Case No. IP-2021-000073

to Pixdene whether or not Paddington has complied with the RDA, the amount of any underpayment by Paddington, and the basis for such a conclusion. However, it submits there is nothing to suggest that the auditor can go further and share with Pixdene any other information, and in particular confidential or privileged information, derived from the inspection. It submits, as I have accepted, that the intention in imposing a requirement for a “third party” auditor must have been to keep Paddington’s documents and confidential information away from Pixdene.Discussion and determination52.If the parties at the time of entry into the RDA considered that Pixdene should have full access to the information that the auditor was given the right to inspect, there seems to be no reason why it would not have given Pixdene a right to inspect those documents itself. I have explained why I am satisfied that clause 5 should not be construed as giving such a right and nor should such a right be implied. 53.Whether or not there is a need to keep Pixdene away from Paddington’s information, as Pixdene submits there is not, is not relevant in my judgment. It is enough that the parties have, as I have found, agreed clause 5 in order to keep Pixdene away from Paddington’s information and allow inspection only by a third party auditor. That was their intention and the reason they agreed the language of clause 5 as they did.54.For the same reason, nor do I accept Pixdene’s submission that clause 5 is unworkable, commercially incoherent or inefficacious without implying a right for Pixdene to receive copies of the documents from the auditor. Pixdene has all the information it needs to instruct the auditor, and the context for the audit is found in the RDA. The auditor’s job is well-defined in clause 5 – to verify Paddington’s compliance with the RDA. The focus of that is, of course, to verify that Paddington has paid to Pixdene, pursuant to clause 1, 10% of the final share of the net Paddington Bear worldwide merchandising income paid by the Agent to Paddington, after payment by the Agent of all prior participations in Paddington Bear worldwide merchandising revenue and all other deductions. Accordingly, I do not understand Pixdene’s submission that it needs access to documents to ensure that the auditor “understands Pixdene’s rights” and so Pixdene can “focus the auditor’s efforts on the issues of the greatest importance to Pixdene”. Pixdene’s rights flow from the RDA, not from any other of the inspected documents, and whatever issues may be of the greatest importance to Pixdene, clause 5 only provides for inspection of Paddington’s documents pursuant to an audit right “to verify Paddington’s compliance with the RDA”.55.For those reasons, I do not consider that clause 5 provides a blanket right to Pixdene to copies of inspected documents from the auditor. 56.However clause 5 is not, in my view, entirely silent on the question of disclosure of information from the third party auditor. I am satisfied that the parties must have intended that the third party auditor permitted to inspect under clause 5 would be entitled to share with Pixdene:i)the conclusion reached on the audit (i.e. whether or not Paddington has complied with its obligations under the RDA); ii)the basis of that conclusion, and if an underpayment is found;iii)what further sums are due from Paddington; and iv)the basis of calculation of such sums; as this is implicit, in my view, in a common sense understanding of the meaning and purpose of an audit. 57.As Paddington accepts, permitting a third party auditor to inspect for the purposes of assessing compliance of its obligations to Pixdene must carry with it the intention that the auditor will report his findings. Accordingly, I am satisfied either that the reasonable person with all the background knowledge at the time would have understood the language of clause 5 to mean that the auditor would be permitted to disclose to Pixdene only such information gained from the inspection of documents as is necessary to report