Glencairn IP Holdings Ltd v Product Specialities Inc. (t/a Final Touch)
| Jurisdiction | England & Wales |
| Judge | Lord Justice David Richards,Lord Justice Flaux,Lord Justice Arnold |
| Judgment Date | 07 May 2020 |
| Neutral Citation | [2020] EWCA Civ 609 |
| Date | 07 May 2020 |
| Docket Number | Case No: A3/2019/1785 |
| Court | Court of Appeal (Civil Division) |
[2020] EWCA Civ 609
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY ENTERPRISE COURT
HIS HONOUR JUDGE HACON
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice David Richards
Lord Justice Flaux
and
Lord Justice Arnold
Case No: A3/2019/1785
Theo Barclay (instructed by Stobbs) for the Appellants
Stephanie Wickenden (instructed by Virtuoso) for the Respondents
Hearing date: 31 March 2020
Approved Judgment
Introduction
The appellants appeal, with the permission of the judge, against the Order dated 5 July 2019 of His Honour Judge Hacon in the Intellectual Property Enterprise Court refusing the appellants' application for an Order restraining the respondents' solicitors, Virtuoso, from continuing to act. The appeal raises the issue whether and in what circumstances a firm of solicitors can be restrained from acting for a defendant where, in earlier similar litigation, the same firm has acted for another defendant against the same claimant, in circumstances where that earlier litigation has been settled through a mediation and/or confidential settlement.
The factual background
The second appellant is a company which designs, makes and sells glassware. The first appellant is a sister company which holds intellectual property rights used by the second appellant in the course of its business. I will refer to them together hereafter as “Glencairn”. In September 2018 Glencairn brought an action against Dartington Crystal (Torrington) Limited (“Dartington”) for infringement of a UK Registered Design. The product alleged to infringe was a whisky glass. Dartington were represented by Virtuoso, a small specialist IP solicitors firm.
In September 2018 Glencairn also became aware of another glass which in their view was too close to their design. It was manufactured by the first respondent, a Canadian manufacturer of glassware based in Ontario and was imported into and sold in this country by the second respondent. I will refer to the respondents together hereafter as “Final Touch”. A letter before action was sent on 25 September 2018. Final Touch instructed Virtuoso to represent them. At that stage the lead solicitor from Virtuoso on both matters was Mr Philip Partington.
On 9 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 a few days before the mediation. As is usual, they were stated to be confidential. The mediation took place on 11 December 2018 under a mediation agreement. Although Glencairn did not disclose the mediation agreement before the judge, the relevant provisions were disclosed by Glencairn to this Court following an Order by the Court at the appeal hearing. The body of the agreement was signed by Mr Partington of Virtuoso as solicitor for Dartington. There was then a separate declaration undertaking to keep information disclosed at the mediation confidential, which was signed by all those participating in the mediation, who were, so far as Virtuoso was concerned, Mr Partington, Mr Walawage and Mr Popa. It is to be noted that none of the solicitors at Virtuoso now acting for Final Touch was in attendance at the mediation or signed that declaration of confidentiality.
The Dartington matter did not settle at the mediation but after further discussions, a settlement was reached. This was set out in a confidential Settlement Agreement annexed to a Tomlin Order dated 8 January 2019. Again, that was not disclosed before the judge, but following the Order of this Court referred to in the previous paragraph, Glencairn disclosed a redacted version to this Court. Clause 3 imposed a duty of confidentiality on the parties to the Settlement Agreement, who were Glencairn and Dartington, but not their solicitors.
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, the day of the mediation. On 19 December 2018 Mr Partington of Virtuoso, who headed the Dartington team, sent an email to Stobbs, the solicitors acting for Glencairn, 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 within Virtuoso. Since the mediation, the Final Touch Team has been led by the principal of Virtuoso, Ms Elizabeth Ward. She has been assisted by Ms Lauren Waterman then a paralegal, now a trainee solicitor. She was also assisted by a solicitor, Ms Jordan Davies, but she left the firm on 22 February 2019, being replaced by Ms Gemma Wilson. Ms Davies had previously assisted Mr Partington on the Dartington matter, but prior to the mediation, Mr Walawage took over from her.
The evidence of Ms Ward before the judge, which he accepted, was that she and her team were based in the firm's Leeds office. Mr Partington and Mr Walawage were based in the London office. The firm used an online case management system, without paper files. The encryption in place meant that only Mr Partington, Mr Walawage and Mr Popa had access to the Dartington files. She confirmed that she, Ms Waterman and Ms Wilson had no knowledge of the terms of the Dartington Settlement.
On 13 or 14 February 2019, a telephone conversation took place between the parties' respective US attorneys, the content of which was disputed. Glencairn's attorney Mr Miller says in his witness statement that Final Touch's attorney, Mr Shapiro, called him and said that he had become aware of details of the Dartington Settlement and in particular that, as part of the Settlement, Dartington had obtained payment from Glencairn for redesigning its glass. Mr Miller says that Mr Shapiro indicated that Final Touch might be prepared to settle on similar terms. Mr Shapiro denies this account, saying he told Mr Miller that he did not know the terms of the Settlement, but that there was speculation on the part of Final Touch as to the terms and, if the speculation was correct, a similar deal might be the basis for productive discussions. Mr Miller told him that Glencairn had no interest in such discussions. Neither attorney was called to give evidence and the judge quite rightly said in [88] of his judgment that he could not reach a conclusion about this conversation and whether any confidential information was passed by Mr Shapiro to Mr Miller but that if it was, it did not subsequently reach the solicitors in the Final Touch team at Virtuoso.
On 14 February 2019 Mr Sleep of Stobbs sent a letter to Virtuoso stating that the Chinese wall at Virtuoso was inadequate and expressing doubt that any information barrier set up between the Dartington and Final Touch teams at Virtuoso could be effective. Mr Sleep was not aware at the time that letter was sent of the telephone conversation between Mr Miller and Mr Shapiro, whatever its content. In his letter, Mr Sleep requested that Virtuoso should cease to act for Final Touch. On 18 February 2019 Virtuoso declined to stand down. On 8 March 2019 Glencairn filed the application notice that is the subject of this appeal.
As the judge noted in [12] of his judgment, Glencairn's concern was 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 contended 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. This essentially remained Glencairn's concern before this Court as to the risk of information which is confidential to Glencairn becoming known to Final Touch.
The judgment below
Having set out the facts as I have summarised them above, the judge went on to consider the principles established by Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 (hereafter referred to as Bolkiah), the leading case on the potential for conflict of interest where professional advisers such as solicitors act for different parties. As he noted at [13], in that case KPMG had acted for the first party then ceased to act. They were then instructed by the second party in litigation against their former client, the first party. It was common ground that, although they had acted as litigation advisers and forensic accountants, their position was to be equated with that of solicitors. The central issue before the judge and, indeed before this Court, was whether the principles established in that case and, in particular, in the speech of Lord Millett, are applicable to a case such as the present where the solicitors never acted for the first party, here Glencairn, but acted for a second party in litigation against Glencairn in circumstances where...
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