England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY
The Hon Mr Justice Birss
[2013] EWHC 2310 (Ch)

		Royal Courts of Justice Strand, London, WC2A 2LL
		3rd February 2015

Lord Justice Kitchin:

1. We handed down judgment on the main appeal in these proceedings on 22 January 2015 ([2015] EWCA Civ 3). We were then provided with bundles for the appeal on costs, which had been held over pending judgment on the main appeal and which counsel had agreed could then be determined by the Court on the basis of their written submissions and without a further hearing. This is the judgment of the Court on that costs appeal.
2. The appellants contend that even if it was open to Birss J to find them liable for passing off, there was no proper basis for making an order that they should pay the costs of the respondents of the action since the question of how and by whom the costs should be borne and paid could not be determined justly and fairly without taking into account matters which could not fully be taken into account until after all matters of liability had been determined.
3. Mr Hobbs has developed this contention as follows. He argues that the respondents were in truth and in substance pursuing a claim to a broad "image" right, and that this is confirmed by the without prejudice correspondence and by the wide form of injunction the respondents sought in their prayer for relief. Moreover, the t-shirts in issue had sold out long before the trial and there was never any real prospect of there being any further passing off, particularly in light of the undertakings offered by the appellants in the without prejudice correspondence. Further, the injunction ultimately granted by the judge related solely to those t-shirts. These were all matters which the judge ought to have taken into account and, had he done so, he would or ought to have found that the respondents had not succeeded in their claim; alternatively these matters ought to have resulted in a large reduction in the respondents' level of recovery.
4. We have given careful consideration to all these arguments but we are unable to accept that the judge fell into error in the manner for which the appellants contend. The central question which the judge had to answer was whether the appellants were guilty of passing off. This in turn required the judge to determine whether or not the activities of the appellants amounted to a material misrepresentation. Ultimately this was the issue on which the claim turned and it was an issue on which the respondents won. Now it is entirely true to say that the judge did not grant a final injunction in the wide terms sought, but he did grant an injunction to restrain the defendants from repeating the activity upon which the claim was founded and which the appellants maintained they had a right to carry out.
5. We accept that the appellants made a series of without prejudice offers. But they never offered an undertaking which bettered or matched the injunction granted by the judge. In these circumstances there was nothing to be gained by deferring the issue of the costs of the trial on liability. The offers made by the appellants suffered from a deficiency which could not be made good at a later date.
6. The judge properly took all these matters into account. He found that the respondents were the winners on the issue of liability. He also had regard to the material parts of the without prejudice correspondence. He decided that he should make what he called the normal order. He made no error in so doing. His order lay well within the bounds of a reasonable exercise of the wide discretion which he had.
7. It follows that the appeal on costs must be dismissed. The parties are asked to draw up and agree a final order reflecting this ruling and our judgment on the appeal on liability.