Can a conflicting email and attachment regarding settlement amount to an acceptance, or does it constitute a counter offer?
In an appeal from the County Court, regarding the forfeiture of a lease, the High Court confirmed that a purported acceptance of a settlement offer was actually a counter offer. In suggesting an alternative payment date, the company had made a counter offer which the other party had not accepted.
Party A offered to settle the dispute before an Appeal Hearing for 90,000, subject to its offer being accepted and monies being paid by a specific date. Party B emailed a response which included words to the effect of "[Party B] accepts your offer". However, the email attached a draft Consent Order which specified the payment date as several weeks later than that originally offered by Party A.
Party B, the Appellant, claimed that it had accepted Party A's offer, and contended that the email's first sentence, which stated the offer was accepted, was clear and unequivocal and didn't on its face amount to a counter offer.
Party A, the Respondent, contended that the communications should be interpreted as a whole and that included the Consent Order. It submitted that it was clear Party B's email was a counter offer and that no agreement had been reached between the parties.
The Court rejected Party B's Appeal, holding that it was clear Party A required payment of 90,000 by a specified date. It was a package that had not been accepted as a whole, particularly as Party B's email included a different payment date (which had not been accepted by Party A). It was held that Party B's email was a counter offer.
The Court also noted it was wrong to ignore communications other than the purported offer and acceptance. Citing previous Supreme Court case law, the Judge held 'in order to determine whether a contract has been concluded in the course of correspondence, one must first look to the correspondence as a whole...'. The Consent Order attached to the email, after the purported acceptance was provided, supported the view that there had been no binding contract.
Childhood obesity strategy
On 18 August 2016, the Government's childhood obesity strategy was published. The 'Childhood Obesity: A Plan for Action' sets out the government's plan to tackle the growing problem of obesity in the UK, costing the NHS an estimated 5.1 billion on overweight and obesity-related illnesses in 2014/15.
The multi-faceted approach largely follows the recommendations made by Public Health England (PHE). This includes a focus on the importance of promoting a healthy lifestyle in schools and during early-years development, using revenue from the forthcoming sugar levy to fund programmes to reduce obesity and encourage physical activity and balanced diets for children in school.
Many soft drink manufacturers have already voiced concerns about the impact the upcoming sugar levy could have on businesses. The levy is now subject to a HMRC and HM Treasury Consultation, issued on the same date as the Obesity Strategy, and which focusses on the design and implementation aspects of the levy, not on whether the levy should be introduced at all.
Aside from the sugar levy, a key element of the strategy is the reformulation of products, in terms of sugar content and calorie content as well as portion size.
The main concern is likely to be the introduction of a programme designed to "encourage" industry to reduce the sugar content of products that contribute to children's sugar intake by at least 20% by 2020. While ostensibly a voluntary programme led by PHE, regular reports will be published by PHE every six months, with a more comprehensive assessment every 18 months, to ensure sufficient progress is being made. The lack of clarity or detail on this element is likely to create an unwelcome degree of uncertainty and competitive unease throughout the industry.
Also of concern are the proposals to review the clarity of food labelling, citing the recent decision to leave the EU as "providing greater flexibility to determine what information should be presented on packaged food, and how it should be displayed." This could signal the imposition of new rules on food labelling, such as making a distinction between sugars and 'free sugars'. If such rules are introduced, there are likely to be significant financial implications for food manufacturers, who would need to develop yet more new labels.
There is no mention in the strategy of two of the measures PHE identified as high priority, namely:
Prohibiting price promotions of junk food in supermarkets, as well as the promotion of unhealthy food to children in restaurants, cafes and takeaways; and
Restricting the advertising of high in fat, sugar or salt (HFSS) products to children during popular family entertainment television programmes.
However, these were the subject of a recent consultation by the Committee of Advertising Practice, which closed on 22 July. That Consultation included proposals to:
Introduce a new rule to the CAP Code to limit where advertising for HFSS products can be placed in all non-broadcast media, including online;
Explore whether the new rule should prohibit HFSS product advertising in media targeted at, or of particular appeal, to children under 12 or under 16; and
Apply the existing rules prohibiting the use of promotions and licensed characters popular with children to HFSS products only, to allow more creative ways for the promotion of healthier foods to children.
No time-scale has been published by CAP on the next steps following the Consultation.
Whilst the new childhood obesity strategy has introduced a variety of measures designed to tackle the incidence of obesity among children, including targeting lifestyle and education issues from an early age, the brunt of the strategy falls on the food industry, but with a lack of clear direction at the current time. Whether this is explained by PHE remains to be seen, but the lack of clarity and detail will be a cause for concern across all areas of the food industry.
Pre Pack Pool One Year On
The Pre Pack Pool (PPP) opened for business in November 2015. The PPP is an independent pool of experts who will review the acquisition of a business through a "pre-pack", where the Buyer is connected to the Seller. The process is designed to give assurance to creditors that independent business experts have reviewed the proposed transaction and to try to reduce the "noise" around this issue in the media. One year from opening, the key headlines are as follows:
Approximately 30 cases have been submitted to the pool since inception; PPP directors consider this to be around a third of connected party insolvencies in the current
market; Pool members are keen to achieve a positive outcome for applicants wherever possible; and To date only one applicant has received a negative outcome.
It is difficult to measure the success and usefulness of the PPP for both IPs and creditors alike at this early stage, particularly given that it is not a compulsory measure nor does it afford any immunity from subsequent challenge to the transaction. However, the PPP is pulling together a panel of pool of members, creditors and `newcos' to collate initial feedback and hopes to share its finding later this year. That feedback should prove useful in assessing how far it has achieved those goals; whether it successfully reduces the overall noise around this issue is an entirely different matter.
Could consumers be set to jump up the insolvency hierarchy?
The Consumer Prepayments on Retailer Insolvency Report has recently been put to parliament by the Law Commission. This report recommends that consumers who prepay for goods and services over 250 in the six month period prior to a formal insolvency process should be paid out as a preferential creditor, instead of ranking as an unsecured creditor. This would only apply if the consumers have not received the goods by the date of insolvency and they did not make the payment using a method which offers a chargeback remedy (e.g. credit card).
Please see the following link for further detail: http://www.lawcom.gov.uk/project/consumer-prepayments-onretailer-insolvency/.
Under current insolvency legislation consumers are generally unsecured creditors (unless they can rely on the chargeback remedy), meaning they are last in the queue for any distribution out of the insolvent estate.
The Law Commission explained that change is required because consumers are often vulnerable, may not understand risk in the same way as corporate or trade creditors and may suffer hardship as a result. They also suggest that there is a `perverse incentive' for struggling retailers to trade their way out of difficulty by taking more prepayments from consumers with little incentive from secured creditors to prevent this.
While liquidators and administrators will have to scrutinise a large number of claims, it is unclear how many consumers will actually benefit from the proposed changes. The credit card chargeback remedy will cover a large number of consumers and many others may not meet the 250 threshold (such as holders of gift cards and vouchers). It remains to be seen how Parliament will balance the need to protect consumers against the potential impact on distressed businesses and other unsecured creditors....watch this space.
Insolvency Rules 2017?
The Insolvency Service advised that there will be a six-month lead in to the anticipated commencement of the new Insolvency Rules 2016 in April 2017.
The Insolvency Service has set about to completely overhaul the Insolvency Rules 1986 (IR 1986) and draft new Insolvency Rules, to replace all previous Insolvency Rules and updates. Since coming into force, IR 1986 has been amended no less than 23 times.
Contemplating the outcome of the leave vote on intellectual property
In our June update we noted that, despite the outcome of the referendum, the UK remained (at least for the time-being) a member of the EU. This remains the case at the time of writing this update and will continue to be the case until such time as Article 50 is invoked and negotiations for an exit from the EU are concluded pursuant to this. As such, for all intents and purposes, it is business as usual for now. However, what might the ultimate effect of Brexit be on the UK's intellectual property (IP) system?
Obviously, this question is a difficult to answer at this stage since much will depend on whatever bilateral arrangements the UK enters into post its departure. However, because of both the unitary nature of some European wide intellectual property rights and the international nature of intellectual property systems, in all likelihood even with certain specific bilateral arrangements being put in place, such as those that already exist between Norway and the EU, it is safe to say that the effects in this area of the law are likely to be profound. We explore below the potential impact from the perspective of trade marks and designs in particular.
European Union trade marks and Community designs
The European Union trade mark (EUTM) and Community design (CD) systems are unique property rights that spread across the EU. The rights, which are very much a creature of the EU, provide the opportunity for applicants to file a unitary trade mark or design that covers all 28 member states, including as of today, the UK. The laws that currently govern the EUTM and CD systems are the EU Community Trade Mark Regulation (207/2009) (EUTM Regulation) and the EU Community Design Regulation (6/2002) (CD Regulation) respectively.
Article 1(2) of the EUTM Regulation states that "...A [EUTM] shall have a unitary character. It shall have equal effect throughout the Community: it shall not be registered, transferred or surrendered...save in the respect of the whole Community...". The CD Regulation contains an identical provision at Article 1(3) in relation to the unitary character of CDs.
Given the wording of these provisions, following Brexit, by definition EUTM and CD registrations will narrow in geographical scope and no longer have any effect in the UK. In the event that owners of EUTMs or CDs do not have corresponding UK trade mark or design registrations, subject to any bilateral transitional arrangements that might be put in place, Brexit may leave them devoid of any registered rights. However, unregistered rights could remain, such as the Berne Copyright Convention, which would allow UK companies to enforce certain rights across the EU.
This scenario is unchartered territory, although by analogy there have been a number of instances where the EU has expanded its membership, such as when Czech Republic, Cyprus and Croatia acceded to the EU. However, while the EUTM and CD Regulations do specifically carve out provisions for what is to happen when countries become members of the EU, the legislation is silent on the effects of a member state leaving the EU.
It is unlikely that the EUTM and CD rights will continue to cover the UK since if they were to do so, such an arrangement would fly in the face of the unitary nature of such rights. One possible bilateral agreement would be for the EU and the UK to give mutually reciprocal recognition of the national and EU wide rights.
Given the absence of a provision in the legislation detailing the impact and effects of countries leaving the EU, a possible option would be for either the UK or EU to introduce transitional provisions to allow owners of EUTM and CD registrations to obtain corresponding rights in the UK. This was previously seen in 1921 when Ireland left the UK. In this instance, provisions were introduced to enable owners of UK trade mark registrations to maintain their UK mark while also converting the registration into a national Irish mark. This allowed owners to maintain the filing date of their earlier UK registration on the payment of a fee.
A new EUTM Regulation came into effect on 23 March 2016, which brought about various changes, both legally and procedurally, to the EUTM system. The changes proposed in the new regulation have to be adopted by all member states by 2019 and implemented in to their national law. Following the UK's exit from
the EU, there will be no obligation for the UK to adopt the new regulation. However, given that the process of EU trade mark reform has been ongoing for a number of years, it is unlikely that the UK would reject the new regulation and not implement the changes into national law. The implementation of the new EUTM Regulation is a matter that will need to be monitored throughout the negotiation stage.
Brexit will probably result in increased costs for the obtaining of registered rights for trade mark and design owners. It is likely that any transitional provisions, converting a EUTM or CD into a national UK right, would carry a fee, as was the case when Ireland left the UK. Also, given the high prospect that EUTMs and CDs will no longer cover the UK, trade mark and design owners will need to apply to register in two territories, the UK and EU, thereby paying two separate fees to enjoy the same protection as they have under the current system. Further, this cost will increase if Scotland were to separate from the UK after Brexit and then not subsequently re-join the EU (as discussed below), as rights holders might need to obtain a Scottish national right, again to obtain the same protection they currently have.
Exhaustion and parallel imports
At present, IP owners can, under the principle of regional exhaustion, prevent the importation and resale into the EEA, which comprises all EU member states in addition to Norway, Iceland and Liechtenstein, of genuine goods which were not put on the market of the EEA by the IP owner or with the owner's consent (parallel imports). Once the goods are in the EEA with the owner's consent, the owner cannot prevent their resale and importation across the EEA. This principle of regional exhaustion flows directly from the EU's principle of the free movement of goods.
It is unclear to what extent after Brexit the UK will restrain parallel imports from the EEA. Much will depend on the extent to which the UK signs up after its departure to the principle concerning the free movement of goods.
The Scottish Government has indicated that, if the UK were to leave the EU, it would campaign for another Scottish independence referendum. This will pose even greater uncertainty surrounding the national UK, EUTM and CD system, as well as the UK patent system. There are a number of ways in which this could play out. First, Scotland could remain part of the UK, which would not alter the status quo between Scotland, the UK and EU.
The second option is if Scotland left the UK and then subsequently rejoined the EU. There would be many questions arising from this situation, such as in the interim between Scotland leaving the UK and then joining the EU, would UK national trade marks or designs (or patents) extend to Scotland? Also if Scotland were to join the EU, EUTMs and CDs would automatically extend to Scotland. In this case, would Scotland have its own national trade mark and design (and patent) system and law?
The third option is if Scotland left the UK but then did not join the EU. Again, it would need to be clarified whether UK national trade marks or designs would extend to Scotland. It is likely that similar transitional provisions would be implemented to those that applied when Ireland left the UK in 1921. In any event, it is probable that a Scottish national trade mark and design (and patent) system would need to be established.
Even though these are important considerations, as stated previously, when the UK leaves the EU it will not be instant but rather a lengthy process of negotiation. The Scottish referendum would be after the definite exit of the UK from the EU, therefore it would not be taking place in the near future. However, this is one aspect that needs to be monitored throughout the Brexit process.
As detailed above, there will be a significant impact on UK and EU IP rights and laws. At the moment it is unclear how the rights will be affected and to what extent the scope of current and future rights will be narrowed or altered.
However, there are a number of issues that IP rights holders will need to monitor throughout the negotiating process, as any transitional provisions or decisions on the scope of the protection of rights are likely to have major implications.
Partner Intellectual Property T: +44(0)113 290 4464 E: patrick.cantrill @bonddickinson.com
Associate Dispute Resolution
T: +44(0)191 279 9490 E: thomas.lillie @bonddickinson.com
Associate (Practice Development Lawyer) Commercial Disputes T: +44(0)117 989 6945 E: davina.watson @bonddickinson.com
Legal Director Restructuring & Insolvency
T: +44(0)117 989 6927 E: tim.pritchard @bonddickinson.com
Consultant Regulatory & Environment T: +44(0)2380 20 8253 E: nicky.strong @bonddickinson.com
Associate Corporate & Commercial Services
T: +44(0)191 279 9071 E: andrew.hall @bonddickinson.com