Commission Recovery Ltd v Marks & Clerk LLP

Hearing dates: 21 and 22 November 2023

Further written submissions dated 27 and 29 November and 6 and 7 December 2023

Approved Judgment

This judgment was handed down remotely at 10.30am on 18 January 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Introduction

This appeal concerns the question whether the Court should direct that the Claimant, Commission Recovery Ltd ( “CRL”), may not act as a representative of other persons who have, or are said to have, the same interest in the proceedings as CRL does.

The Defendants, Marks & Clerk LLP ( “M&C LLP”) and a firm called Long Acre Renewals ( “LAR”), applied for, among other things, an order pursuant to what was then CPR r 19.6(2) (now CPR r 19.8(2)) directing that CRL may not act as such a representative. The application was heard in the Commercial Court by Robin Knowles J ( “the Judge”). He handed down judgment on 24 February 2023 at [2023] EWHC 398 (Comm) dismissing the application. M&C LLP and LAR appeal to this Court with the permission of Males LJ.

Although the facts are not especially complex, the law and practice in relation to representative proceedings is far from simple and we received wide-ranging submissions from Mr John Machell KC, who appeared with Mr Russell Hopkins for M&C LLP and LAR, and from Mr Nico Leslie, who appeared with Mr Christopher Monaghan for CRL, supplemented by a number of rounds of written submissions. On the overall question, I would, despite the able submissions of Mr Machell, uphold the decision of the Judge to allow the proceedings to go forward as a representative action and I would therefore dismiss the appeal; but the appeal has highlighted a number of issues which may lie ahead, and which will no doubt require careful case management.

Facts

The facts have of course not yet been found. But as they currently appear to be (on the basis of the pleadings and the evidence filed for the present application) they can be summarised as follows.

M&C LLP is a well-known firm of patent and trademark attorneys. It was incorporated in February 2009 to be the successor to a general partnership called Marks & Clerk ( “M&C”), and with effect from the end of 14 March 2009 M&C's business was transferred to it.

It acts for clients who wish to apply for the registration of intellectual property rights ( “IP rights”). There are three main classes of registered IP rights, namely patents, trademarks and registered designs. M&C LLP's primary business consists of preparing, filing and prosecuting applications for registration of these rights; it also provides related advisory services including advice on the infringement and validity of IP rights, and on their acquisition and disposal. These are said to be typical of the services offered by firms of patent and trade mark attorneys in the UK.

In general however M&C LLP does not offer services to its clients in respect of the payment of renewal fees. IP rights are national, and each country has its own rules, but the usual pattern is for renewal fees to be payable in order to keep registered IP rights in existence. Thus patents can typically subsist for 20 years from the date of filing subject to the payment of fees, usually payable annually once the patent has been granted; trademarks can last indefinitely subject to the payment of renewal fees, which tend to be payable at 10-yearly intervals; and registered design rights can typically remain in force for 25 years from the date of filing subject to the payment of renewal fees, which tend to be payable at 5-yearly intervals. In addition in some jurisdictions, for example in the European Patent Office, fees are also payable during the application process while a grant is pending.

Timely payment of the correct renewal fee is very important as failure to pay can result in the irrevocable loss of a right. Most firms of patent and trademark attorneys therefore make arrangements to provide their clients with a means to monitor and/or arrange for the payment of renewal fees. This can be done either in-house or by use of an outside arrangement. As already referred to M&C LLP does not itself usually provide these services. Instead the usual position is that it will pass details of its clients' IP rights to an outside provider, CPA Global Ltd (in fact now known as Clarivate). This is the successor to a firm originally established by a number of patent or trade mark attorneys in or around 1969 under the name of Computer Patent Annuities to deal with, among other things, the renewal of clients' IP rights. I will refer, as the parties have done, to this firm and its successors in business as “CPA”, it not being necessary for present purposes to distinguish between them. Once M&C LLP has passed a client's details to CPA, CPA will then issue reminders to the client when a renewal fee is due. It is then a matter for the client whether to instruct CPA, or to instruct another renewals provider, or to deal with the renewal itself (or allow the rights to lapse).

This arrangement is reflected in M&C LLP's standard terms of business. There have been a number of iterations of these, but I can take that dated March 2009 by way of example. This included the following provisions:

(1) Clause 1.1 provided:

“These terms shall apply to all matters in respect of which we accept instructions from you to provide professional services (“the Services”)…”

(2) Clause 2.1 provided that the partners and qualified staff must comply with the respective codes of professional conduct issued by their relevant professional body (The Chartered Institute of Patent Attorneys, the European Patent Institute, or the Institute of Trade Mark Attorneys). We were told by Mr Leslie that it was common ground that those codes of conduct prevented conflicts of interest and required patent and trade mark attorneys to promote the interests of their clients.

(3) Clause 2.2 provided:

“It is our responsibility to: (a) practise competently, conscientiously and objectively, put your interests foremost while observing the law and our duty to any court or tribunal; and (b) avoid conflicts of interest…”

(4) Clause 4.3 provided:

“Unless otherwise specifically agreed by us, the Services will not extend to issuing you with reminders for and processing the renewals of any of your registered rights. However, our standard practice is to pass details of all cases we handle requiring such renewals to specialist renewal agents, and you authorise us to instruct Computer Patent Annuities Limited, St Helier, Jersey, to remind the registered proprietors concerned or their appointed representatives of due dates for payment of renewal fees, and who will invoice such proprietors or their appointed representatives for their services under their current terms of business.”

(5) Clause 10 was concerned with data protection.Clause 10.1 set out the way in which M&C LLP might use the client's personal data. Among other things it provided as follows:

“We may pass your personal data, including details of your registered rights to Computer Patent Annuities Limited and attorneys acting on their behalf for the issue of renewal reminders unless explicitly instructed not to do so.”

As this makes clear, M&C LLP did not itself generally issue reminders to its clients or deal with the payment of renewal fees, but it would, unless instructed not to do so, pass details of the client and their registered IP rights to CPA. That enabled CPA to issue the client with reminders, and it was then a matter for the client whether to instruct CPA or not.

There were further iterations of M&C LLP's standard terms of business dated December 2012 and January 2015 respectively. It was not suggested that their provisions were materially different (so far as affects the present question).

When M&C's business was transferred to M&C LLP in 2009 there was already a practice of CPA making payments of commission if a client referred by M&C duly instructed CPA in respect of renewals. This practice dates back to 2006 and has continued since. The payments were (and continue to be) made not to M&C LLP itself, but to LAR, a general partnership which includes members and former members of M&C LLP. Although LAR is a separate partnership which comprises an overlapping, but not identical, set of partners with the members of M&C LLP, no point was taken by Mr Machell on the distinction between LAR and M&C LLP, at any rate for the purposes of the present appeal.

The commission arrangements were formerly the subject of two agreements (one in respect of patents and the other in respect of trade marks) between CPA and LAR dated 5 November 2009 (but expressed to be effective from 1 February 2006, the agreements replacing an earlier agreement dated 31 January 2006); these agreements were in turn superseded by an agreement dated 7 July 2016 which is the current agreement.

It is not necessary to refer to the terms of these agreements in any detail. Their general purpose can be seen from recitals (C) and (D) to the 2006 agreement which recited respectively that the Customer (ie the firm that...