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Legitimacy of compromise agreement allows IPEC to solve trade mark dispute

Written by Ellis Sweetenham on 27 July 2016

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Oran Pre-Cast Ltd v Oranmore Precast Ltd and others [2016] EWHC 1846 (IPEC), [2016] All ER (D) 112 (Jul)

Facts:

The claimant, Oran, was an Irish company that manufactured and sold precast concrete products, incorporated in 1996.

The first defendant, Oranmore, was a United Kingdom company based in Norfolk. It also manufactured and sold precast concrete products and sold related design and construction services and was incorporated in October 2011.

The second and third defendants were founders and directors of Oranmore. The second defendant, RM, had formerly been a director of Oran. The third defendant, RB, had formerly been Oran's general manager. They were related to many of the directors, shareholders and employees of Oran by blood or marriage.

Oran brought claims for infringement of its UK registered trade mark for the mark 'ORAN PRE-CAST' (the registered mark) in respect of the defendants' use of the signs 'ORANMORE PRE-CAST', 'ORANMORE PRECAST' and/or 'ORANMORE'. Oran submitted that, among other things, the names ORAN PRE-CAST and ORANMORE PRECAST were simply too close to co-exist in competing businesses without confusion.

Oran applied for the registered mark on 11 September 2013 and it was registered on 6 December 2013. The trade mark infringement claim therefore related only to Oranmore's trade after 6 December 2013.

Oran also claimed for passing off in respect of the defendants' use of the ORANMORE signs both with and without Oranmore's device. The passing off claim related to Oranmore's trade since it had started trading in March 2012. Oran submitted that the ORANMORE signs with or without the Oranmore's device were very closely similar to Oran's trading style, and in each case their use was likely to lead to deception on the part of the public which had damaged, and was likely to further damage, its trade.

It was common ground that Oranmore had used the ORANMORE signs in respect of goods and services identical or similar to the goods and services for which the registered mark was registered.

The defendants contended thatthe claims had been released pursuant to a compromise agreement entered into on 17 May 2013, which had had the effect of releasing RB from: (i) any claims that Oran might have had against him as at 17 May 2013, including claims arising out of the use of the ORANMORE signs or Oranmore's device; and (ii) any claims that Oran might have against him arising out of the continued use of the ORANMORE signs or Oranmore's Device after 17 May 2013; and that the effect of such release was also to release the other defendants from any liability to Oran.

If the compromise agreement was held to be successful, it would be an answer to the entire claim.
The defendants relied on the compromise agreement and specifically the Oran release to provide a complete answer to the claim.

Oran submitted that, on its true construction, the Oran release was not a settlement or release of claims, but only a promise not to bring a claim, which would not act to release joint defendants.

Issue: Was the compromise agreement valid?

Judgment:

The general rule at common law was that where a person had a cause of action against two or more joint defendants, a settlement by which he released one or more of them operated as a release of the others.

That was subject to an exception, namely where the settlement agreement for the release of one or more of them contained a reservation of his right to sue the others. That reservation might be express or implied.

Accordingly, it was not the case that where a settlement agreement was silent as to the reservation of a right to sue joint defendants, they were not released unless there was an express or implied term releasing them.

On the true construction of the compromise agreement, the reasonable person with all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant that the Oran release would cover all known and foreseeable claims connected with RB leaving the company, in order to resolve all matters between them and provide the parties with a clean slate.

That included any claims arising from the founding and trading of Oranmore, which had been intimately connected with RB's departure from Oran.

 In order to achieve that clean slate, the reasonable person would have understood the parties to have meant the Oran release to encompass the present passing-off and registered trade mark infringement claims.

There was nothing in the documentary, factual or commercial context to suggest that there was a necessity to imply a limitation of the compromise agreement to Irish law. Such an implied term would defeat the purpose of achieving a clean slate between the parties.


The compromise agreement operated as a release of liability for RB for the present claims of trade mark infringement and passing off, and precluded Oran from bringing the present claims against him.

It also operated as a release of liability of RM and Oranmore as alleged joint defendants with RB, for the present claims, and precluded Oran from bringing the claims against them.

The claims would be dismissed.

If you'd like to know more about this article please send an email to Ellis Sweetenham quoting the article title and any questions you might have, alternatively call the office number on 02380 235 979 or send an enquiry through our contact form.

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