Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd and Others

JurisdictionEngland & Wales
JudgeMr Justice Males
Judgment Date13 April 2016
Neutral Citation[2016] EWHC 809 (Ch)
Docket NumberCase No: HC-2015-000957
CourtChancery Division
Date13 April 2016

[2016] EWHC 809 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Males

Case No: HC-2015-000957

Between:
Marussia Communications Ireland Limited
Claimant
and
(1) Manor Grand Prix Racing Limited
(2) Stephen James Fitzpatrick
Defendants

and

Andrew Jonathan Webb
Third Party

Mr Roger Wyand QC and Mr Philip Roberts (instructed by Mishcon de Reya LLP) for the Claimant

Mr Hugo Cuddigan QC and Mr Tom Alkin (instructed by Kempner & Partners LLP) for the Defendants

Hearing dates: 14–15 March 2016

Mr Justice Males

Introduction

1

This is an application for summary judgment in a claim for trade mark infringement. The claim is based on six propositions, none of which is disputed:

(1) the claimant is the proprietor of a registered trade mark for the "Marussia" name and logo;

(2) the trade mark is valid;

(3) the claimant (or its predecessor in title) licensed the trade mark to the defendant to use as its Formula One team and chassis name;

(4) that licence came to an end on 31 December 2014;

(5) the defendant nonetheless continued to use "Marussia" as the name of its Formula One team and chassis for the 2015 racing season; and

(6) it chose to do so in order to be able to race in Formula One and in particular to collect about US $90 million of prize money which had been earned based on the results from the 2014 season but which would only be payable if the team continued to race.

2

The defendant resists the claim on five grounds, namely that:

(1) the claimant impliedly consented to the use of the trade mark;

(2) the claimant is estopped from asserting its rights as owner of the trade mark;

(3) the defendant's use of the trade mark did not give rise to any "likelihood of confusion" on the part of the relevant public for the purpose of Article 9.1(b) of the Community Trade Mark Regulation;

(4) the trade mark did not have "a reputation in the Community" for the purpose of Article 9.1(c) of the Regulation;

(5) the defendant's use of the trade mark constituted use of its own name "in accordance with honest practices" for the purpose of Article 12 of the Regulation.

3

The claimant also brings a claim in passing off but that is not the subject of this application. There are also additional claims and counterclaims involving Mr Stephen Fitzpatrick as second defendant and Mr Andrew Webb as a third party, but those claims do not arise on this application either. In this judgment, therefore, I refer to Marussia Communications Ireland Ltd (the trade mark owner) as the claimant and Manor Grand Prix Racing Ltd (the alleged infringer) as the defendant.

The test for summary judgment

4

Summary judgment may be given where a defendant has no real prospect of successfully defending the claim. That test has been elucidated and summarised in a number of recent cases, including Barclays Bank Plc v Landgraf [2014] EWHC 503 (Comm), [2015] 1 All ER (Comm) 720. The principles are not in dispute. I need not repeat them, but bear in mind in particular that the court must hesitate before making a final decision where reasonable grounds exist for believing that a fuller investigation at trial would add to or alter the evidence available or would show the existing evidence in a new light.

5

The claimant seeks in the alternative a conditional order for the provision of security for its claim pursuant to CPR 3.1(3), as contemplated by CPR 24.6 and paragraphs 4 and 5 of CPR 24PD, on the basis that even if one or more of the defences listed above may succeed, it is improbable that they will do so. The Rules and accompanying Practice Direction give the court power to order the provision of security where it appears "improbable" that a defence will succeed. It is not necessary to show that a defence is "shadowy" or "dubious in its bona fides" (expressions which were sometimes used in considering whether to give conditional leave to defend under the pre-CPR regime), although if a defence is shadowy or of doubtful good faith that will no doubt be a relevant consideration in exercising the power to make a conditional order and deciding the amount of any security which should be ordered.

6

It follows that there is a category of case where the defendant may have a real prospect of success, but where success is nevertheless improbable and a conditional order for the provision of security may be made.

7

For example, in Bank Leumi (UK) Ltd v Akrill [2014] EWCA Civ 907, although the defence was held to have a real prospect of success, the Court of Appeal regarded the fact that the defence was improbable as a sufficient reason to make a conditional order for security. It remitted the case to this court in order to determine what conditions to impose. It did so because of the principle that a condition should not be imposed with which a defendant is unable to comply, a matter about which it had no evidence, and appears to have contemplated that the remitted hearing would be confined to that issue although in the event it seems to have ranged more widely: see the judgments of Kitchin LJ at [56] and [57] and of HHJ Dight on the remission [2014] EWHC 4341 (Ch).

The facts

8

Except where indicated, the following account is not controversial. It is taken principally from the defendant's skeleton argument.

The claimant

9

The claimant is part of a group of companies sharing the name "Marussia" which is owned and controlled by a wealthy Russian, Andrey Cheglakov. I shall use the term "Marussia" to refer to the group as a whole or when it is unnecessary to distinguish between individual companies in the group. Mr Cheglakov is represented by Mr Andrew Webb in the conduct of day to day business.

10

Between about 2007 and April 2014 Marussia designed, manufactured and marketed high performance motor cars under the Marussia brand, although only 35 of these were ever sold of which six were sold into the European Union. It exhibited and promoted the cars at showrooms in Moscow and Monaco and participated in the 2011 Goodwood Festival of Speed. Marussia cars have been included, under licence, in popular computer racing games which are widely available in this country. In April 2014, however, Marussia ceased designing and producing road cars although it continued to display cars at its showroom in Monaco.

The trade mark

11

The claimant is the current registered proprietor of Community trade mark no. 1011193. The trade mark consists of the "Marussia" name and logo and is registered in class 12 for "vehicles; apparatus for locomotion by land, air or water".

Formula One – the background

12

The Formula One World Championship is contested in a series of Grand Prix races over the course of the season, which runs from March until November. According to the regulations laid down by a body called the Féderation Internationale de l'Automobile ("FIA"), the teams (or "constructors") are required to build their own cars to comply with complex technical regulations which change every season. The commercial rights to Formula One are held by a company called Formula One World Championship Limited ("FOWC") which is controlled in practice by Mr Bernie Ecclestone.

13

Formula One teams are funded primarily by a combination of prize money generated by FOWC's commercial exploitation of the sport (e.g. from the sale of TV rights and merchandising rights), private investment, sponsorship and, among the less well resourced teams, drivers who pay to race. Participation in Formula One is an expensive business. Among other things, a team will typically need to spend millions of pounds developing a new car for each season in order to be competitive, as well as to comply with changing regulations.

14

The defendant was incorporated in 2008 to take advantage of the planned expansion of Formula One from 10 teams to 13. In order to participate (and to be eligible to earn prize money) it had to sign up to a contract concluded between all the Formula One teams, the FIA and FOWC. That agreement was known as the "Concorde Agreement".

15

Having signed up to the Concorde Agreement, the defendant entered as one of the three new teams in 2010 under the name 'VIRGIN RACING' i.e. with Virgin as its title sponsor.

Marussia's sponsorship of the defendant

16

During the team's first season, Marussia offered to replace Virgin as the team's title sponsor for the 2011 season. This led to Marussia acquiring a majority stake in the defendant's parent company, Manor Holdco Ltd ("Holdco"). Mr Cheglakov and Mr Webb became directors of Holdco. Marussia also provided loan finance to the defendant secured against its shares. In September 2011 Mr Webb was appointed as a director of the defendant.

17

As part of these arrangements a Team Partner Agreement ("TPA") was concluded by which Marussia obtained Sponsorship Rights for the defendant's participation in Formula One and granted a royalty free non-exclusive licence to the defendant to use its trade mark for that purpose. The TPA, and thus the trade mark licence, was effective from 1 January 2011 and was to remain in force (unless terminated earlier, which did not happen) until 31 December 2014 when it expired.

18

The effect of this package of agreements, for present purposes, was that Marussia was participating in Formula One racing, through its subsidiary company. The subsidiary needed, and was granted, a licence to use the Marussia trade mark, but as it was Marussia which was funding the defendant's participation, it retained control over the use which the defendant made of its trade mark and indeed of all aspects of the defendant's participation in the sport.

19

The Sponsorship Rights which Marussia obtained included a right to have "Marussia" included in the team name (provided that approval for the change could be obtained from the FIA, as it was) and were regarded as extremely valuable....

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