Category Archives: Legal Updates

Subject to the jurisdiction of the English courts: exclusive?

inclusiveA small, but important, contract-drafting point: imagine a contract clause that says that disputes will be subject to the jurisdiction of the English courts. Should we interpret this to mean that the English courts will have exclusive jurisdiction, or might it mean that the English courts have only non-exclusive jurisdiction?

A well-drafted contract will state explicitly which law and jurisdiction governs the contract, and whether the jurisdiction is exclusive or non-exclusive.

If the contract states that English jurisdiction is exclusive, the parties must go to the English courts. If a party starts an action in another court (let’s say in China), the English court may order that party to stop proceeding in the Chinese courts. If the order is not complied with, the English court may commit the non-complying party to prison for contempt of court.

If the contract states that English jurisdiction is non-exclusive, a party can ask an English, Chinese or any other court to hear the case. An English court is likely to accept, based on the jurisdiction clause. If there is no jurisdiction clause at all, an English court might accept jurisdiction simply because the contract states that English law applies. A Chinese court might accept, eg if there is a strong connection with China in relation to the parties, the place of execution of the contract, or the place of performance of the contract.The first court to hear an action over the contract may issue an order to prevent a party from starting an action in another court. This would be on the grounds that the first court is “seised” of the action, and not because of the (non-exclusive) jurisdiction clause.

csav2A recent case in the English Court of Appeal illustrates these points. Hin-Pro International Logistics Limited v Compania Sud Americana De Vapores S.A. [2015] EWCA Civ 401, was reported on BAILII last week.

The case concerned a shipping contract – a bill of lading. Cargo was carried by sea from China to Venezuela. The claim was that the cargo had been released without production of the original bills. The relevant part of the jurisdiction clause read as follows:

This Bill of Lading and any claim or dispute arising hereunder shall be subject to English law and the jurisdiction of the English High Court of Justice in London. If, notwithstanding the foregoing, any proceedings are commenced in another jurisdiction, such proceeding shall be referred to ordinary courts of law.

The Court of Appeal interpreted this clause as giving exclusive jurisdiction to the English courts, even though the word “exclusive” does not appear in the clause. The court reviewed a substantial body of case law that supported this conclusion.

Hin-Pro’s counsel argued that the second sentence of the clause showed that the parties accepted that they could start an action elsewhere, but the court disagreed. This sentence was concerned more with the situation where another country’s court did not accept the exclusive jurisdiction clause. It did not affect the interpretation of the first sentence by the English courts.

The interpretation point is clear, at least for the English courts. However, best practice in contract drafting requires you to state explicitly whether the jurisdiction is exclusive:

  • for the sake of clarity among the parties, not all of whom will have read the English case law
  • to avoid court disputes
  • to cater for the possibility that other courts may not agree with the English Court of Appeal (eg the UK Supreme Court, or a foreign court).

If this blog had any sense of decorum, it would stop there. However, IP Draughts cannot resist mentioning some other points that come up in the judgment.

  1. Catch me if you can. One of the parties in this case, Hin-Pro, was a Chinese company. It started court proceedings in China. At first instance in the English High Court, the judge ordered that Hin-Pro cease participation in the Chinese court proceedings because of the exclusive jurisdiction clause. Hin-Pro’s sole director was a Miss Su Wei. Apparently she ignored the order. The English judge committed her to prison for 3 months for contempt of court. As the Court of Appeal drily noted: “Miss Wei has not yet been apprehended.”
  2. csavContra proferentem rule. The contract was drafted by the other party, known as CSAV. CSAV is a long-established shipping company. The Court of Appeal considered whether the contra proferentem rule might assist Hin-Pro. In certain circumstances, this rule requires that an ambiguous contract term be interpreted against the interests of the party who drafted it. A version of this rule, in the US, seems to have led to a boilerplate clause being included in many US contracts, that states that the contract is a joint drafting effort and it should not be interpreted strictly against either party. The court’s conclusion was that the rule didn’t assist Hin-Pro in this case, for a variety of reasons, not least because the clause was not ambiguous, and it could benefit either party.
  3. No understand English? Hin-Pro’s counsel argued that many of the users of the contract would not have English as their first language, and many would understand the clause as granting non-exclusive jurisdiction. The Court of Appeal disagreed:

I do not accept Hin-Pro’s submission that the fact that the bills of lading will probably be issued to companies staffed by those whose first language is not English should affect the way in which they are to be interpreted, or that the court should endeavour to determine what the words would mean to a person in that category. This would be an exercise fraught with difficulty, not least because it would, potentially, produce different results according to the non-English first language chosen, and require a determination, in many cases incapable of ready resolution, of which first language the reasonable man is to be taken as speaking. In agreeing in English to an English law contract the parties must be taken to have agreed that it shall be interpreted with all the nuances of the English language and in the way that a speaker whose first or only language was English would do so.

But which version of the English language should Miss Wei be taken to understand? UK, US, Australian? IP Draughts has doubts over whether an intimate knowledge of idiomatic English helps you to know whether “subject to the jurisdiction” means exclusive or non-exclusive jurisdiction.

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OMG – new company names %*@!

sheffieldQuiz question: which of the following names requires permission from the authorities before it can be registered as a company name in the UK, and which is automatically permitted?

(a) OMG F**K :–) Limited

(b) Sheffield University Patent Licensing Institute

Answer: (a) is now permitted, (b) requires permission.

Two UK statutory instruments (SIs) came into force on 31 January 2015, each of which has a very boring traditional name, with no use of symbols or accents, and only sensible punctuation:

The first of these SIs (the 2014 Regulations) updates the list of names that require permission before they can be registered with the UK Companies Registry (Companies House). The second SI (the 2015 Regulations) covers various points of detail relating to business names, but for present purposes we are concerned with the relaxation of the rules governing the letters and symbols that can be used in company names.

Sheffield University Patent Licensing Institute

The Government has attempted to “cut red tape” by reducing the number of names that require permission. However, many names still remain on the list. Before giving permission for a company to include those names, Companies House (on behalf of the Secretary of State) must take into account the views of various stakeholders – Government departments and others. The second company name mentioned above is an extreme example, as every part of its name requires permission. Before permitting this name, Companies House would have to consult with:

  • The Company of Cutlers in Hallamshire (for “Sheffield” – because Sheffield Steel is well known)
  • The Department for Business, Innovation and Skills (for “University”)
  • The Patent Office (for “Patent”)

In addition, Companies House would need to give permission for “Licensing” and “Institute” but these names do not require any specific consultation with others.

This company may be permitted to omit the word “Limited” from its name if it is a company limited by guarantee and meets some other criteria described in Regulation 3 of the 2015 Regulations.

In summary, it may be very hard work getting permission to have this name registered.

OMG F**K :–) Limited

frenchBy contrast, the first name mentioned above does not require any specific permissions. Under the 2015 Regulations, one is now able to register company names that include numbers, punctuation, symbols and accented (ie foreign) letters, though in some cases these cannot be used as the first 3 letters of the company’s name.

Companies House continues to have the power to reject a company name if it is offensive. However, as it has previously permitted the registration of FCUK Limited, it would be odd if it rejected a name that includes F**K.

The 2015 Regulations include provisions about rejecting names that are similar to existing names and use symbols such as “*”. These might be relevant if the proposed company name is “F**K Limited” (ie very similar to FCUK Limited), but the presence of other letters in the first example above brings us outside this territory. There are other companies whose name starts with OMG, but none that is followed by F**K.

While the name may be acceptable as a company name, this blog posting will probably fail to get through your office internet filters. Sorry about that!  &*%!

 

 

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Copyright reform and the bottom line

eames yellowIP Draughts has a comfortable office chair. It is a reproduction of a design by the famous, mid-twentieth-century designers, Charles and Ray Eames. The design is known as the lobby chair, because it was originally designed for the lobby of the Rockefeller Center in New York, in about 1960.

The chair was a bit of a luxury item, as it cost IP Draughts several hundred pounds. It was certainly more than his previous chair, which was also of good quality, but was bought in a clearance sale when Rio Tinto shut one of its offices in London. That one cost £10. The average price paid by IP Draughts for his office chairs is not too unreasonable.

eames redThere must be thousands of reproduction Eames lobby chairs in circulation across the World. They vary in quality and price, but many of them look very similar. You can spend nearly £5,000 on one at the Conran Shop in London, if that is your choice. Or you can get them much cheaper. This one costs AUS$499, while this one seems to cost only US$70-150 if you buy 20 of them, and pay the costs of importing them from China.

With such a disparity of prices, IP Draughts idly wonders whether it is possible to have a reproduction of a reproduction, or a rip-off of a rip-off, to put it less charitably. No doubt, readers who are copyright litigators will be able to answer that one.

IP Draughts is not an expert in US copyright and design laws, but assumes that the Eames design is no longer protected. He is on safer ground discussing the position under UK copyright law. UK copyright law in this area is about to change very significantly, and will make the sale of modern reproduction furniture more difficult (or more expensive).

Let us take the fictional example of a chair designed and first marketed in England in 1960, by the fictional English designers, Karl and Jay Eaves, who both died in 1976. The chair would probably have benefitted from UK copyright, as a type of artistic work known as a “work of artistic craftsmanship”. Usually the period of copyright protection for artistic works is the life of the author plus 70 years. However, section 52 of the Copyright, Designs and Patents Act 1988 limits the period of copyright protection for articles that are manufactured by an industrial process, to 25 years. A statutory instrument states that this provision applies if more than 50 articles are manufactured.

In the above example, assuming that the current law applies, copyright expires in 1985 rather than 2046. (As this is only a blog article, we will skip over the fact that the chair would have first been protected under the Copyright Act 1956 and the effect of the transitional provisions in the 1988 Act for works that existed before the 1988 Act came into effect. This subject is far too boring and complicated for IP Draughts’ brain.)

In principle, this shorter period of protection seems right to IP Draughts. There may be arguments for a long period of copyright protection for creative works such as books and paintings, to give a revenue stream to struggling individual creators and their descendants. But industrially-manufactured items seem to IP Draughts to be in a different category, and the duration of design right (much shorter than copyright) reflects this difference.

morrisThe precise meaning of a “work of artistic craftsmanship” has not been fully established. There has been very little case law on the subject. It probably covers a chair that was designed specially for a building in New York, by leading designers, but this is not certain. This category of works was originally introduced into UK copyright law in response to the UK’s Arts and Crafts Movement, led by William Morris, in the late nineteenth and early twentieth centuries. William Morris wallpaper designs are still selling today.

Part of the problem in deciding what is the right period of protection for works of artistic craftsmanship is that they straddle the line between purely creative works and industrial works. They have both art and craft.

Never mind the historical position, the UK Government is now proposing to repeal section 52, to align UK copyright law more closely with that in the rest of the EU. This will result in a much longer period of copyright protection for iconic furniture designs and other works of artistic craftsmanship. The Government’s detailed proposals, published last week, can be summarised as follows:

  1.  Section 52 will be repealed in the near future. The repeal will take effect from 6 April 2020. In other words, there will be a period of about 5 years in which makers and sellers of reproduction articles can adjust to the new legal regime, in which copyright will last for the life of the designer plus 70 years.
  2. Following the effective date of the repeal, traders will be allowed to sell off existing stocks, and trade in copies that already exist, but will not be allowed to make or import new unlicensed copies.
  3. The Government will issue non-statutory guidance about the types of product that are within the category of works of artistic craftsmanship.

The effect of this change on traders in reproduction furniture and other artistic products is likely to be dramatic. A large number of items will be brought back into copyright. It may be necessary to stop selling items or take licences. It will be interesting to see what happens to the trade in reproduction ‘designer’ chairs. Will the bottom drop out of the market?

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New UK Intellectual Property Act 2014

bitThe Intellectual Property Act 2014 received Royal Assent earlier this week, so is now enacted, but has not yet been brought into effect.  It will be brought into effect by statutory instrument, probably in October.

The Act is a rag-bag of detailed changes to the UK law of unregistered design right, registered designs, patents, and copyright, which the UK IPO considers will “modernise” the law. The UK IPO’s summary of those changes can be found here.

Only a few of those changes are of direct interest to this non-contentious IP lawyer, mainly the following:

  1.  To make the first owner of a commissioned design the designer rather than the commissioner. Under previous (and still current, until October) design laws, the party commissioning a design (ie the client) was the first owner of design right. This change will apply to both unregistered design right and registered designs, and will align the commissionerlaw in this area with the position for copyright. Under UK copyright law, the author is the first owner unless he is acting in the course of his employment. IP Draughts recalls when unregistered design right came in, in 1989, and has always thought it very odd that the rules were different for design and for copyright, respectively. It has only taken the Government 25 years to correct this confusing anomoly! See sections 2 and 6 of the Act.
  2. To introduce criminal offences for intentional copying of registered designs in the course of a business, and marketing of those copies. See section 13 of the Act.
  3. To allow patent marking by means of an internet link rather than providing patent numbers on the patented article. This is relevant to the question of recovering damages for infringement. See section 15 of the Act.
  4. To enable the Secretary of State to make arrangements to establish the Unified Patent Court in the UK. See section 17 of the Act.
  5. To introduce an exception from disclosure under the Freedom of Information Act 2000, in the case of certain information obtained from a research programme, so as to allow orderly publication of results at a later date. See section 20 of the Intellectual Property Act.

 

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