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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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)

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)

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)

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)

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)

Blinx UK Ltd v Blinkbox Entertainment Ltd, Ch Div (Floyd J), 5/2/10
Blinx UK Ltd v Blinkbox Entertainment Ltd, Ch Div (Floyd J), 5/2/10 Location: Case TypesIntellectual PropertyTrade Marks Posted by: Law Brief Publishing 24/02/2010 23:24 An application for an interim injunction, restraining use of a name alleged to amount to passing off and trade mark infringement, was refused where the claimant had delayed more than a year in bringing the application. The claimant’s website BLINKX.COM provided access to film, television and video content, and the defendant had launched BLINKBOX.COM offering a service for viewing, customising and sharing television and video clips. It had been unreasonable and unjustified for the claimant to wait until confusion arose in the market before commencing proceedings Court: No court set yet