Practice - Cormeton Fire Protection Ltd v Pyrocel Ltd

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Jane Lambert

Intellectual Property Enterprise Court (Mr David Stome) Cormeton Fire Protection Ltd v Pyrocel Ltd and another [2021] EWHC 2384 (IPEC) (26 Aug 2021)

These were further proceedings in a dispute between parties that had once been closely associated but had subsequently fallen out over rights to use branding that they had previously shared.  There had already been a trial before Mr David Stone which I discussed in Trade Marks - Cormeton Fire Protection Ltd v Cormeton Electronics Ltd. on 13 Feb 2021.  Following his judgment in that case,  Mr Stone granted the claimant an injunction, orders for delivery up, disclosure of such information as the claimant might reasonably require to choose between an inquiry as to damages  (Island Records disclosure) and an account of profits and an inquiry or account ar the claimant's election (see para [3] of Mr Stone's judgment in  Cormeton Fire Protection Ltd v Pyrocel Ltd and another [2021] EWHC 2384 (IPEC) (26 Aug 2021)).

The Application

That was not the end of the dispute.  The claimant applied for the following relief:

"i) a declaration that automatic gaseous extinguishing systems (AGEs) and automatically operated ventilation systems (AOVs) are mechanical fire safety goods and services, and therefore not goods and services in which the First Defendant is entitled to trade under the CORMETON ELECTRONICS name, following the injunction granted in the Order;
ii) an order for further information pursuant to paragraph 5 of the Order, that is relating to what the Claimant says is insufficient information provided for the purposes of Island Records v Tring disclosure prior to the Claimant's election of an account of profits or damages enquiry; and
iii) costs."

The 2003 Agreement

In the previous proceedings Mr Stone found that there had been an agreement between the parties in 2003 on the following terms:

"i) The First Defendant could continue to trade under CORMETON ELECTRONICS and CORMETON ELECTRONICS LIMITED;
ii) The First Defendant could continue to use the Domain Name; and
iii) The First Defendant would not trade under CORMETON, CORMETON ELECTRONICS or CORMETON ELECTRONICS LIMITED in relation to mechanical fire protection goods and services – rather it would only trade in the supply and sale of electrical safety equipment."

The Injunction

The injunction referred to above restrained the defendant from training under CORMETON, CORMETON ELECTRONICS or CORMETON ELECTRONICS LIMITED in relation to mechanical fire protection goods and services subject to the following provision:

"Save that this injunction shall be stayed in respect of Automatic Gaseous Extinguishing Systems that have an electrical or electronic component and in respect of Automatic Operating Ventilation (AOV) Systems that have an electrical or electronic component until 4pm on Monday 1 February 2021 and the Defendants have liberty to apply for an extension to such stay pending any application for clarification of the scope of this injunction."

No application was ever made for such an extension.

The Claimant's Submissions

The claimant made three submissions in support of its application for a declaration:

"i) given the stipulation in the Order, the time for disputing whether AGEs fall within the scope of the injunction has passed – the Defendants ought to have applied to extend the stay of the injunction in relation to AGEs: as they have not, the injunction came into effect at 4pm on Monday 1 February 2021;
ii) properly construed, AGEs are mechanical, even if some have some electronic elements; and
iii) in any event, if the real question is whether the 2003 licence enabled the continuance of the sale of AGEs, the First Defendant did not sell or service AGEs prior to 2003, or if it did (which was not admitted), they were in such small amounts as to be de minimis."

The Stay

The learned deputy judge agreed with the claimant.  He said at para [21] of his judgment:

"The stay in the order is clear – AGEs were exempt from the injunction until 1 February 2021, at which point, if no further action had been taken, the injunction would bite. No further action was taken. The Defendants have therefore missed their opportunity, and no request was made for relief from sanctions. AGEs were expressly mentioned in the Order as excluded until 1 February 2021 in order to give the Defendants an opportunity to argue this point. They did not take that opportunity. It is now too late."

Whether the First Defe4ndant had traded in AGEs before the 2013 Agreement

Turning to the claimant's third argument, he said at [23]:

"what really matters is what was agreed between the Claimant and the First Defendant in 2003. And what was agreed was that the parties would carry on as they had previously,"

He considered the evidence on what the parties actually did before 2003 and concluded that: 

"the First Defendant did not undertake AGE work prior to 2003 – the amount was so little as not to be noticed by Michael Senior. AGEs were simply not a sufficiently significant part of the First Defendant's pre-2003 trading, even on its own evidence, to be something in the contemplation of Claimant at the time the 2003 licence was granted."

Whether the AGEs are Electrical or Mechanical

As to the second submission, Mr Stone held:

"The evidence before me shows that AGEs can include both electrical and mechanical elements. In my judgment, the bulk of most AGE systems will be mechanical – the release of gas upon detection of a fire. To the extent that there are warning alarms (and not all AGE systems have them), then that aspect will be electrical. But the addition of an electrical alarm does not make what is otherwise a mechanical system (and therefore within the purview of the Claimant) an electrical system (and therefore within the Claimant's licence to the First Defendant)."

Mr Stone's Conclusion on the AGEs

It followed that AGEs fell within the prohibition set out in pars 1 of his order and had done so since 4pm on 1 Feb 2021.   The deputy judge did not see the need for a declaration as the original order had been clear.  He added that nothing prevented the first defendant from providing and/or maintaining AGEs under a name that did not include the word CORMETON but it had to stop using a name that included CORMETON in relation to those goods and services within 21 days of the date of the judgment.

Island Records v Tring Disclosure

In Island Records Ltd v Tring International Plc [1996] 1 W.L.R. 1256, [1995] 3 All E.R. 444, [1995] 4 WLUK 189, [1995] F.S.R. 560,  Times, April 28, 1995, Mr Justice Lightman had held 

"that on a split trial or any application for judgment the court could grant a declaration that the plaintiff was entitled at his election to judgment for either remedy and give directions to secure that the plaintiff obtained such information as was reasonably required to enable him to make an informed election and that it was made within a reasonable time; and that, accordingly, there would be a declaration that the plaintiff was entitled at its election to an assessment of damages or an account of profits in respects of the defendants' infringements, and directions requiring the defendants „ to provide the plaintiff with a schedule detailing the figures which ^ it sought within two months and the plaintiff to elect between the two remedies within seven days thereafter."

The Complaint on Disclosure

The claimant complained that the defendants had not supplied them with sufficient information on the following matters:

"i) all the information referred to in paragraph 4 of the Order in the period from 18 January 2021 (that is, the date of the Order) to date;
ii) all the information required by paragraphs 4(d) and (e) of the Order in respect of the use of CORMETON solus – the Claimant seeks estimates and an explanation of how those estimates have been made; and
iii) an explanation of why the Defendants say they would be entitled to deduct costs in each category."

Information after 18 Jan 2021

The learned deputy judge rejected the claimant's contention that it was entitled to an update from 21 Jan 2021. There was no ongoing obligation to update the information provided over time.   He agreed that information should have been provided up to the date of disclosure rather than the date of the order but, as the defendants had provided disclosure covering nearly 8 years, the difference of approximately 4 weeks, was neither here nor there.

Use of the Cormeton Signs

Mr Stone agreed that the defendants had given inadequate disclosure of their use of the Cormeton sign and that they had given no real explanation or provided an excuse for their failure.   He was keen to ensure that any order to give further disclosure should be proportionate and realistic,  In his view, they should be required to give:

"i) estimates of the numbers of uses of CORMETON solus on uniforms, van livery, stickers, pens and mugs – because this information should be readily available through searching and the actual numbers are likely to be low; and
ii) representative samples of invoices which use CORMETON solus (even if CORMETON ELECTRONIC LIMITED also appears on the invoice) and estimated date ranges on which those forms of invoice were used."

They should be given within 28 days of the date of this judgment.

Deductions

The deputy judge agreed that the defendants had failed to give particulars of the deductions that they claimed to be entitled to make he thought that they had delivered sufficient information for the claimant to make an election.  He refused to order them to make an order for further information as to the third category,

Costs

Though the claimant did not succeed on everything Mr Stone considered it to be the overall winner.   As its costs of the trial had already exceeded £50,000, the claimant could receive nothing from the defendants in respect of this application unless it could persuade Mr Stone that it had behaved unreasonably.  After considering Akhtar v Bhopal Productions (UK) Limited [2015] EWHC 154 (IPEC) where Judge Hacon had held that failing properly to particularize a statement of case had been unreasonable and Phonographic Performance Limited v Hamilton Entertainment Limited and Another [2013] EWHC 3467 (IPEC) where Mr Justice Birss had disapplied the costs cap for obstructive behaviour, Mr Stone said ar para [54]:

"The provision for lifting the cap in relation to applications where there has been unreasonable behaviour is aimed at encouraging parties to act reasonably, so as to try to prevent unnecessary applications in the IPEC, a costs-capped jurisdiction. Where there has been unreasonable behaviour in relation to an application, the CPR enables the court to assess costs at the conclusion of the application (thereby avoiding having to wait until the end of proceedings – which may be some time) and to lift the cap on those costs. Counsel for the parties agreed that the test for unreasonable behaviour is a lower hurdle than for abuse of process, as has been considered by the IPEC on a number of occasions, and I accept that submission."

Mr Stone did not think that the defendants had acted unreasonably in relation to Island Records disclosure but they had in failing to apply for an extension of time in relation to the AGE exception before 1 Feb 2021 and then by not complying with the order.    He, therefore, disapplied the costs cap.   The claimant claimed costs of £8,394.  The judge held that the claimant was entitled to 60% of that sum, namely £5036.40, and that the remainder should be reserved.

Further Information

This is an important case on Island Records disclosure and the lifting of the costs cap on the grounds of unreasonable behaviour.  Anyone wishing to discuss this case may call me during normal business hours on 020 7404 5252 or send me a message through my contact form.

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