Grenade (UK) Ltd v Grenade Energy Ltd & Anor

JUDGE HACON: By this application, the claimant seeks summary judgment against both defendants, or alternatively an order that the defence is struck out and judgment is entered for the claimant.

The background facts are broadly these. The claimant markets food and drinks, specialising in those supplied to a sports market and which offer energy and improved performance. They are sold under two trademarks, one is the word mark "Grenade", the other is a logo which has an image of a grenade firearm in place of the letter A within an overall image of the word Grenade in a particular font.

The claimant has been trading on a substantial scale using these marks since 2010. It has acquired goodwill in its business associated with these marks. It has also acquired two European Union trademarks. One is a word mark in the form of the word Grenade, and the other is a device mark in the form of the logo I have just mentioned.

The first defendant is a company incorporated in June 2013 under the name Grenade Energy Limited. It supplies drinks, including energy drinks and has a website www.grenadeenergy.com. One of the first defendant's principal products is an energy drink called Epic. This and other products have been advertised in a number of ways, including on the first defendant's website. That website also features the company name Grenade Energy Limited and the logo.

The second defendant is the sole director and sole shareholder of the first defendant. It is alleged by the claimant that the first defendant has infringed the two EUTMs and has passed off its products as being those of the claimant or as being otherwise associated in the course of business with the claimant. The second defendant, Mr Chawla, is alleged to be jointly liable with the first defendant, the acts complained of having been authorised by him or made in furtherance of a common design between the defendants.

The position today is that Mr Sampson, who appears for the defendants, concedes on their behalf that the defendants have infringed the two EU trademarks owned by the claimant. It is admitted that the acts complained of constituted a misrepresentation on the part of the defendants. It is also admitted that the claimant has goodwill in its business associated with the wordmark "Grenade" and the claimant's device mark. Nonetheless, it is said that the defendants have an arguable defence to passing off on the ground that it is arguable that the claimants have not suffered damage.

Also it is said that the second defendant has an arguable defence that he is not jointly liable with the first defendant, and that this too should go to trial. Argument today really centred on the claimant's application for summary judgment.

Pursuant to CPR 24.2, I must be satisfied that the defendant has no real prospect of successfully defending the claim, either in relation to passing off or joint tortfeasance. In their respective skeletons, counsel referred me to a number of authorities on summary judgment, but I did not detect there was any real dispute about the criteria necessary for me to make a finding of summary judgment. At the risk of over-condensing the matter, I have to be satisfied that there is an absence of reality to the defendant's case in relation to passing off and joint tortfeasance.

I take passing off first. Damage as an element of the passing off alleged is pleaded in the Particulars of Claim in paragraph 4 as follows:

It is fair to say that is quite brief. It just infers damage from the existence of goodwill and misrepresentation, which of course are now admitted. Mr Sampson submits that is not enough. In particular, he submitted today that the misrepresentation which has been admitted would be dispelled by the time a member of the public bought a can of the first defendant's Epic product.

Mr Hill, who appeared for the claimant, took me to a picture of a trade show, which was one of the exhibits, and which showed a display of the first defendant's Epic drink, set out under a clear label or banner at the display in the form of the words "Grenade Energy". Mr Hill also took me to the evidence of actual confusion which has emerged, I believe, in the last few weeks to show that some customers have indeed been taken in by use of the word grenade and possibly by the device used by the first defendant, into believing that the Epic product has something to do with the course of trade with the claimant. In fact, I was also shown an email dated 26 November 2015 from James Stephens who is managing director of one of the parties who supplied to the claimant. It is apparent from the email that he had seen the first defendant's Epic product being displayed. He says this:

Then he gives a reference to the domain name where Juliet Barrett, the officer of the claimant to whom the email was sent, could find an image of what he had seen in Food Matters Live. Mr Stephens goes on:

It seems to be that it is inevitable given that there has been a misrepresentation by the first defendant and that the claimant owns goodwill, that the claimant will on the present facts suffer damage. I think it is certainly possible that such damage could take the form of loss of sales going to the defendant via sales of its Epic drink rather than the claimant. But even if that does not happen, it is inevitable that there will be some loss of control of the claimant's goodwill. That, of itself, is bound to cause the claimant damage.

For that reason I think there is a lack of reality in the suggestion advanced on behalf of the defendants that the claimant will not suffer damage. I will therefore give summary judgment in relation to the claimant's allegation of passing off.

I turn then to the second aspect which I have to resolve today, namely the allegation of joint tortfeasance. The Particulars of Claim set out certain matters on which the allegation of joint tortfeasance is based. I refer to the particulars in paragraph 28 of the Particulars of Claim:

In response to the Particulars of Claim, two defences were filed, one on behalf of each of the defendants, both of them signed by Mr Chawla. At this stage Mr Chawla might not have had the benefit of legal advice but, for reasons I will come to, I do not think that matters. He said this in relation to the allegation of joint liability:

The second defendant is a shareholder and director of GEL [the first defendant].

His actions, while acting as a director of GEL or acting on behalf of GEL are the responsibility of GEL.

His actions in his individual capacity or any of his actions in other ventures should not have any liability on GEL."

I have the impression from that that Mr Chawla did not at this point understand the allegation of joint tortfeasance. Nonetheless, he can have had no difficulty in understanding the facts which had been alleged in the particulars I have quoted above. He does not deny those facts.

Moreover, in support of this application for summary judgment, a witness statement was served. This is the witness statement of Richard Roberts who is a partner in the firm Browne Jacobson LLP who are instructed by the claimants. In that witness statement, Mr Roberts sets out in some detail and in clear form the various allegations that are being made by the claimant.

Again, I think Mr Chawla, who is a man who can express himself very clearly, must have understood what Mr Roberts was saying, certainly in relation to the facts being advanced Mr Chawla has served two witness statements in response, one on behalf of each of the defendants, both of them dated 1 march 2016. I think it is noteworthy that in neither of those witness statements does he dispute the facts which have been summarised in the Particulars of Claim and which I have quoted above.

I turn to the law. In his skeleton argument and indeed in oral argument before me today, Mr Sampson advanced two propositions of law, both of which I accept. The first is that a director of a company is not automatically to be identified with his company for the purposes of the law of tort, however small the company may be and however powerful his control over its affairs. Mr Sampson referred in particular to MCA Records Inc v Charly Records [2001] EWCA Civ 141; [2002] FSR 26, in particular at paragraph 41 in which Chadwick LJ refers to the earlier cases of Evans v Spritebrand [1985] 1 WLR 317 and PLG Research Ltd v Ardon International Ltd [1993] FSR 197.

The second proposition that Mr Sampson relied on was that there had to be "knowing, willing or a wilful quality" to the participation of the director in order for him to be jointly liable with his company. In this regard Mr Sampson referred to paragraph 40 of MCA Records in which Chadwick LJ refers to the judgment of Slade LJ in Evans v Spritebrand.

I should add that the most up to date summary of the law in relation to joint tortfeasance is to be found in the judgment of the Supreme Court in Sea Shepherd UK v Fish & Fish Ltd [2015] UKSC 10; [2015] AC 1229. I attempted a very short summary of the key criteria for joint tortfeasance identified by Lord Sumption in Sea Shepherd in my judgment in Vertical Leisure Ltd v Poleplus Ltd [2015] EWHC 841 (IPEC), where I said this at paragraph 66:

Mr Chawla is both the sole director and sole shareholder of the first defendant. As Mr Sampson put it, he is a one-man company. In my view, this raises an evidential presumption that all acts done by the first defendant were done at the instigation of Mr Chawla alone. In effect, he was under an evidential burden to show why, contrary to what one might expect, the acts complained of were not initiated and controlled by him.

In fact, in Mr Chawla's pleadings and in his evidence, he has not identified anybody else who was, on his account, responsible for the acts complained of. Therefore, to my mind, there can be no real doubt that Mr Chawla was indeed the sole instigator and controller of those acts. I therefore take the view that he procured the acts complained of or, to put it another way, he actively cooperated with his company to bring about the infringements of community trademarks and passing off, that he intended his cooperation would bring about those acts and that there is no real prospect of Mr Chawla establishing to the contrary at trial.

I therefore give summary judgment in relation to the claimant's claim on tortfeasance.