THE DANGERS OF BEING “BULLISH” ON PROCEDURAL ISSUES: APPLICATION DISMISSED (AND IT TOOK TOO LONG)

In Red Bull GmbH v Big Horn UK Ltd & Ors [2018] EWHC 2794 (Ch) Master Clark completed the judgment”I conclude by noting the regrettable extent to which this judgment has been lengthened by the determination of the procedural points of little or no merit advanced by the claimant in support of its strike out application.”  The judgment contains an interesting discussion of the various procedural points raised by the claimant.

“CPR PD 22 provides that a statement of truth verifying a document on behalf of a company must be signed by a person holding a senior position in the company; and that person must state the position held. The claimant’s counsel did not refer me to any requirement to state that the person signing has been authorised by the company to do so; and there is no such requirement.”

THE CASE

The claimant manufactures an energy drink using a bull as its trade mark. It sought strike out, summary judgment and judgment in default in relation to the defendant’s use of an animal n its drinks known as “big horn”.

THE CLAIMANT’S UNSUCCESSFUL APPLICATION FOR DEFAULT JUDGMENT

The Master dismissed the claimant’s application for default judgment.  It was made in unusual procedural circumstances.   The defendant, against whom default judgment was sought, had already filed a defence.
“Default judgment
    1. The application for judgment in default is based on the fact that D2 has not filed an acknowledgment of service. The claimant’s counsel submitted that since the order for service by alternative means provided that the deemed date for acknowledging service was 7 May 2018, and none had been filed as at that date or when the first application was made on 8 June 2018, the claimant was entitled to judgment. She relied upon Almond v Medgolf Properties Ltd [2015] EWHC 3280 (Comm)). This is authority for the proposition that if no acknowledgment of service or defence has been filed at the date of the application for default judgment, then its subsequent filing before the hearing of the application does not disentitle the claimant from obtaining default judgment.
    2. Before considering this submission, it is necessary to examine the order for service by alternative means more closely. The basis of the application, as set out in Mr Mallinson’s witness statement, was that it would
“ensure that the case is dealt with justly and at proportionate cost, including saving it the expense of having to translate yet more documents into Bulgarian … and by seeing matters progressed expeditiously.”
    1. In addition to the retrospective order for service by alternative means, the claimant sought, as more preferred alternative orders:
(1) a declaration that the claim form and particulars of claim had been validly served on 16 April 2018 and that the period for filing an acknowledgment of service or defence therefore expired on 7 May 2018;

(2) an order that service of the claim form and particulars of claim be dispensed with and a declaration that the period for filing an acknowledgment of service or defence expired on 7 May 2018;

and, as less preferred alternative orders:

(3) an order for service by alternative means by email on D2’s legal representatives in Bulgaria and to the contact email address on D1’s website (with prospective rather than retrospective effect); or

(4) an order extending the time for service of the claim form and particulars of claim by 1 month from 6 August 2018 to 6 September 2018 to allow the claimant to serve D2 at its new address (using the Foreign Process Service).

    1. Although Mr Mallinson referred to the claimant having applied for judgment in default of defence against D2 (and to that application being listed for hearing on 14 September 2018), his evidence did not set out that if an order for retrospective service were made, the claimant would seek to rely upon D2’s retrospective default in seeking default judgment. That was a material and important distinction which ought in my judgment to have been highlighted in his evidence, since the application was made without notice to D2: see the Chancery Guide, para 16.6. Instead, he said:
“28. The options listed in the draft order are in descending order of preference for the Claimant, but each would provide a practical, just and cost-efficient way of ensuring that the hearing set down for 14 September is not jeopardised and yet does not prejudice the opportunity the 2nd Defendant has to defend itself.” (emphasis added)
    1. The order of 6 August 2018 was made on this basis, namely that it would not prejudice the opportunity D2 had at that point to defend itself. In these circumstances, it was in my judgment, implicit in the order, that the deemed service provided for by the order would not prejudice any rights accrued before the order was made.
    2. The claimant’s solicitors (see para 38 below) submitted that the words in bold set out in para 35 above were accurate – because notwithstanding the terms of order with retrospective effect, D2 could still have defended the default judgment application by filing its acknowledgment of service and Defence late, and seeking permission to do so. I do not accept that submission. The prejudice consists of needing to apply for permission, when otherwise D2 would be able to rely upon a Defence filed at a time when it had not yet been served. I also note that orders for prospective service by alternative means, or extending the time for service would not have resulted in any prejudice to D2.
    3. Following provision of this judgment in draft to the parties, the claimant’s solicitors made written submissions as to paras 32 to 35 above; on the basis that Mr Mallinson’s witness statement was not in the bundle, and there was no consideration of it at the hearing. My reasoning in those paragraphs has taken those submissions into account; and the claimant’s solicitors confirmed that they did not wish to make any further oral or written submissions in respect of those paragraphs.
    4. If I am wrong in my conclusion in those paragraphs, in my judgment, the claimant’s counsel’s submissions nevertheless face the difficulty that as at the date when the first application was made, D2 had not in fact been served; and this remained the case when the first application was issued. The first occasion on which it could be said that D2 had been served was 6 August 2018.
    5. Although the most important purpose of service is to ensure that the contents of the claim form are brought to the attention of the person to be served, there is, as Lord Briggs said in Barton v Wright Hassall LLP [2018] UKSC 12[2018] 1 WLR 1119 (at [28]) a second important general purpose:
“That is to notify the recipient that the claim has not merely been formulated but actually commenced as against the relevant defendant, and upon a particular day. In other words, it is important that the communication of the contents of the document is by way of service, rather than, for example, just for information. This is because service is that which engages the court’s jurisdiction over the recipient, and because important time consequences flow from the date of service, such as the stopping of the running of limitation periods and the starting of the running of time for the recipient’s response, failing which the claimant may in appropriate cases obtain default judgment.”
  1. It was not therefore until 6 August 2018 that any time limits were in place for service of the acknowledgment of service or defence. By that date (and by the date of the application for service by alternative means) D2 had filed the Briffa Defence. The effect of retrospectively ordering service by alternative means cannot in my judgment have had the effect of depriving D2 of its right to defend the claim by reason of having filed a Defence before an order had been made obliging it to do so.
  2. For these reasons, I dismiss the application for default judgment.”

STRIKING OUT THE DEFENCE AND SUMMARY JUDGMENT

The claimant was equally unsuccessful in the application to strike out the defence/summary judgment.
    1. CPR 24.2 provides, so far as relevant:
“The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if –
(a) it considers that –

(ii) that defendant has no real prospect of successfully defending the claim or issue; and

(b) there is no other compelling reason why the case or issue should be disposed of at a trial.”
    1. The principles to be applied on applications for summary judgment are well established. They were summarised by Lewison J, as he then was, in Easyair Ltd v Opal Telecom Limited [2009] EWHC 339 (Ch), in a formulation approved in a number of subsequent cases at appellate level, including AC Ward & Sons v Catlin (Five) Limited [2009] EWCA Civ 1098 and Mellor v Partridge [2013] EWCA Civ 477. It is unnecessary to set them out here.
    2. As to striking out, the application notice refers to all 3 sub-paragraphs of CPR 3.4(2):
“The court may strike out a statement of case if it appears to the court –
(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(b) that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings;
(c) that there has been a failure to comply with a rule, practice direction or court order.
    1. As to striking out for no reasonable grounds, as noted in the White Book (para 3.4.6), there is a considerable overlap between the court’s powers under CPR Part 24 and r.3.4.; and the court has a discretion to treat an application made under CPR 3.4 (2) (a) as if it were an application under Part 24. In this case, there is no practical distinction in the test to be applied.
    2. So far as non-compliance is concerned, the claimant’s counsel submitted that the Mitchell/ Denton principles (Denton v TH White Ltd [2014] 1 WLR 3926) are relevant, in particular, the need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with rules, practice directions and orders. She relied upon Walsham Chalet Park Ltd v Tallington Lakes Ltd [2014] EWCA Civ 1607[2015] CP Rep 15. This, she said, requires the court to apply the 3 stage test in Denton – (1) identify and assess the seriousness and significance of the “failure to comply with any rule, practice direction or court order”, (2) consider why the default occurred, and (3) evaluate all the circumstances of the case.
    3. Walsham Chalet Park is authority for the proposition that the Denton principles are “relevant and important” in a strike out application. However, as the decision itself makes clear (at [44]), there is a material difference between the question of whether to impose the sanction of a strike out for non-compliance rather than whether to grant relief under CPR r.3.9 from an existing sanction:
“In a strike-out application under r.3.4 the proportionality of the sanction itself is in issue, whereas an application under r.3.9 for relief from sanction has to proceed on the basis that the sanction was properly imposed (see Mitchell at [44]–[45]). The importance of that distinction is particularly obvious where the sanction being sought is as fundamental as a strike-out. Mr Buckpitt drew our attention to the recent decision of the Supreme Court in Prince Abdulaziz v Apex Global Management Ltd [2014] UKSC 64 at [16], where Lord Neuberger quoted with evident approval the observation of the first instance judge that “the striking out of a statement of case is one of the most powerful weapons in the court’s case management armoury and should not be deployed unless its consequences can be justified”.
    1. I also bear in mind that, as explained by Tugendhat J in Inn Soo Kim v. Youg Geun Park [2011] EWHC 1781 (QB) at [40]:
“…where the court holds that there is a defect in a pleading, it is normal for the court to refrain from striking out that pleading unless the court has given the party concerned an opportunity of putting right the defect, provided that there is reason to believe that he will be in a position to put the defect right.”
Claimant’s submissions
    1. The claimant’s application to strike out was based on the following grounds under CPR 3.4(2):
(1) Failure to comply with rules and practice directions;

(2) Likely to obstruct the just disposal of the proceedings (in relation to the D1/D3 Defence and the re-signed D1/D3 Defences);

(3) No reasonable grounds for defending the claim.

    1. The claimant’s counsel made a number of criticisms of the various Defences, which the claimant’s lawyers unhelpfully referred to as “the First Purported Defence”, “Second Purported Defence”, “Third Purported Defence” and “Fourth Purported Defence”.
    2. As to the D1/D3 Defence, the claimant’s counsel’s criticisms and my conclusions in respect of them are as follows:
(1) In each case, the document entitled “Defence” did not contain a statement of truth.

This is correct, but as noted above, in each case, it was expressly incorporated into the form N9D filed with it, which did contain a statement of truth;

(2) The statement of truth on behalf of the company D1 was invalid because there was no statement that D3 was authorised by D1 to sign the statement.

This criticism is misconceived. CPR PD 22 provides that a statement of truth verifying a document on behalf of a company must be signed by a person holding a senior position in the company; and that person must state the position held. The claimant’s counsel did not refer me to any requirement to state that the person signing has been authorised by the company to do so; and there is no such requirement.

(3) The D1/D3 Defence was not served on the claimant’s solicitors.

This is also correct. However, it was filed; and appears not to have been served because the instructions in the N9D form were in the following terms:

Where to send this form

  • send or take this form immediately to the court at the address given on the claim form”

This reflects the general position under CPR 15.2, which provides that a defendant who wishes to defend all or part of a claim must file a defence; CPR 15.3 provides that the consequence of not doing so is that default judgment may be entered.

The rules (CPR 15.6) also require a copy of the defence to be served on the other party. But (as noted in the White Book at para 15.6.1), the rule does not impose a time limit by which service must be made, nor specify any consequences for the failure to do so.

However, since this claim was issued in the Shorter and Flexible Trials Pilot Scheme, the defendants were obliged (by para 2.29 of PD 51N) to serve their defence within 28 days of the acknowledgment of service of the claim form.

I accept that D1 and D3 were in breach of this provision; and that a failure to serve a statement of case is a serious or significant breach. The reason why the default occurred was the instructions on the form N9D forming part of the Response Pack served with the claim form.

This is apparent from D1’s letter dated 10 April 2018 to the court accompanying the re-signed D1/D3 Defences (a letter in similar terms was sent to the claimant’s solicitors):

“Following strictly the instructions of the Form N9D for Defence and Counterclaim, I sent my Defence to the Court at the exact time for the court procedure.”

The breach was remedied by the service of the re-signed D1/D3 Defences on 11 April 2018, 2 months before the first application was issued. I also consider that, since the claimant was able to (and did) access the court’s electronic file, and obtained a copy of the documents filed by D1 and D3, it would be wholly disproportionate to strike out the defence for a breach of this type.

(4) The D1/D3 defence did not comply with para 2.30 of PD51N which provides:

“The defence should include—

(a) a statement indicating whether it is agreed that the case is appropriate for the Shorter Trials Scheme and, if not, why not;

(b) a summary of the dispute and identification of the anticipated issues (if different to that of the claimant).”

The defendants were in breach of this requirement. I do not regard this breach as serious or significant; and, again, it would in my judgment be wholly disproportionate to strike out the defence for this breach.
    1. The claimant’s counsel criticised the re-signed D1/D3 Defences primarily on the ground that they were backdated to the date of the D1/D3 Defence. She referred to this as a “false date” because it was not the date on which the documents were signed. I am unable to find anything sinister in this, or that the defendants were seeking to mislead the claimant or the court. The date on which these documents were filed is plain from the court file: the defendants seem to have regarded themselves as filing a re-signed document that remedied one of the deficiencies identified by the claimant’s solicitors. It certainly did not falsify them or prevent them from being defences, as the claimant’s counsel suggested.
    2. As for the Briffa Defence, the claimant’s counsel made the following criticisms:
(1) It was inappropriately verified.

This is plainly (and regrettably) correct. It did not in my judgment prevent it from being a defence; the reference to “witness statement” was an obvious error. I do not consider this to be a serious or significant breach; albeit it is one for which there is no reasonable excuse. It would also be wholly disproportionate to strike the Defence out for this defect.

(2) It failed to comply with para 2.30 of PD51N – I have already dealt with this.

(3) It contained a number of bare denials, contrary to CPR 16.5(2) which provides:

“Where the defendant denies an allegation –

(a) he must state his reasons for doing so; and

(b) if he intends to put forward a different version of events from that given by the claimant, he must state his own version.”

This, she said, meant that it was likely to obstruct the proportionate disposal of the proceedings.

The claimant’s counsel did not identify the bare denials. The Briffa Defence is a 6 ½ page, 34 paragraph document setting out in some detail the basis of the defence. I do not accept that it is in breach of CPR 16.5.

    1. Finally, the claimant’s counsel relied on the fact that the re-verified Briffa Defence was not filed or served (it was only sent by email). So far as D1 and D3 are concerned, they required permission to amend their Defence; so the Briffa Defence (and the re-verified Briffa Defence) can only be regarded as their proposed draft amended Defence – though permission to amend was not sought from the claimant or the court. So far as D2 is concerned, the Briffa Defence was the first occasion on which it had filed a Defence. I do not consider the non-filing of the reverified Briffa Defence to be a serious or significant breach, nor a ground on which to strike it out. As for D2’s failure to serve the Briffa Defence or re-verified Briffa Defence, I accept that this was a significant breach of the rules, but for the reasons given above, not one that would justify striking it out.
    2. For these reasons, therefore, the claimant’s application does not succeed on the first ground.
Deficiencies in the Defences
D1/D3 Defence (and D1/D3 re-signed Defences)
    1. The claimant’s counsel submitted that the D1/D3 Defence (and D1/D3 re-signed Defences) were likely to obstruct the just disposal of the proceedings.
    2. She summarised the substantive issues raised by it and her responses to them as follows:
“a The claim is inadmissible because there has been no preliminary finding of admissibility pursuant to Art. 42 Regulation 207/2009 or Art. 42A Regulation 2015/2424 ( Para. 1);
b. The claim is “Extra Petitum”, which appears to be a concept in other jurisdictions akin to ultra vires, where a court decides to grant relief in a matter beyond the relief requested. This is irrelevant here. It appears to rely on the existence of the opposition procedure at EUIPO, but is unclear (Para. 2).
c. D1 & D3 seek relief, but not by way of counterclaim. This includes relief that the claim be dismissed, that it be suspended until after the conclusion of the EUIPO proceedings, that costs be awarded against [the claimant] for a “non-legitimate Law procedure” and that D1 and D3’s costs be paid by [the claimant] (Numbered paras at bottom of p.2).
d. The claim is unlawful and infringes “Free Competition Principles of the EU Comment Market” [sic] (Para (1) on p. 3).
e. The application for the EU trade mark (presumably relying on D2’s application) is guaranteed under Art. 1 Protocol 1 of the EUCHR and does not violate [the claimant]’s rights (Para. (2) first section on p.3).
f. D2 owns the Registered Design 3426071 and this contains D2’s EU TM, which gives “us” (presumably D1 and D3) the exclusive right to use the Registered Design in the EU;
g. Trade Mark infringement requires a likelihood of confusion and an obvious risk of future harm and this is confirmed by contrary evidence. The prima facie evidence is missing and cannot be presented because of the existence of the Registered Design and the EU TM.
h. There is no likelihood of confusion because of the phonetic differences between the words RED BULL and BIG HORN.
i. The visual differences are “subject of disscution in the motives of the decesion” [sic]. It is unclear what defence this raises.”
    1. In the course of the hearing it emerged that the D1/D3 Defence had been drafted by Dr Karatsanova-Rhodes. It is plainly a document whose author is not fluent in English. It is however possible to discern in it defences to the claim, namely:
(1) the claimant’s marks are dissimilar to the signs on Ds’ products;

(2) in the case of the claim under Art 9(2)(b), that there is no likelihood of confusion;

(3) in the case of the claim under Art 9(2)(c), that there is no “link” between the marks.

It exhibits, and relies upon, the submissions of D2 in the opposition proceedings (as mentioned above, this was not in the bundle).
    1. I accept that the allegations set out at paras a, b, d, e and i disclose no real grounds for defending the claim and should be struck out. As for the relief sought by D1 and D3, the application for a stay is now made by application notice, and it is unnecessary to set out a claim for costs in a statement of case. I accept that ownership of the community registered design does not entitle D2 to positive rights to use the design (or the signs on it), but only to restrain others from doing so without its consent; and accordingly, that the allegation set out in para f should also be struck out.
    2. As to dissimilarities between D2’s mark and the claimant’s marks (and the absence of a likelihood of confusion or link), D2’s submissions in the opposition proceedings (incorporated into the D1/D3 Defence) sets out the following differences between the graphic elements of the signs:
“- The animals in the different marks are in different positions – while the bull is with his head down, the bighorns are with their heads up
  • The mirrored bull has the background of a circle while the bighorns have background of a mountain and sun – their natural environment
  • The horns of the bighorns are dominant and catching eye element of the challenged application, while the bull in the former marks has small or no horns”
    1. As to whether the use of D2’s mark gives rise to a link between it and the average consumer, D2’s submissions included:
“The mere fact that the marks at issue consists a pair of animals/one animal mirrored in the former registrations/is not sufficient to establish a link between the signs. Moreover, the bighorns of the challenged application are represented in their natural environment and the scene is derived from their natural behaviour. Since the bulls of the former marks are domestic and not wild animals and are not presented in their natural environment as they do not fight with each other, not to mention they do not usually face a mirror there are no grounds to consider that the common user would establish a link between both signs. As to the aggressiveness and energy the Opponent claims that both signs impulse it should be noted that since the goods at issue are energy drinks such mental conditions are consequences of the use (or at least they are advertised in such way). In this sense energy and aggressiveness are descriptive for energy drinks and can’t be sufficient to establish a proper link between signs for the purposes of art 8 (5) EUTMR.”
    1. D2’s arguments in the opposition proceedings as to the lack of similarity of D2’s mark and the Double Bull were effectively accepted by the Opposition Division, which found them visually and conceptually dissimilar:
“In the earlier trade mark, two bulls race towards each other with their heads lowered, and they are about to collide. The Bulls have two comparatively short horns on their heads. Between the animals, a circle is depicted in the background, showing the same distance between the animals entering the circle takes place in the lower part of the presentation the tales of the animal stand upwards which gives the viewer an impression of tension. Colours are not claimed.
The contested mark shows graphic design elements in the upper part and a word combination in the lower part. All components of the sign have the colours black and yellow. Within the upper part, a sun or yellow circle is shown, which is interrupted at the bottom by a mountain landscape. This mountain range depicts different heights and levels, which are higher towards the centre. In the middle or upper part, to animals jump towards and touching each other. The leap goes clearly upwards in in such a way that the mountains are exactly between them. Striking are the strongly rounded and large horns, which form a clear curve on the heads. Obviously, these are mountain ibexes living in the mountains, their typical habitat. The words “BIG HORN” in the lower part of the mark also have a slight oblique font and are slightly longer than the one above. The hind legs of the two animals are slightly behind the representation of the mountain landscape.
The element “BIG HORN” of the contested sign will be understood by the English speaking public with that meaning. As it is not descriptive, allusive or otherwise weak for the relevant goods, it is distinctive. For the rest of the public, it is meaningless and, therefore, also distinctive.
Visually, as previously stated, the representations differ in the manner of displaying the animals, the background, the composition of the marks, and the additional colours of the contested mark. In addition, the species are clearly different, namely two bulls in the earlier mark and two ibexes in the contested mark. Furthermore, the contested mark with the representation of the mountain landscape and the words “BIG HORN” has components that the earlier mark does not have. The fact that two apparently different animals move towards each other is not sufficient for a finding of similarity. Therefore, the signs are visually dissimilar.
Conceptually, the earlier trade mark is described as a sign in which 2 bulls (fast) move towards each other. The contested mark is a mountainous landscape against the background of a son/yellow circle, with 2 ibexes starting to jump. The meanings of the signs therefore go in different directions, so that they do not overlap in the possible interpretations by the targeted public. They are therefore conceptually dissimilar. For the English-speaking consumers, the additional word combination “BIG HORN” differs from the earlier mark, so there are additional differences in this respect.
As the signs merely coincide in relevant aspects, they are dissimilar.”
  1. In those circumstances it was not necessary for the tribunal to move on to consider the likelihood of confusion or link, or the other elements of the opposition under Art 8(5).