Retail omerta: Wilko v Buyology

Buyology's suppliers, arriving to court
to hear HHJ Hacon's decision

In a dispute where trade mark infringement and passing-off were admitted. The terms of a settlement having been agreed, the trade mark owner then sought a Norwich Pharmacal order compelling the defendant to disclose the names of suppliers of the infringing goods. 

Such an order was outside the agreed settlement terms, and so the judge had to consider a couple of questions: (1) Was the settlement agreement so binding as to prevent a party from seeking additional relief outside the agreed scope of settlement? (2) If the claimant could seek an order, should it be granted in this case?

HHJ Hacon refused to grant the order. The case is Wilko Retail Ltd v Buyology Ltd [2014] EWHC 2221 (IPEC) (07 July 2014).

Background

The claimant, Wilko, is a well-known UK retailer which owns several “WILKO” registered trade marks. The defendant, Buyology, bought and re-sold goods bearing infringing WILKO branding. When Wilko complained of infringement and passing-off there were a few rounds of correspondence and litigation was commenced, but the parties then promptly agreed to settle the proceedings. 

The settlement agreement was silent on the issue of disclosing the identities of suppliers, though this had been argued over in correspondence and Buyology steadfastly refused to do so.   

Did the settlement agreement rule out further relief?

The company used to be Wilkinson.
Now it's just Wilko, dude.

Counsel for the claimant, Kathryn Pickard, argued that this settlement (held by the judge to be a binding contract) did not preclude Wilko from applying separately for a Norwich Pharmacal order. Such an order, she contended, could be applied for before, during or after the proceedings proper. For the defendant, Ashton Chantrielle submitted that the settlement agreement drew a line under all claims in the proceedings and that allowing a new application would be contrary to the rule in Henderson v Henderson requiring finality in litigation.

Judge Hacon had some sympathy for Ms Chantrielle's submission but held that while the claim as pleaded in the proceedings had been settled, the dispute over disclosing suppliers’ identities was outside that claim, so that Wilko was not barred from pursuing this issue separately.

Balance of harm

Ultimately, the judge held, it came down to the balance of irreparable harm. Wilko’s evidence on this point centred on the difficulty of preventing a secondary market in infringing goods. The judge found that evidence difficult to assess as it was unclear what other supply chains existed independently of Buyology and its suppliers, and it had to be borne in mind that Buyology would be injuncted from any future supplies of infringing products.

Buyology’s evidence focussed on the reputational damage and lack of trust that might be caused in a tight-knit retail community if it were to make disclosure off its suppliers. The judge agreed this would give rise to irreparable harm, then considered whether this should be discounted on the basis that Buyology only had itself to blame as an infringer. On reviewing Buyology’s conduct, apart from some carelessness in not eliminating infringing sales quickly enough at the outset, he held that the defendant had submitted an “exemplary” defence admitting wrongdoing and had not prevaricated or disputed any element of the settlement offered by Wilko.

As a result the balance of irreparable harm according to the evidence lay in favour of the defendant and therefore HHJ Hacon refused to order Buyology to give up its suppliers. Omerta honoured, case dismissed.