Karen Denise Millen v Karen Millen Fashions Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Richard Meade |
| Judgment Date | 16 August 2016 |
| Neutral Citation | [2016] EWHC 2104 (Ch) |
| Date | 16 August 2016 |
| Court | Chancery Division |
[2016] EWHC 2104 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY
The Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL
Mr Richard Meade QC
Sitting as a Deputy Judge of the High Court
Charles Graham QC and Alaina Newnes (instructed by Arnold & Porter (UK) LLP) for the Claimant
James Mellor QC and Lindsay Lane (instructed by Fieldfisher LLP) for the Defendants
Hearing dates: 10, 13, 14, 15 and 17 June 2016
Judgment Approved
Richard Meade QC:
| Introduction | 3 |
| The witnesses | 6 |
| The background facts | 10 |
| Development of the KAREN MILLEN business up to the SPA | 10 |
| The SPA | 11 |
| The state of the KAREN MILLEN business at the time of the SPA | 12 |
| Development of the KAREN MILLEN business after the SPA | 19 |
| Corporate structure of the KAREN MILLEN business | 24 |
| Circumstances of the retail trade | 25 |
| Expert evidence of US law | 27 |
| Principles of contractual interpretation | 31 |
| Restraint of trade | 35 |
| Construction of the SPA, and its application (other than clause 5.1.7) | 37 |
| The "frozen in time" argument | 41 |
| Clause 5.1.4 | 47 |
| Clause 5.1.6 | 52 |
| Interpretation of clause 5.1.7 | 54 |
| Interpretation of clause 10 – further assurance clause | 58 |
| Application of clause 10 | 60 |
| Application of clause 5.1.7 | 64 |
| Negative declarations | 66 |
| Assessment of similar or competing business, confusing similarity 65 | 74 |
| China in 2004 | 75 |
| The USA in 2004 | 78 |
| The position at the date of these proceedings | 82 |
| Interest of each Defendant to enforce | 83 |
| Jurisdiction under clause 21 | 84 |
| Conclusion | 93 |
Introduction
In this introductory section of my judgment I will summarise the background and issues at a high level, in an attempt to improve readability. There is much more detail to the dispute, which I have taken into account and to which I return below.
The Claimant, Karen Millen, was one of the moving spirits (the other was her partner, Kevin Stanford) behind the founding and growth of a fashion business which traded under the mark KAREN MILLEN.
The business was founded in 1983; by a share purchase agreement of 25 June 2004 ("the SPA") the Claimant and Mr Stanford sold their shares in the companies holding the business to an Icelandic consortium.
The Defendants derive such rights as they have in one way or another from the SPA, but there is a dispute about which Defendant has what rights, if any.
The SPA contained a number of restrictive covenants as to the Claimant's future conduct. It also contained a further assurance clause and a jurisdiction clause.
In late 2011 the Claimant gave a press interview in which she stated an intention to return to the fashion business under the name KAREN. This led to litigation concerning her intentions in the UK ("the 2011 Action"), which was settled in February 2015. That settlement regulates the position between the parties in the UK and the EU as a whole and broadly speaking prevents the Claimant from using the marks KAREN or KAREN MILLEN there.
However, the settlement of the 2011 Action did not address the position worldwide, and in particular did not address the position in the USA or China; that is what this action is about.
This action was begun on 20 October 2014. From late 2011 up until then, and continuing since, the parties have been in dispute in the trade mark registries of the USA and China, with competing applications and cancellation and opposition proceedings over marks containing the words "KAREN", "KAREN MILLEN" or "KM". I give further details below.
In addition and as part of the battle over trade mark registrations, in June 2014 the Defendants brought a civil action against the Claimant in the Eastern District of Virginia ("the EDV Complaint", "the EDV proceedings"), alleging breach by the Claimant of the SPA and declarations as to its effect on the parties' various US applications. The Claimant asserts that the bringing of the EDV Complaint breaches the jurisdiction clause in the SPA.
By her claim, the Claimant seeks varied and extensive relief along the following lines:
a. Negative declarations that the restrictive covenants in the SPA cannot be enforced by the Defendants, or can only be enforced to a limited extent.
b. Negative declarations that the application for and maintenance of various registered trade marks would not breach the SPA.
c. Negative declarations that the use of those trade marks would not breach the SPA.
d. A negative declaration that carrying on business under the name KAREN MILLEN in the US would not breach the SPA if the name were to be used for homewares but not women's apparel or women's fashion accessories.
e. A negative declaration that the name KAREN solus (i.e. without MILLEN), in plain text or with or without stylised elements, in respect of any goods and services, would not be confusingly similar to KAREN MILLEN such that its use would not breach the SPA.
f. Damages and injunctive relief in relation to the EDV Complaint.
The Defendants have counterclaimed for relief which in the main mirrors what the Claimant seeks against them. Thus they have claimed:
a. Declarations that the Claimant's opposition and cancellation proceedings in the US and China are in breach of the SPA (and related injunctions).
b. Declarations that the Claimant's US applications are in breach of the SPA (and related injunctions).
c. Injunctions pursuant to the SPA to prevent the Claimant carrying on business anywhere in the world under the names KAREN or KAREN MILLEN (or anything confusingly similar) in relation to the goods covered by the Claimant's US applications.
d. Damages arising from the above.
In addition, the Defendants claim two heads of relief which are relatively distinct from that which the Claimant has put in issue:
a. A declaration and related mandatory injunction requiring the Claimant to consent to some of the Defendants' trade mark applications (and damages). This is based on a further assurance clause in the SPA (clause 10).
b. An injunction to prevent the Claimant from doing or omitting to do any act which has the effect of damaging the Defendants' concessions or other similar arrangements (and damages). This arises from one of the restrictive covenants in the SPA.
Mr Charles Graham QC and Ms Alaina Newnes presented the case for the Claimant. Mr James Mellor QC and Ms Lindsay Lane appeared for the Defendants.
The witnesses
I heard oral evidence from the Claimant herself. Also called to give oral evidence in support of her case were Ms Hung Yan Yan Bernie (the Claimant's Hong Kong lawyer) who gave evidence via videolink in relation to trade mark applications in Hong Kong and China, and market conditions there, and Ms Sarah Jane Capp, who used to work for the KAREN MILLEN business and gave evidence about whether KAREN MILLEN cosmetics and beauty products were sold by the US stores prior to the SPA.
The Claimant also submitted a witness statement from her US lawyer Mr Louis Ederer, which was not challenged by the Defendants and which I therefore admit on that basis. This addressed factual matters concerning US trade mark registry proceedings and was distinct from the expert evidence of US law (which I address below).
For the Defendants I heard oral evidence from Mr Michael Shearwood, their former CEO, from Mr Simon Gaffey, the Defendants' international director from 2009 onwards, from Ms Gemma Metheringham, who had a very senior design role in the KAREN MILLEN business from 1999 onwards, and from Mr James Walters, who was the managing director of the Second Defendant from 2008 until early 2016.
The Defendants also submitted a witness statement from Ms Michelle Marsh, its US lawyer and the counterpart of Mr Ederer. The Claimant did not challenge her statement and I likewise admit it.
Finally, the Defendants submitted a statement from Mr Ian Galvin, but withdrew it. So I will ignore that.
The parties made only fairly modest criticisms of the demeanour and manner of giving evidence of the opposing witnesses. The only criticism which I thought had any force was the Defendants' suggestion that Ms Hung was a little prone to argue the Claimant's case. But this was not particularly pronounced and was unsurprising given her role as the Claimant's lawyer. I do not think it affected her evidence materially. That apart, I thought that all the witnesses were clear and fair in the way in which they gave evidence.
I should mention that I reject the Claimant's submission that Ms Metheringham had only limited knowledge of the business; she was not on the commercial side and knew little about that, but she had a very good understanding of the design side and of the market positioning and perception of the KAREN MILLEN brand.
Two other matters were of more significance in relation to the evidence.
First, the Claimant submits that Mr Gaffey and Mr Walters each only joined the KAREN MILLEN business well after the SPA. They nonetheless purported to give evidence about circumstances in and around 2004, based on conversations with others and on their perspective on the KAREN MILLEN business from outside. This was a fair and important point (though not a personal criticism of the witnesses, who were entirely open about the basis of their knowledge) and I have taken it into account.
Second, at the outset of the trial the Claimant objected to aspects of the evidence of Mr Gaffey and Mr Walters on the basis that it was expert evidence for which permission had not been given. I was referred to the decisions of the Court of Appeal and of Birss J in Fenty v. Arcadia Group Ltd. [2015] EWCA Civ 3 and [2013]...
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