Court requires contract to continue pending trial - MCAFEE Ireland Ltd v DSG Retail Ltd (2019)

By Sophie Eyre, Jacob Webster

08-2019

In an unusual decision last week, the High Court granted an interim injunction requiring the defendant computer retail store to continue promoting the claimant's security software (in accordance with the contract between the parties) pending the related trial for breach of contract. The court is often reluctant to order that one side perform positive obligations contained in a contract but in making the order the court acknowledged that the upcoming trial would be expedited and therefore the part of the order requiring the defendant to act 'positively' would be for a relatively short period.

The case is also a useful illustration of the application of the American Cyanamid guidelines (taken from the case of American Cyanamid Co (No 1) v Ethicon Ltd [1975] UKHL 1)  to establish whether an applicant has an adequate case for the granting of an interim injunction in this situation.

The facts

Under the contract, the defendant could only promote the claimant's products in its stores, save where a hardware product existed which was incompatible with the claimant’s security software, at which point the defendant should be able to promote an alternative. The claimant discovered that the defendant had stopped promoting and marketing its products in general, as a result of the possible incompatibility of the claimant's products with Microsoft's Windows 10S. The claimant argued that the contract did not provide a general release of obligations on the defendant where there was alleged incompatibility with some products, and in commencing the claim for breach of contract, sought an interim injunction compelling the defendant to continue marketing its products.

The decision of the court

In applying American Cyanamid the court considered whether there was a serious issue to be tried and determined this part of the guidelines was satisfied.

The court then went onto consider the adequacy of damages as a remedy. The claimant made clear that it would be more than mere sales loss that would follow the failure to grant an injunction. In terms of the alleged breach, a cap existed in the contract on the amount of recoverable damages and this cap had almost been exhausted. The resulting issue concerning adequacy of damages therefore leant towards granting interim relief. 

Finally the court considered where the balance of convenience lay in granting, or not granting, the injunction; it was held to be appropriate to grant the injunction. The injunction as originally requested by the claimant, requiring the defendant to promote only the claimant’s products in-store, was considered a step too far by the court, but court held that the injunction should, in principle, be applied. As such, the court included a carve-out in line with the contract which allowed leeway to the defendant on decisions regarding incompatibility with the claimant's product, where "acting reasonably, following discussions with [the claimant]", the hardware was deemed incompatible with 10S and the claimant's products. 

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