JJH Enterprises Ltd (trading as ValueLicensing) v Microsoft Corporation
| Jurisdiction | England & Wales |
| Judge | Mr Justice Picken |
| Judgment Date | 14 April 2022 |
| Neutral Citation | [2022] EWHC 929 (Comm) |
| Docket Number | Case No: CL-2021-000208 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 929 (Comm)
Mr Justice Picken
Case No: CL-2021-000208
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Maya Lester QC and Max Schaefer (instructed by Charles Fussell & Co LLP) for the Claimant/Respondent.
Robert O'Donoghue QC and Michael Armitage (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Defendants/Applicants.
Hearing dates: 30 and 31 March 2022.
Judgment provided in draft: 12 April 2022.
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.
Introduction
There are two applications before the Court: first, an application by the Second Defendant (‘Microsoft UK’) seeking to strike out (alternatively obtain summary judgment dismissing) the claims which the Claimant (‘ValueLicensing’) makes against it; and, secondly, an application by the First and Third Defendants (‘Microsoft US’ and ‘Microsoft Ireland’ respectively) challenging the jurisdiction (alternatively seeking a stay) in respect of ValueLicensing's claims against them.
These applications are made in the context of proceedings in which ValueLicensing claims damages arising from alleged breaches of competition law by the Defendants (collectively ‘Microsoft’).
ValueLicensing purchases, resells and brokers the purchase and resale of pre-owned perpetual software licences in the UK and EEA, where purchasers of perpetual licences have statutory rights to resell them.
ValueLicensing alleges in its Particulars of Claim at paragraph 2 that Microsoft has engaged in a “ sustained – and ongoing – Campaign to stifle the sale of pre-owned licences for Microsoft software in the UK and EEA”, including by “ paying customers to restrict the supply of pre-owned licences to ValueLicensing and other competitors” (paragraph 3).
The Claim Form puts matters in this way:
“This is a claim for damages and other relief caused by the breaches by the Defendants (‘Microsoft’) of sections 18 and/or 2 of the Competition Act 1998, Arts 102 and/or 101 of the Treaty on the Functioning of the European Union [the ‘TFEU’], and/or Arts 54 and/or 53 of the Agreement on the European Economic Area.
The Claimant resells pre-owned perpetual licences for various software products, materially including for Microsoft Windows and Microsoft Office. In so doing, it competes with Microsoft, which sells new licences and subscriptions in the same markets. Microsoft, which is dominant in those markets, is in the course of a multi-year effort to convert users of its software from making one-off purchases of perpetual licences to paying recurring subscription fees. At the same time, it has undertaken a campaign to stifle the pre-owned segments of the markets for its software. This campaign has included effectively paying customers that switch to subscriptions not to resell their old perpetual licences. The Claimant's case is that such conduct is not competition on the merits and/or that such agreements with customers have the object and/or effect of restricting competition, and that Microsoft has thereby breached the statutory competition rules set out above.
The Defendants are jointly and severally liable for such breaches.
The Claimant claims damages; interest; declaratory relief; further or other relief; and costs.”
At paragraphs 67 and 68 of the Particulars of Claim this is set out:
“Breach of the prohibitions against abuse
67. Contrary to the prohibitions against abuse, Microsoft has abused its dominant position in the relevant markets through the Campaign, including its use of the Impugned Terms (individually and/or taken together.) Paragraphs 52–56 above are repeated. Such conduct is not competition on the merits.
Breach of the prohibitions against anti-competitive agreements
68. The impugned Terms contravened (and continue to contravene) the prohibitions against anti-competitive agreements in that: (1) they were (and are) all agreements between undertakings, namely Microsoft on the one hand, and certain customers switching from perpetual licences to discounted User SLs on the other; (2) in light of the facts and matters set out in paragraphs 54–58 above the object and/or effect of the Campaign was to restrict and/or distort competition in the relevant market; and (3) such restriction and/or distortion of competition was (and remains) appreciable, particularly given Microsoft's dominance in the relevant markets.”
ValueLicensing's case, then, is that the alleged “Campaign” infringes both Article 102 (which prohibits the abuse of a dominant position) and Article 101 (which prohibits anti-competitive agreements) of the TFEU (and the equivalent provisions of the EEA Agreement and the Competition Act 1998) and that this has caused ValueLicensing to be able to sell fewer pre-owned licences than would have been the case but for the alleged “Campaign”. ValueLicensing estimates that, as a result, it has suffered losses amounting to some £269 million.
As pointed out by Mr Robert O'Donoghue QC, on Microsoft's behalf, ValueLicensing's claim is a ‘standalone’ (as opposed to a ‘follow-on’) claim. This means that there is no underlying infringement decision of the European Commission (or any domestic competition regulator) on which ValueLicensing can rely to establish that an infringement of competition law has been committed. Mr O'Donoghue QC submitted that this ought to mean that ValueLicensing would bring forward a precise and well-founded case. Instead, however, Mr O'Donoghue QC suggested (echoing language used by Etherton LJ, as he then was, in KME Yorkshire Limited & Others v Toshiba Carrier UK Ltd & Others [2012] EWCA Civ 1190 at [23]), ValueLicensing's Particulars of Claim entail a “ blunderbuss of alternative allegations, not easy to disentangle” without clearly distinguishing between the roles that each of the individual Defendants is said to have played in the alleged “Campaign”.
With this brief introduction, I turn to the two applications. As will appear, since I have reached the conclusion that the first application(s) should be dismissed, when I come on to deal with the jurisdiction/stay application made by Microsoft US and Microsoft Ireland, I will confine myself to addressing only the stay aspect of that application, namely the forum non conveniens issue.
Microsoft UK's strike-out/summary judgment application(s)
Applicable principles
The position under the CPR is well known. CPR 3.4(2)(a) provides that the Court “may strike out a statement of case if it appears to the court … that the statement of case discloses no reasonable grounds for bringing or defending the claim”. CPR 24.2 provides that “the court may give summary judgment against a claimant … on the whole of the claim or on a particular issue if – (a) it considers that – (i) that claimant has no real prospect of succeeding on the claim or issue…and (b) there is no other compelling reason why the case or issue should be disposed of at a trial”.
The applicable principles are the same in the competition law field as they are in other areas of the law, as demonstrated by Media-Saturn Holding GmbH v Toshiba Information Systems (UK) Ltd [2019] EWHC 1095 (Ch), [2019] 5 CMLR 7 at [75] and Sel-Imperial Ltd v The British Standards Institution [2010] EWHC 854 (Ch), a decision of Roth J. In summary and in line with the guidance given by Lewison J (as he then was) in Easyair Limited v Opal Telecom Limited [2009] EWHC 339 (Ch) at [15]: (i) the Court must consider whether the claimant has a “realistic” (as opposed to a “fanciful”) prospect of success; (ii) a “realistic” claim is one that carries some degree of conviction, which means a claim that is more than merely arguable; (iii) in reaching its conclusion the Court must not conduct a “mini-trial”, albeit this does not mean that the Court must take at face value and without analysis everything that a claimant says in statements before the court; and (iv) the Court may have regard not only to the evidence before it, but also the evidence that can reasonably be expected to be available at trial. Furthermore, where a summary judgment application turns on a point of law and the Court has, to the extent necessary, before it “ all the evidence necessary for the proper determination of the question,” it “ should grasp the nettle and decide it” since the ends of justice are not served by allowing a case that is bad in law to proceed to trial.
Mr O'Donoghue QC submitted, additionally, that in competition law cases (and a fortiori ‘standalone’ claims such as the present) it is important that claims are properly pleaded. He cited in this regard both Sel-Imperial Ltd at [17] and also Forrest Fresh Foods Limited v Coca-Cola European Partners Great Britain Limited [2021] CAT 29, in which Bacon J had this to say at [30]:
“ … the onus is on a claimant advancing a claim of infringement of competition law to identify (i) the relevant primary facts which are the foundation of that claim, (ii) the way in which those facts are said to infringe the relevant competition law provision(s) relied upon, and (iii) the way in which that alleged infringement is said to have resulted in the loss or damage claimed”.
Bacon J went on at [32] to add that it is “ not the function of this Tribunal or any court” to “ speculate as to what case might potentially be advanced if it were repleaded”, but rather “ to assess the case on the materials before it”. That said, as Ms Maya Lester QC, on ValueLicensing's behalf, pointed out, in...
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