Lyle & Scott Ltd v American Eagle Outfitters, Inc

Permission to serve proceedings out of the jurisdiction requires a serious issue to be tried, a good arguable case within a jurisdictional gateway, and England and Wales to be clearly or distinctly the appropriate forum.

At the permission stage, the merits issue is whether the claim has a real, rather than fanciful, prospect of success. A passing-off claim may satisfy that threshold where similar get-up could suggest a trading connection, even though the defendant’s brand name is displayed and actual confusion is limited.

The forum assessment concerns the totality of the dispute. Relevant factors include the governing law, the place of the wrongful act and harm, the location of evidence, and the remedies sought. A claim governed partly by foreign law may nevertheless be appropriately tried in England where the tort, goodwill, evidence and relief are substantially domestic.

Lyle & Scott Limited applied to serve proceedings on American Eagle Outfitters, Inc in Pennsylvania. The claim concerned an alleged breach of a 2006 memorandum and passing off arising from American Eagle’s sale of clothing bearing a similar eagle device through third-party websites accessible in the UK.

Master Clark permitted service out of the jurisdiction. American Eagle challenged jurisdiction and sought to set that order aside. The issues were whether the passing-off claim had a real prospect of success and whether England and Wales was clearly or distinctly the appropriate forum, given that the contract was governed by Pennsylvania law and the passing-off claim raised questions under Rome II.

1. Application dismissed. The application to set aside the order permitting service out of the jurisdiction was dismissed.
2. On a rehearing of an application for permission to serve out, the burden lies on the claimant. Under CPR 6.37, the claimant must show a serious issue to be tried, a good arguable case within a jurisdictional gateway, and that England and Wales is clearly or distinctly the appropriate forum.
3. The passing-off claim met the merits threshold. The parties’ eagle devices were closely similar and used on clothing. There was a realistic case that consumers might believe that American Eagle’s goods had a connection with Lyle & Scott, such as a collaboration, licence or other trading relationship. The prominence of the words American Eagle on websites, labels and swing tags was relevant but not decisive.
4. The court should avoid a mini-trial at this stage. Evidence concerning consumer knowledge, website use, brand associations and the significance of the competing devices would require fuller investigation. The absence of substantial evidence of actual confusion did not defeat the claim, particularly given the limited period of the relevant third-party sales and the practical obstacles to confusion coming to Lyle & Scott’s attention.
5. The forum inquiry concerned the totality of the dispute, including the likely scope of defences and counterclaims. The contract claim was governed by Pennsylvania law. The passing-off claim fell within Article 6 of Rome II, rather than Article 8, and Article 6(2) directed attention to Article 4. English law was probably applicable under Article 4 because the damage and alleged infringements concerned UK goodwill, and the agreement did not create a manifestly closer Pennsylvania connection.
6. England and Wales was clearly or distinctly the appropriate forum. The weightiest factors were the UK tort, the territorial goodwill and damage, the English-law passing-off claim, the UK-focused evidence and the injunction sought for protection in the UK. Those factors outweighed the contractual governing-law factor pointing towards Pennsylvania.