Raft Ltd v Freestyle of Newhaven Ltd & Ors

Factual and Procedural Background

The Plaintiff ("Raft") is a manufacturer and retailer of furniture operating multiple stores in London, including a flagship store on Tottenham Court Road. The First Defendant ("Freestyle") is a sofa manufacturer, successor to a company now in liquidation. The Third Defendant ("Highly Sprung") operates a furniture retail store adjacent to Raft's Tottenham Court Road store. The Second Defendant ("Mr Horsnell") is the sole director and shareholder of both Freestyle and Highly Sprung.

Raft alleged that Freestyle manufactured and Highly Sprung sold sofas infringing Raft's UK unregistered design rights in two variations of the Loft sofa design, with Mr Horsnell jointly liable. Raft also claimed passing off, alleging that the defendants misrepresented their sofas as Raft's by copying sofa shapes, using identical style names, and mimicking the external appearance of Raft's store, thereby misleading customers.

Mr Horsnell counterclaimed, alleging Raft infringed his UK unregistered design right in a sofa called "Combi" by producing sofas named "Manhattan". The counterclaim was alternatively brought by Freestyle if it owned the design right.

Legal Issues Presented

1. Whether Raft's UK unregistered design rights subsisted in the wide-arm and skinny-arm Loft sofa designs.
2. Whether Freestyle and Highly Sprung infringed Raft's design rights through manufacture and sale of sofas.
3. Whether Mr Horsnell was jointly liable for infringement by Freestyle and Highly Sprung.
4. Whether the defendants committed passing off by misrepresenting the source of sofas and the association between stores.
5. Whether the defendants' counterclaim alleging Raft infringed the design right in the Combi sofa was valid.
6. Whether Raft infringed the design right in the Combi sofa by manufacturing the Manhattan sofa.
7. Whether Raft held a licence to manufacture sofas to the Combi design.

Arguments of the Parties

Plaintiff's Arguments

• Raft contended that the wide-arm Loft sofa design was original and entitled to design right protection.
• Raft asserted that Freestyle infringed the wide-arm Loft sofa design by manufacturing copies and that Highly Sprung infringed by selling them.
• Raft argued that Mr Horsnell was jointly liable due to his control over both companies.
• Raft claimed passing off based on three factors: identical sofa shapes, use of identical style names, and the external appearance of Highly Sprung's store resembling Raft's store, leading to customer confusion.
• Raft denied the defendants' counterclaim, arguing the Combi design lacked originality or was commonplace.
• Raft argued it did not infringe the Combi design with its Manhattan sofa, which was sufficiently different.
• Raft contended there was no licence granted by Mr Horsnell to manufacture Manhattan sofas.

Defendants' Arguments

• Mr Horsnell claimed the wide-arm Loft sofa was a copy of the Kubus design supplied by another company, denying originality of Raft's design.
• Mr Horsnell denied knowledge of infringement by Highly Sprung, asserting the sofas sold were copies of Kubus, not Loft.
• Mr Horsnell claimed ownership of the design right in the Combi sofa, asserting Raft infringed it by manufacturing the Manhattan sofa.
• Mr Horsnell alleged that he was not employed by Freestyle of London as a designer and that he had granted Freestyle permission to manufacture his designs.
• Defendants contended that an email from Mr Horsnell to Raft constituted a licence to manufacture sofas to designs claimed by Freestyle.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first considered the subsistence of design right in the wide-arm Loft sofa. It found that the designer, a director of the Plaintiff, had expended sufficient skill, labour, and aesthetic judgment to create an original design, rejecting the Defendants' contention that it was slavish copying of a prior design. Consequently, the design right subsisted and was owned by the Plaintiff.

Regarding the skinny-arm Loft sofa, the court determined that the design changes were minor and did not give rise to a new original design. No separate claim was made for parts of the sofa, so no new design right subsisted.

Freestyle admitted manufacturing sofas to the wide-arm Loft design, and Highly Sprung admitted selling such sofas. The court found that Highly Sprung had knowledge or reason to believe the sofas infringed design rights, based on the director's involvement and awareness, establishing secondary infringement liability.

On joint tortfeasance, the court applied established legal principles requiring active cooperation and intent. Given Mr Horsnell's control over the companies and involvement in infringing acts, joint liability was established.

In relation to passing off, the court examined whether the Plaintiff's goodwill attached to sofa shapes, style names, and store get-up had led to misrepresentation. The court found the evidence insufficient to establish misrepresentation or customer reliance on these factors to identify the source of goods or association between stores. Customer statements indicated awareness of separate retailers, and no reliable evidence supported confusion caused by the Defendants' conduct. Consequently, the passing off claim failed.

The counterclaim alleging infringement of the Combi design was addressed by examining originality and ownership. The court found the Combi design original but held that it was created by Mr Horsnell as an employee of the predecessor company, which owned the design right. There was no valid assignment or transfer of rights to the Defendants following liquidation. Thus, the Defendants lacked standing to bring the counterclaim.

On infringement of the Combi design by the Manhattan sofa, the court found the Manhattan sufficiently different not to be a substantial copy, so no infringement arose.

The alleged licence claimed by the Defendants, based on an email, was rejected. The email was interpreted as a limited offer to continue manufacturing for a short period, not a licence to manufacture the design freely.

Holding and Implications

The court allowed the Plaintiff's claim of infringement by the First and Third Defendants of the design right in the wide-arm Loft sofa and held the Second Defendant jointly liable for these infringements.

The claims relating to the skinny-arm Loft sofa and passing off were dismissed.

The Defendants' counterclaim alleging infringement of the Combi design was dismissed for lack of standing and no infringement.

The direct effect is that the Plaintiff is entitled to remedies for the wide-arm Loft sofa design right infringement, while no new precedent was set regarding passing off or counterclaim issues.