England and Wales Patents County Court

IN THE PATENTS COUNTY COURT

		The Rolls Building, 7 Rolls Buildings London EC4A 1NL
		21/11/2011

His Honour Judge Birss QC :

1. In my judgment dated 1^st November 2011 (Fox v Folly [2011] EWPCC 30) I found in favour of the claimant in this action for trade mark infringement. I directed that consequential orders be dealt with in writing.
2. I have received written submissions from the defendant, Mr Folly, and a skeleton argument from Mr Cuddigan, instructed by Dickinson Dees for the claimant. I have also received a witness statement of the claimant's solicitor Mr Sander and one from Mr Reeves of Fox. These deal with an allegation by Mr Folly that Fox were in contempt of court as a result of a breach of the embargo attaching to the confidential draft judgment which was handed down in advance of 1^st November 2011. I will deal with that issue after dealing with the more conventional points arising on the form of order.
3. The points on the form of order are:

i) Fox seek an order requiring Mr Folly to assign the domain names stalkettackle.co.uk and stalkerclothing.co.uk

ii) Fox seek an order publicising the judgment.

iii) There is an argument about the period in which Mr Folly should give disclosure on the Island Records v Tring principle.

iv) Costs

4. Points (i) and (ii) go together. Mr Folly resists both orders on the basis that, he says, the judgment was about STALKER only and not the use of STALKER TACKLE or STALKER CLOTHING. He is mistaken about that. In paragraphs 62 I found that both signs would give rise to a likelihood of confusion under Art 9(1)(b) of the Regulation when they are used as indication of origin and in paragraph 61 I dealt with Mr Folly's device including the word Tackle. Accordingly I will make the orders sought by Fox, requiring transfer of the domain names and publicising the judgment.
5. A question arose about whether the order would require Mr Folly to put a hyperlink on eBay. Mr Cuddigan stated that Fox accept that eBay do not allow hyperlinks and so his client does not press for an eBay hyperlink. The order will therefore not require an eBay hyperlink.
6. On point (iii) Fox ask for disclosure within 28 days, Mr Folly asked for 60 days without detailed reasons, and Fox replied proposing 42 days. I will make an order for 42 days.
7. Accordingly the order will take the form of paragraphs 1 to 11 of the draft order prepared by the claimant.

Costs (paragraphs 12 and 13 of the draft order)

8. Mr Folly submits that a costs order should only award a portion of the costs to the claimant because, he estimates, Fox only prevailed on 40% of the claims made. This is based on the same misunderstanding on Mr Folly's part which I have mentioned above. Fox won all the issues in this case and in my judgment there is no good reason not to award them 100% of their costs. The costs order will simply be that Mr Folly pays the claimant's costs.
9. Fox seek a payment on account of their costs under CPR Pt 44 r 44.3(8). The sum sought is 50% of their costs to date. The costs to date are £66,000 and the payment on account sought is £33,000. This case was commenced before 1^st October 2010 and is not subject to the PCC costs cap.
10. This is plainly a case in which a payment on account at some level is appropriate. The question is what figure should I award? Mr Folly did not address the payment on account issue, his argument was directed to the overall costs order. Bearing in mind the nature of this case, it seems to me that I can safely make an order requiring Mr Folly to pay £33,000 on account. It is very unlikely that the claimant's costs subject to a detailed assessment will end up at a level lower than that.
11. As regards time to pay, Mr Folly stated that due to the large sum involved, he would only be able to pay at a rate to be negotiated or decided by means of a court judgment, but he did not elaborate. The court cannot invent a payment schedule in vacuo and so I will make an order requiring the payment to be made in 35 days. I will also give Mr Folly liberty to apply in relation to the payment period (and rate).

Alleged contempt of court

12. On 20^th October 2011 the draft judgment was sent out to the parties by email. It carried the usual rubric (so far as material):

This is a judgment to which the Practice Direction supplementing CPR Part 40 applies. It will be handed down on Tuesday 1^st November 2011 at 10:30 in Court No [ ]. This draft is confidential to the parties and their legal representatives and accordingly neither the draft itself nor its substance may be disclosed to any other person or used in the public domain. The parties must take all reasonable steps to ensure that its confidentiality is preserved. No action is to be taken (other than internally) in response to the draft before judgment has been formally pronounced. A breach of any of these obligations may be treated as a contempt of court.. The official version of the judgment will be available from the County Court Office once it has been approved by the judge.

The court is likely to wish to hand down its judgment in an approved final form. Counsel should therefore submit any list of typing corrections and other obvious errors in writing (Nil returns are required) to […] so that changes can be incorporated, if the judge accepts them, in the handed down judgment.

13. A breach of these obligations or restrictions may be treated as contempt of court (see paragraph 2.6 of Practice Direction 40E in CPR Part 40).
14. On 24^th October my clerk received an email from Mr Folly, as follows:

Dear Sir

I would like to draw to your attention what I believe to be a breach of the draft judgement conditions set out in the "In Confidence" heading.

Fox International have requested eBay to remove the listings disputed within the case, hence my belief they have broken the "No action is to be taken (other than internally) in response to the draft before judgment has been formally pronounced" condition.

I have attached correspondence sent to Dickinson Dees regarding the issue and the eBay communication.

Regards

Jay Folly

15. Attached to the email were two further emails. One was an email to Mr Folly from eBay, informing him that Fox International Group Ltd (i.e. the claimant) had notified eBay of breaches of its intellectual property rights. The IP right relied on was the STALKER Community Trade Mark in issue in the proceedings. The goods alleged to infringe were 17 of Mr Folly's products of the kind complained of in the proceedings. The email informed him that eBay had removed Mr Folly's listings as a result, under eBay's VeRO programme (Verified Rights Owner). The other email attached was a copy of a message from Mr Folly to Mr Sander at Dickinson Dees complaining about the matter and pointing out that it was in breach of the embargo on the face of the draft judgment. Mr Folly stated

As this action taken by your client is prohibited by the judgement, we will have no option that to inform the judge of your contempt of court

16. No formal application by Mr Folly has been made. Since I had directed that the consequential orders were to be resolved in writing, I directed that this matter be addressed in writing, at least initially. If necessary a hearing could be arranged to deal with it.
17. In order to address the matter, Fox provided the two witness statement I have already mentioned. Mr Folly did not seek to make any further submissions on the issue, followed receipt of the two witness statements. He does not seek to contradict what Mr Sander and Mr Reeves say in their statements.
18. Mr Cuddigan submits that the timing of the events could be misconstrued but that the explanation for what happened in the two witness statements shows that there has not been any breach of the embargo or contempt of court.
19. It is now clear what happened. In the past the claimant has used the eBay Vero procedure on a number of occasions but had not done so in relation to Mr Folly's products on eBay complained of in this case. Mr Reeves states that he thinks that was because he had decided to wait for the outcome in this case. However on 13^th October, 4 days before the trial, Mr Reeves had a conversation with Mr Sander about the Vero procedure and said to him at that stage that he (Reeves) wished he had used the Vero procedure earlier in relation to Mr Folly. During that conversation Mr Reeves resolved to make a Vero request to eBay in relation to Mr Folly and he told Mr Sander that he would do so.
20. Mr Reeves was very busy around this period. The trial was held on 17^th October. On Thursday 20^th October the draft judgment was sent out and Mr Sander spoke to Mr Reeves by telephone to discuss the judgment. Both men confirm that the confidential nature of the draft was emphasised in the conversation and Mr Reeves states he was left in no doubt that no action could be taken in relation to the judgment.
21. Mr Reeves's practice is to file eBay Vero requests in batches as they are time consuming. He does so in quiet periods outside office hours. In the evening of 20^th October Mr Reeves filed a number of Vero requests for another Fox mark HORIZON against eight different traders. He states that it was while he was filing these Vero requests that he remembered he had been intending to file a Vero request in respect of the defendant's eBay store. Mr Reeves then filed two such requests relating to the defendant's eBay store that same evening in relation to the STALKER mark. The Vero requests make no reference to the Patents County Court and make no mention of the judgment. They are in a standard form and simply assert Fox's position that Mr Folly's goods are infringing.
22. These Vero requests are the ones Mr Folly raised with the court.
23. After explaining what happened Mr Reeves then states as follows:

21. At no point have I sought to take the terms upon which the draft judgment was communicated to me lightly and I hope that the above explanation provides sufficient information for the court to consider the assertion of contempt of court made by the defendant against me.

22. Whilst I hope that it will not be necessary for me to attend court, I appreciate that this is a decision wholly in the hands of the judge presiding over this matter. I await the further direction(s) of a court on this issue

23. Without qualifying anything said above, I accept in retrospect that I made the Stalker Vero request at an unfortunate time, in that it was liable to be misconstrued by the defendant. That is of course what happened. It would have been more sensible for me to have waited until the judgment was handed down. In light of that, I have instructed Dickinson Dees to ensure that none of the costs incurred by the claimant in relation to this issue will be sought from the defendant.

24. Mr Reeves was perfectly entitled to make the Vero request on the day he thought of it, 13^th October 2011, and if he had done so then obviously no question of breach of an embargo or contempt of court could possibly have arisen. The same is true until Mr Reeves knew the outcome of the trial, i.e. right up to 20^th October. Also, following the handing down of the judgment on 1^st November, again no question of contempt of court could possibly arise. The problem arises because the timing of the events would suggest that Mr Reeves made the Vero request as a result of learning that his company had won the case and in reliance on it.
25. Mr Folly has not sought to contradict Mr Reeves' explanation of what happened and it seems to me that in the circumstances, appointing a hearing to deal with this matter would simply increase the costs for no purpose. I will address the issue on paper. Given the gravity of the allegation, if there had been any live substantial dispute on the issue, it would plainly have been appropriate to convene a hearing.
26. I accept Mr Reeves' explanation that what prompted him to file the Vero request in relation to Mr Folly on 20^th October was the Vero requests he had just filed that evening in relation to the other trade mark HORIZON, in the context in which he had recently realised (on 13^th October) that he wished he had used the Vero procedure in relation to Mr Folly. A wise thing to do in those circumstances would have been to hold off until 1^st November. That would have avoided any possibility of an inference which might be drawn from the timing of the Vero request. By filing the Vero request on the same day as he was told about the outcome of the case, Mr Reeves made it inevitable that Mr Folly would feel the embargo had been breached.
27. However the Vero procedure is not based on the findings of a court, it is simply an assertion by the rights holder. The Vero requests here made no mention of the court proceedings.
28. Accordingly I find that Mr Reeves did not breach the confidentiality embargo which related to the draft judgment.
29. That this problem has arisen at all is entirely the fault of Mr Reeves. Mr Folly was fully entitled to raise it. The claimant should not recover any of its costs incurred in relation to this issue from the defendant.

Post script

30. When this judgment in the form it is above from paragraphs 1 to 29 was sent to the parties, Mr Folly replied by email pointing out that paragraph 17 is wrong. Mr Folly had made submissions in response to the statements of Mr Reeves and Mr Sander. Mr Folly is quite correct in that respect and so I treated Mr Folly's email as an application to reconsider the judgment. It was plain that I should reconsider the matter and so I recalled the judgment and did so. This post script is the result of my reconsideration.
31. Mr Folly's submission is entitled "Contempt of Court Statement" and was dated 14/11/11. In the statement Mr Folly states as follows:

On Monday 24^th of October I was notified by the eBay Vero team that I had items removed from my store under the Vero scheme by Fox International. I was unable to make any defence or amendments to the listings as I was bound by the order not to disclose the order or take any action.

32. When it was sent in I remember reading this statement by Mr Folly. When I read it at the time it did not seem to me to seek to contradict what Mr Sander and Mr Reeves say in their statements. When I prepared the judgment in this case I believed that Mr Folly did not seek to contradict what Mr Sander and Mr Reeves said and that is reflected in paragraphs 17 and 25 above. However clearly the judgment was wrong to state that that was because Mr Folly had not sought to make any further submissions on the issue. He had done so.
33. Reconsidering the matter now, it is clearly the case that paragraph 17 was in error but in my judgment the error makes no difference to the outcome. The mistake makes no difference to my decision as to whether the embargo was breached. The account of Mr Reeves and Mr Sander shows that Fox did not breach the embargo.
34. In his email of today which points out the error in paragraph 17, Mr Folly also makes the following statement:

The evidence provided dates the Vero request by Mr Reeves as the 24^th October, not the 20^th October as Mr Reeves statement.

35. That is a new point. Mr Folly did not suggest in his statement of 14/11/11 that the fact that he had been notified by eBay on 24^th October that the items had been removed from his store was in any way inconsistent with Mr Reeves' evidence that the Vero requests themselves had been made on 20^th October.
36. The suggestion is clearly mistaken because in his original complaint raising this issue, on Monday 24^th October 2011 in an email to my clerk, Mr Folly included a copy of an email he had sent to Fox's solicitor Mr Sander on 21^st October starting as follows

Dear Sir,

We have this morning had correspondence from eBay that you have requested our stalker tackle items be removed from our listings.

37. Thus Mr Folly had clearly been informed of the request by eBay on 21^st October and so Mr Folly today is mistaken when he seeks to contend that the Vero requests must have been made on 24^th October. It is plain that the Vero requests were made on 20^th October as Mr Reeves' contends, eBay informed Mr Folly of them in the morning of 21^st October and he raised them with Mr Sander on that day. On 24^th October it seems that eBay acted on them but that does not undermine Mr Reeves' account.
38. I have considered whether this new point means the matter should be dealt with at a hearing. In my judgment it does not justify a hearing. Although now (but not before) Mr Folly appears to be seeking to contradict Mr Reeves' account, he is plainly mistaken in that regard.
39. I have also considered whether Mr Folly's point made in the 14/11/11 submission, that he felt unable to defend his listings, means that I should appoint a hearing. The purpose of a hearing would have been to consider whether the embargo had been breached, but that depended on the account given by Mr Reeves and Mr Sander, which Mr Folly did not challenge until his mistaken challenge now. In my judgment Mr Folly's point does not justify appointing a hearing. Nothing would come of it.
40. Accordingly having reconsidered the matter in the light of Mr Folly's email referred to in paragraph 30, my conclusions remain as before.
41. The judgment in the form sent out without this postscript was marked "Fox v Folly No 2" and given the neutral citation [2011] EWPCC 36. This judgment has been marked Fox v Folly No 3 and has been given the neutral citation [2011] EWPCC 38.