England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		20 June 2008

MR JUSTICE LEWISON:

1. The Chateau and Villa Company Limited and Accomodia Limited are both engaged in the provision of holiday accommodation for people who wish to holiday abroad. In about 2005 they entered into a Joint Venture Agreement. The Chateau and Villa Company Limited ("TCVC") had, until that time, been trading under the name Simply Chateau, and had a list of owners of chateau in France for whom they found customers to rent the chateaux for holidays. Accomodia Limited at the time was engaged in the provision of similar services relating to holiday cottages and also had expertise in IT.
2. Clause 1 of the Joint Venture Agreement provided for a partnership to be established between the two parties to create a web portal for renting French holiday accommodation on a commission basis. Clause 2 set out the respective responsibilities of Accomodia and TCVC, the latter was to provide its clients, switching them over from its existing Simply Chateau website and was to take responsibility for recruiting new owners, communicating with existing clients, obtaining text, images, floor plans and so on. The contract went on to say:

"TCVC will deal directly with customers making bookings in that the company will deal with enquiries, take bookings and collect rental fees." [Quote unchecked]

Accomodia, for its part, was to provide technology, marketing, internet and the systems know-how. That was to include search engine marketing, internet, advertisement, placement management and tracking, and the content management system. It was also to provide a booking and management system.

3. Clause 3 dealt with the ownership of intellectual property. Both parties sought to preserve the status quo ante, as far as that was concerned. That was amplified as follows:

"In general, this means that everything that Accomodia supplies to the portal will remain its copyright, or everything that TCVC supplies will remain theirs. So the text and images will be TCVC copyright unless they are the copyright of the owners themselves. But where they have been amended by Accomodia, TCVC will not be able to use the amended versions elsewhere without Accomodia's consent. Similarly, the relationship with TCVC clients will remain TCVC's alone, while the copy of Five Star, which Accomodia will provide and the content manage website, will continue to belong to Accomodia. Anything that arises from our joint endeavours or we pay for jointly, shall belong to both our companies. In the case of customer and other data, we will both have free access to it. In the case of things such as domain names, visual designs, logos, etc, that we pay for jointly, both our companies will need the express consent of the other before we disclose or use them for any purpose other than this venture." [Quote unchecked]

4. Clause 4 dealt with the division of revenue and clause 5 with the costs of advertising and other costs. Clause 6 was headed "Exit strategy" and read as follows:

"In the event of either party wanting to terminate the agreement, a six month notice period is required to allow both companies sufficient time to plan their respective contingencies. Each party maintains exclusive rights to their intellectual property as outlined in paragraph 3. Anything jointly owned shall remain so until either party buys the exclusive rights from the other. In the event of a standoff where both parties are unwilling to sell to the other, the sale will be decided by the highest offer." [Quote unchecked]

5. In May 2008, Mr Bell and his business partner began writing to clients with a draft new contract. I have an example at pages 37 and 38 of tab 6 in the bundle. The sample letter required the chateau owner to sign and send back the contract within ten days of receipt, and the draft contract included at clause 8, a clause in the following terms:

"We currently work with a company called Accomodia Limited who provide our booking software. Your contract is with TCVC and you are not currently contracting with Accomodia Limited. In the event that we cease to use their services, you agree not to independently use the services of Accomodia Limited or any subsidiary of Accomodia Limited or enter into any form of contract with them. You agree to notify us in the event that you are approached by this company. You are free to use the services of any other company to market your property." [Quote unchecked]

6. Mr Aster, the principal behind Accomodia Limited, suspected that this contract was being sent out, asked Mr Bell for a copy of it, but Mr Bell declined to provide it.
7. On 4 June 2008 at 1407, TCVC gave notice terminating the Joint Venture Agreement. The termination was sent by email and it said, amongst other things:

"We took the decision to contract all of our owners not to work with Accomodia, only with us, on account of your previous track record at Scottish Castles as we were concerned that you may attempt to approach our owners and solicit business from them. We were planning to hand our notice in in about two weeks' time, but this has obviously sped up our decision." [Quote unchecked]

The email continued:

"We will continue to process bookings and uphold our half of the agreement for the next six months, with the revenue share as agreed. From 04/12/08, we will no longer be using your software or any other services that Accomodia provides." [Quote unchecked]

8. By 1930 that evening, it seems that the passwords had been changed and TCVC no longer had access to the website. At 2002 an email was sent to chateau owners by Mr Bell. The email read:

"I am writing to let you know that today we handed in our notice to our current suppliers of our booking software and the host of our website. I am pleased to confirm this will not affect you in any way, as we are simply moving to an improved website with new booking software. We have taken on board feedback from our owners, primarily about the need for a more up to date website and also for an improvement to the automatic email system which we understand has been far too complicated. The new website should be ready for launch in just a few weeks, and in the meantime, bookings will continue as usual with the old software. You may or may not have received a call or email from our existing suppliers, Accomodia Limited. If you receive any contact from anyone at Accomodia Limited, please just drop me an email or call. Tomorrow we will send you full details of the new website. Don't worry, you wont' have to do anything your end, as we will simply be transferring your content over. In the meantime, if you have any questions, please do not hesitate to contact me on Oliver@simplychateau.com..."

Then a telephone number is given.

9. Over the next couple of days, TCVC protested at their exclusion from the website and asserted that the six month notice period would need to be worked out in accordance with the terms of the Joint Venture Agreement. Accomodia Limited has not permitted access to the website and TCVC now applies to this court for an injunction. The injunction sought is not, however, an injunction requiring access to the website. The injunction seeks an order that Accomodia Limited shall not:

"(a) use, copy, disclose, destroy, tamper with or part with -

(i) the database of owners of properties ("the owners") that advertise on the www.holidaychateau.com website ("the website") or any earlier version therefore ("the database") or any part of it or any information obtained from it;

(ii) any written version of the database or any other documents ("the documents") created in the course of the business of the website containing information about the owners or any information obtained from them.

(b) Enter into any contract, whether written or oral, or any other transaction with the owners or any other person contacted by the defendant or any of its officers, employees or agents using the database or the documents or any parts of them, or using any information obtained from them." [Quote unchecked]

There are also ancillary orders for delivery up which are asked for.

10. So far as the owners are concerned, the evidence is that approximately 108 owners advertised with Simply Chateau before the setting up of the JVA and that there are now some 130 owners who advertise. Plainly, therefore, the order as sought goes further than the entitlement of the claimant and Mr Cowser on their behalf acknowledges that it is only the 108 original owners about whom his client can have any complaint.
11. The test which I should apply in order to decide whether to grant an interim injunction is that laid down in the well known case of American Cyanamid. First, I must be satisfied that there is a serious issue to be tried. If I am not so satisfied, then there is no question of a grant of an injunction. If I am satisfied that there is a serious issue to be tried, I must then go on to consider the balance of convenience. That involves weighing up the relative injustice of granting an injunction when there is no underlying cause of action, and on the other hand refusing to grant an injunction when there is an underlying cause of action, and in making that value judgment, I must also consider the consequences of the outcome of trial on the various parties.
12. In the context of this case, I think I must also bear firmly in mind the provisions of the Joint Venture Agreement. This was, after all, set up as a partnership, a partnership which contained provision for an exit strategy. The exit strategy required six months' notice to be given. In addition, so far as the intellectual property rights are concerned, the Joint Venture Agreement deals with text and images transferred over by TCVC but acknowledges that where text and images have been altered or amended by Accomodia, TCVC will not be able to use the amended versions elsewhere without Accomodia's consent. It seems to me, therefore, that the agreement itself it recognises that, where there have been joint efforts in producing material which is the subject of intellectual property rights, the parties are to have joint ownership. That is confirmed by the next paragraph, clause 3 of the JVA which provides:

"Anything that arises from our joint endeavours or that we pay for jointly, shall belong to both of our companies." [Quote unchecked]

13. The main ground upon which the injunction is claimed is the vindication of database rights. The database right arises under the Copyright and Rights in Databases Regulations 1997, which implements the Directive of the European Union. Regulation 13 provides that a database right subsists in a database if there has been a substantial investment in obtaining, verifying or presenting the contents of the database. Regulation 14 provides that, subject to certain matters, the person who takes the initiative in obtaining, verifying or presenting the contents of a database and assumes the risk of investing in that obtaining, verification or presentation, shall be regarded as the maker of and as having made the database.
14. Regulation 14.5 provides that a database is made jointly if two or more persons, acting together in collaboration, take the initiative in obtaining, verifying or presenting the contents of the database and assuming the risk vesting in that obtaining, verification or presentation, and sub-regulation 6 provides that references to the maker of the database are to be construed in relation to a database which is made jointly as a reference to all the makers of the database.
15. The evidence in the present case, in my judgment, is that, to put it at its highest, the database, which is the method of presentation of the owners' information and details on the website was made jointly. It therefore seems to me to belong jointly to both the claimant and the defendant. The injunction sought is predicated on the assumption, which I consider to be erroneous, that the rights in the database belong exclusively to the claimant. That does not appear to me what the JVA provides for and it is inconsistent with the six months working out of notice.
16. The defendant has offered an undertaking to keep full and proper accounts of the receipts of all clients brought in by the claimant and to pay 50 per cent of all such receipts after proper deductions into a solicitor's account pending the trial of this action. In my judgment, therefore, the cause of action upon which the claimant relies has not been sufficiently made out to justify the grant of this very intrusive injunction. I also bear in mind that it is accepted that the defendant is free to compete in what appears to be a competitive market with the claimant, that the claimant already has access to the information itself and therefore is not precluded from running its own business.  I take account also of the fact that, as Mr Quinn submits, that if owners of chateaux wish to advertise on the holiday chateau website at this particular point in the season, they should not suffer the disruption of having their details removed from it without notice.
17. In my judgment, therefore, both because I am not satisfied that there is a serious issue to be tried and also in the exercise of my discretion, I refuse the injunction sought, but only on the basis that the undertaking which the defendant has offered is embodied in the refusal of the order.
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