Online retailer Ocado has been denied an interim injunction to restrain Autostore from referring to 2018 without prejudice discussions between the parties (or any related documents) at a US International Trade Commission (“ITC”) hearing due to take place in August this year. The case is of interest both because it arose as part of multi-jurisdiction litigation with ongoing settlement negotiations and for the discussion of the relevant burden on the grant of an interim injunction in the circumstances. In this note, we set out some practical tips given that the judge decided that there was a high evidential burden on Ocado to justify its application.
The application was made as part of infringement proceedings relating to six UK designated European patents which Autostore asserts are infringed by Ocado’s warehouse technology - this English action itself forming part of a series of patent disputes between these parties spanning multiple jurisdictions. In the related US ITC proceedings, AutoStore alleges that Ocado has infringed three US equivalent patents. These patents relate to a central cavity (adapted to hold a storage bin) in robots of the type that handle merchandise in a warehouse.
One of the defences advanced by Ocado in the ITC proceedings is a defence of equitable estoppel. Ocado argue that AutoStore gave assurances that Ocado did not infringe the central cavity patents and that AutoStore is now estopped from asserting infringement. AutoStore wishes to respond to this defence by relying on a specific document relating to 2018 discussions between the parties. Autostore assert that this document supports the contention that Ocado was fully aware of AutoStore's stance on infringement, thus precluding an estoppel based defence.
At the interim injunction application hearing, Ocado advanced its case on the basis that at the 2018 meetings it was contractually agreed that neither party should use the 2018 discussions or related documents in any legal proceedings. (An equitable duty of confidence had also been raised but Ocado dropped this point.)
It was agreed by the parties that in these circumstances the relevant burden was not the usual one set out by the House of Lords in American Cyanamid ([1975] AC 396), namely whether there is a “serious question” to be tried. Ocado submitted that because this was an instance in which the interim injunction would in all likelihood put an end to the action, the court should have regard to the underlying merits of the parties' respective cases. They further submitted that the judge should follow the decision in Araci v Fallon [2011] EWCA Civ 668 in which Jackson LJ, with whom Elias LJ agreed, said:
“Where the defendant is proposing to act in clear breach of a negative covenant, in other words to do something which he has promised not to do, there must be special circumstances (e.g. restraint of trade contrary to public policy) before the court will exercise its discretion to refuse an injunction.”
AutoStore, on the other hand, relied on the right to freedom of expression in respect of the publication of a document and Section 12(3) of the Human Rights Act 1998 in suggesting that the appropriate burden is whether Ocado is likely to succeed at trial in establishing a breach of contract. AutoStore also placed reliance on authorities dealing with anti-suit injunctions as their position was that Ocado’s application was, to all intents and purposes, an application for an anti-suit injunction.
Hacon HHJ’s Decision
In assessing AutoStore’s reliance on Section 12(3) of the Human Rights Act 1998, Hacon HHJ conducted a brief review of relevant case law. In doing so he found that Section 12 was directed to threatened publications in the sense of them being made available to the wider public. Where the communication is made to a limited number of recipients and made in confidence the section would not apply. Therefore, in ITC proceedings where the document in question would be subject to a protective order and not made available to the public in a wider sense, section 12(3) was not engaged.
However, Hacon HHJ accepted the submission that allowing the interim injunction would be decisive of the point in dispute because the ITC trial was imminent. An interim injunction would therefore mean that the ITC would not be made aware of the relevant document. On the other hand, if the application was declined then the questions of Autostore’s entitlement to rely on the document would come before the ITC judge and Ocado would have the opportunity to persuade the ITC judge that he should not consider that document pursuant to the relevant rules as they apply to ITC. Hacon HHJ accepted the circumstances were an inexact parallel of the anti-suit injunction case law but noted that the injunction would interfere with the conduct of foreign proceedings. As such “circumspection” was required which meant that the threshold test for an injunction was whether Ocado has a high degree of probability of succeeding at trial.
On Ocado’s Araci point Hacon HHJ stated that, as the existence of the relevant contractual obligation was disputed by the parties, the Araci principle would only apply if he could be satisfied (without the aid of a full trial) that AutoStore would be in clear breach of contract if it were to disclose the document in question to the ITC.
Hacon HHJ accepted that it was likely that the parties created (at their 2018 meetings) an implied agreement that neither side could disclose those discussions, but questioned whether it was correct to say that the parties orally agreed that the English without prejudice rule also covered matters subject to US law (such as the document in question).
An attendance note produced by Ocado’s lawyers and provided to Autostore at the time of the 2018 discussions or shortly thereafter was the only contemporaneous evidence of the parties’ discussions and their agreement:
"SA stated that this meeting was a continuation of the confidential and without prejudice discussions between Ocado and AutoStore (AS) and that any US law discussions were to be governed by rule 408 of the rules of evidence.”
Ocado’s case was advanced by a witness statement from Ocado’s Chief Intellectual Property Counsel (who attended the meeting) seeking to explain this note and thus the matter before Hacon HHJ was essentially whether to have regard to the contemporaneous evidence or the memory of the events from one of the attendees.
In Hacon HHJ’s view a straightforward reading of the attendance note indicated that the US law discussions were to be governed by rule 408 of the US Federal Rules of Evidence alone (and not in addition to the English without prejudice rules). He was unable to rule out, without suggesting dishonesty, that witness memories had become coloured by awareness of the issue which has arisen between the parties
Therefore, Hacon HHJ found that there was no clear indication as to which side’s assertions were more accurate. As he was unable to say (with any degree of certainty) that Ocado would succeed on this point at trial, Hacon HHJ found that Ocado's case did not satisfy the threshold requirement for the grant of an interim injunction.
Further, he found the balance of irreparable harm fell clearly in favour of there being no grant of an interim injunction because (absent an injunction) Ocado would still be entitled to challenge the document’s admissibility before the ITC. On the contrary, an injunction (if subsequently found to have been wrongly granted), would leave Autostore without adequate recourse - the ITC hearing would have already taken place and the damage to AutoStore would have been done.
Conclusion
This judgment serves as warning that parties should clearly specify what legal regimes and protections they intend to cover settlement discussions, especially when simultaneously invoking protections afforded by the rules in foreign jurisdictions. Further, parties should carefully consider how any verbal agreements reached during inter-party meetings are to be evidenced.
Case: Autostore Technology AS v Ocado Group Plc & Ors [2021] EWHC 1614 (Pat) (11 June 2021)
