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)

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)

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)

Tate & Lyle Technology Ltd v Freres [2009] EWHC 1312 (Pat) (16 June 2009)
Tate & Lyle Technology Ltd v Freres [2009] EWHC 1312 (Pat) (16 June 2009) A patent concerning the crystallization of a sugar substitute, malitol, was invalid for lack of novelty and because the claim was a discovery and not an invention. The patent claimed the use of a by-product of the malitol production process to modify the form which the malitol crystals took. However, a skilled person following the teaching of a number of prior art papers would infringe the patent, since in reality the industry had been using the by-product to control malitol crystal habit without knowing it. The patent merely informed of a property of the by-product which had been discovered, and explained why malitol crystals took the form they did. 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)

FNM Corporation Ltd v Drammock International Ltd & Anor [2009] EWHC 1294 (Pat) (15 June 2009)
FNM Corporation Ltd v Drammock International Ltd & Anor [2009] EWHC 1294 (Pat) (15 June 2009)

A patent claiming an aerosol spray containing water and dimethyl ether was invalid for lack of novelty and obviousness in light of prior art and common general knowledge. Communications from the claimant and its solicitors conveyed threats of proceedings for patent infringement but were protected by s.70(2A)(b) of the Patents Act 1977 because the claimant did not have reason to suspect that the patent was invalid at the time of the threats. Court: High Court (Chancery Division) (England and Wales)

New Data Protection Fines
New £500,000 Data Protection Fines come into play.
From 6th April 2010, the Information Commissioner (ICO) will be able to order organisations to pay up to £500,000 as a penalty for serious breaches of the Data Protection Act. The ICO has produced statutory guidance about how it proposes to use this new power, which has been approved by the Secretary of State for Justice, and was laid before Parliament in January.

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)