Strand, London, WC2A 2LL
B e f o r e :
| ADOBE SYSTEMS INCORPORATED
|- and -
|(1) NETCOM ONLINE.CO.UK LIMITED
(2) MUSSARAT FATIMA KOSAR BHATTI
Jonathan DC Turner (instructed by Richard Slade & Co.) for the Defendants
Hearing dates: 24th and 25th January 2012
Crown Copyright ©
Mr Justice Warren :
i) Exhaustion of rights under the EU Trademark Regulation (Regulation 207/2009) ("the Regulation") and the EU Trademark Directive (Directive 2008/95) ("the Directive") where products are placed on the market in the EU with the consent of undertakings economically linked with ASI.
ii) Abuse of dominant position contrary to Article 102 of the Treaty on the Functioning of the European Union ("TFEU").
iii) Agreements restricting competition contrary to Article 101 TFEU (originally Article 85 of the Treaty of Rome).
i) An Adobe group company supplied the products to Aptec or companies related to it.
ii) Aptec supplied the products to CFS in Dubai.
iii) CFS exported the products to Netcom.
The Consent Order
"AND UPON the defendants admitting (a) that the first defendant has imported into the United Kingdom Infringing Adobe Products (as defined below) and has sold, supplied and otherwise dealt in Infringing Adobe Products (b)….. and (c) that in particular (and without limitation to the foregoing) the consignments of Adobe Products (as defined below) which are the subject of the documents in trial bundle E are consignments of Infringing Adobe Products which were imported by the first defendant and that such acts of importation infringed each of the Registered Trade Marks and that the second defendant is jointly and severally liable in respect of such acts of infringement"
I shall refer to the consignments referred to in that recital as "the Bundle E products".
"6. There shall be an enquiry as to the damages suffered by the claimant by reason of the defendants' acts of infringement of the Registered Trade Marks. The costs of such enquiry and the question of interest upon damages shall be reserved to the enquiry."
The defences to the inquiry
The competition law issues – abuse of dominant position and agreement restricting competition.
The effect of an order directing an inquiry as to damages
"At trial the court will rule on whether each type pleaded is or is not an infringement. It will also rule on validity if there is a challenge to that. Under normal principles both rulings are res judicata and cannot be revised once all possibility of appeal is exhausted. And both rulings are not just on a sub-issue but on the causes of action decided upon at trial, namely whether or not the pleaded types of infringement do in fact and law infringe the patent and whether or not that patent is valid."
"It is perhaps worth articulating those policy reasons a little more. First and foremost, the estopped defendant has had a full and fair opportunity of attacking the validity of the patent in his own proceedings. Next there is a very, very strong public interest in the finality of litigation. Finally a party who had lost would have a strong motive for finding further or better reasons for attacking a patent and getting some third party to do so, thereby undermining the first decision. It is much better that he knows that the first litigation about validity is the time and place for him to get his best case together—that he knows he will have no second chance."
"The truth is, a judgment by consent is intended to put a stop to litigation between the parties just as much as is a judgment which results from the decision of the Court after the matter has been fought out to the end. And I think it would be very mischievous if one were not to give a fair and reasonable interpretation to such judgments, and were to allow questions that were really involved in the action to be fought over again in a subsequent action. I think, therefore, the judgment should be affirmed, and the appeal dismissed with costs."
"if the arrangement come to was a compromise of doubtful rights and a give-and-take arrangement, parties to it could not afterwards have the compromise set aside because upon obtaining fuller information they thought they had made a bad bargain."
And on appeal, Kay LJ, at p 285 said:
"Now what constitutes a compromise? A compromise takes place when there is a question of doubt and the parties agree not to try it out, but to settle it between themselves by a give- and-take arrangement. I quite agree that if this was a case of that kind it would be extremely difficult to interfere with the order."
Construction of the Consent Order
i) The Bundle E products were not in fact infringing products at all because the Defendants are correct in their contentions on the exhaustion of rights issue and the competition law issues.
ii) The inquiry ordered by paragraph 6 of the Consent Order (damages suffered "by reason of the defendants' acts of infringement of the Registered Trade Marks") does not therefore bite since there were no such acts of infringement.
iii) The recital does not lead to a different conclusion since (a) it is only a recital and does not govern the operative parts of the Consent Order and (b) the Bundle E products do not fall within the definition of "Infringing Adobe Products" since they were not in fact imported into the EEA without Adobe's consent. The admission that the Bundle E products were infringing products is of no evidential value since there is an obvious explanation for it, that is to say an error of law shared by the parties and by Arnold J.
iv) The Consent Order should be construed conformably with EU law, reliance being placed on Case C-106/89 Marleasing  ECR I-4135 at §8. EU law must be applied by the court as an institution of a member state.
Measure of damages