Scottish Court of Session Decisions

[1] What I propose to do is to give my decision in relation to the matters before me and to explain why in fairly brief terms, reserving the right to revise the text if that is required by parties for the purposes of any possible appeal.

[2] The background to the motions before the Court today is explained fully in the petition, the summons, the report of the commission and in very general terms in the report now appearing in 2000 SLT (Issue 19) at p. 683 of Zino Davidoff SA v M & S Toiletries Ltd, another litigation between the same parties. Therefore, I do not need to go into the background in great detail. Mr Moynihan who appears for the pursuers and petitioners (to whom I shall refer as the pursuers) explained that there were four motions before the Court. The motion asking for a minute of amendment to be received was unopposed and I allowed that motion and allowed 14 days for Answers to the Minute of Amendment. A motion in relation to ordaining production of certain articles was dropped at the same time. A third motion was a motion in which the pursuers sought the authority of the Court to inspect certain samples which had been lodged in process by the Commissioner on or about 30 June 2000. These samples are listed in an inventory. In the event there was no opposition to that motion, which is granted.

[3] The matter remaining is the matter of the motion for interim interdict in terms of the first and second conclusions annexed to the summons. In amplification of the facts averred, Mr Moynihan laid before the Court a number of documents in one bundle. The first page contained a chronology and I refer to that for its terms. It discloses that a consignment of the articles in question, including 1294 bottles of perfume material imported from Singapore, was seized at Grangemouth in 1998. That seizing was followed swiftly by the raising of the first action. An undertaking was given in that action by the defenders; and that undertaking is printed as Document 2 in the bundle. I was told there was a similar action raised by a body referred to as Joop but I was not given any more detail about that other than that it followed the same course and had the same result as the first action. Lord Kingarth delivered his Opinion on 4 April 2000 in respect of certain matters debated before him on the Procedure Roll at that time (2000 SLT 683). Thereafter, apparently in response to losing the argument that was presented on that occasion, a Mr Barclay of the respondents and defenders (to whom I will refer as the defenders) made some remarks which are quoted in the "Herald" and some other remarks which he apparently wrote in a letter to and published in "Retail World"; reference was made to these remarks, the details of which are condescended upon in the pleadings before me.

[4] The general background which is described by Lord Kingarth in his Opinion refers to parallel imports or the grey market or the parallel trading, namely the importing into Europe of goods sold and exported from Europe for sale outside Europe. The matters referred to in the chronology were not in dispute. Mr Moynihan then went on to explain the significance of the bar codes referred to in the summons and particularly in the second conclusion annexed to the summons. He explained that on a typical item of goods the box and the bottle containing the perfume or aftershave or other such product there might be a bar code put on by a retail shop indicating a price. There would be two bar codes put on by the pursuers. One would simply be a stock bar code and the other, the more important one, would start with a letter such as "D", followed by a number and by a substantial number of digits. It was explained that that bar code, referred to as the "lower bar code" was important because it enabled the pursuers to identify the provenance of the article marked with such a bar code. Number 6/8 of process was produced to illustrate his feature. He also drew my attention to another similar article, number 6/9 of process, which, however, lacked the bar code of this character; it contained only a shortened bar code with five digits. The significance of the pursuers' lower bar code was first of all that it was a requirement of European Union law to have such a code on the product; this was not subsequently disputed by or on behalf of the defenders. It was explained by Mr Moynihan that a principal reason for this requirement was consumer safety. If there was, or was alleged to be, a defect in some of these articles after they were put on the market then it would be possible to trace the batch from which the articles came and the whole batch could, if necessary, be recalled for inspection and examination. It was explained also that the bar code had the secondary significance: it enabled the pursuers to identify the date and time of manufacture and thus to identify the distributor and the area of the world to which the goods had been exported for distribution. Accordingly erasing or mutilating the lower bar code could conceal the provenance of the article in question and also the identity of the product, that is the distributor who had obtained it from the pursuers. With reference to the particular articles produced, 6/8 with the original bar code on could by means of that bar code be traced back to its origins, but 6/9 with the original bar code removed, and replaced by a small new bar code, could not be traced back to its source.

[5] In relation to the interim interdicts sought, Mr Moynihan submitted first of all that the pursuers were the registered holders of a trademark in respect of the relevant goods . He submitted that the pursuers had a right to defend the property rights conferred upon them as proprietors of the trademark What they were seeking to do was to maintain the status quo by vindicating that property right and preventing others violating it. He then referred in some detail to the circumstances outlined in the chronology and asked the Court to draw the inference that, because the defenders had been required to give undertakings about not distributing articles which originated with the pursuers and had had their bar code interfered with, and because the defenders had given undertakings, first of all in the action and secondly to the Court's Commissioner appointed in the present process, it was appropriate for the Court to take the further step and relieve the pursuers of the need to identify each location for each batch of articles that had come into the possession of the defenders. It would be appropriate, he submitted, for the Court to pronounce a general interdict which would be a comprehensive order to stop the defenders from dealing with any these items.

[6] He submitted that there was plainly a case to try. There was an issue of principle here which could be identified in a number of ways. Some were canvassed in the Opinion of Lord Kingarth. He also referred to a line of authority, both in Scotland and in the European Union relating to the right of a proprietor of a trademark to seek the assistance of the Court to stop infringement of the trademark. I was referred to a document which is contained as Document No 1 in the blue folder of authorities provided for the Court. That is the document which contains the First Council Directive 89/104 EEC of 21 December 1988. That Directive, I was told, has been amended so as to extend the area from the area of the European Union to the whole European Economic Area. Article 5 sets forth the rights conferred by a trademark, Article 7 qualifies those rights in a certain respect and Article 7(2) disapplies Article 7(1) in certain circumstances. I need not narrate the detail of these Regulations at this stage.

[7] Mr Moynihan also pointed out that in the earlier action decided on Procedure Roll by Lord Kingarth, there was no challenge to the action as being one which had no merit. He referred me to the case of Sebago Inc and Ancienne Maison Dubois et Fils SA v GB-UNIC SA which is conveniently printed as No 3 in the blue folder and also the case (No 5 in the blue folder) which at a later stage Mr Campbell for the defenders founded upon. That is a case brought in England by the present pursuers against A & G Imports and decided by Laddie, J.; it is reported in the [1999] 3 AER (Ch. D.) at p.711. Mr Moynihan drew attention to the dates of these cases. In point of time the first was the decision by Mr Justice Laddie; the second was the decision of the Court of Justice of the European Communities in the Sebago case. The last was the decision of Lord Kingarth in the case already referred to.

[8] He distinguished the case decided by Mr Justice Laddie on several grounds. First of all it was merely concerned with whether or not in an application for summary judgment the defenders had an arguable defence. Secondly, it was not expressly followed by Lord Kingarth in the Scottish case at a later date and of course it was based, at least to some extent, upon English law. It was also a judgment delivered before the Sebago judgment already referred to.

[9] He pointed out that although a main line taken by the defenders was that their immediate suppliers were suppliers from within the European Economic Area that, he submitted, did not deal properly with the point that was being made by the pursuers because the essence of the matter was that the pursuers had a right to protect their trademark against commercialisation and distribution by anyone who attempted to do so without their consent within the area. In all the circumstances he submitted that there was a prima facie case.

[10] Turning particularly to the bar codes, in the context of Article 7, he pointed out that the summons in the present case proceeded upon the assumption that the interference with the bar codes whether by removing them altogether or by altering them in some way was itself a pointer to the fact that the goods had an ultimate origin outside the European Economic Area; there would be no point in interfering with the bar codes otherwise. He also referred to the statements attributed to Mr Bill Barclay of the defenders. In these circumstances, the pursuers had "legitimate reasons" within the meaning of Article 7(2) to oppose further commercialisation of the goods whose bar codes had been removed or defaced in some way. The condition of the goods had been changed or impaired. He drew particular attention to the averments in the summons about the bottle which had been seized in Newcastle by the trading standards officer in the (mistaken) belief that the goods contained in the bottle were counterfeit goods. What had apparently led the trading standards officer to that view was the interference with the bar code. For these reasons, it was clear that the bar codes were of some significance and of importance in protecting the pursuers' rights as holders of the trademark. He distinguished the observations of Mr Justice Laddie in relation to the bar codes which were under discussion in the 1999 case; indeed the facts were plainly different and distinguishable.

[11] Mr Campbell accepted that the outstanding matter was the matter of the interim interdicts. He said that there was no submission to be made to the Court on behalf of the defenders in relation to the balance of convenience. The only question was whether or not there was a prima facie case. He drew attention to the detail of the terms of the first conclusion and also the circumstances as narrated in the report of the Commission and the views there narrated by the Commissioner as to the circumstances. The defenders' position was as disclosed to the Commissioner. He indicated that there was nothing to suggest that the defenders had knowingly imported any of the goods in question from outwith the European Economic Area. The defenders had made it plain that they did not know the precise origin of the goods and he suggested that there was no duty upon them to enquire into the provenance of these goods before they bought them from suppliers within the European Economic Area. In relation to the bar codes, he founded in particular upon the observations by Mr Justice Laddie as reported in 1993 AER in the report already referred to. He asked the Court to consider in particular the precise averments of the pursuers as to what it was the defenders were said to have done. It was not averred that the defenders themselves had removed the bar codes or that the defenders had knowingly imported goods in breach of some contract between the pursuers and their distributors outwith the European Economic Area. The Court should not attach much importance to the observations attributed to Mr Bill Barclay in a newspaper or the retail magazine.

[12] In my opinion, there is clearly a case to try here. I am satisfied that the submissions made by Mr Moynihan are sound and that there is a prima facie case of interference with the pursuers' prima facie rights under Article 5 even as qualified by Article 7 of the Regulations referred to. The suggestion that there was not even a prima facie case does not appear to have been made in the case which was heard by Lord Kingarth. A number of the matters that are at the heart of disputes about parallel marketing have gone in one shape or form to the European Court of Justice; see the references narrated at the end of the Opinion of Mr Justice Laddie in the case referred to. In my opinion, it is also abundantly clear that deliberate interference with the bar codes could have no obvious purpose other than to conceal activity of a more or less nefarious character. How the goods got into the European Economic Area or into the hands of the defenders themselves is not disclosed by the defenders; and because of the absence of bar codes on the goods, it is very difficult to discover their provenance. Prima facie the only reason for interfering with the bar codes is to conceal the true origin of the goods. That might be because the background is that the goods were unlawfully come by; it might simply be that the goods reached the European Economic Area because some distributor outside the EEA was in breach of some contractual obligation with the pursuers. Prima facie the defacing or the removal of the bar codes is designed to facilitate some invasion of the prima facie rights of the pursuers under the Directive referred to. Being satisfied that there is a prima facie case, I am clearly satisfied that the balance of convenience favours the pursuers. The defenders say that they do not know, and have not inquired into, the previous history of the relevant goods in their possession. It cannot be right that the defenders, who thus do not appear to come into the Court with entirely clean hands in the matter, should be able to say that the balance of convenience favours them; and indeed I understood them not to do so.

[13] In the circumstances I shall pronounce interim interdict in terms of Conclusions 1 and 2.