Adobe Systems Incorporated v Netcom Online.Co.UK Ltd & Anor

A party cannot ordinarily reopen a settled claim for damages by raising new legal or factual defences during an inquiry ordered by consent. The public interest in finality of litigation and the abuse-of-process principle prevent a defendant from challenging the settled basis of liability, including by relying on subsequently advanced EU competition-law arguments requiring substantial new evidence.

The position may differ for continuing injunctive relief, since future restraints can be reviewed if they are unlawful. An inquiry remains enforceable where the consent order records an admission of infringement and the later arguments merely show that the order might have been incorrectly made. The inquiry may extend to materially indistinguishable infringements, but genuinely different factual cases may still be examined.

The claimant owned Community and UK trade marks relating to Adobe products. It brought infringement proceedings against the defendants, which were settled by a consent order made by Arnold J on 7 April 2011 without a hearing. The order recorded admissions concerning imported infringing products and directed an inquiry as to damages.

Before the inquiry, the defendants sought to raise arguments concerning exhaustion of trade mark rights, abuse of dominance under Article 102 TFEU, and anti-competitive agreements under Article 101 TFEU. They also applied to set aside the consent order and challenged the proposed measure of damages. The preliminary issue was whether those matters could be raised despite the consent order.

1. The preliminary issues were determined for ASI. The defendants were not permitted to raise the proposed exhaustion and competition-law defences in the damages inquiry. Their application to set aside the Consent Order was dismissed.
2. The consent order was to be construed by ordinary principles. The recorded admission that the Bundle E products were infringing meant that paragraph 6, requiring an inquiry into damages caused by infringement of the Registered Trade Marks, applied to those products.
3. Following Coflexip SA v Stolt Offshore MS Ltd (No 2) [2004] EWCA Civ 213 and Unilin Beheer BV v Berry Floor NV [2007] EWCA Civ 364, the inquiry could include other allegedly infringing products whose claims for damages were materially indistinguishable from the established infringement. In the context of a consent order, the relevant basis was the Henderson v Henderson (1843) 3 Hare 100 abuse-of-process principle rather than cause-of-action estoppel.
4. The exhaustion argument was too late. The public interest in finality prevented the defendants from raising a defence which could and should have been advanced before settlement. The court did not decide whether future injunctive relief might be modified or discharged if the argument were later established.
5. The competition-law arguments did not displace finality. Bayer v Sullhofer Case 65/86, [1988] ECR 5249, Courage v Crehan Case C-453/99 and Nungesser v Commission Case 258/78, [1982] ECR 2015 concerned agreements or circumstances materially distinguishable from the settled inquiry. EU law did not require the national court to reopen settled issues by admitting new arguments and evidence, subject to the principles of effectiveness and equivalence.
6. A consent order is an order of the court which must be obeyed unless set aside. Although it may be impeached on grounds invalidating the underlying agreement, including fraud, misrepresentation or operative common mistake, no such mistake was established here. The parties had compromised disputed rights, not acted on a demonstrable common mistake.
7. The same arguments could not be deployed to challenge the measure of damages. Once the inquiry was binding, the defendants could not use competition-law allegations to attack the basis on which damages were to be assessed.