The High Court has held that it had jurisdiction over a defendant's threat of infringement proceedings but not over declarations of non-infringement of its Community or UK unregistered design rights.
The Brussels Regulation (44/2001/EC) has direct effect in EU member states and provides that a defendant is entitled to be sued in the courts of the member state where it is domiciled, unless an exception applies (Article 2).
The 2007 Lugano Convention governs jurisdiction and the recognition and enforcement of judgments in civil and commercial matters between most EU member states and Switzerland, Iceland, Denmark and Norway, and is in substantially the same terms as the Brussels Regulation.
The Community design courts have exclusive jurisdiction for actions for declaration of non-infringement of Community designs, if permitted under national law (Article 81(b), Community Designs Regulation (6/2002/EC)) (CDR) (Article 81). Proceedings in respect of the actions and claims referred to in Article 81 must be brought in the courts of the member state in which the defendant is domiciled or in which it has an establishment (Article 82(1), CDR) (Article 82(1)).
Registered and unregistered Community designs fall within the scope of UK threats legislation (regulation 2, Community Design Regulations 2005 (SI 2005/2339)) (2005 Regulations). Whether a letter threatens proceedings is an objective test so evidence of how a threat is subjectively understood by the recipient is inadmissible (Best Buy Co v Worldwide Sales Corporation España).
L, a Swiss company with establishments in the Netherlands and Croatia, and T, a UK company, both launched impact protection cases for iPad tablets, following an earlier unsuccessful collaboration agreement.
T received a letter from a German law firm acting for L alleging that T's product infringed the Community unregistered design right in L's product. T issued UK proceedings seeking declarations from L that T had not infringed any Community or UK unregistered design rights subsisting in the designs and that L had made unjustifiable threats to bring proceedings for infringement of the Community unregistered design right.
L argued that the UK court had no jurisdiction over the claim.
The court held that it had no jurisdiction to hear the claim for declarations of non-infringement but did have jurisdiction to hear the claim relating to unjustifiable threats.
Under Article 82(1), if a defendant is not domiciled, but has an establishment, in a member state it can be sued in that state. The defendant in Article 82(1) is the person being sued and the claimant is the person that started the proceedings, even if those proceedings are defensive in nature. So the claim for a declaration of non-infringement of L's Community unregistered design right had to be brought in the courts of the Netherlands or Croatia.
With regard to the UK unregistered design right, the court's jurisdiction to make a declaration of non-infringement would only be exercised, under Article 5(3) of the Lugano Convention, if there was a real and present dispute between the parties as to whether T was infringing L's UK unregistered design right by selling its protective cases in the UK. The particulars of claim and the evidence filed did not disclose a good arguable case that there was a real and present dispute between the parties as to whether L was entitled to UK unregistered design right and, therefore, whether T's sales in the UK infringed that right.
However, the court did have jurisdiction to hear the claim under regulation 2 of the 2005 Regulations in respect of the threat made by the letter to bring infringement proceedings in the UK courts. Following Best Buy, evidence of how a letter was subjectively understood by the recipient is not admissible in deciding if the letter threatens infringement proceedings. The question is not whether the letter would reasonably be understood as threatening proceedings, but whether the reasonable reader would understand the threat to be of legal action in the UK, or in Germany, or elsewhere. This depends on understanding the provisions that govern jurisdiction for infringement proceedings in respect of unregistered Community design rights, which an ordinary businessman would not understand.
So the test is whether the reasonable reader, who had received correct legal advice on the relevant jurisdictional provisions, would understand the threat to be of legal action in the UK for the alleged infringement of the claimed Community design right, either immediately or in the future. In view of the demand for EU-wide relief in the cease and desist declaration, a reasonable reader would have regarded it as being likely, or a realistic possibility, that proceedings in Germany, if successful, would be followed by proceedings in the UK.
In addition to the jurisdictional issues, the judgment is interesting in relation to the UK statutory threats provisions. The decision builds on existing principles in relation to threats, referring in particular to Best Buy. The applicable test means that, in some cases, legal advice may be necessary to determine whether a letter is threatening. The court also noted that the purpose of the threats provisions is to create civil liability for what is perceived as undesirable anti-competitive behaviour; its purpose is not to provide a procedure for obtaining a declaration of non-infringement.
Case: Tech 21 UK Ltd v Logitech Europe SA  EWHC 2614 (Ch).
First published in the November 2015 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.