Claim No: IL-2024-000036 - [2025] EWHC 2172 (Ch)

To understand properly the Defendants’ position, it is necessary to review the inter partes correspondence, as well as various pleadings.

The 2012 Agreement provided:

“[Northern Block] will pay [Mrs Lish] 60% of sales received by [Northern Block]’s E-Commerce Web and from other unnamed methods of licensing in [Northern Block’s] distribution network.

Payment will be made 30 days following the end of each of [Northern Block’s] financial quarters and will be calculated on the number of recorded sales. [Northern Block] shall be entitled to make adjustments to subsequent payments due to [Mrs Lish] (and reduce these as appropriate) to reflect sales returns, fraudulent orders, or other costs relevant to the calculation of Net Receipts, to the extent that these arise subsequent to the calculation of the advance on payment…”

In 2015, Mrs Lish and Northern Block agreed to vary the payment terms in the 2012 Agreement. What that variation amounted to is hotly disputed. The Defendants say that the variation involved Mrs Lish forgoing the 60% royalties in exchange for an increased salary with a small bonus payment made each year. Mrs Lish does not agree with that interpretation: she says that, rather than receiving royalties periodically, she would receive a fixed sum each month and then a balancing payment at the financial year end if 60% of the sums received by Northern Block were more than she had been paid. Ultimately, it does not matter for the purposes of this application. It is (now) common ground between the parties that Mrs Lish was in fact paid a regular amount with a small additional amount at the end of each year – this is said by Mrs Lish to be less than the 60% she had agreed.

The Defendants say that they addressed this change in pre-action correspondence dated 8 July 2022 with Mrs Lish’s representatives:

“The unsigned distribution agreement you referred to in your email [meaning the 2012 Agreement] ceased to have effect on 1 December 2015, when our client stopped paying your royalty and after which significantly increased your salary. You have been working under this employment arrangement and accepted the increased salary ever since.

…

Even if you can demonstrate that our client has been investing in, paying for and multiplying copies of fonts made to the design merely under an implied licence, it is a fully paid-up licence as there is no running royalty”

Mrs Lish’s representatives responded on 15 July 2022:

“The only variation to which concerned our client being paid a flat yearly royalty rate, which coincidentally seems to have been a significant underpayment that has substantially benefited your client to our client’s detriment. Therefore, we suggest you revert to your client and take further instructions.”

A further solicitors’ letter followed on 29 July 2022:

“On the basis that you have confirmed your client’s intention to infringe our client’s intellectual property, our client intends to issue proceedings against your client for infringement of those rights and to recover monies owing to it from your client. This is on the basis that your client has not properly accounted to our client for 60% of sales received from exploitation of the fonts. All of our client’s rights are expressly reserved.”

The Defendants submit that, even before the Newcastle Claim was issued, Mrs Lish understood the Defendants’ position – that the 60% royalty had not been paid since 2015. They say that the “significant underpayment” referred to is the same underpayment as Mrs Lish now seeks by way of the Unpaid Royalties Claim.

The Defendants also say that it is implausible that Mrs Lish believed she had still been receiving the 60% royalties between 2015 and 2022 because she was paid a consistent amount each month, and the bonuses she received at the end of each year were always for round amounts, such as £1000 or £2000. The Defendants say that, had Northern Block been paying royalties at 60%, the bonus payments would not have been round numbers, and Mrs Lish would have realised this.

Following the commencement of the Newcastle Claim, the Defendants filed a Defence, which, at paragraph 13(b) noted “the Claimant would forgo her right to the 60% Payments and would be recompensed for her work exclusively through her higher salary and periodic bonuses”.

On 12 May 2023, the Defendants proposed an amended Defence and Counterclaim in the Newcastle Claim. That document asserted in terms that after December 2015, Northern Block had stopped paying Mrs Lish the 60% royalties under the 2012 Agreement and instead paid her a fixed sum plus certain bonuses unrelated to the income from the typefaces she had designed.

The Defendants submit that there is no reason why the Unpaid Royalties Claim could not have been brought as part of the Newcastle Claim: it concerns the same parties, the same subject matter, the same agreement, the same issues and the same remedies.