British Sky Broadcasting Group & Ors v Digital Satellite Warranty Cover Ltd & Ors

I have before me two applications for summary judgment. The first is an application by the Claimants (collectively “Sky”) for summary judgment against the Third, Fourth and Fifth Defendants (Mr Freeman, Mr Sullivan and Mr Marrow, collectively “the Personal Defendants”) on all of Sky's claims against the Personal Defendants. The second is an application by the Personal Defendants for summary judgment in their favour in respect of one of Sky's claims.

Sky is the well-known pay television satellite broadcaster and communications service provider. Satellite television equipment supplied by Sky comes with a standard 12 month warranty. Sky's authorised provider markets “extended warranty” service plans to cover Sky equipment once the standard warranty expires. Prior to late 2006 or early 2007 the Second Defendant (“Nationwide 2”) and from then until the summer of 2010 the First Defendant (“DSWCL”) traded in the provision of service plans for Sky satellite television equipment in competition with Sky's authorised provider. I will refer to Nationwide 2 and DSWCL collectively as “the Corporate Defendants”. From about August 2010 to 16 November 2010 Mr Freeman and Mr Sullivan carried on the same business trading in partnership under the name Satellite Services. I will refer to the Corporate Defendants and Satellite Services collectively as “the Businesses”.

On 16 November 2010 the Businesses were placed in provisional liquidation by order of Newey J. On 31 January 2011 Warren J ordered that they be wound up on public interest grounds. At the time of writing this judgment, judgment is awaited from Court of Appeal on an appeal against that order. As matters stand, however, proceedings against the Corporate Defendants have been stayed pursuant to section 130(2) of the Insolvency Act 1986.

Sky advance two groups of claims in these proceedings. The first concerns the use by the Businesses of substantial quantities of customer data which Sky contend was unlawfully obtained from Sky's customer databases. Sky claim that, by obtaining and using such data for the purposes of marketing service plans for Sky satellite equipment, the Businesses have acted in breach of confidence and infringed Sky's database rights. Secondly, Sky claim that in the course of marketing their service plans the Businesses have infringed Sky's registered trade marks and passed themselves off as connected with, or authorised by, Sky.

Mr Freeman was a director of Nationwide 2. He was also a director of, and a 25% shareholder in, DSWCL. Mr Sullivan was the sole shareholder in, and company secretary of, Nationwide 2. He was also company secretary of, and a 25% shareholder in, DSWCL. Mr Marrow was a 25% shareholder in DSWCL. Sky allege that the Personal Defendants are jointly liable for the acts of the Corporate Defendants.

Before proceeding further, it should be noted that the procedural situation in the present case is unusual in one respect. After Sky had launched their application for summary judgment, the Personal Defendants applied to stay the proceedings on the ground that a settlement agreement had been concluded during a telephone conversation on 13 September 2000. That application necessitated consideration of a series of without prejudice communications between the parties. On 7 July 2011 Peter Smith J directed the trial of a preliminary issue as to whether a binding settlement agreement had been concluded. He also ordered that the summary judgment application be heard immediately after the trial of the preliminary issue. It was agreed between the parties on that occasion that the same judge could hear both applications (and hence that the without prejudice materials would be before the judge hearing the summary judgment application). I heard the stay application on 6 and 7 October 2011, and dismissed it by a judgment given on 7 October 2011.

There is no dispute about these. They were conveniently summarised by Lewison J (as he then was) in the contexts of defendants' applications in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]:

“As Ms Anderson QC rightly reminded me, the court must be careful before giving summary judgment on a claim. The correct approach on applications by defendants is, in my judgment, as follows:

i)

The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 2 All ER 91;

ii)

A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8].

iii)

In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman.

iv)

This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10].

v)

However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550.

vi)

Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63.

vii)

On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.”

This summary was cited with approval by Etherton LJ (with whom Sullivan LJ and Wilson LJ, as he then was, agreed) in AC Ward & Son v Catlin (Five) Ltd [2009] EWCA Civ 1098, [2010] Lloyds Rep IR 301 at [24].

As is obvious, the Personal Defendants cannot be held jointly liable for the wrongful acts of the Corporate Defendants unless it is first established to the requisite standard that the Corporate Defendants have committed such wrongful acts. It follows that I must first consider whether Sky are entitled to summary judgment in respect of each of the four causes of action they rely upon as against the Corporate Defendants. Since I do not understand it to be disputed that Satellite Services essentially continued the business previously carried on by DSWCL, it is convenient to consider the liability of Satellite Services at the same time.

Counsel for the Personal Defendants conceded in the light of the evidence now available that each of the Businesses was liable for breach of confidence. In the light of that concession, it is not necessary for me to describe the evidence relied on by Sky in any detail. It suffices to say that it demonstrates convincingly that large quantities of confidential customer data used by the Businesses emanated from Sky's customer databases.

Article 7 of European Parliament and Council Directive 96/9/EC of 11 March 1996 on the legal protection of databases (“the Database Directive”) provides:

“1.

Member States shall provide for a right for the maker of a database which shows that there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents to prevent extraction and/or re-utilization of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database.

2.

For the purposes of this Chapter:

(a)

'extraction` shall mean the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form;

(b)

're-utilization` shall mean any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by on-line or other forms of transmission. The first sale of a copy of a database within the Community by the rightholder or with his consent shall exhaust the right to control resale of that copy within the Community; Public lending is not an act of extraction or re-utilization.

3.

The right referred to in paragraph 1 may be transferred, assigned or granted under contractual licence.

4.

The right provided for in paragraph 1 shall apply irrespective of the eligibility of that database for protection by copyright or by other rights. Moreover, it shall apply irrespective of eligibility of the contents of that database for protection by copyright or by other rights. Protection of databases under the right provided for in paragraph 1 shall be without prejudice to rights existing in respect of their contents.

5.

The repeated and systematic extraction and/or re-utilization of insubstantial parts of the contents of the database implying acts which conflict with a normal exploitation of that database or which unreasonably prejudice the legitimate interests of the maker of the database shall not be permitted.”

The Database Directive has been implemented in the United Kingdom by the Copyright and Rights in Databases Regulations 1997, SI 1997 No. 3032. Since the 1997 Regulations must be construed, so far as possible, in the same way as the Database Directive and since it is not suggested that there is any difference in wording between the two which impedes such a construction, however, it is unnecessary to refer to the 1997 Regulations.

Sky claim database right in three main databases: the Chordiant database, which is Sky's central customer database, and the FMS and IFS databases, which are the historic and current databases used to manage and control the activities of Sky's field engineers. All of these databases are bespoke to Sky. Chordiant holds all current Sky subscribers' account details. As at 31 December 2009 there were records for approximately 9.7 million subscribers. The details held for each subscriber include name, address, telephone number, email address, details of their Sky equipment and installation date. Customer data is obtained via a number of different channels, including via Sky call centres, third party call centres and Sky's website. Data is transferred from Chordiant to IFS (previously FMS) for the purposes of installations and service calls.

Sky's evidence is that they have invested over £250 million in the development of Chordiant. In addition, they spend over £300 million annually in obtaining and verifying the customer details in the databases. Much of this money is spent on call centres: Sky has around 14,000 call centre staff worldwide, of whom about 4,300 will be working simultaneously at peak times. Sky also spends substantial further sums annually in maintaining both its database systems and the data they contain. Accordingly, Sky contend that they have made a substantial investment in the obtaining, verification and/or presentation of the contents of their databases, and in particular Chordiant, and therefore they own database rights in those databases.

Sky go on to contend that each of the Businesses extracted substantial parts of those databases. In support of that contention, they rely upon the same evidence as to the customer data used by the Businesses as they rely upon in support of the confidential information claim. In the alternative, Sky advance a case of re-utilisation, but counsel for Sky did not suggest that he could obtain summary judgment on that case if he failed on extraction.

The defence advanced by the Personal Defendants to this claim is two-fold. First, they say that the investment relied on by Sky is investment in the creation of the contents of the databases as opposed to the obtaining or verification of those contents. Secondly, they say that, if and in so far as Sky establishes that it has invested in the presentation of the contents, the Businesses did not take any of that presentation, and therefore did not extract a substantial part of the contents of the database. The Personal Defendants must establish that they have a real prospect of success on both of these defences in order to avoid summary judgment. The Personal Defendants contend that they not merely have a real prospect of success, but also that Sky have no real prospect of success in establishing the contrary propositions. Accordingly, the Personal Defendants seek summary judgment in their favour on the database right claim.

The first defence is a legal argument based upon the judgments of the Court of Justice of the European Union in Case C-203/02 British Horseracing Board Ltd v William Hill Organisation Ltd [2004] ECR I-10415, Case C-46/02 Fixtures Marketing Ltd v Oy Veikus AB [2004] ECR I-10365, Case C-338/02 Fixtures Marketing Ltd v Svenska Spel AB [2004] ECR I-10532 and Case C-444/02 Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou [2004] ECR I-10549.

In the British Horseracing Board case, the Court held as follows:

“31.

Against that background, the expression "investment in … the obtaining … of the contents' of a database must, as William Hill and the Belgian, German and Portuguese Governments point out, be understood to refer to the resources used to seek out existing independent materials and collect them in the database, and not to the resources used for the creation as such of independent materials. The purpose of the protection by the sui generis right provided for by the directive is to promote the establishment of storage and processing systems for existing information and not the creation of materials capable of being collected subsequently in a database.

…

The expression "investment in … the … verification … of the contents' of a database must be understood to refer to the resources used, with a view to ensuring the reliability of the information contained in that database, to monitor the accuracy of the materials collected when the database was created and during its operation. The resources used for verification during the stage of creation of data or other materials which are subsequently collected in a database, on the other hand, are resources used in creating a database and cannot therefore be taken into account in order to assess whether there was substantial investment in the terms of Article 7(1) of the directive.

In that light, the fact that the creation of a database is linked to the exercise of a principal activity in which the person creating the database is also the creator of the materials contained in the database does not, as such, preclude that person from claiming the protection of the sui generis right, provided that he establishes that the obtaining of those materials, their verification or their presentation, in the sense described in paragraphs 31 to 34 of this judgment, required substantial investment in quantitative or qualitative terms, which was independent of the resources used to create those materials.

Thus, although the search for data and the verification of their accuracy at the time a database is created do not require the maker of that database to use particular resources because the data are those he created and are available to him, the fact remains that the collection of those data, their systematic or methodical arrangement in the database, the organisation of their individual accessibility and the verification of their accuracy throughout the operation of the database may require substantial investment in quantitative and/or qualitative terms within the meaning of Article 7(1) of the directive.

In the case in the main proceedings, the referring court seeks to know whether the investments described in paragraph 14 of this judgment can be considered to amount to investment in obtaining the contents of the BHB database. The plaintiffs in the main proceedings stress, in that connection, the substantial nature of the above investment.

However, investment in the selection, for the purpose of organising horse racing, of the horses admitted to run in the race concerned relates to the creation of the data which make up the lists for those races which appear in the BHB database. It does not constitute investment in obtaining the contents of the database. It cannot, therefore, be taken into account in assessing whether the investment in the creation of the database was substantial.

Admittedly, the process of entering a horse on a list for a race requires a number of prior checks as to the identity of the person making the entry, the characteristics of the horse and the classification of the horse, its owner and the jockey.

However, such prior checks are made at the stage of creating the list for the race in question. They thus constitute investment in the creation of data and not in the verification of the contents of the database.

It follows that the resources used to draw up a list of horses in a race and to carry out checks in that connection do not represent investment in the obtaining and verification of the contents of the database in which that list appears.”

The CJEU's reasoning in relation to lists of football fixtures in the Fixtures Marketing cases was the same. To adopt Floyd J's pithy summary in Football Dataco Ltd v Britten Pools Ltd [2010] EWHC 841 (Ch), [2010] RPC 17 at [60]:

“The investment relied upon by Fixtures Marketing was held to be of the wrong sort: the investment was not in "obtaining, verification or presentation" of the contents, but in creating the contents in the first place.”

Counsel for the Personal Defendants argued that the investment relied on by Sky in the present case was also of the wrong sort, at least so far as obtaining and verification was concerned, because Sky created the customer data rather than obtaining or verifying it. He accepted that the customer data consisted of real information (such as names, addresses, telephone numbers and so on) about real persons, and that Sky had not created the data in the sense of inventing it. He argued, however, that the data was created at the point when it appeared in Sky's database by virtue of being entered into the database.

I do not accept this argument. In my judgment it is not supported by the British Horseracing Board or Fixtures Marketing cases. In those cases, the key information which the defendants had taken, namely the lists of horses in races and the lists of football fixtures, had been created by or on behalf of the claimants. It is true that the lists were created using pre-existing information (such as the names of the horses, the owners and the jockeys in British Horseracing Board), but nevertheless what resulted was new information: see the judgment of Jacob LJ when the British Horseracing Board case returned to the Court of Appeal [2005] EWCA Civ 863, [2005] RPC 35 at [29]-[30] and [35]. The CJEU held that the investment in creating that new information did not count for the purposes of subsistence or infringement of database right. By contrast, in the present case for the most part Sky do not create new information when they enter a customer's details into the Chordiant database, they simply record pre-existing information in a systematic way. It might be argued that the installation date was created by Sky, but even if it that is right it does not assist the Personal Defendants with regard to information such as the customer's name, address and telephone number. Counsel for the Personal Defendants' argument would substantially deprive the contents of many databases of protection, contrary to the whole purpose of the Database Directive.

In my view this is a point of law which is suitable for summary determination. It is not one which will be affected by further evidence at trial. Accordingly, I determine the point in Sky's favour. It follows that the Personal Defendants's application for summary judgment fails.

It also follows that it is unnecessary to consider the point about presentation. All I will say about it is that I do not regard it as a point which is suitable for summary determination. Although I was referred to the CJEU's judgments in Fixtures Marketing v Svenska Spel at [27] and in Case C-545/07 Apis-Hristovich EOOD v Lakorda AD [2009] ECR I-1627 at [46]-[48], neither of those passages seems to me to provide a clear answer as to what the law is. Furthermore, I consider that the point would require a detailed factual investigation of the structures of Sky's and the Businesses' respective databases.

Although Sky rely upon a number of registered trade marks, it is common ground that for present purposes it is only necessary to consider UK Registered Trade Mark No. 2386970 SKY (“the Trade Mark”). The Trade Mark is registered as of 14 March 2005 in respect of various goods and services in Classes 9, 35, 36 and 37 including “the provision of warranties, extended warranties and assistance in relation to broadcast reception apparatus and instruments and parts and fittings therefor including cable, satellite and digital reception” (“the Services”).

Furthermore, although Sky have pleaded claims under sections 10(1), 10(2) and 10(3) of the Trade Marks Act 1994, corresponding to Articles 5(1)(a), 5(1)(b) and Article 5(2) of European Parliament and Council Directive 2008/95/EC of 22 October 2008 to approximate the laws of the Member States relating to trade marks (codified version) (“the Trade Marks Directive”), it is common ground that it is only necessary for present purposes to consider the claim under Article 5(1)(a). This provides:

“The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:

(a)

any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;

…”.

The Personal Defendants do not dispute that the Businesses used in the course of trade a sign identical to the Trade Mark in relation to services identical to the Services without the consent of Sky. The Personal Defendants' defence to the claim for infringement under Article 5(1)(a) is two-fold. First, they dispute that such use adversely affected any of the functions of the Trade Mark. Secondly, they rely upon defences under section 11(2)(b) and (c) of the 1994 Act, corresponding to Article 6(1)(b) and (c) of the Trade Marks Directive. This provides:

“The trade mark shall not entitle the proprietor to prohibit a third party from using in the course of trade:

…

(b)

indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services;

(c)

the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts;

provided he uses them in accordance with honest practices in industrial or commercial matters.”

Neither counsel took issue with my analysis of the law on these points in DataCard Corp v Eagle Technologies Ltd [2011] EWHC 244 (Pat), [2011] RPC 17 at [245] - [273] and [296]-[299] respectively (and in relation to Article 6(1) see also my more recent decision in Samuel Smith Old Brewery (Tadcaster) v Lee [2011] EWHC 1879 (Ch) at [112]-[120]). As a result, it is common ground that, if Sky can establish that the uses complained of gave rise to a likelihood of confusion on the part of the public, then it follows that (i) the uses fall within Article 5(1)(a) because they adversely affect the origin function of the Trade Mark and (ii) the Businesses have no defence under Article 6(1) because the uses were not in accordance with honest practices in industrial and commercial matters.

I should mention that in his skeleton argument counsel for the Personal Defendants also relied on Article 10(1) of the European Convention on Human Rights. As I think he accepted during the course of argument, however, there is no Convention right to mislead consumers.

In order to decide whether there is a likelihood of confusion for these purposes, it is appropriate to apply the principles established by the CJEU under Article 5(1)(b), as to which see DataCard v Eagle at [273]-[289]. A point of particular relevance in the circumstances of the present case is that the uses of the sign SKY complained of must be considered in context.

It is common ground that the relevant average consumer is someone who has Sky satellite television equipment and that the Trade Mark is both inherently distinctive and has a substantial reputation acquired through use.

Sky rely upon four items of marketing literature sent to consumers by the Businesses as sample infringements. I shall consider these in chronological order. The first is an undated circular letter from Nationwide 2 which was sent to Sky customers in about 2005/2006. This is headed in large print “URGENT NOTICE YOUR SKY DIGITAL WARRANTY IS DUE TO EXPIRY CALL 0870 241 6485 WITHOUT DELAY”. Underneath this is the statement “YOUR SKY DIGITAL WARRANTY AT A PRICE YOU CAN AFFORD AND SERVICE YOU CANNOT IGNORE”. Below this it states “AS SOON AS YOUR SKY DIGITAL SYSTEM IS OVER 12 MONTHS OLD YOUR STANDARD SKY WARRANTY EXPIRES. … RESTORE PEACE OF MIND AND EXTEND YOUR SKY WARRANTY WITH US … EXTEND YOUR WARRANTY COVER WITH UNLIMITED CALL-OUTS”.

In my judgment this letter is clearly misleading. The statement that the Sky warranty is about to expire and the invitation to extend the Sky warranty are both calculated to lead the average consumer to believe that the letter either emanated from Sky or from an organisation authorised by Sky. Although Nationwide 2's name and address are given in small print at the bottom, I consider it likely that some consumers would not notice this and that some who did would either think that Nationwide 2 was part of the Sky group or that it was authorised by Sky. There is nothing in the letter to disabuse such false impressions.

The second item is an undated letter sent by DSWCL to a Sky customer in London in about April 2007. The envelope in which the letter was sent was marked in the top lefthand corner “for SKY Customers WARRANTY INFORMATION”. Under a large heading “URGENT NOTICE”, the letter states “This is your final reminder that your sky digital satellite system warranty is due to expire Although we may have written to you regarding this, you may have misplaced it or forgotten about the benefits that our warranty has to offer”. Under the heading “PLAN BENEFITS”, the second bullet point is “FULLY QUALIFIED SKY ENGINEERS”. Further on the letter reads “Enjoy the benefits of our fully inclusive sky digital satellite warranty service by paying now & receiving 30 days free of charge”. Enclosed with the letter was an application form headed “SKY DIGITAL SATELLITE COVERPLAN”.

In my judgment this letter is even more clearly misleading than the first one. Although it bears DSWCL's name and address, this is in even smaller print than Nationwide 2's name and address on the first letter. Again, there is nothing in the letter to correct the false impressions it is likely to have created amongst some consumers.

The third item is a policy certificate issued by DSWCL dated 1 September 2009. It is common ground that, for the reasons I gave in DataCard v Eagle at [277]-[289], it is immaterial that this post-dates the contract entered into by the consumer in question. The certificate is headed “SKY DIGITAL WARRANTY CERTIFICATE”. Among the benefits listed are “SKY DIGITAL BOX REPLACEMENT WITHIN 72 HOURS” and “SERVICE CARRIED OUT BY SKY QUALIFIED ENGINEERS”.

In my judgment this certificate is misleading for similar reasons to the two letters considered above. The certificate clearly bears the name and contact details of DSWCL, but again there is nothing to dispel false impressions.

The fourth item is an undated letter sent to a Sky customer in West Lothian in about April 2010. The envelope in which the letter was sent was marked in the top lefthand corner “for SKY Customers WARRANTY INFORMATION”. Under a large heading “IMPORTANT NOTICE REQUIRING URGENT ATTENTION”, the letter states “YOUR SKY DIGITAL SATELLITE SYSTEM WARRANTY IS DUE TO EXPIRE”. Below this it states “AS SOON AS YOUR SKY DIGITAL SYSTEM IS OVER 12 MONTHS OLD YOUR STANDARD SKY WARRANTY EXPIRES. … RESTORE PEACE OF MIND AND EXTEND YOUR SKY WARRANTY WITH US … EXTEND YOUR WARRANTY COVER WITH UNLIMITED CALLOUTS”. Among the benefits listed, the second is “FULLY QUALIFIED SKY ENGINEERS”. Enclosed with the letter was an application form headed “SKY DIGITAL SATELLITE COVERPLAN”.

In my judgment this letter is clearly misleading for similar reasons to those given above. In addition, Sky have adduced evidence from the recipient of the pleaded letter and from another recipient of a letter in the same form to the effect that they were actually confused. That evidence has not been tested in cross-examination, however, and therefore I do not rest my decision upon it.

In addition to the written marketing materials, Sky complain about oral uses of the sign SKY by the Businesses during telephone marketing. Sky has served witness statements from seven consumers who say that they were misled by statements made to them by representatives of the Businesses. That evidence has not, of course, been tested in cross-examination. Furthermore, the Personal Defendants' evidence on this application includes transcripts of recordings of some of the conversations which demonstrates inaccuracies in some of the witnesses' evidence. However, the Personal Defendants' own evidence demonstrates that the Businesses' representatives made misleading statements.

First, Mr Sullivan exhibits to his third witness statements “the script provided to DSWCL telesales staff and which they were required to follow”. This includes the following passages:

“It's [name] calling from Digital Satellite Warranty Cover Ltd regarding your SKY digital service.

…

Anyway I won"t keep you long; it's just a quick courtesy call TODAY as it appears your Sky digital cover runs out very soon, for all your breakdowns and repairs.

HOWEVER don"t worry, we can set up a warranty for you TODAY to make sure your [sic] well covered …”

In my judgment this is clearly misleading. It is calculated to convey the impression that the caller is either from Sky or an organisation authorised by Sky, because otherwise how else would the caller know that the consumer's existing Sky warranty was about to expire soon? The truth was that the Businesses had unlawfully obtained Sky customer data which revealed this information, but of course that was not revealed. Furthermore, it is calculated to give at least some consumers the impression that they are being invited to renew their existing Sky warranty.

Secondly, Mr Sullivan exhibited to his fourth witness statements transcripts of conversations with four of Sky's witnesses (or, in the case of one, his wife). As indicated above, Mr Sullivan's purpose in doing this was to demonstrate the witnesses' accounts were inaccurate. But the transcripts themselves show that DSWCL's staff made misleading statements. It is sufficient to refer to two sets of transcripts by way of example.

The first consists of two conversations between a DSWCL representative called Tony and a consumer called Mr Parish. In the first conversation on 12 March 2010 there is the following exchange:

“Hi there Mr Parish, it's Tony calling from Digital Satellite regarding your Sky television.

Oh yeah.

It's just a quick call as your Sky digital warranty is due to expire, however, not to worry we would set that up for your today to make sure you"re fully covered …”

This is misleading for the reasons given above, but the matter does not end there. In the second conversation on 15 March 2010 there is the following exchange:

“Hello Mr Parrish, it's Tony calling from Digital Satellite.

Hiya.

I spoke to you on Friday with regards to extending your warranty.

You certainly did.”

This is even more clearly misleading, since it is calculated to give the impression that the consumer is being offered the opportunity to extend his existing Sky warranty.

The second example is a transcript of a conversation between a DSWCL representative called Natasha and a consumer called Mr England on 9 October 2009. This starts in a similar manner to that quoted in paragraph 43 above. Towards the end of the conversation, there is the following exchange:

“How do I know you"re from Sky?

In the next three to five days you will get all your confirmation, everything you need to know will be in that pack, it includes your account numbers, policy number and your proof of payment.

OK.”

Natasha's response was not a direct answer to the question Mr England asked, but it was calculated to re-assure Mr England that she was from Sky, contrary to the fact. In any event, she did not disabuse Mr England of that impression, which is sufficient for Sky's purposes: cf. British Sky Broadcasting Group plc v Sky Home Services Ltd [2006] EWHC 3165 (Ch), [2007] FSR 14 at [14].

Thirdly, Mr Sullivan admitted in paragraph 40 of his third witness statement that three DSWCL employees had been dismissed for departing from the script. In context, it seems clear that they had been giving customers the impression that DSWCL was affiliated to or authorised by Sky. This was confirmed by Kath Dutton, a former employee of DSWCL, in paragraph 2 of her witness statement. Counsel for the Personal Defendants submitted that these three incidents were de minimis. I do not accept that. In any event, this submission provides no answer to Sky's case based on the script and the transcripts.

Fourthly, the Personal Defendants' own evidence shows that a large number of complaints have been made to Knowsley Borough Council Trading Standards about DSWCL and Satellite Services and that a high proportion of those complaints were to the effect that the complainant had been misled into believing that the caller was from or associated with or authorised by Sky.

For the reasons given above, I consider that the conclusion that the Businesses' activities complained of gave rise to a likelihood of confusion is inescapable. There is no prospect that a trial will lead to any different conclusion.

It is common ground that for present purposes Sky's claims for passing off stands or falls with their claims for trade mark infringement. It follows that Sky succeeds on this cause of action as well.

As noted above, Sky contend that the Personal Defendants are jointly liable for the wrongful acts of the Corporate Defendants. Subject to one point, there was no dispute between counsel as to the applicable principles. These were stated by Chadwick LJ in MCA Records Inc v Charly Records Ltd [2001] EWCA Civ 1441, [2002] FSR 26 as follows:

“49.

First, a director will not be treated as liable with the company as a joint tortfeasor if he does no more than carry out his constitutional role in the governance of the company – that is to say, by voting at board meetings. That, I think, is what policy requires if a proper recognition is to be given to the identity of the company as a separate legal person. Nor, as it seems to me, will it be right to hold a controlling shareholder liable as a joint tortfeasor if he does no more than exercise his power of control through the constitutional organs of the company – for example by voting at general meetings and by exercising the powers to appoint directors. Aldous LJ suggested, in Standard Chartered Bank v Pakistan National Shipping Corporation and others (No 2) [2000] 1 Lloyd's Rep 218, 235 – in a passage to which I have referred – that there are good reasons to conclude that the carrying out of the duties of a director would never be sufficient to make a director liable. For my part, I would hesitate to use the word "never" in this field; but I would accept that, if all that a director is doing is carrying out the duties entrusted to him as such by the company under its constitution, the circumstances in which it would be right to hold him liable as a joint tortfeasor with the company would be rare indeed. That is not to say, of course, that he might not be liable for his own separate tort, as Aldous LJ recognised at paragraphs 16 and 17 of his judgment in the Pakistan National Shipping case.

Second, there is no reason why a person who happens to be a director or controlling shareholder of a company should not be liable with the company as a joint tortfeasor if he is not exercising control through the constitutional organs of the company and the circumstances are such that he would be so liable if he were not a director or controlling shareholder. In other words, if, in relation to the wrongful acts which are the subject of complaint, the liability of the individual as a joint tortfeasor with the company arises from his participation or involvement in ways which go beyond the exercise of constitutional control, then there is no reason why the individual should escape liability because he could have procured those same acts through the exercise of constitutional control. As I have said, it seems to me that this is the point made by Aldous J (as he then was) in PGL Research Ltd v Ardon International Ltd [1993] FSR 197.

Third, the question whether the individual is liable with the company as a joint tortfeasor – at least in the field of intellectual property -is to be determined under principles identified in CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013 and Unilever Plc v Gillette (UK) Ltd [1989] RPC 583. In particular, liability as a joint tortfeasor may arise where, in the words of Lord Templeman in CBS Songs v Amstrad at page 1058E to which I have already referred, the individual "intends and procures and shares a common design that the infringement takes place".

Fourth, whether or not there is a separate tort of procuring an infringement of a statutory right, actionable at common law, an individual who does "intend, procure and share a common design" that the infringement should take place may be liable as a joint tortfeasor. As Mustill LJ pointed out in Unilever v Gillette, procurement may lead to a common design and so give rise to liability under both heads.”

The dispute concerns the liability of the Personal Defendants for acts of breach of confidence committed by the Corporate Defendants. Counsel for the Personal Defendants submitted that, in order to be liable for such acts, it was not sufficient for the Personal Defendants to have procured those acts or participated in a common design to commit those acts: it had to be shown that the Personal Defendants knew or ought to have known that the information in question was confidential. Counsel for Sky took issue with this.

Counsel for the Personal Defendants relied in support of his submission upon the judgment of the Court of Appeal in Vestergaard Frandsen S/A v Bestnet Europe Ltd [2011] EWCA Civ 424. In my judgment that decision is not in point.

At first instance, I held that one of the defendants, Mrs Sig, was liable for breach of an express obligation of confidence her own contract of employment with VF, and that it was immaterial whether she knew that the defendants' recipes were derived from VF database: see [2009] EWHC 1456 (Ch), [201] FSR 2 at [23]-[24]. The Court of Appeal allowed Mrs Sig's appeal. I have to confess that I do not find the reasoning of Jacob LJ (with whom Jackson LJ and Sir John Chadwick agreed) at [45]-[50] entirely easy to follow. It appears to me, however, the crux of it is at [48]:

“[Counsel for VF] relies on Seager v Copydex, as did the Judge, to establish his proposition. But there the defendants were actually using the information which had been imparted to them, albeit they were doing so unconsciously. That is not so in the case of Mrs Sig. I do not think Seager assists here.”

As I understand this, Jacob LJ accepted that Seager v Copydex was binding Court of Appeal authority that a person could be liable for misusing confidential information even though he was not conscious that that was what he was doing. He distinguished Mrs Sig's case on that the basis she had not actually used the information in question herself. In this regard it may be noted that the argument of counsel for VF recorded by Jacob LJ at [46] concludes with an assertion regarding Mrs Sig's use of the information which was not supported by my findings of fact in the judgment under appeal.

Be that as it may be, neither before me nor before the Court of Appeal was VF's case against Mrs Sig one of joint liability for the acts of another person. By contrast, VF did argue that Bestnet Europe Ltd was jointly liable for the acts of Dr Skovmand and IIC. My conclusion that was in principle a claimant could advance a case of joint liability for breach of an equitable obligation of confidence, but this did not assist VF because Dr Skovmand had acted in breach of a contractual obligation: see [2009] EWHC 1456 (Ch), [2010] FSR 2 at [17]-[20].

Accordingly, I would be inclined to reject the submission of counsel for the Personal Defendants. For reasons that will appear, however, it is not necessary for me to come to a conclusion on this point.

Counsel for Sky relied upon a number of different strands of evidence as demonstrating that each of the Personal Defendants had procured or participated in a common design to commit the wrongful acts described above. He also relied upon the absence of any evidence from any of the Personal Defendants asserting that they had merely performed their respective constitutional roles within Nationwide 2 and DWSCL.

It is neither necessary nor appropriate for the purposes of this judgment for me to set out all of the evidence relied by counsel for Sky. It is sufficient for me to say that I consider that it establishes a strong case that each of the Personal Defendants is jointly liable for at least some of wrongful acts of the Corporate Defendants. In my judgment, however, it does not follow that Sky are entitled to summary judgment against the Personal Defendants. My reasons are as follows.

First, counsel for Sky accepted that he was unable to prove at this stage that any of the Personal Defendants had personally carried out any particular wrongful acts. Thus he could not establish, for example, that any of them had personally sent any of the marketing letters complained of let alone made any of the telephone calls complained of.

Secondly, it follows that Sky's case against the Personal Defendants is exclusively based on procurement of, or participation in, the acts of other persons. In my judgment it is clear from the judgment of Chadwick LJ that such a case will ordinarily require a detailed factual investigation at trial. While the case against the Personal Defendants presently appears strong, I cannot say that it is unanswerable. The Personal Defendants are entitled to require it to be tested through the normal procedure of a trial.

Thirdly, even on the present evidence, it appears to me to be at least possible that the three individuals stand in different positions. By way of example, counsel for Sky relied on evidence emanating from Mr Sullivan that Mr Marrow was responsible for looking after customer data at DSWCL. If this is correct, it may indicate that Mr Marrow is jointly liable for DSWCL's, but not necessarily Nationwide 2's, acts of breach of confidence and database right infringement, whereas Mr Sullivan and Mr Freeman are not. (In saying this, I am not ignoring other evidence relied upon by Sky which points to involvement on the part of Mr Freeman and Mr Sullivan in obtaining customer data.) Conversely, Mr Sullivan and, to a lesser extent, Mr Freeman appear on the evidence before me to have been more closely involved in the marketing activities complained of than Mr Marrow. This may indicate that Mr Sullivan and possibly Mr Freeman are jointly liable for the Corporate Defendants' acts of trade mark infringement and passing off, but not Mr Marrow. In short, even if some of them are jointly liable for some wrongful acts, it does not follow that all three are jointly liable for all such acts. Who was responsible for what requires investigation at a trial.

Counsel for the Personal Defendants submitted that, even if the Personal Defendants did not have a real prospect of successfully defending the claims made against them, there was another compelling reason for trial. Sky have not sought summary judgment against the Sixth to Tenth Defendants. These are individuals whom the Personal Defendants have at various times alleged supplied Sky customer data to the Corporate Defendants. Counsel for the Personal Defendants argued that, given that the claims against those defendants would have to be tried anyway, it would not be appropriate to give judgment now against the Personal Defendants.

In my judgment this factor has no bearing the appropriateness of summarily determining the liability of the Corporate Defendants now, but it provides some modest further support for my conclusion that it would be inappropriate to grant summary judgment on the issue of the Personal Defendants' liability. By way of illustration of this, in his first witness statement in these proceedings, Mr Sullivan identified Daltons Data (said to be a trading name of the Sixth Defendant) as a supplier of such data. During the course of his evidence before me on the stay application, however, Mr Sullivan admitted that this was untrue. Again, it requires a trial to establish precisely who was responsible for what.

I will grant summary judgment in favour of Sky as against the Personal Defendants on the liability of each of the Businesses for (i) breach of confidence, (ii) infringement of Sky's database rights, (iii) infringement of the Trade Mark and (iv) passing off; but I will not grant summary judgment on the issue of whether the Personal Defendants are jointly liable for the wrongful acts of the Corporate Defendants. The Personal Defendants' application for summary judgment is dismissed. I will hear counsel as to the appropriate order to make in the light of this judgment.