(1) The Trade Mark Licensing Company Ltd (Claimants and Part 20 Defendants Respondents) (2) Lonsdale Sports Ltd v Leofelis Sa (Defendant and Part 20 Claimant Appellant) (1) Punch GmbH and Others (Third Parties Respondents)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd,Lord Justice Lewison,Lord Justice Pill,Lady Justice Black,Lord Justice Patten,Master of the Rolls |
| Judgment Date | 26 October 2012 |
| Neutral Citation | [2010] EWCA Civ 1366 |
| Date | 26 October 2012 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2012/0762,Case No: B4/2010/1732 |
[2010] EWCA Civ 1366
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR JUSTICE ROTH
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Pill
Lord Justice Lloyd
and
Lord Justice Lewison
Case No: A3/2012/0762
John Baldwin Q.C. and Andrew Lykiardopoulos (instructed by Edwin Coe LLP) for the Appellants
George Leggatt Q.C. and Jasbir Dhillon (instructed by Reynolds Porter Chamberlain LLP) for the Respondent Claimants
Richard Hacon (instructed by Druces LLP) for the First, Fourth and Fifth Third Parties
Hearing date: 11 October 2012
On 23 July 2012 this court handed down judgment on an appeal by Leofelis SA against an order made by Mr Justice Roth on 9 March 2012. We neither dismissed nor allowed the appeal at that stage. Instead we adjourned the appeal so that Leofelis should have the opportunity to formulate in terms of a draft amended statement of case a new contention which had been outlined for the first time at the hearing of the appeal by Mr Baldwin Q.C., Counsel for Leofelis.
The adjourned hearing took place on 11 October 2012. Having heard Mr Baldwin's submissions in support of his application for leave to re-re-amend the Defence and Counterclaim, and with the benefit of skeleton arguments for the appellant and for the respondent Claimants, we decided to refuse permission to make the amendment sought and, accordingly, to dismiss the appeal. This judgment sets out my reasons for making that order.
Our earlier judgment is available as [2012] EWCA Civ 985, to which reference can be made for the history and context of the present judgment. The judgment appealed from is at [2012] EWHC 485 (Ch). Given the availability of those two sources, as well as an earlier decision of the Court of Appeal in previous proceedings between the same parties, in July 2008, [2008] EWCA Civ 640, not to mention other judgments at first instance including one of Mr Justice Kitchin [2010] EWHC 969 (Ch), I can take a good deal of the background and history as read, and can therefore be somewhat more brief than I otherwise would in setting out the circumstances relevant to this judgment. Even so the history that I need to tell is somewhat complex. As before I will refer to the Claimants, respondents to the appeal, as Lonsdale, and to the Defendant Appellant as Leofelis. I will also use the label Punch to refer not only to the First Third Party, Punch GmbH, but also to other companies which are alleged (but, as regards the Third Third Party, not admitted) to be associated, including the Second to Fourth Third Parties. Mr Schotsman, the Fifth Third Party, is or has been the main person behind the First, Second and Fourth Third Parties.
Lonsdale started the present proceedings, suing Leofelis for payment of royalties due but unpaid and for damages under a trade mark licence agreement made in November 2002. Leofelis served a Defence and Counterclaim by which it not only disputed its liability for the royalties and damages claimed but also counterclaimed for damages for breach of contract alleged against Lonsdale. The issue before us is not whether Leofelis has a viable counterclaim for such damages. That was decided by Mr Justice Kitchin. We have to consider the possible scope of Leofelis' claim for damages for breach of contract. Mr Justice Roth held that Leofelis had no arguable case for claiming damages in respect of the period after the termination of the 2002 licence in 2007. He granted summary judgment to that effect. In July we held that his grounds for doing so were correct. In order to support his appeal, however, Mr Baldwin presented to us a new argument which did not feature in his grounds of appeal or his skeleton argument, and was not reflected in the Re-Amended Defence and Counterclaim as it then stood.
As a result of our judgment and order in July, we now have a draft Re-Re-Amended Defence and Counterclaim (RRADC) setting out the amendments for which Mr Baldwin seeks permission. That document has some relevant documents annexed, to which reference is made in the draft statement of case. In addition we have witness statements from two witnesses on behalf of Lonsdale, each of them exhibiting further documents. Disclosure in the claim and counterclaim has already taken place although Mr Baldwin told us that it is continuing in that further documents have come to light since the dates on which disclosure lists were served.
The 2002 licence gave Leofelis an exclusive licence to use the Lonsdale trade mark in relation to certain classes of goods in a territory which included all the then Member States of the European Union except for the UK and Ireland, plus a few other countries. It was to last until 31 December 2008, unless terminated earlier, with a right for Leofelis to have a further licence for another six years from 2009. The royalty payable did not relate to the quantity of sales made. Leofelis did not seek to exploit the licence directly, but granted a sub-licence to Leeside, an associated company, first of all for Italy (with Lonsdale's consent as required under the 2002 agreement) and later for Germany and other countries (without such consent). As a result of prior dealings Punch had a sub-licence for Germany and some other countries, which was to expire at the end of 2006.
By the autumn of 2005 Lonsdale and Leofelis were in litigation against each other in England, Leofelis claiming that Lonsdale had breached the exclusivity granted by the 2002 agreement by sales of Lonsdale-branded goods into Belgium. Leofelis claimed damages for that breach; Lonsdale defended the claim and raised a counterclaim. In February 2006 Lonsdale purported to terminate the 2002 agreement, but it did so equivocally. The Court of Appeal in 2008 held that this termination had not been effective, affirming the decision of Mr Justice Evans-Lombe on that point.
In January 2006 Leofelis gave notice to Punch terminating its sub-licence, on the ground of non-payment of royalties. Punch did not accept the validity of that termination and went on selling in the German market, but it knew that its licence would in any event expire in December 2006. The termination led to Punch approaching Lonsdale, with which it had had no previous direct dealings, with a view to getting a licence directly from Lonsdale which would enable it to continue to supply the German market after the end of 2006. Documents which we have seen show exchanges between Lonsdale and Punch, and some others, on this subject. I will refer to some of them later.
Leeside was not active in the German market until some time into 2006; until January 2006 any such activity would have been inconsistent with the sub-licence to Punch. On 22 May 2006 Lonsdale's solicitors, Reynolds Porter Chamberlain (RPC), wrote to those acting for Leofelis in the 2005 proceedings, Dorsey & Whitney (DW), complaining that Leeside was asserting that it had a sub-licence from Leofelis for Germany which, if true, would be a breach of the 2002 agreement for lack of Lonsdale's consent. They enclosed a number of letters from Leofelis and from its Italian lawyers, Studio Legale Ingrilli, to various parties as evidence of this. DW denied that the sub-licence was invalid. The correspondence continued into July. On 7 July 2006 Punch informed Lonsdale that Leeside was to exhibit at an imminent trade fair in Berlin and asked "can you stop Leeside showing Lonsdale in Germany?"
On 14 July 2006 RPC wrote again to DW requiring immediate confirmation that Leeside would not offer to supply goods, or sell or supply goods, bearing the Lonsdale trade mark at the trade fair. On the next day German lawyers acting for Lonsdale wrote direct to Leeside at the trade fair asking them to stop offering Lonsdale-branded goods at once and to undertake not to offer them for sale, and threatening proceedings in Germany if no such undertaking was given. DW continued to deny that the sub-licence was invalid, and no undertaking as requested was given. Accordingly on 25 July 2006 Lonsdale applied to the court in Berlin for an interim injunction against Leeside, which was granted.
In November 2006 the first English proceedings came to trial before Mr Justice Evans-Lombe. He gave judgment in March 2007. He held that the sub-licence to Leeside for Germany was valid on the basis that Lonsdale had given its consent. Lonsdale appealed against some aspects of his decision and order, including that finding. In July 2008 the Court of Appeal decided that appeal and held that the sub-licence to Leeside for Germany was not valid, because consent had not been given. It followed that the German injunction had been properly obtained, and did not amount to a derogation from the grant of exclusivity under the 2002 licence. In the meantime Leofelis had called on Lonsdale to have the injunction discharged, but Lonsdale had refused to do so because of the pending appeal. Leeside appealed against the order in Germany but failed in that appeal. The injunction remained in force at all material times.
In the meantime the Punch sub-licence came to an end on 31 December 2006, if it had not already been validly terminated by Leofelis in January 2006.
In January 2007 Lonsdale granted a...
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