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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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)

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.

Research in Motion UK Ltd v Motorola Inc, Ch Div (Arnold J), 3/2/10
Motorola’s European patent concerning a messaging gateway system was invalid as lacking an inventive step, and was not infringed by two systems operated by the claimant under the well-known BlackBerry trade mark. 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)

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)

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)

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