LORD REED
[1] This is an action for interdict based on the alleged infringement of a
design right protected by the Copyright Designs and Patents Act 1988.
Interim interdict was granted ex parte by Lord Nimmo Smith on 14 April
2000. The defenders' motion for the recall of that interim interdict came
before me on 12 May 2000. After hearing counsel, I indicated that I was
minded to recall the interim interdict pronounced by Lord Nimmo Smith
and to grant interim interdict of new in substantially the same terms, but
restricted in scope to Scotland. Mr Currie on behalf of the pursuers then
sought, and was granted, leave to amend the summons at the Bar so as
to restrict the interdict sought to Scotland. I then recalled the existing
interim interdict and granted interim interdict of new in terms of the first
conclusion of the summons as amended.
[2] The basis on which interdict is sought is set out in the pursuers'
pleadings, but can be briefly summarised. The pursuers, who are
based in England, design and make ambulance bodies to be fitted on
to vehicle chassis manufactured by vehicle manufacturers. Broadly
speaking (this matter is explained in greater detail later), the pursuers
sell the ambulances to organisations responsible for providing ambulance
services, including the S. Ambulance Service. The defenders are a
competing firm, based in Ireland.
[3] According to their averments, the pursuers in 1998 designed a new
piece of apparatus for providing access to vehicles such as ambulances.
The access apparatus combines a step and a ramp. It can be moved from
a closed position to a position in which a step is provided or to a position
in which a ramp is provided. It is thus suitable either for persons on foot
or for trolleys. The apparatus can be operated electrically. No previous
designs had combined a step and a ramp. The defenders, for example,
had in the past supplied ambulances which had a step and also a ramp
which could be manually operated. The pursuers have applied for UK and
European patents in respect of their design.
[4] From about August 1998 the S. Ambulance Service had on trial from
the pursuers an ambulance fitted with the new design. On about 25
February 1999 the S. Ambulance Service issued invitations to tender
for the supply of 65 "accident and emergency vehicle" conversions.
Tenders were required to comply with the specifications issued by the
S. Ambulance Service. Two separate specifications were issued, one of
which made no reference to a step-ramp feature, and the other of which
contained an outline of such a feature. The pursuers tendered to supply
all 65 ambulances. On about 24 November 1999 they were informed by
the S. Ambulance Service that they were to be awarded a contract to
supply 32 ambulances, and that the contract to supply the remaining
33 was to be awarded to the defenders. The pursuers were not aware of
the basis on which the defenders had tendered for the contract, and in
particular whether the defenders' design included a step-ramp feature.
[5] In about July 1999 the pursuers received information which suggested
that the defenders' tender had included a step-ramp feature. By letter
dated 11 August 1999 the pursuers' solicitors stated to the defenders that
the use of such a step-ramp constituted an infringement of the pursuers'
design right, and required undertakings from the defenders to desist from
any infringement of the right. There followed correspondence between the
respective solicitors for the parties during August and October 1999.
[6] On 22 March 2000 the pursuers received information that the first
ambulance manufactured by the defenders for the S. Ambulance Service
had been delivered to a dealer. The pursuers were able to arrange for
photographs of the ambulance to be taken on about 31 March 2000.
Putting the matter shortly, the step-ramp incorporated into the defenders'
ambulance is said to be extremely similar to the pursuers' design, even in
respect of design features which serve no functional purpose.
[7] On behalf of the defender, Mr Moynihan did not dispute that there
was a prima facie case that the defenders had copied the pursuers'
design. Mr Moynihan argued however that the Court had no jurisdiction to
grant interdict in the terms granted by Lord Nimmo Smith, that being an
interdict of world-wide scope, and that the balance of convenience in any
event favoured the recall of interim interdict.
[8] In relation to the first point, Mr Currie for the pursuers intervened
at the outset of the hearing so as to narrow the area in dispute, by
indicating that he would be content with an interdict expressly confined to
the United Kingdom. Mr Moynihan, however, submitted that any interdict
should be confined to Scotland. The greater part of the hearing was
devoted to this issue. I will deal with it fairly briefly in this Opinion, as I
doubt whether the reclaiming motion will directly concern this point.
[9] Mr Moynihan referred me to the Brussels Convention of 1968 as
amended, as set out in Schedule 1 to the Civil Jurisdiction and Judgments
Act 1982, and in particular to Article 5(3). Mr Moynihan submitted that
the present case related to delict, and that jurisdiction therefore resided
in the Courts for the place where the harmful event occurred. Under
reference to the judgment of the European Court of Justice in case
C-68/93 Shevill v Presse Alliance SA [1995] E.C.R.I. 415, Mr Moynihan
submitted that where a harmful event occurred in a number of countries,
the Courts of each of those countries had jurisdiction which was confined
to the consequences suffered within that jurisdiction. In the present case,
therefore, the Court of Session could only deal with the harmful event
which occurred in Scotland. Mr Currie, on the other hand, argued that
the Court was given by the 1988 Act the power to pronounce an interdict
covering the entirety of the United Kingdom. Mr Currie referred in that
regard to section 227(1) of the 1988 Act, which is in the following terms:
"Design right is infringed by a person who without licence of the design
right owner -
(a) imports into the United Kingdom for commercial purposes, or
(b) has in his possession for commercial purposes, or
(c) sells, lets or hires or offers or exposes for sale or hire in the course of
a business,
an article which is, and which he knows or has reason to believe is, an
infringing article."
Mr Currie pointed out that sub-section (1)(a) refers expressly to the
United Kingdom rather than to any of its particular jurisdictions, and
he submitted that the words "in the United Kingdom" should be implied
also in sub-section (1)(b) and (c), given the presumption against extra-
territorial effect. Mr Currie submitted that there were practical advantages
in avoiding the necessity, for a victim of UK-wide infringement of a design
right, of repeated litigation in each of the three jurisdictions of the United
Kingdom. He submitted that Parliament had intended to confer on the
Scottish Courts, as also on those of Northern Ireland and of England and
Wales, the power to restrain infringements throughout the whole of the
United Kingdom. At the least, he submitted, the pursuers had an arguable
case to that effect. No authority other than the case of Shevill was cited
on behalf of either party.
[10] It appeared to me that, in the absence of any statutory power
extending its jurisdiction, this Court would only grant interdict to prevent
the commission of threatened wrongs within its jurisdiction. I was not
persuaded that section 227 of the 1988 Act had the effect, or arguably
had the effect, contended for. It appeared to me that the reference to
the United Kingdom in section 227(1)(a) was intended merely to define a
particular infringement and was not intended to extend the jurisdiction of
the Courts so as to enable them to pronounce interdicts or injunctions in
respect of actings in other parts of the United Kingdom (any more than, in
a criminal context, the prohibition on the importation of controlled drugs
into the United Kingdom could be regarded as conferring on the Scottish
Courts a general power to try offences committed by importation into
England and Wales). I therefore considered that any interim interdict
should be confined in its scope to Scotland.
[11] In relation to the balance of convenience, Mr Moynihan argued,
first, that the pursuers had delayed unreasonably in bringing the present
proceedings and, secondly, that the loss occasioned to the defenders
as a result of the interim interdict would be disproportionate and in all
likelihood irrecoverable.
[12] So far as delay is concerned, Mr Moynihan pointed out that the
parties had been in correspondence about the alleged infringement since
about August 1999 and that the pursuers had known since 24 November
1999, at the latest, that the S. Ambulance Service had decided to buy 32
ambulances from themselves and 33 from the defenders. Nevertheless, it
was not until April 2000, shortly after the delivery of the first ambulance
by the defenders, that the present action had been commenced. Mr
Moynihan however accepted that the defenders had been aware of the
pursuers' claim to exclusive design rights in respect of the step-ramp
since at least their receipt of the letters from the pursuers' solicitors,
and that they had entered into their contractual and manufacturing
commitments in full awareness of the risk of proceedings being taken.
[13] In reply, Mr Currie submitted that until the pursuers had had an
opportunity to see and inspect one of the infringing ambulances, which
first occurred on 31 March 2000, they did not have any solid evidence
that the defenders were infringing their rights. That submission was in
accordance with the pursuers' averments, and was not contradicted by
Mr Moynihan. The pursuers' solicitors had warned those acting for the
defenders on 8 October 1999 that their clients' position was uncertain
and that they ran the risk of action being taken against them if they
commenced to supply ambulances incorporating a copy of the pursuers'
design. That is a point to which I shall return. In those circumstances, I
did not consider that the pursuers had delayed unreasonably.
[14] In relation to loss, Mr Moynihan emphasised that the defenders
had undertaken a contractual commitment to supply the 33 ambulances
in question to the S. Ambulance Service and would incur a liability
in damages if they were prevented from fulfilling that commitment.
In addition, the manufacturing costs had already been incurred. The
pursuers, on the other hand, could have only a modest claim for lost
profit or royalties.
[15] In reply, Mr Currie submitted first that the configuration of the step-
ramp used on the defenders' vehicle adopted a shape which was not
conditioned by the chassis or by any functional requirement but which
was also used by the pursuers. In those circumstances, there was a very
strong inference of direct copying. That matter was described in greater
detail in the pursuers' pleadings. The strength of the pursuers' case was
a relevant factor to bear in mind. Moreover, it was apparent from the
correspondence, and conceded by Mr Moynihan, that the defenders had
made a commercial assessment of the risk of going ahead. In these
circumstances the Court should proceed on the basis that there was a
strong prima facie case of direct copying, and a conscious decision by the
defenders to run the risk of proceedings being taken against them. Mr
Currie further informed me that the gross value of the 33 Ambulances
was, according to his information, £970,000. The profit element in
that sum, which represented the pursuers' loss, was very substantial
indeed. It might nevertheless be difficult for the pursuers to prove their
loss and damage, especially if the defenders' were to argue that the
pursuers would not have received the contract in any event. This was
a situation in which the balance of convenience strongly favoured the
holder of the design right being infringed. Nor were the pursuers' losses
confined to these 33 ambulances. The pursuers' information was that
the S. Ambulance Service were about to put out a tender for another
40 ambulances. On the other hand, it would be mistaken to suppose
that the effect of the interdict would be the writing off of the defenders'
investment in the 33 ambulances. The step-ramp formed only a part of
the equipment fitted to the chassis. There was no problem in respect of
the chassis or indeed the body fitted to it, other than in respect of one
particular element. In addition, the S. Ambulance Service's specification
did not specifically require a step-ramp matching the pursuers' design.
Reference was made in this regard to the defenders' averments in
Answer 5, at page 13E. According to the pursuers' information, even the
infringing elements could be used on ambulances supplied within the Irish
Republic, where design rights were not recognised. Reference was made
in that regard to the pursuers' averment at page 22E, and the defenders'
response at page 23B.
[16] My starting point, in relation to this aspect of the argument, was that
there was a prima facie case of direct copying of the pursuers' design.
No attempt had been made to dispute that. Indeed, Mr Moynihan did not
seek to dispute Mr Currie's submission as to the strength of the pursuers'
case, on the basis of averments that even non-functional elements of
the design had been copied. It would follow that there was a conscious
decision by the defenders to run the risk of the contract being interrupted
by legal proceedings. The defenders were indeed on express notice of
that from at least 8 October 1999. It also appeared that the pursuers'
losses might be substantial. On the other hand, there was no reason to
suppose that the defenders' expenditure to date would be wholly or even
largely abortive. Any liability in damages which they might incur to the
S. Ambulance Service would be limited by that Service's obligation to
minimise its loss by purchasing equivalent ambulances elsewhere (e.g.
from the pursuers). Accordingly, Mr Moynihan's submissions in relation
to this branch of the case did not persuade me that interim interdict was
inappropriate.
[17] Finally, Mr Moynihan submitted that the parties' respective financial
positions, and their ability to pay any damages which might be awarded
to the other party, were such that the balance of convenience favoured
the defenders. As Mr Moynihan put it, although the defenders did not
have a great deal of money, the pursuers had no money. Mr Moynihan
referred in that regard to management accounts of the pursuers which
he produced (production No 7/1). These accounts indicated that the
pursuers' current assets were exceeded by their current liabilities. They
were therefore in a state of absolute insolvency. Mr Currie, on the other
hand, observed that the pursuers' trading results for 1999 (production No
6/22) demonstrated considerable and growing profitability. The pursuers
had made a net profit over the twelve months of £1,274,000 before tax.
They had been sole supplier to the S. Ambulance Service for the last 11
years. They were a company with a track record.
[18] It appeared to me from the various accounts that the pursuers were
a reasonably substantial company. I was not persuaded that they would
be unable to meet any liability which they might incur to the defenders.
On the other hand, Mr Moynihan readily accepted that the defenders had
little money. No details were provided. Mr Moynihan suggested that the
offering of caution by the defenders might be a possibility at some future
date. He was not however in a position to offer caution at the hearing. In
the circumstances, the pursuers' financial position did not appear to me to
be a basis for recalling the interim interdict.
[19] There are two further matters which I should mention. First, the
precise contractual arrangements between the defenders and the S.
Ambulance Service were not explained to me. Reference was made to the
invitation to offer document which had been issued by the S. Ambulance
Service in March 1999 (production No 6/3). The document was not
discussed in detail. It appears from it, however, that there may be no
direct relationship of a contractual nature between either the pursuers
or the defenders and the S. Ambulance Service. The brief explanation
which I was given tended to suggest that the pursuers and defenders
fitted bodies to chassis supplied by a company which then leased the
vehicles to the S. Ambulance Service. The second matter which I should
mention is that no suggestion was made that either the S. Ambulance
Service or the general public would be prejudiced materially by the
interim interdict being maintained in force. Mr Currie assured me to the
contrary. I proceeded on the basis that there was no public interest at
stake.
[20] In the circumstances, and for the reasons which I have explained,
I recalled the interim interdict pronounced by Lord Nimmo Smith and
granted interim interdict of new in substantially the same terms, but
restricted in scope to Scotland.