Muck Truck UK Ltd & Ors v Helps (t/a Paul Helps Muck Truck Sales) & Anor

A settlement agreement may grant a licence to use intellectual property rights without using the word “licence”, if that is its natural implication when read as a whole. The licence may be defined by detailed contractual restrictions. Here, the agreement permitted use of the existing registered and unregistered designs, subject to conditions concerning dimensions and marketplace confusion. The relevant comparison was with the notional average dealer, and “source” included origin under licence, not merely physical manufacture. Products which were sufficiently similar in shape, design or configuration to create confusion breached the agreement. The defendants therefore could not rely on the claimants’ consent as a defence to the alleged design-right infringement.

The claimants manufactured and sold motorised wheelbarrows under the Muck Truck brand. The defendants imported Power Barrow products from a former manufacturing partner of the claimants after the parties’ relationship had ended.

The claim concerned alleged infringement of registered and unregistered design rights. The trial was confined to a preliminary issue concerning whether the defendants’ acts were done with the claimants’ consent under a settlement agreement dated 15 January 2008.

The central questions were whether the settlement agreement granted the former manufacturing partners a licence to use the claimants’ designs and, if so, whether the imported products complied with the agreement’s restrictions.

1. Construction of the settlement agreement. The agreement was to be construed as a whole, by asking what it would convey to a reasonable person with the relevant background knowledge. The absence of the express word “licence” was not decisive. The permission to use knowledge and experience gained while manufacturing the claimants’ products, together with the provision that no royalties or licensing fees were payable, indicated that clause 5 granted a licence.
2. The licence covered the registered and unregistered designs in the Muck Truck products existing at the settlement date. It did not extend to future designs or the Muck Truck trade mark. Its exercise remained subject to the restrictions in clauses 5(c) and 5(d).
3. Dimensions. The dimension restriction required all three specified dimensions to be exactly the same. The evidence did not establish manufacturing tolerances capable of eliminating the differences between the products. Neither Rocky model therefore breached this condition.
4. Confusion. The relevant standard was the effect on the notional average dealer of motorised wheelbarrows. The question was not whether the products were identical, but whether their similarities in shape, design or configuration created confusion as to source. In context, source included a licensed origin as well as physical manufacture. The substantial similarities established that the Power Barrow products contravened this restriction.
5. Power-drive cover. The imported products did not contain a triangle-shaped power-drive cover and did not breach that restriction.
6. Since breach of the confusion condition meant that the licence conditions were not satisfied, the acts relating to the defendants’ products were not done with the claimants’ consent under the settlement agreement.