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	England and Wales Patents County Court
You are here: BAILII >> Databases >> England and Wales Patents County Court >> AS Watson (Health and Beauty Continental Europe) BV & Ors v The Boots Company Plc & Ors [2011] EWPCC 26 (08 September 2011) URL: http://www.bailii.org/ew/cases/EWPCC/2011/26.html Cite as: [2011] EWPCC 26

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IN THE PATENTS COUNTY COURT
COMMUNITY TRADE MARK COURT

		St. Dunstan's House 133-137 Fetter Lane London EC4A 1HD
		08/09/2011

His Honour Judge Birss QC :

1. This is an application to transfer an action from the Patents County Court to the High Court.
2. The three claimants ("Watson") are in a group owned by Hutchison Whampoa Ltd. The third claimant runs the well known Superdrug shops in the UK. Watson bring proceedings for infringement of a Community Trade Mark against the defendants ("Alliance Boots"). Watson's CTM is No 003767861 for the word SOLAIT registered in class 3 in respect of "cosmetics; lotions and creams for the skin; sun screen products; cosmetic (sun) tanning preparations; after sun products". Alliance Boots have launched a sun cream product called SOLEI (or SOLEI SP). Watson contends that Alliance Boots product infringes under arts 9(1) (b) and 9(1)(c) of Regulation 207/2009. Watson also have a UK registered trade mark but nothing turns on that.
3. An important part of this case is its international aspect. A company in the Alliance Boots group (2^nd defendant) makes the product in the UK and affixes the brand here. However the product is not sold in the UK. Alliance Boots have no plans to sell it in the UK before 2013. Indeed in response to a submission that plans can change, Alliance Boots are prepared to undertake to the court that they will not do so before 2013.
4. Currently Watson's SOLAIT is on the market at substantial levels in UK, Ireland, the Netherlands and Belgium. There have been some sales in other European states too. This judgment should not be taken as prejudging any of the issues arising about Watson's reputation.
5. Currently Alliance Boots's SOLEI product is coming on the market in other countries. The key ones so far are France, Spain, Italy and Portugal. Alliance Boots intends to sell more widely in Europe in due course.
6. In terms of the issues to be decided – 14 member states are in issue. Alliance Boots accepts that in due course it wishes to sell in all 14 of these states. They are: France, Spain, Italy, Portugal, UK, Ireland, the Netherlands, Belgium, Austria, the Czech Republic, Hungary, Poland, Romanian and Slovakia.
7. Watson first got wind of this product in February 2011. They wrote to Alliance Boots about it. There was no reply. Watson learned of the launch in May 2011 and issued proceedings in the Patents County Court on 24^th June 2011.
8. Once proceedings commenced Alliance Boots applied to transfer the case to the High Court. Alliance Boots contends that this is a heavyweight commercial dispute between two major undertakings, neither of which is a small /medium sized enterprise (SME) of the kind the PCC exists to serve. The case is a complicated one which is not suited to the streamlined case management machinery in the PCC. They submit that even in the PCC it will require 4 days to try. Also Alliance Boots submits that the value of the case points in favour of the High Court. This is not so much in terms of the potential damages they may be ordered to pay Watson if they lose, since the product is in the early stages of its life, but in terms of the cost to Alliance Boots of losing the case. Alliance Boots contends that if they lose, then substantial sums spent on the brand so far will be wasted, that the costs of rebranding will be substantial and there will be a significant gap in their sales while they are forced to bring in a new brand.
9. Watson contends that the action should remain in the PCC. They accept that the parties are substantial but contend that the case is suitable to be heard in the PCC. The case is not as complex as the defendants contend and can be heard within the 2 days normally allowed for PCC trials. Watson are concerned that the case can be heard much more quickly in the PCC than in the High Court. A trial in the PCC (if the case was ready) could be heard in Jan or Feb 2012 whereas without expedition a trial in the High Court would not be listed until Oct/Nov 2012. As regards value, they submit that Alliance Boots' evidence is thin and insubstantial and they doubt that the financial consequences of losing this case for Alliance Boots are as substantial as Alliance Boots contends. To keep the case in the PCC they are prepared to undertake to limit the injunctive relief sought to the 14 countries (and to manufacture in UK for these 14 countries), to cap their damages at £400,000 and to permit the defendants to dispose of existing stock if an injunction is granted for a period of 3 months. This disposal period was extended during argument to a possible 6 months.
10. To deal with Watson's point about the timing of the trial, Alliance Boots offered to undertake to support an application to expedite trial in High Court. The information from the clerk of the lists is that, as one might expect, the High Court can accommodate whatever degree of expedition is appropriate to a given case. Alliance Boots will support expedition of this case to a date between late March and May of 2012. They argue that this is the appropriate degree of expedition in this case.
11. The evidence before me consisted of two statements from Peter Ellis of Browne Jacobson on behalf of the defendants and a statement from Bonita Trimmer of Wragge & Co. for the claimants. At the hearing Guy Tritton appeared for the defendants and Michael Hicks appeared for the claimants.

Factors

12. I considered the factors governing the question of transfer of a case from PCC to High Court under the new PCC regime in Alk-Abello v. Meridian Medical Technologies [2010] EWPCC 14, [2011] FSR 13 (see paragraph 30). Mr Tritton reminded me of my conclusion at paragraph 32 as follows:

32. Once those factors are considered I must bear in mind what sort of cases the Patents County Court was established to handle and that its role is to provide cheaper, speedier and more informal procedures to ensure that small and medium sized enterprises, and private individuals, were not deterred from innovation by the potential cost of litigation to safeguard their rights. The decision turns on what the interests of justice require, taking into account both parties interests and interests of other litigants.

13. That passage is of course based on judgment of Bingham MR in Chaplin v Lotus (Court of Appeal, Bingham MR, Rose and Waite LJJ, unreported 17th December 1993).
14. Mr Tritton also reminded me of the judgment of Kitchin J in Caljan Rite-Hite Ltd v. Sovex Ltd [2011] EWHC 669, [2011] FSR 23. The point of Mr Tritton's submission was to emphasise (as Kitchin J did) that the overriding objective to deal with cases justly will always be important.

The factors in this case

15. I will deal with the factors in turn.

Size and financial position of parties

16. Plainly neither side here is an SME. Each side can well afford to bring or defend this claim in the High Court and cannot be said to be deterred from litigating by the prospect of being ordered to pay the other side's assessed costs. In my judgment, although not determinative, this factor points firmly in favour of transfer.

Whether the claim is an appropriate one for the PCC

17. This involves three points: value of claim, complexity of issues and estimated length of trial. I will take each in turn.
18. As to the value of the claim, there was a detailed dispute between parties about this.
19. First there was an issue about the value of sales of the products in issue. The parties pointed to the guidance in The Patents County Court Guide which is aimed at assisting parties to decide whether a case is suitable for the PCC. The passage deals with the size of the parties, the complexity of the claim, the nature of the evidence and the value of the claim. As regards value the guidance states:

Value of the claim. Putting a value on a claim is a notoriously difficult exercise, taking into account factors such as possible damages, the value of an injunction and the possible effect on competition in a market if a patent was revoked. The likely damages to be recovered in an infringement claim is a factor which should be considered. Although no limit on damages in the Patents County Court has been introduced (yet), if the damages are likely to be well in excess of £500,000 then the claim may not be appropriate for the Patents County Court. As a general rule of thumb, disputes where the value of sales, in the UK, of products protected by the intellectual property in issue (by the owner, licensees and alleged infringer) exceeds £1 million per year are unlikely to be suitable for the Patents County Court in the absence of agreement.

20. Mr Hicks submitted that there was no satisfactory evidence about the annual value of sales of the defendants' product. He pointed out that no sales forecasts had been provided by Alliance Boots but that they would have been simple to produce. To plug this gap Mr Tritton relied on the evidence from Mr Ellis about the predecessor product SOLTAN. The sum of the sales of that product in the relevant countries for the last 4 years was about 7 Million euros, giving on average about 1.7 Million euros sales per year. Mr Hicks questioned the reliability of this approach in gauging the likely sales of the product concerned. It seems to me that the detailed debate between the parties on this issue is in danger of getting out of hand bearing in mind its relevance to the issue. It seems to me to be plain that the product(s) in issue in this case are of a kind whose annual sales overall are likely to be somewhat in excess of the figures mentioned in the PCC Guide but not wildly out of scale with those figures.
21. It was suggested in the course of argument that these figures in the PCC Guide were produced with an eye on a patent case rather than a trade mark case. The point of the difference being that a trade mark action relates only to the branding of the product itself and would not ordinarily prevent a product per se being sold where in a patent case the relief generally can be said to relate to the underlying product. The distinction between the two kinds of intellectual property right is of course real but this argument is in danger of elevating what is merely a guideline into legislation. These figures are a general rule of thumb, nothing more. There will be unsuitable cases with a total annual turnover of less than £1million and there will be suitable cases with a higher turnover. The fact the case is concerned with branding rather than the underlying product is also a factor but so too is the fact that, as Mr Tritton submits, in this skin care market brands are themselves very important.
22. Since the PCC Guide was produced there has been a limit on damages introduced for the court's special jurisdiction (patents and designs) of £500,000. That limit does not (yet) apply to claims outside the special jurisdiction of the PCC like this one. In any event Watson have voluntarily undertaken to cap their damages at £400,000.
23. Alliance Boots contended that the impact on them of losing the case would be significant. Figures were given for the sums spent on marketing SOLEI up to end of 2011 which will have been wasted if Watson are right and the mark infringes. Estimates were also given for the cost of rebranding. The detailed figures are highly confidential. To give an idea of the sums involved, the aggregate of the marketing costs wasted and the rebranding on various assumptions was said by Alliance Boots to be in the order of 4-5 Million Euros. Watson submitted that these figures was not adequately substantiated and could not be given much weight.
24. A particular aspect of the argument about value was a dispute about the time which Alliance Boots would need to rebrand if they lost. In Mr Ellis's evidence Alliance Boots set out a timeline for the steps which would be needed to rebrand. The time required was said to be about 12 months. Alliance Boots' timeline was criticised by Watson but Mr Tritton pointed to a passage in Ms Trimmer's evidence on behalf of Watson, that preparation for sales in the summer season began in the previous September. It seems to me that Mr Tritton's point undermines the various criticisms Watson levelled at the evidence about timing (including arguments about whether a further manufacturing run could be scheduled and whether tasks could be performed in parallel). It seems to me that if an injunction was granted in the first half of 2012 next year, even with a 6 month run off period, in reality it will mean that Alliance Boots will have no brand available for the summer 2012 market. That would lead to substantial lost sales.

Conclusion on value

25. The rival arguments about value are in danger of getting out of hand. Something similar was in danger of happening in the ALK Abello case in which arguments about value became highly refined, albeit the detailed points were different. In that case, in paragraph 42, I said:

In my judgment, for the purposes of considering transfers, the assessment of the value of a claim and the value of an injunction is intended to reflect commercial realities. It is not intended to involve fine questions of causation or remoteness of damage.

26. I stand by that observation. The assessment of the value of a claim and an injunction for purpose of a transfer application are not the place for refined debates about detailed evidence. I do not mean that one should look at Alliance Boots's evidence uncritically but Alliance Boots are likely to be the best judge of their own interests. What is at stake is only whether this case is tried in the High Court (which both parties can afford) or the PCC.
27. Overall, this claim is undoubtedly more valuable than many cases before the PCC. The likely annual sales of the products in question might well exceed £1 million overall but the damages will be no more than £400,000. It seems to me that the evidence supports a conclusion that the cost to Alliance Boots of losing and having to rebrand (including the wasted expenditure) is likely to exceed 1 or 2 million euros even if it does not reach the 4 – 5 million total in evidence. As a whole the value of this claim on the evidence before me is not so substantial that value alone would mandate a transfer to the High Court.

Complexity of issues and length of trial

28. In the course of his submissions Mr Tritton addressed a number of legally complicated and important issues which he submits will arise. Mr Hicks did not disagree that the issues may well arise. However in my judgment the presence of these issues in this case is a neutral factor. All of the points were purely matters of trade mark law and as such the Patents County Court is well equipped to deal with them. I note that s289(2) of the Copyright Designs and Patents Act provides that the court may refrain from ordering the transfer of proceedings from the PCC to the High Court notwithstanding that the proceedings are likely to raise an important question of fact or law.
29. Mr Tritton's submission that the case was also factually complicated requires more detailed consideration. He pointed to the recent judgment of the CJEU in DHL v Chronopost Case C-235/09 [2011] ETMR 33 given in April 2011. He referred in particular to paragraphs 46 to 48 of the judgment and submitted that the upshot of this judgment in the case before me is that the position in each member state will need to be considered distinctly. He submitted that the Court in Chronopost was deciding in effect that if a Community Trade Mark court finds that the acts of infringement are limited to a single member state or group of states but also finds no infringement in other member states (perhaps on linguistic grounds) then the court must limit the territorial scope of the injunction granted. I should say that precisely what would need to be established in order to exclude a member state from the territorial scope of an injunction is not a matter before me on this hearing. The judgment refers to the defendant proving that the use of the sign at issue does not affect the functions of the trade mark for example on linguistic grounds. However the basic proposition, that the position in each member state will need to be investigated at trial, was accepted by Mr Hicks.
30. Mr Tritton submitted that at least the following factors will need to be considered for each member state:

i) The reputation of SOLAIT,

ii) The inherent distinctiveness of SOLAIT,

iii) The de facto distinctiveness of SOLAIT,

iv) The visual, aural and conceptual similarity between SOLEI and SOLAIT, and

v) The characteristics of the average consumer.

31. He referred to the evidence of Mr Ellis that the inherent distinctiveness of SOLAIT and SOLEI will vary considerably from state to state. In France sun cream is crème solaire and (he argues) SOLAIT in France would be pronounced very similarly. Although "sol" will often indicate the sun in countries with a Latin based language, in Hungary (one of the 14 states) the word of sun is nap or napsugar. The way SOLAIT and SOLEI are pronounced varies from state to state. Mr Ellis said that in certain member states SOLAIT will be pronounced SO-LIGHT. Mr Ellis stated that the third party brands differ considerably in each member state, so also will the extent to which SOLAIT has been marketed. Mr Tritton also emphasised that the relevant trade channels through which these products are or will be sold will vary in different member states. He was at pains to emphasise that Alliance Boots intend to market their SOLEI product in independent pharmacies. Mr Tritton also submitted that some disclosure would be required in relation to the question of the reputation of SOLAIT in some states and he informed me that his clients wished to adduce survey evidence dealing with some of the issues I have mentioned above.
32. Mr Hicks submitted that the complexities were overstated by Mr Tritton. As regards reputation he accepts that there have been large sales of SOLAIT in 4 states, some sales in a few others and none in the remainder. This will be quite straightforward to deal with. The claimants accept that each state will need to be considered but submitted that a single expert might be able to give evidence dealing with all the relevant linguistic issues.
33. Mr Hicks also pointed out that the Patents County Court was a designated Community Trade Mark court. So he submitted that the new procedural regime in the PCC must have been created with the possibility of having to grapple with a multijurisdictional CTM infringement case in mind. By definition therefore, merely being such a case cannot make it unsuitable for the PCC. Thus in effect Mr Hicks sought to side step the whole debate about the complexity of the factual issues but in my judgment this point cannot be side stepped in that way. For one thing, as Mr Tritton pointed put, the Chronopost decision was given in April of this year, well after the new PCC regime was set up. More importantly though, it seems to me that there is nothing anomalous in the Patents County Court being a designated CTM court even if some heavy CTM cases are of a complexity that militates in favour of transfer to the High Court. For one thing many cases involving infringement of Community Trade Marks are simple ones and do not give rise to the complexity of this case.
34. I do not doubt that a considerable degree of streamlining could be undertaken to reduce the areas of dispute here but the fact remains that 14 countries are distinctly at stake and, at least as matters stand before me, each of them will need to be considered in some detail. Mr Tritton submitted that a single expert would not be enough. I agree. It seems to me to be almost inconceivable than a single expert could deal with the position, including the linguistics, of all the separate countries in issue.

Impact on length of trial?

35. The real issue is the impact the issues will have on the length of trial. Mr Hicks says the case could be done in 2 days. Mr Tritton submits it will need at least 4 days even if streamlined in accordance with the PCC procedures. Although the case is at an early stage, as matters stand I simply cannot see how this case could be shoehorned into a 2 day slot. As it stands it will involve considering numerous countries, with many different languages and different markets. 2 days of court time represents 10 hours. No doubt much can be agreed but even if all that is left was ½ hr of evidence per country, which seems to me to be very optimistic given that it involves 15 minutes for each party, that would take 7 hours to hear and leave only 3 hours for every thing else in the whole case. This is not realistic. Also, although I do not regard the complexity of the legal issues per se as a factor, they nevertheless arise and will themselves require time to be dealt with.
36. The fact that this case is likely to take substantially longer than 2 days to hear is an important factor which points in favour of the High Court both inherently and because it provides an indication of the share of the resources of the PCC which this case will occupy.

Specialist judge

37. Mr Hicks also submitted that a factor in favour of the PCC was the presence of a specialist judge. The point he was making was that I, the full time judge of the Patents County Court, was an intellectual property lawyer before going on the bench. Mr Hicks pointed out that in the Chancery Division of the High Court, trade mark cases can be heard by any Chancery judge regardless of their background.
38. In my judgment this is a bad point. CPR Pt 30 r30.3 (c) refers to "the availability of a judge specialising in the type of claim in question". The Chancery Division is a specialist division of the High Court. While the Patents Court within the Chancery Division is a different matter, all Chancery judges are fully qualified to hear the claims in the general Chancery list, such as trade mark cases. The fact that some Chancery Judges have different backgrounds is irrelevant.

Overriding objective to deal with cases justly

39. Looking at the matter overall and bearing in mind the overriding objective, I think the balance in this case is in favour of transfer to the High Court.
40. The case is a dispute between two major organisations with a complexity which makes it unsuitable to be heard in the Patents County Court. It will take much more than 2 days to try even with all the case management powers available here. Mr Tritton described the case as a heavyweight trade mark trial between two large organisations. I accept that characterisation of the size of the case although not its value. In my judgment the value of this case is not a factor of significance as compared to the nature of the litigants and the suitability of the case to be heard in the PCC.
41. The proper administration of justice favours transfer of this case to the High Court. The fact that the PCC diary could accommodate a trial in this case earlier than in the High Court (much earlier if it is not expedited) is not an indication that the resources of the PCC are lying idle. The streamlined procedure in this court means that cases are generally resolved on a faster timescale than is available in the High Court. As a result at any given point, the available period in the future at which the PCC is able to fix a trial is likely always to be earlier than would be possible in the High Court. That is not a reason why a heavyweight trade mark trial between two large organisations should employ the resources of the PCC. Those resources exist to facilitate access to justice in intellectual property disputes in circumstances where the costs of litigating the matter in the High Court would have acted as a deterrent.
42. Although the trial is likely to come on in the PCC sooner than it might in the High Court even if expedited, the difference is a matter of a couple of months and the distinction makes little substantive difference.
43. I will order the case to be transferred to the High Court, on the undertakings offered by Alliance Boots.