In-House Lawyers Update - November 2009

Intellectual Property

Interflora Inc v Marks and Spencer PLC [2009] EWHC 1095 (Ch): Google AdWords and Third Party Trade

Last year Google started to allow businesses to bid for registered third party trade marks as keywords on its search engine.  M&S purchased the keyword 'Interflora' and used it to link consumers to its own flower delivery service, diverting internet traffic from Interflora Inc, who own the trade mark "Interflora".  

Interflora Inc claim that Google and M&S are jointly liable for infringing their registered trade mark and questions have been referred to the ECJ.  In a similar case involving Louis Vuitton, the Advocate General has issued an opinion stating that Google does not infringe registered trade marks by selling them as keywords.  If the ECJ concurs with the opinion of the Advocate General this will have implications for the Interflora case and will be a real blow to trade mark owners and their ability to police the use of their trade marks in the online environment.

Commercial Property

Guidance for local authorities on receiving repossession notification

The Department for Communities and Local Government has published guidance for local housing authorities ("LHAs") on its role on receiving notification of repossession from a lender. The purpose of the guidance is to:

• explain the new requirement (under Civil Procedure Rule 55.10) for lenders claiming possession of residential property to send notification to LHAs;
• provide suggestions to LHAs on how they might use the information in the notices from lenders to provide support for households; and
• remind LHAs of their obligations in relation to homelessness and data protection that arise from such notices.

To read the guidance in full please use the follow link: http://www.communities.gov.uk/documents/housing/pdf/1346182.pdf

Litigation

Part 36 Offers: Acceptance after Rejection

A strategic and well structured Part 36 can be instrumental in prompting timely settlement of a claim. In the case of Sampla and Others v Rushmoor Borough Council and another [2008] EWHC 2616 (TCC), the Court confirmed that there is no direct analogy between CPR 36 and contract law, therefore there is nothing to preclude an offeree accepting an offer that he had previously rejected subject to agreement or ruling as to the position on costs. Furthermore, the Court stated that submitting a counter-offer does not have the effect of extinguishing a Part 36 offer.  

The effect of this rule may be that claimants/defendants hold out for a better offer, whilst knowing that they are able to return to a previous offer if a better one is not forthcoming. There is no easy solution to this issue, however, should it be necessary to revoke a Part 36 offer (for example where new evidence comes to light during negotiations) this should be effected by serving a notice of withdrawal on the offeree.

Insolvency

Casson and Wales v The Law Society [2009] EWHC 1943 (Admin)

This case concerned a compensation award made by the Legal Complaints Service ("LCS") against two solicitors who gave inadequate advice to clients.

The solicitors who are both discharged bankrupts, argued that as they gave the advice prior to being made bankrupt, the compensation awards were bankruptcy debts.

The High Court held that in order for there to be a bankruptcy debt there must be an obligation that will inevitably result in a payment falling due after the bankruptcy.

The Court held that as the payment obligation did not arise until the LCS made a compensation award and as the LCS had discretion not to make an award, even though the advice that led to the compensation awards being made was given before the bankruptcy, there was no element of inevitability about the awards being made, therefore, the awards were not bankruptcy debts.

FOCUS ON…PFI/PROJECTS

Development Agreements - OGC guidance on public procurement rules

The Office of Government Commerce ("OGC") has recently published guidance on the application of the public procurement rules (the "Rules") to development agreements between public bodies and private developers in light of the judgment of the European Court of Justice ("ECJ") in Jean Auroux v Commune de Roanne (C-220/05) ("Auroux").

The OGC recognises that there is no formal single definition of a development agreement and so the guidance given highlights the generic factors which should be applied to the specific circumstances of each transaction.

Do the Rules apply?

The OGC identified the three main considerations in determining whether a contract is a public works or a public works concession contract:

1. Does the contracting authority require or specify works?
2. Is the contractor under an enforceable obligation to carry out the works?
3. Does the contractor receive some pecuniary interest for carrying out the works?

If the answer to these questions is yes then it is highly likely that the agreement will be subject to the Rules.

"Specified Requirement"

A public works contract is a contract "for the carrying out of a work or works for the contracting authority" or "to procure the carrying out for the contracting authority of a work corresponding to specified requirements."

The OGC is not aware of any explicit guidance as to how detailed a specification has to be but it states that it is clear that it does not have to be exhaustively detailed or be a full "technical specification". The OGC considers that specifications must be sufficiently specific and detailed and be expressly referred to in the contract itself such that they can be legally enforceable.

The OGC highlighted the difference between the setting of broad parameters for a development and the type of specification that would need to comply with the Rules. For example, where a contracting authority invites proposals for a development from developers without specifying its requirements, the rules may not apply, even where the contracting authority chooses the winning proposal.

The OGC identified the following circumstances as being situations in which development agreements are less likely to comprise public works or public works concession contracts:

1. the development is to be undertaken at the initiative and autonomous intention of the developer;
2. the development agreement is ancillary or incidental to a transfer or lease of land to the developer and is intended to protect the interests of a contracting authority which is the lessor or otherwise retains an interest in the land;
3. the development agreement is based on proposals put forward by the developer, even if the winning proposals are chosen by the authority;
4. there is no pecuniary interest passing from the contracting authority to the developer as consideration for undertaking the development including by way of providing guarantees; and
5. the development agreement does not include contractually enforceable obligations on the developer to realise the work/works.

The OGC anticipates that the European Commission will look at the totality and overall nature of agreements in determining whether the Rules should apply. Any artificial arrangements intended to avoid the application of the Rules are likely to attract challenge.

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