Nike European Operations Netherlands BV v Rosicky

This is an application by the claimant in these proceedings, Nike European Operations Netherlands BV, for interim injunctive relief. The application is made under s.25 of the Civil Jurisdiction and Judgments Act 1982, which itself gives effect to the provisions of Article 31 of Regulation 44/2001, the Regulation that implements to the Brussels and the Lugano Conventions.

Section 25 of the 1982 Act gives the High Court in England jurisdiction and power to grant interim relief where (a) proceedings have been or are to be commenced in a Brussels or Lugano contracting State other than the United Kingdom; and (b) they are or will be proceedings whose subject matter is within the scope of the Regulation as determined by Article 1.

In s.25(2) there is also a provision that on an application for interim relief under sub-section (1) the court may refuse to grant that relief if in the opinion of the court the fact that the court has no jurisdiction apart from this section in relation to the subject matter of the proceedings in question makes it inexpedient for the court to grant it.

The proceedings with which I am concerned on that ancillary basis is an action soon to be commenced in Holland in relation to a contract that was entered into on 1^st January 2005 between the claimant company and the defendant, Mr. Rosicky, who is a footballer. He is a member of the Arsenal team. He joined the team in May 2006. Before that he played for Sparta Prague, and he is also currently the captain of the Czech national side.

Under the terms of the contract with Nike, which ran for the period from 1^st January 2005 to 31^st December 2006, the defendant agreed, amongst other things, firstly, that during the contract period he would not enter into or maintain any endorsement, promotion, consulting or similar agreement with any person or entity that licenses, manufactures, brands or sells products as defined; and secondly, in clause (f) of the agreement, that he would wear and/or use exclusively Nike products in accordance with para.2 of the general terms. Nike products are defined in those terms in para. 1(g) as:

“All products in connection with which or upon which the Nike name, the swish design or the Nike air design, or any other trademarks or brands now or hereafter owned or controlled by Nike or any other member of Nike Group appear.”

“Products” means all athletic sports and sports or spinal derived footwear and clothing articles of an athletic, at leisure, active wear or casual nature, including but not limited to shirts, T-shirts, polo shirts, etc.

The general conditions go on to provide in condition 2 that on each occasion that the player wears or uses products then he should ensure that each product is a Nike product.

The contract, as I have mentioned, was granted for a period of two years, but was subject to various provisions in condition 8 of the general terms and conditions, including in particular in condition 8(a) the benefit of an option in favour of Nike under which it was entitled to extend the contract period for an additional period of two years – that is to say from 1^st January 2007 through to 31^st December 2008, exercisable “upon written notice of such election given to player no later than 30^th September 2006”.

I should also mention for completeness that in condition 8(c) there is what is described as a right of or first refusal in favour of Nike for a period of 180 days after the end of the initial contract period. The gist of that provision is that if the player should within that period receive a bona fide third party offer with respect to any endorsements or services from some similar would-be sponsor then the player is under a duty to submit that offer to Nike in writing, and if Nike – and this is my paraphrase – is prepared to match the offer then the player is under an obligation to enter into a new contact with Nike on those terms in preference to those offered by the other third party.

There has been some discussion on behalf of the claimant about whether or not the defendant acted in good faith in operating those provisions, but because there is no evidence about that I do not intend to base the decision on this application in relation to that part of the contract.

So far as this application is concerned, the claimant bases its application on the premise that it did give written notice extending the contract period prior to 30^th September 2006. So far as I can see, that seems to be the sole issue between the parties. The question of whether or not there is still a subsisting contractual relationship between the parties turns on that.

The Nike contract of 1^st January 2005 is, according to clause (h) of the contract, subject to Dutch law and to the jurisdiction of the competent courts of Amsterdam in the Netherlands. I have got the benefit of evidence from a Dutch lawyer, Mr. Alfred Paul Meijboom, which indicates that that would be interpreted by the Dutch court as giving to that court exclusive jurisdiction in relation to the substance of any dispute about the contract. On that footing the provisions of Article 23 of the Brussels Regulation applies so as to make the Dutch court the appropriate court in which to try the substantive proceedings and, by the same token, to oust the jurisdiction of the English court in relation to the self-same matters.

Mr. Beloff on behalf of the defendant submitted that it was at least open to argument on his reading of Mr. Meijboom’s evidence that the proper construction of clause (h) of the contract according to Dutch law might be not merely that the agreement gave the Dutch court in Amsterdam exclusive jurisdiction to try any contractual dispute, but also conferred exclusive jurisdiction on that court in relation to the grant of any interlocutory or ancillary relief. The relevance of that point is that there is at least an argument that the power of the English court under Article 31, and therefore under s.25 of the 1982 Act, would be ousted were the parties to have conferred exclusive jurisdiction on the relevant foreign court not only in relation to the substantive dispute, but also in relation to the grant of any ancillary relief.

In this particular case, although ultimately this is a matter for the court in Amsterdam, there is certainly no clear indication in the wording of clause (h) that that is what the contract ought to be interpreted to mean; nor I think on a fair reading of Mr. Meijboom’s evidence is that what he suggests. There is no evidence of an expert nature put in on behalf of the defendant on this application and in those circumstances it seems to me that the correct way in which I ought to proceed is that the terms of the contract do not in any sense oust the jurisdiction of this court to consider an application under the provisions of Article 31.

The issue therefore for me is whether or not I ought to grant an interlocutory injunction today over the hearing of an application for similar relief in Amsterdam, the effect of which would be to prevent Mr. Rosicky from wearing Puma marked boots pursuant to the terms of a new contract which he entered into on 5^th July this year with that manufacturer.

The evidence is that from about January of this year there was clearly some kind of dispute between the parties as to whether or not Nike had validly extended the term of its contract by exercising the option. This, as I have indicated, turns on whether or not the option notice in accordance with the provisions of condition 8(a) was served or given to the defendant.

It is clear that towards the middle of 2006 the parties did enter into some sort of correspondence or negotiations in relation to the renewal of the contract. There is in evidence, for example, a letter from the player’s agent, Mr. Paska, of International Sports Management in Prague, to Nike referring to the imminent end of the contract period in which he indicates that Mr. Rosicky is willing, as he puts it, “to negotiate on the renewal of the above mentioned contract or on the conclusion of a similar contract with the same or a similar subject”. For those purposes Mr. Paska was given a power of attorney by Mr. Rosicky, which he provided to Nike, under which Mr. Rosicky authorised International Sports Management, with an address in Prague, to represent him, as it puts it,

“… in full in all talks connected with the extension, termination or any other change to the contract between the football player and the Nike firm in accordance with Article 8 of the contract, and also in talks about the conclusion of any other contract with a third party in connection with my activities as a player in the performance of my professional sports career.”

Of particular relevance to this dispute is the following paragraph of the power of attorney in which Mr. Rosicky authorises ISM to have the right “in connection with his authorisation to sign and accept all the necessary documents and to present with proposals and to deal with authorities and other institutions in relation to the renewal of the contract.”

It is, I think, accepted that that power of attorney gave ISM the right and ability to receive any notice which Nike chose to serve under condition 8(a) of the contract so as to make the service of such a notice on the agent good service on the player for the purposes of exercising the contractual option.

The claimant’s case is that on 27^th June 2006 a letter were sent to the agent, Mr. Paska. That letter in terms purports to exercise the right to extend the contract period for a further two years from 1^st January 2007 to 31^st December 2008. It is dated, as I have said, 27^th June 2006. I do not have in evidence a copy of the envelope in which it was sent, but what I do have is a document headed “Notification of result of complaint procedure”, which relates both to that letter and also to a letter in similar terms sent by Nike to Mr. Rosicky himself on 18^th August of last year. It is I think clear that if those letters did reach the hand – and I use that at the moment neutrally – of either the agent or the player then there must be a strong, if not overwhelming, case to the effect that the contractual option was properly exercised in accordance with the provisions of condition 8. The only issue, as I mentioned earlier, is whether or not those letters were properly served or received.

So far as that is concerned, the document that I have just mentioned is, according to the evidence, the information that comes out of the post office which handled the letters that were sent by a form of registered or recorded delivery. The addressee in relation to the letter sent to ISM is ISM at its office address given in correspondence that is also in evidence. In the case of Mr. Rosicky himself, the address is different and appears to be, or at least I assume was his home address. There is on the document in relation to both of the two entries under the heading “Delivery address” a reference to 11006 Prague 06. That appears on the correspondence from ISM to be the equivalent of a postcode or postal district and it is submitted to me, although I think it is not formally in evidence, that what is meant by “delivery address” in this document is the postal district of the post office which dispatched the registered letter for delivery at the addressee’s address and was responsible therefore for its sending out and receipt.

The only puzzle about that in terms of the evidence is that Mr. Paska in some replies to various questions put to him for the purposes of providing some evidence on this application says in relation to the 11006 Prague 6 address that that is his office address. However, that is not I think inconsistent with it being the postal district in which his office is situated, and I think the reconciliation of the two is simply that the address of ISM is that given in the document at p.73 of the bundle and in the correspondence but within that postal district.

Perhaps of more importance so far as the defendant’s case is concerned is that the entry in respect of the letter sent to ISM under the heading “Result of complaint procedure” indicates that the letter was handed over on 28^th June 2006 to a Mrs. Husakova, who appears, at least according to the entry, to have stamped in with the name of “Prago Sport”, the “neighbouring firm”, which I take to mean one of the other firms that occupies the same business address. Mr Paska says that Prago Sport is the landlord of the building where ISM has its offices.

So far as the letter to Mr. Rosicky is concerned, the result of the complaint procedure is, it is said, that the item was handed over to the addressee – that is to say Mr. Rosicky – on 1^st September 2006. It then goes on to say “Signature plus” and in brackets “(copy ?)”. Underneath it says that there is no ground for the complaint. I take it that the complaint is a reference to some complaint about non-delivery. The evidence therefore from the post office is that the Defendant took delivery of the letter.

Against that, the defendant’s evidence is this: in the case of the agent, Mr. Paska, he says that Mrs. Husakova was not employed, as he puts it:

“… in my company, she is working for Prago Sport, this is a different company. I have no shares and no connections to Prago Sport. Prago Sport is the landlord of my office premises. They are totally different companies.”

He does not say in terms that the letter, notwithstanding that, did not get to him, but I infer that that is what he is suggesting.

So far as the defendant is concerned, his evidence in a short witness statement is that he did not receive the letter, or a letter, from Nike before 30^th September 2006 stating that it wished to exercise the option. He offers no comment on the claimant’s evidence.

There is, however, some further evidence in the form of an exchange of emails which, although I think it is fair to say does not in express terms confirm the exercise of the option by the receipt of the letter, is certainly not inconsistent with that. There is a reference to Nike having written a letter to the agent and there is certainly no denial, at least in the email correspondence that the letter was not received. In fact, Mr. Rosicky in an email of 16^th August 2006 suggests that Nike should communicate Mr. Paska because he has the relevant power of attorney to deal with any renewal of the contract.

In summary the position therefore is this: the English court, in my judgment, has jurisdiction to grant an interim injunction pursuant to s.25 of the Act in support of the Dutch proceedings as and when they are issued. So far as that is concerned, the Dutch action is about to be commenced and an undertaking is offered to issue at short notice an application for parallel interlocutory relief in the Dutch proceedings. The difficulty, however, which the claimant says it faces is that according to Mr. Meijboom the Dutch court takes, under normal circumstances, considerably longer to process an application for interim relief than the court here in England. In the first of his two witness statements he suggests that even if an interim application were to be commenced almost at once it would be unlikely to result in a judgment much before the end of October or early November. So far as the substantive proceedings themselves are concerned, his estimate is that they could take the best part of two years to resolve.

In his second witness statement, however, he thinks that it might be possible to persuade the Dutch court, bearing in mind the urgency of this matter, to advance the date of any hearing so that a time-frame of two to three weeks might be more realistic.

Whichever of those two estimates is correct, what is clear and what is, I think, a significant feature in this case is that the interlocutory application and any interim relief granted may well be the only opportunity at which the Dutch court has to consider the strength of the parties’ respective cases prior to the expiry of the contractual period that is alleged to have come into play as a result of the exercise of the option. It seems most unlikely on the evidence that there will be a trial and a judgment following a trial before the end of 2008. That I think confirms that the Dutch court when it hears the interim application will have to take considerable care in deciding whether or not it is appropriate for injunctive relief to be granted, which is likely to be, for the reasons I have just given, tantamount to final relief in the action.

The reality of this case is that, although nominally a dispute between Nike and Mr. Rosicky, it is, in fact, a battle between Nike and Puma for the use of this player’s service. He is a valuable commodity to both of those companies. They are both equally, on the evidence, anxious to secure his services in order to display their trademarks and to use their products, and Puma has indicated that it will indemnify Mr. Rosicky against any claims brought by Nike; by the same token it is unlikely to sue Mr. Rosicky if ultimately it transpires that when he entered into the contract with them he was already contractually committed to Nike for a further two years.

In weighing up the balance of convenience I have to take all those matters into account.

There is equally, I think, no real dispute between the parties that, for the purposes of founding the jurisdiction of the English court in a case where the court has no jurisdiction to try the substantive dispute, there is a sufficient connection between the defendant and the subject matter of this action and the English court to satisfy the guidelines given by the European Court of Justice in Van Uden Maritime BV v. Firma Deco-Line. As I have already indicated, Mr. Rosicky is resident or domiciled here in England. He plays football for Arsenal, and although he is the captain of the Czech national team most of his football will be played here in the Premier League. It is not therefore inexpedient (within the meaning of s.25(2) for this court to hear and decide this application and it would not, I think, be appropriate to reject the application simply because the Dutch court is the parties’ chosen forum and will itself be asked comparatively shortly to consider the grant of interim relief. The purpose of the 1982 Act and the Brussels Regulation is to enable the courts of other contracting states to render assistance where the necessary connection with the subject matter of the proceedings exists. But obviously a principal consideration for this court in these circumstances will be to try to ensure that any order it makes is consistent with what the Dutch court is likely to do.

If this were a purely domestic dispute I would unquestionably be asked to apply the Cyanamid principles to the determination of whether or not to grant interim relief. Under those rules, which are too familiar really to need to be recited, the first question which the court has to face is whether or not damages would be an adequate remedy. Nike’s case is that if an injunction is not granted so that the Puma contract is allowed to go ahead, it will lose the benefit of having the defendant play in its boots over the next week, and with that the benefit of whatever marketing effect that is likely to have.

Perhaps in particular its concern over this interim period is what is the likely effect of the more observant members of the public noticing that Mr. Rosicky has changed from Nike to Puma boots, notwithstanding that until now he has continued to wear Nike boots and of course wears the Nike kit which is provided to all Arsenal football players as part of a team sponsorship arrangement with the claimant.

It is also of concern, they say, to them that over and above the defendant beginning to wear Puma boots there is in process of preparation an advertising campaign centring around the defendant, not yet launched, which is designed to run and provide Puma with publicity for its products based on the contract that was entered into this year. If no injunction is granted then every indication is that that campaign will go ahead as planned.

It seems to me that in all these trademark cases it is never possible to put a price on the value of being able to display one’s mark and to get a prominent player to wear one’s products. Therefore, the correct view has to be that at trial an injunction will be the appropriate remedy.

So far as the defendant, himself, is concerned, it is said that damages would be an adequate remedy because all he is faced with is not being able to perform the terms of his contract with Puma for a limited period of time. As to that, there will in reality be no financial penalty because of the indemnity arrangements that I have referred to, but even if Puma were to take a more hard-nosed attitude about it and choose to sue then Nike is good on its cross-undertaking in damages and the defendant will be compensated for any loss which he suffers as a result.

Notwithstanding this, I am not convinced that damages would be an adequate remedy for him. It seems to me that the court would also be bound to have regard to the fact that on the basis of the claimant’s case the defendant has deliberately chosen to break his contract with the claimant and to enter into a contract with a rival supplier and sponsor. That raises issues about his reputation and good faith, which are not, in my judgment, capable of being met simply by an award of damages in the event that it ultimately turns out that the injunction should never have been granted and that the defendant is correct that the contract was not renewed for a further two year period.

In summary, I consider that the court is likely, simply on an application of Cynamid principles, to come to the conclusion that damages are not an adequate remedy for either party, although of course I accept that both parties are well able to satisfy any award of damages that might be granted.

Therefore, inevitably the resolution of the application turns on the balance of convenience. There are a number of issues which I am asked to take into account. It is said, for example, that the application is made very late in the day against a background in which there has been a dispute about whether or not the defendant is bound by the Nike contract since the beginning of this year. I think it is true to say that certainly there were the beginnings of a dispute early on which manifested itself by his refusal to appear, for example, at autograph sessions back in January and in April. Since then, however, the indications are that attempts have been made to negotiate a way out of this dispute, and although I do not think these constituted in any sense any waiver or otherwise of the defendant’s position, it is the case that as late as the beginning of June of this year he continued to wear Nike mark boots, although his evidence is that these were boots that he had had for some time and were not new boots provided during the course of this year. Be that as it may, the matters have really only crystallised with the entering into of the new Puma contract at the beginning of July, the consequence of which is that unless an injunction is granted the defendant definitely will cease to wear Nike boots and to start to wear Puma boots with effect from this Saturday at the start of the new English football season. I am not, on balance, minded to think that this is a case where delay of itself disentitles the claimant to the relief it seeks, although it is clearly a factor amongst many others to be taken into consideration.

The other important matter is really the competing interest in terms of the weight to be given to them of the alleged contract with Nike and the contract that was entered into clearly on any view with Puma on 5^th July. Mr. Beloff says that I ought to give certainly nothing less than equal weight to those two considerations and, if anything, more weight to the existence of the Puma contract, which is undisputed, as against what he, I think, submits is really no more than a contention on the basis of disputed evidence that the Nike contract was extended towards the end of last year.

I think that it is very difficult in relation to the essential factual issue, and probably not appropriate, for me to form any definitive view as to what is likely to be the outcome of that particular issue. But I am bound to say that on a very preliminary view of the evidence there is no real evidence on the part of the defendant to show what precisely is said to have happened to letters which, on the claimant’s evidence, clearly were delivered to the office address of the agent and it would appear to the address of the player. I am met in relation to that with simply a denial by the player of receipt and a denial, or at least an inference of a denial of receipt, by the agent based on the fact that it was handed to a lady at the reception who was not in fact an employee of the player’s agent. It seems to me that there is clearly a strong, if not seriously arguable, case that the service or delivery of the letters to those two addresses, in particular the player’s address, are capable of constituting the service of a notice within the meaning of the contract. Ultimately, of course, that is a question of Dutch law, but there is certainly no evidence from any Dutch lawyer on behalf of the defendant to indicate that on the basis of the evidence before me that would not be regarded as being capable of amounting to good service of the option notice within the meaning of the contract.

In the end, not being able to resolve that issue, I think I have to, and would have were this simply an English dispute, to take what would be the safest course having regard to the guidance given by the English Court of Appeal in Zockoll Group Ltd. v. Mercury Communications Ltd., that is to say to satisfy myself that there is a high degree of assurance that the claimant will be able to establish his case at trial. On the evidence before me, I think there is a high degree of assurance. It seems to me that there is really no substantial evidence other than the mere denial of receipt to counteract what appears to be the evidence from the postal authorities that the letters were delivered to the relevant addresses. There is also I think the evidence of the email correspondence with the player.

I want to make it clear that I am not deciding these matters, and I accept, of course, that the defendant has come to meet this application at very short notice. I did ask when this matter was called on whether or not I was being asked to decide this so far as the English court was concerned on a final basis this afternoon, or merely over an adjourned hearing which would have enabled the defendants, if they chose, to put in further evidence. I was told that this was to be the effective hearing in England and I have, therefore, to do the best on the evidence as it stands.

I am, therefore, on that basis satisfied that the claimant’s case as it stands today is sufficiently strong to mount the hurdle set in the Zockoll judgment. Even if that is setting the hurdle too high and I was dealing with this simply on a Cyanamid basis as to whether or not there was a seriously arguable case and having regard to the balance of convenience, the analogy with cases of patent infringement, which is what American Cyanamid was all about, does I think provide a helpful analogy. In most cases what the court is faced with is an allegation that the new product will infringe the registered patent. Lord Diplock made it clear that ultimately on a consideration of the factors relevant to the balance of convenience where everything was more or less even the court should veer in favour of trying to preserve the status quo.

If one approaches this case on that basis, it seems to me that preserving the status quo for what is likely to be a relatively limited period of time must be to preserve the situation as it subsisted up to the beginning of June, namely with the defendant continuing to wear Nike products, including Nike football boots. The Puma agreement of course came into being on 5^th July, but as far as that is concerned there has so far been no wide-scale use of their products.

If the injunction is granted for a limited period over the effective hearing of the Dutch interim proceedings, then all that will happen is that the defendant will not be able to wear Puma boots for that limited period of time and the advertising campaign will have to be postponed. If, on the other hand, the injunction is refused, then there will be a change of sponsor so far as the boots are concerned, together with the publicity, and that, in my judgment, will cause more damage than is likely to be caused by granting the injunction at this stage.

The only other matter which I think I have to consider is whether or not the fact that this is an application made in support of proceedings in the Netherlands in some way alters the approach that I would have taken were it solely a domestic dispute. One of the differences, and perhaps the most obvious difference, is that the court does not have the option of ordering a speedy trial. The only jurisdictional power which I have is simply to deal with this until the Dutch court itself makes an interim order.

However, there is, I think, a rough although not complete analogy between what would be a speedy trial in this jurisdiction and what I hope will be a speedy hearing of the interim application in Holland. It seems to me that what I should primarily be concerned with is to ensure that I do not reach a result that is, or is likely to be, inconsistent with the result reached by the Dutch court on the hearing of that interim application. It is not, I think, necessary for me to go any further than that because the injunction which I propose to grant will be limited in point of time until the effective hearing of that application in Amsterdam. My injunction will come to an end regardless of the outcome of that hearing, so that if the Dutch court on that occasion does come to the view that no injunction ought to be granted then the English injunction will cease to apply.

Doing the best I can on the information before me, it seems to me that there is nothing really in the evidence, including the expert evidence, which should cause me to think that the Dutch court is likely to take a radically different approach to the issues, assuming that they are faced with the same evidence that I have today. In those circumstances, I do not believe that the fact that this is an application made under s.25 ought therefore to produce a different result. It may of course be that when the matter comes back to the Dutch court the evidence is rather fuller than it is and a different outcome results. On the basis on the material which I have, I take the view that the balance of convenience, bearing in mind that this is a short period of time, is in favour of granting the injunction and that is the order which I propose to make.

I have been provided with a number of versions of the proposed injunctive relief and what I propose to do is to make an order in the form which is in the final revision that was provided giving the defendant the option, if he wishes, of wearing unmarked boots. That ultimately, of course, will be a matter for him.