Passing Off: Au Vodka v NE10 Vodka
The claimant in these proceedings distilled and distributed the vodka on the left. The first defendant the vodka on the right. The claimant applied for an interim injunction to retrain the first defendant and its sole director and shareholder (the second defendant) from marketing and selling the vodka on the right until trial or further order. The defendants applied to strike out the claim against the second defendant and sought an expedited trial.
The application and cross-applications came on before Mr Justice Mellor as applications by order on 16 Aug 2022. At the end of the hearing, his lordship refused the application for an injunction and the cross-application for a strikeout but granted a speedy trial. He set out his reasons in AU Vodka Ltd v NE10 Vodka Ltd and another  EWHC 2371 (Ch) which he handed down on 21 Sept 2022.
S.37 (1) of the Senior Courts Act 1981 enables the High Court to grant interlocutory or final injunctions in all cases in which it appears to the court to be just and convenient to do so. Subsection (2) adds that any such order may be made either unconditionally or on such terms and conditions as the court thinks just. The circumstances in which a court should grant an interim injunction were considered by the House of Lords in American Cyanamid Co (No 1) v Ethicon Ltd  UKHL 1,  AC 396,  2 WLR 316,  1 All ER 504,  FSR 593. In that appeal, Lord Diplock observed:"The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff's need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff's undertaking in damages if the uncertainty were resolved in the defendant's favour at the trial. The Court must weigh one need against another and determine where 'the balance of convenience' lies."
"It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial. One of the reasons for the introduction of the practice of requiring an undertaking as to damages upon the grant of an interlocutory injunction was that 'it aided the court in doing that' which was its great object, viz. abstaining from expressing any opinion upon 'the merits of the case until the hearing' (Wakefield v. Duke of Buccleugh  12 L.T. n.s. 628 at 629). So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought.
As to that, the governing principle is that the court should first consider whether if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant's continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiff's under- taking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction.
It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.
Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo."
He also quoted the following passage on the American Cyanamid criteria from Wadlow on the Law of Passing Off (6th Edition, 2021):
“(1) Applications for interim injunctions should be decided primarily on the balance of convenience, in the wider sense of that phrase, rather than on the relative strength of the parties’ substantive cases as they may then appear.
(2) There is no rule of law that the court may consider the balance of convenience only if satisfied that the claimant has made out a prima facie case.
(3) The court must, however, satisfy itself that there is a serious question to be tried.
(4) An interim injunction should be refused if damages awarded at trial would adequately compensate the claimant and the defendant will be able to pay.
(5) An interim injunction should be granted if the claimant’s cross-undertaking in damages would adequately compensate the defendant if successful at trial, and the claimant would be able to pay.
(6) If, as will normally be the case, damages would not fully compensate either party, then the issue depends on the balance of convenience.
(7) If other factors are finely balanced, the status quo should be maintained.
The claimant had alleged that the second defendant was personally liable for his own acts and jointly and severally with the first defendant for that company's acts. The defendants asked for both allegations to be struck out. His lordship held that the first was unsustainable but not the second.
The judge directed a two-day trial on the first available date in January 2023. The brevity of the interval between the hearing of the application by order and trial appears to have been one of the factors that his lordship took into account when deciding the balance of convenience.