PROCTER & GAMBLE INTERNATIONAL OPERATIONS SA v STAR GLOBAL TRADING LTD

Transcription

1 676 [2016] R.P.C. 19 PROCTER & GAMBLE INTERNATIONAL OPERATIONS SA v STAR GLOBAL TRADING LTD CHANCERY DIVISION Henry Carr J.: 23 March 2016 [2016] EWHC 734 (Ch), [2016] R.P.C. 19 H1 Trade marks Community trade marks Parallel imports Fragrances Summary judgment Whether goods put on the market in the EEA with the consent of the trade mark proprietor Whether estoppel defence arguable Acquiescence Burden of proof Whether the BMS conditions applied H2 Council Regulation (EC) 207/2009 ( the CTM Regulation ), arts.9, 13(1), 13(2) Treaty of the Functioning of the European Union ( TFEU ), arts.34, 36 European Convention for the Protection of Human Rights and Fundamental Freedoms, art.6(1) Civil Procedure Rules, rr. 24.2(b), This was an application by the claimant ( P&G ) for summary judgment in an action for infringement of various Community trade marks of which P&G was registered proprietor or licensee. The action concerned the importation and sale by the first defendant ( Star ) of eighteen fragrance products. The packaging of seven of the fragrances bore product codes which P&G contended were an indication that they had been put on the market outside the EEA ( the Coded Fragrances ). However the relevant product codes had been removed from the remainder ( the Decoded Fragrances ). P&G contended that the fragrances complained of, although genuine, had not been put on the market in the EEA by P&G or with its consent and accordingly infringed. Alternatively, even if placed on the market in the EEA with its consent, the Decoded Fragrances still infringed due to the removal of those product codes by virtue of art.13 of Council Regulation (EC) 207/2009 ( the CTM Regulation ). H3 The application for summary judgment was made against the first defendant ( Star ) only. However Star had since entered into administration and no financial remedies were now sought against it in the action. Instead T, its director, had been joined as a party to the action at the commencement of the summary judgment hearing and relief was sought against T on the basis that he was jointly liable with Star in respect of the acts complained of. P&G continued with its summary judgment application against Star on the basis that Star had no reasonable prospects of success on four specific issues and that it was appropriate that those be determined at this stage. In particular, P&G argued that disclosure would be extensive and very costly. Further, while it recognised that it could not seek summary judgment against T, P&G argued that any findings against Star would also be binding on T. Star did not appear and was not represented on the application but T was. It was agreed that T could be heard on the issue as to whether summary judgment should be granted against Star. H4 The issues in respect of which summary judgment was sought were (i) whether Star s dealings in the Coded Fragrances amounted to trade mark infringement, (ii)

2 [2016] R.P.C H5 H6 H7 who bore the burden of proving whether the Decoded Fragrances were put on the market in the EEA by the trade mark proprietor or with its consent, (iii) whether the BMS Conditions identified in Bristol-Myers Squibb Co v Paranova A/S 1 (which concerned changes in the condition of the packaging in which goods had been placed on the market in the EEA and which had been developed in pharmaceutical cases) applied to the Decoded Fragrances, and (iv) if they did, whether Star had complied with them. T accepted that, if the BMS Conditions applied, conditions 3 and 5 had not been complied with and accordingly the only contested issues at the hearing were issues (i) to (iii). As to the Coded Fragrances (i.e. issue (i)), T argued that P&G had done more than merely turn a blind eye and fail to police the trade in parallel imports; it had made a positive decision to condone and consent to it. Reliance was specifically placed on the alleged supply by P&G of large quantities of fragrances to the grey market both inside and outside the EEA including significant supplies to distributors, such as Forma Italia, who were neither authorised distributors nor part of P&G s selective distribution network. T contended that such supplies occurred so that P&G staff could meet quarterly and other periodic sales targets and that it was noticeable that the quantity of grey market fragrances available on the market tended to increase toward the end of each P&G quarter and each P&G financial year. T also contended that Star had a defence of estoppel, laches and/or acquiescence in respect of these goods. P&G specifically denied supplying Forma Italia. Further, it argued that it took active steps to close down imports from outside the EEA including marking its fragrances with codes, issuing manuals to staff stressing that the diversion of goods from markets for which they were intended was strictly forbidden, operating a Global Diversion Control team, and taking action against particular distributors and traders. Further, whatever may have been the position before August 2014, after that date there could be no question of consent by P&G to Star s dealings in such fragrances. It was in August 2014 that P&G had first commenced proceedings against Star and was alleged by Star to have changed its policy in relation to grey market supplies. P&G also contended that the alleged defences of estoppel, laches and/or acquiescence were unarguable: (i) it had sent letters to Star objecting to its trade in particular fragrances (the first of these having been sent in 2008), (ii) there was no plea or evidence that Star had relied upon P&G s alleged conduct and there was nothing which would have made it unconscionable for P&G now to assert its rights, and (iii) such a plea added nothing to the allegation of consent in any event as, as a matter of EU law, national rules could not provide for any exhaustion of trade mark rights which was of wider scope than that provided by art.13(1) of the CTM Regulation. As to the Decoded Fragrances, the burden of proof was a key issue as Star had no evidence that these were put on the market in the EEA and P&G accepted that, if P&G carried the burden of proof, the question as to whether they were put on the market in the EEA would have to go forward to trial. P&G argued, inter alia, that the general rule, established in the Van Doren 2 case was that the burden was on the defendant to establish that the trade mark proprietor had consented to the goods being placed on the 1 C-427/93, C-429/93 and C-436/93 Bristol-Myers Squibb Co v Paranova A/S ( BMS ), EU:C:1996:282, [1996] ECR I-3457, [1997] F.S.R. 102, ECJ 2 C244/00 Van Doren + Q. GmbH v Lifestyle sports & sportswear Handelsgesellschaft mbh, EU:C:2003:204, [2003] ECR I-3051, ECJ

3 678 PROCTER &GAMBLE V STAR GLOBAL TRADING H8 H9 H10 market in the EEA. A defendant might be able to shift the burden of proof to the proprietor, but only if it established that there would otherwise be a real risk of partitioning of national markets within the EEA, but there was no question of that in the present case. P&G had offered an undertaking not to use any information as to the ultimate source of the goods in issue disclosed in the present action for the purpose of taking action against any trader based in the EEA other than Star. T argued, inter alia, that the decision in Van Doren made it clear that a paradigm case of a real risk of the partitioning of national markets was where (as here) the trade mark proprietor marketed its products using an exclusive distribution network as this made it possible for the proprietor to maintain different prices in different Member States and suppress competition. Further, if the onus was on Star, it would need to investigate the supply chain. This could lead to the cutting off of the ultimate source of supply of the goods in issue and to a chilling effect on the market whether P&G ultimately used any information supplied to it as to the identity of Star s ultimate source or not. It was P&G s case that its goods were sold through a selective distribution network, not an exclusive distribution network. T also argued that the burden of proof issue was particularly significant where, as here, there had not yet been any disclosure or cross-examination and this was another reason why summary judgment should not be granted. Turning to the BMS Conditions, P&G argued that these required, inter alia, the giving of notice to the trade mark owner by the importer before the importation of goods sold in packaging which had been altered as it had here. Star contended, inter alia, that the concerns applicable in pharmaceutical cases did not apply here and that they could not simply be transposed to cases such as the present. If they applied at all, how to apply them would itself be a difficult and fact sensitive issue suitable for trial. The judgment reported here also considers the consequent issues of costs and permission to appeal. Held, dismissing the application, The Coded Fragrances H11 H12 (1) As to the Coded Fragrances, the question was ultimately whether there was a serious question to be tried that, as at the dates when the alleged infringements were purchased, P&G was prepared not only to tolerate, but also to allow commercial quantities of the Coded Fragrances, first placed on the market outside the EEA, to be imported and sold within the EEA. However the distinction between turning a blind eye to parallel trade and facilitating it, could, depending on the evidence, be a difficult and fact-sensitive line to draw. ([19]-[21]) Mastercigars Direct Limited v Hunters & Frankau Limited [2007] EWCA Civ 176, [2007] R.P.C. 24, CA, referred to. (2) The claimant s witnesses had not explained to the standard required for the grant of summary judgment (i) how it came about that Forma Italiana and other unauthorised distributors both within and outside the EEA had been able to offer large quantities of P&G fragrances without P&G s involvement and cooperation, and (ii) an from Forma Italiana which appeared to suggest that P&G had been involved in such supplies. This lent force to the contention that P&G had been supplying the grey market, both inside and outside the EEA, and had consented to the onward sale of such goods, both inside and outside the EEA. ([26]) Published by Oxford University Press for the Intellectual Property Office

4 [2016] R.P.C H13 H14 H15 H16 (3) A further offer to Forma Italia was for such a large amount that the court was not satisfied to the standard required for summary judgment that P&G was not involved in that supply. This required investigation at trial. ([28]) (4) Although the position was not all one way, there was a serious question to be tried as to whether P&G staff had sought to meet internal targets by selling to distributors outside the terms of P&G s distribution agreements, including to distributors they well knew could be expected to sell into the grey market in the EEA and whether P&G had thereby consented to and/or permitted and encouraged parallel trade in grey market fragrances into and within the EU and the EEA. ([33]-[36]) (5) Accordingly, summary judgment was refused on the issue as to whether Star s dealings in the Coded Fragrances prior to August 2014 amounted to trade mark infringement. There were factual issues which could not be resolved on a summary basis, and could only fairly be decided by P&G giving proportionate (as opposed to excessive) disclosure in respect of the specific instances raised by the defendants, following which, cross-examination would be required so that the court could reach a conclusion against the relevant background of facts. ([37], [80]) Easy Air Ltd (t/s Open Air) v Opal Telecom Ltd [2009] EWHC 339 (Ch), Ch D; Three Rivers DC v The Bank of England (No. 3) (Summary Judgment) [2001] UKHL 16, [2003] 2 AC 1, HL; Partco Group Limited v Wragg [2002] EWCA Civ 594, [2002] 2 Lloyd s Rep 343, CA and Iliffe v Feltham Construction Limited [2015] EWCA Civ 715, [2015] CP Rep 41, CA, referred to. (6) As to the position after August 2014, the most recent purchase referred to in the particulars of claim and alleged to infringe had been made in March Therefore, there was no pleaded instance of infringement post-august 2014 which would entitle P&G to obtain summary judgment in respect thereof. ([39]) Estoppel, laches and acquiescence H17 (7) It may well be correct that it would not be possible, on the basis of estoppel, to resist injunctive relief in the present case. However, financial relief was claimed against T and it would require full argument at trial to decide whether it was appropriate to grant an inquiry as to damages or an account of profits against T, given Star s alleged defence of equitable estoppel, if the trial judge was otherwise minded to do so. It was arguable that whether such remedies should be granted was a matter of procedural, rather than substantive law. Accordingly this issue also raised a serious question to be tried. ([42]) The Decoded Fragrances burden of proof H18 (8) It was arguable that the Court of Justice in the Van Doren case had been referring to the existence of an exclusive distribution network as a paradigm case where the burden of proof would shift to the claimant. However, the issue needed full argument once the relevant facts had been fully determined. It was a difficult question which would need to go to trial. Summary judgment on this issue was accordingly refused. ([54]-[57]) C-244/00 Van Doren + Q. GmbH v Lifestyle sports & sportswear Handelsgesellschaft mbh, EU:C:2003:204, [2003] ECR I-3051, ECJ and Honda Motor Co Ltd v David Silver Spares Ltd [2010] EWHC 1973 (Ch), [2010] F.S.R. 40, Ch D, considered.

5 680 PROCTER &GAMBLE V STAR GLOBAL TRADING The Decoded Fragrances the BMS Conditions H19 H20 (9) The BMS Conditions could not simply be transposed to non-pharmaceutical products. How to apply the principles of BMS, if at all, to the present factual scenario was a difficult and fact-sensitive issue which would have to go to trial. Further, P&G had conceded that it was not in a position at this stage to say that the condition of the packaging of the goods complained of had been so adversely affected by the removal of the product codes that the public would notice this and that it might affect the reputation of the product. ([65], [66], [83]) C-427/93, C-429/93 and C-436/93 Bristol-Myers Squibb Co v Paranova A/S ( BMS ), EU:C:1996:282, [1996] ECR I-3457, [1997] F.S.R. 102, ECJ; Boehringer Ingelheim KG v Swingward Ltd [2004] EWCA Civ 129, [2004] E.T.M.R. 65, CA and C-349/95 Loendersloot (t/a F. Loendersloot Internationale Expeditie) v George Ballantine & Son Ltd, EU:C:1997:530, [1997] ECR I-6227, [1998] F.S.R. 544, ECJ, considered. (10) Summary judgment would in any event have been inappropriate for the following further reasons: (i) that T had only just been joined as a party to the action and there was a considerable overlap between the issues in respect of which summary judgment was sought against Star and the question of T s personal liability which had to go to trial; (ii) given that P&G contended that summary judgment would be binding upon T and that he would not be entitled to contend at trial that the products complained of were not infringements and that some of the acts complained of could not be raised against T as they were statute barred, it would not be fair to T to grant summary judgment against Star; and (iii) the hearing of the summary judgment application was not arranged until 15 months after the commencement of the proceedings and by that time P&G could have had a trial. ([7], [67]-[69]) Costs H21 (11) The claimant would be ordered to pay 75% of 90% of T s costs in defending the summary judgment application. ([77]) Permission to appeal H22 H23 (12) Any appeal stood no realistic prospect of success and accordingly permission to appeal would be denied. ([84]) Observed: It will be instructive to understand how other Member States which have legal doctrines analogous to equitable estoppel, such as the German doctrine of forfeiture, apply such principles to goods bearing trade marks which have been imported from outside the EEA. Neither party was in a position to explore this at the hearing before me. ([42]) Cases referred to: H24 Boehringer Ingelheim KG v Swingward Ltd [2004] EWCA Civ 129, [2004] ETMR 65, CA C-427/93, C-429/93 and C-436/93 Bristol-Myers Squibb Co v Paranova A/S ( BMS ), EU:C:1996:282, [1996] ECR I-3457, [1997] F.S.R. 102, ECJ Easyair Ltd (t/s Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch), Ch D Honda Motor Co Ltd v David Silver Spares Ltd [2010] EWHC 1973 (Ch), [2010] F.S.R. 40, Ch D Published by Oxford University Press for the Intellectual Property Office

6 [2016] R.P.C Iliffe v Feltham Construction Limited [2015] EWCA Civ 715, [2015] CP Rep 41, CA C-349/95 Loendersloot (t/a F. Loendersloot Internationale Expeditie) v George Ballantine & Son Ltd, EU:C:1997:530, [1997] ECR I-6227, [1998] F.S.R. 544, ECJ Mastercigars Direct Limited v Hunters & Frankau Limited [2007] EWCA Civ 176, [2007] R.P.C. 24, CA Partco Group Limited v Wragg [2002] EWCA Civ 594, [2002] 2 Lloyd s Rep 343, CA Stephens v Cannon [2005] EWCA Civ 222, [2005] CP Rep 31, CA Three Rivers DC v The Bank of England (No. 3) (Summary Judgment) [2001] UKHL 16, [2003] 2 AC 1, HL C-244/00 Van Doren + Q. GmbH v Lifestyle sports & sportswear Handelsgesellschaft mbh, EU:C:2003:204, [2003] ECR I-3051, ECJ James Abrahams Q.C., instructed by Powell Gilbert LLP, appeared on behalf of the claimants. Martin Howe Q.C. and James St. Ville, instructed by Kuit Steinart Levy LLP appeared for the second defendant. The first defendant did not appear and was not represented. JUDGMENT HENRY CARR J.: Introduction 1 This is a claim for infringement of registered trade marks brought by the claimants ( P&G ). The case concerns certain fragrance products which are alleged to have been imported from outside the EEA by the first defendant ( Star ) and sold under trade marks of which P&G is either the owner or licensee. The claim is brought under the Community Trade Mark Regulation by P&G as licensee of very well-known fragrance marks owned by a variety of fashion houses, and as proprietor of its own P&G house trade mark, which appears on most of the products which are alleged to infringe. 2 The goods in question are accepted to be genuine, and there is no allegation of counterfeiting. However, P&G claims that the goods have not been put on the market in the EEA by P&G or with its consent. Alternatively, it claims that even if they were placed on the market by P&G or with its consent, they still amount to an infringement due to removal of certain codes from the packaging. 3 This is the adjourned hearing of P&G s application for summary judgment. The previous hearing of the application, in February 2016, was adjourned because, on the day before that hearing, Star notified P&G of its intention to appoint administrators. Administrators have now been appointed and they have indicated they do not oppose the continuation of the summary judgment application, subject to certain conditions, to which P&G has agreed. 4 P&G alleges that the appointment of administrators was a tactic by Star to avoid judgment being entered against it. This is refuted in a letter from the administrators dated 9 March 2016, and in the third witness statement of the second defendant ( Mr. Thakrar ). It is said that Star received confirmation from HM Revenue & Customs on 1 February 2016 that it intended to commence winding up proceedings due to unpaid PAYE and VAT. It is immaterial to the issues that I have to resolve to decide which explanation is correct.

7 682 PROCTER &GAMBLE V STAR GLOBAL TRADING 5 At the outset of this hearing, P&G applied to add Mr. Thakrar as a defendant to the proceedings, as it is alleged by P&G that he is personally liable for the acts of infringement of Star. Subject to certain conditions, to which P&G agreed, this was not resisted and I made an order at the start of the hearing adding Mr. Thakrar as the second defendant. In addition, I granted P&G s application for permission to continue the proceedings against Star. Mr. Thakrar was represented at this hearing, but the administrators of Star did not appear and were not represented. It was agreed that Mr. Thakrar s counsel were entitled to be heard on the question of whether summary judgment should be granted against Star. The issues raised by P&G s application 6 There are four issues in respect of which P&G alleges that Star has no realistic prospect of succeeding at trial. P&G contends that the determination of these issues would conclude a significant part of the litigation; in particular, all of the claims of infringement of trade mark against Star. By agreement with the administrators, financial relief, costs and damages against Star are no longer pursued. Such remedies will be pursued against Mr. Thakrar at trial. P&G recognises that the issue of Mr. Thakrar s personal liability for the acts complained of by Star cannot be the subject of the summary judgment application. However, Powell Gilbert, P&G s solicitors, have stated in correspondence that he will be bound by the results of this hearing. In other words, if summary judgment is granted, Mr. Thakrar will not be able to contend at trial that the products complained of do not infringe the registered trade marks relied on. P&G alleges that it is entitled now to certain relief, including an injunction, against Star, as a result of this application. 7 The summary judgment application against Star is complicated by the fact that Mr. Thakrar has been added to the proceedings. Mr. Thakrar contends in his evidence that, for the last ten years, P&G has supplied fragrances such as those complained of to the parallel trade or grey market, both within and outside the EEA, knowing and consenting to their sale in the EEA. He claims that P&G has done this in order to maximise its market share. Parts of that evidence are said to give rise to his personal liability. In my judgment, there is a significant overlap between the issues which will have to go to trial, and which P&G accept cannot be the subject of summary judgment (namely, Mr. Thakrar s personal liability), and the issues in respect of which it seeks summary judgment. 8 In these circumstances, even if I granted summary judgment, it would not conclude the proceedings and there would still have to be a trial of significant complexity. For this reason, at the outset of the hearing I raised the issue of whether it was appropriate to proceed with the summary judgment application. Mr. Abrahams Q.C., who appeared on behalf of P&G on this application, persuaded me that it was appropriate to continue with the argument, given that P&G contends that defences to trade mark infringement raised by Star would require very extensive disclosure of documents, at an estimated cost of hundreds of thousands of pounds (a contention which is disputed by Mr Howe). Nonetheless, the fact that proceedings against Mr. Thakrar will continue even if summary judgment is granted against Star, is a matter to which I will return when considering whether or not to grant this application. 9 The particulars of claim complain of eighteen fragrances purchased from Star. The packaging of seven of these products (numbered 1-6 and 8) bear product codes which, according to P&G, enables it to determine that the goods were first placed on the Published by Oxford University Press for the Intellectual Property Office

8 [2016] R.P.C market outside the EEA ( the Coded Fragrances ). The remaining fragrances (numbered 7 and 9-16) have had their product codes removed, and so P&G is unable to tell where they were first placed on the market ( the Decoded Fragrances ). 10 P&G s application notice identifies four issues in respect of which summary judgment is sought against Star. I have not taken them in the same order in which they are presented in the application notice, but rather in the order in which they were argued by Mr Abrahams: (i) Do Star s dealings in the Coded Fragrances amount to trade mark infringement? P&G contends that separate consideration should be given to dealings prior to August 2014 and after August (ii) Who bears the burden of proving whether the Decoded Fragrances were put on the market in the EEA by the trade mark proprietor or with its consent? (iii) Do the BMS Conditions apply to the Decoded Fragrances? This involves analysis of Joined Cases C427/93, C429/93 and C436/93, Bristol-Myers Squibb Co v Paranova A/S [1996] ECR I-3457, [1997] F.S.R. 102, ( the BMS case ) and of certain authorities decided subsequent to the BMS case. (iv) If the BMS Conditions apply, has Star complied with those conditions? This is not contentious, because Mr Howe accepts that if the BMS Conditions apply, then conditions 3 and 5 were not complied with. The approach to summary judgment applications 11 The principles that I shall apply are summarised in the judgment of Lewison J., as he then was, in Easyair Ltd (t/s Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]: (i) The court must consider whether the claimant has a realistic as opposed to a fanciful prospect of success: Swain v Hillman [2001] 2 All ER 91; (ii) A realistic claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]; (iii) In reaching its conclusion the court must not conduct a mini-trial : Swain v Hillman; (iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]; (v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No. 5) [2001] EWCA Civ 550; (vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where

9 684 PROCTER &GAMBLE V STAR GLOBAL TRADING there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] F.S.R. 63; (vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent s case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant s case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Ltd [2007] EWCA Civ In addition, Mr Howe relies on to the well-known judgment of Lord Hope in Three Rivers DC v The Bank of England (No. 3) (Summary Judgment) [2003] 2 AC 1, pp at [87]-[95]. In particular, he relies on the following principles: (i) The words no real prospect of being successful or succeeding do not need any amplification, they speak for themselves. The word real distinguishes fanciful prospects of success. They direct the court to the need to see whether there is a realistic as opposed to a fanciful prospect of success [90]. (ii) The question is whether the claim (or defence) has no real prospect of succeeding at trial and it has to be answered having regard to the overriding objective of dealing with cases justly [92], [94]. To adopt the language of art.6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms with which this aim is consistent, the court must ensure that there is a fair trial [92]. (iii) Useful though the power is under Part 24, it is important that it is kept to its proper role. It is not meant to dispense with the need for a trial where there are issues which should be investigated at trial [93]. 13 He also relies on the judgment of the Court of Appeal in Partco Group Limited v Wragg [2002] EWCA Civ 594, [2002] 2 Lloyd s Rep 343 at [27]-[28]. This passage makes clear that the court should be slow to deal with single issues in cases where there will need to be a full trial on liability involving evidence and cross-examination in any event and/or where summary disposal of the single issue may well delay, because of appeals, the ultimate trial of the action. It also sets out the well-known principle that it is inappropriate to strike out (or grant summary judgment) in a Published by Oxford University Press for the Intellectual Property Office

10 [2016] R.P.C claim in an area of developing jurisprudence. In such areas, decisions should be based on actual findings of fact. 14 Finally, I was referred to the judgment of the Court of Appeal in Iliffe v Feltham Construction Ltd [2015] EWCA Civ 715, [2015] CP Rep 41 at [72], where the court held that a judge in multi-party litigation must aim to do justice to all parties in the case and that therefore it was inappropriate to [grant summary judgment] when similar issues remain to be determined at a full trial as between other parties. Those circumstances constitute a compelling reason not to enter summary judgment within the meaning of CPR 24.2(b). Do Star s dealings in the Coded Fragrances amount to trade mark infringement? 15 The relevant legal provisions are arts.9 and 13 of Council Regulation (EC) 207/ 2009 ( the CTM Regulation ). In particular, art.13(1) of the CTM Regulation provides that: A Community Trade Mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the community under that trade mark by the proprietor or with his consent. 16 Mr. Abrahams submitted that the following principles are now well-established by the case law of the CJEU: (i) where the trade mark proprietor has put the goods on the market outside the EEA art. 13(1) does not apply, and the proprietor may assert his trade mark rights to prevent importation of those goods into the EEA without his consent; (ii) to establish the defence provided by art.13(1), the consent referred to must relate to each individual item of the product in respect of which the exhaustion of rights is pleaded; (iii) such consent must be so expressed that an intention to renounce those rights is unequivocally demonstrated; (iv) it is for the trader alleging consent to prove it and not for the trade mark owner to demonstrate its absence. 17 These, amongst other, principles, were summarised by Jacob L.J., giving the judgment of the Court of Appeal in Mastercigars Direct Limited v Hunters & Frankau Limited [2007] EWCA Civ 176, [2007] R.P.C. 24 at [16]. Jacob L.J. stated at [19]: I do not think that the court s repeated use of the word unequivocal is about standard of proof at all. What the court was concerned with is acts of the proprietor which do not show that he must have consented to marketing in the EEA. It was not concerned with the standard of proof of those acts. It was saying that a proved act, which is merely consistent with such consent, but also consistent with its absence, is not enough. All the examples considered in Davidoff are of that type.

11 686 PROCTER &GAMBLE V STAR GLOBAL TRADING 18 At [45] Jacob LJ, having considered the facts of Mastercigars, said: The unequivocal test is passed. Despite having exclusive distributors outside Cuba, HSA were prepared not only to tolerate, but to allow small commercial quantities to be purchased by foreigners within Cuba for them to take out and resell abroad. 19 So, the question for me is whether there is a serious question to be tried that P&G, at the dates when the alleged infringements were purchased, was prepared not only to tolerate, but also to allow commercial quantities of the Coded Fragrances, first placed on the market outside the EEA, to be imported and sold within the EEA. 20 At [59] Jacob L.J., in allowing the appeal in Mastercigars, said: The judge thought that turning a blind eye to parallel trade was not enough to imply consent. That may, indeed, follow from Davidoff if one means simply that the trade mark owner has knowledge that parallel trade goes on and yet does nothing to stop it. Failure to police is not enough, according to Davidoff, but that is not this case. The trade mark owner has done more. He has facilitated the parallel trade in addition to failing to police. 21 This paragraph draws the distinction between, on the one hand, knowing that parallel trade is going on and doing nothing to stop it, and on the other hand, facilitating parallel trade. Mr. Howe submitted, and I accept, that the distinction between turning a blind eye to parallel trade, and facilitating it, may, depending on the evidence, be a difficult and fact-sensitive line to draw. 22 I now turn to the evidence in the present case. The defendants case is that P&G has done more than turn a blind eye and failed to police parallel trade, although they rely on the failure to police to indicate the true nature of P&G s behaviour in the marketplace. Mr. Thakrar goes further in his evidence and and says that there was a positive decision to condone and consent to the parallel trade. 23 Mr. Thakrar explains that P&G has, for a long period supplied fragrances, such as those in issue, into the grey market, both within and outside the EEA, knowing and consenting to those goods being sold in the EEA. He provides a general explanation of how and why that has happened, namely to meet monthly, quarterly, half-yearly and annual targets on the part of P&G. He then gives specific examples of this happening within the EEA, through supplies by P&G to distributors known as Forma Italiana, who were not authorised distributors of fragrances and not part of P&G s selective distribution network. He specifies a similar case of supplies by P&G to Sheneel Enterprises (also not an authorised distributor) in the UK. 24 Next, he gives specific examples of supplies by P&G to distributors outside the EEA, in particular Great American Beauty; Horizon; and Quality King in the United States; SASA in Hong Kong; and distributors in other countries outside the EEA; which products have then put on the market in the EEA with, Mr. Thakrar claims, P&G s consent. 25 In order to assess these allegations, it is necessary to look in more detail at Mr. Thakrar s evidence. In his first witness statement, Mr. Thakrar says at para. 9: P&G supply via its Italian operation, clearance stock directly to Forma Italiana (based in Italy) on a regular basis. This stock is then offered out on the grey market. We have regularly received and regularly receive offers from Forma Italiana. We have been receiving these offers for over 10 years. I Published by Oxford University Press for the Intellectual Property Office

12 [2016] R.P.C attach at DT2 an dated 4 May 2015 received from Jackie Blanga at Forma Italiana relating to a P&G discounted offer. The states As for previous clearances the orders are subject to confirmation from the company (which is a reference to P&G). As can be seen from the attached spreadsheet the offer relates to a large volume of lots of different products. The offer relates to 306,699 units with a value of 2,973, Mr. Rushton, on behalf of P&G, has responded to this in his evidence, and has asserted that Forma Italiana are not an authorised supplier of fragrances and that P&G has not supplied them. However, in my judgment, he has not explained to the standard that I would require to grant summary judgment, first, how Forma Italiana are able to offer such a very large quantity of units, to the value of nearly 3 million, without P&G s involvement and cooperation and, secondly, why, if P&G has no involvement in this supply to the grey market, the from Jackie Blanga, appears to suggest to the contrary. Mr. Rushton s evidence does not descend to this level of detail. Of course, I recognise that this is a supply within the EEA, but it lends force to Mr. Howe s submission that there is an arguable case that P&G has been supplying the grey market, both inside and outside the EEA, and have consented to the onward sale of such goods, both inside and outside the EEA. 27 Mr. Thakrar then continues at para. 10: I refer to a further from Jackie Blanga at Forma Italiana dated 5 February 2015, a copy of this is at DT3. Again this relates to an offer of P&G stock. The states I spoke with procter manager and they told me they have already passed the order. They advised me to pass the order anyway (with no guarantee of delivery) and they will do their best to submit it. A spreadsheet is attached containing details of the offer. The offer relates to 306,840 units with a value of 3,427, Again, Mr. Rushton denies any involvement in this transaction by P&G. However, the , on its face, refers to Jackie Blanga speaking with a Procter manager and suggests to the contrary. Again, the offer is for such a large amount that I am not satisfied, to the standard required for a summary judgment application, that P&G was not involved in this supply. It requires investigation at trial. 29 Mr. Howe also showed me that there are examples of offers for the same P&G batches of fragrances, to the value of millions of pounds, which have been made to Mr. Thakrar, both by distributors within the EEA and distributors outside the EEA. Therefore, this evidence suggests that there is a triable issue that P&G are indifferent when they supply the grey market as to whether those goods are re-sold within or outside the EEA. 30 At para. 13 Mr. Thakrar refers to a table setting out details of offers received by Star. These, it seems to me, are unlikely to be the totality of offers that have been made of P&G fragrances in the grey market over the period considered by Mr. Thakrar, but simply the offers of which Mr. Thakrar is personally aware. He refers to five recent offers all sent between February 2015 and May 2015, and says that the total value of these five offers alone is 30,231, He also refers to other offers dating between , the total value of which is 11,636,563.40, and relating to 597,314 units. 31 Mr. Abrahams pointed out that it appears from the table that at least one of those offers, said to be in 2015, was in fact made in That single offer is for over 15 million-worth of goods. How a grey market distributor was able to gain access to that

13 688 PROCTER &GAMBLE V STAR GLOBAL TRADING amount of P&G fragrances, without cooperation from P&G, needs explanation. That explanation has not yet been provided in P&G s evidence. Mr. Abrahams also points out that there is likely to be duplication between the offers, because different distributors are likely to be offering the same goods. That may be true, but it still does not answer the evidence that, to Mr. Thakrar s personal knowledge, tens of millions of pounds of goods have been offered on the grey market. 32 In light of this evidence, Mr. Howe submits that the correct conclusion is that from about and, in particular, under the leadership of Mr. A.G. Lafley as CEO, P&G set about increasing the market share of its fragrances, including the fragrances in issue. He submits that in doing so it allowed and encouraged grey market trade in those fragrances to continue outside the terms of the distribution agreements which it had in place, and appeared to use that trade as part of its strategy to penetrate the market within the EEA. 33 Further, he submits that it was noticeable that the quantity of grey market fragrances from P&G on the market tended to increase at the end of each P&G quarter and each P&G financial year, because its staff sought to meet quarterly and annual targets and sold products to distributors, including distributors outside the EEA who, as they well knew, could be expected to sell those products into the grey market in the EEA, outside the terms of P&G s distribution agreements. He argues that, in that way, P&G consented to and/or permitted and encouraged parallel trade in those products into and within the European Union and the EEA. On the evidence which I have seen I consider that there is a serious question to be tried in respect of these submissions. 34 Of course, the position is not all one way and there is much to be said for P&G s case to the contrary. In particular, Mr. Abrahams suggests that there is undisputed evidence that P&G has, over the years, taken steps to close down imports from outside the EEA. He relies on Mr. Rushton s evidence to support the following propositions: (i) that P&G marks all its fragrances with codes so that it can trace goods found on sale outside of its distribution system; (ii) that all P&G staff are provided with an employment manual which stresses that diversion of products from markets for which they are intended is strictly forbidden; (iii) that P&G maintains a well-staffed and well-resourced Global Diversion Control team, with bases in Switzerland and Germany, whose only job is to detect and prevent diversion of P&G fragrances from one market to another; (iv) that P&G has taken numerous actions against its distributors where products sold outside the EEA have been found on sale inside the EEA; (v) by way of example, that P&G has objected to its US distributors selling fragrances outside the EEA; (vi) that P&G has taken action, including legal proceedings, against traders in the EEA who have been found to be dealing in non-eea fragrances; (vii) that includes a number of letters sent to Star itself, which were followed by these proceeding, complaining of the sale of non-eea fragrances in the UK. 35 Mr. Howe responds that Star fully accepts that P&G has take measures against its authorised distributors where it finds they are diverting products i.e. authorised distributors who divert products to other distributors for onward sale, contrary to Published by Oxford University Press for the Intellectual Property Office

14 [2016] R.P.C the terms of their distribution agreements. However, Mr. Howe contends that there is, at the very least, a serious question to be tried, that when P&G has wished to maximise its sales, it has not been so chary. On the contrary, it is submitted that, whilst sending occasional token letters to third-party distributors, P&G has not chosen to enforce its rights and, indeed, has positively encouraged such sales by its own actions. 36 I consider that there is a considerable amount to say for both sides case on this issue and that both sides have established a serious question to be tried. By way of example, I consider that it is potentially a strong point in P&G s favour that it sent three warning letters to Star. However, those warning letters are very odd. They do not specify in any detail the relevant products complained of to enable Star to identify them. Furthermore, the earliest of those letters is dated 2008 and concerns certain of the products in issue in this action (although it omits other products included in this action which were the subject of the same trap purchase). Yet it was not until 2014 that P&G chose to bring action in respect of that complaint. That is in spite of the fact that the letter describes itself as a final warning. Mr. Howe says, with some force, that the delay of one day under six years is evidence of a token letter sent to keep selective distributors happy but without any serious intention, until very recently, to enforce trade mark rights against Star. 37 Having considered all of this evidence, I conclude that on this first issue there are factual issues which cannot be resolved on a summary basis, and can only fairly be decided by P&G giving proportionate (as opposed to excessive) disclosure in respect of the specific instances raised by Mr. Thakrar, following which, cross-examination will be required, so that the court can reach a conclusion against the relevant background of facts. Accordingly, I refuse to grant summary judgment on this issue. The position subsequent to August P&G contends that, whatever might be the position before August 2014, Star has no defence to the claim in respect of sales after August Star accepts that, at least from August 2014, P&G did not consent to Star s dealing with in non-eea fragrances. Star s position is that there was consent prior to that date, but P&G has changed its policy around then. So, Mr. Abrahams submits that, in relation to post-august 2014 dealings in non-eea fragrances, P&G is entitled to summary judgment. 39 However, all of the products which are alleged to infringe were purchased several years ago. The most recent purchase referred to in the particulars of claim and alleged to infringe was made in March I have been shown evidence that those products were placed on the market in During 2012, I have held that there is a serious question to be tried as to whether or not P&G consented, as a matter of policy, to sales into the grey market. Therefore, there is no pleaded instance of infringement post- August 2014 which would entitle P&G to obtain summary judgment on this issue. Estoppel, laches and acquiescence 40 While this disposes of the first issue, I should, nonetheless, refer to Star s defence of estoppel, laches and acquiescence, given that the parties argued whether or not it raised a serious question to be tried. In particular, the defence, at paras , contends that P&G cannot claim any remedies by reason of estoppel, laches or acquiescence.

15 690 PROCTER &GAMBLE V STAR GLOBAL TRADING 41 Mr. Abrahams submits that this plea is unarguable for the following reasons: (i) P&G has sent letters to Star objecting to its trade in particular fragrances. I have already dealt with those letters. I consider that they are a point in P&G s favour, but they raise serious questions, both as to the lack of identification of the relevant products and as to the failure, for many years, to pursue the complaints which were raised in them; (ii) it is alleged that there is no pleading or evidence that Star relied on P&G s alleged conduct, nor any other facts which would make it unconscionable for P&G to now assert its rights. I do not accept that submission. In particular, at para. 21 of Mr. Thakrar s first statement, he says that: The fact that they did not take action to stop it led us to believe that [this] trade was accepted and implicitly consented to by P&G. The fact that the letters were vague and were not followed up led me to believe that P&G were well aware of the availability of P&G fragrances on the grey market in Europe and did not prohibit or prevent this... my understanding is that throughout the period from around 2007 to 2014, P&G actively encouraged trade outside of its distribution agreements as part of its strategy to increase market penetration worldwide... Star continually received large offers of P&G fragrances, most often from the USA. It is true that Mr. Thakrar does not expressly state that Star relied on P&G s conduct; however, the clear implication of his evidence is that it did so, in continuing to sell the relevant products. (iii) It is submitted that such a plea adds nothing to the allegation of consent, in any event. The English law of estoppel is consistent with art. 13(1), in that nothing short of an unequivocal representation that the trade mark proprietor does not intend to enforce its rights to oppose import of goods from outside the EEA will do; and as a matter of European law, national rules may not provide for exhaustion of trade mark rights that is wider in scope than that provided for by art. 13(1). 42 I consider that sub-issue (iii) above raises powerful arguments. It may well be correct that it will not be possible, on the basis of estoppel, to resist injunctive relief. On the other hand, financial relief has been disclaimed against Star, but is still pursued against Mr. Thakrar. In my judgment, it will require full argument at trial to decide whether it is appropriate to grant an inquiry as to damages or an account of profits against Mr. Thakrar, given the defence of equitable estoppel, if the trial judge was otherwise minded to do so. It is arguable that the question of whether this remedy should be granted is a matter of procedural, rather than substantive law. It will be instructive to understand how other Member States which have legal doctrines analogous to equitable estoppel, such as the German doctrine of forfeiture, apply such principles to goods bearing trade marks which have been imported from outside the EEA. Neither party was in a position to explore this at the hearing before me. Therefore, I consider that this issue also raises a serious question to be tried. Published by Oxford University Press for the Intellectual Property Office