Friday 22 October 2010

Summary judgment, but no quick fix on costs

At least in England and Wales, where a large-scale IP owner finds itself constantly having to commence proceedings against small defendants, where (i) the value of each infringement is very small in financial terms but (ii) the perception that infringers can "get away with it" damages the confidence of lawful traders, the IP owner often commences proceedings which the defendant cannot and/or will not defend, being willing to accept an undertaking not to infringe in future and delivery up of infringing stock if applicable. The threat held over the head of the small defendant is that, if the case goes to trial, the IP owner will seek an order for costs.

In the Patents County Court, in Nike International Ltd & Ors v Bateman [2010] EWPCC 010 (11 October 2010), a small-scale infringer imported a single pair of Nike trainers which he purchased over the internet. Since he put in a defence that he did not know the trainers were counterfeit, Nike could not obtain judgment in default and had to seek summary judgment. Said Judge Birss QC:
"It may be questioned whether the sledge hammer of these proceedings is necessary in order to crack this nut of this magnitude but ... I accept, that brand owners in this situation have no realistic alternative to enforcing their rights this way. Accordingly although this appears to be the smallest of cases, nevertheless the Claimant is entitled to bring proceedings".
But what of the question of costs? Nike's solicitor warned the defendant of the problem the defendant faced with his defence (i.e. that it was not a defence to the action) and offer to settle on terms, warning him that, if he did not settle, his client would seek its costs. The defendant wrote back:
"Could this action please be transferred to my local county court?
Unfortunately I cannot deliver any goods as I have not received anything as these goods were seized on entry to the country.
I ordered these goods in good faith over the internet believing them to be authentic; I will not be ordering anything else.
This was a simple mistake. and the only information I can you give about the supplier is the msn contact I used this is
I undertake not to infringe the Claimants rights in the future and consent to the destruction of the goods".
On this offer Judge Birss QC had this to say:
"In substance the Defendant offered the Claimant all the relief it sought in the letter and it seems to me that the better course would have been for the Claimant to engage with the defendant to produce a consent order in appropriate terms. I understand ... that the Claimant proceeded with this application for judgment because [the defendant] had sought to transfer the case to another county court. While I can understand the Claimant's desire in a case like this not to devote undue resources to the matter that does not seem to me to be a cogent reason for avoiding doing so. Even if, which is unclear but may be the case, the letter was only sent after the application for summary judgment had been served, it still seems to me that some sort of engagement with the Defendant would have been preferable in the circumstances. 
Accordingly I will make no order as to costs".
The moral is clear: both pressing for judgment and sorting out a consent order will cost an IP owner money -- but if he doesn't opt for the latter in cases such as this, he won't get costs when he goes for the former. Multiply this a few hundred times over and you have an enforcement spend issue that requires budgeting aforethought.


Anonymous said...

S. 10(1) states "...uses in the course of trade a sign..."

10. (4) defines use of the sign as including import of goods.

BUT, still has to be in the "course of trade" to be infringement.

Bateman only ordered one pair - what sort of "trade" is that?

Seems a bit harsh to find infringement in those circumstances

Jeremy said...

Bateman's defence wasn't that his importation wasn't in the course of trade and he never said the trainers were for his personal use. He was one of a batch of eight defendants who had ordered trainers from the same detained consignment, and he purported to have no fixed address. Naturally I'd be happy to give him the benefit of the doubt ...