IP Insight – “Chinese Walls”: Claimant Fails to Injunct IP Boutique Acting for Opponents
IP Insight is a series from Virtuoso Legal the Intellectual Property Specialists. This case concerns “Chinese walls” information barriers, and their efficacy in small firms.
Glencairn IP Holdings Ltd & Anor v Product Specialities Inc (t/a Final Touch) & Anor  EWHC 1733 (IPEC) (05 July 2019)
On 5 July 2019, His Honour Judge Hacon, sitting in the Intellectual Enterprise Court, dismissed an application to injunct Virtuoso Legal from acting for Product Specialities Inc. in their defence to a registered design right infringement claim brought by Glencairn IP Holdings Ltd (“Glencairn”), who are the well-known Scottish glassware producer, and represented by Stobbs IP.
Link to the judgment can be found here. This has been covered by us previously here.
In a rather uncommon application, Glencairn sought to prevent the Leeds team at Virtuoso Legal from acting for Glencairn’s opponent, Product Specialities Inc. on the basis that Virtuoso Legal’s London team had previously acted for Dartington Crystal on an earlier similar set of proceedings brought by Glencairn, which resulted in a confidential settlement.
Background – “Chinese Walls” of the Opposition?
In late 2018, Product Specialities Inc found itself also being aggressively pursued by Glencairn in relation to their Durashield Whiskey Tasting Glass.
In March 2019, Glencairn objected to Product Specialities being represented by Virtuoso Legal’s Leeds team on the basis that a relatively small boutique firm would not be able act for Product Specialities since another team within the firm reached confidential settlement terms Glencairn entered into with Dartington.
On 5 July 2019, His Honour Judge Hacon dismissed the application the following basis:
While “the Dartington team at Virtuoso is aware of the contents of the Settlement Agreement and that at least some of this is confidential to Glencairn,” Virtuoso Legal has in place an effective barrier and, “[t]he likelihood of any confidential information at all being passed to Final Touch [and the team administering the Product Specialities matter] is very low.”
"any prejudice caused to Glencairn would only be significant if the entirety of the Settlement Agreement were disclosed and I believe that to be extremely unlikely, to the point of being fanciful.” – HHJ Hacon
The claimants asked his Honour to apply the case of Bolkiah decided by the House of Lords. Judge Hacon went into detail in relation to the principles developed in Bolkiah and stated that Bolkiah approach should not be applied with full force to the present case. This is due to the differences between the facts in this case and Bolkiah:
"The most important difference of fact between Bolkiah and the present case is that Virtuoso has never acted for Glencairn. The potential risk posited by Glencairn is the disclosure to Final Touch of information gleaned in the Dartington mediation and thus a breach of the obligation of confidence owed by Virtuoso to Glencairn arising from the mediation. In Bolkiah there was an additional risk in play: the possibility of a breach of the continuing fiduciary duty owed by a solicitor to a former client.” – HHJ Hacon
Therefore, only certain aspects of the Bolkiah decision have been applied here.
His Honour Hacon stated that unlike in Bolkiah, it is important to assess “any likely impact of the order sought on the current client.”
While in Bolkiah, it was held that the burden of proof shifted to the defendant, in Glencairn His Honour Hacon stated that the overall burden of proof remains with the claimant.
While the judge agreed that the risk of disclosure is greater in a small firm, the steps taken by Virtuoso Legal have been sufficient in order to avoid such disclosure.
This decision illustrates the importance of effective so called “Chinese Walls”. Furthermore, that it cannot be assumed that a small firm would be automatically less likely to be able to administer an information barrier. Moreover, it shows that parties can choose their own lawyers but not those of their opponents.