The Intellectual Property Enterprise Court has refused applications to strike out two claims for...
The Intellectual Property Enterprise Court has refused applications to strike out two claims for breach of contract, or alternatively for summary judgment on the claims, concluding in each case that the claim must go to trial.
The claims involved two companies that traded in phototherapeutic products. One of the companies had entered into a non-disclosure agreement (NDA) with a manufacturer in China which went on to manufacture the products. The other company had reached an agreement with a distributor in the UK. After a falling out with the manufacturer, the companies began to obtain the products from another manufacturer. The distributor also fell out with the companies and began to obtain the products directly from the manufacturer.
One of the companies brought a claim against the distributor, alleging that it had acted in breach of the distribution agreement and had infringed the company's registered designs. The distributor counterclaimed that the companies had breached the NDA by applying for and seeking to enforce the registered designs, and by seeking to enforce unregistered design rights. The manufacturer also brought proceedings, seeking to restrain the companies from bringing claims of design right infringement, or claiming design rights in the products, on the grounds that they had breached the NDA. The companies applied to strike out the claims, or alternatively for summary judgment, arguing that they were bound to fail.
The distributor contended that, by virtue of Section 1 of the Contracts (Rights of Third Parties) Act 1999, it could bring a claim for breach of the NDA despite not being a party to it. The companies disputed this and also claimed that, by the time of the alleged breaches, the designs had become generally known through no act or omission by them, within the meaning of the NDA. However, the distributor argued that one of the companies had been partly responsible for the designs becoming public.
In respect of the manufacturer's claim, the Court noted that its main complaint was that one of the companies had disclosed the designs to the other for purposes not permitted by the NDA, in that the disclosure had been partly for the purposes of claiming and enforcing design rights. The Court observed that the registered designs appeared to have been applied for before the expiry of the NDA.
The Court identified aspects of both the distributor's and the manufacturer's claims that must go to trial, and was satisfied that their allegations of breaches of the NDA carried some degree of conviction. The companies' applications to strike out and for summary judgment were dismissed.