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Neutral Citation Number: [2019] EWHC 1207 (IPEC) Neutral Citation Number: [2019] EWHC 1207 (IPEC)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

INTELLECTUAL PROPERTY LIST

INTELLECTUAL PROPERTY ENTERPRISE COURT



Rolls Building

New Fetter Lane

London 14 May 2019

B e f o r e : HER HONOUR JUDGE MELISSA CLARKE

Sitting as a Judge of the High Court

____________________ ATB SALES LIMITED





Claimant

- and -





RICH ENERGY LIMITED

WILLIAM JOHN STOREY

STAXOWEB LIMITED





Defendants

____________________ Mr Roger Wyand QC and Mr Ben Longstaff (instructed by Hall Ellis) for the Claimant

Mr Thomas St Quintin (instructed by Brandsmiths) for the Defendants

Trial dates: 12 and 13 March 2019

Judgment provided in Draft: 9 May 2019

____________________ HTML VERSION OF JUDGMENT

____________________ Crown Copyright ©

full particulars of any allegation of fraud, dishonesty, malice or illegality; and

where any inference of fraud or dishonesty is alleged, the facts on the basis of which the inference is alleged."

"These cases and guidelines are all based on the same rationale. Assertions of fraud and dishonesty are easy to make but difficult to prove and can cause a major increase in the cost, complexity and temperature of an action. The court's approach is not intended to stop soundly based allegations of fraud or dishonesty from being made. It is intended to make sure that improper and unfounded assertions are not permitted and to make sure that the party against whom the allegation is made knows what case they have to meet".

i) The Defendants honestly believe that they knew nothing of the Claimant or C's Device until the letter before action in these proceedings ii) The Defendants honestly believe that D1's Device was independently created; and iii) All the documents disclosed by the Defendants in support of their claim of independent design are authentic.

WITNESSES

EVIDENCE

Amended Defence

" was selected before the incorporation of the First Defendant to simultaneously refer to a number of things and concepts. One of the purposes of its selection was as an abbreviation of "Richmond", in order to give the brand a sense of geographical origin and to assist in the creation of a brand narrative.".

"The design of D1's [Device] was carried out by Sean Kelly of Staxoweb with the assistance of others at Staxoweb Limited under Mr Kelly's instruction. In addition to the inspiration from the deer of Richmond Park, one objective of the design was to create a modern image that distinguished it from stag imagery often used by Scotch whisky brands (such as, for example, Glenfiddich, Dalmore, Arran ). A number of iterations of the design were proposed until D1's [Device] was selected".

Mr Storey's Witness Statement

"Before Sean began formally designing, I conducted research into drinks that were in a similar market, as well as those brands that were using a stag logo. I exhibit at page 6 of WS1 this research. That research did not identify the Claimant's logo. As I explain below, I had never seen it before this litigation commenced".

"The stag features in a lot of logos, they are often quite simple, however the majority favour the classic design. I explained to Sean that a classic design may not necessarily be my vision for Rich Energy Sean therefore put together a collage of images of stags which he could use as inspiration when designing the logo. This is exhibited at page 28 of WS1."

"25. In early June 2015, Sean then put pen to paper and produced some exploratory sketches by hand. These sketches which I have exhibited at page 29-30 of WS1 showed a stag face on. These were classic yet modern designs But in my opinion, were more akin to the traditional stags employed by Scotch Whisky producers I wanted something more modern and innovative.

26. It was for this reason that Sean suggested geometric shapes, this [which] would make the stag look more angular. Sean produced the angular logo ideas which are exhibited at pages 37  39 of WS1. The sketch which is exhibited at page 40 of WS1 was getting close to what I wanted. I liked the use of geometric shapes, they represented the modern characteristics I wanted for the brand and departed from any possible association with whisky brands."

Mr Kelly's Witness Statement

Disclosure issues

i) "Please explain the provenance of those pdfs and supply us with a whole copy of the document or documents from which those pdfs have been extracted"; and

ii) "There is no correspondence passing between the Defendants setting out the scope of the design project, Rich Energy's/Mr Storey's own ideas/preferences for design style, presentation of Staxoweb's design process/ideas or feedback from Mr Storey/Rich Energy on the design ideas that had been supplied to them by Staxoweb. There are also no documents illustrating the iterative process that was followed before the final form of the Logo was selected. Please disclose copies of all such correspondence and/or notes of meetings falling within the types of documents set out above".

" this is quite frankly an imbecilic request by you. You are asking our client to provide more documents that could only ever support its case of independent creation".

"The RFI, quite simply, is an attempt to challenge the authenticity of our clients' disclosure. It is clear to use [sic] that it is an unsubtle and thinly veiled vehicle to commence the advancement of an extremely serious allegation that our client has fraudulently created documents for the purposes of this litigation in support of its defence. This is not the case and our clients deny any allegation of wrongdoing vehemently. In any event, at no point has an allegation of fraud been alleged or pleaded. The reasonable inference here being that following disclosure your client's position is becoming increasingly untenable and this is no more than a final 'roll of the dice' your scattergun approach of throwing as much mud at our clients in a hope that something sticks is completely inappropriate and heavily criticised by the Courts"

provided what they described as without prejudice and voluntary disclosure, enclosing with the RFI Response:

i) An electronic copy of a document described as "Rich Energy Brand Guidelines" and which is entitled "Brand Research  How we created Rich Energy" ("Brand Document"); ii) Electronic copies of the renderings underlying pages 19 and 20 of the Brand Document, which include those in Mr Storey's witness statement and appended to Mr Kelly's first witness statement, but also include others; and iii) Screen shots of the properties of each of these electronic documents.

i) by Mr Kelly from other documents that had been created by or were in the possession of the Third Defendant before that compilation; ii) in or around July 2018 and finalised on 3 August 2018.

i) the pencil drawings on pages 6-18 of the Brand Research document were created by Mr Kelly in May and/or June 2015; and ii) Mr Kelly created the computer-generated renderings on pages 19-22 of the Brand Research document in May and/or June 2015. The properties/metadata of two electronic files containing the renderings on page 19 and 20 (but not 21 and 22) were disclosed, which show that those two files were in fact created on 2 July 2015.

"produced to try and aid the court to see, to put together the pieces, because the only originals we had were the original sketches and the black geometric designs, and obviously the can design, but those are the only originals. So just to aid, you know, our recollection of those events, we decided to put together a comparison document, which kind of pieces it together, so that we could talk about it more easily".

i) he believed, but was not certain, that the various third party stag head logos used as exemplars or potential "starting points" for the design, including the Example Geometric Stag Designs, came from internet searches carried out by Mr Storey at the time of creation of the Brand Document in 2018, not creation of D1's Device in 2015; ii) the photographs, including those contained in the moodboard collage, were found and put together in 2018, not 2015; iii) the narrative explanatory text and headings were also only created during the course of creation of the Brand Document in 2018; and iv) the ticks, seemingly showing Mr Storey's preferred options at various stages, were superimposed on the various images during the creation of the Brand Document in 2018; v) nonetheless, the Brand Document attempted to "recreate" the "design journey" that he and Mr Storey had undertaken when they independently created D1's Device.

Contradictions between Mr Kelly's and Mr Storey's oral evidence

i) his evidence was that Mr Kelly kept all the documents from 2015 (or at least that only Mr Kelly knew where any saved documents were kept); and ii) Mr Kelly's evidence was that he only had the pencil sketches and some computer-aided renderings from 2015. No further documentation has been disclosed.

i) Mr Kelly was involved in the design of D1's Device for just over a month in June 2015 until around 2 July 2015; ii) I accept Mr Storey's evidence that he did research into drinks brands and brands using a stag logo, before Mr Kelly began designing; iii) I prefer Mr Kelly's evidence that Mr Storey carried out initial internet searching and research into logos and brands, and most internet searching thereafter per his witness statement, rather than Mr Storey's later oral evidence that Mr Kelly did all such searches, or alternatively most of the donkey work of internet searches; iv) Both Mr Kelly and Mr Storey saw hundreds and hundreds of logos of stag's heads, arising from Mr Storey carrying out such searches and sharing results with Mr Kelly; v) The only documents which can have been contemporaneously produced in 2015 (about which I will go on to make further findings), and so may be relevant to the issue of independent design, are the pencil sketches and the black CAD renderings. vi) The creation of the Brand Document was a joint endeavour between Mr Kelly and Mr Storey, being manufactured by Mr Kelly ex post facto in 2018 for the purposes of this litigation from content which included that only obtained in 2018, in order to strengthen the Defendants' case of independent design. vii) The Brand Document has significantly undermined my view of the credibility of both Mr Story and Mr Kelly: a) in the manner in which they created it, using photographs and logos obtained from searches carried out in 2018 and presenting them as providing 'inspiration' and maybe 'a starting point' for the development of D1's Device; b) in the incorrect and misleading description of the document in the RFI Response which they both signed with a statement of truth; c) In Mr Storey's misleading and untruthful oral and written evidence about its creation.

Issues with Pencil Sketches

"Mr Kelly did not mean, and it is not his evidence, that every example sketch of a stag on page 2 was produced at the time when he first began to start to produce exploratory sketches. Page 2 contains a collection of sketches collaged from the pencil sketches he produced throughout the design process, only some of which were produced at the time when he first began to start to produce exploratory sketches".

"Q. page 419, this is sketch VI. This one appears to be mirrored?

A. In what sense, sorry?

Q. That the right-hand side is a mirror image of the left-hand side?

A. It is symmetrical, which it probably should be. Sorry, can you expand further?

Q. Let us have a look at the next page, page 420. Do you see, on the right-hand outer antler, there is a bit of a line going down. The sketch is not terribly polished and you see exactly the same thing on the left-hand side.

A. It is just how I draw things. I mean, that is  you know.

Q. Well, here is an enlarged version of sketch VI You can see what I was talking about. The top of the right-hand antler has a little imperfection. It is repeated on the top of the left-hand one. The lines on the antler, on both sides, there is the double line, exactly the same on both sides.

A. (Pause) Possibly. That could have been a tactic that I did on these. Yes, you may be right. Yes.

Q. So, when would you have done the mirroring?

A. So, sometimes when I do it in this method, I would draw it originally, to get roughly what I want, and then re-draw it, effectively fold the page over or use tracing paper, just to get the sketch as symmetrical as possible."

Issues with Renderings

Q. In the electronic copies, you can see the vector lines, is that correct?

A. Yes.

Q. And what did you do, did you drop that into this box on this page?

A. So this page is a snippet of one of the final drawings that we put in here just to show the final, final, which is based off originally a file in Adobe that we used to create it.

Q. So, those straight lines are the Adobe lines? (Pause). Is that correct?

A. I believe so, yes.

Q. What else could they be?

A. (Pause) I am sorry, I did not quite understand the question.

Q. The straight lines shown on there are the Adobe Illustrator lines, are they?

A. I cannot remember if they are or not.

Q. What else could they be?

A. These may have been superimposed afterwards as part of this document. I am not quite sure, I cannot remember. But certainly the black elements look like to me the final, it looks like the final shape we went with.

Q. Why would the lines be superimposed afterwards?

A. I cannot actually remember. Possibly to further illustrate the geometric and the angular, you know, route we took, that they are all effective mirrored, hence why we decided to use Adobe Illustrator."

"Q. You were speculating as to whether these lines were or were not Adobe Illustrator vector lines, when you knew all the while they were not, because you say you added these lines on afterwards?

A. I did not say that. I said I do not remember doing that. I could not remember whether I inserted the whole thing or if the lines were done afterwards. It is clear that the lines were done afterwards, because if they were done in Adobe, they would be pixel perfect, as we say.

Q. I would put it to you that you have put them there to make it look like they are vector lines, defining the logo, but they are something that you have just added in, in order to generate this image, to make it look more as though you have designed it?

A. I would not agree. It is purely meant to highlight, you know, some of the angles, some of them are, you know, mirrored, it does look roughly symmetrical. I admit I did this far too quickly. It is an oversight on my behalf.

Q. You did this for the court, for the benefit of the court, for the benefit, apparently, of us, because this is the document that was going to be disclosed to us. That seems to be the only reason this document was produced and this document has got these misleading vector lines on it I am going to suggest to Her Honour that this is an attempt by you to try and create a vision of how this was independently created by you, when in fact it was based on the Claimant's design?

A. I would totally disagree. This document, I have tried my best to put together what we did, tried to explain the journey, you know, it is not perfect I did not intend to go to the nth degree; if I did, I probably would have spent several more hours on it."

Findings in relation to pencil sketches and renderings

i) There are no metadata to show that any of these sketches were scanned/digitised in 2015. Mr Kelly gave conflicting evidence on this point, initially in cross-examination that the sketches were scanned only in 2018, and later stating that some were scanned in 2015 and others in 2018. In my judgment, if metadata were available showing that any or all of the sketches were scanned in 2015, it is highly probable that the Defendants would have disclosed it (as they disclosed the metadata relating to the renderings). For that reason, I find on the balance of probabilities that the pencil sketches were not scanned until 2018. ii) No original pencil sketches have been disclosed, even though they must have been in Mr Kelly's/the Third Defendant's possession in 2018 in order to scan them and Mr Kelly in his oral evidence said that he had all the "hand drawn sketches" in 2018. iii) I am satisfied on the balance of probabilities that the mirroring of two of the sketches (bundle pages 419 and 420) was carried out digitally as one side is an exact, facsimile replica of another. I am satisfied that this cannot be explained by Mr Kelly free-hand tracing one side, as he suggested in his oral evidence. Therefore this work can only have been carried out after the sketches were digitised in 2018. iv) I am satisfied that this digital mirroring (and other minor digital 'cleaning up' of the sketches which I have not described in this judgment but which were explored in Mr Kelly's oral evidence) was more likely than not carried out in order to use those manipulated images in the Brand Document, to strengthen the Defendants' case of independent design. Although Mr St Quintin submits they are 'peripheral', those sketches must have been digitally manipulated for a reason, and there is no evidence before me as to what other purpose such manipulation might serve. v) The impression Mr Kelly gave during his evidence on this point was that he didn't know such mirroring had been done. I am satisfied on the balance of probabilities that he did know that work had been done, but he gave that impression in an attempt to hide his work, much as he attempted to hide the fact that he had superimposed false 'vector lines' in Premier Pro. I make this finding because Mr Kelly did not attempt to blame Mr Storey for that work and neither Mr Storey nor Mr Kelly say that any other person was involved in the production of the Brand Document or its contents. It was not put to Mr Storey that he was involved in this digital manipulation. vi) Following Mr Kelly's evidence, I cannot rely on the fact that various sketches are found on the same 'page' as providing any reliable evidence of the chronology of their creation, since those sketches appear to have been grouped together in 2018 and not in 2015, and some are duplicates. This also appears to be true even of the "Finals Rich Logo" document, which is dated in manuscript 25 June 2015, as Mr Kelly's own written evidence is that: "This document contained a number of sketches that we had considered during the creative process". However I do accept on the balance of probabilities in that case that those sketches were grouped together in that form on 25 June 2015.

i) The renderings were created on 2 July 2015 as per the metadata. ii) The curved, shaped vector stag head renderings disclosed in the RFI Response undermine the evidence of Mr Storey and Mr Kelly that D1's Device arose from an independent design journey involving a process of continual refinement and consistent preference towards geometry and angularity. iii) It is more likely than not that Mr Kelly and Mr Storey did not include these curved vectors in their witness statements or the Brand Document, but only included the more angular and geometric ones, because they undermined their evidence about the independent design journey they say they had undertaken. iv) Mr Kelly added the vector lines to the final rendering of the D1's Logo in an effort to mislead the Claimant and the court. In my judgment he inadvertently admitted as much in his evidence when he said that he did it "far too quickly" and could have spent "a couple more hours on it".

SUBMISSIONS

Issue (i) - Proof of copying

Similarity sufficient to give a prima facie inference of copying?

i) When the two designs are overlaid upon each other it can be seen how closely the two designs are aligned in their geometries; ii) All of the principal features of C's Device are found in D1's Device; iii) The differences relied upon are minimal and only serve to highlight the similarities, being of the order of: a 2 degree difference in angles; 6.8% taller antlers; two extra small tines to the outer antlers, and a thickening of the inner antlers.

i) Mr Kelly's own evidence he had total design freedom ii) The Defendants' own images returned by a Google image search for "stags head logo" and "antler logo" show nothing even remotely as alike to C's Device as D1's logo is and even the most similar are, he submits, hopelessly unlike the Device.

i) While there are some similarities between D1's Device and C's Device, they are the result of both logos being simple, stylised representations of stags heads. ii) The choice of a stag head is not surprising, given the evidence of both Mr Kelly and Mr Storey that he wished to emphasise an association with Richmond. iii) The similarities amount to a triangular head, splayed antlers and simple lines which are the result of simplifying a representation of a stag head into something stylised and angular. iv) The triangular head is not surprising as stag generally have triangular heads, as can be seen from annotated photographs contained in the Brand Document and other companies' logos, including the Dalmore logo v) The stylised splayed antlers are also not surprising and are ubiquitous in the logos retrieved from Google searches carried out by both the Claimant and the Defendants. vi) Splayed antlers with vertical or near vertical inner tines symmetrically about the head are features that real stags have, and appear in almost every logo found. vii) There are also many differences of detail that point away from copying. In particular, Mr Morgan's analysis of the two devices is wrong to the extent that it asserts that C's Device has a straight line from the outside of the head to the inside of the inner tines, like D1's Device. It does not. viii) Such similarities as there are arise from coincidence, because both C's Device and D1's Device are simple stylised representations of a stag's head with antlers.

Access and Independent Creation?

The Defendants rely on the observations of HHJ Birss (as he then was) in the Patents County Court in Mitchell v British Broadcasting Corporation [2011] EWPCC 42 at p122: "This illustrates the slippery nature of the allegation of subconscious copying when it is combined with the reality of the internet today. Since everything is available to everyone on the world wide web, no evidence can ever rule out a subconscious influence."

i) my concerns about Mr Kelly and Mr Storey's credibility; ii) their own case of extensive searches and consideration of stag head logo designs created by others; iii) their own evidence, albeit from 2018, that they used stag head logos of others as a 'starting point' for their own design; iv) the, in my view, unreasonable unwillingness of both witnesses to even countenance the possibility that they might have seen, but forgotten, C's Device in the course of those extensive searches; v) my findings that they have misled the court in relation to, inter alia, the creation and disclosure of the Brand Document and Mr Kelly's dishonest evidence in relation to the mirroring of the sketches and the application of false 'vector' lines to the final logo render, to support their case of independent creation; vi) the fact that their story of independent creation through a reiteration of design sketches following Mr Storey's more angular and geometric preferences is undermined by the final vectors including curved designs which do not fit with this story; vii) the high degree of inconsistency and contradiction between the differing accounts of the role each of Mr Storey and Mr Kelly played in the design process, which in my view is inconsistent with a truthful case of independent creation; viii) the very limited documents available from 2015, which are fewer than I would expect to see had D1's Device truly been independently created; and ix) the very high degree of similarity between C's Device and D1's Device; I am satisfied on the balance of probabilities that both Mr Kelly and Mr Storey have lied about not being familiar with C's Device. I find it more likely than not that they were familiar with it, and that they directly and knowingly copied C's Device in designing D1's Device.

i) The Defendants have no motive to copy and a positive motive to avoid copying, as explained in particular by Mr Storey in his oral evidence. He is trying to build a world-class business and exploit the Rich Energy branding commercially; ii) The First Defendant has also paid for trade mark searches and filed its own trade mark application, which is also inconsistent with copying C's Device; iii) The First Defendant has paid the Third Defendant £50,000 for services including the development of D1's Device, which it would not do had it copied C's Device.

Issue (ii) - Whole or substantial part?

Issue (iii) - Joint tortfeasorship

"I interpret this to mean that in order to fix an alleged joint tortfeasor with liability, it must be shown both that he actively co-operated to bring about the act of the primary tortfeasor and also that he intended that his co-operation would help to bring about that act (the act found to be tortious). Liability will always be subject to the threshold requirement that the alleged joint tortfeasor's contribution to the act was more than de minimis."

SUMMARY