Software Lock and Injunction Refusal

April 24, 2018

In Blade Motor Group Ltd v Reynolds & Reynolds Ltd [2018] EWHC 497 (Ch), the claimant (Blade) made an application for an injunction to require the defendant (R&R) to provide access to its business software, until the trial of the main action.

The parties had made a series of agreements which had led to the supply of the software and which R&R claimed could not be terminated until 2019. Blade sought to migrate to an alternative supplier in 2016; Blade wrote to R&R explaining that it required the continued support of R&R during a period of transition. Following correspondence, R&R wrote to Blade to say that it would be suspending performance of its obligations on 26 June 2017 unless payments of sums allegedly due (over £40k) were made. R&R then applied a remote lock which prevented Blade from being able to log on to the system and accessing data in a readable form.

The injunction was sought on the basis of the irreparable harm being caused to Blade’s business. Blade also, perhaps optimistically, sought rectification of the agreement so as to remove the obligation not to terminate it before 2019 on the grounds of mistake.

Mr David Stone (sitting as a Judge of the Chancery Division) approached the application for an interim injunction using the well-known test laid down in American Cyanamid Co v Ethicom Ltd [1975] AC 396. Mr Stone was not convinced that damages would not provide an adequate remedy in the event that Blade made out its primary case on the agreement (about which he was clearly sceptical). Moreover, applying the balance of convenience test and rejecting the application, perhaps influenced by his doubts about Blade’s main case, Mr Stone rejected the idea that granting the injunction was a return to the status quo, took account of the delay in bringing the claim and weighed the fact that it was open to Blade to pay the money claimed and reclaim any overpayment.