Twentieth Century Fox Appeal Refused; a Cautionary Tale on Transfer Applications
In January 2019, we wrote about Virtuoso Legal’s success against Twentieth Century Fox in a High Court transfer application.
To recap, Virtuoso Legal act for Cyclone Events Limited (“Cyclone”), which is a family-run events company and the Stiwt Arts Trust (“Stiwt”), which runs a 490-seater Stiwt community arts theatre in Rhosllannerchrugog, in the northern Welsh county of Wrexham.
The Virtuoso Legal IP Protect team, led by director Philip Partington and assisted by trainee Gemma Wilson, immediately upon receipt of the proceedings back in August 2018 invited Twentieth Century Fox to transfer the proceedings from the High Court to the Intellectual Property Enterprise Court (“IPEC”).
Twentieth Century Fox’s well-resourced legal representatives, comprising of Wiggin LLP and a leading IP QC, refused and forced the parties into a hearing on 25 January 2019. At that hearing, Master Clark ordered the proceedings be transferred to IPEC and that Twentieth Century Fox ought to pay Cyclone and Stiwt’s legal costs of the application.
Twentieth Century Fox Appeal: REFUSED
On 14 February 2019, Twentieth Century Fox sought to appeal the decision, on the basis that Master Clark had “adopted the wrong approach to the question of the damages cap in IPEC” and that the “The Master’s decision was irrational”.
On 22 March 2019, Mr Justice Birss, refused the Twentieth Century Fox application for permission to appeal because the “appeal is wholly without merit” and that his decision “is final and is not subject to review or appeal”. Mr Justice Birss then set out in full his reasons for refusing the appeal.
Stating, in particular:
“This is an appeal from the order of Master Clark whereby she transferred the action to the IPEC. The challenge is not to the transfer itself but to the terms on which it was ordered. The claimants’ case was that as a condition of the transfer the defendants should be required to agree to waive the IPEC damages cap of £500,000 under CPR r63.17A(2). The defendants had said they would be prepared to waive the cap if it was required to secure transfer but they resisted the imposition of the condition. The Master decided not to impose the condition. The claimants seek permission to appeal, it having been refused by the Master.
The two grounds on which permission is sought are as follows. First that the Master adopted the wrong approach in that a transfer in these circumstances can only be made (absent agreement) where the claim for more than £500,000 has no real prospect of success in the sense used in part 24 summary judgment. That is because the effect of the transfer is to summarily deny the claimant’s claim in excess of £500,000. The second ground is that the decision was irrational because there was no risk of injustice if the Master had required the defendants to agreed to waive the cap whereas there was a real risk of injustice if the transfer was ordered without waiving the cap.
These grounds appear to have some prospect in principle until one realises that they do not face up to the Master’s decision. The Master’s decision was simply that the appellants had had an opportunity to adduce evidence to support their factual allegation that the claim might exceed £500,000 in value but had not done so. There was nothing on the face of the Particulars of Claim to indicate the claim exceeded £500,000 and she noted that the gross revenue from the infringing performances was £40,000 plus VAT.
The Master was right that there was no evidence which dealt with this. The submissions in the appeal skeleton, particularly at paragraphs 3 to 9 (a) to (d) make submissions to advance a case that the damages may exceed £500,000 for various reasons. However those submissions are not backed with any evidence at all. In fact it is the skeleton argument itself which purports to give evidence on these topics. That is not the right approach and is no substitute for the lack of evidence before the Master. Nor is there any application to adduce this evidence on appeal. Absent proper evidence those submissions are not relevant.
There is no real prospect of success on either ground because on the state of the evidence before the Master she was entitled to reach the conclusion she did.
The appellants refer to the fact that intellectual property pleadings conventionally do not give particulars of the damages claim at the outset and also to the point that when applying the summary judgment standard, one takes into account further material likely to be available at trial. Both points are true in principle but neither of them justifies the absence of evidence before the Master on the transfer application.
The evidential hurdle for the appellants may well have been a low one indeed. As the grounds of appeal contend, all that evidence needed to do was show that there was a real prospect of establishing that the damages might exceed £500,000 (in the summary judgment sense). But the evidence did no such thing.
The Master has not made a summary determination of the appellants claim. On the contrary the Master has made an assessment of what the damages might be based on the evidence available. If there had been a real prospect on the evidence that the damages might exceed
£500,000 then the condition ought to have been imposed, but there is no real prospect on appeal of showing that there was not.
That is why neither ground as any real prospect of success and permission is refused and also why, on the state of the evidence, both grounds are totally without merit.
However it bears emphasis that the fact this case has been transferred to IPEC in these circumstances does not preclude the appellants from applying to transfer the claim back to the general Intellectual Property list of the High Court, no doubt on an application backed by proper evidence, at a later date if needs be.
Finally, since the defendants appear to be based on Wales, and since Birss J is both an Enterprise Judge and the Supervising Judge for the Business and Property Courts in Wales, the parties are invited to consider whether the matter could or should be heard in Wales and if so to write to me in that regard.”
Of these court decisions, Philip Partington said:
“This case illustrates that would be Claimants should be extremely careful when issuing a claim. For those who do issue in the wrong court, the sooner transfer is agreed, the lower your cost exposure. In addition, it is vital that legal advisors serve evidence as to likely damages if they are seeking to rely upon the question of value as reason to retain proceedings in the High Court. Further, given Twentieth Century Fox’s legal team are very well resourced, it is unclear how such a failure to file the necessary evidence could have occurred”.– Philip Partington
For more information about this judgment, please contact Philip Partington via email, or call:
02074 128 372
Twentieth Century Fox Appeal Refused; a Cautionary Tale on Transfer Applications was written by Martin Douglas Hendry