Poul Chang Metal Industry Company Ltd v Bailcast Ltd & Anor

Under Articles 29 and 30 of the Recast Brussels Regulation, proceedings concerning the same design and infringement issue may be related even where the parties differ. A mandatory stay requires the same cause of action, object and parties. Parties are not the same merely because they share an interest in establishing non-infringement; their interests must be identical and indissociable in relation to the disputes. A discretionary stay for related actions should be assessed by reference to the risk of irreconcilable judgments, the procedural stage reached and the courts’ proximity to the dispute. A declaration of non-infringement is a real and commercially useful remedy. Under CPR 38.1, abandoning a distinct cause of action requires a notice of discontinuance, with the applicable costs consequences.

The claimant, a Taiwanese manufacturer, sought a declaration that its pneumatic tool did not infringe a registered Community design owned by the second defendant and licensed exclusively to the first defendant. The first defendant had commenced German infringement proceedings against the claimant’s German customer, KS Tools, concerning the same tool and design.

The defendants applied for a stay under Articles 29 and 30 of the Recast Brussels Regulation. The claimant also sought to remove a withdrawn claim for invalidity of the design by amendment rather than by notice of discontinuance. The issues were whether the German and English proceedings involved the same cause of action, object and parties, whether a discretionary stay was appropriate, and whether the invalidity claim constituted part of the claim for CPR purposes.

1. Stay under Article 29. The German proceedings were first commenced. Applying Gubisch Maschinenfabrik KG v Giulio Palumbo (Case C-144/86) [1987] ECR 04861 and The Tatry (Case C-406/92) [1994] ECR I-05439, the court held that the proceedings involved the same cause of action and object. Both concerned whether the same tool created the same overall impression on the informed user. The negative form of the English declaration did not alter that conclusion.
2. The parties were not the same. Although the claimant and KS Tools shared an interest in establishing non-infringement, their interests were not identical and indissociable. KS Tools was an independent customer with no control over the claimant and might settle or change its commercial position. The close relationships in The Tatry, Drouot Assurances SA v Consolidated Metallurgical Industries (Case C-351/96) [1998] ECR I-3075, Re Cover Europe Ltd [2002] EWHC 861 and Kolden Holdings Ltd v Rodette Commerce Ltd [2002] EWHC 1597 were absent. Article 29 therefore did not apply.
3. Stay under Article 30. The proceedings were related actions. Article 30 conferred a discretion, not a mandatory stay. Having regard to Owens Bank Ltd v Fulvio Bracco Industrial Chimica SpA (Case C-129/92) [1994] ECR I-117, Starlight Shipping Co v Allianz Marine and Aviation Versicherungs AG (The Alexandros T) [2013] UKSC 70 and Sarrio SA v Kuwait Investment Authority [1992] 3 WLR 1143, the court considered the relatedness of the proceedings, the risk of irreconcilable judgments, their procedural stages and the courts’ proximity to the dispute. A stay was refused. The German first-instance decision would be available before the English merits hearing, reducing the risk of inconsistency, while a stay would merely delay commercial certainty.
4. Discontinuance. The claimant was abandoning a distinct cause of action for a declaration of invalidity, not merely a remedy. Under CPR 38.1, that was part of the claim and required a notice of discontinuance. The word “may” gave a party the choice whether to discontinue, but not a choice of procedure once discontinuance was chosen.
5. The stay application failed. The claimant was required to file a notice of discontinuance for the invalidity claim. The defendants were ordered to pay the costs of the stay application in the ordinary IPEC regime; the claimant was ordered to pay the discontinuance costs incurred up to 24 August 2018, with no order as to the remainder.

First-instance decision in the Intellectual Property Enterprise Court. No appellate history was stated in the judgment.