Case No: HC 05 C 01743
Neutral Citation Number: [2006] EWHC 62 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 30/01/2006

Before :

THE HONOURABLE MR JUSTICE WARREN
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Between :

	SUN MICROSYSTEMS INC.	Claimant	
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	AMTEC COMPUTER CORPORATION LTD	Defendant	

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James Mellor (instructed by Messrs Nabarro Nathanson) for the Claimant
Andrew Norris (instructed by Messrs Lester Aldridge) for the Defendant

Hearing date: 21st December 2005
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Judgment

Mr Justice Warren
Introduction
1.	This is the application of the Claimant (“Sun”) for judgment in default of defence, alternatively summary judgment, for relief in relation to the infringement by the Defendant (“Amtec”) of various of Sun’s registered trade marks.  Amtec now accepts that it has been in breach.  The issues before me relate to (a) the extent of the enquiry as to profits or damages which should be ordered as a result of the acknowledged infringements and (b) the extent of any injunctive relief to protect Sun from further infringement.

The facts
2.	The case concerns parallel imports into the EEA.  The Particulars of Claim identify 4 Sun Fire V240 servers.  These servers were put on the market in Israel, and thus not in the EEA, in February 2005.  Through a short chain of intermediaries, the servers were offered for sale to, and purchased by, Orion Business Services Ltd (“Orion”).  This was a “trap” purchase and led to the present proceedings.  The servers were supplied to Amtec by Kimbrer Systems a/s (“Kimbrer”), a Danish intermediary which in turn had been supplied by Caledonian Technology Ltd (“Caltech”) in the UK.  Amtec was not itself the importer of the servers into the EEA.  The servers were not imported into the EEA, nor put on the market anywhere in the EEA, by Sun or with its consent.  Although the “trap” purchase related to only 4 servers, it is common ground that there were 10 infringing servers acquired from Kimbrer.

3.	Amtec’s case in relation to its own acquisition is this. It regarded Kimbrer as a reputable European source of Sun products.  It was a term of the contract between Amtec and Kimbrer that the servers were of EU origin; Amtec was happy to rely on that term as a guarantee that the servers were, in fact, of EU origin (which in fact they were).  Kimbrer told Amtec that the servers had been bought from Caltech, which added strength to Amtec’s belief that the servers had been sold by Sun, or a Sun-authorised reseller, within Europe.  Amtec now accepts that it has infringed Sun’s trade marks, but says that it did so innocently and reasonably thinking that it was allowed to do what it did.

4.	The offer for sale of the 4 servers by Amtec to Orion was made on 10 March 2005, the sale contract was made on 7 April 2005 and delivery took place on 9 May 2005.  The boxes containing the servers were labelled with a rubric containing the words “Origin: United Kingdom” and the servers themselves had UK serial numbers.  Following service of the Particulars of Claim on 1 July 2005, Amtec did not immediately accept that it had infringed Sun’s trade marks.  Correspondence ensued between solicitors.  During the course of that correspondence, Amtec’s solicitors, Lester Aldridge, wrote on 20 July 2005, to Sun’s solicitors, Nabarro Nathanson, saying that they would have expected to see certain documents disclosed which would show, for instance, that the servers had in fact physically reached Israel; they asserted that, without such documents, it would be difficult for Sun to show that the servers ever left the EEA (thus implying that the servers had been put on the market in the EEA by Sun or with its consent).  They expressed their (incorrect) understanding of the rubric to mean that the goods were manufactured for sale within the UK.  Although I was not taken to it, I understand that there is some evidence which suggests that there is a general understanding, in parts of the industry at least, that a product with a UK manufacture/serial number is regarded as available for sale in the UK: if that were right, then the servers would have been put on the market by Sun or with its consent, although, as I have said, Amtec no longer contests liability.

5.	As well as the documents just referred to, Lester Aldridge required disclosure of a number of other documents, including contractual documents relating to the arrangement between Sun companies for the sale of the servers, being documents relevant to abuse of dominant position by Sun (although abuse of dominant position was not, in the end, alleged).

6.	In their letter, Lester Aldridge also made the point that the servers were obtained from a supplier in Denmark (ie Kimbrer) who in turn had obtained them from another company within the EAA (ie Caltech) stating that 

“Our client has always taken steps to ensure that the Sun products it sells are of EU origin……Indeed, our client’s Terms of Purchase require that the goods supplied be of EU origin.  Accordingly, it had an honest belief that they were of EU origin and at all times acted in accordance with honest commercial practices.

In addition, if the chain of sale ultimately leads back to one of Sun’s authorised resellers (which our client believes is the case) then these goods must have been put on the market within the EEA with your client’s consent….”

7.	From that one can see that Amtec were far from accepting Sun’s claim; rather, they were seeking to challenge it on a number of grounds.  Indeed, towards the end of the letter, Lester Aldridge stated that 

“…this is not a straightforward case of parallel importation of goods resulting in trade mark infringement as your correspondence and the Particulars of Claim allege….”.  

They ended by asking for an extension of time for filing a defence to allow for collection of evidence which was agreed to by Nabarro Nathanson.

8.	Mr Norris, who appears for Amtec, complains that no response was given to the request for information to show that the servers were, in fact, exported out of the EEA.  Accordingly, Amtec sought information and documentation from Caltech.  A refusal by Caltech to produce that information provoked Amtec into making an application for third party disclosure against Caltech aimed at producing documents evidencing the purchase of the servers by Caltech from an unknown third party, which, according to the managing director of Amtec, Mr Warren Ayrton, Amtec believed at that time was a Sun company or Sun-authorised reseller.  An order for disclosure was obtained but it has not, to date, been complied with.  

9.	The application now before me was issued on 27 October 2005.  The evidence in support included material which was sufficient to persuade Amtec that it has no defence to the claim.  However, there is only a grudging acceptance of that position.  Mr Ayrton, in a second witness statement, says this:

“Given the uncertainty surrounding the ultimate source of the goods, I would submit that it is by no means absolutely certain that the goods were not put on the market within the EEA by Sun or with its consent.  However, I admit that Amtec cannot prove this without the information Caltech should have provided under the [order for disclosure].”

10.	In his first witness statement, Mr Ayrton also deals with some issues relating to Sun’s hardware maintenance contracts and manufacturer’s warranties.  He states that in the last six years Amtec has sold 3,038 Sun computer systems and 318 Sun storage devices (including new and re-conditioned products).  He states that 39 customers have been put on Sun Spectrum hardware maintenance contracts (between them accounting for 58 new or refurbished Sun systems or storage devices).  I understood it to be suggested by Mr Norris that Sun would have known, through registration of products sold by Amtec, of Amtec’s activities.  However, Mr John Sanders, Business Controls Manger at Sun, has given a witness statement which addresses this point.  He says that he has checked the maintenance contracts in relation to the 39 customers and says that none of them makes any reference to Amtec but all refer to a company called Single Source Computers Ltd.  Since Sun did not associate Amtec with Single Source Computers Ltd, there is nothing in the point.

11.	Mr Sanders also says that of the 58 systems or devices referred to, 2 related to software only: this evidence is not challenged.  In relation to 5 of the remaining 56, the country where they were put on the market cannot now be established.  Of the 51 where the country can be identified, 5 (ie almost 10%) were put on the market by Sun outside the EEA in the Czech Republic (before it became a Member State of the EU), in Israel and in the United States.  It cannot, therefore, be suggested that there is no evidence of infringement except in relation to the 10 servers acquired from Caltech and that it is only supplies from that source that can be regarded as tainted.  Of course, the fact that products were first put on the market outside the EEA does not mean that Sun has not subsequently consented to their being put on the market within the EEA; but that has not been shown to be so and Sun is certainly justified in thinking that there may have been infringements as a result of sales of these products by Amtec.  However, Mr Ayrton, in his second witness statement, points out that no action was taken against Amtec until these proceedings and that it should therefore be inferred that there had been no previous infringement.  I do not consider that there is anything in that suggestion and I reject it.

12.	On 13 December 2005, with this hearing imminent and with no material obtained from Caltech on which to rely to show that the servers had been placed on the market in the EEA by Sun or with its consent, Lester Aldridge wrote again to Nabarro Nathanson.  After grudgingly accepting liability in relation to the servers noted in the Particulars of Claim, Lester Aldridge expressed the view that the real issues which needed to be dealt with at the hearing (ie the hearing before me) related to remedies rather than liability.  Two proposals were put forward for disposing of the matter:

a.	Sun should confirm that any goods about which Amtec may have suspicions were either infringing or not infringing.  Detailed provisions were suggested for dealing with all outstanding matters.

b.	Alternatively, the injunctive relief sought should be amended.  The injunction proposed by Sun restraining infringement of the trade marks was to be deleted; and that restraining import, sale etc of products where the same has not been put in the market in EEA by Sun or with its consent was to be modified so that it would bite only where “after Amtec’s reasonable investigation, it reasonably believed or ought to believe” that the product had not been put on the market by Sun or with its consent.

13.	The first proposal contained 10 paragraphs.  It was unacceptable, not least because of paragraphs 7 and 8 which limited disclosure in the action to the 10 servers acquired from Caltech and limited the enquiry as to damages/profit to one in respect of those 10 servers.  This was, understandably, unacceptable to Sun.  The second proposal was and is, hardly surprisingly, also totally unacceptable to Sun, not least because nothing is said anywhere about what reasonable investigations Amtec could, and would, make.

14.	In his skeleton argument dated 19 December 2005, Mr Norris says this:

“The first [proposal] is an agreement that Amtec send Sun the serial numbers for the goods in stock and if those goods are infringing they will assist Sun in a potential claim.  Notably, in the past Amtec have requested that Sun verify serial numbers for them and Sun have refused [there is then a footnote referring to a letter dated 8 August 2005].  Thus Sun have made it clear that they are not interested in informing Amtec whether the goods are for resale or not.”

15.	The description in that skeleton argument of the first proposal (contained in the letter of 13 December 2005) is very selective albeit accurate as far as it goes, which is not very far at all.  It deals, for instance, only with goods in stock at the date of any final order and does not begin to cover the position for the future when Amtec acquires further stock.  Further, the letter of 8 August 2005 makes a very casual reference to this idea: it was not pursued or even mentioned in witness statements served on behalf of Amtec.  Mr Norris’s skeleton argument provoked a justifiably wounded response from Nabarro Nathanson.  It is dated 21 December 2005, the date of the hearing, and was delivered shortly before the hearing commenced.  It  ended on a positive note as follows:

“For the avoidance of doubt, therefore, we write to make it clear that Sun is quite prepared to give reasonable assistance to Amtec to verify whether a given product has been put on the market within the EEA by Sun or with its consent by reference to a specified serial number.  Sun would naturally expect, in return, that if it turned out that the product in question had in fact been put on the market outside the EEA then Amtec would disclose to Sun the name and address of the supplier or proposed supplier of the product in question.”

The Law – parallel imports and trade mark infringement
16.	If the trade mark proprietor has put a particular product bearing his trade marks on the market anywhere in the EAA, or if it has been put on that market with his consent, he cannot use registered trade mark rights to prevent or interfere in further dealing with that particular product.

17.	But if the product in question has not been put on the market in the EEA by, or with the consent of, the trade mark proprietor, anyone who imports, offers for sale or sells such product bearing the trade mark in the UK infringes the trade mark.

18.	Accordingly, a person engaged in dealing with what is a parallel imported product must establish either that (i) the product was put on the market in the EEA by, or with the consent of, the trade mark proprietor or (ii) that, in the case of an import by a third party, the consent of the trade mark proprietor has been secured to putting the product on the market in the UK.

19.	Although it is acknowledged that the servers were parallel imports put on the market in the UK without Sun’s consent, it is necessary to say a bit more about what “consent” means since it has some implications for the nature of the relief which should be granted to Sun.

20.	The matter of consent was deal with by the ECJ in the conjoined references in Zino Davidoff SA v A&G Imports Ltd; Levi Strauss & Co v Tesco Stores Ltd and Levi Strauss & Co v Costco Wholesale UK Ltd [2002] Ch 109.  Mr Mellor, appearing for Sun, submits (and I agree with him) that the following principles can be extracted from the decision:

a.	Articles 5 to 7 of Council Directive 89/104/EEC embody a complete harmonisation of the rules relating to the rights conferred by a registered trade mark.

b.	The “consent” referred to in Articles 5 and 7 is tantamount to the proprietor’s renunciation of his exclusive right under Article 5 and therefore constitutes the decisive factor in the extinction of that right.

c.	If the concept of consent were a matter for the national laws of Member States, protection would vary.  Therefore, it was necessary for the ECJ to supply a uniform interpretation of the concept of consent to the placing of goods on the market within the EEA.

d.	In view of the serious effect in extinguishing the exclusive rights of the trade mark proprietor, consent must be so expressed that an intention to renounce those rights is unequivocally demonstrated.

e.	Consent will normally have to be express, although implied consent is not ruled out in all circumstances.

f.	Consent cannot be inferred from mere silence on the part of the trade mark proprietor.

g.	Ignorance on the part of the trader importing goods into the EEA is irrelevant.  The reasoning of the Court applies equally, in my judgment, to a trader who has not himself imported the goods but who has acquired them through a chain of suppliers where one of the suppliers in the chain has imported the goods.

21.	The following points should also be made:

a.	There is no requirement of knowledge on the part of an infringing trader that he is infringing.  To put that proposition another way, lack of knowledge is not a defence to infringement proceedings.

b.	It is not a defence for the trader to show that he took all reasonable steps open to him to establish that goods were put on the market by, or with the consent, of the trade mark proprietor.  

22.	Accordingly, it is clear on the facts that Amtec has infringed Sun’s registered trade marks since Amtec cannot show that the servers were put on the UK market by Sun or with its consent.  It is no defence for Amtec to show that it did all that it reasonably could do to satisfy both itself and its customers that the servers bought from Kimbrer were of EU origin or that the servers were obtained within the EU (each of which is asserted by Mr Ayrton who gave witness statements in support of Amtec); neither is sufficient to show that the servers were put on the market in the EEA by Sun or with its consent.

The form of relief
23.	There are two separate areas of dispute about the relief sought namely (i) the extent of the account (whether as to profits or damages) which should be ordered in respect of past infringements and (ii) the extent of any injunction to protect Sun from further infringements in the future.

24.	As to the past, Amtec submits that the order should be restricted to an enquiry in relation to the 10 servers which I have mentioned.  However, the evidence establishes infringements which go beyond the 10 servers supplied to Amtec by Caltech: see 10 and 11 above.  Further, Amtec says it had satisfied itself that there would be no infringement by ensuring that the products in question were of EU origin.  That is now recognised to be an inadequate basis on which to infer an absence of any trade mark infringement.  This basis having proved to be inadequate in relation to Caltech, there must be a real risk (to put it at its lowest) that it is inadequate too in relation to other suppliers.  In the circumstances, Sun is entitled to an enquiry going beyond the 10 servers.  In my judgment, Sun is entitled to orders designed to identify any further infringements in the past.  Following such an enquiry, it is entitled to make an informed election between damages and an account of profits: it does not, therefore, need to make its election until after disclosure in the enquiry/account: see Island Records Ltd v Tring International PLC  [1995] FSR 560.

25.	The order which Sun seeks in the draft minute of order which Mr Mellor has prepared does go very wide and perhaps wider than is appropriate.  I have not heard submission on its detail, the argument so far being directed at whether the order should be restricted to the 10 servers.  I will hear further submissions on the precise form of this part of the order.

26.	However, I would mention one aspect since Amtec says that it will face practical difficulties in dealing with disclosure on as wide a basis as is contained in the draft order.  As I see it, provision of the disclosure sought should not prove to be a difficult exercise in relation to much of what was sold by Amtec back to January 2004 because, since then, serial numbers of systems sold have been recorded by Amtec on its own computer systems and disclosure can be given by reference to such computer records.  However, prior to that, there are only paper records.  Further, serial numbers have not, unfortunately, been recorded at any time for components and spares (in contrast with entire systems) the sale of which forms part of Amtec’s business.  However, the practical difficulties which production of the necessary information entails should not be insuperable.  They may, I accept, be time-consuming; the order which I make should therefore allow adequate time for compliance to ensure that the diversion of man-power within Amtec, which is a small company, necessary to comply with the order does not have a significant impact on its ability to carry on business.

27.	As to the future, it is not seriously contended that there should be no injunctive relief at all.  An infringement having been established, ordinarily speaking some injunctive relief will follow, although there may be cases where it is obvious that there will be no further infringement in which case an injunction should not run.  Amtec acknowledges that the usual form of order is cases of this nature is one prohibiting further infringement of the trade mark.  It is said, however, that the order in the present case should be restricted.  The injunction, it says, should be qualified by making Amtec investigate the source of the goods before dealing in them; but so that only if, after reasonable investigation, it believes the goods are not for re-sale in the EEA will it be a breach of the order then to deal in those goods (although if such dealings are, in fact, an infringement, Amtec would remain liable for damages or an account of profits).

28.	Mr Norris relies on Microsoft Corporation v Plato Technology Ltd a decision of the Court of Appeal given on 15 July 1999, on appeal from a decision of Mr Alan Steinfeld QC (sitting as a deputy judge of this Division) given on 11 March 1999.  In that case, the defendant had purchased 45 copies of what turned out to be counterfeit copies of Windows 95 from a company called Agency Sales Ltd (“Agency”) and had on-sold at least some of those 45 copies.  The defendant had not known that the copies were counterfeit when it acquired them or when it sold them and denied that it ought to have discovered that fact on enquiry.  The defendant submitted to summary judgment but argued that the plaintiff should not be entitled to an injunction that went so far as to prohibit all infringements of the plaintiff’s trade marks and copyright.  Instead it offered undertakings not sell software which it knew or ought reasonably to have known were counterfeit.  

29.	Mr Steinfeld proceeded on the basis that the defendant should not be criticised for failing to realise that the software was counterfeit since this was an issue not suitable for resolution on a summary judgment application.  He regarded the crucial distinction as being between an honest and dishonest trader.  It was only in the latter type of case that the court could assume the likelihood that the trader had in the past dealt extensively in infringing goods and that, unless restrained by a far-reaching injunction, he would continue to do so.  In the case before him, the defendant had evinced no intention to deal in counterfeit software.  But Mr Steinfeld held that even an honest trader owed the plaintiff a duty, when purchasing other than from an authorised distributor, to take some steps to satisfy himself that the product was genuine.  Accordingly, the plaintiff was entitled to an injunction restraining the defendant from dealing in software which he knew or ought upon reasonable enquiry to know was counterfeit.  On the evidence it could not be concluded that there was any likelihood that products which the defendant had purchased other than from Agency were counterfeit so the enquiry and Norwich Pharmacal relief were limited.

30.	Mr Steinfeld referred to Phonographic Performance Ltd v Saibal Maitra [1998] FSR 749 which had been relied on to show that the normal rule in intellectual property cases is that an unrestricted injunction should be granted.  But, as he pointed out, that case was concerned with the terms for the grant of injunctive relief once a copyright infringement and a threat to continue the acts of infringement had been established (that latter condition not being established in the case before him).

31.	Before turning to the decision of the Court if Appeal in Plato, I should mention the decision of Laddie J in Coflexip SA v Stolt Comex Seaway Ms Ltd  [1999] FSR 473 (which also went to the Court of Appeal: see [2001] RPC182).  The decision of Laddie J became available after Mr Steinfeld had finished hearing Plato but before he had given judgment.  He received written submissions on it and took account of it in his judgment.  As he put it, that was a case of innocent, in the sense of non-deliberate, infringement of patent.  The essential issue in the action was whether the defendant had by means of particular item of machinery installed on its vessel infringed the plaintiff’s patent.  The judge held that it had infringed and that the issue which arose was what, if any, injunctive relief to grant given that the infringement was unintended.  Laddie J granted a limited form of relief restricting the injunction to the acts of infringement proved, there being nothing to suggest that the defendant would in the future make or use any apparatus which could arguably be said to fall within the scope of the plaintiff’s patent.  No doubt that decision, and the citation of a lengthy part of Laddie J’s judgment referring to many authorities, influenced Mr Steinfeld’s decision.

32.	In the Court of Appeal, Laddie J’s decision on the width of the injunction was reversed.  Aldous LJ held that the usual form of injunction, which protects rights established by the patentee, with its ambit construed by the court, does in general provide a fair solution, but that each case must be determined on its own facts and the discretion exercised accordingly.  He considered that the facts of the case were unexceptional and that the restricted injunction granted by the Judge was inappropriate.

33.	Mr Steinfeld’s decision was upheld by the Court of Appeal.  Mr Norris suggests that the Court of Appeal said no more than that it would not interfere with the exercise of Mr Steinfeld’s discretion.  That is true, as a matter of decision, but the Court of Appeal’s decision is of more general utility in the approach which it applied.  Thus, Mr Steinfeld had said that the defendant had infringed the plaintiff’s intellectual property rights “but only in a relative minor and unintended way and in circumstances where there is no evidence to suggest that the defendant has any intention of repeating the infringements”; and in relation to this, Counsel for the plaintiff submitted, on appeal, that it was incorrect because of three factors.  Since these same three factors are relied on by Mr Norris as taking the present case out of the ordinary case where an unrestricted injunction is normally granted, I need to deal with them.  However, although identified as three separate factors, they overlap and interlink to such an extent that I find it more helpful to consider them all together.

34.	The three factors are these: first, the extent of the infringement; secondly, the lack of intention to infringe; and thirdly, the lack of any evidence to suggest that the defendant had any intention of repeating the infringement.

35.	The Court of Appeal decided that Mr Steinfeld was entitled to treat the extent of the infringement as having been relatively minor.  In the present case, the infringement identified clearly extends to 10 servers (not just the 4 mentioned in the Particulars of Claim).    Whether that is properly to be regarded as minor I am not in a position to judge, although for present purposes it is not to be treated as part of a massive, deliberate, course of conduct constituting infringement continuing over a long period. 

36.	I should in this summary application no doubt proceed on the basis that Amtec did not deliberately set out to sell products the sale of which it knew would amount to an infringement.  It did, however, deliberately set out to sell the servers in question.  Even if it did so in the belief that there would be no infringement of Sun’s trade marks the only basis on which such a belief could have been formed was inadequate to justify that conclusion.  What it thought, and thought incorrectly, was that a UK origin and serial numbers for the servers, coupled with a chain of sales which passed through two EU-based sellers (Kimbrer and Caltech), was enough to establish that there was no infringement or at least that it was reasonable to proceed on that basis; and that it would thereby be protected.  

37.	Accordingly, the very same mistaken approach which has led to infringement in relation to the 10 servers is inherently inadequate to pick up any other infringements which there may have been.  The evidence, whilst not establishing beyond doubt that there have been other infringements, indicates that that may well be the case: see 10 and 11 above.

38.	The same problem arises for Amtec for the future.  If all that Amtec does is to rely on the EU origin of goods which it sells, there is a real possibility, to put it no higher, that those goods have not been put on the market in the EEA with Sun’s consent.  Amtec might pause to consider how it is able to acquire these goods (when they are new rather than second-hand) at the prices which they do and whether it considers it likely that those prices reflect products which have been put on the market in the EEA by Sun or with its consent. 

39.	Amtec has not, with one exception to which I will come, suggested any improvement in the way in which it can ensure that goods it acquires have indeed been put on the market in the EEA by, or with the consent of, Sun.  Indeed, its problem, or one might say complaint, is that, apart from that exception, there does not seem to be anything which it can do and that it is therefore faced with either ceasing to deal in Sun products (effectively the major part of its business) or risk being in contempt of court if an unqualified injunction is granted.   

40.	One therefore sees a tension.  Sun should be entitled to injunctive relief to prevent further infringement of its trade marks; but Amtec should be entitled to carry on its legitimate business, including dealing in Sun products which have been put on the market in the EEA by, or with the consent of, Sun without the risk of being in contempt of court in doing so.  There is a balance to be struck: the remedy afforded to Sun must be proportionate.  I should avoid making an order the practical effect of which runs a serious risk of shutting down Amtec’s legitimate business unless that order would be a proportionate means of protecting Sun’s trade marks.

41.	The difficulty for Amtec is, as I have said, that it does not have any way in which it can, at least without assistance from Sun itself, find out the status of the products concerned.  However, with Sun’s assistance, much is capable of resolution.  Sun acknowledges that it has data-bases of serial numbers of products.  In a significant number of cases, if not all cases, Sun would have sufficient information to ascertain whether the product bearing a given serial number has or has not been put on the market in the EEA by, or with the consent of, Sun.  It would be reasonable, in my judgment, for Sun, as the price of injunctive relief, to co-operate with Amtec in using information within Sun’s own possession and control, to establish the status of the product bearing a given serial number.

42.	Accordingly, Amtec suggests that, whenever it wishes to acquire a product, it would obtain the serial number form the supplier and immediately check with Sun.  Sun would be made subject to an obligation to use its reasonable endeavours to search its databases and inform Amtec whether the product had been put on the market in the EEA by, or with the consent of, Sun.  If Sun is able to say, in any particular case, that the product definitely has been put on the market in the EEA with its consent (using the word consent in the sense established by the case-law of the ECJ) then the injunction would not apply.  Conversely, if Sun is able to say that the product has definitely not been put on the market by it, or with its consent, then the injunction would apply (subject, of course, to Amtec being able to argue that, as a matter of fact, Sun’s information is incorrect and that the product was put on the market in the EEA by Sun or with its consent).  If Sun is unable to say what the true position is, then the suggestion would be that the injunction should not bite, Sun being left to its ordinary remedies if, in the event, it turns out that there is an infringement of its trade marks.

43.	Mr Mellor says that this approach is wrong as a matter of principle.  He says, correctly, that Davidoff shows how strictly the ECJ approaches the issue of goods having been put on the market with the consent of the trade mark proprietor.  There can be no doubt that the onus is on the trader to show that consent has been obtained; accordingly, if a trader has no proper grounds on which he can establish consent in respect of a product, he runs the risk of infringement if he deals in that product.  Mr Mellor then submits that the national court should, where consent is not established, ensure that the trade mark proprietor’s rights are effectively, and strictly enforced, otherwise the approach of the ECJ would be undermined.  An unqualified injunction should therefore issue as a matter of course.

44.	I do not accept this submission: it goes too far.  What the ECJ was keen to achieve was uniformity of approach throughout the EU to “consent”.  It was not concerned with the remedies which the national courts provide where infringement is established, a question which can only be answered on the facts of a particular case.  I do not find the Davidoff  decision of much help save to the extent that it shows  that it is no defence to infringement proceedings that reasonable steps have been taken to establish whether or not goods have been put on the market in the EEA with the consent of the trade mark proprietor.  The Court retains a discretion; neither ECJ jurisprudence nor English authority precludes the grant of a qualified injunction if that is the just solution.  For instance, if it were clear that, in all cases, Sun could easily and speedily provide the relevant information by a straightforward computer search, the argument would, I think, be compelling that the injunction should not bite if, having asked for information about the status of a particular product, a response was not given one way or the other within a reasonable period specified in the order.  

45.	Although that submission on principle goes too far, Mr Mellor also makes a submission on the facts.  As a matter of practicalities, the person who would deal with a request of this sort may not be able to respond in a time-scale acceptable to Amtec to enable it to decide whether or not to make a purchase of goods from a supplier.  That individual has a job to perform and his priority may not be to give Amtec the information it requires; there are periods when he travels abroad on business.  There are also uncertainties about the availability of information.  These matters are not in evidence.  I make no criticism of that since the possibility of dealing with the problem in this way was only suggested by Amtec at a very late stage indeed.  And, in those circumstances, I do not consider that I should simply proceed on this application on the basis that Sun can easily answer Amtec’s enquiries within any particular time-scale or in some cases perhaps at all.

46.	Nonetheless, I consider that the correct balance to strike between Sun and Amtec is for me to grant an injunction but qualified in such a way that Amtec is not prevented by it from dealing in Sun products if 

a.	it has informed Sun in writing or by email of the serial numbers of products giving at the same time a description of the product, stating whether it is new or second-hand (Sun may not be interested in pursuing the question in relation to components rather than complete systems or second-hand goods) and

b.	Sun has not responded within a defined period that its records and/or information available to it show to its satisfaction that the product has not been put on the market in the EEA by it or with its consent but only provided that

c.	Amtec does not know or believe that the product has not in fact been put on the market in the EEA by, or with the consent of, Sun.

Sun would, I apprehend, not be able to give the response envisaged by b., unless it had conducted a search of its data-bases and other information, the result of which showed that the relevant product had been sold to a supplier for onward sale only outside the EEA.  If Sun does not provide such a response, Amtec is to be able to deal in the product without breach of the injunction but will remain liable if, in fact, it turns out that the product has not been put on the market in the EEA by, or with the consent of, Sun.  I will hear further argument as to the period to specify for response, but provisionally consider something between 7 and 14 days to be appropriate.

47.	I would add two things: First, if, after the period for providing a response but before Amtec has effected an onward disposal, Sun is able to demonstrate that the product has not been put in the market in the EEA by it or with its consent, it may seek further injunctive relief and nothing which I have said is intended to prevent that.  It will depend on the facts of the particular case, and in particular when Sun had first identified the information which establishes the absence of consent, whether Amtec should be enjoined from disposing of that which it had innocently acquired.  Secondly, if it transpires on the enquiry which will form part of my order that Amtec has substantially infringed Sun’s trade marks, there may be a case for modifying or removing altogether the qualification which I consider it correct to impose on the injunction. In any event, Sun should have liberty to apply at any stage to modify the injunction in the light of its operation without the need to issue new proceedings.

48.	This course does not, in my judgment, render substantially ineffective the requirement of Community law to the effect that it is for the trader to establish consent and not for the trade mark proprietor to show lack of consent.  Nor is the result of this course to impose a compulsory licence by Sun to Amtec.  The substantive right to damages or an account of profits remains if, in fact, there is an infringement and in cases where Sun is easily able to show that a particular dealing would indeed give rise to infringement, the injunction will be effective.

49.	In that context, it is perhaps worth considering the position were Sun to seek to obtain a committal order for breach of the injunction were it to be made in unqualified form.  It is established, as already discussed, that a strict approach must be taken to the issue of consent in determining whether there has been a trade mark infringement; the onus is on the trader to show that the trade mark proprietor has consented according to the requirements set out by the ECJ in Davidoff.  If that onus is not fulfilled, the trade mark proprietor will have his ordinary remedies of damages or account of profits against the trader.  But in any action where the proprietor seeks to enforce his trade mark, disclosure will have to be given; so that the trader will have at least some opportunity to see whether or not consent was in fact given.  In the present case, matters did not get as far as formal disclosure, but production of documents by Sun persuaded Amtec that it was unlikely to have a sensible prospect of success in any defence.  

50.	Now consider what would happen on a committal application.  It would not be enough for the applicant simply to show the court that a trader has dealt in trade marked products and that the trader was unable to show, when he dealt, that consent had been given.  In practice, the trade mark proprietor would be well advised to produce evidence, if he has it, that the product had not been put on the market in the EEA by him or with his consent since, in the absence of any evidence, the trader would be likely to obtain disclosure, just as he would been able to do so in a substantive action to establish infringement.  These considerations lend support to the approach which, in any event, I favour.  It seems to me to be preferable to make a qualified injunction which would prevent a breach taking place in the first place rather than leave Sun to seek committal after a breach, in circumstances where Sun would need, on a committal application, to seek out very much the same sort of information as the qualified injunction would require it to produce in order for the injunction to bite.

51.	Mr Norris points out that a considerable part of Amtec’s sales of Sun products relates to used/second-hand products.  There are, clearly even greater practical difficulties facing Amtec in relation to these products than there are in relation to new products.  No matter how much investigation is done Amtec would be reliant on representations made by suppliers; and information is in any event difficult to obtain up a chain of supply because traders guard their sources and secrets.  In principle, however, there is, it seems to me, no difference between new and second-hand goods when it comes to the basic proposition that an infringement is established unless the goods have been put on the market in the EU by, or with the consent of, Sun.  I see no proper basis on which to distinguish between new and second-hand products so far as concerns the relief to be granted.

52.	There is one remaining point of principle concerning the form of the injunction.  I am troubled by a form of injunction, even though it may have been a common form in the past, which simply prohibits infringement of specified trade marks.  In the present case, the infringement complained of arises because the relevant products have not been put on the market in the EEA by, or with the consent of, Sun.  I consider that the injunction should be restricted to that type of infringement and should not be drawn in a wider form.  

53.	This deals with the outstanding points of principle in relation to the form of Order.  I will hear counsel on the details of the order in the light of this judgment.