Good news for parties looking to set up a quick and hopefully-not-too-dirty private IP dispute resolution procedure – they seem to work.
The High Court has scrutinised one such arrangement carefully, in the context of an application to set aside a statutory demand for damages and costs flowing from the decision of an independent expert IP lawyer, and it all stacked up (Beacham Parts & Service Ltd v Jaguar Land Rover Ltd [2019] NZHC 1137). The agreement was fully enforceable and the party in breach was left with nowhere to hide. It was given 10 working days to pay the debt of $137,485.29 or face liquidation.
Let’s look at what happened.
settlement agreement
Back in 2012, Jaguar Land Rover sued Beacham Parts & Service for infringement of IP rights. Now I’m just guessing here, but given the parties it seems likely that the allegations involved breach of the FTA, passing off and trade mark infringement on the basis that Beacham Parts & Service was holding itself out as an authorised dealer or repairer of certain types of car.
The parties settled that dispute, and Beacham agreed to make a contribution of $150,000 towards Jaguar’s damages and legal costs. The deed of settlement imposed continuing obligations on Beacham, and there was a dispute resolution procedure that Jaguar could employ if it believed that Beacham had breached those obligations.
Helpfully, Hinton J set out the dispute resolution clause in full – so if you’re game, I guess you could infringe copyright by adopting Simpson Grierson’s innovative drafting:
“If the Independent Lawyer determines in favour of JLR, Beacham will immediately and permanently withdraw the offending promotional or advertising material. Unless the Independent Lawyer determines that the breach is purely technical with no prospect of damage to JLR or its distribution channels, Beacham will also pay to JLR liquidated damages of $2000 per day for each day or part of day that offending promotional or advertising material is available to the public. …”
(Incidentally, if you are going to steal that clause as a precedent – which I could not possibly condone – you might want to make it a bit clearer what happens in the case of multiple breaches and whether the aggrieved party gets $2000 per day in respect of each of them – this was one of the issues in dispute.)
subsequent breaches
Jaguar alleged that Beacham breached its obligations under the settlement deed, and it referred the breaches to an independent IP lawyer for determination. The independent lawyer found in favour of Jaguar, and Jaguar demanded liquidated damages of $122,000 plus legal costs which were also calculated in accordance with the deed (four-fifths of actual costs).
Beacham did not pay, and Jaguar served statutory demands for the outstanding sums.
Beacham applied to set aside the statutory demands, raising various arguments about the approach taken by the independent lawyer, the meaning of the dispute resolution clause, and whether the liquidated damages clause constituted a penalty and was unlawful on that basis.
result and implications
The settlement deed proved to be watertight despite these concerted attacks. Beacham was ordered to pay up.
From the perspective of the IP profession as a whole, I think this is a really positive development. At the last IPSANZ meeting there was a lot of discussion about ways to resolve IP disputes quickly and cheaply – especially as in New Zealand there is no equivalent to the UK’s Intellectual Property Enterprise Court (IPEC). The three main options discussed were mediation, arbitration and the proposed short trial procedure. This decision shows that agreements to refer disputes to independent expert IP lawyers for determination is another workable option to add to the arsenal.
