Europe-wide Contract Law Proposed

On 1 July 2010 the European Commission published a Green Paper setting out policy options for introducing a European contract law for consumers and businesses.

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DANGEROUS LETTERS OF INTENT

Oct 2010: Müller supplies dairy products and RTS supplies and installs machinery for packaging food products. Müller selected RTS to supply it with a system to package yoghurt pots and start was agreed under a letter of intent that set out the full contract sum and it also stated that the final contract would be based on Müller’s amended form of MF1 and for a limited four-week “initial” period. Negotiations dragged and the initial period came and went and the letter of intent was not issued. RTS worked and Müller paid until a dispute aose. RTS refused to finish installing the equipment. Mr Justice Clarke of Technology and Construction Court found that the letter of intent had expired at the end of the initial period and did not govern the relationship between the parties thereafter. It also decided that as the parties continued to carry out works after the letter of intent had expired, they intended to create legal relations and enter into a contract but was not the MF1 terms but one that excluded some of the MF/1 terms (limited contract). RTS now argued that no contract was concluded after the letter of intent expired and as there was no formal contract RTS was entitled to bring a quantum meruit claim. The Court of Appeal decided that there was no contract between the parties because the MF1 terms included a “subject to contract” clause and therefore that no contract was formed. The Supreme Court confirmed that the letter of intent had expired at the end of the initial period; and conduct thereafter suggested that parties intended to enter into a contract and amounted to a waiver of the “subject to contract” clause and that therefore the full MF1 had been entered into. Comment: Three separate court proceedings! Three different decisions! Make sure letters of intent are for (i) a limited scope of works and (ii) a limited period of time and (iii) for a limited maximum sum and (iv) must specify what will happen when the letter expires and the default position if the expected position does not occur. RTS Flexible Systems Limited v Molkerei Alois Müller Gmbh & Company KG (UK Production) (2010). (The Müller case)

BSW Ltd v Balltec Ltd [2006] EWHC 822 (Ch) (11 April 2006)
BSW Ltd v Balltec Ltd [2006] EWHC 822 (Ch) (11 April 2006)

An application for pre-action disclosure of design drawings belonging to a potential defendant to a design right and copyright claim was rejected. The applicant alleged that it was impossible for the respondent to have designed, produced and tested a range of products in a short period of time without copying the applicant’s designs. However, the applicant was unable to particularise its claim without pre-action disclosure of the respondent’s designs. The claim was speculative and based on uncorroborated statements of impression and theory not supported by expert evidence, and disclosure might damage the respondent, whose designs were secret and alleged to be valuable. Court: High Court (Chancery Division) (England and Wales)

The German BGH decided on 12 May 2010 that a private individual left his home WiFi router unsecured (on factory default settings) could be forced to close his router. An unknown 3rd party downloaded a copyright protected piece of music using the unsecured WiFi spot and the owner could show that he was, at the time of the download, on vacation. The owner of the copyright in the song sued for copyright infringement, asking for an injunction and financial damages. The first instance court both issued an injunction and found the owner of the WiFi spot liable to pay damges. The second instance court reversed and dismissed the claim of the copyright holder. The German Supreme Court (BGH) distinguished between the injunction and the financial damages: the owner of the WiFi spot could be enjoined to secure his WiFi, but was not liable for financial damages. The BGH decided that the owner was not required to use the latest, state of the art security technology to secure his WiFi router, but at the time of the installation common precautions against the use of the WiFi spot by unknown third parties had to be taken (i.e. some form of security must be put into place) and therefore defendant could be forced to take the necessary precautions. The Court also discussed that if a password was used but was defeated, the owner was not liable. GBH held the WiFi owner liable for the legal costs for the lawyer's letter from the copyright owner as a "Störer", but not a "Täter" (i.e. as a facilitator but not an infringer, i.e. not personally committing the infringement) and found that the WiFi owner did not aid or abet copyright infringement, because he lacked the necessary intent to support the infringement and therefore, he could not be held liable for financial damages.

Folding Attic Stairs Ltd v Loft Stairs Co Ltd & Anr, Ch Div (Peter Prescott QC), 9/6/09
Folding Attic Stairs Ltd v Loft Stairs Co Ltd & Anr, Ch Div (Peter Prescott QC), 9/6/09 The claimant’s patent for a process for manufacturing a folding stairway was valid and infringed. Before the priority date of the patent, the claimant had allowed a minister and a photographer onto its premises where they were able to see the product under development. This was quite different to displaying the test unit in a public place, and did not deprive the patent of novelty or inventiveness. The individuals who viewed the test unit were not skilled in the art or interested in manufacturing folding stairs. Also the test unit did not disclose or render obvious all aspects of the patent claim. Court: High Court (Patents Court) (England and Wales)

Cranway Ltd v Playtech Ltd & Ors [2009] EWHC 1588
Cranway Ltd v Playtech Ltd & Ors [2009] EWHC 1588 (Pat) (07 July 2009)

A patent concerning a home computer gaming system was revoked on grounds of (1) lack of novelty in light of the prior art; (2) obviousness over the common general knowledge and prior art; and (3) consisting wholly of excluded matter under s.1(2) of the Patents Act 1977, the subject matter being a computer program not claiming a technical effect. Court: High Court (Patents Court) (England and Wales)

Procter & Gamble Company v Reckitt Benckiser (UK) Ltd [2007] EWCA Civ 936 (10 October 2007)
Procter & Gamble Company v Reckitt Benckiser (UK) Ltd [2007] EWCA Civ 936 (10 October 2007)

An appeal was allowed against a decision that P’s registered Community design for an air freshener spray container had been infringed by R’s product. It was sufficient to avoid infringement if the accused product was of a design which produced a different overall impression. There was no policy requirement that it be ‘clearly’ different. It was legitimate to compare the registered design and the alleged infringement with a reasonable degree of care. The possibility of imperfect recollection had a limited part to play in the exercise. In the instant case, the similarities between the products were at too general a level to say fairly that they would produce on the informed user the same overall impression. Court: Court Of Appeal (Civil Division) (England and Wales)

Far Out Productions Inc v Unilever UK & CN Holdings Ltd & Ors, Ch Div (N Strauss QC), (16 December 2009)
Far Out Productions Inc v Unilever UK & CN Holdings Ltd & Ors, Ch Div (N Strauss QC), (16 December 2009)

Where an action for copyright infringement against four defendants had been settled as against the first three and discontinued as against the fourth, the claimant was liable for the costs the fourth defendant had incurred until the date the notice of discontinuance was served. Costs were awarded on an indemnity basis because of the claimant’s unreasonable behaviour in joining the fourth defendant, delaying progress and refusing to negotiate. The action had concerned infringement of copyright in a sound recording used in an advertisement. Court: High Court (Chancery Division) (England and Wales)

Nanjing Automobile (Group) Corporation & Ors v MG Sports & Racing Europe Ltd
Nanjing Automobile (Group) Corporation & Ors v MG Sports & Racing Europe Ltd & Anr, Ch Div (Sir William Blackburne), 19/2/10 An action for trade mark infringement and passing off, brought by the Chinese transferees of the business and assets of the British car manufacturer MG (in administration in 2005), was successful. The defendant English company had purported to buy the “MG X POWER” trade mark from the liquidator in 2007 along with the sports car arm of the business, but on a proper construction of the 2005 agreement with the Chinese purchaser, all the trade marks including the MG X POWER mark were transferred to the Chinese in 2005. The purported agreement to sell the mark in 2007 was therefore of no effect. Court: High Court (Chancery Division) (England and Wales)