The Court of Appeal of England and Wales has upheld a High Court ruling allowing claims against patent and trademark attorneys Marks & Clerk for allegedly receiving secret commissions to proceed as a representative action.

On 18 January, Lord Justice Nugee along with Lord Justice Snowden and Sir Geoffrey Vos, Master of the Rolls, upheld the earlier decision of Mr Justice Robin Knowles, who found that the claimant, Commission Recovery Limited (CRL), had successfully met the hurdle for representative claimants set out in the Supreme Court judgment of Lloyd v. Google in November 2021.

The case, which is expected to go to trial in January 2025, is the first appellate ruling on the representative action regime since Lloyd v Google.

CRL was established to bring the claim against Marks & Clerk in relation to secret commissions allegedly paid by CPA Global (now Clarivate), an IP management organisation, in return for Marks & Clerk client referrals. CPA allegedly paid these commissions to Long Acre Renewals, a partnership set up by current and former partners of Marks & Clerk.

Marks & Clerk and Clarivate both strongly deny any claims of wrongdoing.

Nugee noted CRL’s “core proposition” that to establish liability all it needed to prove – subject to the possible defences of disclosure and fully informed consent or limitation – was that members of the class contracted on Marks & Clerk’s standard terms of business, which “required it to act on a disinterested or nonconflicted basis” and that commission payments were made.

He ruled that, if such a proposition could be established, then: “I see no difficulty in the court so declaring, and it seems to me self-evident that such a declaration would be equally beneficial to every member of the class.” 

He added: “I do not think it matters that even if CRL succeeds in obtaining such a declaration it would not resolve all the issues in the case, even on liability.”

The judge went on to state: “I conclude that there is therefore both an issue common to all members of the class and no relevant conflict between them. It follows that the members of the class have the ‘same interest’ in the claim for the purposes of CPR r 19.8(1), and that the rule therefore applies.” 

Rule 19.8 refers to the rules around parties and group litigation in England and Wales; it was renumbered in 2023 (formerly 19.6).

Nugee also rejected the defendants' assertion that there was no guarantee individual members of the class would think it worthwhile to come forward to make claims. The judge noted evidence that former Marks & Clerk client Bambach Europe, whose claim CRL has taken assignment of as representative of the class, had generated £6,627 of commission payments, although the total figure across the classs “was likely to run into millions, or tens of millions, of pounds”.

“There may indeed be difficulties ahead for CRL,” he said. “But the court should not in my judgement seek to second-guess CRL’s decision that it is commercially worth its while to continue with the litigation unless it can clearly see that the exercise is futile. I do not think that can be said.” 

Welcoming the ruling CRL director Peter Rouse, an IP enforcement specialist and the former CEO of IP firm Rouse, said the defendants had “taken every opportunity to derail this claim” to prevent it from reaching trial, adding that the trial would “fully expose the confidential commission arrangement with CPA Global”.

A Marks & Clerk spokesperson said it was “disappointed” by the judgment, adding: “We maintain our position that CRL mischaracterises the relationship that our firm had with CPA during the period in question – and the work that was done for our then clients – whilst attempting to use the representative action system in an unsuitable and financially-motivated manner.”

The firm said it was looking forward to showing the High Court at trial why “CRL’s complaint cannot be properly advanced on a representative basis”.

David Greene, co-president of the Collective Redress Lawyers Association (CORLA), commented that in upholding the High Court’s decision to allow this claim to proceed as a representative action, “the Court of Appeal has provided very helpful clarity in an important developing area of law”. 

He continued: “The decision can be seen as a significant step in the development of the collective redress regime in England and Wales ensuring access to justice for SMEs and consumers.”

Signature Litigation represented CRL comprising Daniel Spendlove and Neil Newing (partners), George Bazinas (senior associate) and Katrin Harter (paralegal). Nico Leslie and Christopher Monaghan from Fountain Court appeared as counsel. 

Marks & Clerk was represented by Serle Court's John Machell KC and Russell Hopkins, of Temple Garden Chambers, instructed by Clifford Chance.

The case is Commission Recovery Limited v. Marks & Clerk LLP and Long Acre Renewals (A Firm) CA-2023-000691.  

Analysis

Commenting on the case, Alan Watts, global head of class actions at Herbert Smith Freehills, fellow partner Julian Copeman, and professional support consultant Maura McIntosh said the ruling addressed a "narrow issue" given there will be a "'bifurcated' approach to the claim of the sort envisaged by Lord Leggatt in the Supreme Court’s landmark decision in Lloyd v Google... with common issues addressed at an initial trial and individual issues left to be determined at a later stage".

They point out that the Court of Appeal's decision does not "address in any detail the question of how the case will proceed if the claimant succeeds at the initial stage".

They maintain: “The potential for running bifurcated claims has been clear since Lloyd v Google, but the obvious difficulty for funders looking to back such cases has been how they would be paid: a declaration on common issues will not in itself result in a pot of damages for the funder to share in, and there is no guarantee that class members will contract with that funder for the later stage of the case and therefore share their damages with them.”