Tuesday, 7 January 2014

Arbitrating licence agreements: interim relief

The mysteriously-named  AB v CD [2014] EWHC 1 (QB) (03 January 2014)  concerns not, as one might expect, a badly-behaved professional footballer or television presenter but two businesses with a licensing agreement. The agreement concerned an electronic marketplace, but no software was supplied. The claimant faced big problems when threatened with termination the licence to use a facility which was an essential part of their business, and sought an interim injunction to stop the termination until arbitration had been completed. Because the dispute was subject to arbitration, and there were obligations of confidence in addition to what one would normally expect to be inherent in arbitration proceedings, the names of the parties were not disclosed.

Why was the agreement going to be terminated? First, because in breach (it was alleged) of the licence the claimant had failed to stick to a sales and marketing plan which the licence required it to agree with the defendant (the licensor). But no such plan had actually been agreed, so there was at least an issue to be tried there. Likewise the second ground, that the claimant's business had developed in a different direction from that of the defendant, because the judge (Stuart-Smith J) thought it was arguable that the core business remained the same.

Would damages be an adequate remedy? The judge, perhaps slightly surprisingly, thought so. It looks like a clear case of a situation in which the claimant will suffer too much damage if the defendant is allowed to do what they propose to do. The situation is further complicated by the fact that the parties had agreed to limit the damages available for breach. The case-law left the judge feeling somewhat uneasy with the result, and consequently have gave leave to appeal. So, an interesting case which highlights a legal issue that's novel to me, but not, I suspect, the last word on it.

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