In granting an injunction to the exclusive distributor of proprietary software in cash machines (Talaris (Sweden) AB v Network Controls International Ltd [2008] EWHC 2930), Mr Justice Coulson provides an object lesson in the application of the “American Cyanamid principles” in a dispute focusing on the construction of the terms of an exclusive distributor agreement (EDA). The judge concluded that whilst the software developer was entitled to make “preparatory arrangements” for the eventual termination of the EDA, for example by entering into discussions with alternative distributors, such arrangements did not extend to marketing jointly with a competitor of the Claimant a product incorporating the software at a trade fair.

The Defendant, NCI, provided software for cash machines produced by Talaris, the Claimant. Pursuant to a written EDA, NCI was not permitted to supply software to anyone else. NCI was subsequently bought by NCR, a competitor of NCI. NCR then exhibited one of its own machines alongside one from Talaris, both running software provided by NCI. Talaris had not given permission for this demonstration and accordingly applied for an injunction to prevent a breach of the EDA.

The judge awarded an injunction in relation to a particular breach of the EDA which specifically did not allow NCI to market the software without the involvement of Talaris, particularly in conjunction with one of Talaris’ principal competitors. In this respect, there is some value in the judge’s consideration of what actually constitutes marketing which has at its heart a public element that is arguably more than satisfied by featuring a product on a display stand at a trade fair.

In so holding, the judge stressed an important case management point. It was plain that the issues in the dispute were very limited. A number were concerned with construction of the agreement and although there was need for some evidence as to the software, particularly the relationship between the competing versions, the judge considered that the issues could be determined promptly and that the case would be suitable for a two-day trial at the beginning of the next court term which was in only six or seven weeks’ time. Whilst it was important that the court did not decide to grant an injunction simply because it was also going to give directions for a speedy trial of the underlying issues, the judge considered that by the same token it was plainly a factor that the court should take into account when considering the balance of convenience.