Court denies Rolls-Royce anti-suit injunction against 3D software supplier
Luxury car maker sought to halt proceedings in California against Rolls-Royce dealers | Court decided that exclusive jurisdiction clause did not apply to circumstances.
Rolls-Royce has lost a bid to secure an anti-suit injunction against German software supplier Topalsson, following allegations of breach of contract and IP infringement in a multi-jurisdictional dispute between the two firms.
The decision was handed down on Thursday, August 17, in the Technology and Construction Court of England and Wales. Rolls-Royce failed to convince Justice Waksman that it should be granted an anti-suit injunction that would halt proceedings between Topalsson and a group of US Rolls-Royce dealers taking place in California, and prevent further litigation concerning Topalsson’s IP rights against Rolls-Royce, its dealers or any BMW company taking place outside England and Wales.
However, the judge said the luxury car manufacturer may be entitled to damages as Topalsson had breached an exclusive jurisdiction clause (EJC) by originally bringing a complaint against Rolls-Royce in California.
‘Vexatious and oppressive’
The dispute between the firms arose initially from the termination of a contract between them. Topalsson supplied Rolls-Royce with its 3D configurator software, which allows consumers to interact with virtual models of cars they are considering buying.
However, the project was “not a success” and Rolls-Royce terminated the agreement early, citing reasons that included “delay and failure to supply a satisfactory product”. The dispute went to trial in the autumn of 2022 and in July this year it was determined that Rolls-Royce had been entitled to end the agreement, and damages were awarded against Topalsson.
In March this year, Topalsson started proceedings in the US against various Rolls-Royce dealers and Rolls-Royce itself, alleging copyright infringement and misappropriation of trade secrets. Topalsson is said to have believed that its software was being used to sell Rolls-Royce cars in the US, despite Rolls-Royce agreeing not to use it.
It later amended this complaint to remove Rolls-Royce as a defendant, and with alterations to the text.
Rolls-Royce claimed that the matters raised in this amended complaint breached an EJC between the firms that stated that any dispute that arose from the agreement between them would be covered by the exclusive jurisdiction of the Courts of England and Wales.
Further, it said that even if there was no contractual basis for an anti-suit injunction, Topalsson’s conduct in bringing the amended complaint was “vexatious and oppressive”.
Anti-suit injunction dismissed
Justice David Waksman opined that Topalsson’s amended complaint was connected to the agreement. However, he concluded that with the removal of Rolls-Royce, the remaining defendants were ‘third parties’ to the agreement and therefore not covered by the EJC.
Therefore, he found “no contractual basis” for an anti-suit injunction. He also found that “the conduct of Topalsson was clearly not vexatious or oppressive” nor did it otherwise warrant the grant of a non-contractual anti-suit injunction.
“I cannot see why Topalsson is not entitled to sue dealers using software which it says infringes its copyright in California, and to do so in their own jurisdiction,” he wrote.
However, on the grounds of the original complaint made by Topalsson against Rolls-Royce, the EJC had been breached, Justice Waksman said. In principle, Rolls-Royce was therefore entitled to damages—albeit not in relation to this trial.
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