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Lloyd Maynard successfully defends claims arising under a Distribution Agreement

15 / 1 / 2020

Acting for Koch Media Ltd, an English subsidiary of a German-Austrian media enterprise, Lloyd Maynard successfully defended claims made by DVD producer Demand Media Ltd for c£1m. The claims were for alleged breaches of an exclusive distribution agreement. Demand Media claimed that an exclusive distributor must be subject to an implied duty not to sell products that are similar to or compete with products of its supplier. Demand Media further claimed that Koch Media had breached a duty of confidence to Demand by producing Meccano-like construction sets similar to those sold by Demand. Upon termination of the distribution agreement, Demand Media sought to deny Koch Media’s entitlement to a contractual lien over stock until final reckoning of accounts, claiming that its alleged ownership of stock meant that it was entitled to the return of its stock at any time.

In a judgment handed down on Monday, 13 January 2020, Gavin Mansfield QC (sitting as a Deputy Judge of the High Court) accepted Koch Media’s submission that it was not necessary to imply a non-compete clause within an exclusive distribution agreement, that ownership of stock does not grant a supplier an unfettered right to recall that stock, and that Demand Media had not shown its alleged information was confidential or that Koch Media had breached such confidentiality.

The Judge awarded Demand a modest sum of just less than £17,000 for a small amount of stock lost following termination. But such a sum fell a long way short of Koch Media’s part 36 offer of £124,000 made 8 months before trial.

The Judge accepted Koch Media’s submission that he was entitled to make a costs order pursuant to CPR rr.36.17 and 44.2, notwithstanding the parties have an ongoing dispute concerning a registered design right claim transferred to the Intellectual Property and Enterprise Court on the first day of trial.

A copy of the judgment is available here.

Lloyd was instructed by Shoosmiths LLP

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