"Subject to the provisions of this section, the holder of an exclusive licence under a patent shall have the same right as the proprietor of the patent to bring proceedings in respect of any infringement of the patent committed after the date of the licence; and references to the proprietor of the patent in the provisions of this Act relating to infringement shall be construed accordingly."
"Subject to the provisions of this section, the holder of an exclusive licence under a patent shall have the same right as the proprietor of the patent to bring proceedings in respect of any infringement of the patent committed after the date of the licence; and references to the proprietor of the patent in the provisions of this Act relating to infringement shall be construed accordingly."
One of the provisions to which that right was subject was s.67 (3):
"In any proceedings taken by an exclusive licensee by virtue of this section the proprietor of the patent shall be made a party to the proceedings, but if made a defendant or defender shall not be liable for any costs or expenses unless he enters an appearance and takes part in the proceedings."
"In any proceedings taken by an exclusive licensee by virtue of this section the proprietor of the patent shall be made a party to the proceedings, but if made a defendant or defender shall not be liable for any costs or expenses unless he enters an appearance and takes part in the proceedings."
That requirement would have been met had the assignment to Mr Bridge and the reassignment to Mr Price been effective. As they were not the patents remained vested in Mr Price's trustee in bankruptcy. The trustee was aware of the proceedings but he was not a party to them. As the point had not been raised by the defendants, Mr Caddick's preliminary view was that it would not be right to dismiss Supawall's claim on the basis of non-compliance with s.67 (3). He, therefore, allowed the parties to make submissions as to the appropriate way forward before making any order giving effect to this judgment. He had previously dismissed an argument that the exclusive licence agreement permitted Supawall to sue only with the patentee's permission. Subject to the s.67 (3) point the deputy judge was satisfied that Supawall had the right to bring infringement proceedings under s.67 (1) of the Act.
Whether the Patents have been infringed
- The Old Injectawall Product
As I said above, the defendants had admitted that the Old Injectawall Product infringed GB 2415714C but contended that a product referred to at trial as "the New Injectawall Product did not.-The Liability of the Second Defendant
Mr Caddick dismissed the claim against the second defendant at para [131] because there was no evidence that it had ever traded in any Injectawall product.- Whether the New Injectawall Product Infringed
The New Injectawall Product fell outside the claims of GB 2415714C because the it omitted the final outer layer of insulation. Supawall argued that it would have been obvious to attach an additional layer. It noted that Flitwick appeared to stock such material. It contended that Flitwick had infringed the patent under s.60 (2) of the Patents Act 1977 which provides:
"The deputy judge directed himself at para [134] that
"...... to be liable under s.60 (2), it would have to be shown that the Defendants, merely by supplying customers with the New Injectawall Product, are:
a. Supplying those customers with the means for putting an essential element of the invention into effect andb. Doing so in the knowledge or in circumstances where it would be obvious to a reasonable person that those means are suitable for putting and are intended to put the invention into effect."
It was common ground that Flitcraft was supplying the means by which customers could put the invention into effect and that those means were in relation to an essential element of the invention. However, it was disputed that they did so so in the knowledge or in circumstances where it would have been obvious to a reasonable person that those means were suitable for putting, and were intended to put, the invention into effect.
On the question of knowledge and intent, Mr Caddick referred to para [106] of the joint judgment of Lords Justices Jacob and Etherton in Grimme Maschinenfabrik GmbH & Co KG v Scott (t/a Scotts Potato Machinery) [2010] EWCA Civ 1110, [2011] Bus LR D129, [2011] FSR 7 and the following passage from the judgment of Lord Justice Jacon in KCI Licensing Inc v Smith & Nephew plc (2011) 117 BMLR 81, [2010] EWCA Civ 1260, [2011] FSR 8:
ii) It is enough if the supplier knows (or it is obvious to a reasonable person in the circumstances) that some ultimate users will intend to use or adapt the 'means' so as to infringe, [107(i)] and [114].
iii) There is no requirement that the intention of the individual ultimate user must be known to the defendant at the moment of the alleged infringement, [124].
iv) Whilst it is the intention of the ultimate user which matters, a future intention of a future ultimate user is enough if that is what one would expect in all the circumstances, [125].
v) The knowledge and intention requirements are satisfied if, at the time of supply or offer to supply, the supplier knows, or it is obvious to a reasonable person in the circumstances, that ultimate users will intend to put the invention into effect. This has to be proved on the usual standard of the balance of probabilities. It is not enough merely that the means are suitable for putting the invention into effect (for that is a separate requirement), but it is likely to be the case where the supplier proposes or recommends or even indicates the possibility of such use in his promotional material, [131]."
He also referred to para [32] of Mr Justice Arnold's judgment in Actavis UK Limited v Eli Lilly & Co. [2016] EWHC 234 (Pat):
Mr Caddick rejected Supawall's contention. There was no evidence before him that anyone had actually bought the New Injectawall Product and added another layer of insulation in order to make the patented product. It seemed unlikely that any of them would do so for the following reasons:
"a. There is no suggestion that the Defendants have indicated to customers that they should or even that they could add an additional layer of insulation to the exterior of the New Injectawall Product.
b. It seems to have been common ground that, even without an additional layer, the New Injectawall Product satisfied the requisite building regulations guidelines regarding thermal insulation.
c. Mr Hickey [the claimants' expert] noted that the New Injectawall Product, whilst it satisfied those guidelines, would have a problem with thermal bridging in the timber framing. However, Mr Evans' evidence [on behalf of the defendant] was that a customer was unlikely to address that problem by adding an extra layer of insulation to the outside of the Product. His evidence was that to do so could prevent or reduce the ability of the membrane in the Product to breathe and would, therefore, be inadvisable. In this regard, it was common ground that, in order to ensure breathability in the walls of a building, there must always be a 50mm void between exterior face of the Product and the outer wall of the building. Accordingly, if a customer was to add the external layer of insulation to exterior of the Product, the gap to be allowed would have to be increased by the width of that layer. Mr Evans noted that this might involve a change to the foundations.
d. Mr Gregory [Flutcraft's general manager] made a similar point when asked whether a builder or architect acting for a customer would recommend adding this layer of insulation. His response was: 'That could not be done. We are -- our plans are prepared. When a client engages Flitcraft, they place an order, we send everything off to a structural engineer to get checked and they come back with any line and (indistinct). They are then given to our designers who design the DPC detail, which is the ground detail and the sole plate layout and that would clearly show any pad stones or any steel or additional reinforcement that may be required. But it also shows where the outer skin of the property is going to go, it will show a 50 millimetres cavity and then it will show the depth of the panel that we are recommending. So if we were to recommend, price, sell and erect this 140 millimetres panel, there would only be 50 millimetres left as a cavity before the external skin or brickwork or cladding or whatever, so you could not do it because you would be filling the cavity.'
e. Mr Evans also commented that he could not see why a customer would want to add an additional layer of insulation to the New Injectawall Product. He commented that: 'I cannot envisage anyone buying this system in order to bastardise it into a hybrid of something else' He also stated that: 'Why would you go to a proprietary system with given quality and cost if you wanted to achieve something other than what the proprietary system offers? It just seems rather unlikely that one would go about designing a building by selecting a product that you were not satisfied with so that you wanted to enhance its performance before you even started the building.'
f. Ultimately, the addition of an extra layer of insulation to the new Injectawall Product would require customers to incur additional cost and labour and maybe also to depart from their existing plans. It would achieve a higher level of thermal insulation than was recommended in the guidelines but would, potentially, lead to other problems."
The deputy judge held that the claimants had not established that the defendants' customers (or a proportion of them) intended to use the New Injectawall Product as a means to put the patented invention into effect, let alone that any such intention would have been known to the Defendants or would have been obvious to a reasonable person.
The deputy judge concluded that the evidence showed that Garry Flitcroft was sufficiently involved in the infringement of GB2415714C through the marketing and supply of the Old Injectawall Product to make him a joint tortfeasor with Flitcraft. He set out his reasons at [178]:
"a. Garry Flitcroft had been the sole director of and sole shareholder in [Flitcraft Ecobuild Limited]. His own evidence in cross-examination was that he ran that company and took all important decisions. His evidence was that [Flitcraft Ecobuild Limited] had "progressed to sell, manufacture and install timber frame products, built in accordance with the specifications of and associated with the Patents….". This was clearly something decided by Garry Flitcroft.
b. On 30 January 2017, very shortly before [Flitcraft Ecobuild Limited] went into administration, [Flitcraft] was incorporated with Garry Flitcroft's domestic partner (Charmian Wilson) and his son, Thomas, as its shareholders. Although, initially, Thomas (then 18 years old) was [Flitcraft's] only director, Garry Flitcroft was appointed a director only 3 days later, on 2 February 2017.
c. When [Flitcraft Ecobuild Limited] went into administration on 14 February 2017, it was Garry Flitcroft who negotiated with [Flitcraft Ecobuild Limited] administrator for Flitcraft to purchase the assets of [Flitcraft Ecobuild Limited]. This was confirmed by Thomas Flitcroft in cross-examination and by [Flitcraft Ecobuild Limited]]s administrator who stated in his report to the creditors of [Flitcraft Ecobuild Limited] dated 7 April 2017 that Garry Flitcroft had "advised that he would wish to buy the assets of [Flitcraft Ecobuild Limited] using his new company Flitcraft Limited" and later that Flitcraft was "controlled and owned by [Garry Flitcroft]".
d. That Garry Flitcroft was perceived to be the person who owned and controlled Flitcraft at this stage is apparent from these statements in the Administrator's Report. It is also apparent in a North West press article entitled "Ex-premier league star buys construction firm out of administration", which reported that all [Flitcraft Ecobuild Limited]'s employees had transferred to Flitcraft and that "Both companies are controlled by Gary Flitcroft".
The judge added at [179] that when it was decided that Flitcraft would continue to manufacture, sell and install the Old Injectawall Product, Flitcraft was continuing where [Flitcraft Ecobuild Limited] had left off. It was clearly acting under the control and direction of Garry Flitcroft, just as [Flitcraft Ecobuild Limited] had done. In the deputy judge's view. there was nothing to suggest that thise decisions taken by anyone else.
"a. Mr Price has failed to establish that he has title to the Patents and I therefore reject his patent infringement claims.
b. Subject to further submissions regarding the application of s.67 (3) in this case, [Supawall's] rights as exclusive licensee of the 714 Patent were infringed by [Flitcraft's= dealings with the Old Injectawall Product.
c. I reject [Supawall's] claims that [Flitcraft's] dealings with the New Injectawall Product infringed its rights as exclusive licensee of the 714 Patent.
d. Mr Price has failed to establish that he has title to the Copyrights and I therefore reject his copyright infringement claims.
e. I reject the Claimants' passing off claim and their claim for quia timet relief arising from [Flictaft's] ownership of the domain names:
<mapletimberframe.org>,
<mapletimberframe.info> and
<mapletimberframe.co.uk
f. I reject all claims against the Second Defendant (FTFL).
g. Subject again to the s.67 (3) issue, the Third and Fourth Defendants (Garry and Thomas Flitcroft) are jointly liable with [Flitcraft] as regards its said infringements of the 714 Patent."
f. Ultimately, the addition of an extra layer of insulation to the new Injectawall Product would require customers to incur additional cost and labour and maybe also to depart from their existing plans. It would achieve a higher level of thermal insulation than was recommended in the guidelines but would, potentially, lead to other problems."
Copyright Issues
Mr Caddick considered first the photographs taken by Mr Price's father and then the drawing made by Mr Price.
The Photographs
The deputy judge held at para [143] that copyright subsisted in those photos and that the first owner of those copyrights was Mr Price's father. He rejected the defendants' contention that he held them on trust for the MTF Partnership on the ground that there was no evidence to support the existence of a trust or a commission by that firm. A licence was much more likely in the judge's view.
Upon the death of Mr Price senior, the copyrights passed to his wife as his executor. The problem for Mr Price junior is that his mother never took out a grant of probate and never executed an assent in his favour. Flitcraft had posted the photographs to its website without Mr Price or anybody else's licence. Had his mother taken out a grant his copyright infringement claim would have succeeded.
Upon the death of Mr Price senior, the copyrights passed to his wife as his executor. The problem for Mr Price junior is that his mother never took out a grant of probate and never executed an assent in his favour. Flitcraft had posted the photographs to its website without Mr Price or anybody else's licence. Had his mother taken out a grant his copyright infringement claim would have succeeded.
Mr Price's Drawing
Mr Caddick held that copyright subsisted in the drawing and that Mr Price was the first owner. He rejected the defendant's contention that he held that copyright on trust for MFT Partnership and the claimant's that it had been assigned to Lightspeak or Mr Bridge. The copyright had passed to his trustee in bankruptcy when Mr Price became bankrupt and that was where it remained.
Passing off Issues
The learned deputy judge referred to Lord Oliver's speech in Reckitt & Colman Products Ltd v Borden Inc (No. 3) [1990] WLR 491, [1990] 1 All ER 873, [1990] 1 WLR 491, [1990] RPC 341, [1990] UKHL 12 at 499E-H. He directed himself that "the Claimants must establish (i) goodwill or reputation attached to their goods or services; (ii) a misrepresentation by the Defendants to the public that is likely to lead the public to believe that the goods or services offered by the Defendants are those of the Claimants and (iii) that they have has suffered, or in a quia timet action are likely to suffer, damage by reason of the erroneous belief caused by that misrepresentation." He found that the claimants had goodwill in the sign "Maple Timber Frame" and that if the defendants were to make use of the disputed domain names in connection with their goods or services, such use was highly likely to constitute passing off. He added that it was hard to see how any such use would not be likely to lead the public to believe that such goods or services were in some way connected with the claimants. However, there was no evidence that Flitcraft had ever used those domain names or intended to do so.
The claimants argued that this was a quia timet action and referred to Lord Justice Aldous's speech in British Telecommunications plc v One in a Million Ltd. [1998] EWCA Civ 1272, [1998] Masons CLR 165, [1997-98] Info TLR 423, [1999] 1 WLR 903, [1999] WLR 903, [1999] FSR 1, [1998] ITCLR 146, [1999] ETMR 61, [2001] EBLR 2, [1999] 1 ETMR 61, [1998] 4 All ER 476 at 920D-G:
"… a jurisdiction to grant injunctive relief where a defendant is equipped with or is intending to equip another with an instrument of fraud. Whether any name is an instrument of fraud will depend upon all the circumstances. A name which will, by reason of its similarity to the name of another, inherently lead to passing off is such an instrument. If it would not inherently lead to passing off, it does not follow that it is not an instrument of fraud. The court should consider the similarity of the names, the intention of the defendant, the type of trade and all the surrounding circumstances. If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, I can see no reason why the court should not infer that it will happen, even if there is a possibility that such an appropriation would not take place. If, taking all the circumstances into account the court should conclude that the name was produced to enable passing off, is adapted to be used for passing off and, if used, is likely to be fraudulently used, an injunction will be appropriate. It follows that a court will intervene by way of injunction in passing off cases in three types of case. First, where there is passing off established or it is threatened. Second, where the defendant is a joint tortfeasor with another in passing off either actual or threatened. Third, where the defendant has equipped himself with or intends to equip another with an instrument of fraud. This third type is probably a mere quia timet action."
The deputy judge distinguished One in a Million at para [171]:
"Ultimately, though, the basis for quia timet relief is the existence of a threat of infringement and I do not think that the Claimants have established such a threat. The fact is that the domains have not been used for 6 years (initially by FEBL and, since 2017, by FL) and it seems highly unlikely that they would be used now, particularly in view of the indications above that use in relation to their goods or services would constitute passing off. The domain names may be of no use to the Defendants, but they are the Defendants' property and an order for transfer would not, therefore, be appropriate."
"Ultimately, though, the basis for quia timet relief is the existence of a threat of infringement and I do not think that the Claimants have established such a threat. The fact is that the domains have not been used for 6 years (initially by FEBL and, since 2017, by FL) and it seems highly unlikely that they would be used now, particularly in view of the indications above that use in relation to their goods or services would constitute passing off. The domain names may be of no use to the Defendants, but they are the Defendants' property and an order for transfer would not, therefore, be appropriate."
He, therefore, dismissed the claim for passing off.
Whether Garry Flitcroft and Thomas Flitcroft were liable with Flitcroft as Directors of that Company
Mr Recorder Campbell KC had decided that Mr Thomas Flitcroft was liable as a joint tortfeasor before trial. The question was whether Garry was also liable.
Mr Caddick directed himself was referred to MCA Record Inc. v Charly Records Ltd (No.5) [2001] EWCA Civ 1441, Sea Shepherd UK v Fish & Fish Limited [2015] UKSC 10 and Lifestyle Equities CV v Ahmed [2021] EWCA Civ 675 at [28] to [41]. He directed himself that the relevant question was whether an individual's conduct is such as to make that person liable as an accessory for the acts said to infringe. That may be because that person was closely involved and participated in the relevant acts and/or had directed or procured their commission or had assisted in (not merely facilitated) them pursuant to a common design to bring them about. Where the principal infringer is a company, a person can be liable as a joint tortfeasor regardless of whether or not that person is a director or shareholder.
The deputy judge concluded that the evidence showed that Garry Flitcroft was sufficiently involved in the infringement of GB2415714C through the marketing and supply of the Old Injectawall Product to make him a joint tortfeasor with Flitcraft. He set out his reasons at [178]:
"a. Garry Flitcroft had been the sole director of and sole shareholder in [Flitcraft Ecobuild Limited]. His own evidence in cross-examination was that he ran that company and took all important decisions. His evidence was that [Flitcraft Ecobuild Limited] had "progressed to sell, manufacture and install timber frame products, built in accordance with the specifications of and associated with the Patents….". This was clearly something decided by Garry Flitcroft.
b. On 30 January 2017, very shortly before [Flitcraft Ecobuild Limited] went into administration, [Flitcraft] was incorporated with Garry Flitcroft's domestic partner (Charmian Wilson) and his son, Thomas, as its shareholders. Although, initially, Thomas (then 18 years old) was [Flitcraft's] only director, Garry Flitcroft was appointed a director only 3 days later, on 2 February 2017.
c. When [Flitcraft Ecobuild Limited] went into administration on 14 February 2017, it was Garry Flitcroft who negotiated with [Flitcraft Ecobuild Limited] administrator for Flitcraft to purchase the assets of [Flitcraft Ecobuild Limited]. This was confirmed by Thomas Flitcroft in cross-examination and by [Flitcraft Ecobuild Limited]]s administrator who stated in his report to the creditors of [Flitcraft Ecobuild Limited] dated 7 April 2017 that Garry Flitcroft had "advised that he would wish to buy the assets of [Flitcraft Ecobuild Limited] using his new company Flitcraft Limited" and later that Flitcraft was "controlled and owned by [Garry Flitcroft]".
d. That Garry Flitcroft was perceived to be the person who owned and controlled Flitcraft at this stage is apparent from these statements in the Administrator's Report. It is also apparent in a North West press article entitled "Ex-premier league star buys construction firm out of administration", which reported that all [Flitcraft Ecobuild Limited]'s employees had transferred to Flitcraft and that "Both companies are controlled by Gary Flitcroft".
The judge added at [179] that when it was decided that Flitcraft would continue to manufacture, sell and install the Old Injectawall Product, Flitcraft was continuing where [Flitcraft Ecobuild Limited] had left off. It was clearly acting under the control and direction of Garry Flitcroft, just as [Flitcraft Ecobuild Limited] had done. In the deputy judge's view. there was nothing to suggest that thise decisions taken by anyone else.
Whether any Sums recoverable from the Defendants for Patent or Copyright Infringement and Passing off fell within the Terms of a Charge over Intellectual Property Rights that Mr Price had given to the NWTIF
The short answer was that they did not. As the charge was a transaction between Mr Prince and the NWTIF it could only affect Mr Price. It could not affect Supawall because its licence was granted and registered before the NWTIF charge was granted. The deputy judge had already found that Mr Price held no intellectual property rights so Mr Garry Flitcraft could acquire nothing from Mr Price's claim. As Supawall was not bound by the charge, that company could keep any damages that might be recovered.
Summary
Mr Caddick summarized his conclusions at [188]:
"a. Mr Price has failed to establish that he has title to the Patents and I therefore reject his patent infringement claims.
b. Subject to further submissions regarding the application of s.67 (3) in this case, [Supawall's] rights as exclusive licensee of the 714 Patent were infringed by [Flitcraft's= dealings with the Old Injectawall Product.
c. I reject [Supawall's] claims that [Flitcraft's] dealings with the New Injectawall Product infringed its rights as exclusive licensee of the 714 Patent.
d. Mr Price has failed to establish that he has title to the Copyrights and I therefore reject his copyright infringement claims.
e. I reject the Claimants' passing off claim and their claim for quia timet relief arising from [Flictaft's] ownership of the domain names:
<mapletimberframe.org>,
<mapletimberframe.info> and
<mapletimberframe.co.uk
f. I reject all claims against the Second Defendant (FTFL).
g. Subject again to the s.67 (3) issue, the Third and Fourth Defendants (Garry and Thomas Flitcroft) are jointly liable with [Flitcraft] as regards its said infringements of the 714 Patent."
Conclusion
This case is unusual in that there was no challenge to the validity of the patents on grounds of obviousness and novelty even though there seems to have been quite a lot of prior art. Nor was there any argument over the construction of the claims of the patents in suit. The action succeeded only on an issue that the defendants had admitted. It may yet fail if Mr Caddick decides the s.67 (3) issue in favour of the defendants.
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