Total Electrical Solutions UK Limited & Anor v Nortek Electrical Circuits Limited

On an application for summary judgment or strike out, the court may decide a pleaded issue without a trial where the claim has no realistic prospect of success, no compelling reason requires a trial, or the pleading discloses no reasonable grounds. Contractual assignment of intellectual property rights requires clear language. Ownership of products, ideas or specifications does not necessarily assign copyright or design right, particularly where the contract separately allocates ownership of the design. An implied term must be necessary for business efficacy or so obvious as to go without saying. A joint-authorship claim must identify meaningful contributions capable of involving free and creative choices and explain how those contributions were reflected in the works relied on. Broad, indiscriminate and incoherent pleading which cannot be answered meaningfully may be struck out.

The claim concerned electronic products designed and manufactured under a supply relationship between the claimants and the defendant. The claimants alleged breaches of contract, copyright infringement and infringement of unregistered design right. They claimed that the supply agreement assigned future copyright and design rights to them, or alternatively that those rights were jointly owned because of contributions by personnel from both companies.

The defendant applied for summary judgment and strike out of the relevant parts of the particulars of claim. It challenged the proposed contractual construction, the implied terms, the joint-ownership case and the particularisation of the works and designs said to be protected.

1. Disposition. The defendant’s application succeeded. The relevant contractual, joint-ownership and particularisation aspects of the claim were summarily dismissed and struck out.
2. Summary judgment and strike out. A claim must have a realistic, rather than fanciful, prospect of success. The court must not conduct a mini-trial. Strike out is a draconian remedy, but is appropriate where a pleading discloses no reasonable grounds, is vague or incoherent, and cannot be answered meaningfully. The court may entertain the application before a defence is filed.
3. Construction of the supply agreement. The agreement did not assign future copyright or unregistered design right. Clause 2 confirmed the claimants’ ownership of products, ideas and specifications, but separately provided that the defendant would own the design if it funded the design costs. The contractual prohibition on replication was not equivalent to an assignment of intellectual property rights. The agreement’s confidentiality and exclusivity provisions supported that construction.
4. The alleged assignment could not be implied. It was neither necessary for business efficacy nor so obvious as to go without saying. The proposed terms concerning termination, breach and survival were likewise unnecessary and, in some respects, would operate regardless of the seriousness of the breach.
5. Joint ownership and pleading. The alleged contributions by the claimants’ representative were insufficiently specified. The pleading did not explain what free and creative choices were made, or how the asserted contribution was reflected in the particular works. The products and PCB designs were not the same as the files or representations relied on. The design-right pleading was even less particularised.
6. The claim was not merely deficient in particularisation. Its broad and indiscriminate formulation made the scope of the proposed inquiry uncertain and left the defendant unable to respond except by bare denial. The court therefore struck out the relevant paragraphs, while recognising that a legally sustainable and coherent alternative claim might be proposed by amendment.
7. Permission to appeal was refused. The defendant’s costs were summarily assessed at £32,000, with no order for indemnity costs.

First-instance decision. Permission to appeal was refused by the High Court, subject to any application to the Court of Appeal.