Practice: Juul Labs, Inc. and Others v MFP Enterprises Ltd.

A Person using a Juul Device

Author Sarah Johnson Licence CC BY 2,0 Source Wikipedia Juul

 

Jane Lambert

Patents Court (Mr Justice Mann) Juul Labs, Inc and others v MFP Enterprises Ltd (t/a 'Smoke Nation' and others) [2020] EWHC 3380 (Pat) (10 Dec 2020)

This was an application for summary as well as default judgment against defendants that had not acknowledged service of the claim form or particulars of claim.  Such applications are rare because CPR 24.4 (1) prohibits a claimant from applying for summary judgment until the defendant against whom the application is made has filed an acknowledgement of service or a defence unless the court has given permission or a practice direction provides otherwise.

The circumstances in which a court may give permission were considered by Mr Justice Bryan in The European Union and another v The Syrian Arab Republic [2018] EWHC 1712 (Comm) (29 June 2018) and Mr Justice Hensaw in DVB Bank SE v Vega Marine Ltd and others [2020] EWHC 1494 (Comm) (10 June 2020).  Mr Justice Bryan said in the Syrian case:

"(1) The purpose of the rule is to ensure that no application for summary judgment is made before a defendant has had an opportunity to participate in the proceedings and to protect a defendant who wishes to challenge the Court's jurisdiction from having to engage on the merits pending such application.
(2) Generally, permission should be granted only where the Court is satisfied that the claim has been validly served and that the Court has jurisdiction to hear it. Once those conditions are met there is generally no reason why the Court should prevent a claimant with a legitimate claim from seeking summary judgment.
(3) The fact that a summary judgment may be more readily enforced in other jurisdictions than a default judgment is a 'proper reason for seeking permission under CPR 24.4(1) ."

Mr Justice Henshaw had added:

"I would add, in relation to (3), that it would in my view be sufficient that the claimant has a reasonable belief that a summary judgment may be more readily enforced than a default judgment. There is no justification for the court subjecting any such belief to minute examination when the permission the claimant is seeking is in reality no more than the opportunity to obtain a reasoned judgment on the merits of its claim".

The reason why the claimants wanted summary judgment, in this case, is that they make and sell electronic cigarettes and vaping equipment that were protected in the UK until 23:00 on 31 Dec 2020 by various registered Community designs and EU trade marks. Articles that infringe their intellectual property rights are distributed over the internet.  The claimants had brought proceedings against the defendants for infringement of those EU trade marks and registered Community designs and passing off.  They wanted a reasoned judgment against the defendant declaring their rights in order to persuade online distributors like Amazon and eBay as well as the customs authorities to remove infringing items from the reach of consumers and thereby prevent future infringements.

The application came on before Mr Justice Mann who was minded simply to refuse permission to apply for summary judgment.  He allowed it to be made because he considered that the more convenient course would be to allow the application for summary judgment to be made because prima facie a decent reason had been advanced which had to be dealt with on the merits of the application rather than procedural factors.   He could this consider whether the declaration should be granted on the merits as a proper exercise of his discretion.

The judge examined each of the claims and considered whether they had been properly brought and served.  He found that they had and that the claimants were entitled to a default judgment in respect of each cause of action.  The claimants sought summary judgment in relation to the EU trade mark infringement claim to preclude the use of an art 14 (1) (c) defence by other defendants in future cases.

Mr Justice Mann referred to paragraph [21] of the judgement of Mr Justice Marcus Smith in Bank of New York Mellon, London Branch v Essar Steel India Ltd. [2018] EWHC 3177 (Ch):

"The power to grant declaratory relief is discretionary…. When considering the exercise of the discretion, in broad terms, the court should take into account justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose and whether there are other special reasons why or why not the court should grant the declaration. … More specifically:
(1) There must, in general, be a real and present dispute between the parties before the court as to the existence or extent of a legal right between them. However, the claimant does not need to have a present cause of action against the defendant… A present dispute over a right or obligation that may only arise if a future contingency occurs may well be suitable for declaratory relief and amount to a real and present dispute….
(2) Each party must, in general, be affected by the court's determination of the issues concerning the legal right in question…
(3) The fact that the claimant is not a party to the relevant contract in respect of which such a declaration is sought is not fatal to an application for a declaration, provided that the claimant is directly affected by the issue… In such cases, however, the court ought to proceed very cautiously when considering whether to make the declaration sought….
(4) The court will be prepared to give declaratory relief in respect of a "friendly action" or where there is an "academic question", if all parties so wish, even on "private law" issues. This may be particularly so if the case is a test case or the case may affect a significant number of other cases, and it is in the public interest to decide the point in issue…
(5) The court must be satisfied that all sides of the argument will be fully and properly put. It must, therefore, ensure that all those affected are either before it or will have their arguments put before the court… For this reason, the court ought not to make declarations without trial… In Wallersteiner v. Moir, Buckley LJ said this:
'It has always been my experience and I believe it to be a practice of very long standing, that the court does not make declarations of right either on admissions or in default of pleading. A statement on this subject of respectable antiquity is to be found in Williams v. Powell [1894] WN 141, where Kekewich J, whose views on the practice of the Chancery Division have always been regarded with much respect, said that a declaration by the court was a judicial act, and ought not to be made on admissions of the parties or on consent, but only if the court was satisfied by evidence. If declarations ought not to be made on admissions or by consent, a fortiori they should not be made in default of defence, and a fortissimo, if I may be allowed the expression, not where the declaration is that the defendant in default of defence has acted fraudulently…'
(6) In all cases, assuming that the other tests are satisfied, the court must ask: is this the most effective way of resolving the issues raised? In answering that question, the court must consider the other options of resolving the issue."

Mr Justice Mann drew the following conclusions from the above passage at paragraph [29] of his own judgment:

"It is true to say that the court now looks more favourably on granting declarations by consent, or in "friendly" actions, than used to be the case. It may also be appropriate in some cases to grant a declaration on a summary judgment application rather than a trial, provided that the facts are clearly established. However, in all such cases there has to be a good reason for such actions, and in all those cases there is at least some level of activity by both parties which is missing from this application – see the notes in the White Book (2020 Edition) at para 40.20.3. Where one side is absent the court has to approach the above factors with even more care."

He noted that the defendant was not present in the Mellon case and that Mr Justice Marcus Smith had taken into account the fact that the declaration would have an effect on a third party as a reason for not granting a declaration.   He said at [31] that he entirely agreed with the approach of Mr Justce Marcus Smith and that he would;d take the same factors into account in the case before him.

Mr Justice Mann said at [32] that it would be wrong to grant the declarations sought for the following reasons:

"(a) There is no active dispute between the parties. The defendants have not engaged with the proceedings, and while it can be anticipated that the defendants would not agree to the relief being sought against them, they have not raised an actual dispute. Even if one accepts they would be hostile to the claim, they have not raised the Article 14 response to the apparent infringement of the mark, which is what the declarations go to. The court is therefore not invited to determine an actual issue between the parties.
(b) The other side of the Article 14 argument, which the claimants wish me to rule against, has not been put. Mr Moody-Stuart has, quite properly, pointed out a number of points which might be taken against him on the whole application, as is his duty, but the defendants' side of the Article 14 point has not been argued fully. In this case this is a very important factor. As will appear below, even without argument it seems to me to be quite likely that the claim to at least some of the declarations will fail.
(c) As between the parties, the declarations are academic because they have not raised the point and the claimants have all the relief they need on the default judgment.
(d) The declarations may well have an effect on third parties. That is not a side-effect, as in Bank Mellon (see para 22, end); it is the main purpose of the declaration. Marcus Smith J held that the effect on an unrepresented third party was an important factor pointing against the making of the declaration. Again I respectfully agree. I develop this point a little more below."

In refusing the application for summary judgment, his lordship acknowledged that a declaration in this case would not preclude an art 14 challenge in future cases, that there are test cases that affect the interests of persons unconnected with the litigation and that the court might well make a wide-ranging declaration after a trial though probably not as broad as the one requested by the claimants.  He added that he was not persuaded by the claimants' arguments in relation to the art 14 defence though he did not rule against it.

Anyone wishing to discuss this case or summary and default judgments in general may call me on 020 7404 5252 during office hours or send me a message through my contact form.