Judge applies One in a Million principle against CyberScot

If you've seen this movie, you
probably ARE one in a million

It's not often that the IPKat ventures into the remote and exotic surroundings of the Queens Bench Technology and Construction Court, but he has found this delightful little gem from a judge he never knew existed, Mr Justice Edwards-Stuart. The case is Lifestyle Management Ltd v Frater [2010] EWHC 3258 (TCC) and judgment was given last Friday.  In just a few short paragraphs the judge gave interim relief to two foreign companies in their dispute against a Scottish cybersquatter who was not only using near-identical domain names but was allegedly infringing copyright, passing off and acting in breach of confidence.  Since the defendant was demanding money from the claimants, the judge had the opportunity to apply the Court of Appeal's ruling in One in a Million, in which the notion of an adversely-held website being an "instrument of fraud" was espoused.  Since the judgment was so short, the Kat is reproducing almost all of it here.  It's interesting for the jurisdictional issue too.

"... The Claimants are companies registered in Kenya and the British Virgin Islands, respectively. The Respondent lives in Scotland.

The Claimants carry on business in, I assume, Kenya as financial advisers to expatriates from the United Kingdom working, mainly, in Africa. The Claimants engaged the Respondent as an agent. The terms of that contract are not relevant to this application save for the fact that it contained no jurisdiction clause. That contract has now been terminated. The Respondent claims that he is entitled to commission under the terms of the contract which the Claimants have not paid. The Claimants deny that the Respondent is owed any commission, or at least that he is owed as much as he claims.

... The Claimants have a website with the domain name "offshorelsm.com". According to this evidence the Respondent has registered the domain names "offshorelsm.net", "offshorelsm.org" and "offshorelsm.co.uk". If one goes to these websites there is on at least one of them a home page that bears a very close resemblance to the home page of the Claimants' website. On one, if not both, of the others the Respondent has set out confidential extracts of the Claimants' presentation (or method of presentation) to clients and a photograph of the members of the Claimants' staff. These websites contain material that it is arguably defamatory of the Claimants and which is certainly calculated to damage their business.

The Respondent has made it quite clear that he intends to "cyber squat" using these websites until the Claimants pay the sum that he is currently demanding. The terms of his e-mails to the Claimants make it clear beyond any doubt that his intention is to injure their business and to go on doing so for as long as his demand for payment is not met. One of the websites says this in terms.

Mr Matthew Richardson, who appeared for the Claimants ... submits that the Respondent is using these domain addresses, together with the simulation of the Claimants' home page, to deceive clients of the Claimants, or companies and organisations in England who may refer clients to the Claimants, into going onto one or other of his websites in the belief that they are the Claimants' website and then using the content of those websites to damage the business of the Claimants.

Mr Richardson submits that the Respondent's conduct amounts to the tort of using unlawful means to injure another or is a form of reverse passing off, in the sense that having deceived potential clients to go onto his websites they are then exposed to information that is intended to damage or to undermine the credibility of the Claimants' business.

In my judgment the conduct of the Respondent as disclosed in the evidence before me establishes the threefold requirement of (1) a reputation (or goodwill) required by the Claimants in their domain name"offshorelsm.com", (2) a misrepresentation by the Respondent's use of domain names calculated to lead potential clients of the Claimants into thinking that his three websites are websites of the Claimants and (3) damage to the Claimants ... 

Mr Richardson has also referred me to the case of British Telecommunications plc v One in a Million Ltd [1999] 1 WLR 903, a case which the defendants registered the claimants' company names as domain names as part of a scam to gain money from the legitimate owners. Aldous LJ said, at 920:

"In my view there can be discerned from the cases 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."

Whilst the facts of this case are not the same as those in One in a Million, it seems to me that the essential ingredients of a deceptive use of a company name with an acquired goodwill in order to damage the owner of that name are present here.

The problem that troubled me when this application first came before me last week was whether or not I had jurisdiction to entertain the application. As I have mentioned, the Respondent lives in Scotland. Schedule 4 to the Civil Jurisdiction and Judgements Act 1982 provides that persons domiciled in a part of the United Kingdom shall be sued in the courts of that part unless the case comes within rules 3 to 13 of the Schedule.

Mr Richardson relies on rule 3(c). This provides that a person domiciled in part of the United Kingdom may, in another part of the United Kingdom, be sued . . . in matters relating to tort "in the courts for the place where the harmful event occurred or may occur".

Mr Richardson submits, and I accept, that in the circumstances that I have already described potential clients of the Claimants, or companies or organisations who employ such clients and with whom I am told the Claimants enjoy a relationship, may go on to one of the Respondent's websites in the mistaken belief that it is the website of the Claimants - thereby being deceived - and will then be put off by what they find there. This, he submits, is a harmful event within the meaning of rule 3(c) of Schedule 4 of the 1982 Act with the result that the claimants can sue the Respondent in the courts of England and Wales.

I have been persuaded on the evidence before me that this submission is a good one. The evidence indicates also that the Respondent is in possession of the Claimants' confidential database of their clients.

Accordingly, I am satisfied that this Court has jurisdiction to entertain the application and that interim relief should be granted, against the usual undertakings, in the form that I have set out above.

I am not prepared to make the order requiring the Respondent to relinquish his interest in the three websites that I have identified, or to transfer the domain names to the Claimants, without giving the Respondent an opportunity to be heard. I have therefore adjourned that part of the application to the return date".

The IPKat looks forward to the next instalment.

Why BBC stalled in race with The Stig

The BBC's next great idea, "Junior Top Gear"
 -- but will little Tommy overtake The Stig in popularity?

Readers with a mild interest in the parameters of commercial privacy/publicity, or with an obsession with the BBC's "Top Gear" television series, may recall the IPKat's posts here and here on the unsuccessful efforts of the British Broadcasting Corporation to secure an interim injunction to prevent Ben Collins ,the human being whose persona as "The Stig" was the subject of much attention and speculation, from revealing in his biography who he really was. The IPKat guessed what had happened, and his guess was confirmed at the time -- but now the full judgment of Mr Justice Morgan (Chancery Division, England and Wales) is available for all to read and (unless they do the BBC's contract work) enjoy. In short, there was a contract between the BBC and Collins' service company, but no contract and no obligation of confidentiality owed by Collins himself to the BBC.  As the judge put it,

"My conclusion is that Mr Collins was not a party to the relevant contracts. Although Mr Collins signed the contracts, he did so on behalf of the service company which was expressed to be the relevant contracting party, for which he signed. He did not, by his signature, become a further party to the contracts. The BBC contends that Mr Collins must have been a party to, at any rate, some of the earlier contracts because those contracts contained an obligation on the other contracting party that "you will not reveal your identity". It is said that it cannot have been intended that the service company would not reveal its identity; it must have been intended that Mr Collins would not reveal his identity. Therefore, it is argued, the contract must be directly binding on Mr Collins and it should be held that Mr Collins made himself a party to the contract for the purpose of taking on this obligation, but not, apparently, for any other purpose. I agree that the language of the obligation referring to "you" and "your" is not ideal given that the other contracting party is prima facie the service company. The real reason for that is that the parties did not think through the consequences of the fact that the contracting party was the service company rather than the individual performer. There are a number of ways for a court to react to this state of affairs. One is to take the contract literally. That produces the result that the service company contracted not to reveal its identity. That is not an absurd suggestion; if the service company had revealed its identity, that would indirectly reveal the identity of Mr Collins. Another way to read the contract is to hold that the service company contracted not to reveal its identity or the identity of Mr Collins. In my judgment, it is appropriate to hold that the contract is to be read in one or other of those ways and it is not appropriate to hold that Mr Collins himself entered into the contract for the sole purpose of entering into the obligation in question ...".

What about any duty of confidentiality which, apart from the contract, Collins might owe to the BBC? Yes, the judge said, such a duty of confidence existed.  However, that did not avail the BBC since, on the evidence the cat (metaphorically speaking) was out of the bag.

" I will ask whether the identity of The Stig is so generally accessible so that, in all the circumstances, it can no longer be regarded as confidential. In my judgment, the press coverage, in particular the press coverage in August 2010 [nb the BBC's claim was lodged on 17 August and was heard on 31 August/1 September], goes well beyond speculation as to the identity of The Stig. The statements in the press that Mr Collins was The Stig would be understood by the public as statements of fact. The number of different newspapers which have stated that fact is such that the fact is now generally accessible. For all practical purposes, anyone who would have any interest in knowing the identity of The Stig now knows it. The identity of The Stig is no longer a secret and it is no longer confidential information. I conclude that at the latest by 29th August 2010, the date of the last of the thirteen publications (between 19th and 29th August 2010) to which I referred above, the fact that Mr Collins was The Stig was so generally accessible that that information had lost its confidential character. At the lowest, I think it is likely that the court at any trial of this action would reach that conclusion".

All things considered, this was not good news for anyone seeking an interim injunction:

"Such an injunction would not protect the claimant from harm caused by the unlawful action of a defendant. Although such an injunction would deprive the defendant of a benefit, it is not a proper use of the court's power to grant an injunction merely to punish a defendant for his previous unlawful action, where the injunction does not protect the claimant against further harm, unlawfully caused. The court may award a financial remedy to a claimant in such a case, but that is not the remedy sought by the BBC on this application.".

This must be right, as far as it goes, says the IPKat, but it does raise questions as to the bases under which the BBC might seek damages or equitable remuneration at some later stage -- if they have not already contemplated doing so.

What's The Stig doing now? Click here, here and here
A speedy Morgan here

Jinx for Blinxx

Spotted recently on Thomson Reuters' Lawtel subscription service is the decision last week of Mr Justice Floyd (Chancery Division, England and Wales) in Blinxx UK Ltd v Blinkbox Entertainment Ltd.

Blinxx, which since 2004 had run the blinkx.com website ("Over 35 million hours of video. Search it all"), sought interim injunctive relief to stop Blinkbox using the word Blinkbox in the name of its website blinkbox.com from which the company offered its customers, among other things, the ability to choose, customise and share video and television clips. After Blinxx discovered that Blinkbox had applied to register various Community trade marks which included the word BLINK, Blinxx wrote to Blinkbox, complaining that the latter was clearly attempting to utilise Blinxx's reputation, which was to Blinxx's disadvantage. Blinxx did not however bring proceedings against Blinkbox until some years after this initial correspondence.

In the action before Floyd J, Blinxx sought interim injunctive relief, maintaining that Blinkbox was infringing its trade mark and passing off and that it had been appropriate for it to delay the commencement of its proceedings until such time as actual confusion arose in the market between the two services.

Floyd J refused Blinxx's application. In his view,

* Blinxx had known since at least 2008 that Blinkbox was providing an on-demand media service through its website but had taken no ealier steps to issue proceedings despite that knowledge. The possibility that the two services might be confused should have been apparent in the light of what Blinxx knew.

* It was wholly unreasonable and completely unjustified for Blinxx to wait to issue proceedings. In commercial terms, if Blinxx won and got its injunction, Blinkbox would have to stop using its name and would immediately face the loss of advertising revenue, potential breaches of licensing agreements and the cost of a re-branding exercise -- all of which might prove unnecessary if it were to be successful in the substantive action. On the other hand, while Blinxx would suffer only some possibility of harm to its existing business if its application was refused. This meant that there would be an element of finality to the proceedings if the interim injunction was granted.

* If Blinxx had acted promptly, the balance of convenience might have favoured the grant of an injunction. As it was, its delay was fatal.

The IPKat thought this was a real no-brainer. We've been reminded so often by the courts that a delay in seeking interim injunctive relief is apt to have fatal consequences that -- unless the Lawtel note has omitted some salient facts that spoke in Blinxx's favour -- it's difficult to see why the good judge had to be troubled by this application. Merpel says, just as we're all talking about graduated responses to file-sharers, why not have graduated responses for litigants in IP infringement proceedings? The first time you sue someone, you get two years within which you can still obtain interim injunctive relief; second time you have just six months; third time you have to commence proceedings within a week ...

Blinking reflex here

What cats mean when they blink here

How to blink at cats here

Blinking nuisance here

India: will IP litigation be both 'punctual' and 'faithful'?

Thank you, Amit Jamsandekar, for sending the Kats this fascinating (and blessedly short) ruling of the Indian Supreme Court on 16 September in Bajaj Auto Limited v TVS Motors Limited, MANU/SC/ 1632/2009 which, says Amit, is "expected to change the entire scenario of intellectual property litigation in India".

Right: Indian IP litigation is quite tigerish at interim level, but rarely gets beyond it ...

Explains Amit:

"Justice Katju [as a Jewish Kat, Jeremy loves this name!] noted the judgment of the Supreme Court dated 7 September 2009 (which is not reported and went unnoticed) in Special Leave Petition (C) No. 21594 of 2009 in Shree Vardhman Rice & Gen Mills v Amar Singh Chawalwala in which the Court said:

“...Without going into the merits of the controversy, we are of the opinion that the matters relating to trademarks, copyrights and patents should be finally decided very expeditiously by the Trial Court instead of merely granting or refusing to grant injunction. Experience shows that in the matters of trademarks, copyrights and patents, litigation is mainly fought between the parties about the temporary injunction and that goes on for years and years and the result is that the suit is hardly decided finally. This is not proper.

Proviso (a) to Order XVII Rule 1(2) C.P.C. states that when the hearing of the suit has commenced, it shall be continued from day-to-day until all the witnesses in attendance have been examined, unless the Court finds that, for exceptional reasons to be recorded by it the adjournment of the hearing beyond the following day is necessary. The Court should also observe Clauses (b) to (e) of the said proviso.

In our opinion, in matters relating to trademarks, copyright and patents the proviso to Order XVII Rule 1(2) C.P.C. should be strictly complied with by all the Courts, and the hearing of the suit in such matters should proceed on day to day basis and the final judgment should be given normally within four months from the date of the filing of the suit."

The Court added that the fact that the litigation is mainly fought in India in respect of a temporary injunction is a very unsatisfactory state of affairs. He held that the order passed in Shree Vardhman Rice & Gen Mills, which is quoted in the present judgment, was passed to serve the ends of justice. Significantly, the Supreme Court has directed all the Court and Tribunals in India to follow the order passed in Shree Vardhman Rice & Gen Mills "punctually" and "faithfully".

The reaction of the Supreme Court was much awaited considering the practice followed in India for IP litigation. In practice, IP litigation in India ends at the interim stage. It would be interesting to learn how the Courts and Tribunals and the IP Professionals react to the Judgment of the Supreme Court. By virtue of the provision of the Constitution of India, the judgment of the Supreme Court is law of the land.

Today, civil courts are severely over-burdened. Apart from IP, they also adjudicate all other disputes of civil nature. As things stand today, the civil courts find it difficult to dispose of interim applications during the pendency of the suit within the timeframe provided as per the Code of Civil Procedure, 1908. Additionally, there are no specialized civil courts, which adjudicate singularly on IP matters. The Intellectual Property Appellate Board (IPAB), established under the Trade Marks Act 1999, which has jurisdiction under the Patents Act, can only try matters in respect of opposition to and rectification of trade marks/ patents/ designs. The IPAB also has jurisdiction to entertain, try and dispose of appeals from the orders passed by the Controller of Patents and the Registrar of Trade Marks. However, the IPAB has no jurisdiction to try infringement suits; the civil courts have the exclusive jurisdiction in respect of the same.

In this scenario, given their constrained bandwidth, it would be interesting to see how civil courts follow the Supreme Court’s directive “punctually” and “faithfully”.

This weblog has a large, enthusiastic and vocal Indian readership. Accordingly the IPKat expects to receive plenty of comments from the subcontinent.

Judge puts Strip Party on hold

Interim injunctive relief to stop use of the word "nude" may not have been granted (see earlier IPKat post here and Class 46 post here), but the word "strip" has fared rather better.

Right: from the safety of her vantage point on the roof, Tiddles looked down to see whether the Feline Depilator Squad had left the area yet ...

In Strip Ltd v Strip Pte Ltd and Strip UK Ltd [2009] EWHC 2070 (Ch) Mr Justice David Richards (Chancery Division, England and Wales) granted interim relief in an action for passing off brought by a celebrity waxing and depilatory business against another which, having traded in Singapore, Malaysia, Indonesia and Dubai under the names “Strip” and “Strip Co-Ed”, was about to open up in London under the name "Strip Co-Ed" and was just one day away from its launch party. The claimant had traded as "Strip" in London since 2005 and was the only local business to do so. The invading depilators had traded under their names since 2002.

Could the claimant legitimately seek to monopolise the word "Strip"? The judge thought so:

"22. Mr. Baldwin [for the defendants] submits further that any loss of business which is associated with the name “Strip” is not capable of protection by the law of passing off because in connection with depilatory services the word “strip” is no more than descriptive and that it has no real distinctive quality. ...

23. On this interim application, I am satisfied that the claimant has a very serious argument to the effect that the word “Strip” in this context – I say absolutely nothing of completely different businesses – is, or may well be distinctive and is not simply a descriptive term".

The judge accepted that there was a real prospect of damage to the claimant if no interim injunction were granted, and a real prospect of damage to the defendants if it were. The clincher was the fact that the claimant was already trading in London but the defendants weren't. He added:

"29. ... The fact that [the defendants' business] is due to open this week and this application is being heard the day before the launch party is, in my view on the evidence before me, the almost exclusive responsibility of the defendants".

Says the IPKat, this was basically because, while there was a history between the parties in relation to trade mark opposition and invalidation proceedings, the defendants didn't invite the claimant to their launch party, and certainly didn't keep the claimant fully informed about its launch plans. Merpel adds, if counsel for the defendants had succeeded on behalf of its depilatory client, it would definitely be a case of a Bald-Win. Indeed, adds Tufty, something to wax lyrical about.

This decision is not yet on BAILII but you can read it here. Thank you, Douglas Campbell (Three New Square), for tipping the Kat off.

Hair removal -- not be confused with unhairing.

How to use an Epilady here

How to remove cat hair here

Hair of the dog here

Stella's nude perfume in the pink with Floyd

The Telegraph was first off the blocks with breaking news of this morning's court action in the dispute between Nude Brands Limited and Stella McCartney Limited (SML) over the former's right to stop the latter using the word "nude" as part of the name of its new STELLANUDE eau de toilette.

Right: The IPKat also launched a Nude perfume, but the printers left the "k" out of "skin" ...

Nude Brand, which holds registrations for the word NUDE in many classes (see earlier IPKat post here), alleges trade mark infringement and, in today's proceedings, applied for interim injunctive relief ahead of STELLANUDE's proposed launch this Saturday. Two other defendants in this action were SML's co-venturers in the STELLANUDE launch, L'Oréal and YSL Beauté.

Mr Justice Floyd, refusing the interim relief, said at para.53 of his judgment:

"I have come to the conclusion that the balance of injustice in this case requires me to refuse the injunction. It seems to me that, in this particular case, the likely damage to SML and L'Oréal if an injunction is wrongly granted outweighs the damage to NBL if it is refused. Whilst NBL may ultimately prevail at the trial, it seems to me that an injunction and damages at that stage, though far from perfect as remedies, are more likely to be able to restore them to their rightful position than an award of damages under the cross undertaking to SML. The effect of an injunction wrongly granted against SML would be to cause a massive disruption to their business, and probably cause them to abandon use of the brand altogether. Against this I regard the likelihood of actual confusion between the products in the market place in the form in which they are currently presented as minimal. In coming to this conclusion I have not needed to attach any weight to an attack by SML on the ability of NBL to pay. Nevertheless, even though an offer to fortify the cross undertaking in damages by deposit of up to £1 million with NBL's solicitors was made, I was not persuaded that if an injunction was granted, NBL's asset position is such that the award of damages on the cross undertaking would provide full protection to SML and L'Oréal".

You can read the judgment in full, together with the pretty pictures, here.

Judge not rash in psoriasis ruling

On Wednesday the Court of Appeal for England and Wales (Lords Justices Mummery, Jacob and Wilson) heard the appeal in Leo Pharma and another v Sandoz Ltd, a decision of Mr Justice Mann this March (see earlier IPKat post, "Dangerous to use common sense" Says Patent Judge, here). The Court of Appeal is not yet available on BAILII, though it has been briefly noted on the LexisNexis Butterworth subscription-only service.

Right: the IPKat is working on a new process for making calcipotriol monohydrate ...

Leo, the first claimant, held a patent for calcipotriol monohydrate, a new crystalline form of calcipotriol used to treat psoriaris, the second claimant being Leo's subsidiary. Sandoz, a big player in the generic pharmaceutical market, secured market authorisation for a cream containing the monohydrate version of the calcipotriol molecule, whereupon Leo roared "patent infringement!" and applied for an interim injunction to stop the distribution of the cream.

The question arose as to whether damages would be an adequate compensation for Leo if Sandoz were allowed to sell the cream up till the time of the trial, and as to the adequacy of a cross-undertaking in damages for Sandoz if that company were banned from selling a cream which, if it later turned out, they were allowed to trade in. On top of this, Leo's own financial difficulties were relevant, particularly in the light of its potential loss of sales and the need to reduce its own prices in order to combat the presence of a competitor in what would otherwise have been its monopoly market. Sandoz, on the other hand, wanted to protect itself against the loss of the benefit of being the first generic supplier to market the cream. Finally, the effect of the balance of convenience and the status quo fell to be determined.

Mann J allowed Leo's application. On the evidence, Leo would not adequately be compensated by damages and the balance of convenience meant that the injunction should be granted. Sandoz appealed, complaining that Mann J had erred in principle by taking into account the likelihood of Leo having to cut its prices before trial.

The Court of Appeal dismissed the appeal. In its view it was important to bear in mind precisely what it was that the judge had to consider. He did not have to decide on a balance of probabilities whether there would be price cuts if the injunction were not granted. His job was to undertake an entirely different exercise -- to consider the various possibilities that might happen before the trial, disregarding those possibilities which were fanciful. If there was any chance of a circumstance occurring, the judge was entitled to consider whether that circumstance affected the question of whether damages were an adequate remedy. That's what Mann J and his judgment could not be faulted.

The IPKat, who regarded the original decision as impeccable, naturally agrees with the Court of Appeal too.

Psoriasis here, here and here

Past interpretation no guarantee of future performance

The topsy-turvy world of patent construction got a little bit more topsy-turvy this week with a neat little ruling on whether a trial court was bound by an earlier trial court's interpretation of a litigated patent. That ruling was Novartis AG v Dexcel-Pharma Ltd [2008] EWHC 1266 (Pat), a decision of Mr Justice Floyd this Tuesday.

Novartis owned a patent for 'pharmaceutical compositions containing cyclosporins', these being a class of immunosuppressive drugs which were important in the treatment of transplant patients since they helped prevent the rejection of transplanted tissue. Cyclosporins did not dissolve very well in aqueous media, which reduced their bioavailability. Novartis's patent was for a novel cyclosporin formulation in the form of a micro-emulsion pre-concentrate.

Dexcel wanted to launch a new pharmaceutical product comprising a cyclosporin as its active ingredient. Novartis said this infringed its patent and sought interim injunctive relief. Dexcel was not deterred, arguing that, on the basis of the construction of the same patent in earlier litigation, there was no serious question to be tried on the issue of infringement.

Floyd J allowed the application for interim injunctive relief. In his view it was seriously arguable that a subsequent court was not actually bound by a previous court's conclusion as to the correct construction of a patent specification where the earlier conclusion depended on evidence which was either lacking in the previous case or materially different in the later case. In this instance, the question as to whether Dexcel's product infringed was a serious issue which fell to be tried. Both parties conceded that the other would suffer unquantifiable loss if the 'wrong order' was made. Nonetheless, the balance of convenience fell in favour of granting the injunction to stop Dexcel from marketing its product until the infringement issue was determined.

The IPKat says, how exciting this all is. First the Court of Appeal whittles down the ambit of res judicata (see the IPKat here); then it says it's not bound by its earlier decisions if they no longer fit European Patent Office doctrine (see the IPKat here); now previous interpretations of patents can be cast aside too. Merpel says: it's the usual trade-off between (i) justice in the individual case and (ii) predictability of the judicial process. Which would you pay more for, any why?

"Dangerous to use common sense", says patents judge

A treatment for psoriasis was at the core of Leo Pharma and another v Sandoz Ltd, a decision of Mr Justice Mann in the Chancery Division, England and Wales, on 17 March 2008. So far this decision has only been picked up by LexisNexis Butterworths' subscription-only site.

Leo held a patent for calcipotriol monohydrate, a new crystalline form of calcipotriol which was used in the treatment of the skin disease psoriaris. The patent claimed that the monohydrate form had technical and stability properties better than those of the existing anhydrate form. On April 2007 Sandoz obtained market authorisation for a calcipotriol ointment, launching the product shortly thereafter. On 18 June, it obtained market authorisation for a cream, the authorisation being posted on a publicly available website on 26 July.

Leo obtained a sample of the ointment and, on testing it, found that it contained the monohydrate version of the calcipotriol molecule. On 28 August Leo's lawyers wrote to Sandoz, stating that the ointment infringed its patent. Their letter added that Leo understood that the cream was to be launched in September and requested a sample, inferring that it too would contain the monohydrate molecule.

In the subsequent correspondence between the parties, Sandoz refused the request for a sample on confidentiality grounds and challenged the reliability of Leo's testing procedures. Sandoz continued to refuse the request, which was repeated on several occasions, and failed to disabuse Leo of their mistaken belief as to the date of the cream's launch, which actually occurred on 31 October. Following a further request for a sample made in December, Sandoz told Leo that the cream had been on the market for some time, meaning they could obtain a sample from a third party. Having experienced difficulties in getting hold of a sample, Leo repeated the request and later told Sandoz that it would be bringing infringement proceedings. At this point Sandoz made samples available, the testing of which revealed the presence of the monohydrate molecule, which constituted 15% of the crystalline forms detected.

At this point Leo applied for an interim injunction to stop Sandoz distributing the cream. Sandoz argued that there was no serious issue of infringement to be tried since, according to Leo's own tests, the presence of monohydrate crystals was so small that, as a matter of common sense, the beneficial effects referred to in the patent were not present. Questions also arose as to whether damages would be an adequate remedy for Leo if Sandoz were allowed to market the cream until trial, and as to the adequacy of any cross-undertaking in damages that Leo (whose own financial position was in doubt) would have to make in favour of Sandoz in the event that interim relief should not have been granted.

Mann J allowed Leo's application for interim relief. In his assessment of the situation

* there was a serious issue to be tried regarding infringement. It would be dangerous for a judge in an interim application to use common sense to determine what is ultimately likely to be a technical question that might require expert evidence.

* as to the balance of convenience if an interim injunction were either granted or refused, both parties had a case for saying that financial compensation would be inadequate to address their losses, although the impact of the financial uncertainty was greater so far as Sandoz was concerned. Accordingly, it was necessary to turn to other factors going to the balance of convenience and, if necessary, the status quo.

* the balance of convenience and what could be taken to have been the status quo also pointed in favour of granting an injunction. The correspondence in this case showed that Sandoz had embarked on a deliberate tactic to obstruct Leo as far as possible. While this was not something which was legally wrong, since Sandoz was entitled, as a matter of law, to employ this tactic, the fact that it had done so would have an effect on the balance of convenience and on determining the appropriate period by which the status quo was measured.

* the uncertainties relating to the adequacy of damages were created by Sandoz itself. This shifted the balance of convenience in favour of granting an injunction. Likewise Sandoz could not rely on a status quo whereby it had been distributing its product for three months as a result of its own unreasonable behaviour.

The IPKat agrees with the result, but wonders whether it is strictly correct to predicate the issue of balance of convenience -- an issue relating to the future -- upon the nature of the defendant's past conduct. It would have been nicer, he thinks, if the court was able to say that, since Sandoz's own conduct, though not unlawful, was not very sporting or cooperative, equity favoured Leo whose own conduct had been (on the brief facts of the LexisNexis note) irreproachable. Merpel adds, the conduct of patent owners is often the subject of adverse criticism; it makes a change to see the reproaches being aimed at the alleged infringers. Says Tufty, here's a conundrum: the judge says that it's dangerous to rely on "common sense" to determine a technical issue -- but the decision not to leave the technical issue to common sense is itself a decision that is based on common sense. Sort that one out!

More on psoriasis here
Coming up to scratch: psoriasis treatments for cats here

Roundabout trade avoids trade mark infringement, says Court of Appeal

The IPKat has been a little slow to report on Eli Lilly and Co and another v 8PM Chemist Ltd [2008] EWCA Civ 24, a decision of the Court of Appeal for England and Wales earlier this month, on appeal from the ruling late last year from Mr Justice Mann (noted here by the IPKat).

In brief, Eli Lilly -- a big international pharma company -- owned the Community and UK registrations of the Cialis, Lilly, Evista, Humalog and Humulin word and logo trade marks. 8pm, a substantial UK company, ran a pharmacy business. Eli Lilly's products sold well in the USA, where patients tried to buy genuine goods more cheaply outside the USA, generally by using the internet. This was done in the following manner: USA patients would first get a doctor's prescription for the product; they would then order it from a Canadian company, which placed an order with a Turkish company (which had genuine stocks of the drugs concerned, packaged in boxes bearing the Lilly trade marks, instructions in Turkish and containing information leaflets in Turkish). That order would then checked by a pharmacist, who reviewed the dispensing label to check the directions. The appropriate label would then be stuck on to the side of the Lilly box, following which the product would be placed into a brown box which was sealed and given a label containing just the patient's name and address. Each brown box was then air-freighted to 8pm in the UK, where the box remained sealed and the relevant trade mark was not revealed. Boxes would then be posted to the patient in the US.

8pm's activities were all carried out under an authorised Customs procedure which enabled products to be processed or dealt with in the UK without incurring the obligation to pay duty or VAT. The goods were under 'inward processing relief suspension' and were, accordingly, not 'released for free circulation' in the EU. Eli Lilly sued for trade mark infringement and, in an application for interim relief, Mann J held that there was an arguable case of infringement and granted an interim injunction. 8pm appealed.

The Court of Appeal (Lords Justices Rix and Jacob and Sir William Aldous) allowed the appeal.

* The European Court of Justice of the European Communities in Case C-405/03 Class International BV v Colgate-Palmolive Co (here ) had made it plain that a trade mark owner's goods which were 'non-Community' goods were to be regarded as not having entered the EU for trade mark infringement purposes. This was so, regardless of the fact that those goods had a physical presence.

* Using a mark in the course of trade required introduction of the goods into the Community for the purposes of putting them on the market there. As long as the requirements of the customs-approved treatment or use, other than release for free circulation, under which the goods had been placed were satisfied, the mere physical introduction of the goods into the territory of the Community was not 'importing' and did not entail using the mark in the course of trade.

* The key issue is whether there is an interference with the right of first marketing within the EU. The genuine goods of a trade mark that never become Community goods do not interfere with that right.

* The essential function of the claimants' European trade marks was in no way jeopardised by 8pm's activities. No one in Europe even saw the trade marks and it was unlikely in those circumstances that there would be infringement.

* There was no use of the marks 'in the course of trade'. 8pm's acts were all in relation to goods subject to Customs control and none of the goods ever became Community goods. It followed that the marks were never used in the course of trade in the EU. The giving of an impression to consumers in the USA that goods emanated from the UK, if that could be proved, did not make the case arguably different from that in the case law of the European Court of Justice.

The IPKat can't fault the reasoning of the Court of Appeal, but he feels unhappy at the result. That's not to say that he believes that the principle of Class International is wrong, but rather that any set of rules that requires such a roundabout business model in order to comply with the formal rules relating to trade mark infringement creates the impression that something dodgy is being done.

Anonymised net drug sales might yet infringe

The IPKat found this decision a little while ago on subscription service Lawtel, but has only just caught up with it. It's Eli Lilly & Company and Lilly Icos LLC v 8PM Chemists Ltd, a Chancery Division for England and Wales decision of Mr Justice Mann on 23 November.

Eli Lilly made and sold prescription drugs under its trade marks. PM, a UK-based business, ran an operation that enabled US customers to buy Eli Lilly drugs cheaply over the internet. This was done in the following manner: customers would place orders on a website. The drugs were then supplied from Turkey by a Turkish supplier having first been repackaged under "anonymous" packaging. Thus repackaged, the drugs would be sent to PM in the UK, from where they would be dispatched to individual customers in the US.

This dispute arose after UK Customs officials became suspicious that some of the drugs in one consignment might be counterfeit. Eli Lilly was granted an ex parte injunction restraining the use that PM could make of the goods in that particular consignment, as well as a Norwich Pharmacal to require the disclosure of information concerning the consignment's origins.

Before the court on this occasion was the question whether Eli Lilly had an arguable case for trade mark infringement. This in turn depended on whether PM was importing or exporting products in relation to which the trade mark was registered, contrary to the Trade Marks Act 1994 s.10(4)(c). According to PM, (i) there had been no trade mark infringement since the goods had been brought into the UK under the inward processing relief system and all were intended for re-export. If there had been no import, there could not have been any export; (ii) Eli Lilly's ex parte application for the interim injunction had been attended by such serious non-disclosure that the original order should be discharged. Eli Lilly disagreed, and applied for the ex parte relief to be continued.

Mann J, holding for Eli Lilly, continued the injunction. In his view

* Eli Lilly had an arguable case that its trade marks were being infringed. The ECJ ruling in Case C-405/03 Class International BV v Colgate-Palmolive Co (noted here by the IPKat) suggested that the holding of goods under Customs warehousing procedures or external transit procedures was not, without more, an import. The same was very likely to be true of the inward processing relief system. However, while the ECJ was saying that putting the goods into free circulation within the European Union constituted an import, it was not saying that nothing short of such an act would be capable of amounting to an import.

* It was properly arguable that the impression given by the method of distribution used in this case was that the drugs had an English origin. That, coupled with the manner in which the goods arrived in the UK, made it arguable that this case was distinguishable from the more ordinary transshipment cases envisaged by the ECJ in Class, and that the acts amounted to "importing" within the meaning of s.10(4)(c) of the Act.

* The fact that the drugs were placed in anonymous packaging in Turkey did not necessarily mean that the importation was not under the mark. It was more likely that the expression "under the sign" qualified the goods, rather than the act of importation, the goods being under the sign if they bore it or were associated with that sign.

* The balance of convenience was in favour of granting an appropriate injunction until trial, given that the reputation of Eli Lilly's trade marks in relation to its products was at stake. Any damage done to it would not be easily remediable.

* Two out of the three allegations of non-disclosure raised by PM failed. The subject of the third allegation, while amounting to culpable non-disclosure, was not of itself sufficient to justify discharge of the original ex parte injunction.

The IPKat concurs with this. If everyone trading in the drugs knows what they are and who is making them, but seeks to circumvent the trade mark right by blanking out the marks and taking a devious shipping route, while the "course of trade" is effectively British, it makes good sense in pre-trial proceedings to look at the substance of the transaction rather than at the niceties.



Left: the IPKat blasts off from Ankara, seeking a new route to the United States that does not cross UK air-space


There will be plenty of opportunity for the court to take a more literal view of the scope of trade mark protection once the merits of the argument are properly aired. Merpel adds, the main problem here is that the ECJ in Class International only did what it was supposed to do, and considered the law on the basis of the facts before it: it's quite likely that each trade dodge that seeks to circumnavigate the notion of putting goods into circulation within the European market, will be separately tested with an ECJ reference.