Talaris (Sweden) AB v Network Controls International Ltd

For an interim injunction, the court must first ask whether there is a serious issue to be tried. It must then consider whether damages would be an adequate remedy and, if not, where the balance of convenience lies. Where an interlocutory order would effectively determine the dispute, a much stronger case is required than a merely triable issue. Contractual exclusivity may permit private preparations for post-termination distribution while restraining premature public marketing with a competitor. The court may grant a limited injunction where marketing arguably breaches the agreement, damages are difficult to quantify, and a prompt trial can resolve the underlying issues.

The claimant was the exclusive distributor of the defendant’s software under an Exclusive Distributor Agreement. After the defendant was acquired by a competitor of the claimant, software was publicly demonstrated alongside the competitor’s machine at a trade show. The claimant alleged breaches concerning marketing, distribution, provision of updated software and display of its logo.

An ex parte injunction was granted and the defendant applied on the return day for its removal or modification. The court considered whether each restraint raised a serious issue to be tried, whether damages were adequate, and where the balance of convenience lay.

1. Interim injunction principles. The court applied the approach in American Cyanamid Co v Ethicon Ltd [1975] AC, 396. The threshold question was whether there was a serious issue to be tried. Only if that threshold was satisfied did the court consider adequacy of damages and the balance of convenience.
2. Where an interlocutory injunction would effectively determine the whole dispute, the court must require a much stronger case than a merely triable issue. That exceptional category did not apply here because the underlying dispute remained capable of prompt determination. The case was distinguished from Cayne v Global Natural Resources plc [1984] 1 All E.R. 225.
3. Serious issue. The agreement did not prevent the defendant from privately discussing future distribution arrangements during the final twelve months of the term. It did, however, arguably prevent public marketing of a new or revised version of the claimant’s software with a principal competitor before termination. The public demonstration therefore raised a serious issue to be tried. The display of software without the claimant’s logo raised a separate serious issue.
4. There was no serious issue concerning sales, dealings with other potential distributors on the evidence, or contact with customers, because the agreement expressly permitted customer contact. Those parts of the original order were discharged.
5. Damages and balance of convenience. Loss on both sides would be difficult to quantify and prove. The balance was nevertheless slightly in favour of the claimant because its loss from premature marketing was likely, while the defendant could continue earning licence revenue and prepare for post-termination distribution. The defendant’s relatively small net asset position also supported the claimant’s position.
6. The court maintained a strictly limited interlocutory injunction restraining the relevant marketing and requiring display of the claimant’s logo. It remained in force pending a prompt final trial, which the court considered could be completed within approximately six or seven weeks.

Not stated in the judgment.