Topalsson GmbH v Rolls-Royce Motor Cars Limited

This judgment concerned an application by Rolls-Royce Motor Cars Limited (RUK) for an anti-suit injunction (ASI) to restrain Topalsson GmbH from pursuing related copyright proceedings in the United States. The court analysed (i) whether the United States proceedings fell within the exclusive jurisdiction clause (EJC) in clause 44.4 of the Service Agreement between the parties; and (ii) if not, whether a non-contractual ASI was justified as vexatious or oppressive. The judge concluded that the subject-matter of the US complaint (claims of copyright infringement of Topalsson’s specific configurator software) did arise from or was connected with the Agreement and so fell within the EJC, but that the EJC did not, on its proper construction, extend to third-party defendants (such as US dealers or BMW corporate entities). Accordingly there was no contractual basis to restrain the US claims against those third parties. The court also refused a non-contractual ASI on discretionary grounds, finding that proceedings in California were not vexatious or oppressive given the locus of alleged infringements and other connecting factors. Permission to amend RUK’s Defence and Counterclaim was granted; RUK was left free to pursue damages for any breach of the EJC but the ASI application was dismissed.

Background and parties. Topalsson is a German supplier of digital twin and car-configurator software. RUK, a Rolls-Royce subsidiary in England, engaged Topalsson under a Service Agreement containing an exclusive jurisdiction clause (clause 44.4). After RUK terminated the Agreement in April 2020 and pursued the contractual dispute in the Technology and Construction Court (the Main Proceedings), Topalsson issued copyright and related claims in the United States against BMW entities, Rolls-Royce US and several US dealers, alleging unauthorised use of Topalsson’s DTE/Vary/Sologic software (the Relevant Software). RUK applied for an anti-suit injunction against Topalsson to restrain the US proceedings and sought permission to amend its Defence and Counterclaim to include damages for breach of the EJC.

Nature of the application. RUK sought (1) a contractual ASI on the basis that the US claims fell within the EJC in the Agreement; and (2) alternatively a non-contractual ASI on grounds that the US proceedings were vexatious or oppressive. RUK relied on the terms of the Agreement (including intellectual property provisions allocating rights in Supplier, Bespoke and Deliverable software) and on the likelihood that resolution of the US claims would require detailed examination of rights and conduct under the Agreement. Topalsson disputed that the EJC extended to non-contracting third parties and contended the US forum was plainly appropriate for alleged infringements occurring in California.

Issues for decision.

1. Whether the United States proceedings were within the subject-matter of the EJC (arising from/connected with the Agreement).
2. Whether the EJC extended to the defendants sued in the US (third parties, including US dealers and BMW entities).
3. If the EJC applied, whether an ASI should be granted on contractual grounds.
4. Alternatively, whether the US proceedings were vexatious or oppressive so as to justify a non-contractual ASI.

Reasoning and key findings.

• The essential nature of the US complaint was copyright infringement of Topalsson’s identifiable software (DTE, Vary, Sologic). The dispute as pleaded would require detailed technical and evidential comparison between the Relevant Software and the software used in the dealers’ configurators; issues such as access, derivation and the role of Mackevision and BMW in producing the fallback configurator would involve examination of materials and dealings arising from the Agreement.
• On that factual and legal matrix, the judge concluded that the US proceedings as to subject-matter did fall within the broad words of the EJC: the dispute arose from or was connected with the Agreement and would likely require recourse to contractual IP provisions (for example clause 23.1) and the parties’ dealings under the Agreement.
• However, on construction of the Agreement as a whole the EJC did not extend to third-party defendants. The Agreement used defined terms and specific provisions where third parties or BMW Group companies were intended to benefit, but the EJC itself was expressed in the context of "The Parties" (Topalsson and RUK) and related clauses used "between the Parties". Where the parties had intended wider effect (for specified BMW Group companies or particular benefits) they had done so expressly elsewhere. The court therefore held the EJC did not cover claims brought against the dealers or other non-contracting defendants.
• Because there was no contractual basis to restrain the US proceedings against those third parties, the court next addressed the discretionary non-contractual basis. Applying the established principles (including the need to show the foreign proceedings would be vexatious or oppressive and to give due weight to comity and forum connections), the judge concluded that California was a legitimate forum for infringement claims that had occurred in California, that the defendants had strong connecting factors to that forum, and that the proceedings were not an abusive attempt to evade the EJC. A non-contractual ASI was therefore refused.
• The court granted permission to amend RUK’s Defence and Counterclaim (including claims for damages for breach of the EJC) but dismissed the ASI application. The judge left open RUK’s ability to pursue damages for any breach of the EJC in due course.

This is a first instance decision. The court dismissed Rolls-Royce Motor Cars Limited’s application for an anti-suit injunction. The judge held that (i) the subject-matter of the US proceedings (copyright claims in respect of Topalsson’s DTE/Vary/Sologic software) fell within the scope of the Agreement’s exclusive jurisdiction clause in terms of subject-matter, but (ii) the clause did not, on its proper construction, extend to the third-party defendants sued in the United States. Accordingly there was no contractual basis for an ASI against Topalsson in respect of the US claims. The court also refused a non-contractual ASI, concluding the US proceedings were not vexatious or oppressive given the strong US connections (including alleged acts in California). Permission to amend RUK’s Defence and Counterclaim was granted; RUK may pursue damages for any breach of the EJC but the ASI application was dismissed.