Trademark Licensing Company Ltd & Anor v Leofelis SA

On summary judgment, a defendant must show a realistic prospect of successfully defending the claim. The court may consider admissions made with knowledge of the material facts, particularly where the defendant later advances a different case. A contractual exclusivity provision is not necessarily a condition. Unless the contract indicates otherwise, the court must ask whether the breach was sufficiently serious to amount to repudiation. A party which has affirmed a contract with knowledge of the relevant facts cannot ordinarily rely on those facts to justify later termination. Where a defence has a real but improbable prospect of success, the court may make summary judgment conditional on payment into court, subject to evidence that the order would stifle the defence.

The claimants granted the defendant an exclusive six-year licence to use Lonsdale trade marks in specified European territories. Following disputes in earlier proceedings, the defendant purported to terminate the licence on the basis of a German injunction and later sought to rely on further alleged breaches. The Court of Appeal subsequently held that the German injunction was justified, so that ground of termination failed.

The claimants then sought summary judgment for a declaration that their November 2007 termination was valid, accrued royalties and damages to be assessed. The defendant had admitted liability but applied to withdraw the admission, relying on alleged sales in the licensed territories and the terms and purpose of a separate SIA licence.

1. Summary judgment. The court applied the established test of whether the defence had a realistic, rather than fanciful, prospect of success. It was permissible to consider evidence reasonably expected to be available at trial, but the court must avoid conducting a mini-trial. The defendant’s earlier written admission, made after knowledge of the relevant circumstances, was also relevant when assessing the substance of its belated defence.
2. Construction of the SIA licence. Clause 2.1 granted a licence limited to the SIA Territories. Clause 2.6 regulated unsolicited orders and dealt with warranty and indemnity consequences. It did not grant permission to use the trade marks in the defendant’s territories. The alleged wider licence therefore depended on factual evidence of a separate agreement.
3. Repudiatory breach and affirmation. The exclusivity term was not a condition. A breach, however small, did not automatically justify termination of the six-year licence. The defendant had no realistic prospect of relying on the alleged Belgian and Netherlands sales: the evidence was thin and the defendant had affirmed the agreement in September 2007 with knowledge of the material facts. The position concerning possible authorised sales through SIA and Punch in France and Sweden was different. Those allegations raised a realistic, though improbable, prospect of establishing repudiation and were not defeated by affirmation because the defendant lacked knowledge of the relevant SIA arrangements and sales.
4. Order. Permission to withdraw the admission was therefore linked to the surviving defence. The court proposed a conditional order requiring payment of €1,675,000 into court, subject to an application supported by evidence that payment would stifle the defence. The order would not be perfected until that issue had been determined.

First-instance decision. The judgment records earlier proceedings and a Court of Appeal decision concerning the German injunction, but this judgment is not itself an appeal.