Vape: IP dispute
A claimant has been ordered to pay indemnity costs because of its solicitors’ misuse of criminal contempt proceedings and threats to report their opposition to the Solicitors Regulation Authority (SRA).
His Honour Judge Matthews, sitting as a High Court judge in Bristol, said making “very serious allegations against officers of the court, and potentially having far-reaching professional consequences for those officers” in contempt proceedings was on the same level as allegations of dishonesty.
He said: “The claimant made very serious allegations against the defendants, and lost. It was wrong and out of the norm for the claimant’s solicitors opportunistically to seek to use criminal contempt proceedings, in which the touchstone is the public interest in the administration of justice, in order to pursue their client’s private interests.
“It was wrong and out of the norm for the claimant’s solicitors to threaten the defendants with being reported to the SRA in order to persuade them to agree to their client’s terms.”
The applications for contempt arose on “the periphery” of intellectual property litigation between Bargain Busting and Shenzhen Ske Technology (SST) over the former’s application to register a trade mark for one of its vaping products.
SST challenged the registration unsuccessfully before the Intellectual Property Office (IPO) and High Court, with the order arising from the latter providing that the trade mark application “shall proceed to registration”.
SST was represented by intellectual property specialist Stobbs IP and it wrote to the IPO asking it not to do so before its client’s application for permission to appeal had been determined.
Bargain Busting’s solicitors, Brandsmiths, opposed this and subsequently issued contempt proceedings against SST, Stobbs and two solicitors who work for it.
Last month, HHJ Matthews struck out the proceedings and yesterday he handed down the consequentials ruling. While Bargain Busting accepted it should have to pay costs on the standard basis, the four defendants sought indemnity costs.
Among the grounds were that, at a directions hearing in January for the contempt applications, Mr Justice Trowers said: “The weaponisation of the contempt jurisdiction in these courts is a problem… and at first blush this application strikes me as an application which falls fairly and squarely into that category of case.”
HHJ Matthews made a similar comment in his main ruling.
Further, they claimed that a letter later that month from Brandsmith alleged that Stobbs and the solicitors were in breach of the SRA Code of Conduct, but offered not to report the matter to the regulator if they and SST paid the costs incurred over the trade mark applications.
The letter listed supposed breaches of the code but went on: “[O]ur client is also prepared to refrain from pursuing this matter further, including notification to the Solicitors Regulation Authority, in the interests of reaching a prompt and amicable resolution with your clients.”
In subsequent telephone call between the two law firms in March, the Brandsmiths lawyer “emphasised the negative impact of the contempt proceedings on the careers of the lawyers concerned”, according to an attendance note.
The claimant countered that the court made no findings that the applications were abusive and argued that the letter was not a threat – it simply explained that, if the contempt allegations were well founded, the conduct would also amount to breaches of the SRA code.
In deciding to order indemnity costs, HHJ Matthews noted that Stobbs’ actions in asking the IPO not to enforce an order until the Court of Appeal had disposed of an application for permission to appeal was “the kind of thing which solicitors do all the time”.
In this case, it was also supported by the previous published practice and decisions of the IPO.
“It is hard to understand how the claimant’s solicitors can have formed the view that this conduct could have amounted to a criminal offence,” the judge said. “I had little difficulty in reaching the conclusion, after hearing argument, that it did not.”
He held that the letter, “very carefully constructed as it was, would have been read and understood by any reasonable addressee as a threat to report the defendants to the SRA unless they agreed to the claimant’s terms”.
He added: “I am satisfied to the civil standard that the claimant’s solicitors so intended, but, even if I were wrong about that, the letter should still be judged for present purposes by its effect upon the reasonable addressee, because the meaning of such a letter is to be ascertained objectively.”
Further, it was clear from the note of the telephone call “that the claimant justified the issue of criminal contempt proceedings in August 2025 as a form of pressure on the defendants to cease trying to persuade the IPO to delay registration of their client’s trade mark. But criminal proceedings should not be used for such a purpose”.
Taken together, these factors “overwhelmingly” justified an award of costs on the indemnity basis, HHJ Matthews concluded.
The defendants are seeking nearly £300,000 and the judge sent their bills for detailed assessment, but made an order for payment on account of £215,000. He also denied Bargain Busting leave to appeal his ruling.
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