Intellectual Property
EU - international trade - exhaustion of rights - infringement - parallel imports - tobacco products - trade marks - Cuban cigars - unequivocal implied consent to importation
Mastercigars Direct Ltd v Hunters & Frankau Ltd: Corporacion Habanos SA (part 20 claimant/respondent) v (1) Mastercigars Direct Ltd (part 20 defendant/appellant) (2) Christopher Du Mello Kenyon (part 20 defendant): CA (Civ Div) (Lords Justice Chadwick, Jacob, Lloyd): 8 March 2007
A company (M) appealed against the decision ([2006] EWHC 410 (Ch), [2006] RPC 32) that the parallel importation of Cuban cigars into the UK had infringed the trade marks owned by the respondent Cuban company (C).
M's business was importing cigars into the UK. C had exclusive rights to buy, sell and market nationally and internationally rolled Cuban tobacco in any form or type, including hand-rolled Cuban cigars or Habanos, and it owned the trade marks in suit. M had imported consignments of Cuban cigars into the UK. They had been purchased from a retail outlet in Cuba that was permitted by C to sell up to $25,000 (£13,000) worth of cigars to an individual on any one occasion.
Every such sale had to be recorded on an invoice or factura in triplicate, one part of which had to be presented to customs on leaving Cuba. One of M's consignments was seized by UK Customs as counterfeit at the instigation of C's exclusive UK distributor (H).
M commenced proceedings, claiming a declaration as against H that there had been no trade-mark infringement, and release of the consignment.
The judge held that the consignment was not counterfeit but that parallel importation did infringe C's trade-mark rights because C had not consented to the goods being put on the market in the European Economic Area within the meaning of article 7 of the First Council Directive.
M submitted that the judge had dealt with the parallel imports case without properly considering the facts, and that it was sufficient if consent was given not by the actual owner of the trade-mark right but by a party that was legally or economically linked to it.
Held, consent for the purposes of the directive did not have to be express but could be implied. The factors taken into consideration in finding implied consent had to demonstrate unequivocally that the trade-mark proprietor had renounced any intention to enforce his exclusive rights (Zino Davidoff SA v A & G Imports Ltd (C414/99) [2001] ECR I-8691 applied).
Unequivocal did not mean that the defendant had to prove implied consent to the criminal standard of proof (Roche Products Ltd v Kent Pharmaceuticals Ltd [2006] EWCA Civ 1775, (2007) 93 BMLR 123 considered). The use of the word 'unequivocal' did not refer to the standard of proof. It meant that a proved act that was merely consistent with such consent, but also consistent with its absence, was not enough.
The court did not accept M's argument about consent being given by a licensee or connected company. The 'point of control' was what mattered (Internationale Heiztechnik GmbH v Ideal Standard GmbH (Case C9/93) [1994] ECR I-2789 applied). The focus had to be on what was really happening, on actual knowledge and actual, practical control, or the right of control by the trade-mark owner. In this case that meant concentrating on the acts of C and its legal and de facto powers of control.
On that basis, C had unequivocally consented to the sale of the consignments in Europe. C had permitted Cuban retailers to sell small but commercial quantities of cigars to foreigners, and provide them with documentation so that they could go through customs and take them home to sell. That led to the conclusion that consent to the use of the trade marks on the purchaser's home market had been given.
That conclusion applied as much to purchases by Europeans for sale within Europe as it did elsewhere. The factors taken as a whole unequivocally indicated consent. The judge had erred in holding that M knew of any objection to local purchase for export to Europe, and in failing to consider the impact of the evidence as a whole. Therefore, none of the consignments concerned had involved trade-mark infringement.
Appeal allowed.
Geoffrey Hobbs QC, Denise McFarland (instructed by Crane & Staples) for Mastercigars Direct Ltd; Richard Arnold QC, Mark Vanhegan (instructed by Mishcon de Reya) for Corporacion Habanos SA.
Employment
Automatically unfair dismissal - qualifying disclosures - whistleblowers - reasonable belief in commission of criminal offence or breach of legal obligation
Babula v Waltham Forest College: CA (Civ Div) (Lords Justice Thorpe, Thomas, Wall): 7 March 2007
An employee (B) appealed against a decision of the Employment Appeal Tribunal (EAT), upholding the employment tribunal's striking-out of his claim against the respondent employer (W) for unfair dismissal as a result of a protected disclosure.
W employed B as a lecturer. Following his concerns about the actions of a predecessor, which in B's view might have amounted to at least a criminal offence of incitement to racial hatred, or conspiring to commit an act of terrorism, in respect of which W had taken no action, B had reported the matter to a police authority. That disclosure led to a series of actions by W, as a result of which B had felt that he had no option but to resign.
He then issued a claim against W alleging unfair, constructive dismissal on the basis that he had made a protected disclosure within the meaning of section 43A of the Employment Rights Act 1996. The tribunal took the view that it was bound by the decision in Kraus v Penna Plc [2004] IRLR 260, which provided that if an employee's disclosure related to a legal obligation that did not actually exist, he could not claim protection by claiming that he had reasonably believed it had existed. The tribunal found that B had failed to demonstrate that W had been under a legal obligation to take action, so that there had been no qualifying disclosure under section 43B(1)(b) of the Act, and struck out B's claim as having no prospect of success. B appealed, but the EAT declined his invitation to hold that Kraus v Penna had been wrongly decided, and upheld the tribunal's decision.
B contended that a 'whistleblower' made a qualifying disclosure under section 43B(1)(b) if he disclosed facts that in his reasonable belief tended to show that a criminal offence had been committed, or that a legal obligation existed, and that he did not lose his protection because he was wrong about the criminal offence or legal obligation. B further submitted that in that regard Kraus v Penna had been wrong in law, albeit correctly decided on the facts.
Held, for the purpose of section 43B(1)(b), what was relevant was the whistleblower's reasonable belief, and not whether or not it turned out to be wrong (Darnton v Surrey University [2003] ICR 615 applied).
The use in the Act of the word 'likely' did not import an implication that the whistleblower had to be right, or that, objectively, the facts had to disclose a likely criminal offence or an identified legal obligation. Furthermore, the purpose of the Act was to encourage responsible whistleblowing, and to expect employees to have a detailed knowledge of criminal law sufficient to enable them to determine whether or not particular facts that they reasonably believed to be true were capable, as a matter of law, of constituting a particular criminal offence, was unrealistic and contrary to public policy.
The concept of 'good faith' added the element of protection for an employer in such a case (Street v Derbyshire Unemployed Workers Centre [2004] EWCA Civ 964, [2004] 4 All ER 839 applied). It followed that Kraus v Penna had imposed a gloss on the statute that was not there, and did not set out the law. The decisions of the EAT and the tribunal were, accordingly, set aside, and B's claim remitted to a fresh tribunal.
Appeal allowed.
Rabinder Singh QC, Catherine Rayner (instructed by Luqmani Thompson & Partners) for the appellant; Nicholas Hinchliffe QC (instructed by Eversheds) for the respondent.
Civil procedure - bias - striking out - unfair dismissal - whistleblowers - fact-sensitive cases - approach taken in discrimination cases
Ezsias v North Glamorgan NHS Trust: CA (Civ Div) (Lords Justice Ward, Maurice Kay, Moore-Bick): 7 March 2007
An employer (N) appealed against a decision of an employment tribunal to overturn an order striking out a claim of unfair dismissal brought by the respondent employee (E).
N had dismissed E on the basis that there had been a breakdown in the relationship between him and his colleagues. E maintained that the real reason for his dismissal was that he had made allegations of fraud against other employees.
N applied for E's claim of unfair dismissal to be subject to a deposit order or struck out. At a pre-hearing review held to consider the deposit order, the chairman concluded that E's claim had no prospect of success. At a subsequent hearing, the chairman granted the order to strike out.
The tribunal upheld E's appeal against that decision on the grounds that it was vitiated by apparent bias on the part of the chairman, as she had come to the second hearing having pre-judged the issue, and that in any event there were fundamental factual disputes that made the strike-out order wholly inappropriate.
N submitted that the chairman's statement at the pre-hearing review that E's claim had no prospect of success was no more than a provisional view and should not be equated with a pre-determination; the tribunal had erred in its assessment of E's prospects of success.
Held, what the chairman had stated at the pre-hearing review was not, at the time, said to be a preliminary or provisional view subject to further submissions - it was articulated in concluded terms. Accordingly, it was reasonable for a fair-minded and informed observer to take the view that the chairman, at the second hearing, had a closed mind as to N's prospects of success (Magill v Weeks [2001] UKHL 67, [2002] LGR 51 applied). Therefore, the error of law was not found in the decision of the tribunal, but in the determination of the chairman.
Given the extent of the factual dispute in this case, the decision of the chairman to strike out N's claim was legally perverse. The competing accounts of the circumstances surrounding E's dismissal could not be resolved without a full hearing from both parties.
In whistleblowing cases, a similar approach to that taken in discrimination cases should prevail. It was important that where a case is fact-sensitive, a claim should not be struck out except in the most obvious and plain circumstances (Anyanwu v South Bank Student Union [2001] UKHL 14, [2001] 1 WLR 638 considered). If the chairman had had that consideration in mind, it was unlikely that she would have come to the conclusion that she did.
Appeal dismissed.
Timothy Pitt-Payne (instructed by Eversheds) for the appellant; the respondent appeared in person.
Postal Services
Compensation - licences - Postal Services Commission - regulatory bodies - Royal Mail - interpretation of standards of service compensation scheme
Royal Mail Group PLC v Consumer Council for Postal Services: CA (Civ Div) (Lords Justice Laws, Sedley, Maurice Kay): 7 March 2007
M appealed against a decision ([2006] EWHC 3163 (Admin)) on the interpretation of the standards of service compensation scheme promulgated by the Postal Services Commission (P).
M provided a postal service under a licence granted by P. M's licence provided for a compensation scheme to be agreed between M and the respondent consumer organisation (C), failing which the terms of the scheme would be determined by P.
M and C failed to agree terms, and following a consultation exercise P had determined the terms of the scheme which were annexed to P's decision document. Under the scheme, users of bulk mail services were entitled to compensation if M failed to meet specified performance targets but clause 20(b), under the heading 'Bulk services - exclusions', provided that M was under no obligation to provide compensation 'where a sender is in default of credit terms without reasonable excuse'.
The judge held, in favour of C, that any credit default had to be determined by reference to a point in time and not, as M contended, over the target year for which compensation had been calculated, and that clause 20(b) was a netting-off provision which entitled M to withhold compensation to the extent that the sender's account was in default and not to withhold compensation altogether.
M contended that clause 20(b) on its ordinary and natural meaning was not a netting-off provision but an exclusion clause, and that no compensation was payable where a sender was in default of credit terms without reasonable excuse; the default was to be ascertained by reference to a period of time, namely the year for which compensation was being assessed.
Held, the natural meaning of clause 20(b) was that M was not obliged to provide any compensation to bulk mail senders who were in default of credit terms. But for his interpretation of paragraph 5.42 of the decision document, the judge would have construed the scheme as providing for a total exclusion of compensation and not merely a right of set-off.
His interpretation of that paragraph had been erroneous, and on its proper interpretation it presented no obstacle to the adoption of the natural meaning of clause 20(b). The subsidiary arguments put forward by C were insufficient to displace the natural meaning of the clause that provided for an exclusion of all compensation in cases to which it applied.
The natural meaning of clause 20(b) was that default was to be ascertained by reference to a point in time, namely the point in time at which compensation would otherwise fall to be paid. If there was any difficulty operating the scheme on that basis, it was open to M and C by agreement to identify the relevant date. There would be no substantial difficulty in operating clause 20(b) on the basis that customers' default without reasonable excuse would be ascertained by reference to a fixed point in time.
Appeal allowed in part.
Michael Beloff QC, Pushpinder Saini (instructed by Slaughter and May) for the appellant; David Pannick QC, Michael Fordham QC (instructed by Wragge & Co) for the respondent.
Criminal
Evidence - human rights - burden of proof - presumption of innocence - reverse burden
R v Keogh: CA (Crim Div) (Lord Chief Justice Lord Phillips, Sir Igor Judge (President, Queen's Bench), Mr Justice David Clarke): 7 March 2007
K appealed against a ruling by a trial judge in a preliminary hearing that the reversal of the burden of proof under sections 2 and 3 of the Official Secrets Act 1989 was compatible with article 6 of the European Convention on Human Rights.
K, who had been a Crown servant employed in the communications centre at Whitehall, was scheduled to stand trial for breaches of the Act. It was the Crown's case that K had obtained a highly confidential letter containing details of a meeting between the prime minister and the US president.
The letter was of a sensitive nature, primarily concerned with policy in Iraq. K had photocopied the letter and passed it on to his co-defendant, a political researcher for an MP. The photocopy was placed in the MP's papers, and he contacted the police.
The trial judge ruled that sections 2 and 3 of the Act created offences of strict liability, save that the Crown had to prove intentional disclosure, and that while the statutory defences under sections 2(3) and 3(4) of the Act imposed a reverse burden of proof, which infringed the presumption of innocence, that was justifiable.
K contended that the offences under sections 2 and 3 were made up of both the act of disclosure and the mental element that a defendant had to disprove. K also submitted that the gravaman of the offence lay, not so much in disclosing the information, but in doing so while knowing or having reasonable cause to believe that it would be damaging, and that the reverse burden was arduous and there was no justification for imposing it when all the relevant facts were more readily accessible to the Crown than to a defendant.
Held, the offence of making a damaging disclosure included the mental element that a defendant was required to disprove under sections 2(3) and 3(4). The question was whether the reverse burden of proof was necessary for the effective operation of sections 2 and 3.
From a practical viewpoint, even if the burden was on a defendant to show that he had no reasonable cause to believe that information related to defence or to international relations, or that disclosure was likely to be damaging, it would be expected that the Crown would advance a positive case in relation to those. The trial would be completely unbalanced if the Crown waited until a defendant had advanced his case before advancing a positive case in relation to the mens rea. Procedurally, the trial was likely to proceed as if the burden of proof of mens rea lay at the outset upon the Crown.
Accordingly, the Act could operate effectively without the reverse burdens that sections 2(3) and 3(4) imposed according to their natural meaning. To give the sections their natural meaning would be disproportionate and unjustifiable. As the natural meaning of the words was incompatible with article 6 of the convention, they should be read down by applying a similar interpretation to that achieved by section 118 of the Terrorism Act 2000.
Appeal allowed.
R Tedd QC for the appellant; D Perry QC, L Mably for the Crown.
Landlord and Tenant
Assignment - business tenancies - covenants - indemnities - notices - rent arrears - rent reviews - underleases - landlord's ability to recover reviewed rent retrospectively as against original tenant - service of protective notices
Scottish & Newcastle Plc v Zeljko Stephen Raguz: CA (Civ Div) (Lords Justice Mummery, Rix, Lloyd): 6 March 2007
An assignee (R) appealed against a decision ([2006] EWHC 821 (Ch), [2006] 4 All ER 524) that the respondent (S) was entitled to an indemnity from R in respect of sums S had paid to the reversioner (N) under two underleases.
S was the original tenant under two underleases of hotel premises. S had assigned both leases to R.
R had in turn assigned the leases. At the relevant time, the premises had been occupied by a later assignee that had gone into administrative receivership. At that time, the reversion was owned by N.
The amount of the rent due under each lease had then been increased as a result of two rent reviews. Since the occupier could not pay, N demanded the rent from S, which paid it. N required payment of those sums as a condition of agreeing to the assignment of the leases to a purchaser of the business as a going concern.
The judge held that, although N had not served the notices under section 17(2) of the Landlord and Tenant (Covenants) Act 1995 necessary to preserve S's liability in respect of large parts of the money claimed, nevertheless S, having paid the arrears for its own good commercial reasons to facilitate an assignment to a solvent assignee, was entitled to be indemnified for them by R under section 24(1)(b) of the Land Registration Act 1925.
S submitted by way of respondent's notice that the landlord, to preserve his ability to claim the reviewed rent retrospectively as against the original tenant, only had to serve notice under section 17(2) of the 1995 Act when the rent review had been completed, and did not have to serve notice on the original tenant under section 17(2) within six months of the original unreviewed rent falling due, followed by a notice under section 17(4) on the completion of the review.
R submitted that where S had a defence to liability by virtue of section 17 of the 1995 Act, it could not be right that S could nevertheless pay the rent, which it was not obliged to pay, and be indemnified by R against that payment under section 24(1)(b) of the 1925 Act; and that S was not entitled to an indemnity in respect of rent for which notices under section 17(2) had been served in due time, where S had prompted N to serve those notices.
Held, as the judge held, if a landlord wished to preserve the possibility of claiming against an original tenant when the rent was subject to review, he had to serve section 17(2) notices within six months after each rent day in turn, specifying in the schedule that the sum intended to be recovered was then nil, but subject to paragraph 4 of the notice and the possibility of the rent being determined to be a greater sum. That was the result of the legislative language chosen. Therefore, the point taken in the respondent's notice was rejected.
The scope of the indemnity under section 24(1)(b) of the 1925 Act was not limited to payments that the assignor was legally liable to make. Clearly it extended to payments that the assignor chose to make, for example, to its own lawyers or other advisers in considering and perhaps defending a claim by the landlord for the unpaid rent. It could be assumed that, notwithstanding the wide express terms of the covenant, there was a limitation on the scope of the indemnity to expense that was fairly and reasonably incurred (Smith v Howell (1851) 6 Exch 730 considered).
However, in respect of payments to N as the landlord, the extent of the indemnity was not limited to payments that N could compel S to make by legal proceedings. That was particularly so given the commercial strength of N's position, through its ability to decline to consent to an assignment unless all rent already due was paid. On that basis, the payments made by S in respect of rent for which section 17 was not complied with did satisfy the fairly and reasonably incurred test, and were recoverable under the indemnity.
It made no difference that, in respect of later instalments of rent, section 17 notices were only served on S's prompting. That was because being compellable to make the payment was not a prerequisite for ability to recover under the indemnity. Even if the landlord had not served notices under section 17 at the prompting of S, the rent would have had to have been paid to allow the assignment to proceed. That reason for making the payment would have been sufficient to justify S's claim for an indemnity in respect of those payments. The expenditure was not unreasonable or unfair, whether or not valid notices had been served under section 17.
Appeal dismissed.
Edward Bannister QC (instructed by LHP Law) for the appellant; Christopher Stoner (instructed by Eversheds) for the respondent.
Family
Conflict of laws and allocation of jurisdiction - divorce - pre-marital agreements - stay of proceedings - dispute as to court first seised of divorce proceedings
Carel Johannes Steven Bentinck v Lisa Bentinck: CA (Civ Div) (Lords Justice Thorpe, Wall, Lawrence Collins): 6 March 2007
A husband (H) appealed against a case-management order, directing preparations for contested hearings in relation to divorce proceedings brought between H and his wife (W) in both the Swiss and English jurisdictions.
Following the break-up of their marriage, H had taken up permanent residency in Switzerland and W had remained in the UK. A pre-marital agreement had provided that the contract and marital relationship between the parties would be governed by Swiss law and be subject to Swiss jurisdiction. H initiated conciliation and divorce proceedings in the Swiss court. W then petitioned for divorce in England and later contested the jurisdiction of the Swiss court.
Following various hearings and applications, the issue was pending in both courts as to which was first seised. The Swiss court issued a notice fixing the hearing on jurisdiction in divorce and ancillary matters. That hearing proceeded, and at the time of this hearing judgment was reserved.
H argued that as the Swiss court had yet to decide whether it was first seised, the English court should stay its proceedings until such time as that decision was made, and that once Switzerland had decided whether or not it was seised of the matter, the English court could make the necessary directions consequent on the Swiss decision.
Held, H's appeal succeeded, despite the fact that no single criticism could be made of the judgment of the court below.
The judge had rightly identified that the essential dispute between the parties was as to money. With equal clarity, he recorded that he had taken the case in circumstances that were plainly unsatisfactory, with no opportunity for pre-reading and little time for argument. Despite the absence of error in the judgment below, it was not only open to the instant court but incumbent on it to act to avoid any further wastage of costs and court resources.
There was a strong argument for deferring in London, for the simple reason that the issue as to which jurisdiction was first seised was to be determined in Switzerland according to Swiss law. The notion of having conflicting expert evidence from Swiss lawyers, on which a London judge had then to determine seisin according to Swiss law, made no sense when a Swiss judge was there to determine the very issue.
That consideration became even more powerful when the issue had been argued out in Switzerland, and all that was awaited was the judgment of the court. The instant court would abandon common sense and responsibility if it permitted the parties to continue to incur costs in the English jurisdiction in preparation for a London fixture, on the premise that it might precede in time the delivery of the Swiss judgment. H's application for a stay of proceedings was granted.
Appeal allowed.
B Singleton QC, R D N Castle (instructed by Mayer Brown Rowe & Maw) for the appellant; R J Bailey-Harris (instructed by Payne Hicks Beach) for the respondent.
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