England and Wales Patents County Court

IN THE PATENTS COUNTY COURT

		St. Dunstan's House London EC4A 1HD
		3rd May 2011

JUDGE BIRSS:

1. I have before me an application to set aside a judgement in default. The action relates to a trademark infringement of the claimant's Community Trade Marks No. 006897862 and 006890056 for the mark "Suntech" and "STP". These marks are registered in respect of solar panels.
2. The claimant is Wuxi Suntech Power Company Limited of the Jiangsu Province, China. It is represented by Mr. Cohen of Collyer Bristow. The claimant is the owner of the trade marks. The claimant's case is that the defendant, Tittmann Solar GmbH of Kernen im Remstal, Germany, was the consignee of a consignment of counterfeit solar panels, which were detained by customs at Thamesport last year. Mr. Hobson appears instructed by Withers for Tittmann.
3. The judgment in default was entered by my predecessor, His Honour Judge Fysh QC, by an order made on 5^th August 2010. This application to set aside was made by an application notice issued on 17^th February 2011.
4. The defendant's defence is essentially to say that the bill of lading, which named Tittmann Solar as the consignee, is a forgery; that is Tittmann Solar had nothing to do with these goods, was not the importer and, therefore, cannot be liable for trademark infringement.
5. An application to set aside or vary a judgment in default is governed by Part 13 of the CPR and, in particular, by Rule 13.3, which provides that:

(1) … the court may set aside or vary a judgment entered under Part 12 if –

(a) the defendant has a real prospect of successfully defending the claim..."

Then, in 13.3(2), the rules provide:

"In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.

(Rule 3.1(3) provides that the court may attach conditions when it makes an order)."

6. The two matters before me are: (1) the question of whether the defendant has a real prospect of success; and (2) the question of delay and whether the application was made promptly. The defendant submits that they do have a real prospect of success. The defendant's case, that the bill of lading is a forgery, is based on (and is entirely based on) the witness statement of Mr. Michael Tittmann dated 1^st April 2011. Essentially, his evidence is that his name should not have been on those bills of lading and they were nothing to do with him.
7. The claimant's case goes in two parts. First of all, for the purpose of this application, the claimant says that Mr. Tittmann's evidence is untrue. It relies on various matters where the claimant submits that it can be shown that Mr. Tittmann's evidence is untruthful. In particular two matters arise. One is that Mr. Tittmann's first witness statement could be read as saying that he has never been involved in any counterfeiting in the past. The claimant points out that that is not true because in 2009 a consignment of counterfeit goods entered Germany via Hamburg and the defendant knows that very well. Mr. Tittmann's position on that is that he explained that point and therefore, although it is a regrettable issue, it does not show that anything he said is untruthful.
8. The other matter that Mr. Cohen puts forward is the evidence that Mr. Tittmann gives about his dealings with Suntech. Paragraph 7 of Mr. Tittmann's witness statement relates, among other things, to dealings which the defendant had with the claimant at least via various agents. The evidence of Grace Wang (her correct name in Chinese is Guixaing Wang, but Grace is the name she uses as a Western name), in her witness statement dated 26^th April 2010 explains that essentially the defendant has not had dealings with Suntech at all. In response Mr. Tittmann produced a second witness statement which explains that the transactions that he was referring to involved a company in Mexico acting as an intermediary between himself and Suntech.
9. It is fair to say, in my judgment, that the impression one gets from para.7 of Mr. Tittmann's first witness statement (which is what Ms. Wang was contradicting) is rather significantly altered by his second witness statement. I make it absolutely clear that I am not making a finding at this stage as to whether Mr. Tittmann is giving untruthful evidence because it would be inappropriate to do so. This is a summary process. It is not appropriate to make findings of that kind, particularly if the witness does not accept that what he said was untrue, but I am struck by the fact that the impression one gets from this evidence is rather different when read in the context of his second witness statement.
10. The first issue then is: is there a real prospect of success? The claimant says that what appears to have happened is that a consignment was ordered by, or at least was heading for, the defendant in Hamburg. As a result of the prior consignment being caught by Customs in Germany, this, the second consignment, was diverted to Thamesport. Mr. Cohen has shown me copies of bills of lading. There are two particulars ones. In the first one the goods in question were heading for Hamburg. The second one shows the goods with the same references then going to Thamesport. Mr. Cohen submits that it is perfectly plain what happened. Counterfeit goods were going to Hamburg for Mr. Tittmann, but because the first consignment was caught they were then diverted to Thamesport. On that basis, he says, there is no question that the bill of lading is a forgery, it is not. This is a straightforward case and the defendant's denials are untrue.
11. The second matter to be taken into account is the question of delay. The CPR makes it very clear that promptness is a factor which is to be taken into account. I will simply refer to one reference in the White Book which, I understand from the way the test is written, is a quote or a summary at least of what was said in the Court of Appeal in Standard Bank v. Agrinvest International [2010] EWCA Civ 1400 , as follows:

"Promptness will always be a factor of considerable significance and, if there has been a marked failure to make the application promptly, a court may well be justified in refusing relief notwithstanding the possibility that the defendant may well succeed at trial."

12. The time that this case has taken to come to this application is quite remarkable. Mr. Hobson for the defendant has explained why the application was not made before about 25^th November 2010 and, in my judgment, that explanation is a good one. Essentially there was correspondence between the solicitors for the defendant and the solicitors for the claimant and it was accepted that an application would be put on hold until various matters were sorted out. I do not think it was a particularly satisfactory way of having proceeded, but I do think that it, just, absolves the defendant of any criticism that one might make that an application was not made before that.
13. More troubling, in my judgment, is why this application was not made after 25^th November. It was not made until February 2011. It was perfectly clear that the claimant was not going accept that the judgment should be set aside and, therefore, if the defendant wanted to defend these proceedings, he would have to make this application. Mr. Hobson explains that the reason for that, essentially, was (again, going back to the correspondence) that the defendant was still trying to explain to the claimant that he had a good defence and was seeking to avoid costs because the costs were in danger of running out of control in a case of this kind.
14. I have been told that the costs on each side are as follows. The claimant's costs so far total £36,000 or thereabouts. The defendant's costs so far on this application are about £21,000 and over and above that will be some few thousand pounds on top. So total costs between these parties of over £50,000 have been spent on this matter so far. These costs mainly relate to the application.
15. To put the costs into perspective, I asked how much the consignment of solar panels was worth but neither party has been able to explain that in detail. On the basis of the evidence that I do have, the consignment was worth a considerable sum of money. It was, as I understand it, thirteen tons of solar panel material. An individual solar panel - I gather on instructions from Mr. Cohen - sells for something like £500. Therefore, in my judgment, although one cannot put a figure on it, it is very clear that this was a substantial consignment of counterfeit goods of very considerable value. While that does not justify spending vast sums of money on legal proceedings, it does put into perspective the matter that I have to decide.
16. In the end this boils down to an exercise of my discretion. Although the defendant's prospects of success is obviously a crucial matter, the question of promptness and delay is also important. I also remind myself that the court has the power to attach conditions when it makes an order.
17. In my judgment, the defendant's defence is a weak one. I am far from convinced that the bill of lading in this case is a forgery. I say that, in particular, because the explanation that the goods were heading for Hamburg and then things were changed makes more sense in the overall scheme of things than an explanation that the defendant's name was put on this bill of lading (as it were) purely by chance or randomly or in some other way like that, or that it was really nothing to do with the defendant. However, it is not the purpose of an application to set aside a default judgment to resolve questions of the credibility of witnesses and it is not for me (and I do not do so) to make a finding that Mr. Tittmann is giving untruthful evidence. Mr. Tittmann's credibility will be an absolutely crucial matter if this matter goes to trial. As I say I have very great doubts whether the defendant's defence is a good one, but that is not the question.
18. I also have a considerable concern that this is a matter which should have been brought much sooner. However, there are explanations for the timing and it does relate to an attempt by the parties to resolve the matter and to save costs.
19. I should also add another factor which bears on this. The judgment in default itself, although a Part 23 application, was made without a hearing and without the defendant having had the opportunity to make submissions. Though relevant I think that is a relatively minor matter.
20. Taking these matters into account, in my judgment, the correct thing to do is to make an order specifically contemplated by Rule 13.3 and attach conditions. I will set aside the judgment in default, but I will only do so with a condition. I have the power to put in conditions under CPR Part 3 Rule 3.1(3), which provides that:

"When the court makes an order, it may -

(a) Make it subject to conditions, including a condition to pay a sum of money into court; and

(b) specify the consequence of failure to comply with the order or condition."

21. The order that I am going to make, having regard to the cost of these proceedings and the nature of the defence the defendant wishes to put forward, is that the order for judgment in default will be set aside and the defendant will be at liberty to defend these proceedings on the condition that within a period of time the defendant pays into court a sum as security for the costs of these proceedings. I will hear the parties as to that period, but it will be a matter of a few weeks and I will decide on the sum in a moment.
22. If the defendant has a good defence then, of course, the money will be returned to the defendant because the sum will be security for the claimant's costs. That is an unusual approach to take on a question of a security of costs, but, in my judgment, it is the right thing to do in this case when (as I have said already) I have significant doubts as to whether the defendant's defence is really a good one. If the defence is a good one then the money will be there for the security of the claimant's costs and, ultimately, if it wins, the defendant will get the money back.
23. The sum of money that I will require to be paid into court will be determined now. Looking at the figures that the parties have spent so far. The claimants have spent £36,000 or thereabout. The defendants have spent something like £24,000. The sum of money the defendant will be required to pay into court will be £20,000. That is the order I will make.