Montres Breguet S.A. v Samsung Electronics Company Ltd (a company incorporated in South Korea)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Falk |
| Judgment Date | 15 July 2022 |
| Neutral Citation | [2022] EWHC 1895 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No. IL-2019-000011 |
[2022] EWHC 1895 (Ch)
Mrs Justice Falk
Claim No. IL-2019-000011
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
Mr Simon Malynicz QC, Mr Geoffrey Pritchard and Dr Daniel Selmi (instructed by Wilmer Cutler Pickering Hale and Dorr LLP) for the Claimants
Mr Daniel Alexander QC and Ms Ashton Chantrielle (instructed by Allen & Overy LLP) for the First Defendant
Approved Judgment
Injunctive relief
As Mr Alexander accepted, I ought to grant an injunction unless there are special reasons that justify me not doing so: Article 130 of the EU Trade Mark Regulation ((EU) 2017/1001).
There is a very helpful summary of the principles to apply in Arnold J's judgment on consequential issues in Sky Ltd v SkyKick UK Ltd [2020] EWHC 1735 (Ch) at [14] to [36]. Relevantly here, “special reasons” would include the possibility of Samsung showing that an injunction would not be proportionate or would not strike a fair balance. That takes account, amongst other things, of Article 3(2) of the Enforcement Directive (European Parliament and Council Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights).
I should grant an injunction in this case, therefore, unless Samsung can show that it would not be fair and proportionate to do so. I do not consider that Samsung has discharged that burden and persuaded me not to grant the conventional form of injunction.
The considerations I have taken into account include that Samsung is effectively seeking to persuade me that the steps it says it has taken in the light of paragraph 226 of my judgment are sufficient to give it a defence under Article 14 of the e-Commerce Directive ( Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000). However, in addition to the fact that I am not in a position to assess that evidence and that Swatch have not had a chance to respond to it, paragraph 226 of the judgment is framed the other way round: it was a highlighting of particular deficiencies, or examples of them, that led me to conclude that Samsung was not behaving as a diligent economic operator and therefore did not benefit from the Article 14 defence because it did not satisfy the condition in Article 14(1)(a). I did not decide that if Samsung did address those deficiencies it would be a diligent economic operator. Further, I did not decide that if it did then that would necessarily mean that the Article 14 defence would be available. I made my decision on the grounds that the condition in Article 14(1)(a) was not satisfied: see the judgment at paragraph 222.
I have taken into account Samsung's concern that the grant of a standard form of injunction is not only, it says, unnecessary because of the measures it has implemented (a point I have just commented on), but also creates a state of uncertainty as to what Samsung can or cannot do. Samsung fairly makes a point about the position of an app store operator dealing with third party suppliers who are putting these apps together, and suggests that it has less control than a supplier.
A practical answer to this is Samsung does have full control of the system, as I found in the judgment, and it does actively screen any app before it is loaded.
More importantly, there is frequently some element of uncertainty in questions of trade mark infringement, for example, in determining similarity of marks and sign or similarity of goods. That sort of uncertainty is not sufficient to justify not granting an injunction. Further, realistically there will not be an application for contempt in the event of an inadvertent breach which occurs despite Samsung acting as a diligent operator, particularly given the way in which I expressed my decision. In addition, if there is real uncertainty, then it is open to Samsung to seek declaratory relief from the court: see Lifestyle Equities CV & Anor v Amazon UK Services Ltd & Ors (Consequential Issues) [2022] EWCA Civ 634 at [14].
Overall, I consider that an injunction is justified. I am not persuaded that without it there is no real risk of further infringement. I have to take into account that no undertakings were offered until very late. The offer that was then made was of undertakings in very limited terms, and only this morning were they offered to be provided to the court. The undertakings that were offered before this morning required nothing of Samsung in terms of positive action, and contained no commitment to cure the deficiencies that I found to exist. I accept that the undertakings offered were slightly widened this morning, but by reference to the steps Samsung says it has implemented in the light of paragraph 226 of my judgment, which I am not in a position to assess.
In the circumstances, I consider that a grant of an injunction in the normal form is appropriate.
(After further argument)
Stay of injunction pending appeal
On the question of stay pending appeal, I need to apply the normal principles. I am going to consider the risk of irremediable prejudice and the balance of hardship. The actual effect of my decision is that if Samsung acts as a diligent operator, then it is not infringing. If an injunction is stayed, then, in the absence of undertakings, Samsung could unwind any improvements put in place since the infringing apps or not implement those improvements as it says it has.
Samsung raises what Mr Kim describes in his latest witness statement as a “possibility” of closing the SGA store to new apps in the event that an injunction is granted. That word was no doubt chosen advisedly. No reasons are given and there is no real elaboration of the point. It is really not possible for me to determine that there is a material risk of that occurring.
The same witness statement also refers to the difficulty of putting in place alterations and then reversing those alterations. But Samsung says it has made alterations already, and no doubt Samsung has been advised that those alterations ought to ensure that it does not infringe. I cannot place material weight on the evidence about putting something in place and unwinding it when Samsung says it has already done what it needs to do. To re-emphasise, the judgment does not provide authority that Samsung cannot rely on Article 14 at all, but that on the facts it did not meet the standard of a diligent economic operator. That is the current position as between the parties, and pending any appeal, that remains the case.
If I stay an injunction, then there must be some risk to Swatch because Samsung would not be under any obligation to take steps to ensure that infringing action does not occur. The onus ought to be on Samsung, not Swatch, to ensure that infringement does not occur. I have already made points about the difficulty of Swatch monitoring the SGA store: see the judgment at paragraphs 53 and 54.
Overall, and taking account of the comments I have already made about inadvertent errors not leading to contempt proceedings and the ability of Samsung to seek declaratory relief if necessary, I have concluded that there is insufficient reason to justify a stay of the injunction pending any appeal.
(After further argument)
Quantum determination
This issue is whether I should require any steps to be taken towards determining quantum pending any appeal. Swatch's position is that all steps should be deferred pending the outcome of any appeal, and then there should be disclosure on the Island Records basis ( Island Records Ltd v Tring International plc [1995] FSR 560), followed by an election for an account of profits or an inquiry. That would then be followed in due course by points of claim.
Samsung says that it has been making the point for a number of years that it does not understand Swatch's case on quantum, and essentially that the time has come for Swatch to come off the fence. Before Swatch does so Samsung is also prepared, with the benefit of confidentiality undertakings, to provide sales and profit figures in relation to smartwatches, although it says that that information is not relevant.
I indicated yesterday that, given Swatch's preparedness to agree to stay issues of quantum pending any appeal, there was much to be said for staying any substantive work on inquiry or account issues as well. However, that was subject to a caveat. I could see that there was something to be said for Swatch being asked to clarify its case (and for proportionate steps to be taken to enable that to occur) if I could be persuaded that there was a realistic prospect that doing so would avoid the need for an appeal. I asked the parties to consider this prior to the hearing.
Swatch say that clarifying their case on quantum would involve a lot of work to do properly, and further that resolution of the dispute by settlement is highly unlikely, indeed impossible. They point to the existence of a parallel dispute in the US. Swatch's position is that there is no prospect that going through a process of the kind just described would...
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