ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
His Honour Judge Mackie QC
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE BLACK
LORD JUSTICE TOMLINSON
| Interactive Investor Trading Limited
|- and -
|City Index Limited
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)
Anthony Trace QC and Louise Hutton (instructed by Macfarlanes LLP) for the Appellant
Hearing dates : 24, 25 May 2011
Crown Copyright ©
Lord Justice Tomlinson :
The contentions on the appeal
"(a) The names, addresses and contact information of "Clients" are not the Respondent's "Confidential Information" (as defined in the CFD Agreement and the SB Agreement).
(b) The Appellant is entitled to market any and all of its services to Clients under the CFD Agreement and under the SB Agreement during and after the Wind Down Periods provided for by each agreement.
(c) The Appellant is not obliged to pay commission to the Respondent in respect of CFD trading by the Clients during the Wind Down period provided for by the CFD Agreement or in respect of SB trading by the Clients during the Wind Down Period provided for by the SB Agreement."
Interactive seeks to uphold the judgment below and additionally seeks a declaration that the contracts impose on City Index the obligation to provide notice of termination to clients in respect of its contractual relationships with them so as to ensure that (where such contracts would not otherwise expire at the end of the WDP) such contracts terminate on the expiry of the WDP.
The CFD Contract
"1. The Company has agreed to offer CFD trading services using the Names.
2. The Introducer wishes to appoint the Company to provide CFD trading services to its clients."
" "Application Form" - The Company's standard Ample CFDs branded application form from time to time for use by persons who wish to open an account with the Company for CFD Trading (incorporating consent from the Applicant to disclosure of information to the Introducer), branded using the Names in such manner as has been agreed between the parties on or before the date hereof and subject to any amendments in accordance with clauses 4.2 and 4.3.
. . .
"the Branded ITP" the interactive trading platform from time to time made available by the Company in connection with Branded Trading.
"Branded Trading" CFD Trading branded with the Names in accordance with this agreement and as from time to time carried on by the Company pursuant to this agreement.
. . .
"CFD" or "CFDs" products from time to time in the range of products marketed by the Company under the name CFD including (a) all CFD products marketed by the Company under the name CFD at the date hereof and (b) such other products from time to time in the range of products marketed by the Company under the name CFD and which the Company and the Introducer agree shall be CFD products for the purposes of Branded Trading but excluding for the avoidance of doubt other types of contracts for differences such as, without limitation, spread betting and provided that if the Company ceases to offer trading services to its clients generally in respect of any particular CFD product, that CFD product shall cease to be a CFD product for the purposes of Branded Trading.
"CFD Trading" trading facilities from time to time made generally available by the Company to its clients in respect of CFDs.
. . .
"a Client" an Applicant who the Company has in its absolute discretion (during this agreement) accepted as a client of the Company in respect of Branded Trading and in respect of whom the Company has allocated an account number as referred to in clause 3.3.
. . .
"Confidential Information" means confidential and/or trade secret information (whether in documentary form or on computer disk tape or any other electronic medium) of the Disclosing Party and which is disclosed by the Disclosing Party to the Receiving Party in connection with this agreement (whether before or after the date hereof) and such information shall include where the Company is the Disclosing Party, financial information, information relating to planned products, business development, pricing, charging and commission policies, marketing surveys and research information names addresses contact details and requirements of clients of the Company.
"Disclosing Party" means the party to this agreement which imparts the Confidential Information to the other.
. . .
"the Initial Period" the period set out in paragraph 2 of Schedule 1.
"the Introducer's Site" the electronic pages on the world wide web operated by on on behalf of the Introducer and which may be accessed at the URL: http://www/iii.co.uk or http://www.ample.com
. . .
"the Names" the names set out in paragraph 3 of Schedule 1.
"the Notice Period" the notice period set out in paragraph 4 of Schedule 1
"Receiving Party" means the party to this agreement to which the Confidential Information is imparted by the other
"the Section" the section of the Introducer's Site dedicated to the Branded Trading (and containing a link to the Branded ITP) to be agreed by the parties as referred to in clause 5.1
. . .
"the Terms and Conditions" the Company's standard terms and conditions of business for CFD Trading from time to time branded using the Names in such manner as has been agreed between the parties, on or before the date hereof and subject to any amendments in accordance with clauses 4.2 and 4.3
. . .
"the Wind Down Period" the period of 6 months after termination of this agreement. "
2.1 This agreement shall commence with effect from the Effective Date and shall continue in force subject to termination by either party giving to the other notice in writing of not less than the Notice Period, provided that no such notice may be given on or before expiration of the Initial Period.
2.2 Notwithstanding clause 2.1. this agreement may be terminated in accordance with clauses 15.1 or 23.3.
Applicants and Clients
3.1 The Introducer may from time to time send to the Company a duly completed Application Form signed by any person being a person who wishes to open an account with the Company in respect of Branded Trading. Each such person is referred to in this agreement as an "Applicant".
3.2 Promptly following receipt of an Application Form duly completed and signed by the relevant Applicant the Company shall (subject to clause 3.5) decide whether or not to accept the Applicant as a client in respect of Branded Trading and if so on what basis.
3.3 If the Company decides (in its absolute discretion) to accept the Applicant as a client (in respect of Branded Trading) the Company shall confirm to such Applicant in writing that the Applicant is accepted as a client of the Company in respect of Branded Trading ("a Client"), providing such Applicant with such account number and the other branded information as has been agreed with the Introducer to be provided to Applicants on opening their accounts.
3.4 All accounts opened by the Company with any Client in respect of Branded Trading shall be deposit accounts and the Company shall in its absolute discretion determine the amount of any deposit from time to time required.
3.5 The Company shall be responsible for compliance with the applicable laws and regulatory rules that the law requires to be complied with by the Company prior to the Company accepting any person as a Client.
. . .
3.8 All provisions of this agreement which refer to the Company providing information concerning Applicants and/or Clients (including trading activities) to the Introducer are conditional upon the Company being in possession of a valid and binding consent in the form of the Application Form (and/or Agency Agreement) duly executed by the Applicant and/or Client concerned, authorising the disclosure of such information to the Introducer and such Applicant and/or Client not having withdrawn its consent to the disclosure of the information concerned nor otherwise terminated such Agency Agreement. The foregoing shall prevail over any term or condition to the contrary contained herein and if the Company is not in possession of a duly executed consent and/or any Applicant and/or Client has withdrawn its consent to the disclosure of information by the Company or otherwise terminated the Agency Agreement then the Company shall not be obliged to disclose the information concerned.
3.9 If any Client withdraws its consent to the disclosure by the Company to the Introducer of information pertaining to that Client, then the Company shall insofar as it is entitled to do so without breaching any of the Terms and Conditions cease to provide Branded Trading to that Client, provided that the foregoing will not prevent any trades in order to close the Clients account.
4. The Names, Client Data and Branding
4.1 All written communications, publications and documents used by either party relating to Branded Trading including without limitation the Terms and Conditions, the Agency Agreement, the Application Form, the information referred to in clause 3.3, all contract notes, account opening letters and statements (collectively "Documents") shall:-
4.1.1 be branded using the Names in such manner as the Introducer and the Company may from time to time agree;
4.1.2 make clear that the Terms and Conditions form a contract between the Company and the Client.
. . .
4.5 The Introducer hereby grants to the Company a non-exclusive non-transferable, royalty free licence for the duration of this agreement and during the Wind Down Period to use the Introducer Trademarks for the sole purpose of the Company performing its obligations in relation to the Branded Trading pursuant to this agreement (including for the avoidance of doubt in the Names) and dealing with Clients for those purposes and provided that:-
4.5.1 each reference to the Introducer Trademarks shall be in the form agreed in writing in advance) by the Introducer;
4.5.2 any and all references to the Introducer Trademarks by the Company shall contain such acknowledgements of the Introducer's ownership of any and all intellectual property rights in the Introducer Trademarks as the Introducer may from time to time reasonably require;
4.5.3 the Company shall not use any of the Introducer Trademarks other than in respect of the Branded Trading;
4.5.4 the Company shall not (save with the prior express consent of the Introducer) use any other trade mark other than the Introducer Trademarks on or in relation to the Branded Trading;
4.5.5 the Company shall not apply for or obtain registration of any of the Introducer Trademarks listed in paragraph 6 of Schedule 1 (or any trade or service mark which consists of or comprises the Introducer Trademarks listed in paragraph 6 of Schedule 1 or any confusingly similar word or words or logo) for any goods or services in any country;
4.5.6 the Company shall not dispute or challenge the validity of, or the Introducer's rights to, any of the Introducer Trademarks listed in paragraph 6 of Schedule 1 during the term of this agreement.
4.6 The Company hereby grants to the Introducer a non-exclusive non-transferable royalty free licence for the duration of this agreement and during the Wind Down Period to use the City Trademarks for the sole purpose of the Introducer performing its obligations in relation to Branded Trading pursuant to this agreement and provided that:-
4.6.1 each reference to the City Trademarks shall be in the form agreed (in writing in advance) by the Company;
4.6.2 any and all references to the City Trademarks by the Introducer shall contain such acknowledgments of the Company's ownership of any and all intellectual property rights in the City Trademarks as the Company may from time to time reasonably require;
4.6.3 the Introducer shall not use any of the City Trademarks other than in respect of the Branded Trading;
4.6.4 the Introducer shall not apply for or obtain registration of any of City Trademarks (or any trade or service mark which consists of or comprises the City Trademarks or any confusingly similar word or words or logo) for any goods or services in the country;
4.6.5 the Introducer shall not dispute or challenge the validity of, or the Company's rights to, any of the City Trademarks during the term of this Agreement.
4.7 The licences granted under clauses 4.5 and 4.6 shall be irrevocable for the duration of this agreement and the Wind Down Period.
. . .
4.14 The Introducer hereby consents to the Company registering the Names with and maintaining registration of the Names with the Financial Services Authority for the purposes of this agreement and the conduct of Branded Trading. The Company shall be entitled to maintain such registration throughout the duration of this agreement and the Wind Down Period. The Introducer shall promptly at the Company's request execute such deeds and documents and give the Company such reasonable assistance as it may from time to time reasonably require in connection with such registration. On or prior to expiration of the Wind Down Period the Company shall promptly withdraw the registration of the Names with the Financial Services Authority and shall promptly do all acts and things and execute such deeds and documents required in order to withdraw the registration and the Introducer shall give the Company all reasonable assistance in that regard.
. . .
5. The Branded IP
5.1 The Company and the Introducer shall co-operate together and provide each other with all reasonable assistance to:-
5.1.1 agree the content of the Section (including the manner of representation of the Names);
5.1.2 agree the content of the Branded ITP
so that the same are fully operational and so that the Section connects to the Branded ITP by means of a hyper-linked file, on or before Monday 10th May 2004.
. . .
5.5 The Company hereby grants to the Introducer (exclusively for the purpose hereinafter specified) a non-exclusive non-transferable royalty free licence for the duration of this agreement and during the Wind Down Period to such extent as may be reasonably necessary or convenient for all software forming part of the Section to connect to, access and use the software used by the Company in relation to the Branded ITP and for the purpose only of maintaining the said link between the Section and the Branded ITP.
6. Basis of dealing
6.1 The contract between the Company and the Client shall be the Terms and Conditions and the Company shall be responsible for transactions with Clients pursuant to the Terms and Conditions.
. . .
7. The responsibilities of the Company
. . .
7.2 The Company shall:-
7.2.1 answer telephone calls from Clients using Ample CFDs;
7.2.2 designate all Clients as private clients; and
7.2.3 treat all Clients as the Company's clients for the purposes of Rule 4.1.5(2) of the Conduct of Business Source book of the Financial Services Authority.
. . .
9. Commission and Payment Provisions
9.1 The Company shall pay to the Introducer a share of the commission paid on all trades executed by Clients in respect of Branded Trading during this agreement. The amount of the commission share is set out in the table in Schedule 3, and the payment terms are set out in Schedule 3.
. . .
10. Confidential Information
10.1 The Receiving Party shall not during this agreement:-
10.1.1 Disclose the Confidential Information to any person save to those of its employees who need access to the same in order to perform the obligations of the Receiving Party under this agreement;
10.1.2 Use the Confidential Information for any purpose other than as strictly necessary for the performance of the Receiving Party's obligations under this agreement.
10.2 On the termination of this agreement the Receiving Party shall forthwith cease all use of and shall not thereafter use or disclose the Confidential Information.
10.3 On the termination of this agreement the Receiving Party shall forthwith return to the Disclosing Party the Confidential Information and any and all copies made of it, or any part of it and all notes, records and other documents relating to the same. References in this clause to copies includes copies in whatever form whether documentary or stored on computer disk, tape or any other electronic medium and so that the Receiving Party shall at the Disclosing Party's request either return the same to the Disclosing Party or permanently delete the same from the medium in which it is stored. If so requested by the Disclosing Party the Receiving Party shall provide written confirmation that the provisions of this clause have been complied with.
10.4 Clause 10 shall not prohibit the use or disclosure of information:-
10.4.1 which is in or comes into the public domain without breach of this agreement by the Receiving Party;
10.4.2 which is after execution of this agreement lawfully acquired by the Receiving Party from any third party who did not whether directly or indirectly acquire the same from the Disclosing Party subject to any obligations of confidentiality;
10.4.3 which is not of a confidential or trade secret nature;
10.4.4 if and to the extent required by law or any relevant regulatory rules, provided that unless not practicable in the circumstances the Receiving Party shall give the Disclosing Party as much notice as it reasonably can of any such proposed disclosure prior to the same being made.
. . .
13. Restrictive Covenants
13.1 The Introducer agrees that it shall not during this agreement whether itself or together with any other person whether as principal agent shareholder as part of any joint venture or otherwise howsoever and whether directly or indirectly:-
13.1.1 Refer, recommend or introduce any person (including the Introducer's clients) to any person other than the Company in respect of the provision of CFD Trading, provided that the foregoing shall not prevent the Introducer placing advertisements for third parties on the Introducer's Site in the usual course of the Introducer's business in the same manner as the Introducer places such advertisements at the date hereof;
13.1.2 Deal with any person other than the Company in respect of trading facilities which are from time to time directly competitive with CFD Trading for or on behalf of the Introducer's clients;
13.1.3 (otherwise than pursuant to this agreement) undertake or be directly or indirectly concerned engaged or interested in the provision of trading facilities in respect of CFDs.
13.2 The Company agrees that it shall not during this agreement market the Clients for the supply of CFD trading services other than in respect of Branded Trading, save in response to a direct request from a Client which has not been solicited by the Company.
13.3 Nothing in this agreement shall prevent or restrict the Company from dealing with any person who approaches the Company and requests the provision of services and/or products by the Company.
. . .
15.1 Either party (the "Notifying Party") shall be entitled at any time by giving written notice to the other to terminate this agreement:
15.1.1 forthwith, in the event that the other party commits a material breach of this agreement and (if capable of remedy) fails to remedy the same within 30 days of being required by the Notifying Party in writing to do so (such notice to give reasonable particulars of the alleged breach); or
15.1.2 forthwith (a) on the other party passing a resolution, or the court making an order, that such other be wound up or (b) if a receiver, administrative receiver, manager or administrator is appointed in respect of all or a material part of such other's business or assets or (c) if such other party enters into any composition or arrangement with its creditors.
15.2 Termination of this agreement shall be without prejudice to any other rights or remedies a party may be entitled to and shall not affect any accrued rights or liabilities of either party nor the continuance in force of any provision hereof which expressly or by implication is intended to survive termination (including without limitation clauses 6, 10 and 13.3)
15.3 The Introducer shall maintain the Section and the link to the Branded ITP and the Company shall maintain the Branded ITP in order to enable the Company to deal with Clients during the Wind Down Period and so that neither of them shall terminate the said link or do any act or thing in relation to the Section or Branded ITP which would prevent or restrict the Company dealing with Clients during the Wind Down Period. Each of the parties shall be entitled to terminate the link between the Section and the Branded ITP after expiration of the Wind Down Period and they shall each give the other all such reasonable assistance that may be required in that regard.
15.4 After expiration of the Wind Down Period:
15.4.1 the Company shall cease all use of the Introducer Trademarks and the Names;
15.4.2 the Introducer shall cease all use of the City Trademarks (including on the Section);
15.4.3 the Company shall remove all references to the Introducer Trademarks and the Names on the Branded ITP.
15.4.5 the Company shall transfer ownership of the Clients to the Introducer for the consideration of ฃ1.00.
15.4.6 the Company shall use all reasonable efforts to assist the migration of the Clients either to the Introducer or any of its associates or to a third party nominated by the Introducer, including but not limited to making available all account history for the migration.
15.4.7 the Company shall not use information obtained under this agreement in relation to any Client to directly offer to that Client other services provided by the Company, save in response to a direct request from a Client which has not been solicited by the Company.
15.5 On and following termination of this agreement each party will promptly give to the other such assistance as the other may reasonably request to comply with any law or regulatory rule applicable consequent on the termination of this agreement, including any de-registration of the Names with the Financial Services Authority and/or under any other regulatory rules, provided that neither party shall do any act or thing which would prevent or restrict the Company from dealing with Clients.
16.1 This agreement constitutes the entire agreement and understanding of the parties and supersedes any previous agreement (whether oral or written) between the parties relating to the subject matter of this agreement.
. . .
1. Effective Date Monday 10th May 2004
2. The Initial Period 12 months from the Launch Date
3. The Names: "Ample CFDs"
"Ample CFD Trading Service"
"Interactive Investor CFDs"
Interactive Investor CFD Trading Service"
4. The Notice Period: 3 months
5. The City Trademarks
5.1 the name "City Index"
6. The Introducer Trademarks
6.1 the name "Ample"
6.2 the name "Interactive Investor"
. . .
1. Division of Commission
The table below sets out the amounts agreed at the date hereof which:-
1.1 the Company will charge Clients in respect of trades executed by Client in the course of Branded Trading (or pay to the Client in the case of funding on shorts);
1.2 the Company will pay the Introducer in respect of such trades; and
1.3 the amounts the Company will retain in respect of such trades."
The rival submissions
i) On his construction the words "during this agreement" when used in Clause 9.1 include the WDP whereas the draftsman has in Clauses 4.5, 4.5.6, 4.6, 4.6.5, 4.7, 4.14, 5.5 and 5.6 apparently drawn a clear, consistent and coherent distinction between "the duration or term of this agreement" and the WDP. In passing, I should say that it seems to me entirely rational that the parties should have agreed that the various trademarks should not be challenged during the agreement but should be capable of being challenged during the WDP. It is unlikely that any such challenge would be resolved for some time.
ii) Clauses 15.2, 15.3, 15.4 and 15.5 seem to draw a clear distinction between (a) termination of the agreement and (b) expiration of the WDP. Yet on Interactive's case the expression "on the termination of this agreement" when used in Clauses 10.2 and 10.3 means at the expiry of the WDP.
iii) Interactive's case requires that the expression "during this agreement" when used in Clause 13.1 does not include the WDP. It is common ground that it does not. However from the point of view of Interactive this is because Interactive regards the WDP as a period in which it can prepare the clients for the migration which will take place on the expiry of the WDP. Thus on Interactive's case the expression "during this agreement" as used in Clause 13.1 bears a meaning different from that which it bears in Clause 9.1. Furthermore, Interactive's case requires that the same expression when used in Clause 13.2 reverts to the meaning which it bears in Clause 9.1. So not only is the contract internally inconsistent but the same expression is used in two different senses within the confines of a single clause, Clause 13.
iv) If names, addresses and contact details of clients are information confidential to Interactive of which no use can be made by City Index after expiry of the WDP (Clause 10.2), and of which all records must then be returned to Interactive (Clause 10.3), Clause 15.4.7 is redundant since City Index will have no means of contacting clients after the expiry of the WDP.
The Wind Down Period
Lady Justice Black :
Lord Justice Ward :