[2006] IEHC 45
THE HIGH COURT

[2006 462P]
BETWEEN

CONTECH BUILDING PRODUCTS LIMITED
PLAINTIFF
AND

JAMES WALSH, CONTECH (NORTHERN IRELAND) LIMITED 
AND C-TECH NI LIMITED
 DEFENDANTS

EX TEMPORE JUDGMENT of Ms Justice Geoghegan delivered on the seventeenth day of February, 2006

This is an application for an interlocutory injunction seeking to restrain the defendants from passing‑off certain products not sold and distributed by the plaintiff as the products of the plaintiff, in particular by the use of the names "Contech CT7" and "CT7trans".

Whilst the application is couched in more general terms, the focus of the application on the affidavits and in the submissions is a product which is a sealant sold under the name "CT7" by the defendant, and in conjunction with, over differing periods of time, under the name "Contech" or "C‑Tech".
 
The background to the present dispute is well known to the parties, but what may be shortly stated is that between 1992 and May 2003, Mr Oliver Dunne, who is the Managing Director of the plaintiff and first name defendant, Mr Walsh, were together involved in business through a number of Northern Ireland companies and companies in this jurisdiction.  It appears that in the summer of 2003, they went their separate ways and reached and entered into an agreement in July 2003, which provided essentially that Mr Walsh took over the ownership and running of the Northern Ireland companies and Mr Dunne that of the companies in this jurisdiction.  That agreement included a non‑compete clause for two years.

The plaintiff company is, stated by Mr Dunne on affidavit, to have been in the business of selling and distributing maintenance products in the building and allied trades market and, in particular, since November 2003 has marketed and sold a product range known as the "7 range" and, in particular, products known as "Tech 7" and "Trans 7", which are distributed by Novatech NV of Belgium; the plaintiff has the exclusive right to distribute those products in Ireland.  Those products are used to bond and seal in the building industry and are sold in 310ml tubes.  

Mr Dunne has averred that he became aware, in October 2005, that the defendants were importing sealant from a company of the Netherlands called "Hercuseal BV" into Northern Ireland, and he subsequently became aware that this product was being sold by one or other of the defendants in this jurisdiction as "CT7".  He also became aware that the defendants were using leaflets which, it is alleged, contain, on one of the pages, wording which is substantially the same as the wording used by the plaintiffs in the leaflets provided with the "Tech 7" sealant.

The plaintiffs, through their solicitors, wrote initially on the 22nd November to the first named defendant alleging passing‑off and there was further correspondence then with the second and third named defendants in December, and these proceedings were commenced on the 2nd February and an immediate motion brought seeking an interlocutory injunction.

The plaintiffs allege that the defendants, in the manner of get‑up of the sealant product "CT7", are passing‑off and refer, in particular, to the similarity of the tubes; the use of the number "7" in the name; the position of the number "7" in the name after the letters and at the commencement of the sales, the use of the word "Contech" in a prominent position on the product.

The defendants have responded by stating on the facts that they are no longer using the word "Contech", and are now using the word "C‑Tech" on the top of the product.  The two tubes were produced in the course of the interlocutory application.

In considering an application for an interlocutory injunction, this court has a rather limited function in relation to the disputes at issue.  There was substantial agreement between counsel for the respective parties as to the applicable principles, and I think I may shortly state that I can do no better than follow the approach of Laffoy J in Miss World Limited v. Miss Ireland Beauty Pagent 2004 I.R. 394.  In that judgment, Laffoy J at page 39 summarised the function of the court in such an interlocutory application as being:  

"...to determine whether:‑ 
  
 (a)   the plaintiffs have raised a fair and bona fide question to be tried; 
 
(b)   if they have, in the event of being refused an injunction and succeeding in the action, they would be adequately compensated by damages; 
 
(c)   if they would not, in the event of the injunction being granted and the plaintiffs failing to succeed in the action, the defendants would be adequately compensated by damages; and 
 
(d)   the balance of convenience lies in favour of granting or refusing the injunction."
 
 The first question then is whether the plaintiffs have raised a fair and bona fide question to be tried.  The allegation is that the defendant is passing‑off, or seeking to pass‑off, its goods as those of the plaintiff.  Again, it appears to me that the approach of the court to this question is well set out in the same judgment of Laffoy J, where she followed the three part test formulated by Lord Oliver in Reckitt and Coleman Products Limited v. Borden inc 1990 1 W.L.R. 491 at page 499.  

Lord Oliver, I am not going to quote the entirety of the passage, summarised a three part test.  The first being that the plaintiff must establish a good will or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying get‑up, such that they are recognised as distinctive specifically to the plaintiff.  Secondly, the plaintiff must demonstrate a misrepresentation by the defendant to the public, whether or not intentionally leading or likely to lead the public to believe that the goods or services offered by him are the goods or services of the plaintiff.  Thirdly, the plaintiff must demonstrate that he suffers, or is likely to suffer, damages by reason of that erroneous belief engendered by the defendants' belief of misrepresentation.

On the facts set out in the affidavits, I am satisfied that the plaintiff, in this action, has demonstrated that it has an arguable case.  I am satisfied, firstly, that it has, established a prima facie case that it has a reputation and good will in, what is described by Mr Dunne as the, "7 range" and in particular "Tech 7" and "Trans 7".

Secondly, I am satisfied that there is an arguable case that the use of the name "CT7"; the manner in which the tube is got‑up and this name placed on the tube either in association with the word "Contech" or "C‑Tech" is such that it is likely to lead the customers, who may be either members of the public or members of the trade, to believe that these may be the products distributed by the plaintiff.  

Thirdly, I am satisfied that it has established a probability of loss if such confusion arises.

That being so, I must now move on to the second question identified which is: if an injunction is now refused to the plaintiff and the plaintiff succeeds at the trial, will the plaintiff being adequately compensated by damages?  On this issue, there was some dispute between counsel as to the proper approach of the court and Mr O'Floinn, for the defendant, suggested that the court should not take what was, perhaps, a more straightforward approach in some of the earlier decisions; I think, in particular, following a decision of Costello J in Mitchelstown Creamery that it was axiomatic in cases of passing‑off, that damages would not be an adequate remedy.

I accept that the court should look at is question on the facts of each case.  On the facts of this case, the plaintiff has asserted as part of such claim that it believes that the product being sold by the defendant under the "CT7" name is an inferior product to the product being sold under the name "Tech 7".  This is hotly disputed on the affidavits, and it is not possible for me to resolve that disputed issue of fact on the affidavits.

Leaving aside that allegation, I am satisfied that if the plaintiff were now refused an injunction but succeeded at the action, that it would not be adequately compensated by damages.  Mr Dunne has averred that an estimated €100,000 has been spent in marketing the "Tech 7" product, or the “7 range" more accurately, since November 2003.  

He has also expressed a concern that if the defendant is permitted now to continue selling the "CT7" product, or selling its sealant product under the name "CT7" and present get‑up, that the plaintiff would lose market share which it would not easily regain.  I am satisfied that it would not be possible to quantify the losses potentially arising to the plaintiff under each of those headings and, in that sense, it seems to me that I could not be satisfied that the plaintiff would be adequately compensated in damages.

The next issue is: if the injunction is granted and the plaintiff fails at the trial, would the defendants would be adequately compensated in damages.  Similarly, I have concluded that the defendants would not be adequately compensated in damages.  The defendants are in a start‑up situation in this jurisdiction in the sale of this sealant product, and it seems to me that it would be not be possible to quantify, with any degree of confidence, the loss which the defendants would suffer if they are now restrained but was ultimately successful in defending this claim.

That being so, I must turn to the last question as to whether the balance of convenience lies in favour of granting or refusing the injunction.  I accept, in considering this question, that this court must not attempt, in any way, to express a view on the strength of the contending submissions in relation to the fair question to be tried.  This appears to follow from the decision of the Supreme Court in Westman Holdings Ltd v. McCormack 1992 1 I.R. 151.  I also accept that the preservation of the status quo is an important factor in determining the balance of convenience.

Mr O'Floinn, on behalf of the defendants, submitted that in approaching the preservation of the status quo, the court must consider the position as of the date of the hearing and submitted that the current status quo is that the defendants are selling the "CT7" products in this jurisdiction.

Whilst I accept that the court should take into account the actual position as of today and, for instance, I take into account fully the fact that the defendant is now selling the product under the name "C‑Tech", or with the name "C‑Tech" rather than the name "Contech", it does not appear to me that in considering the preservation of the status quo in an application to restrain passing‑off in what is a start‑up situation, that the court is confined to looking at the position at the date of the hearing.

It is very common in injunctions sought to restrain passing‑off, that the plaintiff will only have become aware of the new product which it alleges is being passed it off as the plaintiff's goods when it commences to be sold on the market in question.  There are some examples of situations where a plaintiff may learn in advance of the commencement of the sale of a product and seeks to move for a quia timet injunction.

However, where a plaintiff moves speedily after learning of the commencement of selling of a product on a market, it appears to me that the status quo which the court must primarily have regard to is the position which prevailed before the commencement of the alleged wrongful acts, or the acts alleged to constitute the passing‑off.  I am satisfied, in this instance, that the plaintiff did so move.  There was no suggestion made on behalf of the defendants that there was any delay in the plaintiff moving to seek to restrain the defendant in this market.

The other submission I wish to deal with is that Mr O'Floinn submitted that, as it were in the present and modern era, the courts are increasingly looking at the commercial reality of the situation and that they should do so.  The commercial reality it submitted is that his client is permitted to compete with the plaintiff in this jurisdiction and that, in reality, what is at issue is a competition between products which are capable of one substituting for the other and where there is a price differential.

I would accept that the courts should look at the commercial reality in the sense that any injunction seeking to restrain passing‑off will relate to a particular product and a particular market, and the court will always have regard to the facts of that market.  But what the courts will have regard to is what is permitted by way of legitimate competition in that market.  What is alleged here is that the defendants are doing what is not permitted, in that they are seeking to pass‑off their goods as the goods formerly and currently sold and distributed by the plaintiff as "Tech 7".

On the facts of this case, I have concluded that the balance of convenience favours granting the injunction and the factors which have, I have concluded, tipped the balance in favour of granting the injunction are: firstly, the preservation of the position which pertained prior to the commencement of the alleged passing‑off; and secondly, the fact that in the affidavit sworn on behalf of all the defendants in this application the defendants have not sought to offer to the court any explanation as to why they chose the name "CT7" for the sealant product, when this is a product which is being supplied to them from a company called "Hercuseal NV".

Accordingly, I have concluded that the plaintiff is entitled to an injunction and I will come back to the precise terms of that injunction.

There are two further issues I must deal with.  Firstly, the defendants have sought to submit that the plaintiff company might not be able to meet any undertaking as to damages.  That assertion has been met by the plaintiff company exhibiting their last audited set of accounts and the last management accounts and I am satisfied, having regard to those documents, that the assertion is not warranted and therefore I am satisfied to take an undertaking as to damages from the plaintiff.

The second issue I wish to address is the question of the defendants against whom the injunction should be granted, and an injunction such as this binds the specific people named and any person having notice of the making of the injunction.  The form of the injunction is to restrain a person who is distributing or selling goods from continuing to do so.

On the affidavits, it appears to me that whatever confusion may arise between the two corporate defendants, that is to say the second and third named defendants, there are no grounds at this stage for the court restraining by name, the first named defendant, as it appears that the business is being carried on by the second or third named defendants.  Therefore, I would not propose granting the injunction against the first named defendant by name.

I now wish to turn to the form of the injunction and I will hear counsel in relation to the precise form, but my concern is the form in which the junction is sought in paragraph 1 of the Statement of Claim is, in broad form, "Restraining the defendants and each of them,  their servants or agents..." and I would propose putting in "... any person having notice of the making of the order from passing‑off products not sold or distributed by the plaintiff as the products of the plaintiff by use of the "Contech", "CT7" and "CT7 Trans".  

As the application progressed, it related, on the facts before me, only to a sealant or bond and it seems to me that it should be so limited in its terms.  But I will hear counsel I would propose rather that the form of the injunction would be an injunction restraining the second and third named defendants and each of them, their servants or agents or any person having notice of the making of this order from passing‑off sealant products as the products of the plaintiff by use of "Contech", "C‑Tech, "CT7" and "CT7 Trans" or otherwise whatsoever. 

	[Following further submission the form of the injunction granted was:  An injunction restraining the second and third named defendants and each of them, their servants or agents or any person having notice of the making of the order from selling, distributing or promoting sealant or bonding products with the use of the names “Contech”, “C-Tech”, “CT7” or “CT7trans”.]

Approved: Finlay Geoghegan J.