The Kennel Club Ltd v Micro-Id Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Recorder Douglas Campbell |
| Judgment Date | 25 June 2019 |
| Neutral Citation | [2019] EWHC 1639 (IPEC) |
| Court | Intellectual Property Enterprise Court |
| Date | 25 June 2019 |
| Docket Number | Claim No: IP-2017-000241 |
[2019] EWHC 1639 (IPEC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY ENTERPRISE COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Recorder Douglas Campbell QC
(sitting as a High Court Judge)
Claim No: IP-2017-000241
Lindsay Lane QC (instructed by Farrer & Co LLP) for the Claimant
Nicholas Brummitt (a director of the Defendant) for the Defendant
Hearing dates: 13 th – 14 th May 2019
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.
Mr Recorder Douglas Campbell QC:
Introduction
The Claimant is a well-known organisation in relation to dog welfare. Among its other activities, it has since the early 1990s operated what was referred to at the trial as the Petlog database. This holds data from animals which have been implanted with microchips supplied by various companies. The Defendant is one such supplier. The idea is that if the dog is lost, then the microchip ID can be read using a suitable device and compared against the information stored on the Petlog database so that the dog can be reunited with its owner.
This action is brought by the Claimant against the Defendant for a debt in the sum of £123 843.03, alternatively for breach of a contract entitled the Reunification Database Management Agreement which was entered into between the parties on 4 th January 2010 (“the Agreement”). There is no dispute as to the existence or amount of the debt. There is a defence of set-off which alleges breach of the Agreement, alternatively infringement of database right under The Copyright and Rights in Databases Regulations 1997 (“the Database Regulations”). Both the Agreement and the database infringement claim relate to the Petlog database. Since it was not disputed that the Petlog database qualified for protection within the particular meaning of “database” defined in the Database Regulations, I will simply refer to Petlog from now on.
There is no counterclaim as such, but at the case management conference held before HHJ Hacon on 18 July 2018 express provision was made whereby the Defendant can, if its set off is greater in value than the Claimant's claim, apply at trial to claim for the difference.
The Claimant was professionally represented throughout. The Defendant was legally represented when it filed its Defence, but was represented at trial by one of its directors, Mr Nicholas Brummitt. Mr Brummitt was, understandably, unfamiliar with many aspects of Court procedure but he was a quick learner and I am grateful to him for making my job easier. The present case is therefore yet another in which one side is professionally represented and the other is not. The Court must nevertheless apply the same rules to each side.
There were applications by both sides at the outset of the trial to adduce further material, permission for which had not been given at the case management conference. I refused both applications on the ground that in each case there were no exceptional circumstances as required by Part 63.23(2).
After the trial was completed Mr Brummitt made what was in effect a further application to adduce more material, namely extracts from the Claimant's annual reports as filed at Companies House. I refuse this application since again there are no exceptional circumstances. In any event the statements in these documents on which Mr Brummitt relied (eg “The Kennel Club's key resources are its data …”) are so general that they do not take matters forward.
The witnesses
I heard oral evidence on behalf of the Claimant from each of Ms Jacqueline Easton, who has worked for the Claimant since 1986 and is now its Chief Operating Officer; Ms Helen Fox, who has worked for the Claimant since 1996, and was its Marketing and Business Development Executive between 1996 and April 2018; and Mr Kevin McGuirk, who has worked for the Claimant since 2017 and is now its Chief Finance Officer. Mr Brummitt expressed surprise at some of the answers these witnesses gave, but I am satisfied that they were all doing their best to assist the Court and I accept their evidence.
I made it clear at the beginning of the trial that each side would be allowed only 2 hrs 15 minutes for cross-examination. I also periodically reminded each side of the time they had left so that they could use their remaining time most effectively. The imposition of this limit nevertheless meant that Mr Brummitt ran out of time in which to cross-examine Ms Anita Tabrett, who has worked for the Claimant since 1999 and is now a Welfare Relationship Manager. Her evidence is therefore unchallenged.
I heard oral evidence on behalf of the Defendant from Richard Fry, a director and shareholder of the Defendant. It was Mr Fry, and not Mr Brummitt, who had conducted the Defendant's dealings with the Claimant over most of the relevant period. Mr Brummitt first became involved with the Defendant in September 2016 and only became aware of the Agreement in November 2016 as part of a due diligence process.
Mr Brummitt had a number of comments about Mr Fry's evidence, as follows.
First, Mr Brummitt attacked Mr Fry's credibility on the grounds that when Mr Fry was during his cross-examination shown slides from a 2010 meeting which he had attended, Mr Fry said he “vaguely” recalled these slides. Even assuming Mr Brummitt is entitled to attack his own witness's credibility, which he is not, I do not accept that this example shows any lack thereof. At most it shows Mr Fry being somewhat charitable, but no more than that. In any event the authenticity of the slides themselves was not challenged so the point goes nowhere.
Secondly Mr Brummitt also complained that some of the questions put to Mr Fry in cross-examination were unfair. When I asked him for an example he specifically relied on the following passage:
Q. And it's therefore in your interests for Petlog to work as a reunification tool, correct?”
A. Correct.
Q. And so it's very important, as we've discussed earlier on, I think, to keep contact details up-to-date if you want reunification to work; correct?
A. Yes”
I accept that with a vulnerable witness this structure of question (sometimes called a “tag” question) should be treated with caution depending on the witness's degree of vulnerability. However Mr Fry was not a vulnerable witness and nor did it appear to me that he was confused or uncertain as to the meaning of these questions. Secondly if Mr Brummitt felt that these questions were unfair, he should have complained at the time they were asked rather than leaving it until the next day. Thirdly it is in any event difficult to see how the answers to these questions could reasonably have been anything other than the ones Mr Fry gave. It is the supplier's interests for Petlog to work as a reunification tool, since that is the reason for the microchip. It is also very important to keep contact details up to date if you want reunification of pet and owner to work.
I therefore reject these criticisms. I found Mr Fry to be a good witness. The Claimant had no criticism of him either.
Mr Brummitt himself gave written evidence and the Claimant chose not to cross-examine him on it. Accordingly his written evidence is also unchallenged. Where it contains matters of opinion rather than primary facts, I accept that Mr Brummitt genuinely holds these opinions.
The issues
Thirteen issues were identified in the case management conference, falling into 4 main categories as follows:
1. The Agreement
2. Alleged Breach of the Agreement
3. Alleged Database right infringement
4. Quantum
I shall use these as the main headings and the thirteen more specific issues as subheadings.
The Agreement
Legal context
The most recent distillation of the relevant legal principles, by now very well-known, is by Popplewell J in Lukoil Asia Pacific PTE Limited v Ocean Tankers (PTE) Limited [2018] EWHC 163 (Comm) at [8]. I shall apply these principles.
Issue 1 — What is the factual matrix against which the Agreement was made?
Much of this evidence was in the end undisputed. The following are my findings in respect thereof.
Petlog and Petlog Premium
As I have already stated, the Claimant has operated Petlog since the early 1990s. Initially the RSPCA was the only supplier of microchips, but subsequently others joined this market. For instance there were 11 in 2016 and now there are 6. Petlog was not intended to operate as a commercial enterprise, and instead welfare and reunification was the primary focus. Demands on the service grew by the early 2000s, as did the Claimant's investment in building, developing, and maintaining a bespoke IT system.
Mr McGuirk set out detailed figures as to the investment made by the Claimant in Petlog from 2010 to 2017 in his confidential exhibit KM1. I will not set out the precise figures but the combination of the total for Aylesbury staff costs and total head office costs rose from just under £1m per year in 2010 to nearly £2m in 2016. These figures were not challenged. It was not suggested that they were insubstantial, nor that the figures for the years leading up to 2010 were significantly different.
The Claimant always charged microchip suppliers a fee to go towards the cost of the reunification service. This fee did not come near to covering the actual costs of running the overall service including the cost of providing lifetime support to the owner. For instance the fee did not include the costs of registering change of contact details for the owner, for which the owner was charged a separate fee (eg £10).
In 2003 the...
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