Muck Truck UK Ltd & Ors v Helps (t/a Paul Helps Muck Truck Sales) & Anor [2013] EWHC 74 (Ch)

[2013] EWHC 74 (Ch)Case No HC08C02976
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 24/01/2013
Before
MR JUSTICE ROTH
Between
(1) MUCK TRUCK UK LIMITEDClaimants(2) TERRY CHARLES ROWLANDSClaimant(3) DEESIGN PARTNERSHIP LIMITEDClaimant(1) PAUL HELPS t/a PAUL HELPS MUCKDefendantsTRUCK SALESDefendant(2) PAUL HELPS LIMITEDDefendant
Thomas St Quintin (instructed by Michelmores LLP) for ClaimantsRichard Hacon (instructed by Geldards LLP) for DefendantsHearing Hearing dates: 15 & 16 November 2012
Judgment

INTRODUCTION

[1]This is the trial of a preliminary issue concerning the alleged infringement of registered and unregistered design rights in motorised wheelbarrows (“MWBs”). Those are among a range of allegations of breach of intellectual property rights in a claim issued as long ago as October 2008.[2]The first claimant, Muck Truck UK Ltd (“MTUL”), manufactures and sells MWBs and related parts and accessories under the brand name “Muck Truck”. The second claimant, Mr Rowlands, is the sole director and shareholder of MTUL. The business now operated by MTUL was acquired in 2005 from another of Mr Rowlands’ companies, Deesign Partnership Ltd (“DPL”), the third claimant. The designs at issue are owned by the claimants between them and for present purposes it is unnecessary to distinguish in that respect between the individual claimants.[3]MTUL supplies end-users through a dealership network in the UK, as do other competing manufacturers of MWBs. The pattern of this trade in the UK is that dealers are exclusive to one or other manufacturer.[4]The second defendant, Paul Helps Ltd (“PHL”), is a company through which the first defendant, Mr Helps, operates his business as a dealer selling MWBs. The claimants allege that Mr Helps also traded on his own account but that is not admitted and for present purposes it is unnecessary to resolve that issue. PHL was formerly a Muck Truck dealer. However, in August 2008 the relationship between PHL and MTUL came to an end and PHL imported a few consignments of MWBs purchased from Power Barrow Company LLC (“PBC”) in Florida. It is those consignments which are alleged to infringe the claimants’ rights. As the defendants have not imported any further MWBs from PBC since then, and indeed PBC has now been acquired by the claimants, the reality of this case is a claim for damages and not for a continuing injunction.[5]PBC manufactured and sold MWBs under the brand name “Power Barrow”. PBC was at the time a company controlled by Chris and Steven Boyle (together “the Boyles”). The Boyles had been manufacturing MWBs under a manufacturing licence agreement dated 15 September 2004 (the “MLA”) entered into between DPL and another company which they controlled, CSB Enterprises LLC (“CSB”). Under the MLA, the Boyles manufactured MWBs to the claimants’ design and sold them in the United States.[6]In 2007, CSB stopped paying the royalties due to DPL under the MLA and litigation ensued in both England and Florida. DPL instigated legal proceedings against CSB in England in relation to the breach of the MLA and CSB instigated proceedings in Florida alleging deformation and tortious interference against Niche Products Sales LLC (“NPS”), a Florida company controlled by Mr Rowlands, and its employee, Mr Jeremy Pollard. NPS then filed a counter-claim against CSB in the Florida litigation alleging breach of the MLA. On 15 January 2008, a settlement agreement was concluded to resolve the litigation in both England and Florida (“the Settlement Agreement”).[7]In the Settlement Agreement, the Boyles, PBC, CSB and another company the Boyles controlled were referred to collectively as “the Boyle Parties”; and Mr and Mrs Rowlands, MTUL, DPL and NPS were referred to collectively as “the Rowlands Parties”. It will be necessary to refer to the terms of the Settlement Agreement in some detail since, although the defendants are not party to that agreement, it is at the core of the dispute on this preliminary issue. In summary, the defendants contend that as regards the registered and unregistered design rights, the products which they imported from the US and about which the claimants complain were manufactured and sold to them by PBC in accordance with the terms of the Settlement Agreement and therefore with the consent of the claimants. Accordingly, by the order of Floyd J dated 11 June 2012, the preliminary issue for determination at this trial is as follows:
“Whether all acts done in relation to the Defendants’ products alleged to infringe the Claimants’ registered and unregistered design rights were done with the consent of the Claimants pursuant to the terms of the Settlement Agreement between the Boyle Parties and the Rowland Parties dated 15 January 2008.”
[8]The case has been well argued by Mr Thomas St Quintin for the claimants and Mr Richard Hacon for the defendants, and my mind has shifted as to the correct resolution of the issue in the course of the trial.[9]The preliminary issue breaks down to two distinct questions:(a) Did the Settlement Agreement grant the Boyle Parties a licence of the design rights in the claimants’ MWBs?(b) If yes, since such a licence is accepted to be subject to compliance of the particular conditions in the Settlement Agreement, did the Power Barrow products imported by the defendants comply with those conditions?

THE SETTLEMENT AGREEMENT

[10]The Settlement Agreement is governed by Florida law but it was common ground that for present purposes Florida law should be treated as the same as English law.[11]By the first recital, “Muck Truck Products” are defined as the MWB called Muck Truck and related Muck Truck accessories sold by one or more of the Rowlands Parties.[12]The recitals record the existing litigation in England and Florida and the seventh recital is as follows:
“Whereas, the Parties have entered into this Agreement for the purposes of resolving the outstanding UK Litigation and Florida Litigation, including any and all issues that were or could have been raised in connection with either lawsuit.”
[13]By clause 2, the MLA was terminated, “with no further rights or obligations existing thereunder and with no provisions thereof surviving execution of this Agreement.”[14]By clause 3, the Rowlands Parties waived any claim against the Boyle Parties for “any past due, current, or future license fees or royalty fee payments pursuant to” the MLA.[15]By clause 4, the Rowlands Parties agreed to pay $25,000 to CSB in full and final settlement of all claims that the Boyle Parties may have against the Rowlands Parties or Mr Pollard. By clause 25, the Agreement was expressly without any admission of liability by any party.[16]Clause 5 is entitled “Competition”. It is at the heart of the present dispute and I therefore set it out in full as an Appendix to this judgment. However, by way of summary:(a) by clause 5(a), the Boyle Parties were entitled to use the knowledge and experience they had gained from selling Muck Truck Products “to create, design, manufacture, market, sell and protect by [IP rights] any ideas, processes, designs, inventions, machines, equipment, services and/or other products that may have similarities” in any respect to the Muck Truck Products or may compete with them. However, this was expressly subject to the limitations in sub-clauses 5(c) and (d);(b) again except as specifically limited by sub-clauses (c) and (d), the Boyle Parties were permitted to compete with the Rowlands Parties and any entity in which they were interested as regards the manufacture and sale of MWBs and no royalty or fees would be owed for sale of MWBs in accordance with clause 5;(c) by clause 5(c), for a period of two months to 15 March 2008, the Boyle Parties were permitted to continue to manufacture market and sell MWBs “using the same or substantially similar specifications as those associated with Muck Truck Products”, subject to two exceptions: they could not use (i) the name “Muck Truck” or “Muck” or any variation thereof in naming or marketing those products; and (ii) the same colours or colour schemes used at the time of the Agreement by the Rowlands Parties for Muck Truck Products. They were further permitted to supply MWBs manufactured on that basis in fulfilment of orders received up to 15 March 2008;(d) by clause 5(d), from 16 March 2008 onwards, the Boyle Parties were prohibited from manufacturing, marketing, advertising or selling any MWBs which contravened any of seven specified prohibitions.

(c) and the further conditions relevant in the present case are:

“(iii) having exactly the same dimensions (length, height, and width) as the Muck Truck currently produced by the Rowlands Parties as depicted in Exhibit B; … (vi) that are so similar in shape, design or configuration to the Muck Truck Products currently produced by the Rowlands Parties as depicted in Exhibit B as to create confusion in the mind of the average dealer of [MWBs] as to the source of such products.”
The seventh condition prohibited the manufacture of a MWB containing a triangle-shaped power drive covers once the Boyle Parties’ existing supply of such covers, including those that had been ordered by them before the date of the Agreement, had been used up.[17]Clause 6 is a minimum resale price provision, whereby the parties agreed that for two months following the date of the agreement they would maintain a retail sales price of no less than $1,399 for any MWBs “sold in the territory of the United States of America.”[18]Clause 10 is as follows:
“10. Business Records and Confidential Materials. Any materials containing proprietary information regarding the Muck Truck Products that were supplied by the Rowlands Parties to the Boyle Parties pursuant to the Manufacturing and License Agreement and that are currently in the possession, custody or control of the Boyle Parties: (a) if in written form, shall be returned to the Rowlands Parties no later than March 16, 2008; (b) if in electronic form, shall be deleted or destroyed by the Boyle Parties no later than March 16, 2008.”
[19]A copy of the MLA is annexed as Exhibit A to the Settlement Agreement. Under the MLA, DPL had granted CSB an indefinite licence to manufacture MWBs and accessories known as the Muck Truck range (“the Product”) in the United States in consideration of a licence fee of £75,000 and a royalty fee equivalent to £50 per Muck Truck sold, a figure index-linked to the US Consumer Price Index for annual review, and 7.5% of the ex-factory price of accessories and attachments sold from the Muck Truck range. The MLA states that it is governed by “the laws of the United Kingdom” and includes the following provisions:
“1. Confidentiality 1.1 DPL discloses the Technical information, know-how and future developments within the Product range, this is referred to as Confidential information. 1.2 CSB agrees not to disclose any Confidential Information to any third party, except to the extent that it is required by suppliers and or customers of CSB for use, maintenance or repair of the Product range. Further, CSB will only use the Confidential Information for the manufacture, assembly, testing, repair, marketing, sale and use of the Product strictly in accordance with the terms of this Agreement and for no other purpose. 1.3 CSB undertakes to keep the Confidential Information communicated to CSB about the Product with DPL confidential. All documents, computer discs, drawings and or extracts from the same containing Technical Information and improvements, including the copyright therein, shall remain the property of DPL and CSB shall not in any way reproduce such material. 1.4 The provision of confidentiality shall remain in force and until such time as the licensing agreement is terminated by mutual consent in any eventuality for a minimum period of 20 years. 2. Licenses In consideration of the performances of the Parties respective obligations herein; 2.1 DPL hereby grants to CSB license to use the Technical Information to manufacture, assemble and test the Product in the Territory (United States of America). 2.2 DPL hereby grants to CSB license to sell, lease, maintain and repair the Product in the Territory also to print, copy and distribute marketing related documentation in paper, electronic or CD ROM media in the Territory in conjunction with the sale of the Product. … 9. Term and Termination … 9.4 Upon termination, CSB agrees to immediately cease manufacturing the Product and all Technical know-how including improvements and rights to the Product will remain the property of DPL. CSB agree to either hand to DPL or destroy completely all paper documentation, computer discs and drawings pertaining to the Product. Any further License Fees will be waived.”
All documents, computer discs, drawings and or extracts from the same containing Technical Information and improvements, including the copyright therein, shall remain the property of DPL and CSB shall not in any way reproduce such material.[20]I should add that the expression “Technical Information” as used in clauses 1.1, 1.3 and 2.1 is not defined. DOES CLAUSE 5(a) OF THE SETTLEMENT AGREEMENT GRANT A LICENCE? The parties’ submissions

DOES CLAUSE 5(a) OF THE SETTLEMENT AGREEMENT GRANT A LICENCE?

[21]The principles applicable to the construction of the Settlement Agreement were not in dispute. They are set out in the well-known passage in the speech of Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912-913:
“(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. (2) The background was famously referred to by Lord Wilberforce as the “matrix of fact,” but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man. (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them. (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] A.C. 749. (5) The “rule” that words should be given their “natural and ordinary meaning” reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191, 201: “if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.”” “if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.””
[22]For the claimants, Mr St Quintin emphasised that nowhere does clause 5(a) of the Settlement Agreement use the word “license”. The expression “similarities to the design [etc]” of the Muck Truck Products is clearly different from saying “the same as the design”. This can be contrasted with the expression “the same or substantially similar” in clause 5(c). Further, he submitted that the defendants’ construction was inconsistent with clause 10 since if the Boyle Parties were able to use the same designs, subject to the changes required by clause 5(d), they would need the drawings, yet these had to be returned within two months of the Settlement Agreement. Moreover, it was commercially inconceivable that the claimants would have granted the Boyle Parties an indefinite, world-wide licence to the design rights for no consideration when under the previous MLA they had a licence limited to the United States that required them to pay royalties.[23]For the defendants, Mr Hacon submitted, in summary, that once the MLA was brought to an end the Boyle Parties would in any event have been able to compete with the claimants anywhere in the world, so long as they did not use confidential information acquired while licensees. After three years manufacturing and distributing Muck Truck products, the Boyle Parties obviously had valuable knowledge and experience of those MWBs and, so long as they did not infringe design rights or other IP rights, they would be able to use that knowledge and experience provided that they complied with the restrictions within sub-clauses 5(c) and (d). Thus clause 5(a) was meaningless unless it provided the Boyle Parties with something that they otherwise would not have. Moreover, the reference in clause 5(b) to no royalty or licensing fees being due for sale by the Boyle Parties of MWBs in accordance with clause 5 is consistent with a licence being granted. If, in addition to the detailed restrictions in sub-clauses (c) and (d), the Boyle Parties further had to avoid infringing the claimants’ design rights, clause 5(a) would be highly misleading. That cannot be the intention to be imputed to the parties to a commercial settlement agreement. That agreement, with the detailed restrictions in clause 5(d), should be seen as establishing a complete code as to what the Boyles could and could not do going forward.

Discussion

[24]It is necessary to consider the Settlement Agreement as a whole. It was to provide a way forward for both the Boyle Parties and Rowlands Parties after they had been in litigation in both England and the United States. I consider that it was designed to make clear what the Boyle Parties could do in producing MWBs to compete with the Muck Truck products. Accordingly, it expressly makes clear that they can use their knowledge and experience acquired while licensees of Muck Truck for the purposes of design and manufacture of competing products. That knowledge would include the details of manufacture with which they had become familiar and the specifications of the products. Although they had to return materials containing proprietary information under clause 10, I accept Mr Hacon’s argument that this provision concerns materials that were supplied by the Rowlands Parties. It does not cover drawings which the Boyle Parties had themselves made as part of the manufacturing process.[25]In my judgment, the absence of express use of the word “license” in clause 5(a) is not significant. What is important is the extent of the restrictions (after the initial, interim period of two months) as to the nature and appearance of the products which the Boyle Parties could manufacture set out in clause 5(d). Those cover many aspects of the design involved in producing their own MWBs, including specific details. Once the Boyle Parties observed those prohibitions, I consider that it is contrary to the natural implication of clause 5(a), read in context of the agreement as a whole, that they further must avoid infringing design rights. The provision in clause 5(b) expressly stating that no royalties or licensing fees would be due strongly supports, in my view, the interpretation of clause 5 as granting a licence for which such a liability might otherwise arise.[26]There is no continuing restriction on the use of confidential information. Clauses 1.4 and 9.4 of the MLA are swept away: see clause 2 of the Settlement Agreement. Commercially viewed, the bargain was that so long as the Boyle Parties kept within the confines of clause 5(d), the claimants would not object although the Boyle Parties were using their knowledge of the Muck Truck products, however confidential that may be. I consider it is implicit that this includes use of the designs protected by design rights in the existing Muck Truck products at the time of the Agreement. Moreover, it was not simply a contractual agreement that the claimants would not object; since it was necessary to extend protection also to dealers who purchased from the Boyle Parties, it should be construed as providing for a licence.[27]The claimants argued that this would be a very bad bargain as it gave the Boyle Parties a world-wide design licence with no obligation to pay royalties. However, this licence only covered the Boyle Parties’ knowledge regarding the existing product at the date of the agreement and thus rights in the design at that date, not any new design rights that would arise if the claimants redesigned the Muck Truck MWBs in the future. Nor was there any licence for the trademark, as clause 5(c) and (d) make clear. The provisions of clause 5(d) make the use of the design subject to very strict limitations. Since the parties had been in litigation, I do not find a settlement on that basis surprising. Even if it were relevant to consider whether this agreement was a good or bad bargain, without knowing the strength of each side's case in the two sets of proceedings it would be impossible to reach a view. The construction urged by the defendants is very far from being so absurd or uncommercial that the court should reject it on that basis.[28]I should add that the claimants also relied on the comment apparently made by the judge in Florida recommending to the parties that they should seek to agree a commercial settlement as otherwise the Boyles and their employees could be left without a viable income if they were prevented from designing or selling any kind of MWB because of the restrictions under the MLA on their use of the knowledge they gained. The evidence that the judge made such a statement was not challenged, but I do not find it of any assistance on the question of interpretation of the subsequent Settlement Agreement which is now before this court.[29]Accordingly, I conclude that on its proper interpretation, the Settlement Agreement entitled the Boyle Parties to manufacture and sell their Power Barrow MWBs using the registered and unregistered designs in the Muck Truck products as at the date of the Agreement, but subject always to the conditions in clause 5(c) and (d).

THE PROHIBITED PRODUCTS

[30]Of the conditions in clause 5(d), it is not suggested that the products imported by the defendants infringed the prohibitions regarding the name, the colour, the handlebar/cowling configuration or the capacity. However, infringement of each of the three other conditions is relied on by the claimants: as regards dimensions; confusion in the mind of the average dealer; and the power drive cover. I shall address each of these in turn. (1). Dimensions[31]The condition prohibits the manufacturing or sale of MWBs “having exactly the same dimensions (length, height and width) as the Muck Truck currently produced by the Rowlands Parties as depicted in Exhibit B”. Exhibit B is a NPS brochure for the Muck Truck MWB known as the Muck Truck Mark 2 (or Mk 2). It is common ground that to contravene this condition all three of the specified dimensions must be the same.[32]By the consent order made by Floyd J on 11 June 2012, the parties were directed to attempt to agree the dimensions of the Power Barrow MWB supplied by the defendants which is alleged to infringe the claimants’ design rights, if necessary at a meeting which the parties should attend with measuring equipment and cameras. A meeting duly took place, albeit only on 6 November 2012, just over a week before the trial.[33]The defendants sold three different models of Power Barrow, known as the Rocky, Buddy and Brutus. The Buddy and Brutus are larger models, with respectively 8 and 10 cubic foot skips. It is accepted that they do not have the same dimensions as the Muck Truck Mk 2. The third model, the Rocky, has a 7 cubic foot skip which may be either metal or plastic. Following the examination and measurement, the disputed issues on dimensions concern the Rocky model with metal skips, that comes in two forms, Mark 1 and Mark 2.[34]The dimensions of the Muck Truck Mark 2 are agreed. It is unnecessary to determine whether the reference in clause 5(d) to Exhibit B is only for identification of the model or also incorporates the measurements set out in the specifications in the brochure. The dimensions are the same and are set out in the table below.[35]Both Mr Rowlands and Mr Helps gave evidence at trial. Mr Rowlands agreed in cross-examination that the relevant dimension was that which is most important to the user from a practical point of view. As regards the width, that would be the width at the widest point of the MWB, whether that be the wheels or the skip.[36]On that basis, the dimensions (in mm.) of the two models of the Power Barrow Rocky with metal skips imported by the defendants were agreed at the measurement meeting on 6 November as set out in the table below, by comparison with the reference measurements of the Muck Truck Mk 2: Exhibit B/ Muck Truck Mk 2 Rocky Metal Mk 1 Rocky Metal Mk 2 Length 1550 1570 1590 Height 850 880 895 Width at widest point 700 712 755[37]In the schedule prepared following the measurement meeting, it is recorded that the claimants contended that the length of these two models of Rocky could be rather more on the basis that the Rocky was made with adjustable handles, enabling the handles’ position to be altered so as to vary the barrow’s length. However, no evidence was led to that effect on behalf of the claimants at trial. On the other hand, Mr Helps gave evidence that the defendants have never bought Power Barrow MWBs with adjustable handles, and that evidence was not challenged. Accordingly, there is no basis to qualify the measurements set out in the above table.[38]The argument between the parties regarding the question whether the two models of Rocky were to be regarded as “having exactly the same dimensions” as the reference Muck Truck came down to the question of manufacturing tolerances. Mr Helps very properly accepted that there are manufacturing tolerances for these products since they are not precision tools. Therefore the measurements for the two Rocky models set out in the table may not be precisely the same as for all such products acquired for resale by the defendants.[39]As regards width, Mr Helps’ evidence was that he measured the 17 Rocky Mk 2 with metal skips which he had in his possession and all of them came out at exactly 755 mm, corresponding with the agreed measurement of the two Rocky Mk 2 with metal skips brought along (one by the claimants and one by the defendants) to the meeting on 6 November. On that basis, while he accepted that in principle there could be a small manufacturing tolerance, it was argued that there was no ground to accept a tolerance of more than 2 mm. Mr Rowlands said that he had measured a batch of fabricated metal skips from Power Barrow in the United States and that the difference in width between the widest and the narrowest was 20 mm. Even if that tolerance were accepted, it is clear that the width of the Rocky Metal Mk 2 is not the same as that of the Muck Truck Mk 2. That rules out infringement by that model of the dimensions condition.[40]Moreover, it emerged on cross-examination that in fact Mr Rowlands was measuring the skips for the Brutus model that are significantly larger skips than those on the Rocky. He said that this was because he did not have a batch of skips for Rocky MWBs since that model had now been discontinued. I do not see that one can extrapolate in this way between the variation found in larger skips and apply it to the smaller Rocky skip. Furthermore, Mr Rowlands had not brought any of those skips to the measurement meeting on 6 November. I did not find the photographs he produced of a stack of skips in themselves persuasive since it was impossible to ascertain the degree of alignment from those photographs. When the court has specifically ordered that if the parties failed to agree on dimensions there should be a meeting at which measurements can be carried out, I do not regard it as acceptable that one party should nonetheless seek to rely on measurements taken in the absence of the other party of particular models which it did not arrange to bring to the joint meeting.[41]Accordingly, I find that the claimants have failed to show that there could be a manufacturing tolerance of anything like 20 mm on the Rocky Metal models. I consider that the difference in width of 12 mm for the Rock Metal Mk 1 in itself means that the model does not have the same width as the Muck Truck Mk 2; and the difference in length is more pronounced. In the light of this, it is not necessary to evaluate the significance of the recorded difference in height. The parties agreed that some difference in height could be attributable to tyre pressure but I very much doubt that could explain a difference as great as 30 mm.[42]Accordingly, I conclude that neither the Mk 1 nor the Mk 2 Rocky Metal Power Barrow had the same dimensions as the Muck Truck Mk 2. (2). Confusion[43]The relevant condition prohibits the manufacturing or sale of MWBs “that are so similar in shape, design or configuration to the Muck Truck Products currently produced by the Rowlands Parties, as depicted in Exhibit B, as to create confusion in the mind of the average dealer of [MWB] products as to source of such products.”[44]I found this the most troubling aspect of this case. Mr Rowlands gave evidence regarding the attitude of certain dealers at the Saltex Trade Exhibition in around September 2008 where Mr Helps had displays of Power Barrow products at his stand. However, that is hearsay evidence and I give it little weight: Mr Rowlands himself is of course not a dealer, he has an obvious interest in these proceedings, and his evidence about one of those dealers, Mr Douglas, was shown to be incorrect.[45]Two third party dealers did give evidence: Mr Christopher Hardy and Mr Keith Douglas. Mr Hardy owns a dealership in Scotland and has been a Muck Truck dealer for some seven years. I found him an impressive witness who gave clear and straightforward evidence. He said that he saw the Power Barrow MWBs on display at the Saltex Exhibition in 2008. He said that he was not aware of the Power Barrow brand before and that although he saw the Power Barrow name on the products his reaction was that this was a Muck Truck machine because it was so similar. He noted that it had a different shape of skip, but that otherwise the Power Barrow used a Honda engine, like the Muck Truck, which drives the transmission axle using the same engine/transmission arrangement. He noted that the belt between the engine and the transmission which carried the drive from the belt to the wheels appeared to be the same, the wheels were the same and the cable controls were the same. He said that his reaction was that this was an apparently new model produced by Muck Truck about which Muck Truck had not told him, and that he was initially quite upset by that.[46]It was suggested for the defendants that Mr Hardy was not a reliable witness in his recollection because in his written witness statement he said that he made enquiries with Muck Truck about the Power Barrow products after he had returned from the exhibition whereas in his oral evidence he said that he went over at Saltex to the Muck Truck stand and spoke to Mr Rowlands who clarified the matter for him. However, I consider that it is necessary to bear in mind that Mr Hardy was trying to recall what happened more than four years ago. The fact that he had at first recalled that he made enquiries only after the exhibition but then, after hearing the evidence of Mr Rowlands, he remembered that he had spoken to him at the exhibition seems to me exactly the kind of matter that one would not readily recall and does not, in my view, weaken his evidence about the reaction he had on examining the Power Barrow product.[47]Mr Douglas is a Muck Truck dealer from Berkshire. He also saw the Power Barrow MWBs at Saltex in 2008. He said that he tipped the flat bed and skip forward on both the Power Barrow products on show, and the actual shape of the base, mounting and securing points on them looked identical to the Muck Truck. He said that the only differences he noticed were the colour (yellow as opposed to orange) and that the handlebar arrangement that was different. Although Mr Rowlands in his statement suggested that Mr Douglas was confused as to the origin of these MWBs and concerned about what had happened, that is clearly not correct. Mr Douglas himself made no such suggestion in his own statement and, indeed, it was clear from the evidence of Mr Robin Saunders adduced on behalf of the defendants (and not challenged) that Mr Douglas was well aware before the Saltex Exhibition that Mr Helps was importing Power Barrows from his new supplier in the United States.[48]Mr Helps is of course also a dealer and he pointed to certain differences between the Power Barrow and Muck Truck MWBs by reference to the configuration of the mainframe in the two machines, illustrated by photographs. However, although the two machines are not identical Mr Helps himself accepted that they are very similar. It must be emphasised that the requirement of this condition in clause 5(d) is not that the two products must not be the same but that the design etc of the products supplied by the Boyle Parties must not create confusion as to its source. The differences regarding the mainframe seem to me just the sort of relatively minor changes in design that a manufacturer might be expected to make. The same applies to the other points made by Mr Helps: for example, that the Power Barrow has texture coated paint whereas the Muck Truck has a smooth finish.[49]Reliance was also placed for the defendants on the fact that the Power Barrow products have a label stating: “Assembled by The Power Barrow Company” with the address in Florida and a serial number.[50]The prohibition is on the creation of confusion in the mind of the “average dealer” of MWB products as to the source. The “average dealer” is a notional individual, like the average consumer under the test applied for confusion in trademark law. In that regard, I do not regard the fact that only one dealer gave evidence regarding confusion as significant. It is the quality of the evidence which counts since it is for the court to evaluate the effect of that evidence on the notional, average dealer: cp the discussion of the “average consumer” by Lewison LJ in Marks & Spencer plc v Interflora Inc [2012] EWCA Civ 1501 at [37] to [43].[51]Moreover, confusion “as to the source” of the products, considered in isolation, might simply mean the manufacturer. But in the context of the Settlement Agreement, I consider that this should be interpreted to mean not only physical manufacture but origin, such that if the machine is manufactured under licence then the licensor should also be regarded as “the source” of the product. This is a relatively small industry and it was well known to dealers that some of the manufacturers licensed other companies to manufacture “their” products. That had of course been the case with CSB under the MLA prior to the parting of the ways between the Rowlands Parties and the Boyle Parties. It emerged in evidence that another of the main suppliers of MWBs, Belle, also manufactures under licence from MTUL or another of the Rowlands’ companies. This provision in clause 5(d) should, in my view, be interpreted to mean that the average dealer should not think that any MWBs manufactured by the Boyle Parties thereafter was connected to the MWBs made by the Rowlands Parties, including whether it might have been produced pursuant to a manufacturing licence as had applied to the Power Barrow products before.[52]In the light of that, I do not attach great significance to the label which, in any event, refers to the identity of the company which assembled the MWB and not the manufacturer. This was a point made by Mr Hardy when he was asked about the label. Furthermore, I do not think it assists on this question to appreciate that any dealer would be likely to make enquiries of MTUL or of the producer of the Power Barrow MWB and then would no doubt be informed of the true position. On that basis, this condition would be redundant and such an approach does not reflect the objective that I consider it was seeking to achieve.[53]There were many photographs of the Muck Truck and Power Drive products in the evidence and I recognise that I must take care not to substitute the impression made on me for that which would be made on a dealer with experience of different producers’ MWBs. However, in the end, on the basis of the very substantial similarities pointed out by Mr Hardy and Mr Douglas, I conclude that the Power Barrow products are sufficiently “similar in shape, design and/or configuration” to contravene this prohibition. (3). Power drive cover[54]In the light of my conclusion regarding the “confusion” condition, it is not strictly necessary to consider the third condition under clause 5(d) relied on, i.e. not to use a “triangle shaped power drive cover”. However, for completeness, I shall address this further point.[55]The power drive is located on the body of the machine between and slightly above the two wheels. On the Muck Truck model as at the time of the Settlement Agreement, the cover to the power drive was not in fact a perfect triangle since the three sides were curved: the top, horizontal edge being slightly convex and the two other sides being slightly concave. That may be why the looser expression “triangle-shaped” is used. On the Power Barrow models imported by the defendants, the cover is more of a T-shape, although it is far from a perfect “T” since the two vertical sides curve outwards to meet the end of the horizontal edge as opposed to meeting it at right angles.[56]As Mr Hacon pointed out, there is not great scope for difference in design for this part which functionally has to fit between the tyres while covering the power drive. The point is a short one that does not admit of elaborate argument, and in the end is very much a matter of impression. This condition is not expressed by reference to a contrast with the power drive cover on the Muck Truck model but in absolute terms, albeit that interpreted in context I think it is appropriate to have regard to the form of cover used on the Muck Truck MWB. On balance, I find that the cover on the Power Barrow models imported by the defendants is of a design that would not, objectively viewed, be described as a “triangle shape”; moreover it is evident that it is a different shape from that on the Muck Truck model. I therefore find that there was no infringement of this condition.

CONCLUSION

[57]For the reasons expressed above, I find that on the true construction of the Settlement Agreement the Boyle Parties were granted a licence to use the design rights (registered and unregistered) in the Muck Truck products as at the date of the Settlement Agreement, provided that they complied with all the conditions in clause 5(d). However, the Power Barrow models imported by the defendants contravened one of the conditions in clause 5(d) regarding the creation of confusion in the mind of the average dealer of MWBs as to source.[58]Accordingly, I answer the preliminary issue as follows: the acts done in relation to the defendants’ products alleged to infringe the claimants’ registered and unregistered design rights were not done with the consent of the claimants pursuant to the terms of the Settlement Agreement. APPENDIX CLAUSE 5 OF THE SETTLEMENT AGREEMENT “5. Competition.(a) The Parties expressly acknowledge and agree that the Boyle Parties have acquired valuable knowledge and experience through: (i) their communications with the Rowlands Parties, Pollard, and third parties; (ii) their involvement with manufacturing, marketing, and selling the Muck Truck Products; and (iii) networking with various dealers, retailers, wholesalers, suppliers, and manufacturers throughout the world. Further, the Parties acknowledge and agree that except as specifically limited by subsections (c) and (d) of this Section 5, such knowledge and experience may be lawfully used by the Boyle Parties to create, design, manufacture, market, sell and protect by patent, trademark, and copyright laws any ideas, processes, designs, inventions, machines, equipment, services and other products that may have similarities to the design, functionality, configuration and/or appearance of the Muck Truck Products and/or that may compete with the Muck Truck Products.(b) Further, the Parties agree that, except as specifically limited by subsections (c) and (d) of this Section 5, the Boyle Parties shall be permitted to compete freely, openly, and directly with: (i) the Rowlands Parties; (ii) Pollard; (iii) any entity in which any of the Rowlands Parties or Pollard may have, either presently or in the future, a beneficial interest; or (iv) any third party, in connection with the manufacture, marketing, and sale of motorized wheel barrows and motorized wheel barrow accessories (collectively, "Motorized Wheel Barrow Products"). No royalty fees, licensing fees or any other fees, payments or sums of money shall be owed by the Boyle Parties with respect to any Motorized Wheel Barrow Products sold in accordance with this Section 5.(c) The Parties expressly agree that, from and after the Effective Date through March 15, 2008, the Boyle Parties may continue to manufacture, market and sell Motorized Wheel Barrow Products using the same or substantially similar specifications as those associated with the Muck Truck Products, except the Boyle Parties shall be prohibited from using: (i) the name "Muck Truck", "Muck” or any variation of the term "Muck" in naming and/or marketing their Motorized Wheel Barrow Products, except as otherwise provided in Sections 7 and 9 hereof; and (ii) the same colors or color schemes currently used by the Rowlands Parties for the Muck Truck Products, as depicted on the documents attached hereto as Exhibit “B” and incorporated herein. The Boyle Parties shall be permitted to fill any orders for Motorized Wheel Barrow Products manufactured in accordance with this subsection (c) that they receive through the date of March 15, 2008. The Rowlands Parties shall provide no express or implied warranties for any Motorized Wheel Barrow Products sold by the Boyle Parties in accordance with this Subsection 5(c).(d) From and after March 16, 2008, the Boyle Parties, including any entity or other business in which they have a controlling interest, shall not manufacture, market, advertise or sell, or directly assist any person or entity with manufacturing, marketing, advertising or selling, any Motorized Wheel Barrow Products: (i) using the name "Muck Truck", "Muck" or any variation of the term "Muck"; (ii) using the same colors or color schemes currently used by the Rowlands Parties for the Muck Truck Products, as depicted in Exhibit “B”; (iii) having exactly the same dimensions (length, height, and width) as the Muck Truck currently produced by the Rowlands Parties, as depicted in Exhibit “B”; (iv) using the same handlebar/cowling configuration currently used by the Rowlands Parties for the Muck Truck, as depicted in Exhibit “B”; (v) having a maximum carrying capacity of less than five hundred (500) pounds; and (vi) that are so similar in shape, design or configuration to the Muck Truck Products currently produced by the Rowlands Parties, as depicted in Exhibit “B” as to create confusion in the mind of the average dealer of motorized wheel barrow products as to the source of such products. Moreover, the Boyle Parties shall not manufacture any Motorized Wheel Barrow Products containing a triangle-shaped power drive cover after such time as the Boyle Parties’ existing supply of any such power drive covers, which shall include all power drive covers that are in stock or have been ordered by the Boyle Parties through the Effective Date, has been depleted.” APPENDIX CLAUSE 5 OF THE SETTLEMENT AGREEMENT