The recent UK Intellectual Property Enterprise Court (IPEC) trade mark infringement case of Oran Pre-Cast Ltd v Oranmore Precast Ltd provides a useful warning for practitioners in respect of settlement agreements. Full case note below.
Oran Pre-Cast Limited (“ORAN”) is an Irish company, based in Oranmore in Galway, which manufactures and sells precast concrete products. It is a family company, established in 1996, which has sold and offered for sale precast concrete products and related design and construction services in Ireland since 1996 and in the UK since 2008.
Oranmore Precast Limited (“ORANMORE”) is UK company based in Norfolk incorporated in 2011, which also manufactures and sells precast concrete products and related design and construction services (trading since March 2012). The RM and RB are founders and directors of ORANMORE. RM was a previous ORAN director, and RB was previously ORAN’s General Manager. Both RM and RB being related to many of the directors, shareholders and employees of ORAN by marriage or blood. From Oct 2011 – Sept 2014 RM was a director of both ORAN and ORANMORE.
ORAN brought an action against ORANMORE, Ross Melville (RM) and Richard Burke (RB)(collectively “the Defendants”). The claim was for :
The court found both hypothetical Trade Mark infringement under Section 10(2) TMA 1994 and Passing off in favour of ORAN. However, interestingly here, a Compromise Agreement existed (formed of three documents) between ORAN and RB in which, in return for RB waiving both his redundancy claim (equivalent to nearly €57k) and his back pay claim (worth some €600k) against ORAN, ORAN agreed that they would “…have no claim against you, Richard Burke, whether it be in contract, common law and/or statute.”
This wording was the subject of much judicial scrutiny, however, factoring in the commercial purpose behind the agreement (i.e. to draw a line behind all previous matters and to allow RB to move forward with his new business), it was ultimately determined that it (and the Compromise Agreement) should cover “all known and foreseeable claims connected with RB leaving the company [ORAN]”, which importantly included all future claims ORAN may have against RB. In addition, given it was shown that ORANMORE and RM were joint tortfeasors with RB in this dispute, it was concluded that this release above, pursuant to the Compromise Agreement, should also apply to them.
As such, although the court technically found both Trade Mark infringement and Passing off in favour of ORAN, these claims ultimately failed due to the existence of this Compromise Agreement. Accordingly both limbs of the claim of ORAN failed against all of the Defendants.
A word of warning
In the legal profession it is commonplace to engage in settlement agreements or undertakings in order to attempt to resolve matters without the need for recourse to formal proceedings. This case serves as careful reminder to us all to ensure that these agreements/undertakings are not drafted too broadly, and are instead drafted to deal with only the current matter at hand mindful of future disputes, so that one does not find themselves in a position similar to that of ORAN where their legally valid claims are prevented.