Creative Resins International Ltd. v Glasslam Europe Ltd.

This is a libel action brought by the Claimant in a claim form issued on 5^th November 2004. As originally issued it was against the First and Second Defendants for libel in respect of words contained in two letters dated 7^th September 2004. There was also a claim against the First and Third Defendants for damages for libel in respect of words contained in an article entitled “Creative Resins served by Glasslam” published and/or caused to be published by the First and/or Third Defendant on the website of US Glass Magazine www.usglassmag.com available within the jurisdiction of this Court.

On 18^th October 2005 the Claimant issued an Application Notice by which it applied for an order that the Claimant have permission under CPR 17.1 (2)(b) to amend the Particulars of Claim. The amendment relates to the claim in respect of the American magazine and website. For the purposes of this judgment I need only recite the contents of that part of the Particulars of Claim, originally served on 19^th November 2004, which relates to this Application Notice.

The Particulars of Claim in the form for which permission to amend is sought include the following:

“11.

In an article in US Glass Magazine and posted on its website www.usglassmag.com from about 2 February 2003 to the present day the First Defendant and the Third Defendant published or caused to be published the following words defamatory of the Claimant in the way of its business:

“Creative Resins served by Glasslam”

During the recent glasstec 2002 in Düsseldorf Germany, Glasslam Europe Limited served UK-based Creative Resins International Limited with a writ claiming copyright infringement, theft of intellectual property and unfair business practices…. Certain items in Creative Resins’ stand imitated products already offered by Glasslam and its licensees. A German court supported documentary evidence and legal documents were issued. Glasslam Europe is claiming 500,000 EUROS in damages.

Patrick Sumner managing director of Creative Resins International was served with the writ by a court bailiff during the trade show. All products and materials in violation of the court order had to be removed from the stand.

‘We and our licences have spent many years establishing our products and designs to be the best in the world and the market leader in its field’ said Stephen Howes, chief executive officer for Glasslam NGI Inc (USA) sister company of Glasslam Europe.

‘We will not allow such flagrant acts of copyright infringement to undermine the confidence the industry has in our tried and tested brand.’

According to Howes Creative Resins is refusing to respond to the German Court’s order. Glasslam has thus objected very strongly to Creative Resins ever again exhibiting at glasstec.”

12.

At all material times, the copy of the article posted on www.usglassmag.com was and remains accessible by any user of the World Wide Web including users in the jurisdiction of this Honourable Court.

12A. The First Defendant is responsible for publication of such of the words complained of as were contained in a press release issued by the First Defendant and provided to the Third Defendant with the intention that the press release should be given to US Glass magazine (or other media organisations) for publication or in the knowledge that such publication was the natural and probable consequence of the First Defendant providing the Third Defendant with the press release.

13.

In their natural and ordinary meaning the words complained of in para 11 above meant and were understood to mean that:

1). The Claimant has been guilty of flagrant acts of copyright infringement in relation to the First Defendants products, forcing the First Defendant to mount a €500,000 damages claim in Germany.

2). The Claimant has deliberately ignored an order of the German court.”

The meanings pleaded in respect of the US Glass publication overlap with the meanings pleaded in relation to the letters. The claim in respect of the letters is more fully described in a judgment I gave in this matter on 3^rd May 2005, Neutral Citation Number [2005] EWHC 777 (QB). The meaning complained of in respect of the letters is:

“1.

The Claimant’s manufacturing process is defective with the result that the laminate cracks over time.

2.

The Claimant has a history of infringing intellectual property rights. This has previously forced the First Defendant and/or its parent company to obtain an injunction against the Claimant in Germany”.

In July 2005 the Claimant and the Second Defendants settled their dispute. The proceedings therefore continue against only the First and Third Defendants.

Having reached that agreement, on 18^th August 2005, the Claimant notified the First Defendant of the proposed amendments to paragraphs 11 and 12A of the Particulars of Claim. Consent to the proposed amendment was sought and refused with the result that this Application Notice was issued.

On 26^th January 2005 the Third Defendant served a Defence. That has now been amended with consent in a form provided to me at the hearing. As originally pleaded the Third Defendant made no admissions as to the date or dates between which the words complained of appeared on the website, pleading that it no longer appeared at the date of service of the Defence. In the amended form it is pleaded that “as the Claimant was aware, [it] was removed on or about 19^th November 2004”. There then follows a plea in para 3.1a, inserted by amendment, that, since the action was commenced on 5^th November 2004, the alleged publications on the website before 6^th November 2003 were outside the one year limitation period, and so statute barred pursuant to section 4A of the Limitation Act 1980 as amended by Section 5 of the Defamation Act 1996.

In the Third Defendant’s Defence as originally framed no admission was made of any publication to any Internet user within the jurisdiction and the Claimant was put to strict proof of such publication. By amendment it is added that “the Claimant is only entitled to recover damages in respect of this jurisdiction”.

Miss Addy submitted to me at the hearing that the alleged website publication represents a very weak claim. I agree. First there is no plea of publication within the jurisdiction other than in paragraph 12 of the Particulars of Claim, which says no more than that the article complained of was posted on the website and remained accessible. There is no pleading that it was actually accessed by anyone in the jurisdiction. Secondly she submits that the period of publication is confined to the few days between 5th and 19^th November 2004.

Mr Peter Jennings of the Claimant’s solicitors made a witness statement dated 7^th February 2006 and which I received on the morning of the hearing the following day, 8^th February. He says he makes the statement in support of the Claimant’s application to amend the Particulars of Claim. He states that, as is already pleaded in paragraph 16.3 of the Particulars of Claim, the First and/or Third Defendant issued a press release in November 2002 following the Exhibition in Düsseldorf in that month. A copy was sent to the Claimant on 14^th November 2002. As set out in that letter the press release reads as follows:

“Glasslam Europe Limited served Creative Resins International with a claim during the recent Glasstec International Exhibition in Düsseldorf. Certain items on display on the Creative Resins stand imitated existing products already offered by Glasslam and its licensees. When presented with the documentary evidence a German court issued the necessary legal document. The claim which was served on Mr Patrick Sumner Managing Director of Creative Resins International Limited by a court bailiff covers infringement of Copyright, Theft of intellectual property and unfair business practices. Mr Steven Howes CEO of Glasslam USA (NGI Inc) the sister company of Glasslam Europe Limited commented “we and our licensees have spent many years establishing our product and designs to be the best in the world and the market leader in its field. We will not allow actions of competitors which contravene our intellectual property rights so as to undermine the confidence the industry has in our tried and tested brand. Glasslam Europe Limited is claiming euros €500,000 (euros) in damages plus costs, and will pursue this matter to a conclusion in Germany and any other territories in which the companies rights have been compromised”.

The Claimant’s solicitors were instructed in September 2004 and wrote to the First Defendant and his then solicitors to refute the allegation made against the Claimant. The witness statement goes on to say that on 18^th October 2004 Mr Sumner received from one of his customers an email which had been sent by the First Defendant containing wording similar to the November 2002 press release. Mr Jennings did an internet search. On 21^st October 2004 he found the article on the US Glass website. He brought this to Mr Sumner’s attention and Mr Sumner confirmed to him, Mr Jennings, that he, Mr Sumner, had not been aware that the article was available on the internet. Another exhibition was due to start in Düsseldorf on 9^th November 2004. These proceedings were therefore commenced. He explains the delay that has taken place. This was partly due to the application made by the Second Defendants, which I heard and dismissed, and by the settlement negotiations with them which followed. Since then, he says, the difficulties have been caused by obtaining this appointment.

In her skeleton argument for the hearing, Miss Addy initially included a submission that there was no discretion to allow this proposed amendment, on the grounds that it was a new claim, not within the conditions set out in the Limitation Act 1980 section 35(5) and CPR Part 17.4 (2). However, at the hearing she accepted that that submission was not well founded and she did not pursue it. Accordingly she submits that permission for the amendment should be refused as a matter of discretion, firstly because it is too weak and secondly because it is too late.

In support of her application for permission to amend Miss Moorman for the Claimant submits that this is a proper case for the exercise of the court’s discretion. The Defendants do not submit that there would be any prejudice arising from the amendment and there has been no significant delay. She submits that the amendment is of substantial importance to the Claimant, in particular in respect of enforcing any award of damages, or undertaking or injunction. She submits that the terms of the Third Defendant’s Defence make clear that the First Defendant also bears responsibility for the defamatory contents of the article.

The passage in the Third Defendant’s Defence she relies on in support of this submission is paragraph 6.8, which reads:

“During November 2002 the Third Defendant was telephoned by US Glass Magazine and asked for his comments about the First Defendant’s actions against the Claimant. The Third Defendant declined to comment until after a statement had been issued by the First Defendant in England. Upon its release, on or about November 2002, the Third Defendant sent a copy to US Glass Magazine. The magazine contacted the Third Defendant for comment, which he gave”.

It is submitted that this provides a clear factual basis for asserting that the First Defendant is liable jointly with the Third Defendant for the defamatory content of the website article.

I do not accept this submission. What the paragraph in the Defence says is that the press release was issued by the First Defendant and the Third Defendant sent a copy to the magazine. The fact that the First Defendant issued the press release has been known to the Claimant at least since the 14^th November 2002. It does not seem to me that the Third Defendant’s statement that he sent a copy to the American magazine provides a factual basis for asserting that the First Defendant did so. As Miss Addy submits, the appropriate test for determining responsibility for route publication has been recently stated in McManus v. Beckham [2002] 1WLR 2982 para 43 which reads as follows:

“It will not however in my judgment be enough to show that D’s slander is a cause of X’s further publication: for such a cause might exist although D could have no reason to know of it; and then to hold D responsible would not be just. This is why the old formula ‘natural and probable cause’, is inapt even as a figurative description of the relationship that needs to be shown between D’s slander and the further publication if D is to be held liable for the latter. It must rather be demonstrated that D foresaw that the further publication would probably take place, or that D (or a reasonable person in D’s position) should have so foreseen and that in consequence increase damage to C would ensue”.

Where a person issues a press release, as the First Defendant did in November 2002, it may well be that the appropriate test is satisfied when a magazine in the same trade publishes parts of the press release. It does not seem to me that the Third Defendant’s involvement, as he describes it, adds anything to this. Accordingly I approach the matter on the footing that the amendment was one which, if good, was open to the Claimant to plead from the very beginning.

Miss Moorman submits that the First and Third Defendants are closely connected, the Third Defendant being a substantial shareholder in the First Defendant and the CEO of its sister/parent company in the US. It is a fact that they are represented by the same solicitors and counsel. The Defences served by each are naturally along the same lines, both relying on the defence of qualified privilege and neither relying on the defence of justification. In his Defence, at para 6.9, the Third Defendant pleads that, in publishing the press release and comments, he was concerned to assert his rights in the Glasslam Resin Bevel process and the Glasslam Companies’ determination to protect those rights and associated rights of its licensees. He adds that the American magazine was the appropriate forum through which to inform actual or potential licensees of the action that the sister company of the American company had taken. So, he says, the statements made by him were made in the reasonable protection of his own legitimate interests and those of his company and the readership of the American magazine had a corresponding interest in receiving them.

Next Miss Moorman submits that the application to amend is made at the stage of a Case Management Conference, after the Defences and a Reply, but before any further steps including disclosure had taken place. Accordingly, albeit there has been some delay, the application is not to be regarded as a late one.

On the issue of enforceability, it is well known that there can be difficulties in enforcing an English judgment in defamation proceedings in the United States. But the only evidence on this before me is in the Claim Form itself, which gives an address in Florida for the Third Defendant. In addition in the Particulars of Claim it is asserted that the Third Defendant is a substantial shareholder in the First Defendant company (which is a company registered in England and Wales). That is admitted in paragraph 1 of the Defence of the First Defendant, and nothing is said about it in the Defence of the Third Defendant. I was told in the course of argument that that shareholding may not be an asset of value for the purposes of execution, but that is where the evidence rests. In my judgment that is a very weak basis upon which to submit that the Claimant has a substantial reason for applying for permission to make the amendment.

Another reason given by the Claimant for this application, as stated in the witness statement of Mr Jennings this morning, is that the Claimant has become aware that several of its potential customers outside the jurisdiction, in particular in Northern Ireland, Holland and Spain, have had their attention drawn to the US Glass article on the internet by the First Defendant and have downloaded the article as directed. Mr Jennings states that the Claimant is currently gathering evidence of these further publications within Europe. As things stand there is no evidence about them. I do no even know when they are alleged to have occurred. In her submissions Miss Moorman contends that there is no scope for introducing downloads of the website publication in Europe against a non European Defendant, and that is a further reason for wishing to join the First Defendant as a Defendant to the claim on the website publication.

In my judgment, in the absence of any evidence about publications in other jurisdictions, it would not be proper for me to give any weight to this submission and I do not do so.

I turn to Miss Addy’s submissions. She submits that it is simply not enough to plead in relation to the website publication of a technical magazine that a copy of an article in it was posted on a website and “remains accessible by any user of the World Wide Webb including users in the jurisdiction of this court”. It is of course well known that in the case of many media publications the court can, and frequently does, infer publication (in the sense that particular readers have read and understood the words complained of). The cases where publication can be proved by such a general plea, and those where it is necessary to adduce evidence from a particular reader, are distinguishable according to the facts of any particular case. In my judgement, in this case, Miss Addy is on very strong ground. I do not have to determine whether she is right or wrong, because there is no application by the Defendants to strike out paragraph 11 of the Particulars of Claim, or to obtain summary judgment upon them. I am concerned with an application for permission to amend. The strength of the case is a relevant consideration.

So far as the proposed amendment is concerned, that is not the only point Miss Addy makes. She submits that the case on the website publication is quite different in relation to the First Defendant from the case in relation to the Third Defendant. The Third Defendant is actually quoted and remarks are attributed to him in the words complained of. The First Defendant is also referred to in the words complained of in relation to the website publication, but none of the words complained of are attributed to it.

Moreover, submits Miss Addy, no evidence is adduced that the First Defendant did publish or cause to be published the words complained of on the website. While there is some similarity between the words attributed to the Third Defendant in the website article and the press release issued by the First Defendant, the wording is not identical. On the website the following sentence is included: “we will not allow such flagrant rights of copyright infringements to undermine the confidence the industry has in our tried and tested brand”. In the press release the corresponding sentence is: “we will not allow actions of competitors which contravene our intellectual property rights so as to undermine the confidence the industry has in our tried and tested brand”.

So far as concerns the First Defendant, therefore, the case is weak, both as to the fact of the words complained of having been read within the jurisdiction, and as to the fact of the First Defendant having caused the words to appear on the website in the first place. In my judgment that amounts to a strong reason for not allowing the proposed amendment to paragraph 11 of the Particulars of Claim.

Miss Addy submits that a comparison of paragraph 11 with the proposed paragraph 12A reinforces this point. In paragraph 12A the case is that the First Defendant is responsible for publication of such of the words complained of as were contained in the press release. But there is no pleading that it was the First Defendant that provided a copy of the Press Release to the American magazine. What is pleaded is that it was issued by the First Defendant and provided to the Third Defendant, with the intention that it should be given to the American magazine for publication, or in the knowledge that such publication was the natural and probable consequence of the First Defendant providing the Third Defendant with the press release. However, Miss Addy submits that there is no statement, in the pleading or anywhere else, to support that allegation of intention or knowledge, nor is anyone identified as having that state of mind. What has to be established is that the knowledge or intention was of a publication by the American magazine in this jurisdiction, not in the United States, nor anywhere else. It would not be difficult to infer that by reason of issuing the press release within this jurisdiction, if that is what they did, the First Defendant intended that a media organisation should publish the words complained of in this jurisdiction. But that is not this case. It is not alleged that anyone other than the American magazine published the contents of the press release within this jurisdiction. If a case is to be made that the First Defendant is responsible for such publication within this jurisdiction, something more than the bare assertion in paragraph 12A is going to be required. This is a very weak claim.

In addition Miss Addy refers me to the words of Eady J in Komarek v. RamcoEnergy plc (unreported) 21^st November 2002, at para 65. Having given other reasons for not allowing a proposed amendment, he said:

“Moreover, proportionality would not justify such disruption. If the Claimants have been wronged, they will be effectively vindicated in respect of the allegations already pleaded. To recover in respect of different publications would not be likely to make any significant difference to the restoration of reputation”.

Those words seem to me to be applicable here. Miss Moorman submitted, and I accept, that in a claim of this nature, where real damage can be done to a Claimant’s business by defamatory publications made even to a very small number of individuals, within the same trade, or amongst their prospective customers, the fact that only a very limited publication may be proved is not itself a reason for refusing an amendment. But that seems to me to support the arguments of both parties. So far as the prospective customers and others are concerned, it seems to me that the allegations in respect of which the Claimant most needs vindication are the allegations that its manufacturing process is defective and that it has been infringing the First Defendant’s intellectual property rights. Both of those are matters in respect of which, if it succeeds on the pleadings as they are, it will obtain vindication in its claim in respect of the letters. In any event there is no plea of justification by either Defendant.

The overriding objective (CPR 1.1) requires that the court should, as far as is practical, save expense and deal with a case in ways which are proportionate to the amount of money involved, the importance of the case, the complexity of the issues and the financial position of each party, and that it should ensure that a case is dealt with expeditiously and fairly. The court is required to seek to give effect to the overriding objective when it exercises any power given to it by the Rules.

While I accept that the proposed amendment, if allowed, could be dealt with at any trial to a large extent by reference to evidence and submissions that will any event be made, I do not accept that that all the issues would be dealt with in any event. The proposed amendments would introduce new factual enquiry, additional submissions and, I think, delay. For the reasons I have given the claim sought to be made by the amendments is very weak, and I have no material before me which demonstrates the need for the amendments, or justifies the complexity and cost that would be added to the case. In the exercise of my discretion, and in the light of the overriding objective, I refuse permission to make the amendments and the application is dismissed.