Glencairn IP Holdings Ltd v Product Specialities Inc. (t/a Final Touch)
| Jurisdiction | England & Wales |
| Judge | Hacon |
| Judgment Date | 05 July 2019 |
| Neutral Citation | [2019] EWHC 1733 (IPEC) |
| Court | Intellectual Property Enterprise Court |
| Docket Number | Case No: IP-2018-000183 |
| Date | 05 July 2019 |
[2019] EWHC 1733 (IPEC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY ENTERPRISE COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
HIS HONOUR JUDGE Hacon
Case No: IP-2018-000183
Theo Barclay (instructed by Stobbs (IP) Limited) for the Claimants
Stephanie Wickenden (instructed by Virtuoso Legal Limited) for the Defendants
Hearing dates: 13 June 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE Hacon
Introduction
The claimants (‘Glencairn’ where I refer to them collectively) apply for an injunction to restrain the defendants' solicitors (‘Virtuoso’) from acting further for the defendants (collectively ‘Final Touch’) in these proceedings.
Glencairn say that if Virtuoso continue to act for Final Touch, there is a risk that information confidential to Glencairn and known to solicitors within Virtuoso through acting in earlier litigation will inadvertently be passed to Final Touch.
Theo Barclay appeared for Glencairn in their application, Stephanie Wickenden for Final Touch.
Background
The second claimant is a company with registered offices in Hamilton, South Lanarkshire. It designs, makes and sells glassware. The first claimant is a sister company which holds intellectual property rights used by the second claimant in the course of its business.
In September 2018 Glencairn brought an action against Dartington Crystal (Torrington) Limited (‘Dartington’) for infringement of UK Registered Design No. 2,093,670 (‘the Registered Design). The product alleged to infringe was a whisky glass. Dartington were represented by Virtuoso.
In September 2018 Glencairn became aware of another glass which in their view was too close to their design. It was manufactured by the first defendant, a Canadian manufacturer of glassware based in Ontario and was imported into and sold in this country by the second defendant. A letter before action was sent on 25 September 2018. Final Touch instructed Virtuoso to represent them.
On 8 November 2018 Glencairn issued the claim form in the present action. It is for infringement of the Registered Design and also infringement of an EU Trade Mark for the three-dimensional shape of a whisky glass and for passing off.
At about the same time, Glencairn and Dartington agreed to conduct a mediation in an attempt to settle their differences. Position statements were exchanged. As is usual, they were stated to be confidential. The mediation took place on 11 December 2018 under a mediation agreement which expressly bound the parties and the solicitors present to keep confidential information disclosed at the mediation.
Following discussions which continued after the mediation agreement was reached. The Dartington litigation was settled by a Tomlin Order dated 8 January 2019.
By the time of the mediation Virtuoso had taken the view that it would not be appropriate for their Dartington team to be involved in the Final Touch litigation. An information barrier was set up on 11 December 2018. On 19 December 2018 Mr Partington of Virtuoso, who headed the Dartington team, sent an email to the solicitors acting for Glencairn (‘Stobbs’) stating that he and his colleagues, Mr Walawage and Mr Popa would not be acting for Final Touch and that a ‘Chinese wall’ had been implemented.
On 14 February 2019 Stobbs sent a letter to Virtuoso stating that the Chinese wall at Virtuoso was inadequate and expressing the doubt that any set up between the Dartington and Final Touch teams at Virtuoso could be effective. Stobbs requested that Virtuoso should cease to act for Final Touch. On 18 February 2018 Virtuoso declined to stand down. On 8 March 2018 Glencairn filed the application notice for this application.
Glencairn's concern is that Virtuoso became aware of information disclosed by Glencairn during the Dartington mediation and during discussions both leading up to it and afterwards. This included Glencairn's negotiating position and the terms on which Glencairn was prepared to settle. Glencairn argues that there is a risk that this information or some of it will become known to Final Touch via Virtuoso and that this will provide Final Touch with an advantage in these proceedings, particularly in any settlement negotiations that may take place.
The principles established in Bolkiah
Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 provides the most authoritative guidance to date in relation to the potential for a conflict of interest arising when professional advisors act for different parties. This was in a particular context: the professional advisors had acted for a first party, had ceased to act, and subsequently wished to act for a second party in litigation against their former client, the first party. The professional advisors were forensic accountants but it was common ground that on the facts of the case their position was to be equated with that of solicitors.
In summary, Lord Millett, with whom the remainder of their Lordships agreed, held:
(a) The basis of the court's jurisdiction to intervene on behalf of a former client of a solicitor to restrain the solicitor from acting for a current client is the protection of information confidential to the former client (at 234G-H). The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence (at 235D).
(b) The former client must establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own (at 235D-E).
(c) The burden of proof on the former client is not a heavy one. Matter (i) may readily be inferred. Matter (ii) will often be obvious. Whether a particular individual is in possession of confidential information is question of fact which must be proved or inferred from the circumstances of the case (at 235E-F).
(d) The solicitor's duty to preserve confidentiality is unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so. Moreover, it is not merely a duty not to communicate the information to a third party. It is a duty not to misuse it, that is to say, without the consent of the former client to make any use of it or to cause any use to be made of it by others otherwise than for his benefit (at 235G-H).
(e) The former client is entitled to prevent his former solicitor from exposing him to any avoidable risk; and this includes the increased risk of the use of the information to his prejudice arising from the acceptance of instructions to act for another client with an adverse interest in a matter to which the information is or may be relevant (at 235H–236A),
(f) The court should intervene unless it is satisfied that the risk of disclosure of confidential information is no more than fanciful or theoretical (at 237A).
(g) It is not appropriate to conduct a balancing exercise. Considerations such as (i) the knowledge of the former client that the solicitor acted for the later client and (ii) the inconvenience and expense to which the later client would be put if he were prevented from employing the solicitor's services are not relevant (at 237B-F).
(h) Once the former client has established that the defendant firm is in possession of information which was imparted in confidence and that the firm is proposing to act for another party with an interest adverse to his in a matter to which the information may be relevant, the evidential burden shifts to the defendant firm to show that even so there is no risk that the information will come into the possession of those now acting for the other party (at 237G).
(i) There is no rule of law that Chinese walls are insufficient to eliminate the risk. But the starting point is that unless special measures are taken, information moves within a firm (at 237H).
(j) Notwithstanding the implementation of a Chinese wall, the court should restrain the firm from acting for the second client unless satisfied on the basis of clear and convincing evidence that effective measures have been taken to ensure that no disclosure will occur (at 237H–238A).
(k) Effective measures in the form a Chinese wall will normally involve some combination of the following organisational arrangements: (i) the physical separation of the various departments in order to insulate them from each other – this often extends to such matters of detail as dining arrangements; (ii) an educational programme, normally recurring, to emphasise the importance of not improperly or inadvertently divulging confidential information; (iii) strict and carefully defined procedures for dealing with a situation where it is felt that the wall should be crossed and the maintaining of proper records where this occurs; (iv) monitoring by compliance officers of the effectiveness of the wall; (v) disciplinary sanctions where there has been a breach of the wall (at 238C-E).
(l) An effective Chinese wall needs to be an established part of the organisational structure of the firm, not created ad hoc and dependent on the acceptance of evidence sworn for the purpose by members of staff engaged on the relevant work (at 239D-E).
The judgment of the House of Lords in Bolkiah has been explained and...
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