Artifical Solutions Germany GmbH v Creative Virtual Ltd & Anor

At the interim stage, an injunction should not be refused merely because title or contractual rights are disputed, nor granted where foreign-law evidence reveals genuine issues requiring trial. The court must assess the balance of convenience, including the adequacy of damages, the nature of the rights relied upon, the risk and scale of practical injustice, and preservation of the status quo.

Related proceedings under Article 28 of the Judgments Regulation need not lead to a wholesale stay. The court may identify issues that can be tried promptly as preliminary issues and use case management to reduce the risk of inconsistent judgments.

The claimant, a German company, brought copyright infringement proceedings concerning the Lingubot software package. It sought an interim injunction preventing the defendants from copying or distributing the software. The defendants contended that the claimant was bound by a distribution agreement, that the claimant’s title might be affected by related German proceedings, and that German-law doctrines could prevent termination for non-payment.

The defendants also sought a stay under Article 28 of the Judgments Regulation because related proceedings were pending in Hamburg between the claimant and the business’s former owner. The court had to determine whether there was a serious issue to be tried, whether a stay was appropriate, and which interim arrangements best preserved the parties’ positions.

1. Interim injunction. The claimant had established an arguable copyright case. The evidence was sufficient, for present purposes, to show that enough of the programmes comprising Lingubot were likely to have been created or acquired on terms vesting copyright in Kiwi Logic and subsequently transferred to the claimant. The possibility that the Hamburg proceedings might later result in rescission did not presently deprive the claimant of title.
2. The defendants had serious issues to be tried concerning whether the claimant was subject to the distribution agreement and whether termination for non-payment was effective. The German-law doctrines of Creditor Delay and Tu Quoque raised issues requiring resolution of disputed facts and conflicting expert evidence. Foreign-law questions should not be given robust interim determination unless the court can see without cross-examination that one expert is clearly right.
3. The balance of convenience favoured continuation of the existing payment-into-account and reporting regime rather than an injunction. Copyright was a property right and damages might be difficult to quantify, but an injunction would probably shut down the defendants’ business. That would create a certainty of serious injustice if the defendants succeeded, whereas the claimant faced principally a temporary postponement of a commercial opportunity. The pre-existing status quo also favoured the defendants.
4. Article 28 stay. The English and Hamburg proceedings were related because issues concerning the distribution agreement and possible rescission could give rise to inconsistent reasoning or outcomes. Nevertheless, Article 28 did not require a wholesale stay. Case management could reduce the risk of inconsistency, particularly because the termination issue and the copyright-ownership issue did not arise in Hamburg in the same form.
5. The appropriate course was to direct a speedy trial of the triable issues that did not also arise in Hamburg, especially termination, while maintaining the interim payment and reporting arrangements. Any later interim regime could be reconsidered after those preliminary issues were determined.