Lifestyles Equities CV & Anor v Sportsdirect.Com Retail Ltd & Ors [2017] EWHC 154 (Ch)

[2017] EWHC 154 (Ch)Case No HC-2015-003973
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 9/2/2017
Before
MASTER CLARK
Between
(1) LIFESTYLES EQUITIES C.V.Claimants(2) LIFESTYLE LICENSING B.V.Claimant(1) SPORTSDIRECT.COM RETAIL LIMITEDDefendants(2) SPORTS DIRECT INTERNATIONAL PLCDefendant(3) SDI (BROOK UK) LIMITEDDefendant(4) SDI (BROOK EU) LIMITEDDefendant(5) SDI (BROOK ROW) LIMITEDDefendant(6) REPUBLIC.COM RETAIL LIMITEDDefendant
Thomas St Quintin (instructed by Brandsmiths) for ClaimantsNicholas Saunders (instructed by Reynolds Porter Chamberlain LLP) for DefendantsAshton Chantrielle (instructed by Fieldfisher) for Proposed Seventh DefendantThe Proposed Eighth Defendant in person for in personJonathan Hill (instructed by Harbottle & Lewis) for Proposed Ninth to Eleventh DefendantsHearing Hearing date: 13 January 2017
Judgment ApprovedMaster Clark:Application
[1]This is my judgment on the claimants’ application issued on 28 September 2016 seeking the joinder of 6 additional defendants (“the new defendants”) to the claim.

Parties and the claim

[2]The first claimant (“C1”) is the proprietor and the second claimant (“C2”) the head licensee of various “Beverly Hills Polo Club” registered trade marks. These include:(1) European Union Trade Mark 005482484 (“the EUTM”) registered for, amongst other things, “Clothing” in class 25;(2) UK registered trade mark 1259226 (“the UK mark”) registered for, amongst other things, “Articles of clothing; but not including footwear” in class 25;(3) European Union Trade Mark 004033742 (“the second EUTM”) registered in class 3 for, amongst other things soaps, gels and deodorants. Each of these marks has the following appearance:[3]The existing defendants are all companies in the Sports Direct group, of which the second defendant is the holding company, and are collectively referred to as “D1-6”.[4]For the purposes of this application the claim can be divided into two parts. The first part comprises a claim for infringement of the EUTM and the UK mark by offering for sale, selling, importing or exporting clothing; and a claim for procuring breach of a licence agreement between C2 and another company in the Sports Direct group (together, “the Clothing claim”).[5]The second part of the claim alleges infringement by the first to fifth defendants (“D1-5”) of the second EUTM by offering for sale, selling and exporting shower gels (“the Gels”) from about March 2016 (“the Gels claim”).

The claim against the new defendants

[6]The proposed claim against the new defendants seeks to add them to the Gels claim. It alleges that they were each involved in the supply chain which ultimately resulted in the supply of the Gels to D1-5. The evidential basis of the claim is D1-5’s response dated 17 June 2016 to the claimants’ request for further information dated 3 June 2016, which set out the defendants’ understanding (said to be derived from its immediate supplier) that the supply chain of the Gels was:
“(1) Air-Val (2) Luxury Beauty Products (3) Trading Secrets (4) Blue Print Trading (5) Star.”
[7]The seventh defendant, Air-Val International SA (“D7”) is a Spanish company and the former licensee of C2 under a written licence dated 2 October 2008 (“the Licence”). The Licence was terminated by a letter agreement dated 14 July 2011 (“the termination letter”). D7 is alleged to have sold the Gels to Luxury Beauty Products Limited (“LBP”) in April or May 2012. The claimants’ case is that the sales of the Gels by D7 were outside the terms of the Licence and/or at a time when the Licence was no longer in force, so made without their consent.[8]LBP is now in liquidation. The eight defendant, Jonathan Spital, was its sole director and shareholder at the relevant time and is alleged to be a joint tortfeasor with LBP.[9]The ninth defendant, Trading Secrets (Iver) LLP (“D9”) or alternatively the tenth defendant, Trading Secrets Limited (“D10”) are alleged to be the third entity in the supply chain, “Trading Secrets”. D10 was also a member of D9, and also alleged to be a joint tortfeasor with it. The eleventh defendant, Eoin Alan MacLeod, was a member of D9 (and the only natural person who is a member) and the sole director of D10. He is alleged to be a joint tortfeasor with D9 and/or D10.[10]The twelfth defendant, Blueprint Trading SL, is a Spanish company and alleged to be the fourth entity in the supply chain. The fifth entity, Star Global Trading Limited, is in liquidation and not sought to be added.

Background

[11]The claim was issued on 11 September 2015, when it consisted of the Clothing claim only. On 1 December 2015, Lane IP Limited applied to the EUIPO (then OHIM) for revocation of the second EUTM on the grounds of non-use in the 5 year period ending with the filing of the application, 1 December 2010 to 2 December 2015 (“the revocation application”).[12]At a case management conference on 27 April 2016 I gave permission to re-amend the Particulars of Claim to add the Gels claim, with consequential directions for responding amendments to the Amended Defence. I also ordered the trial to be listed with a time estimate of 8 days; and it is now listed in a 5 day window commencing on 27 June 2017. Although the revocation application had been made by that stage, it was not mentioned by either side, nor referred to in the draft Re-Amended Defence and Counterclaim put before the court.[13]The Gels claim was added by re-amendment on 17 May 2016, and the Re-amended Defence and Counterclaim was filed on 1 June 2016. This admitted the sale of the Gels in the UK by the first defendant, that the sign on the Gels was similar or identical to the second EUTM and that shower gel is identical to “gel” for which the second EUTM is registered. The only defence raised to infringement was that of exhaustion of rights: that the Gels were placed on the market in the Community by the claimants and/or with their consent.[14]In support of this defence D1-5 alleged that D7 had placed the Gels on the market in 2012 with the claimants’ consent; and that at the material times D7 was a licensee of the claimants.[15]In addition, para 4A of the Re-amended Defence referred to the revocation application having been made and continued:
“This action insofar as it relates to the [second EUTM] is liable to be stayed pursuant to Article 104(1) of the CTM Regulation and this Re-Amended Defence and Counterclaim is filed without prejudice to any application for such a stay.”
[16]On 3 June 2016, the claimants made the Part 18 request referred to in para 6 above for further information in relation to the exhaustion defence, including details of the supply chain from D7 to D1-5. This elicited D1-5’s response setting out their understanding as to the supply chain. This response resulted in the claimants’ solicitors investigating the identity of the named entities in the supply chain; and on 8 and 12 July 2016 sending detailed letters before claim to the new defendants. The claimants’ letter before claim to D7 dated 8 July 2016 was sent by email, received by it around that time, and seen by one of its directors. There is a factual dispute (which it is not necessary to and which I cannot resolve) as to whether the letters dated 12 July 2016 sent (also by email) to D9, D10 and Mr MacLeod were received by them.[17]Having received no response to the letters before claim, the claimants issued the joinder application on 28 September 2016, asking for it to be determined without a hearing. After an enquiry by me as to whether D1-D6 consented to the application, the application was sent to D1-6’s solicitors, who by their email dated 26 October 2016 indicated that they did not consent to the application. I then directed that the application be listed for a hearing.[18]The application was sent to the new defendants on 8 November 2016. It was received by D7 on 14 November 2016, by Mr Spital on 15 December 2016 and by solicitors for D9-11 on 8 November 2016. The claimants and existing defendants were offered a provisional listing of the application on 13 December 2016 (subject to a trial listed in that week settling), but to accommodate D1-6’s counsel’s availability, the application was listed on 13 January 2017, by extending the CCMC listed for that date.

Joinder - legal principles

[19]The rules governing joinder are found in CPR Part 19.[20]CPR 19.2 provides:
“(2) The court may order a person to be added as a new party if – (a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or (b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.”
[21]CPR 19.4 provides, so far as relevant:
“Procedure for adding and substituting parties 19.4 (1) The court’s permission is required to remove, add or substitute a party, unless the claim form has not been served. (2) An application for permission under paragraph (1) may be made by – (a) an existing party; or (b) a person who wishes to become a party. (3) An application for an order under rule 19.2(4) (substitution of a new party where existing party’s interest or liability has passed) – (a) may be made without notice; and (b) must be supported by evidence. (5) An order for the removal, addition or substitution of a party must be served on – (a) all parties to the proceedings; and (b) any other person affected by the order. (6) When the court makes an order for the removal, addition or substitution of a party, it may give consequential directions about – (a) filing and serving the claim form on any new defendant; (b) serving relevant documents on the new party; and (c) the management of the proceedings.” (a) an existing party; or (b) a person who wishes to become a party. (a) may be made without notice; and (b) must be supported by evidence. (a) all parties to the proceedings; and (b) any other person affected by the order. (a) filing and serving the claim form on any new defendant; (b) serving relevant documents on the new party; and (c) the management of the proceedings.”
[22]Notwithstanding the fact that the claimants would not have required the permission of the court to bring a fresh claim against the new defendants, it is clear from CPR 19.4 that unless the application is made under CPR 19.2(4), the application to join should be made on notice. This is confirmed by CPR PD19A, para 4 which provides that the application may (and implicitly, may only) be dealt with without a hearing where all the existing parties and the proposed new parties are in agreement. This is because the joinder of parties gives rise, as it has done here, to case management issues, in which all the parties have an interest.[23]The respondents to the joinder application who appeared at the hearing were D1-6, D7, Mr Spital in person, and D9-11. Blueprint Trading has never responded to the claimants’ correspondence or the application, and did not attend the hearing.

Issues to be determined

[24]The following issues arose for determination on the parties’ submissions:(1) Whether the claims against D8, D10 and D11 have any reasonable prospect of success, it being accepted that the claims against D7 and D9 do – a reasonable prospect of success being a necessary but not sufficient condition for joinder to be ordered;(2) Whether the court has jurisdiction in the claim against D7;(3) Whether the issue of whether a stay of the Gels claim could or should be granted by the court (pursuant to Article 104(1) of the Regulation (EC) 207/2009 on the Community Trade Mark (as amended by Regulation (EU) 2015/2424) (“the Regulation”)) was relevant to whether the new defendants should be joined to that claim;(4) Whether or not the court should of its own initiative (and in the absence of any application) determine at this hearing whether the claim should be stayed;(5) If the court did determine whether a stay should be granted, the outcome of that application.(6) It also being accepted that the claims in respect of the Gels against D1-5 and the new defendants should all be determined in one claim, whether they should be determined in the existing claim, or whether the claimants should issue a new claim to which D1-5 would be defendants (and the Gels claim be discontinued);(7) If joinder is granted, what directions as to trial should be made, the options being: (i) trial of both claims at the currently listed trial; (ii) trial of the Clothing claims in the currently listed trial and a separate trial at a later date of the Gel claims; (iii) vacation of the existing trial and a later trial of both claims. (1). Reasonable prospect of success – joint tortfeasorship[25]As discussed in more detail below, the claims against D8 (Mr Spital), D10 and D11 (Mr MacLeod) are largely (though in the case of D10 not wholly) based on allegations that they were joint tortfeasors in the alleged infringing acts.

Joint tortfeasorship – legal principles

[26]The principles governing joint tortfeasorship in trade mark infringement cases were recently reviewed in Grenade UK Ltd v Grenade Energy Ltd [2016] EWHC 877 (IPEC), in which HHJ Hacon granted summary judgment against a sole director of a business that had undertaken acts of trade mark infringement, holding as follows at [22] to [25]:
“[22] …the most up to date summary of the law in relation to joint tortfeasance is to be found in the judgment of the Supreme Court in Sea Shepherd UK v Fish & Fish Ltd [2015] UKSC 10; [2015] AC 1229. I attempted a very short summary of the key criteria for joint tortfeasance identified by Lord Sumption in Sea Shepherd in my judgment in Vertical Leisure Ltd v Poleplus Ltd [2015] EWHC 841 (IPEC), where I said this at paragraph 66: “I interpret this to mean that in order to fix an alleged joint tortfeasor with liability, it must be shown both that he actively co-operated to bring about the act of the primary tortfeasor and also that he intended that his co-operation would help to bring about that act (the act found to be tortious).” 23 Mr Chawla is both the sole director and sole shareholder of the first defendant. As Mr Sampson put it, he is a one-man company. In my view, this raises an evidential presumption that all acts done by the first defendant were done at the instigation of Mr Chawla alone. In effect, he was under an evidential burden to show why, contrary to what one might expect, the acts complained of were not initiated and controlled by him. 24 In fact, in Mr Chawla's pleadings and in his evidence, he has not identified anybody else who was, on his account, responsible for the acts complained of. Therefore, to my mind, there can be no real doubt that Mr Chawla was indeed the sole instigator and controller of those acts. I therefore take the view that he procured the acts complained of or, to put it another way, he actively cooperated with his company to bring about the infringements of community trademarks and passing off, that he intended his cooperation would bring about those acts and that there is no real prospect of Mr Chawla establishing to the contrary at trial. 25 I therefore give summary judgment in relation to the claimant's claim on tortfeasance.” “I interpret this to mean that in order to fix an alleged joint tortfeasor with liability, it must be shown both that he actively co-operated to bring about the act of the primary tortfeasor and also that he intended that his co-operation would help to bring about that act (the act found to be tortious).”
[27]In this claim, as is often the case, the claimants have no direct knowledge of the circumstances in which the infringing acts occurred and the individuals directly involved in them. Their case is necessarily based on inference from the facts (including publicly available facts) known to them before disclosure, witness statements and cross examination of the defendants’ witnesses. The question in this application is whether the claimants have a reasonable prospect of success of establishing that those facts are capable of giving rise to the evidential presumption HHJ Hacon refers to.

D8 – Mr Spital

[28]The claim against Mr Spital is set out at para 10D of the Re-amended Particulars of Claim. It is based upon the undisputed fact that at the material times he was the sole director and shareholder of LBP. From this, the claimants say, it is to be inferred that he was directly in charge of making and implementing all decisions relating to the operations of LBP, including its carrying out of the infringing acts complained of. This, the claimants allege, constituted authorising, directing, counselling and/or procuring those infringing acts, and/or acting in common design with LBP to ensure that such acts took place.[29]Mr Spital in his written evidence does not dispute any of the factual allegations made against him nor allege that anyone else was responsible for LBP’s acts. He only relies on the fact that LBP is a separate entity from him, which is irrelevant to the question of whether or not he was a joint tortfeasor. I am satisfied that the claim against him has a reasonable prospect of success, and that he should be joined as a defendant to the Gels claim.

D10 and D11- Trading Secrets Limited and Mr MacLeod

[30]The joint tortfeasorship claims against D10 and Mr MacLeod are closely linked, and conveniently considered together.[31]The claim against D10 is set out at para 10E of the Re-amended Particulars of Claim and is made in the alternative: either that it committed the infringing acts or that it acted in common design with D9 to ensure the acts took place. The claimants rely upon the facts that D9 and D10 share a common name (“Trading Secrets”), which indicates that they are both involved in the sale of fragranced products, upon their common directorship, and upon the fact that D10 is a member of D9. At this stage, liability is a matter of inference from these facts.[32]The claim against Mr MacLeod is set out at para 10F of the Re-amended Particulars of Claim. It is based on the facts that he was the only officer of D9 who was a natural person, the other officer being D10; and that he was the sole director of D10. From this, it is the claimants allege, to be inferred that Mr MacLeod was directly in charge of making and implementing all decisions related to the operations of D9 and D10 including decisions about the Gels.[33]Mr MacLeod filed a witness statement on behalf of D9, D10 and himself, in which he accepts that D9 has traded in the Gels and exhibits an invoice dated 18/5/2012 from D9 to D12. However, his evidence on this issue is largely legal argument, and notably fails to address the factual matter of his and D10’s involvement in the acts of D9. He does not actually deny that involvement, but only asserts that the inference alleged by the claimants cannot be drawn from the facts alleged by them.[34]As an initial point, the fact that D9 carried out one sale (as Mr MacLeod has admitted) is not inconsistent with D10 having carried out others; and given its name, I am satisfied that the claimants have a reasonable prospect of success in showing that D10 acted as a principal infringer.[35]Turning to the joint tortfeasorship claim, it would have been straightforward for Mr MacLeod to deny any involvement by himself or D10 in the relevant sales, but, as noted, he does not; and, like Mr Spital, he does not identify anyone else who was, on his account responsible for D9’s acts. In my judgment, even assuming that only D9 is a principal infringer, D10’s role in D9 and Mr MacLeod’s role in D9 and D10 are sufficient to give rise to the inference of joint tortfeasorship, and to shift the evidential burden to them to show otherwise. The claimants also relied upon Mr Spital’s evidence of his long term relationship with Mr MacLeod as supporting the inference that the two men dealt with each other personally; and upon the fact that the sale invoice exhibited by Mr MacLeod gives an email address which appears to be his personal email address. I agree that these additional facts, though not currently pleaded, also support the inference that Mr MacLeod (and acting by him, D10) were sufficiently personally involved in the relevant acts.[36]I am therefore satisfied that the claims against D10 and Mr MacLeod have a reasonable prospect of success, and that, subject to the arguments considered below, they should be joined as defendants to the Gels claim.

Jurisdiction

[37]Without prior warning to the claimants, D7 sought to argue for the first time in its skeleton argument that the English court had no jurisdiction in respect of the claim against D7. Its counsel submitted that D7 could only be sued in Spain, as the Member State of its domicile (Art 97(1) of the Regulation), or as the Member State in which the act of infringement was committed (Art 97(5) of the Regulation), referring me to AMS Neve Limited v Heritage Audio SL [2016] EWHC 2563 (IPEC).[38]It is not however necessary to consider this argument in detail. This is because having put the claimants’ counsel to the trouble of preparing a supplemental skeleton argument on this point, D7’s counsel rightly accepted at the hearing that the relevant provision governing jurisdiction in this case (where all the existing defendants and most of the new defendants are domiciled in England) is Article 8(1) of Regulation (EU) No. 1215/2012 of 12 December 2012 (“Brussels 1”) which provides:
“A person domiciled in a Member State may also be sued: (1) where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings;”
[39]Brussels 1 is partly, but not completely, modified in respect of jurisdiction in claims in respect of EUTMs by Art 94 of the Regulation. In particular, Art 8(1) is not disapplied; though, confusingly, the Regulation has not been amended to refer to Brussels 1 and still refers to its predecessor, Regulation (EC) No. 44/2001 and to the (different) article numbers in that regulation.[40]Art 94(1) sets out the general rule that, unless otherwise specified, the European Union rules on jurisdiction apply to EU trade mark claims. Art 94(2) sets out the provisions which are disapplied – these do not include what is now Art 8 of Brussels 1.[41]None of the above was disputed by D7’s counsel. However, she nonetheless sought to argue that it was open to D7 to challenge jurisdiction on the basis that the existing Gels claim and the claim against D7 are not so closely connected that it would be expedient to hear and determine those claims together. The claimants’ counsel submitted that such a submission could not seriously be made, and I agree. The submission is also inconsistent with D7’s concession made earlier in the hearing that the claim in respect of the Gels should be determined in one claim to which D1-5 and the new defendants were parties.[42]It is clear therefore that the English court has jurisdiction to determine the claim against D7. Stay Whether the court should decide whether or not to grant a stay in the joinder application

Stay

[43]Article 104 of the Regulation provides, so far as relevant:
“(1) A Community trade mark court hearing an action referred to in Article 96 , other than an action for declaration of non-infringement, shall, unless there are special grounds for continuing the hearing, of its own volition, after hearing the parties, or at the request of one of the parties and after hearing the other party, stay the proceedings where the validity of the Community trade mark is already in issue before another Community trade mark court on account of a counterclaim where an application for revocation or for a declaration of invalidity has already been filed at the office… (3) Where the Community trade mark court stays the proceedings, it may order provisional and protective measures for the duration of the stay.”
[44]The leading case on Art 104 is the Court of Appeal decision of Starbucks (UK) Ltd v British Sky Broadcasting Group Plc [2013] Bus LR 633. Both D7 and D9-11 relied upon the following passage at [109]:
“it will be a rare and exceptional case where there are special grounds within article 104(1) … the parties cannot determine the issue of a stay merely by reaching agreement between themselves. It is a matter for the decision of the court itself, which ought to be addressed at the earliest opportunity in the proceedings.”
[45]Although the court is required to raise the issue of its own initiative and the agreement of the parties is not determinative, that agreement may be a factor which can be taken into account when deciding whether there are “special grounds” – see Samsung Electronics (UK) Ltd v Apple Inc [2012] Bus. LR 1889 at para 49.

D7’s position

[46]D7 asserted that this was a case where a stay should be granted. It did not however rely upon the likelihood of a stay as a ground for opposing joinder, but submitted that if joinder was ordered the court should go immediately to consider whether to grant a stay.[47]As set out above, D7 received the letter before claim in July 2016; and the claimants’ application on 14 November 2016. It first suggested that a stay should be granted in the witness statement of its solicitor, Sheena Brown, served after hours on 11 January 2017 i.e. less than 1 clear day before the hearing.

D9-11’s position

[48]D9-11 initially, in their solicitors’ letter dated 24 November 2016, suggested that the existing Gels claim should be stayed, and that that was a reason for not joining D9-11 to that claim. The suggestion that the Gels claim should be stayed was repeated in their letter of 3 January 2017, with the assertion that it was for the claimants’ to establish exceptional circumstances which justify not staying it. However, Mr MacLeod’s witness statement dated 6 January 2017 on behalf of D9-11 did not actively seek a stay. He drew the court’s attention to the revocation application, exhibited a copy of it; and relied on the fact that the Gels claim might be stayed as a ground for resisting joinder.[49]D9-11’s counsel submitted that the court was required of its own initiative to consider whether a stay should be granted at this hearing, and put forward various arguments in favour of a stay.

D1-D6’s position

[50]D1-5 have not issued an application for a stay, and did not seek to argue that a stay should be granted at this hearing; though as noted they have pleaded that the revocation application has been made, and reserve their right to so apply. Claimants’ position[51]The claimants’ counsel made the following submissions. First, whether or not a stay could or should be ordered was not relevant to joinder. Otherwise a claimant could be prejudiced by a limitation defence becoming available to a defendant during the stay. Secondly, he submitted that a stay would not be granted in any event; and that in respect of shower gels and perfumery, the revocation application was bound to fail, not least because D7, during the period of the Licence and within the 5 years immediately preceding the revocation application (i.e. in the period 1 December 2010 to 31 December 2011) sold very considerable quantities of those goods bearing the second EUTM in a substantial part of the EU. He also put forward a number of other arguments directed towards establishing that a stay would or should not be granted, which for the reasons given below, I do not consider in detail.

Discussion

[52]In my judgment, whether the new defendants should be joined to the Gels claim and whether the Gels claim should be stayed are discrete questions, which can and should be answered independently of each other. I reject D9-11’s submission that the fact (if established) that a stay would be granted would be a reason for refusing joinder. The fact that to refuse joinder where a stay was or would be granted could result in a windfall limitation defence is an illustration of the distinctness of the two issues.[53]It follows that, having held that the claimants have reasonable grounds for their claims against all the new defendants, there is no basis on which joinder can or should have been resisted, subject to the case management issues discussed below.[54]Having concluded that joinder should in principle be ordered, should I go on and consider at this hearing whether to grant a stay? Even if the new defendants had standing before their joinder to apply for a stay (as to which I am doubtful), they have not made an application, nor have they stated in correspondence that a stay would be sought at the hearing of the joinder application. As set out above, D7 suggested a stay should be granted at a very late stage in its evidence, whilst D9-11’s evidence confined itself to suggesting that this was “the normal rule”.[55]In my judgment, it is not appropriate to consider and determine whether to grant a stay immediately following determination of the joinder application. Where, as Art 104 requires it to do, the court raises this issue of its own initiative, it should do so in a structured manner, providing the parties with a proper opportunity to adduce such evidence as they wish, and to put forward fully considered arguments in the light of that evidence. Usually, the appropriate time to consider whether a stay should be granted would be after pleadings have closed: either at the case management conference, with the court previously having given directions, so that it is in a position properly to deal with the issue; or on an application where there will have been structured preparation for the hearing. In this case, in the short time available to them, the claimants have filed only limited evidence on this issue, and such evidence as has been filed has been criticised by D7 and D9-11 as insufficient to show genuine use. The claimants (and indeed the other parties) should be given an opportunity properly to address the question of whether a stay should be granted.[56]I will therefore direct that there is a hearing to determine whether or not a stay should be granted, and the parties should seek to agree the directions I should make in relation to that hearing.

Case management

[57]In the course of the hearing, when dealing with the case management of the claim, I asked the parties to make enquiries as the listing position in the following scenarios:(1) the Gels claim was separately listed, with the June trial maintained for the Clothing claim;(2) the June trial was vacated and the trial of both claims were relisted at a later date. These produced the response that the Gels claim could be heard in October 2017, but that the trial of both claims would not be heard until the first 3 months of 2018.[58]However, having after the hearing made my own further inquiries, on the basis that an existing trial was to be vacated and relisted, it became apparent that the trial may (if I so direct) be relisted earlier than a trial being listed for the first time at a CMC (which was the basis of the enquiries made by the parties). It is open to me therefore to direct that the trial of both claims comes on for hearing on the first available date convenient to the parties after 1 October 2017. I informed the parties that I proposed to decide the application on this basis, and provided them with an opportunity to comment. The

Claimants’ position

[59]The claimants’ position, both at the hearing and after it, was that, if the new defendants were joined, their preferred (and the appropriate) outcome was to maintain the current trial date and time estimate; though they maintain, as they have done previously in correspondence, that they are open to all sensible case management directions. A June/July trial, they submitted, would not result in any prejudice to the existing or new defendants.[60]In support of this the claimants’ counsel argued that the Gels claim was not a complex case, with only one issue as to liability, namely whether the Gels were first placed on the market with the claimants’ consent; and one issue (arising out of the existence of the revocation application) as to liability, namely whether, if the claimants succeeded on liability, an injunction should be granted. He submitted that the issue of consent already fell to be determined in the Gels claim, so that the addition of the new defendants would not significantly increase the time needed to be spent on that issue; and the issue of whether an injunction should be granted need not be determined at the trial of liability and could be adjourned to the quantum hearing.[61]In these circumstances, he argued disclosure would not be extensive and would be effectively confined to the Licence, the termination letter, and documents evidencing the date of the sale to LBP in April to May 2012 i.e. after the termination of the Licence. As for oral evidence, the only additional evidence would, he said, be as to the nature of LBP’s business, namely whether it was a “mid-tier store” within the meaning of clause 2.4B of the Licence, which restricted sales of the licensed goods to “retailers commonly considered and referred to in the industry as department stores, speciality stores, and mid-tier stores and specifically excluding mass merchants, discounters, off-price stores and public market”.[62]Finally, he submitted the fact that the governing law of the Licence was Dutch law was unlikely to result in any significant increase in the trial length, as experts in Dutch law are already giving evidence in the Clothing claim.[63]The claimants’ fall back position was that even if the June trial is vacated, there was absolutely no impediment to an October trial, with ample time for all the necessary steps to be taken. The Defendants’ position D1-6’s position

The Defendants’ position

[64]D1-6’s position (in both its correspondence and skeleton argument) was to oppose the joinder, on the grounds its effect would be to disrupt the timetable to trial and the trial itself. They submitted that the claimants should bring separate proceedings, and that the Gels claim should either be stayed or transferred to the other proceedings.[65]However, at the hearing, D1-6’s position had altered, so that it contended that the two claims should be tried together, for the following reasons. An issue in both claims is whether the relevant EUTM has a reputation “for luxury goods with an allure and prestigious image”. Since the marks are identical in appearance, factual evidence as to their reputation will be relevant to both marks. In addition, in the Clothing claim, the claimants rely upon Article 13(2) of the Regulation, which provides:
“Exhaustion of the rights conferred by a Community trade mark 1. A Community trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent. 2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.”
[66]In relation to certain acts of alleged infringement by D1-6 (“the 2015 acts”), the claimants allege that if, contrary to their primary case, the relevant clothing had been placed on market in the Community by the claimants or with their consent, the claimants nonetheless had legitimate reasons to oppose the further commercialisation of that clothing. Copad SA v Christian Dior Couture SA Case C-59/08; [2009] ECR I-3421; [2009] FSR 22 is authority for the proposition that the quality or condition (within the meaning of Art 13(2)) of luxury goods results not only from their material characteristics but also from their “allure and prestigious image”, so that damage to the aura of luxury would affect “the actual quality of those goods”. The claimants allege (in para 36 of the Amended Particulars of Claim) that the 2015 acts damage the luxurious reputation of the EUTM in the manner established in Copad. A key element in this allegation will be establishing the EUTM’s luxurious image; and, if, as D7 suggested in its submissions might be the case, the Gels and other products bearing the second EUTM have been sold in discount stores or other non-luxury outlets, then this will be relevant to the reputation of the EUTM.[67]D1-6 submitted therefore that, if I permitted joinder and did not order a stay, then the trial dated in late June could not be maintained, as the trial preparation timetable was already compressed, and the hearing length insufficient. Although it would be open to me to allow the time estimate for the trial to be increased, D1-6’s counsel was not available in the extension period so to do so would be to deprive D1-6 of counsel instructed in the case from the outset.[68]D1-6 therefore submitted that following joinder the trial should be vacated and both claims relisted for trial at one hearing. They are content with a trial in October 2017.

D7’s position

[69]D7’s position at the hearing was that it had had insufficient time to consider the claim against it, that if the trial took place in June, it would have insufficient time to prepare for; and that the current time estimate cannot be maintained.[70]Like D1-6 (and D9-11), D7 also initially submitted that the Gels claim should be split off from the Clothing claim, and later consolidated with a new claim made by the claimants against the new defendants. However, again in the course of the hearing D7 accepted that if joinder was ordered, both claims should be heard together.[71]In support of her submission that D7 had not had sufficient time to date to consider the claim, D7’s counsel relied on the fact that the letter before claim had been sent by email; and that for that reason D7’s director had not appreciated its importance. However, the letter was clear in its terms, and in my judgment should reasonably have been appreciated for what it was. D7 also relied upon a period of a month’s without prejudice negotiations following service of the joinder application. Again, in my judgment, conducting without prejudice negotiations is not a reason not to make preparations for the outcome should the negotiations be unsuccessful.[72]As for trial preparation time, D7 relied on the following (as evidenced by the witness statement of its solicitor, Sheena Brown):(1) The first language of its directors is not English, so that obtaining instructions and giving advice takes more time;(2) D7 will need to carry out investigations into a number of factual matters including: (i) whether the sales complained of were made during the sell-off period provided for by the Licence; (ii) whether an additional sell-off period was agreed; (iii) to whom D7 sold the gels; (iv) whether the claimants consented to the sales to the persons to whom the gels were sold, D7’s case being that some relevant approvals by the claimants were given in 2004; (v) whether the Gels sold by D1-5 were those sold by D7; and these investigations will involve both interviewing witnesses (who are likely to be Spanish) and locating relevant documents, including correspondence between the claimants and D7 in relation to sales of gels and documents relating to sales to discounting stores in the course of the Licence.[73]D7’s position as to the June trial date was maintained in respect of an October trial date for both claims. It submitted that the remaining time until October 2017 was insufficient to carry out these investigations, plead to the claim and deal with disclosure and preparation of witness statements. It submitted that a year was the time it needed for these tasks. D7’s counsel put forward a timetable following the hearing in support of her submission that it would be 12 months before the Gels claim would be ready for trial. This is a relaxed timetable which contemplates, for instance, 3 months after the CMC for disclosure and a further 2 months for witness statements and experts reports. It appears to be based on the incorrect assumption that work on disclosure and witness statements need not commence until the previous stages in the timetable have been completed.

D9-11’s position

[74]Like D7, D9-11’s counsel spent a considerable amount of time in the initial stages of the hearing seeking to persuade me that a trial of both claims together would be unfair on his clients, as involving them in being present in court for the part of the proceedings relating to the clothing claims. However, by the conclusion of the hearing, having heard the submissions of D1-6 as to the overlap of the claims set out at paras 65 and 66 above, he accepted that they should be tried together (with appropriate directions by the trial judge to release the new defendants from those parts of the trial in which they have no interest.) D9-11 have no difficulty in preparing for a trial in October 2017.

Discussion and conclusion

[75]It seems to me unrealistic to conclude that the 8 day trial time estimate can be maintained with the addition of 5 or 6 active parties, some of whom may bring cross claims against each other. In the absence of other factors favouring adjournment of the trial, I would have simply directed an increase in the trial time estimate.[76]Turning to those other factors, the most important is whether D7 has sufficient time to prepare for the trial. Although this factor is difficult to evaluate, I consider that D7 has shown at least a risk that it would not be ready for a trial in June from a standing start now. However, I also consider that, to a large degree, D7 is the author of its own misfortune, having been on notice of the claimants’ intention to join it to the Gels claim since July 2016, and of the joinder application itself since mid November 2016. D7’s approach to this litigation is exemplified by its position on service. Although it instructed English solicitors and counsel to appear on its behalf at the joinder application, its position at the hearing was it that it did not agree that the claim could be served on its English solicitors; and sought to rely on the additional time needed to serve it in Spain as part of the time needed in its preparation for trial. After the hearing, D7 appeared willing to instruct its solicitors to accept service, by putting forward a proposed procedural timetable which was consistent with service in England or Wales. However, following receipt of the draft judgment, D7 indicated that it had not in fact instructed its solicitors to accept service.[77]Furthermore, if D7, the other new defendants and the existing defendants had, as they should have done, consented to the joinder application in late October/early November 2016, and agreed sensible case management directions, a further 3 months would have been available for trial preparation.[78]A further, less significant, factor is the unavailability of D1-6’s counsel for an extended trial in June 2017, the original trial having been fixed with reference to his availability. Against these factors must be balanced the prejudice to the claimants in having their claims determined later than they otherwise would be. This prejudice is relatively slight, if I direct that the trial is listed in the autumn term, a matter of 3 or 4 months later.[79]The trial preparation timetable put forward by D7 is not in my view a reasonable timetable. I see no reason why pleadings cannot be closed and a CCMC (if necessary) held by April 2017; and disclosure, witness statements and experts’ reports completed within the following 3 or 4 months. This would not be an expedited timetable. I consider that the parties can and should be working to a trial in the autumn term, and that D7 would not be prejudiced by doing so.[80]I will therefore order the joinder of the new defendants, vacate the existing trial and order that it be relisted on the first available date convenient to the parties after 1 October 2017; I will hear counsel as to the further directions I should make, including the time estimate for the relisted trial; the parties should discuss and seek to reach agreement as to these.