The single renewal date of 1 October is not the only cause of last year’s problems with professional indemnity insurance (PII) renewals, the chairman of the Law Society’s PII working group stressed this week. Nigel Day, a partner at Manchester firm Hague Lambert, said: ‘It’s superficially attractive to point to [the date] as a problem. But the majority of the profession didn’t have a problem, and for those that did, whether this was caused by a single renewal date isn’t clear.’ The PII working group convened following last year’s turbulent renewals season, during which a number of major insurers stopped providing PII cover to small firms. Day said the PII group and the Solicitors Regulation Authority, which holds the power to alter the renewals process, are continuing to discuss staggered renewals and other issues. In another development, the Gazette has learned that German insurance giant Allianz is to enter the solicitors PII market and provide up to £10m of cover for the coming season. Allianz will provide PII for firms with four or more partners. However, Mark Carver, head of financial lines at Allianz Global Corporate and Specialty, said: ‘Don’t expect us to be a “white knight”.’ He said firms’ internal risk management and business strategies will come under close scrutiny before cover is given. Carver said Allianz may open its doors to smaller firms in future years depending on market conditions.
Julian Landy, partner, Miller Sands, Cambridge That well-known source of reliable information, Wikipedia, helpfully says that there is no generally accepted definition of the word ‘recession’. However, I think it reasonable to accept that it is a sustained period of economic downturn. I understand that partners in some City firms have suffered diminution in their profit shares from seven figures down to six figures. Poor things. Those of us elsewhere in the country have experienced reductions in profit shares from something to nothing or worse. Indeed, there are solicitors who have found that their firms can no longer afford to keep them, or which have ceased to exist. Long-standing and good names have gone. A lot has been learnt this year, but a lot more could be learned. Christmas comes but once a year. A time at least this year for reflection. For consideration of both what has passed and what is to come in terms of professional practice. As ever, there have been changes, but relatively few that have any substantial effect on the profession. While legal publications will proclaim, or more frequently whinge, about changes to the way we practise, remarkably little of substance seems to change. Things go on as they always have, for better or worse. However, the firms who are proactive and take matters into their own hands will survive and thrive in the present and near future. My firm has sent one partner on the business growth and development programme at Cranfield University and it is about to send a second. This is to bridge the gap between what trainees learn and what is actually needed to run a modern business. Even our most recently qualified solicitors have little idea how to run a business. And what we are doing in general practice is running a business. It would be very helpful if all solicitors had to do the equivalent of the business growth and development programme somewhere in the UK before being admitted to partnership anywhere. Frankly, the level of ignorance among solicitors about how to run a business is frightening. How can it be sensible for a solicitor to advise a client concerning a business matter when the lawyer has no idea about how to run their own business? On a happier note, this is a wonderful time for recruitment. Unless you are interested in recruiting lawyers specialising in insolvency, it is relatively comfortable to find a good candidate in the area you need. There is, however, an odd phenomenon in the area of residential conveyancing. Although it is decried and abused, conveyancing is still the mainstay of most firms. The remarkable and unsurprising thing is that there are relatively few conveyancing solicitors under 50. As each year goes by, there seems to be a smaller and smaller pool of young solicitors able and willing to deal with residential property. Solicitors with say five to 10 years of post-qualification experience appear to have all been put off by reading in publications such as the Gazette and about the death of conveyancing. Tesco usually does everything very well and manages to make it profitable. The work of conveyancers is, I am told, just as simple as shelling peas. Well, if you have ever done any conveyancing you will know that is so far from the truth as to be laughable. There does appear to be, however, a problem substantially created by the legal media. Conveyancing is not dead. Far from it. People will always need to buy and sell property in greater or lesser numbers. Legal education could sensibly therefore suggest that conveyancing is an area where it is appropriate to specialise and look for a reasonably good future. However well the Co-op and AA think they can do conveyancing, I have firm faith in the client. Ultimately the client wants to be treated as a person, with individual needs, rather than a number to be processed through a checkout. This will be so even if the cost is rather greater than the ‘value-range’ supermarket will charge. Even the finest will not be that good. It has been a horrible year. Money has been short and jobs have been shed. There is, however, a future. Do not despair. And maybe think the unthinkable – conveyancing has a future.
There are many useful online discussions on marketing and management issues that I feel sure are helping to develop legal services marketing. In these discussions, descriptions of clients, customer groups and market segments appear to be variable and used interchangeably without much thought to what they mean. These compact descriptions hide many of the details that slow or stop actual promotions happening. This is because once you ask who your potential future clients that should know about your services are, it all gets rather complicated. How do we usefully identify client groups in meaningful ways that help get your firm’s promotional messages across without costing too much? ‘Conveyancing clients’ is a group that covers a wide range of customer needs. Are they first-time buyers, families trading up/down or seniors cashing out of the property market? What about probate, matrimonial and commercial client types? Each legal service has a distinct group of potential clients who may need a particular set of benefits to suit their situation. The other side of this issue is how to avoid paying to send the wrong message to potential clients. The answer is a similar response to the question: ‘How long is a piece of string?’ Measure it or define it yourself by looking at what your firm does well. Think about the services you offer in your firm’s geographic area. Look at your past clients and what best describes them, things like postcode, income levels, family or business circumstances. Enquiry sources, referrers and professional contacts may also help you identify discernable groups with similar legal services requirements. Since the aim is to retain or gain clients in an increasing competitive market (particularly people interested in conveyancing around Bristol) talking about client groups’ needs for legal services and not the services you offer will help you deliver the right benefits messages to the right people. Defined future client groups should always be viewed with two other factors: the relevant future competitive services and the benefits the client will receive. If the client group changes, the benefits and competitors will also change. Spending the time to do this analysis will save promotional budget, make marketing choices easier and provide better-informed website debates.
The issuesLord Hope identified two key issues:As to the first issue, in light of an examination of convention and other case law, the court found that there was no determination of a ‘civil right’ in these circumstances. As Lord Hope indicated, cases such as the present, that is the right to accommodation under section 193 of the 1996 act: ‘… where the award of services or benefits in kind is not an individual right of which the applicant can consider himself the holder, but is dependent upon a series of evaluative judgements by the provider as to whether the statutory criteria are satisfied and how the need for it ought to be met, do not engage article 6(1).’ The Association of Council Secretaries and Solicitors (ACSeS – the professional organisation for chief and senior local government lawyers and other senior corporate government officers) was represented at the LGA meeting by ACSeS president Dr Mirza Ahmad and myself. Dr Ahmad said: ‘There is a pressing need – and the time is right – for local government to be given a general power of competence to achieve excellence for the public. All local and regional partnerships will demand – and benefit from – the greater clarity and certainty of powers that would flow from a general power of competence and help local governance to be fit for purpose for the 21st century.’ This meeting resulted in a Draft Local Government (Power of General Competence) Bill being presented to parliament by the LGA last week. With an introduction and explanatory notes to supplement the draft bill, the document is ‘published as a contribution to the debate about local democracy and the powers which councils need to innovate, and to meet the needs of local communities’. But whatever happens, local authorities need the confidence to be able to make a positive difference locally without undue fear of being ruled out of court. As the LGA points out: ‘Legislating to create a power of general competence for local government would contribute to councils’ confidence in their powers to tackle in new ways the challenges their communities face.’ It is true that appropriate care in the lead up to, and taking of, local authority decisions should make successful challenge less likely. But if vires confidence continues to approach flatline across many local authorities, the proposed general competence power could be just the thing to return it to healthy zigzag. If money does actually make the world go round (as enthusiastically asserted by MC and Sally Bowles in the 1972 film Cabaret) then it is confidence that fuels it. For, as we have all been experiencing, just as confidence ebbs, so does the economic system slow down and stagnate. And banks that lose market confidence are likely to enter rapid meltdown as depositors run to withdraw their cash – as at Northern Rock. But confidence can be a magic ingredient in the public sector too. And, in terms of legal powers, local authorities appeared to suffer a massive loss of confidence following the June 2009 judgment of the Court of Appeal in the LAML case (see Brent LBC v Risk Management Partners Ltd and London Authorities Mutual Ltd and Harrow London Borough Council as interested parties  EWCA Civ 490). As previously indicated (see  Gazette 10 September, 14), the court found that the local authorities in question could not lawfully participate in a mutual insurance company and that the well-being powers in part 1 of the Local Government Act 2000 would not in the circumstances assist. While the Court of Appeal in LAML did take a rather traditional view of vires (no doubt partially in light of the evidence and other material before it), and this is currently envisaged to be tested by the Supreme Court on appeal in December 2010, well-being does remain a valuable and broad power in the meantime. The trick is to make sure it is used properly. This includes making appropriate reference to the power in the officer report submitted in respect of the proposed decision and identifying the specific outcomes that are proposed to promote or improve the relevant ingredient of well-being. It is also useful to identify which strands of well-being the activity or outcome is designed to promote or improve. In summary:But to return to the confidence issue – despite the continuing breadth of well-being (and the width of previous judicial interpretations) the LAML decision has certainly caused a crisis of vires confidence in many local authorities. It is for this reason that the Local Government Association (LGA) recently hosted a meeting of local government lawyers, and others with expertise in this area, with a view to producing a draft power of general competence as a legislative way forward. Does a section 204 appeal involve the determination of a ‘civil right’ for the purposes of article 6(1), either generally or in cases such as the present ones where the issue is simply one of fact? If so, does article 6(1) require that the court hearing such an appeal must have a full fact-finding jurisdiction so that it can determine for itself a dispute of fact, either generally or in cases such as these? Nicholas Dobson is a lawyer specialising in local and public law. He is also communications officer for the Association of Council Secretaries and Solicitors be mindful of the precise statutory width but also the statutory boundaries of well-being; with well-being, there needs to be ‘some reasonably well-defined outcome’ which is proposed to promote or improve the well-being in question; the proposal needs to be objectively reasonable in light of the fiduciary duty and all the circumstances, and also consistent with the statutory purpose of each of the powers relied on; make clear in the relevant report the precise powers to be relied on and how they are proposed to operate in the particular circumstances. And in respect of the ‘full fact-finding jurisdiction’ point, Lord Hope applied the decision of the House of Lords in Runa Begum v Tower Hamlets London Borough Council  UKHL 5, and held that the absence of a full fact-finding jurisdiction in the court to which an appeal lies under section 204 does not deprive it of what it needs to satisfy the requirements of article 6(1). Homelessness determinations not a ‘civil right’ Article 6 of the European Convention on Human Rights (right to a fair trial) provides, among other things, that in the determination of a person’s civil rights and obligations… everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. So far, so fine. But like most pieces of law this immediately raises more questions than it answers. For instance, what is a ‘civil right’ for these purposes? Also, to what extent will judicial review (which determines decision lawfulness on the basis of facts already found) amount to a conformably fair hearing? And where do local authority homelessness decisions stand in all this? On 17 February the Supreme Court tackled these issues head on in Tomlinson and others v Birmingham City Council  UKSC 8. Lord Hope (with whom Lady Hale and Lord Brown agreed) gave the leading judgment. Part VII of the Housing Act 1996 contains local authority homelessness responsibilities. The primary duty (in section 193(2)) is to ensure that accommodation is available for a homeless applicant. This applies (per section 193(1)) where the authority is satisfied that the applicant is homeless, has a priority need, is eligible for assistance and where the authority is not satisfied that the applicant became homeless intentionally. However, under section 193(5), this duty does not apply where the applicant, having been informed by the authority both of the possible consequences of refusal of an accommodation offer and of the right to request a review of the suitability of the accommodation, refuses an offer of accommodation which the authority is satisfied is suitable for him. In addition, the applicant needs to have been notified by the authority that it thereby regards itself as having discharged its duty. The issue in the instant case had been whether some applicants did in fact receive the section 193(5) letters which the council contended it had sent. As Lord Hope in the Supreme Court pointed out, the jurisdiction exercised by the county court under the statutory appeals process (see section 204(1) of the 1996 act) is one of judicial review. For there ‘… is no general right of appeal against the decision of the reviewing officer’. And the ‘county court judge may not make fresh findings of fact’ but ‘must accept the conclusions on credibility that have been reached by the reviewing officer’. Consequently, the appellants contended that where simple questions of fact are in issue, the court must exercise a full fact-finding jurisdiction if the requirements of article 6(1) are to be satisfied. They argued that the decisions of the reviewing officers should be remitted to the county court for consideration on their merits, or that it be declared that section 204(1) of the 1996 act is incompatible with the appellants’ rights under that article. CommentIn making this decision the Supreme Court has laid to rest a legal issue that has been festering for some time. In Runa Begum, Lord Hoffmann had observed that ‘parliament is entitled to take the view that it is not in the public interest that an excessive proportion of the funds available for a welfare scheme should be consumed in administration and legal disputes’. Lord Hope referred to this in the introduction to his judgment and said that since ‘concerns about over-judicialisation of dispute procedures in the administration of social and welfare benefits have not gone away…this case provides us with an opportunity to introduce a greater degree of certainty into this area of public law’. Following this judgment, those within local authorities charged with taking difficult decisions in applying very limited resources to an unrelenting and seemingly infinite torrent of demand will undoubtedly be relieved that at least one layer of legal complexity has been removed from the task in hand.
Liberal Democrat peer and barrister Lord Lester of Herne Hill QC has introduced a private member’s bill to reform the country’s ‘archaic’ libel laws. The peer’s Defamation Bill is designed to clarify and modernise the law of libel, protecting both the rights to reputation and freedom of expression. It would introduce a new statutory defence of ‘responsible publication’ on a matter of public interest; protect those reporting on proceedings in parliament and other issues of public concern; and require claimants to show substantial harm, and corporate bodies to demonstrate financial loss, in order to bring proceedings. The bill clarifies the defences of justification and fair comment, renaming them as ‘truth’ and ‘honest opinion’. It also tackles problems that have arisen from internet use, including multiple publication and the responsibilities of internet service providers. It aims to encourage the speedy settlement of disputes without recourse to litigation. In its coalition manifesto, the government pledged a review of the libel laws. Lester told the Gazette: ‘The government is committed to a review of the law of defamation with a view to protecting free speech, but not to legislate. ‘The purpose of my bill is to put forward legislative proposals in the hope that it will be taken up by government, improved and enacted. It is meant to be a catalyst for reform.’ He said: ‘The time is over-ripe for parliament to replace our patched-up archaic law with one that gives stronger protection to freedom of speech. This is an attempt to look at the law in a comprehensive way and modernise it, bringing it in step with the technological revolution.’ Lester said he hoped a new Defamation Act would be passed in this parliamentary session, which lasts 18 months. Crossbench peer and human rights barrister Lord Pannick QC said: ‘Lord Lester’s bill will remedy many of the legal deficiencies that have made London the libel capital of the world and severely damaged freedom of expression.’
Participating in the IBC Conference in Manchester recently, I heard Nick Green QC speak in person about his vision for the bar, and came away with a copy of his excellently clear paper The Future of The Bar.Typically, most conference packs that I pick up float around in the boot of my car for a few weeks or quickly find a home in the corner of my office before eventually making it into the recycling bin. Not this one. It provides a frank and refreshing analysis of the bar’s market position and should be essential reading for all managing partners, business development specialists and marketing directors in law firms. Having given much thought to the challenges and opportunities arising from the changes to the competitive environment within the legal profession, I confess that I had really not given a great deal of thought to the potential of direct competition from the bar. Having spoken to a number of our clients since, I was comforted by the fact that I was not alone in this. I had seen a few disparaging remarks on the Gazette website and LinkedIn discussions and assumed – wrongly – that the bar was bogged down in internal debate and was nothing much to worry about. On the contrary, the impression that I gained was that Nick Green QC and his team had a very clear assessment of their market position, threats and opportunities, and a clear plan regarding how to go about exploiting their competitive strengths. Given that Nick Green QC specialises in competition law, and some leading brains at Freshfields have been involved in developing the ProcureCo structure, it will be interesting to see this in action. Solicitors with a history of tendering for business will know that there is a lot more expertise required when it comes to getting on to tender lists, being shortlisted and obtaining a position on a panel. Even this is not a guarantee of work! As with solicitors, there are innovators within the bar who are already moving to take competitive advantage of recent reforms, which include removing restrictions upon barristers practising in partnership and increasing the right of barristers to engage in direct access work. In fact, I know a number of chambers who have employed experienced business development professionals from top law firms for a number of years. With all the focus being on ‘Co-op Law’ (as I prefer to call it), it is perhaps an easy mistake to forget to look for competition from below you in the food chain – when you are expecting the threat to come from above. However, with potentially so much to lose, it might be a mistake to underestimate someone with so much to gain. ’He who exercises no forethought but makes light of his opponents is sure to be captured by them’ says Sun Tzu in The Art of War. To exercise a little forethought about competition from the bar, download The Future of the Bar.
Eversheds Legal Services Ltd v J De Belin: EAT (Mr Justice Underhill (president), B Beynon, T Haywood): 6 April 2011 John Cavanagh QC (instructed by in-house solicitor) for the appellant; Simon Popplewell for the respondent. Discrimination – Compensatory awards – Maternity leave – Polkey reductions The appellant employer (E) appealed against an employment tribunal’s decision that the respondent male employee (D) had been discriminated against on grounds of his sex and unlawfully dismissed. E also appealed against the compensation award of more than three years’ loss of earnings to D. D had been one of two solicitors employed in a particular team. The other solicitor (R) was on maternity leave when E decided that one of them had to be made redundant. D and R were scored against various criteria, including one, ‘lock up’, which measured the length of time between completion of work and receipt of payment from the client. As R had been on maternity leave for seven months, ‘lock up’ could not be measured for her and she was awarded the maximum score for that criterion. R’s overall score was higher than D’s and he was selected for redundancy. E contended that (1) its treatment of R was special treatment which it was required to give under section 2(2) of the Sex Discrimination Act 1975; (2) the tribunal had failed to properly consider whether the dismissal was unfair; (3) D would in any event have been made redundant nine months later and the award of compensation should have been based on that period or at least substantially discounted on Polkey principles. Held: (1) The protection of employees who were pregnant or on maternity leave sometimes required them to be accorded treatment which was more favourable than that accorded to colleagues, male or female. However, that obligation could not extend to favouring pregnant employees or those on maternity leave beyond what was reasonably necessary to compensate them for the disadvantages occasioned by their condition. To the extent that a benefit extended to a woman who was pregnant or on maternity leave was disproportionate, there was no reason why a colleague who was correspondingly disadvantaged should not be entitled to claim for sex discrimination. The only justification for treating women more favourably was the need to see that they were not disadvantaged by their condition. Where the treatment went beyond what was reasonably necessary for that purpose a real injustice might be done to a colleague. It was also important not to bring into disrepute the legislation which protected pregnant women and those on maternity leave by giving it a wider scope than was required. That approach was not inconsistent with the decisions of the European Court of Justice in Caisse Nationale d’Assurance Vieillesse des Travailleurs Salaries (CNAVTS) v Thibault (C-136/95)  All ER (EC) 385 ECJ (6th Chamber) and Abdoulaye v Regie Nationale des Usines Renault SA (C-218/98)  ECR I-5723 ECJ (5th Chamber), as the issue of proportionality had not arisen in those cases, Thibault and Abdoulaye distinguished. The means adopted by E to resolve the problem created by R’s absence at the applicable lock up measurement date went beyond what was reasonably necessary and were not proportionate. There had been alternative ways of removing the maternity-related disadvantage to R without unfairly disadvantaging D, the most satisfactory being to measure the lock up performance of both as at the last date R had been at work. Section 2(2) of the 1975 act had to be construed in a manner which incorporated the principle of proportionality. That would allow a wide margin of discretion to employers regarding the appropriate special treatment to be accorded. Captious claims by male colleagues who resented the proper protection given to pregnant women and mothers could expect short shrift but the instant case was not that kind. The disproportionate advantage given to R had meant a direct and unfair corresponding disadvantage to D (see paragraphs 28-33 of judgment). (2) The question of unfair dismissal should have been considered separately by the tribunal. However, it had not been reasonable for E to believe that it had no alternative to maintaining a maximum lock up score for R when it became clear that that would be decisive in the choice between her and D. The result was patently unfair to D (paragraphs 36-40). (3) The tribunal’s reasoning that there was insufficient evidence to enable it to carry out a Polkey exercise was plainly unsatisfactory. There was cogent evidence that if D had been retained instead of R he would have been part of the later redundancy exercise. It was not therefore a case of some wholly speculative future contingency and it had been the tribunal’s duty to engage with that evidence and explain why it was not accepted. The case would be remitted to a different tribunal for that issue to be addressed (paragraphs 42-49). Appeals allowed in part.
Profits per equity partner (PEP) at magic circle firm Clifford Chance have topped £1m for the first time since the recession. The end-of-year figures released today by the Canary Wharf-based firm showed revenues were up for the last financial year to £1.22bn, up just 2% on the previous 12 months. Partnership profit rose by 10% to £381m as the firm expanded into the Middle East and Australia and stabilised in more mature Western markets. But it is the PEP figures, up by 8% on 2009/10, which stand out, with partners bringing in more than £1m for the first time since the boom years of 2006/07 and 2007/08. Managing partner David Childs added: ‘The year ahead looks exciting for our firm. ‘Our breadth of high-quality practices across all the major financial markets, and our market-leading expertise in regulatory matters, make us extremely well positioned to support our clients’ increasing need for cross-border advice.’ Among the highlights of the Clifford Chance client work was advising on the creation of the €440bn (£409bn) European Financial Stability Fund, with legal work on the packages set up to bolster economies in Ireland, Portugal and Greece. Offices have opened in Qatar and Istanbul, with 12 out of 23 newly promoted partners this year based in the Asia Pacific operations.
Derek Phillips, Phillips & Co, Salisbury, Wiltshire Thank you for Roger Smith’s report on the International Legal Aid Group’s meeting in Helsinki. It is so comforting to see that those of us in England and Wales who are supportive of legal aid here are not totally misguided. Thanks to Roger also for reminding us of Steve Orchard – the like of whom it seems we are unlikely to see again on the legal aid scene.
Sabel BV v Puma AG and Rudolf Dassler Sport: C-251/95  All ER (D) 69 considered; Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc (formerly Pathe Communications Corp): C-39/97  All ER (EC) 934 considered; Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV: C-342/97  All ER (D) 652 considered; Medion AG v Hauptzollamt Duisburg: C-208/06; Canon Deutschland GmbH v Hauptzollamt Krefeld: C-209/06  All ER (D) 164 (Sep) considered; Adidas AG v Marca Mode CV: C-102/07  All ER (D) 147 (Apr) considered; Shaker di L Laudato & C Sas v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM): T-7/04  All ER (D) 144 (Nov) considered. (2) In relation to art 6(1)(b) of the Directive; first, the requirement to act in accordance with honest practices in industrial or commercial matters ‘constitutes in substance the expression of a duty to act fairly in relation to the legitimate interests of the trademark proprietor’. Secondly, the court should ‘carry out an overall assessment of all the relevant circumstances’, and in particular should assess whether the defendant ‘can be regarded as unfairly competing with the proprietor of the trademark’. Thirdly, an important factor was whether the use of the sign complained of either gave rise to consumer deception or took unfair advantage of, or was detrimental to, the distinctive character or repute of the trademark. If it did, it was unlikely to qualify as being in accordance with honest practices. Fourthly, a mere likelihood of confusion would not disqualify the use from being in accordance with honest practices if there was a good reason why such a likelihood of confusion should be tolerated. In applying these principles the following factors were material: (i) whether the defendant knew or reasonably ought to have known of the existence of the trademark; (ii) whether the defendant had used the sign complained of in reliance on competent legal advice based on proper instructions; (iii) the nature of the use complained of, and the extent to which it was used as a trademark for the defendant’s goods or services; (iv) whether the defendant had known or ought to have known that the trademark owner had objected to the use of the sign complained of have at least appreciated that there was a likelihood that the owner would object; (v) whether the defendant had known, or should have know, that there had been a likelihood of confusion; (vi) whether there had been actual confusion, and if so whether the defendant had known that; (vii) whether the trademark had a reputation, and if so whether the defendant had known or at least should have appreciated that and whether the defendant knew, or ought to have known, that the reputation of the trademark would be adversely affected; (viii) whether the defendant’s use of the sign complained of interfered with the owner’s ability to exploit the trademark; (ix) whether the defendant had a sufficient justification for using the sign complained of; and (x) the timing of the complaint from the trademark owner (see  of the judgment). The instant was the first occasion in which the court had to consider the issue of use in accordance with honest practices in industrial or commercial matters in relation to art 6(1)(b) of the Directive. That made little difference to the principles to be applied (see  of the judgment). In the instant case, the two different uses complained of raised quite different considerations so far as honest practices were concerned. On the facts, in relation to Yorkshire Bitter, CB’s use of the white rose element of the sign had been in accordance with honest practices in industrial and commercial matters. In relation to Yorkshire Warrior; CB’s use of the white rose element of the sign had been in accordance with honest practices until the end of October 2009, but had not subsequently (see ,  of the judgment). CB had a defence (see , of the judgment). Infringement – Unauthorised use of registered trademark Denise McFarland and Jeremy Heald (instructed by Travers Smith LLP) for the Samuel Smith. Mark Engelman (instructed by Walker Morris) for CB. Samuel Smith Old Brewery v Philip Lee (trading as Cropton Brewery): Chancery Division (Mr Justice Arnold): 22 July 2011 Och-Ziff Management Europe Ltd v Och Capital LLP  All ER (D) 07 (Nov) applied; Datacard Corporation v Eagle Technologies Ltd  All ER (D) 199 (Feb) applied; Gerolsteiner Brunnen GmbH & Co v Putsch GmbH: C-100/02  All ER (D) 21 (Jan) applied; Bayerische Motorenwerke AG (BMW) v Deenik: C-63/97  All ER (EC) 235 applied; Gillette Co v LA-Laboratories Ltd Oy: C-228/03  All ER (D) 305 (Mar) applied; Celine Sarl v Celine SA: C-17/06  All ER (D) 55 (Sep) applied; Anheuser-Busch Inc v Budejovicky Budvar Narodni Podnik  All ER (D) 196 (Oct) applied. (3) The ambit of the word aggrieved in s 21 of the Act was a question of law, but whether or not a person was aggrieved by a threat was a question of fact. The requirement to show that ‘the threats have or are likely to cause him damage which is not minimal’ did not mean that the claimant had to prove loss of identifiable contracts. It was sufficient to show that ‘his commercial interests are or are likely to be adversely affected in a real as opposed to a fanciful or minimal way’ (see ,  of the judgment). The first letter was a threat of infringement proceedings made to an important commercial customer of CB and normally the court would have no hesitation in concluding that the supplier had been a ‘person aggrieved’ by such a threat to its customer. However, in the unusual circumstances, where the allegedly infringing label had been designed by M&S, not CB, and there had been no evidence that the threat had adversely affected CB’s commercial relationship with M&S, CB had not established that it had been ‘a person aggrieved’ by the threat in relation to the first letter (see  of the judgment). The counterclaim would be dismissed (see  of the judgment). Article 5 of Council Directive (EC) 2008/95, so far as material, provides: ‘1. The registered trademark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade: … (b) any sign where … there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trademark.’ Article 6 of Council Directive (EC) 2008/95, so far as material, provides: ‘The trademark shall not entitle the proprietor to prohibit a third party from using in the course of trade: … (b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services; … provided he uses them in accordance with honest practices in industrial or commercial matters.’ Section 21 of the Trade Marks Act 1994 Act, so far as material provides: ‘(1) Where a person threatens another with proceedings for infringement of a registered trademark … any person aggrieved may bring proceedings for relief under this section. (2) The relief which may be applied for is any of the following – (a) a declaration that the threats are unjustifiable … and the plaintiff is entitled to such relief unless the defendant shows that the acts in respect of which proceedings were threatened constitute (or if done would constitute) an infringement of the registered trademark concerned.’ The claimant brewery, Samuel Smith, (SS) was one of the oldest established and still trading breweries in the United Kingdom. A stylised white rose device (the trademark) was registered as a trademark being both distinctive of the brewery and a reminder to customers of SS’s strong connection with Yorkshire. SS applied to register the trademark in 1973. Cropton Brewery (CB), founded in 1984 in Yorkshire, agreed to supply Yorkshire Bitter to Marks & Spencer (M&S). The label for the beer was designed by or on behalf of M&S. The front of the label bore the words ‘Yorkshire Bitter’ printed on white on a red roundel which surrounded a slightly stylised white rose emblem with red accents. When Yorkshire Bitter came to the attention of SS it sent, on 10 December 2007, a letter before action to M&S alleging infringement of the trademark and passing off. The letter was not copied to CB, nor did M&S inform CB about the complaint at that time. In June 2009, SS brought a claim against CB alleging infringement and passing off in respect of Yorkshire Warrior, another beer produced by CB. From 9 September 2009, an informal licence granted by the Ministry of Defence for use of the Yorkshire white rose had been withdrawn in respect of Yorkshire Warrior in order to respect SS trademark rights. It was only when SS solicitor’s sent CB’s solicitors photographs of the products complained of on 14 September 2009, that it was made clear that the claim related to both products, namely Yorkshire Warrior and Yorkshire Bitter. On 30 October 2009, CB served a defence and counterclaim alleging that the letter of 10 December 2007 (the first letter) had been an unjustified threat of trade mark infringement proceedings contrary to s 21 of the Trade Marks Act 1994 (the Act). The defence to counterclaim admitted the letter but denied that it was an actionable threat as CB was not a person aggrieved under s21 of the Act. A further letter was sent from SS solicitor’s on 7 July 2010 (the second letter)(see  of the judgment). Following failure to settle the matter came before the courts. Consideration was given to arts 5 and 6 of Council Directive (EC) 2008/95 (the Directive). Those provisions were implemented in the UK by s10(2),(3) and 11(2)(b) of the Act. Corresponding provisions were contained in arts 9(1)(b),(c) and 12(b) of Council Regulation (EC) 207/2009 (the Regulation). The issues were, inter alia: (i) whether CB had infringed the trade mark by use of the Yorkshire Bitter label; (ii) whether CB had infringed the trademark pursuant to art 5(1)(b) of the Directive by use of the Yorkshire Warrior label; (ii) whether CB had a defence in respect of its infringement of the trademark by use of the Yorkshire Warrior label under art 6(1)(b) of the Directive in respect of the period to the end of October 2009; (iii) whether the first and second letters had been unjustified threats of trademark infringement proceedings under s 21 of the Act and whether it was an actionable threat. The court ruled: (1) It was established that the likelihood of confusion had to be appreciated globally through the eyes of the average consumer of the goods or services in question. The average consumer normally perceived a mark as a whole and did not proceed to analyse its various details. The ‘visual’ aural and conceptual similarities of the marks had normally to be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it was only when all other components of a complex mark were negligible that it was permissible to make the comparison solely on the basis of the dominant elements. Nevertheless, the overall impression conveyed to the public by a composite trademark might in certain circumstances, be dominated by one or more of its components and it was quite possible that in a particular case an element corresponding to an earlier trademark might retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark. A lesser degree of similarity between the goods or services might be offset by a great degree of similarity between the marks, and vice versa. There was a greater likelihood of confusion where the earlier mark had a highly distinctive character, either per se or because of the use that had been made of it. Mere association was not sufficient. If the association between the marks caused the public to wrongly believe that the respective goods [or services] had come from the same or economically-linked undertakings, there was a likelihood of confusion (see  of the judgment). There was an important difference between the comparison of marks in the registration context and the comparison of mark and sign in the infringement context, namely that the former required consideration of notional fair use of the mark applied for, while the latter required consideration of the use that had actually been made of the sign in context (see  of the judgment). In the instant case, so far as Yorkshire Bitter was concerned, the identity of the goods and the distinctive character of the trademark favoured a likelihood of confusion, but the differences between the white rose device and the trademark, the remainder of the sign and the identification of CB as the producer on the front of the label all militated against it. SS’s dilatoriness in pursuing M&S and CB over the matter suggested that it had not considered that there had been a real likelihood of confusion. Yorkshire Bitter had only been included in the case because Samuel Smith had thought it would look odd to pursue Yorkshire Warrior without pursuing Yorkshire Bitter. The evidence of experience strongly suggested that there had been no likelihood of confusion. Overall, SS had had not established that there had been a likelihood of confusion. In regard to Yorkshire Warrior, the identity of the goods and the distinctive character of the trademark again favoured a likelihood of confusion. The white rose device was more similar to the trademark, and it was more a dominant element of the sign, than in the case of Yorkshire Bitter. Although there had been no evidence of actual confusion in practice, it was more difficult to place confidence in that as showing there was no likelihood of confusion than in the case of Yorkshire Bitter. Although the majority of consumers would not be confused. Overall, there was a ‘likelihood’ that some consumers would be confused into believing either that Yorkshire Warrior was a SS product or that it had some other connection with SS (see ,  of the judgment). Reymes-Cole v Elite Hosiery Co Ltd  RPC 102 applied; Brain v Ingledew Brown Bennison and Garrett (a firm) (No 3)  FSR 511 applied. (4) The meaning of the word ‘threat’ covered any intimation that would convey to a reasonable man that some person had trademark rights and intended to enforce them against another. It did not matter that the threat might be veiled or covert, conditional or future. Nor did it matter that the threat had been made in response to an enquiry from the party threatened. The conclusion as to whether a document amounted to a threat of patent proceedings was essentially one of fact. It was a jury-type decision to be decided against the appropriate matrix of fact. Thus a letter or a statement might on its face seem innocuous, but when placed in context it could be a threat of proceedings. The test was whether the communication would be understood by the ordinary recipient in the position of the claimant as constituting a threat of proceedings for infringement. It was immaterial that the threat was contingent (see  of the judgment). In the instant case, read against the relevant background, the letter of 7 July 2010 had not constituted or contained a threat of proceedings for infringement of a registered trademark by Samuel Smith (see  of the judgment). L’Oreal (UK) Ltd v Johnson & Johnson  All ER (D) 290 applied.