Lyle & Scott v American Eagle. The High Court holds the applicable law for passing off does not fly under IPR wings.

Lyle & Scott Ltd v American Eagle Outfitters, Inc [2021] EWHC 90 (Ch) entertains ia the question whether the governing law for passing-off claims involving an eagle trademark, fall under Article 6 or 8 Rome II. The application is for an earlier order allowing service of jurisdiction, to be set aside.

Parties had agreed a ‘memorandum’ (which may or may not be a ‘contract’ – it is further referred to in the judgment as a ‘contract’) following a disagreement on whether each corporation’s eagle (L&S’s being trademarked in the UK and various EU Member States; AEO’s not being trademarked here, I understand) incorporated in apparel involved infringement of trademark and passing off.

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AEO are domiciled in the US  and have no physical presence in the UK (or, one assumes, anywhere in the EU (the litigation was initiated pre-Brexit); their apparel is offered via online sales.

Jurisdiction is decided on the basis of the laws of E&W. Applicable law comes into the discussion for per Lord Mance at 46 in VTB v Nutritek,

“The governing law, which is here English, is in general terms, a positive factor in favour of trial in England, because it is generally preferable, other things being equal, that a case should be tried in the country whose law applies. However, that factor is of particular force if issues of law are likely to be important and if there is evidence of relevant differences in the legal principles or rules applicable to such issues in the two countries in contention as the appropriate forum…”.

Miles J discusses the governing law issue at 64 ff. Claimant argue the claim comes under A8 Rome II: infringement of intellectual property rights, English law, lex loci protectionis. Defendants argue they fall under A4 (by way of A6(2): Act of unfair competition), and that A4(3) is engaged to make the applicable law that of the state of Pennsylvania, because of the ‘contractual’ relationship.

At 72 Miles J agrees with the classification under A6, holding ia that ‘(t)he cause of action protects the goodwill of traders against deceptive conduct; goodwill is not an intellectual property right; and passing off is not the infringement of a right.’ Unlike the judge I do not think Rome II’s recital is of much help here and I suspect more can be made of the comparative law insights (common law and civil law) offered.

The next question is whether the claim falls within A6 (2). In Miles J’s succinctly expressed view it does, at 73: ‘The act of unfair competition alleged (passing off) affects exclusively the interests of a specific competitor (L&S). It follows that Art. 4 applies.’ As I have often noted, I find it very difficult to think of acts of unfair competition do not ultimately also impact the consumers of those involved.

The final hurdle then is whether A4(3) is engaged to displace E&W law as the lex loci damni, which at 75 the judge holds is not the case. Parties have not agreed on a governing law for the ‘contract’, they have conducted previous proceedings on the basis of that law being the laws of Pennsylvania. However even if the lex contractus is probably Penn law, and English law probably the lex causae for the passing off claim, Miles J holds this should not have an impact at the jurisdictional level: particularly seeing as there is no immediate reason to assume E&W courts will have great difficulty in applying Penn law to what on the contractual substance does not seem an overly complicated case.

Application dismissed, service out of jurisdiction stands.

This case once again highlights the level of complication resulting from having inserted different heads of applicable law into Rome II – a phenomenon which as I recently reported, might soon be expanded upon.

Geert.

EU private international law, 3rd ed. 2021, Chapter 4, Heading 4.5.2, 4.6.2, 4.6.4.

Shenzen Senior Technology Material v Celgard. On Rome II’s rule applicable law rule for unfair competition, distinguishing ‘direct’ from ‘indirect’ damage, and the Trade Secrets Directive.

Shenzhen Senior Technology Material Co Ltd v Celgard, LLC [2020] EWCA Civ 1293 concerns an appeal against service out of jurisdiction (the judgment appealed is [2020] EWHC 2072 (Ch)). Celgard allege that the importation and marketing by Senior of battery separator film involves the misuse of Celgard’s trade secrets.

Senior (of China) contend that the judge fell into error in concluding, first, that Celgard (incorporated in Delaware) had established a serious issue to be tried (here part of the jurisdictional threshold) assuming that English law applies to its claims and, secondly, that England is the proper forum to try the claims. As to the latter the core argument is that in limiting its claims to remedies in respect of acts in the UK, Celgard could not establish the requisite degree of connection to England. As for the former, they argue the law applicable to Celgard’s claims is Chinese law, which would count against jurisdiction.

Strategically, Celgard’s case against Senior is not based on breach of the NDA applicable between Celgard and one of its former employees,  Dr Zhang who, when he left Celgard, told its then COO that he was going to work for General Electric in California, which does not compete with Celgard in the field of battery separators. It later transpired that he had in fact joined Senior in China, where he was using the false name “Bin Wang”. This element of the facts triggers the question whether Senior is liable for the acts of another, even if that other is its employee.

The Celgard – Zhang NDA is governed by the law of South Carolina, application of which would also have triggered A4(3)(b) or (c) of the Trade Secrets Directive 2016/943. Celgard do rely on the NDA as supporting its case that the trade secrets were confidential. Rather Celgard claim that Senior’s employee acted in breach of an equitable obligation. This engages Rome II,  specifically Article 6(2) because Celgard’s claims are concerned with an act of unfair competition affecting exclusively the interests of a specific competitor, namely Celgard. In such circumstances, Article 6(2) provides that “Article 4 shall apply”.

Of note is that this is one of those cases that show that Rome II applies to more than just tortious obligations: as Arnold LJ notes at 51, as a matter of English law, claims for breach of equitable obligations of confidence are not claims in tort.

Celgard’s case, accepted by Trowe J at the High Court, is that A4(1) leads to English law because the ‘direct damage’ (per Rome II and CJEU Lazard indirect damage needs to be ignored) caused by the wrongdoing it complains of has occurred (and will, if not restrained, continue to occur) in the UK, that being the country into which the infringing goods (namely the shipment to the UK Customer and any future shipments of the same separator) have been (and will be) imported, causing damage to Celgard’s market here.

Senior’s case is that confidential information is intangible property and that damage to intangible property is located at the time and place it became irreversible (support is sought in extracts from Andrew Dickinson’s Rome II volume with OUP). At 58 ff Arnold LJ gives 7 reasons for rejecting the position. I will not repeat them all here. Of note is not just the (most justifiable) heavy leaning on the travaux but also the support sought in secondary EU law different from private international law (such as the Trade Secrets Directive 2016/943) as well as in the consistency between Brussels Ia and the Rome Regulations [on which Szpunar AG has written excellently in Burkhard Hess and Koen Lenaerts (eds.), The 50th Anniversary of the European Law of Civil Procedure]. This is not an easy proposition however given the lack of detail in Rome I and the need for autonomous EU interpretation, understandable.

The Trade Secrets Directive is further discussed at 65 ff for in A4(5) it makes importation of infringing goods an unlawful use of a trade secret “where the person carrying out such activities knew, or ought, under the circumstances, to have known that the trade secret was used unlawfully within the meaning of paragraph 3”. One of the possibilities embraced by paragraph 3 is (a), the person “having acquired the trade secret unlawfully”. Arnold LJ then asks: what law is to be applied to determine whether it was acquired “unlawfully”? Is A4(5) read together with A4(3)(a) an implicit choice of law rule pointing to the law of the place where the trade secret was acquired? Arnold LJ suggests this is not acte clair and may need CJEU clarification however not at this stage for his provisional view (with an eye on the jurisdictional threshold test) is that the Directive is not an implicit choice of law rule and that per Rome II, English law applies.

Plenty applicable law issues to discuss at the merits stage.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 4, Heading 4.6.2. Third ed. forthcoming February 2021.

 

 

Sodmilab. The Paris Court of Appeal on lois de police, Rome I, II and commercial agency.

Thank you Maxime Barba for flagging the judgment in the Paris Court of Appeal Sodmilab et al. (Text of the judgment in Maxime’s post). The case concerns the ending of a commercial relationship. Part of the contract may be qualified as agency with lex causae determined under the 1978 Hague Convention. On this issue, the Court of Appeal confirmed French law as lex causae.

Things get messy however with the determination of that part of the contract that qualifies as distribution (a mess echoing DES v Clarins), and on the application of Rome II.

The Court of Appeal first (at 59) discusses the qualification of A442-6 of the French Code du commerce, on unfair trading practices (abrupt ending of a commercial relationship), dismissing it as lois de police /overriding mandatory law under Article 9 Rome I. As I noted in my review of DES v Clarins, this is a topsy turvy application of Rome I. The qualification as lois de police is up to the Member States, within the confines of the definition in Rome I. The Court of Appeal holds that A442-6 only serves private interests, not the general economic interest, and therefore must not qualify under Rome I. Hitherto much of the French case-law and scholarship had argued that in protecting the stability of private interests, the Act ultimately serves the public interest.

Next (as noted: this should have come first), the Court reviews the application of A4f Rome I, the fall-back position for distribution contracts – which would have led to Algerian law as lex causae. It is unclear (62 ff) whether the Court reaches its conclusion as French law instead either as a confirmation of circumstantial (the court referring to invoicing currency etc.) but clear choice of law under Article 3, or the escape clause under Article 4(3), for that Article is mentioned, too.

Rome I’s structure is quite clear. Why it is not properly followed here is odd. That includes the oddity of discussing French law under Article 9 if the court had already confirmed French law as lex causae under A3 or 4.

Finally, corners are cut on Rome II, too. Re the abrupt ending of the relationship (at 66ff). French law again emerges victorious even if the general lex locus damni rule leads to Algerian law. The court does not quite clearly hold that on the basis of Article 4(3)’s escape clause, or circumstantial choice of law per A14. The court refers to ‘its findings above’ on contractual choice of law, however how such fuzzy implicit choice under Rome I is forceful enough to extend to choice of law under Rome II must not be posited without further consideration. Particularly seeing as Article 6 Rome II excludes choice of law for acts of unfair trading.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9; Chapter 3, Heading 3.2.8, Heading 3.2.8.3; Chapter 4).

 

Heavily loaded. Applicable law in follow-up competition cases: watch the Dutch Supreme court in Air Cargo.

Up;date October 2020 a late update to alert readers to the lower courts’ decisions to apply Dutch law, in application of residual Dutch rules: Rome II was held not to be applicable ratione temporis.

Update March 2018. Quentin’s blog has a link to the SC decision refusing to take the case, considering it was academic given that an appeal against the decision of the European Commission is still pending before the EU courts. It has therefore not irreversibly been decided whether the eleven air carriers had violated European competition law. Most probably the case will be back, one imagines.

Quentin Declève alerted me to the Air Cargo damages compensation case currently making its way through the Dutch courts. (I have previously reported on jurisdictional issues re such cases; searching the tag ‘damages’ should help the reader).

I have difficulty locating the actual judgment addressing the issue in this post: namely applicable law in follow-up competition cases. I have however located one or two previous judgments addressing the damages claims assignment issue in same. This web of litigation seems to be particularly knotty and any help by Dutch or other readers would be appreciated.

At issue is whether Rome II applies to the facts ratione temporis; if it does, how Article 6 should be applied, in particular: locus delicti commissi, locus damni and ‘affected markets”; and if it does not, how the previous Dutch residual connecting factor ought to apply.

A case of great relevance to competition law and fair trading cases.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 4, Heading 4.6.2.

 

VKI v Amazon. Readers who read this item should also read plenty of others.

C-191/15 Verein für Konsumenteninformation v Amazon SarL is one of those spaghetti bowl cases, with plenty of secondary law having a say on the outcome. In the EU purchasing from Amazon (on whichever of its extensions) generally implies contracting with the Luxembourg company (Amazon EU) and agreeing to Luxembourg law as applicable law. Amazon has no registered office or establishment in Austria. VKI is a consumer organisation which acted on behalf of Austrian consumers, seeking an injunction prohibiting terms in Amazon’s GTCs (general terms and conditions), specifically those which did not comply with Austrian data protection law and which identified Luxembourg law as applicable law.

Rather than untangle the bowl for you here myself, I am happy to refer to masterchef Lorna Woods who can take you through the Court’s decision (with plenty of reference to Saugmandsgaard Øe’s Opinion of early June). After readers have consulted Lorna’s piece, let me point out that digital economy and applicable EU law is fast becoming a quagmire. Those among you who read Dutch can read a piece of mine on it here. Depending on whether one deals with customs legislation, data protection, or intellectual property, different triggers apply. And even in a pure data protection context, as prof Woods points out, there now seems to be a different trigger depending on whether one looks intra-EU (Weltimmo; Amazon) or extra-EU (Google Spain).

The divide between the many issues addressed by the Advocate General and the more narrow analysis by the CJEU, undoubtedly indeed announces further referral.

Geert.

(Handbook of) European Private International Law, 2016, Chapter 2, Heading 2.2.8.2.5.