IPEC rev their engine over Scooter design dispute
Written by Ellis Sweetenham on 10 November 2017« Return to Reading Room
Scomadi and another company v RA Engineering Co Ltd and other companies  EWHC 2658 (IPEC),  All ER (D) 09 (Nov)
The claimant companies made retro-style scooters. Their range was sold under the marque Scomadi.
In March 2012, the first claimant entered into a design and manufacture agreement with the additional counterclaimant, Hanway, relating to design and production.
In November 2013, the parties signed a supplementary agreement which modified the original agreement.
Among other things, the supplementary agreement gave the first claimant the right to terminate the design and manufacture agreement that it had with Hanway by giving 30 days' notice.
It stated that Scomadi would not be allowed to find a third party to produce the same or similar scooter and that, if that happened, Hanway would be allowed to sell the scooter without restriction.
The scooters went into production, and Hanway paid royalties to the first claimant.
The relationship deteriorated, owing to the claimants' contacts with a third party, Pimol.
In January 2017, the first claimant purported to terminate the design and manufacture agreement.
The claimants commenced proceedings for registered and unregistered design right infringement, seeking to prevent the continued manufacture and sale of certain scooters by the defendants, including Hanway.
The dispute concerned three different scooter models (the GT, GP1 and the GP2), each of which was made by Hanway and were intended to be distributed in the United Kingdom.
The issues in the case are as follows:
(1) Whether, among other things, the supplement agreement was a legally-enforceable binding contract between Hanway and the first claimant, and whether the defendants' trade in their own scooters was permitted pursuant to the supplement agreement.
Consideration was given to the circumstances in which the desing and manufacture agreement could have been legitimately terminated.
(2) Whether, among other things, infringement had occurred. Two registered community designs for scooters were considered: RCD1 and RCD2.
In regards to issue (1):
On the evidence, both sides had been involved in the drafting of the supplement agreement.
There had been consideration for it.
With regard to the interpretation of the supplement agreement, the key point was Hanway's contribution to, and thus joint ownership of, the scooter designs. There had been such a contribution as a matter of fact.
Once it was accepted that both sides had owned rights in relation to the designs, and not just the first claimant, the rest of the defendants' argument logically followed.
The supplement agreement was intended to apply in the event that the first claimant went elsewhere for manufacture of the jointly owned designs, and it did not provide a regime whereby both sides could continue to manufacture scooters made to the relevant designs, as opposed to being only able to stop the other doing so.
It was clear that, at least by the end of October 2016, the first claimant had taken the decision that it was going to proceed with Pimol.
At such a date, Hanway had been entitled to terminate the DMA.
Hanway had not been in fundamental breach in terminating the contract.
In regards to issue (2):
On the evidence, there were enough detailed differences to support the validity of RCD1 and RCD2 over the pleaded prior art, in the sense that both of the designs were new and had individual character having regard to the same.
The overall impression on the informed user was that GT infringed RCD2.
Given the modest scope of protection conferred by both RCD1 and RCD2, and the nature of the differences identified, the overall impression on the informed user of the GP1 and GP2 was different to both RCD1 and RCD.
Hence, the GP1 and GP2 did not infringe either design.
The defendants were entitled to manufacture and sell all of the GT, GP1, and GP2 pursuant to the true construction of the supplement agreement.
Both RCD1 and RCD2 were valid.
The GT infringed RCD2, but not RCD1. The GP1 and GP2 did not infringe either RCD1 or RCD2
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