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)

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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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)

Quads 4 Kids v Campbell, Ch Div (Pumfrey J), 13/10/06
Quads 4 Kids v Campbell, Ch Div (Pumfrey J), 13/10/06

An injunction was granted, based on an action for statutory threats of proceedings for infringement of a sequence of Community registered designs for a child’s dirt bike. Quads 4 Kids had been offering children’s quad bikes for sale on eBay. Campbell alleged the bikes infringed his design rights, and he availed himself of eBay’s VeRO system to prevent Q from selling them. This involved merely completing an online form recording the registration number of the designs. Publication of the registered designs had been deferred and C did not disclose the design file. Q argued that the registered designs were likely not to be valid. It was seriously triable that the use of the VeRO system amounted to an actionable threat, taking a wider view than previously as a result of the clear potential for abuse of registered rights which this system was open to. Substantial damage was being caused, which C was unlikely to be able to compensate. Court: High Court (Chancery Division) (England and Wales)

Bailey & Anor v Haynes & Ors [2006] EWPCC 5 (02 October 2006)
Bailey & Anor v Haynes & Ors [2006] EWPCC 5 (02 October 2006)

The claimants alleged infringement of UK and Community unregistered design rights (UDR) in a polyvinyl alcohol warp knitted ladder-resistant micromesh bait bag used to catch freshwater fish. It was held that the 3D structure was excluded from UK UDR protection under the ‘method or principle of construction’ exclusion. A challenge to subsistence of Community UDR based on functionality failed because the design was not the only design which was capable of achieving the function of containing fine bait in proscribed circumstances. However, there was no infringement because on the evidence the defendants had designed their own product independently. Court: Patents County Court (England and Wales)

Virgin Atlantic Airways Ltd v Premium Aircraft Interiors UK Ltd [2009] EWCA Civ 1062 (22 October 2009)
Virgin Atlantic Airways Ltd v Premium Aircraft Interiors UK Ltd [2009] EWCA Civ 1062 (22 October 2009) The Court of Appeal found in favour of the appellant patentee, reversing the decision below and holding a patent for an airline seating system valid and infringed by the respondent’s system for a rival airline (BA). The core finding was that the claimed invention was not limited to systems which use ‘flip-over’ seats (contoured as a seat on one side, and flat on the other side for use as a bed). The patent was not invalid for added matter because the parent application did cover systems which did not use “flip-over”. Jacob LJ clarified that the skilled reader of a patent can be expected to know (or to find out) about such matters as explicit drafting conventions and divisional applications. Court: Court Of Appeal (England and Wales)

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Free Encrypted Internet Videophone
A new low bandwidth, high performance encrypted videophone has been launched by an Anglo-Irish consortium allowing users to turn their computers and mobile phones into Videophones.
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Phonographic Performance Ltd v British Hospitality Association & Ors, Ch Div (Arnold J), 12/2/10
Phonographic Performance Ltd v British Hospitality Association & Ors, Ch Div (Arnold J), 12/2/10

An appeal against a decision of the Copyright Tribunal was dismissed. The Tribunal had been entitled to find that new tariffs set by PPL for public performance of sound recordings as background music in pubs, restaurants, shops and offices showed an unjustifiably substantial increase on previous tariffs.
Court: High Court (Chancery Division) (England and Wales)

Court: High Court (Patents Court) (England and Wales)

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)