Lappet Manufacturing v the defendant: High Court keeps counterfeit yashmagh claim

What happened

Lappet Manufacturing, a Lancashire textile maker, and its licensor sued a defendant and their company, London Textile Industries. The claim alleged counterfeit yashmaghs, the head shawls worn across the Middle East, were sold from London premises bearing Lappet's registered trademarks. Rather than fighting the substance of the claim at this stage, the defendants raised two procedural objections. First, they said the claim form didn't certify a value over £100,000 or specify the Intellectual Property Enterprise Court (IPEC) as a specialist list, so the High Court had no business hearing it. Second, they applied to transfer the whole case down to IPEC, a court designed for smaller, lower cost intellectual property disputes.

What did the court decide in Lappet Manufacturing Company Limited v the defendant?

The court dismissed both applications. On jurisdiction, the judge held that the £100,000 certification rules only apply to claims for a specific sum of money. Because Lappet was seeking an inquiry as to damages or an account of profits, the claimant's own share of the defendants' profits, rather than a fixed sum, this wasn't a money claim at all, so the certification requirement didn't apply and the High Court had jurisdiction regardless. On transfer to IPEC, the judge found the value of the claim uncertain but potentially significant, and the complexity finely balanced. Crucially, the defendants hadn't shown they could only afford to litigate in IPEC. They pointed to one co-defendant company's weak accounts but gave no personal financial evidence, despite apparently owning property assets.

What we learned from this

• What I'd take from this is that defendants hoping to use cost arguments to force a case into a cheaper court need to put their own finances on the table, not just point to a struggling co-defendant's accounts.
• If you're bringing a trademark infringement claim and asking for an account of profits rather than a fixed sum, the usual £100,000 threshold for issuing in the High Court may not apply.
• Procedural skirmishes over which court hears a case can delay things but won't necessarily change where a claim ends up if the claimant has a legitimate reason to be in the High Court.
• Keep financial evidence specific to each defendant. A company's poor accounts don't automatically tell a court anything about an individual director's ability to pay for litigation.

Things to be aware of

The businesses involved

What others said about it

• Legal Futures reports the costs ruling applied a new clear and compelling test, finding specialist IP advice justified lawyers charging well above guideline hourly rates.Source: Legal Futures, October 2022