Lidl Great Britain Ltd v Tesco Stores Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Joanna Smith |
| Judgment Date | 21 June 2023 |
| Neutral Citation | [2023] EWHC 1517 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: Claim No. IL-2020-000127 |
[2023] EWHC 1517 (Ch)
Mrs Justice Joanna Smith DBE
Case No: Claim No. IL-2020-000127
Claim No. IL-2021-000041
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (CHD)
Rolls Building
Fetter Lane
London, EC4A 1NL
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (CHD)
Mr Benet Brandreth KC and Mr Tristan Sherliker (instructed by Bird & Bird LLP) for the Claimants/Defendants
Mr Hugo Cuddigan KC and Mr Daniel Selmi (instructed by Haseltine Lake Kempner) for the Defendants/Claimants
Hearing date: 22 May 2023
APPROVED JUDGMENT
This judgment was handed down remotely at 10.30am on Wednesday 21 June 2023 by circulation to the parties or their representatives by email and release to the National Archives.
INTRODUCTION
Further to my judgment following the trial in this matter (“ the Main Judgment”), handed down on 19 April 2023 (neutral citation number [2023] EWHC 873 (Ch)), I must now deal with arguments made by the parties at the consequentials hearing. The order made at that hearing reflects agreement between the parties that Lidl is entitled to final injunctive relief in respect of the trade mark infringement and passing off claims 1. However, the parties remain in dispute over (i) whether a final injunction against copyright infringement is justified on the facts of this case; and (ii) what the time period for compliance with each injunction should be following final determination of the action, including any application for permission to appeal or any appeal. These issues were argued at the consequentials hearing but, in circumstances where new authorities were referred to at the hearing and time was short, I reserved my judgment.
In this judgment I shall use the definitions adopted in the Main Judgment. I shall assume that anyone reading this judgment will also have read the Main Judgment and that there is no need for me to go into any further background detail.
A FINAL INJUNCTION FOR COPYRIGHT INFRINGEMENT
The parties are in agreement over the applicable law, but profoundly disagree as to its application to the circumstances of this case.
The Law
I can summarise the law to which my attention was drawn as follows:
i) Section 37(1) of the Senior Courts Act 1981 provides the power to grant a final injunction. Since Lord Cairns' Act (the Chancery Amendment Act 1858 (21 & 22 Vict c 27)), the court has had power to award damages instead of an injunction. That power is now set out in section 50 of the Senior Courts Act 1981.
ii) The discretion to award damages in lieu of an injunction is a wide one to be exercised having regard to the particular facts of any individual case (see Coventry v Lawrence [2014] UKSC 13, per Lord Neuberger at [120]).
iii) Although the discretion is not fettered, the prima facie position is that an injunction should be granted. The legal burden is on the defendant to show why it should not ( Coventry at [121]).
iv) In Shelfer v City of London Electric Lighting Company [1895] 1 Ch 287 at 322–323, A.L. Smith LJ identified four factors as tending to indicate by way of a “good working rule” (when taken together) that damages in substitution for an injunction may be appropriate. These were:
“(1) If the injury to the plaintiff's legal rights is small,
(2) And is one which is capable of being estimated in money,
(3) And is one which can be adequately compensated by a small money payment,
(4) And the case is one in which it would be oppressive to the defendant to grant an injunction…”.
A.L. Smith LJ went on to make it clear that what constituted a “small money payment” was a relative matter.
v) The four factors identified in Shelfer ought not to be mechanistically applied and must not fetter the exercise of the court's discretion – they do not operate as a statute or a straightjacket (see HTC Corporation v Nokia Corporation [2013] EWHC 3778 (Pat) at [8]). In Coventry, Lord Sumption and Lord Clarke regarded the decision in Shelfer as out of date (albeit that they were not prepared to lay down principles to be followed in the future) and Lord Carnwath (at [239]) described the decision in Coventry as an opportunity to move away from the strict criteria derived from Shelfer, particularly in cases where an injunction would have serious consequences for third parties. Lord Neuberger (who gave the leading judgment) observed that “in the absence of additional relevant circumstances pointing the other way, [it would] normally be right to refuse an injunction if those four tests were satisfied” but “the fact that those tests are not all satisfied does not mean that an injunction should be granted” (see Coventry at [123]).
vi) It is clear from Shelfer at page 323, that A.L. Smith LJ was of the view that even if his four tests were satisfied, “[a]dditional relevant circumstances pointing the other way” (to use Lord Neuberger's language) might include the conduct of a defendant, including actions in reckless disregard of a claimant's rights:
“[t]here may be cases in which, though the four above-mentioned requirements exist, the defendant by his conduct, as for instance, hurrying up his buildings so as if possible to avoid an injunction, or otherwise acting with reckless disregard to the plaintiff's rights, has disentitled himself from asking that damages may be assessed in substitution for an injunction.”
At [121] in Coventry, Lord Neuberger cautiously approved the observations of Lord Macnaghten in Colls [1904] AC 179 at 193 to the effect that in cases where “a defendant has acted in a high handed manner” or where “he has endeavoured to steal a march upon the plaintiff or to evade the jurisdiction of the court”, then an injunction may be necessary in order to do justice to the claimant and as a warning to others.
vii) In cases concerning infringements of intellectual property rights, Article 3(2) of the Enforcement Directive ( Directive 2004/48/EC) focuses on similar considerations to those raised by the Shelfer tests, but uses different language. In Nokia, Arnold J (as he then was) observed at [26] that
“in cases concerning infringements of intellectual property rights, the criteria to be applied when deciding whether or not to grant an injunction are those laid down by Article 3(2): efficacy, proportionality, dissuasiveness, the avoidance of creating barriers to legitimate trade and the provision of safeguards against abuse”
(see also the discussion of CJEU case law at [22] in Nokia and in Sky v Skykick [2020] EWHC 1735 (Ch) at [27]–[32] per Arnold LJ).
viii) Article 3(2) of the Enforcement Directive permits and requires the court to refuse to grant an injunction “where it would be disproportionate to grant one even having regard to the requirements of efficacy and dissuasiveness” (see Nokia at [32] and Evalve Inc v Edwards Lifesciences Ltd (No.2) [2020] RPC 13 per Birss J (as he then was) at [56]–[57]).
In light of the factors that will be relevant to the exercise of the court's discretion to grant damages in substitution for an injunction, it is important to be clear as to the approach the court will take to the availability of damages (or profits) in relation to a proven act of copyright infringement. The overriding principle is that damages are compensatory, but (as is clear from USP Plc v London General Holdings Ltd [2006] FSR 6 per Laws LJ at [29]) the basis upon which damages for infringement of copyright are awarded is necessarily to be determined by reference to the nature of the wrongdoing which infringement of copyright represents. Thus a claimant whose rights have been infringed is entitled to recover the damage caused by the reproduction of the protected work, but not the damage caused by the use of any ideas contained in the work (because, as Laws LJ pointed out in USP v London with reference to Halsbury's Laws, “[i]deas as such are not the subject matter of copyright, but only the form in which ideas are expressed”. No damage had been suffered by reason of the unauthorised deployment of the actual text of the artistic work in that case).
In intellectual property cases the approach to the assessment of damages is well established. In General Tire & Rubber Co v Firestone Tyre & Rubber Co [1975] 1 WLR 819 Lord Wilberforce explained at 824–827 that there are three main types of cases:
“1. Many patents of inventions belong to manufacturers, who exploit the invention to make articles or products which they sell at a profit. The benefit of the invention in such cases is realised through the sale of the article or product. In these cases, if the invention is infringed, the effect of the infringement will be to divert sales from the owner of the patent to the infringer. The measure of damages will then normally be the profit which would have been realised by the owner of the patent if the sales had been made by him…
2. Other patents of inventions are exploited through the granting of licences for royalty payments. In these cases, if an infringer uses the invention without a licence, the measure of the damages he must pay will be the sums which he would have paid by way of royalty if, instead of acting illegally, he had acted legally…
3. In some cases it is not possible to prove either (as in 1) that there is a normal rate of profit, or (as in 2) that there is a normal, or established, licence royalty. Yet clearly damages must be assessed. In such cases it is for the plaintiff to adduce evidence which will guide the court. This evidence may consist of the practice, as regards royalty, in the...
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Lidl Great Britain Ltd v Tesco Stores Ltd
...BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES, INTELLECTUAL PROPERTY LIST (ChD) Mrs Justice Joanna Smith [2023] EWHC 783 (Ch) and [2023] EWHC 1517 (Ch) Royal Courts of Justice Strand, London, WC2A 2LL Benet Brandreth KC, Tristan Sherliker and Edward Cronan (instructed by Bird & Bird LLP......