Raft Ltd v Freestyle of Newhaven Ltd & Ors

The claimant (“Raft”) is a manufacturer and retailer of furniture. It owns and operates two stores in London. One is a flagship store in Tottenham Court Road and the other is in Cricklewood. There used to be a third in Islington. There are five other Raft furniture stores, mostly in the south of England, operated under franchise agreements.

The first defendant (“Freestyle”) is a manufacturer of sofas. It is the successor in business of another sofa manufacturer, Freestyle of London Limited (“Freestyle of London”) which is now in liquidation. The third defendant (“Highly Sprung”) operates a furniture retail store in Tottenham Court Road, immediately adjacent to Raft’s store, towards the Euston Road end of Tottenham Court Road. The second defendant (“Mr Horsnell”) is the sole director and sole shareholder of both Freestyle and Highly Sprung.

Raft’s initial complaint is that Freestyle has made and Highly Sprung has sold sofas which infringe Raft’s UK unregistered design right in the overall designs of two variations of the Loft sofa. One of these was referred to as ‘the wide-arm Loft sofa’ and the other as ‘the skinny-arm Loft sofa’. Mr Horsnell is said to be jointly liable for the acts of infringement.

Raft’s other complaint is that the defendants have passed off sofas as Raft sofas. Raft says that this passing off was achieved by a combination of three means. First, the defendants sold three styles of sofas which were identical in shape to three styles sold by Raft. Secondly, the defendants used the same names as Raft for those three styles: ‘Loft’, ‘Manhattan’ and ‘Lincoln’. Thirdly, the external appearance of Highly Sprung’s store was repainted in a style which, as Raft perceives it, resembles the appearance of Raft’s store next door. Raft’s case is that by a combination of these three means, or alternatively any two of them, customers were led to believe that the Highly Sprung store and Raft’s Tottenham Court Road store were part of the same enterprise selling the same goods. The allegation is pleaded generally against the defendants, but at trial it was advanced as a claim against Highly Sprung with Mr Horsnell again being liable as a joint tortfeasor.

Mr Horsnell counterclaimed. He alleged that Raft has infringed his UK unregistered design right in the overall design of a sofa called ‘Combi’ by making and selling sofas given the style name ‘Manhattan’. By way of alternative, the counterclaim was brought by Freestyle in the event that Freestyle owned the design right.

Design right subsists in a design if it is an original design, see s.213(1) of the Copyright, Designs and Patents Act 1988 (“the 1988 Act”). There are two requirements for originality. The first is that the design is original in what is often called the copyright sense: the design must be the creation of the designer, not copied form another, see Farmers Build Ltd v Carier Ltd [1999] R.P.C. 461, at 475 and Lambretta Clothing Co Ltd v Teddy Smith (UK) Ltd [2005] R.P.C. 6 at [12].

Of course, the author of any design is inevitably influenced by earlier designs. Just because design influences from elsewhere are copied in that sense, it does not follow that the design in issue is not original. The more useful test is therefore whether the author has expended sufficient time, labour and skill in the creation of his design. If so, the design satisfies the first requirement of originality, see Farmer’s Build at p.475. The bar for originality is set quite low. In Sawkins v Hyperion Records Ltd [2005] EWCA Civ 563; [2005] R.P.C. 32, a copyright case, Mummery LJ said (at [31]):

“A work need only be ‘original’ in the limited sense that the author originated it by his effort rather than slavishly copying it from the work produced by the efforts of another person.”

Jacob LJ observed (at [77]):

“For, whilst it is trite that mere servile copying (for instance tracing or photocopying) does not amount to originality, there are clearly forms of ‘copying’ which do – the shorthand writer’s copyright is a paradigm example which has stood since Walter v Lane [1900] A.C. 539.”

Mance LJ agreed with both Mummery and Jacob LJJ. Thus, provided that a designer has expended some sort of effort or skill, such as by way of aesthetic judgment, above merely copying an earlier design in a manner that can be described as slavish or servile, his or her design is liable to satisfy the first requirement of originality.

That said, where an existing design is amended is some minor way – and assuming the amendment was the product of sufficient skill and effort to generate a new original design – this may not confer a new originality on the whole of the amended design. The owner of the design right may be able to claim that the amended part is of a new original design, but not the article as a whole, see Ultraframe (UK) Ltd v Eurocell Building Plastics Ltd [2004] EWHC 1785; [2005] R.P.C. 7, at 130-1, in which Lewison J refers to what Lord Oliver said in Interlego AG v Tyco Industries Inc [1988] R.P.C. 343, at 371-2.

There is a complication in that the test for originality in copyright law has moved on from the traditional UK test referred to above and is now expressed in terms of the work comprising the expression of the author’s own intellectual creation, see Infopaq International A/S v Danske Dagblades Forening (Case C-5/08) [2009] E.C.R. I-6569. The difference may be only semantic, see Newspaper Licensing Agency Ltd v Meltwater Holding BV [2011] EWCA Civ 890; [2012] R.P.C. 1, at [20]. In any event the change in copyright law, influenced in particular by Directive 2001/29/EC (often referred to as ‘the Infosoc Directive’), can have no direct bearing on design right law under the 1988 Act.

The second requirement for originality is that the design is not ‘commonplace’ within the meaning of s.213(4) of the 1988 Act. This was not alleged against either of the overall designs of the Loft sofa.

Michael Quinn, a director of Raft and the designer of the Loft sofa, gave evidence. He said that his concept of the Loft design began with a conversation with John Collinson of Ashley Manor, another furniture retailer, at Birmingham NEC in January 2004. Ashley Manor had previously supplied Raft with a sofa called ‘the Linear’.

Mr Quinn said that after this conversation he approached Mr Horsnell in his workshop. This was in February 2005. At this time Mr Horsnell was Managing Director of a Freestyle of London Limited (“Freestyle of London”), Freestyle’s predecessor. Freestyle acquired Freestyle of London’s business in August 2012. Freestyle of London was one of the suppliers of sofas to Raft, along with Ashley Manor and a Polish company called SITS.

According to Mr Quinn, he largely created the wide-arm Loft design in the process of explaining to Mr Horsnell what he wanted by way of a new sofa. Mr Quinn said he informed Mr Horsnell of the dimensions, styling and look he wanted. He further explained the positioning and placement of a locking mechanism to be used to hold the modular elements of the proposed sofa together. In his witness statement Mr Quinn said that he would generally draw such designs roughly on paper, which he would not keep, although in cross-examination he admitted that he did not have a specific recollection of doing so on this occasion. Nonetheless, Mr Quinn said, Mr Horsnell was provided with all the information he needed to create a sofa of the wide-arm Loft design. Mr Quinn referred to an invoice dated 2 March 2005 which he said records the request for payment for the first wide-arm Loft sofa delivered by Freestyle of London to Raft.

Mr Horsnell’s version of events was that at the meeting at his workshop in February 2005 Mr Quinn provided a very rough, broad brush description of a sofa which he wanted Freestyle of London to make and supply to Raft. No drawing was made or provided. Mr Horsnell said that he recognised from the description and dimensions that Mr Quinn was giving him that Mr Quinn was trying to describe a style of sofa known as the ‘Kubus’ and said as much to Mr Quinn. The Kubus was a style made and supplied by Ashley Manor. Mr Horsnell and Freestyle of London went ahead anyway with the production of sofas made to the Loft design, for supply to Raft.

Mr Horsnell said that some time later he contacted Steve Morgan of Ashley Manor, providing a picture of the Loft sofa. According to Mr Horsnell Mr Morgan reacted by saying that his Kubus design had been knocked off by Mr Quinn. This was said to reinforce Mr Horsnell’s position that the wide-arm Loft design made to the instructions of Mr Quinn was nothing but a copy of the Kubus design. Mr Horsnell did, however, concede that there were several differences in dimensions, which he dismissed as minor, as well as a difference in rake.

Mr Quinn denied that he had ever seen the Kubus sofa, even by the time of the trial. He also referred to an email dated 20 May 2015 to him from Mr Morgan, in which Mr Morgan identified several differences between the Kubus and wide-arm Loft designs, apparently to assist Mr Quinn’s side of the argument.

There was also direct evidence from Laxley Pennant, now the director of an import business called Fredrick A. Black Ltd, and between October 2007 and May 2010 a director of Lansdowne Interiors Ltd. At a date Mr Pennant could not recall, but over five years ago, he called Mr Horsnell to ask whether he could be supplied with the wide-arm Loft sofa, examples of which he had seen. According to Mr Pennant, Mr Horsnell said he could not supply the Loft sofa because it was Raft’s design.

The design of sofas is a field in which competing designs can be quite close. A point made by Mr Horsnell was that even a change in the height of the back of a sofa can completely change its look and feel. I accept this: what on paper may seem small differences in dimensions may lead to a difference in appearance which may be enough to influence the customer in his or her purchasing decision. When Mr Quinn explained the look, dimensions and certain construction details of the wide-arm Loft sofa to Mr Horsnell in February 2005, he was in my view exercising his skill as a furniture designer in a manner that was sufficient to create an original design. I accept his evidence that he had not seen the Kubus sofa, but even if he had, I think his adaptations would have been enough to avoid the allegation of slavish copying. I find that the design of the wide-arm Loft sofa satisfies the first requirement of originality.

Design right therefore subsisted in this design. Mr Quinn’s evidence that he created the design in his capacity as employee of Raft was not challenged. I find that the design right was owned by Raft.

There was a dispute about the date on which the width of the arm of the Loft design was slimmed from 25mm to 15mm, with a consequent change to the overall width of the back of the sofa. Mr Horsnell said that this was done in 2006 at Mr Quinn’s request. Mr Quinn said in his witness statement that it happened in 2008, although in cross-examination he said that a one-off ‘special’ of the skinny arm was created in 2006 at one customer’s request. I find therefore that the change in arm width was done in 2006 even though the skinny-arm Loft sofa was not generally marketed until 2008.

I also find that the change in design was too minor and localised to give rise to a newly original design in the sofa as a whole. No claim was made in relation to the design of the arm alone or any other isolated part of the sofa.

Freestyle admitted that it made sofas to the wide-arm Loft sofa design for supply to Highly Sprung. I therefore need take this no further: Freestyle infringed.

It was admitted by Highly Sprung that such copies were sold from its store in Tottenham Court Road. Possession and sale of an infringing article is a secondary infringement, so to establish that Highly Sprung was liable for secondary infringement it was necessary for Raft to show that Highly Sprung had knowledge or reason to believe that the sofas in issue sold were infringing articles, see s.227 of the 1988 Act. Mr Horsnell confirmed that he was a hands-on director in relation to both Freestyle and Highly Sprung, taking all decisions himself save with regard to pricing. The knowledge or reason to believe on the part of Highly Sprung was in practice the knowledge or reason to believe in the mind of Mr Horsnell.

Mr Horsnell’s stated ground for his lack of knowledge or reason to believe was that in his view the sofas in question were copies of the Kubus design. This view does not absolve Highly Sprung from secondary infringement. Mr Horsnell accepted that the sofas were copies of the wide-arm Loft design and that he knew it. His own opinion as to whether Raft owned any design right that could be infringed by copying the Loft design was not based on any informed advice. Mr Horsnell was aware that the creator of a design in an article such as a sofa gave the creator rights, by way of design rights, even if he did not know all the finer legal details. Mr Pennant confirmed this. Mr Horsnell must have known that if he was wrong about Raft having no design right in the Loft design, that design right would be infringed by making copy Loft sofas. Therefore Mr Horsnell had ample reason to believe that the copy sofas sold by Highly Sprung were infringing articles.

The allegation of secondary infringement by Highly Sprung is made out.

The law relating to this species of joint tortfeasance was explained by the Supreme Court in Fish & Fish Ltd v Sea Shepherd UK Ltd [2015] UKSC 10; [2015] AC 1229, which I attempted to summarise in Vertical Leisure Ltd v Poleplus Ltd [2015] EWHC 841 (IPEC) in this way:

“[66] I interpret this to mean that in order to fix an alleged tortfeasor with liability, it must be shown both that he actively co-operated to bring about the act of the primary tortfeasors and also that he intended that his co-operation would help to bring about that act (the act found to be tortious). Liability will always be subject to the threshold requirement that the alleged joint tortfeasor’s contribution to the act was more than de minimis.”

As I have already indicated, Mr Horsnell said that he took all the decisions for Freestyle and Highly Sprung save in respect of pricing, where others were involved. The acts I have found to be tortious were, non-exhaustively, the manufacture and sale of copy Loft sofas. Those acts cannot have been carried out without the active involvement of Mr Horsnell and with his intent that they should happen. In the case of Freestyle’s acts of primary infringement, it was not necessary that Mr Horsnell knew that they were, in fact, acts of infringement. In the case of Highly Sprung’s secondary infringement, I have found that Mr Horsnell had reason to believe that the sales of the sofas were acts of infringement. The three defendants are jointly liable for all acts of infringement.

It was not in dispute that Raft owns goodwill in its business. Certainly it was and remains attached to the trading name: Raft. However, Raft argued that it was also attached to names and shapes of the sofas it sold. In other words, when a prospective customer sees the particular shape of one of Raft’s sofas, bearing the name given to it by Raft, then irrespective of where the sofa is seen the customer will assume that it was supplied by Raft.

Raft went further and said that its goodwill was also attached to the get-up of its Tottenham Court Road premises. If a customer went into a store which had an external design similar to that of Raft’s store, then this combined with either (a) the sight of sofas with the same shape as those sold by Raft and/or (b) the sight of names for these sofas which are the same as equivalent names used by Raft, would lead the customer to believe that sofas in Highly Sprung’s store were supplied by Raft.

Raft thus raised two alternative misrepresentations: one a false representation about the source of some of Highly Sprung’s sofas and the other a false association between the Raft and Highly Sprung stores in Tottenham Court Road. Unfortunately, the two were frequently blurred.

The classic three criteria necessary to establish a successful action in passing off set out in Reckitt & Coleman v Borden [1900] 1 WLR 491 are well known. For present purposes I can summarise them as (i) the claimant’s ownership of goodwill in his business, the goodwill being attached to a badge of origin, (ii) a relevant misrepresentation on the part of the defendant by use of the badge of origin or something similar to it and (iii) consequent damage to the claimant’s goodwill.

The badge of origin relied on by Raft in the present case was a combination of any two of three: the shape of sofas, the style names given to sofas and external store get-up.

This was not the usual passing off case concerned with a brand name, but neither was it purely a ‘get-up’ case, the get-up here being the shape of a sofa. Nonetheless, the law relating to get-up claims is relevant. It was considered recently by Arnold J in The London Taxi Corporation Ltd v Frazer Nash Research Ltd [2016] EWHC 52 (Ch); [2016] E.T.M.R. 16:

“[285] As Floyd J (as he then was) stated in Numatic International Ltd v Qualtex UK Ltd [2010] EWHC 1237 (Ch); [2010] R.P.C.25 at [39]:

“It is recognised that it is more difficult to acquire a sufficient reputation and goodwill in the shape or get-up of a product. Whilst the principal function of a brand name is to denote origin, the shape and get up of a product are not normally chosen for such a purpose. A member of the public seeing a product which looks identical to another (a red cricket ball is an example) does not necessarily, or even normally, conclude that they come from the same source. The claimant must prove that the shape of its goods has come to denote a particular source to the relevant public: see Hodgkinson & Corby Ltd v Wards Mobility Ltd [1994] 1 W.L.R. 1564; [1995] F.S.R. 169 at 1573-4. In that case Jacob J asked whether:

‘the plaintiffs have proved that the shape of their cushion is the “crucial point of reference” for those who want specifically a ROHO cushion … And have they proved that persons wishing to buy a Roho cushion are likely to be misled into buying a Flo’Tair.?’”

[286] It is worth citing a further passage from Hodgkinson & Corby Ltd v Wards [1995] F.S.R. 169 which follows on immediately from that cited by Floyd J:

“Before turning to the evidence I would make one general observation. It was the Reverend Wm. Paley who said in Natural Theology (1784), ch. i: ‘The watch must have a maker.’ In that sense every manufactured article conveys a representation — that it had a maker. Now where an article has a readily distinguishable appearance and there has only been one maker, once the article becomes well-known in the market, consumers when they see an article like that may assume that it is made by the same maker as he who made the articles of that individual appearance which they have seen before. So, in the instant case, almost all those who casually saw the Flo’Tair cushion (or just a picture of it) reacted by saying, ‘That is a Roho.’ One more precisely said, ‘That is a Roho or a convincing copy.’ This sort of evidence alone can seldom, if ever, satisfy the legal test for passing off. It does not prove that anyone relies upon the appearance to get the product of the maker they want.”

[287] As can be seen from this passage, whether or not reliance is the acid test for the purposes of the acquisition of distinctive character by a shape trade mark in European law, it is certainly the acid test for the purposes of acquisition of goodwill in a shape for the purposes of English passing off law.

To add to what Arnold J said in that last paragraph, ‘reliance’ means reliance on get-up irrespective of any trade name used – by the claimant or the defendant. There can be no misrepresentation by reason of the use of a get-up if a trade name overrides the get-up as a badge of origin in the mind of the relevant section of the public. In the present case, the question is whether customers for sofas relied (in that sense) on any of the combinations of shape of sofa, style name or store get-up advanced by Raft to identify a store; alternatively, whether they relied on the shape and style names of sofas to identify the maker of the sofas. These questions are most easily considered by looking at the evidence of misrepresentation which was presented by Raft.

In his closing submissions Mr St Quintin, who appeared for Raft, cited the following:

I will comment on Mr Rahman’s draft separately because of the nature of his statement. It is usual at case management conferences in the IPEC for the parties to be limited in the number of witnesses they are permitted to call. This is part of the process of requiring parties to have thought through their respective cases by the time of the CMC and to run the prospective trial efficiently. Extra witnesses may not be thrown in just in case they might prove useful on the day, or alternatively in the belief that the same point of evidence will carry more weight if made by several witnesses. I would make two observations about this. First, it is always open to parties to apply to the court after the CMC to add a further witness statement if the evidence it contains has only later come to light, will be of significant help to the trial judge and could not be provided by any of the existing witnesses. Such applications need to be convincing and so, in the way of things, are not often made successfully. But the possibility is there. Secondly, the limit on witnesses at trial may not be circumvented by exhibiting draft or even signed statements to the witness statement of a witness attending trial. In fact, it may well be appropriate for the opposing party to object to such drafts being included in the trial bundle. A litigant must arrange its evidence to fit within the total number of witnesses permitted at the CMC. In the overwhelming majority of cases this seems to be achieved without any real difficulty. If it turns out not to be possible, the party must apply to the court.

Mr Rahman’s statement, which I read because it was in the bundle, provides a clear example of why a court will give little or no weight to a statement that has not been challenged in cross-examination. I have no idea of how reliable Mr Rahman’s recollection of the 7 customers is. Evidence said to support an alleged misrepresentation frequently depends on nuances and a clear understanding of precisely what happened. For instance, there is often a fine line between a customer wondering about a trade connection and making the assumption that it exists. (I discussed the legal relevance of this distinction in Moroccanoil Israel Limited v Aldi Stores Limited [2014] EWHC 1686 (IPEC); [2015] F.S.R. 4, at [8] to [12].) In the present case, even if there were indeed 7 customers who went into the Highly Sprung store thinking it was a Raft store (which I am not prepared to assume), this may in each case have happened during the period when the ‘A’ board was outside Highly Sprung’s door or for some other reason that had nothing to do with any misrepresentation. Mr St Quintin found Google street images of Tottenham Court Road taken a various times, none of which showed the ‘A’ board outside Highly Sprung’s door. He invited me to find that the board must have been there for only a short time. I cannot say one way or the other. I give no weight to Mr Rahman’s draft statement.

I find nothing in the evidence which sufficiently supports either of the alleged misrepresentations on the part of Highly Sprung. In some proceedings evidence of misrepresentation is unlikely to emerge and so nothing much can be inferred from its absence. I do not think that this is that sort of case. It is likely that if a significant proportion of the public were misled about a trade connection between Raft and Highly Sprung as retailers or about the maker of Highly Sprung’s sofas, at least somebody would have made that plain. Raft were apparently monitoring the views of their customers. Yet no customer asked why the same store was using two quite different trading names. No customer asked the sales staff at Raft why it was charging significantly more than next door for the same sofa made by the same maker – an obvious ploy to negotiate a discount. These are merely examples; the point is that none of the several recorded statements from customers proves the alleged misrepresentations.

In the absence of any misrepresentation there can have been no passing off. One possibility is that there was no misrepresentation because Raft’s goodwill in its business attaches solely to its trade name, and perhaps then only as a retailer’s trade name. I reach no conclusion about that and find it unnecessary to do so.

By their counterclaim, the defendants contended that Mr Horsnell, or alternatively Freestyle, owned the design right in the design of a sofa called ‘Combi’. It was alleged that this had been infringed by Raft’s manufacture and sale of a sofa called ‘Manhattan’.

Mr St Quintin said at the start of the trial that there was some doubt as to what was being claimed by way of design right. If there was ground for doubt, it was removed by Mr Roberts who said that his clients were relying on design right in the design of the Combi sofa in its entirety, and no more. Mr Horsnell’s evidence was that he created the Combi design in 2004, basing it on an earlier design of his of the ‘Chelsea’ sofa.

It was alleged by Raft that the Combi design lacked originality, both in the copyright sense and because it was commonplace. The argument that it was commonplace was presented as a squeeze: if the differences between the Combi and the Manhattan were close enough for the Manhattan to infringe, the Combi must be a commonplace bearing in mind the similar designs available at the time it was created. At best it would be an imperfect squeeze. I will take originality and infringement separately.

As I have already discussed, the bar for establishing originality in the copyright sense is low. I find that Mr Horsnell applied sufficient skill and labour as a designer for the Combi design to satisfy the first requirement for originality.

In DKH Retail Ltd v H Young (Operations) Ltd [2014] EWHC 4034 (IPEC); [2015] F.S.R. 21, I stated my view that establishing that a design is commonplace requires more than finding some similar prior art or even quite a lot of it (at [32] to [42]). To make good its allegation that the Combi design was commonplace, I think it would have been necessary for Raft to identify all the significant features of that design and then identify items of prior art which display the same features in the same juxtaposition sufficiently to make good the allegation that it is commonplace. I am not satisfied that the burden of establishing the allegation that the design is commonplace, whether by that or another appropriate means, has been achieved.

I therefore find that the Combi design was original and that design right subsisted in it.

Mr Horsnell was primarily a furniture designer by trade. He described himself in cross-examination as a designer and manufacturer of furniture, not an out-and-out retailer. At the time Mr Horsnell created the Combi he was a director and also an employee of Freestyle of London. Freestyle of London was in the business of the design and manufacture of furniture. This seems to me to create strong grounds for an inference that Mr Horsnell’s work in designing the Combi was done by him as an employee of Freestyle of London in the course of his employment, within the meaning of s.215(3) of the 1988 Act. Alternatively, as director of Freestyle of London, he held the design right on trust for that company, see Ultraframe UK Ltd v Fielding [2004] R.P.C. 24, at [34] to [39] per Waller LJ with whom both Longmore LJ and Sir William Aldous agreed.

The significance of this is that Freestyle of London is now in liquidation and there was no suggestion that any rights in the Combi design had been acquired by any of the defendants from the company or later from the liquidator or otherwise.

An issue such as Mr Horsnell’s status as designer of the Combi, which turns on identifying the precise nature of the relationship between an individual and a company and the duties owed to that company, commonly gives rise to evidence from the designer – contracts of employment, tax documents and so on. Not in this case. The entirety of Mr Horsnell’s evidence on the point was his bald assertion in his witness statement that he was not employed by Freestyle as a designer and that he allowed Freestyle to manufacture his designs. He described this as the grant of express permission by him to Freestyle of London. In cross-examination he accepted that any such ‘express permission’ would have been from himself as an individual to himself as director of Freestyle of London and that it never happened. There was one other telling concession by Mr Horsnell: he said that the Combi would have been designed by him at Freestyle of London’s premises, although he added that he did a lot of things after hours.

No written assignment from Mr Horsnell to Freestyle of London was relied on. In principle I see no barrier in law to an ‘oral’ assignment between Mr Horsnell as designer and Mr Horsnell as director of Freestyle of London. But it would have to have been pleaded, positively asserted by Mr Horsnell as having been a conscious resolution on his part and preferably supported by documentary and/or other evidence consistent with Mr Horsnell’s alleged intention that Freestyle of London should own the right. None of these were present.

An oral assignment would anyway have been ineffective as an assignment of the design right, see s.222(3) of the 1988 Act. At best it would have created an ownership of the right in equity by Mr Horsnell. On the present facts that would not help the defendants.

In Mr Horsnell’s witness statement an alternative route was floated by which the design right in the Combi design may have reached Freestyle. He said that the assets of Freestyle of London were purchased from the liquidator on 24 August 2012. This was contrary to the defendants’ pleaded case, signed by Mr Horsnell. In cross-examination Mr Horsnell admitted that the documentary record of the assignment on 24 August 2012 indicated that no intellectual property rights were transferred. He dealt with this by saying that there was a side letter in which the liquidators had expressed the view that Freestyle of London’s IP rights had no value and had transferred the rights to him.

During his closing speech Mr Roberts provided copies of what Mr Horsnell had meant by the ‘side letter’. It was an email dated 10 November 2015 from Hugh Thomson of Ashwells Nationwide Services Limited, the valuer used in the liquidation of Freestyle of London, to Jon Beard of Begbies, the liquidators. This had been forwarded by Mr Thomson to Mr Horsnell on 27 November 2015. It read in relevant part:

“Further to our recent telephone conversation, as discussed I have retrieved the report and valuation from our archive and note that, at the time of my visit to the company, I noted that the director Chris Horsnell stated that the designs and drawings relating to the furniture manufactured by the company were designed and drawn by him over many years and it was concluded that these assets were owned by him personally, this should have been noted and included in our report and valuation (R&V) but was omitted by me for which I apologise.”

Mr Thomson then quoted extracts from the R&V, including this:

“INTELLECTUAL PROPERTY

10.0

The company have their own website: www.freestyleoflondon.co.uk. The site is designed mainly to showcase their products and is unable to receive orders, therefore due to the minimal cost of designing and setting up a similar site we attribute no value to this asset in either type of sale.”

The first point I would make is that this email was plainly a document which should have been disclosed pursuant to the Order made at the CMC. It did not inspire confidence in Mr Horsnell’s willingness to ensure that he had disclosed all relevant documents.

Secondly, the view that Freestyle of London’s IP rights had no value, in fact made by Mr Thomson, not the liquidators, related only to the company’s website. Thirdly, it seems that Mr Horsnell either told Mr Thomson that he owned the rights to the furniture designs he had created for use by Freestyle of London, or they reached that conclusion together, apparently without taking legal advice on the matter. The fourth and most important point is that, contrary to what Mr Horsnell had said in his witness statement, the liquidators did not even purport to assign any IP rights to him.

I do not accept Mr Horsnell’s contention that the Combi design was created by him for his own benefit. I find on the evidence that it was created by him for the benefit of Freestyle of London in the course of his employment by that company. The right generated by his work, i.e. the design right in the Combi design, was at all times owned by the company. Alternatively, it was held on trust by him as director of the company, for the company as beneficiary. Even if, which I do not accept, Mr Horsnell decided at some point that the right should be his, no written assignment was done which could have made the transfer effective. The design right was owned by Freestyle of London up to the point that the company went into liquidation. It has not since been assigned to Mr Horsnell or any of the other defendants.

The counterclaim fails because none of the defendants has a cause of action.

Given my finding on lack of ownership, I will take the allegation of infringement quite briefly. The alleged copy, the ‘Manhattan’ sofa, was created by Mr Quinn. It was admitted in the Reply and Defence to Counterclaim, with a statement of truth signed by Mr Quinn, that Mr Quinn based his design of the Manhattan on the Combi.

This took the defendants over the hurdle of copying. The issue was whether the design influence of the Combi was such as to mean that Manhattan sofas were produced substantially to the Combi design.

The Manhattan is part of a family of designs which includes the Combi, the Loft and several other designs of sofa that were in evidence. By ‘family’ I imply no necessary connection other than an overall similarity in appearance. Mr Quinn said that the dimensions of the Combi and Manhattan were different in several regards, as appears to have been the case. He produced his original sketch of the Manhattan which is on a page of his Filofax dated 31 January 2005. It is, as Mr Quinn conceded, a very rough sketch indeed, but I accept that with dimensions it provided enough instructions to the make the Manhattan and that it was not identical to the Combi.

In a design field such as this one, where one design will often be based on another earlier design, it is difficult to define the limit beyond which the later design ceases to be substantially the earlier design. On one view all the designs within this style family of sofas differ from one another only marginally. Yet as Mr Horsnell said, it does not take much by way of just dimensional changes to create a different look of sofa, albeit within the same family style. In my view, in the context of this design field the Manhattan was just different enough not to be substantially to the design of the Combi. If Mr Horsnell or Freestyle had had a cause of action, I would have found that Raft did not infringe.

Manhattan sofas were first produced in about 2005. They were manufactured by Freestyle of London as exclusive supplier to Raft. During that time no complaint was raised by Mr Horsnell, although this is not inconsistent with his claim. Mr Horsnell said that it was only when Raft began to make Manhattan sofas itself that he had grounds to complain. Even then, nothing was done until the present counterclaim in April 2015.

On 14 January 2013 Mr Horsnell sent Mr Quinn an email which included this:

“As discussed on Saturday the events of the past few months and the manner in which they have happened leave my position as a supplier to raft untenable and therefore I have had to make the very difficult decision to close your account. To minimise the disruption and allow you time to organise your own production I am prepared to accept orders up to 28^th February 2013.” (original underlining)

Mr St Quintin argued that this was a licence by Mr Horsnell to Raft to manufacture sofas to any design claimed by Freestyle, including the Manhattan, as it pleased. I reject that. As I interpret the email, it was an offer to continue to make sofas for Raft, including the Manhattan, until 28 February 2013, by which time Raft would be able to organise its own production of sofas – meaning, by implication, sofas of a design to which Mr Horsnell did not object. Had it been necessary for Raft to have a licence to make Manhattan sofas, there was none.

Raft’s claim to infringement by Freestyle and Highly Sprung of the design right in the wide-arm Loft sofa succeeds. Mr Horsnell is jointly liable for the acts of infringement. Raft’s claims in relation to the skinny-arm Loft sofa and passing off are dismissed. The counterclaim is dismissed.