20 December 2014

Is Infringement of a Foreign Patent akin to Highway Robbery?




















Patents: Les Laboratoires Servier and another v Apotex Inc and others [2014] UKSC 55, [2014] 3 WLR 1257, [2014] WLR(D) 452, [2014] BUS LR 1217, UK Supreme Court


In Everet v. Williams (1893), 9 L.Q. Rev. 197, the highwayman John Everet sued his partner in crime Joseph Williams "for discovery, an account, and general relief" for dealing "with several gentlemen for divers watches, rings, swords, canes, hats, cloaks, horses, bridles, saddles, and other things" which they acquired "at a very cheap rate". The court dismissed the action on the ground that no action arises from a disgraceful act ("ex turpi causa non oritur actio"), fined the claimant's solicitors and ordered them to pay the defendant's costs. They got off lightly. Their client and the defendant were arrested, brought to trial for their "dealings" and hanged. You can find out more about the case in The Highwayman's Case.

Fast forward to 2008.  In  Les Laboratoires Servier and another v Apotex Inc and others  [2008] EWHC 2347 (Ch), [2009] FSR 3 (9 Oct 2008) Mr Justice Norris awarded the Apotex companies ("Apotex") £17.5 million upon the Servier group ("Servier")'s cross-undertaking in damages because the Apotex had been prevented from importing perindopril erbumine tablets from Canada and selling them in the United Kingdom by an interim injunction that was subsequently discharged (see my case note Interim Injunctions: Les Laboratoires Servier v Apotex Inc 10 Oct 2008).  However, the manufacturer of those tablets in Canada by the defendants had become unlawful when Madam Justice Snider held in Les Laboratoires Servier and others v Apotext Inc, and another 67 CPR (4th) 241; [2008] FCJ No 1094 (QL); 332 FTR 193 that such manufacture infringed a patent for the drug that had been granted to one of the Servier companies. Servier had asked Mr Justice Norris for permission to amend their points of defence in the inquiry proceedings to plead Madam Justice Snider's decision but the judge refused to allow them to do so on the grounds that they had applied for permission too late. Servier appealed to the Court of Appeal which allowed the amendment (Les Laboratoires Servier and another v Apotex Inc and others [2010] EWCA Civ 279).

By the time the appeal was heard Apotex had already received the £17.5 million that had been awarded to them by Mr Justice Norris. The effect of the Court of Appeal's decision was that those moneys had to be treated as an interim payment.  The question
"whether a patentee who has obtained an interim injunction from this court to restrain infringement of a European patent (UK) which is subsequently held invalid should compensate the defendant for losses sustained as a result of being prevented by the injunction from selling goods manufactured by the defendant in infringement of a valid foreign patent owned by the same group of companies"
came before Mr Justice Arnold in  Les Laboratoires Servier and another v Apotex Inc and others [2011] RPC 20, [2011] EWHC 730 (Pat). His Lordship held that it should not and because such claim was barred by the ex turpi cause rule and he ordered Apotex to repay the £17.5 million that they had been awarded by Mr Justice Norris. Apotext appealed to the Court of Appeal which allowed the appeal (Les Laboratoires Servier and another v Apotex Inc and others [2012] EWCA Civ 593, [2012] WLR(D) 138, [2013] RPC 21, [2013] Bus LR 80. One of the reasons why the Court of Appeal allowed the appeal was that Apotex had agreed to give credit in the English litigation for any damages that might be awarded against them in Canada. Servier appealed to the Supreme Court.

The issue before their Lordships was whether the rule that had prevented one highway robber from claiming an account from another also prevented the defendants from claiming damages for being prevented from infringing a patent in Canada.  The point was summed up neatly by Lord Sumption at paragraph [9] of his judgment:
"(1) Does the infringement of a foreign patent rights constitute a relevant illegality ("turpitude") for the purpose of the defence?
(2) If so, is Apotex seeking to found its claim on it?
(3) Is Servier entitled to take the public policy point having given an undertaking in damages?"
Another way of putting it might be "is foreign patent infringement akin to highway robbery?"

The Court's first task was to determine what is meant by turpitude? At paragraph [25] of his judgment Lord Sumption said:
"The ex turpi causa principle is concerned with claims founded on acts which are contrary to the public law of the state and engage the public interest. The paradigm case is, as I have said, a criminal act. In addition, it is concerned with a limited category of acts which, while not necessarily criminal, can conveniently be described as "quasi-criminal" because they engage the public interest in the same way. Leaving aside the rather special case of contracts prohibited by law, which can give rise to no enforceable rights, this additional category of non-criminal acts giving rise to the defence includes cases of dishonesty or corruption, which have always been regarded as engaging the public interest even in the context of purely civil disputes; some anomalous categories of misconduct, such as prostitution, which without itself being criminal are contrary to public policy and involve criminal liability on the part of secondary parties; and the infringement of statutory rules enacted for the protection of the public interest and attracting civil sanctions of a penal character, such as the competition law considered by Flaux J in Safeway Stores Ltd v Twigger [2010] 3 All ER 577."
There were some cases that suggested that the principle might be wider than that but apart from those decisions
"the researches of counsel have uncovered no cases in the long and much-litigated history of the illegality defence, in which it has been applied to acts which are neither criminal nor quasi-criminal but merely tortious or in breach of contract."
His Lordship reasoned:
"In my opinion the question what constitutes "turpitude" for the purpose of the defence depends on the legal character of the acts relied on. It means criminal acts, and what I have called quasi-criminal acts. This is because only acts in these categories engage the public interest which is the foundation of the illegality defence. Torts (other than those of which dishonesty is an essential element), breaches of contract, statutory and other civil wrongs, offend against interests which are essentially private, not public. There is no reason in such a case for the law to withhold its ordinary remedies. The public interest is sufficiently served by the availability of a system of corrective justice to regulate their consequences as between the parties affected."
He added, at paragraph [29]  that there may be "exceptional cases where even criminal and quasi-criminal acts will not constitute turpitude for the purposes of the illegality defence." In his Lordship's opinion
"the illegality defence is not engaged by the consideration that Apotex's lost profits would have been made by selling product manufactured in Canada in breach of Servier's Canadian patent. A patent is of course a public grant of the state. But it does not follow that the public interest is engaged by a breach of the patentee's rights. The effect of the grant is simply to give rise to private rights of a character no different in principle from contractual rights or rights founded on breaches of statutory duty or other torts. The only relevant interest affected is that of the patentee, and that is sufficiently vindicated by the availability of damages for the infringements in Canada, which will be deducted from any recovery under Servier's undertaking in England. There is no public policy which could justify in addition the forfeiture of Apotex's rights."
Having decided that point, the other two issues listed at paragraph [9] of Lord Sumption's judgment did not arise.

Lord Mance agreed with Lord Sumption that the appeal should fail on the simple basis that the manufacture and supply of product in breach of the Canadian patent would not have involved turpitude such as to engage the maxim ex turpi cause action non oritur. 

Lord Toulson thought that Servier was attempting to extend the doctrine of illegality beyond any previously reported decision in circumstances where he could see no good public policy reason to do so.

The conclusion of the Supreme Court was that infringing a foreign patent is not like highway robbery. If anyone wants to discuss this fascinating case, public policy, interim injunctions or patent law in particular, he or she should not hesitate to call me on 020 7404 5252 during office hours or message me through my contact form.

13 December 2014

What is the definition of "design" in s.213 (2) of the Copyright, Designs and Patents Act 1988 following the deletion of "any aspect of" from the sub-section

Jane Lambert














In DKH Retail Ltd v H. Young (Operations) Ltd the claimant, which claimed design rights and unregistered Community design in relation to the front portion and hood of a range of gilets sold under the product name Academy under the Superdry brand sued the defendant for importing and selling a range of Glaisdale gilets under the Animal brand. The defendant raised the usual defences on subsistence, ownership and infringement. 

This case is interesting because it is the first judicial analysis of the effect of the deletion by s.1 (1) of the Intellectual Property Act 2014 of the words "any aspect of" from the definition of "design" in s.213 (2) of the Copyright, Designs and Patents Act 1988. I had discussed that deletion in "How the Intellectual Property Act 2014 will change British Unregistered Design Right Law" 11 June 2014 and "The Intellectual Property Bill 2013" 28 May 2013.  Even though the case began before the Intellectual Property Act 2014 received royal assent both parties agreed that "design" for the purposes of this litigation had to be construed in accordance with the new definition:
"In this Part “design” means the design of ... the shape or configuration (whether internal or external) of the whole or part of an article."
Judge Hacon began his task by determining what the deleted words used to mean.  He considered Lord Justice Jacob's discussion at paragraphs [22] and [23] of Dyson Ltd v Qualtex (UK) Ltd [2006] RPC 31, [2006] EWCA Civ 166 and concluded at paragraph [12] of his judgment that
"........ the reason for the extreme width of the definition of 'design', as Jacob LJ saw it, was that the definition of 'design' including the shape or configuration of any part of an article, in contrast with copyright which subsists in the copyright work as a whole. Jacob LJ appears to suggest that "any aspect of" in s.213(2) has a limiting function, that is to say it excludes from the definition of 'design' a feature which is neither discernible nor recognisable."
The problem  with that interpretation was that the deletion of "any aspect of" from s.213 (2) would extend the scope of what qualifies as a design. That would be inconsistent with paragraph 10 of the explanatory note which stated
"Subsection (1) limits the protection for trivial features of designs, by making sure that protection does not extend to "any aspect" of the shape or configuration of the whole or part of an article. It is expected that this will reduce the tendency to overstate the breadth of unregistered design right and the uncertainty this creates, particularly in relation to actions before courts."
Counsel for the claimant had argued that the deletion of "any aspect of" from the definition had made no difference to the definition of "design" at all but the judge rejected that contention as  contrary to the usual principles of statutory construction. He thought he must assume that the subsection makes a difference and, guided by the explanatory note, he must further assume that the scope of what can constitute a design under s.213 (2) has narrowed.  He said at paragraph [14]:
"The words "any aspect of" permitted variations of what a party could claim as a design which are no longer available. Spotting why that might be is not easily done just by looking at the words of s.213 (2)."
The judge also considered the definition of "Community design" in art 3 of the Community Design Regulation and while there was
"no reason to suppose that Parliament intended the new definition of 'design' in s.213 (2) to be identical to that in the Design Regulation and plainly it isn't ...... for policy reasons of consistency where that can be achieved, there is much to be said for treating "the design of the shape or configuration (whether internal or external) of the whole or part of an article" as having a meaning as close as possible to "the appearance of the whole or part of a product"
Accordingly
"One route to such a result would be to interpret the effect of s.1 (1) of the 2014 Act as being that it no longer permits a claim to unregistered design right to extend to designs other than those specifically embodied in all or part of the claimant's article, i.e. no more UK unregistered design rights in abstract designs (see above)."
In any event, it made no difference to the outcome of the claim before His Honour.

The rest of the case turned very much on its own facts. The judge concluded that design right and unregistered Community design  did subsist in the features of the gilet relief upon, that such design rights belonged to the claimant and that those rights had been infringed by importation and sale of the gilet. However, the defendants only had knowledge that the gilet was an infringing article 14 days after receiving the letter before action and for that reason the judge would not award additional damages pursuant to art 13 (1) of the Entitlement Directive.

11 December 2014

Is this a copy? John Kaldor Fabricmaker UK Ltd v Lee Ann Fashions Ltd

In John Kaldor Fabricmaker UK Ltd v Lee Ann Fashions Ltd[2014] EWHC 3779 (IPEC) (21 Nov 2014) Judge Hacon had to decide whether the fabric used to make the dress in the bottom photo was a copy of the fabric in the top one.

The Facts
Some time before the beginning of Aug 2012 Lee Ann Fashions Ltd. ("Lee Ann") received the following design brief from Marks & Spencer:
"Print Direction 
More primitive wood blocking prints, bold batiks, multi-stripes and tribal prints. Often these are anchored with stone and Black with highlights of the colour pops of the collection"

On 2 Aug 2012 employees from Lee Ann met a sales executive of John Kaldor Fabricmaker UK Ltd ("Kaldor"). Lee Ann invited Kaldor to supply samples of its materials so that Kaldor could bid for Marks & Spencer's order.

Kaldor supplied 22 samples including 4 metres of the fabric in Annex 1. Lee Ann offered to supply Marks & Spencer dresses made from that fabric. The offer was accepted and Lee Ann won Marks's contract to supply it with tribal print dresses for its "Per Una" range.

Lee Ann asked Kaldor to quote for supplying the fabric on 25 Sept. For some reason or other, Lee Ann decided not to order from Kaldor and instructed one of its own designers called Rachel Vance ("Mrs Vance") to design a fabric which would satisfy Marks & Spencer's design brief.

The judge explained what happened at paragraph [36] of his judgment:
"Mrs Vance had earlier created tribal prints which were collected in her computer archive. She selected one of these as her starting point. It was referred to as 'the Earlier Design'. It contained a number shapes in juxtaposition to create an African 'tribal' look. Mrs Vance selected the triangles, chevrons and 'bow tie and dot' shapes. Two triangles were merged to create a fourth, diamond shape. Using Photoshop the four individual shapes were distorted to make them more individual. 'Swatch tiles' of each of the four shapes were created and juxtaposed. The tiles were distorted and stretched to alter the design. A 'repeat tile' was then created which formed the basic unit which is repeated to create the design. Finally colours were added using computer brushstrokes. The design was given the number RAS-790 and six colour versions were identified as RAS-790A to F. Images of these were sent to Mark & Spencer. They selected RAS-790C, which was the design to which the fabric alleged to infringe was later made. All this was done on 27 September 2012."
The Claim
Kaldor sued Lee Ann for infringement of copyright and unregistered Community design right.  By the time the action came to trial it was common ground that the fabric in Annex 1 was an original artistic work in which copyright subsists pursuant to s. 1 (1) (a) of the Copyright Designs and Patents Act 1988 ("CDPA") and that the design of that fabric was also an "unregistered Community design" within the meaning of art 1 (2) (a) of the Community Design Regulation (Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs (OJ EC No L 3 of 5.1.2002, p. 1)).

Copyright
At paragraph [10] of his judgment His Honour directed himself as follows:
"Primary infringement of copyright pursuant to section 16 of the Copyright, Designs and Patents Act 1988 requires the claimant to establish that (1) the alleged infringing article was copied, directly or indirectly, from the copyright work and (2) the act of copying was done in relation to the work as a whole or any substantial part of it."
In most cases claimants have to point to similarities between the copyright work and the alleged copy and also to the defendant's access to the original to raise a presumption of copying. It is then up to a defendant to rebut that presumption by explaining away the similarities or showing that the alleged copy was created independently.

Referring to Stoddard International plc v William Lomas Carpets Ltd [2001] FSR 44, Designer Guild Limited v. Russell Williams (Textiles) Limited (Trading As Washington Dc)  [2000] UKHL 58, [2000] WLR 2416, [2001] 1 All ER 700, [2001] ECDR 10, [2001] FSR 11, [2001] FSR 113, [2000] 1 WLR 2416 (23 Nov 2000) and C-5/08 Infopaq International A/S v Danske Dagblades Forening  ECLI:EU:C:2009:465, [2009] ECDR 16, [2010] FSR 20, [2009] ECR I-6569, EU:C:2009:465, [2012] Bus LR 102, [2009] EUECJ C-5/08 (16 July 2009) Judge Hacon discerned the following guidance:
"(1) The first stage is to consider whether the claimant has established a prima facie inference of direct or indirect copying by reason of the similarities between the copyright work and the defendant's work.
(2) Similarities which constitute the expression of ideas that have no connection with the literary, dramatic, musical or artistic nature of the work are to be disregarded.
(3) Similarities not thus excluded but which are shown to be commonplace give rise to little or no inference of copying; the nearer a similarity approaches the strikingly original end of the spectrum, the greater weight it carries in supporting an inference of copying.
(4) If the claimant establishes a prima facie case of inferred copying, this may be rebutted by the defendant's evidence of independent design. The stronger the prima facie case, the more cogent the defendant's evidence must be to rebut the inference.
(5) If there is no finding of copying, there is no infringement. If there is a finding of fact that there has been copying, the next stage is to consider whether copying was done either in relation to the copyright work as a whole or any substantial part of it.
(6) Designers Guild sanctions two alternative approaches to the question of substantial part. They are alternatives because neither was expressly endorsed by a majority. The first is to disregard the defendant's work and to assess whether the similarities from which an inference of copying was drawn constitute a substantial part of the copyright work. This is a qualitative, not a quantitative assessment. The second, which applies only in an instance of altered copying, is to determine whether the infringer has incorporated a substantial part of the intellectual creation of the author of the work. In many cases the difference between the two approaches to an allegation of altered copying may be limited.
(7) To the extent that it has not already been excluded under step (3), a commonplace similarity can in any event make no contribution to any substantial part of the copyright work alleged to have been copied since it is not capable of attracting copyright protection.
(8) Assessment of whether there has been copying of a substantial part of the copyright work is a necessary and distinct step in the determination of whether the defendant has infringed. However, where copying has been established, on the facts it may be that this will almost inevitably lead to the conclusion that a substantial part of the copyright work has been copied. This may be influenced by the degree to which the finding of copying depended on the similarities between the two works."
Unregistered Community Design
Art 19 (2) of the Community Design Regulation confers on the holder of an unregistered Community design the same right to prevent "the making, offering, putting on the market, importing, exporting or using of a product in which the design is incorporated or to which it is applied, or stocking such a product for those purposes "provided that the contested use results from copying the protected design." The article also provides that
"The contested use shall not be deemed to result from copying the protected design if it results from an independent work of creation by a designer who may be reasonably thought not to be familiar with the design made available to the public by the holder."
As the parties had agreed that an unregistered Community design subsisted in the design in Annex 1 and that the fabric used to make the dress in Annex 2 did not produce a different overall impression on the informed user (in this case "a person with a keen fashion sense and a good knowledge of the design of prints for women's fashion wear including tops, skirts and dresses") the only issue was whether the fabric in Annex 2 was the result of copying.

The Similarities
Kaldor alleged the following similarities between Annex 2 and Annex 1 in its particulars of claim:
"(a) the lines, patterns, contours, colours, shapes and dimensions (including relative dimensions) of the repeated small diamond block shapes;
(b) the lines, patterns, contours, colours, shapes and dimensions (including relative dimensions) of the repeated small triangle block shapes;
(c) the lines, patterns, contours, colours, shapes of the background pattern of the design being a mix of contrasting colours which appear to be "feathered" onto the fabric;
(d) the predominant use of four colours in the background pattern;
(e) the repeated use of diamond shapes in larger areas and triangles in smaller and fill-in areas on sections of the pattern;
(f) the repeated use of patched and spliced sections of the pattern in chunks on the fabric, interlocking with different repeated pattern sections at different angles, to build a multi-directional repeated pattern."
In comparing the designs Judge Hacon took into account the "design corpus" - that is to say, both sides' set of 10 designs to represent the design corpus - even though the design corpus is strictly relevant only to issues regarding Community design. He did so because he believed that they should be considered also in this context in order to give him some objective idea of where design features fall on the spectrum between commonplace and strikingly original. After considering the two designs, the corpus and the pleaded list of similarities the learned judge concluded that there was "a prima facie possibility of copying", but the possibility was "neither strong nor negligible".

The Rebuttal
Kaldor argued that the similarities between the fabrics resulted either from "conscious copying", "sub-conscious copying" or "indirect copying". There were discrepancies in Mrs Vance's evidence but she acknowledged those and corrected them. After observing her in the witness box the judge concluded at paragraph [48] that there has been no copying:
"The arguments advanced on behalf of John Kaldor are not in my view collectively enough for me to reject the clear evidence given by Mrs Vance that she created the design of the LA Fabric independently of the conscious influence of the JK Fabric. With regard to indirect copying, Mrs Vance said that she could not remember the precise words of instruction she was given by Ms Cook or the other individual at Lee Ann which led to her creation of the LA Fabric. She also said that she was given a general design brief, including the requirement of a tribal look, as opposed to specific instructions, by way of the starting point for her design process. She said that she came up with the design herself. I have no good and sufficient reason to reject that evidence. Finally there is Lee Ann's allegation of unconscious copying. That argument could only be sustained by a strong inference of copying from similarities between the two designs. As I have already stated, I do not find those similarities sufficiently compelling from which to infer a strong inference of copying."
In the absence of copying the claims for both infringement of copyright and infringement of unregistered Community design failed.

Comment
This case raises a number of interesting points and lessons.

The first is that Kaldor would have won had it registered its fabric design as a registered design in the UK under the Registered Designs Act 1949 or as a registered Community resign for the while EU under the Community Design Regulation as there was no dispute that the fabric used to make the dress in Annex 2 did not produce a different overall impression on the informed user as the fabric in Annex 1. Since there is no examination for design or Community design registration in either the Intellectual Property Office or the Office for Harmonization in the Internal Market design registration is a relatively cheap and easy exercise.

The second point is that the parties focused on essentials. At paragraph [7] the judge said:
"The parties are to be commended in taking a realistic view of which issues were really at stake. There was some judicial pressure exerted at the case management conference regarding subsistence and ownership of copyright but even allowing for that, the parties' conduct of these proceedings was both efficient and in my view rational."
At paragraph [8] he added:
"Without identifying particular proceedings, I should also record that in the IPEC what some regard as a traditional approach to litigation, that is to say taking every conceivable point on the chance that something might gain traction, is never appropriate."
All I would venture to add is that as it is now part of the overriding objective in CPR 1.1 (1) to deal with cases at "proportionate cost" His Honour's remarks could apply to all civil litigation and not just to proceedings in the Intellectual Property Enterprise Court.

Thirdly, neither party nor the judge raised the red bus case (Temple Island Collections Ltd v New English Teas Ltd and another [2012] EWPCC 1 (12 Jan 2012) which I discussed in "Copyright in Photographs: Temple Island Collections and Creation Records" 15 Jan 2012) even though Mrs Vance used Photoshop to create her designs just as the defendant did with its photo of the red bus in Temple Island. As the defendant's photo was taken independently of the claimant's it must have been the manipulation with Photoshop to enhance similarities that made the difference. It is not clear why that point was not discussed but my guess is that it is because of a consensus among intellectual property lawyers that Temple Island stands on its own very special facts.

Further Information
In the run up to Christmas there is a great temptation to copy in the fashion, toy and novelties trade and hence a lot of cases like John Kaldor. At one time the motions court (the old name for the Chancery interim applications court) was chockablok with applications for interim injunctions against market traders and discount stores for offloading lookalikes and knockoffs of the latest fashion item or craze. Rising litigation costs and the risk of having to pay the successful party's costs if the application is unsuccessful has cooled designers' ardour for this sort of relief but not extinguished it altogether. As an injunction is the relief that a designer really needs the small claims track of IPEC provides a cheap and relatively risk free means of getting one. If anyone wants to discuss this case or copyright or registered or unregistered Community design right infringement in general he or she can call me on 020 7404 5252 during office hours or use my contact form.

24 November 2014

Eli Lilly and Co. v Government of Canada: Latest Developments














I mentioned Eli Lilly's claim against Canada for compensation under art 1110 of the North American Free Trade Agreement ("NAFTA") in Bilateral Investment Treaties: Claiming Compensation from Foreign Governments under Bilateral Investment Treaties for failing to provide adequate IP Protection 27 July 2013 and Bilateral Investment Treaties: Eli Lilly and Co. v Government of Canada 2 Jan 2014 as well as my article "Bilateral Investment Treaties: A Remedy for SME?" which was published in Issue 12 of Volume 35 of the European Intellectual Property Review on page 759.

Following Eli Lilly's Notice of Arbitration which I mentioned in January the parties appointed Professor Albert Jan van den Berg, Mr Gary Born and Sir Daniel Bethlehem KCMG, QC as arbitrators. Eli Lilly designated its Notice of Arbitration as its statement of claim by a letter from its lawyers dated 14 May 2014. The arbitrators have made a procedural order dated 26 May 2014

  • designating the International Centre for the Settlement of Investment Disputes as the administering authority;
  • Washington DC as the seat of the arbitration;
  • applying the UNCITRAL Arbitration Rules except as modified by NAFTA;
  • proceeding in English;
  • providing for liability and damages to be determined separately; and
  • setting out a timetable for disclosure, exchange of evidence and final hearing which should take place 2016.
The Canadian government filed a defence on 30 July 2016 denying breach of any international obligation under NAFTA or otherwise. Eli Lilly served its memorial (lengthy written submissions) on 29 July 2014.
I will advise you what happens.

17 November 2014

Software Patents - Lantana v The Comptroller









Lantana Ltd. ("Lantana") is a California company that offers communication cable services, telephone systems and services and computer and data network services mainly to customers in Southern California. One of the company's employees invented a "method, systems, and computer program products for retrieving a file of machine readable data" for which Lantana applied for patents in the USA and around the world under the Patent Co-operation Treaty.

The Invention 
The invention is described in the abstract of the application as follows:


"A user, wishing to retrieve a file of machine-readable data from a remote machine-readable data storage device, transmits a first e-mail message from a local station to a remote station via a packet switched network. The first e-mail message includes a first machine-readable instruction and a first machine-readable retrieval criterion. The remote station receives the first e-mail message from the packet switched network. The remote station parses the first e-mail message to determine if it includes the first machine-readable instruction and the first machine-readable retrieval criterion. The remote station executes the first machine-readable instruction to transmit a second e-mail message from the remote station to the local station. The second e-mail message includes the file as an attachment. The local station receives the second e-mail message from the packet switched network."
One of the countries for which patent protection was sought was the United Kingdom. When the application was examined by the Intellectual Property Office the examiner found that the invention was excluded from patentability as a program for a computer as such.

The Law
It will be recalled that s.1 (2) of the Patents Act 1977 declares that:
"the following (among other things) are not inventions for the purposes of this Act, that is to say, anything which consists of -
....................................................
(c) a scheme, rule or method for performing a mental act, playing a game or doing business, or a program for a computer."
However, that exclusion is subject to the following exception:
"the foregoing provision shall prevent anything from being treated as an invention for the purposes of this Act only to the extent that a patent or application for a patent relates to that thing as such."
The effect of these provisions was summarized neatly by Lady Justice Arden at paragraph [7] of her judgment when Lantana's appeal against the refusal of Mr Justice Birss (Lantana Ltd v The Comptroller-General of Patents, Designs and Trade Marks [2013] EWHC 2673 (Pat) (4 Sept 2013) to disturb the Comptroller's decision to uphold the examiner's objection (Re Lantana Ltd.'s application BL O/056/13 4 Feb 2013) came before the Court of Appeal (Lantana Ltd v The Comptroller General of Patents, Design And Trade Marks [2014] EWCA Civ 1463 (13 Nov 2014):
"Computer programs are not therefore wholly excluded. They are excluded unless the applicant shows that his application goes beyond an application for a computer program "as such".
Her Ladyship referred to computer programs which are within the exclusion and not patentable, as 'excluded matter'".

History
Lantana appealed to the Comptroller who upheld the examiner on the grounds that the contribution made by the invention fell solely within excluded matter and that the contribution did not have a relevant technical effect.  The company appealed to Mr Justice Birss contending that the contribution made by the invention was technical in nature and not within the exclusions on patentability because:
"(i)  telecommunications messages are generated by computers forming part of a telecommunications network, and transmitted from one computer to another over the network;
(ii)  one computer remotely controls the processing performed by another via a telecommunications network;
(iii) the result of this remote control is the transmission of files and information from the remote computer over a telecommunications network to the local computer;
(iv) this remote control and transmission is achieved in a manner which does not require a continuous connection between the two computers."
Between paragraphs [32] and [34] of his judgement the judge considered the 4 effects relied upon:
" [32]  ......... The first one is no more than the fact that the invention involves communication between two computers over the internet. This cannot help. At the priority date in 2008 (as today) this was entirely conventional and cannot form part of anything contributed by the invention. The same goes for the third effect, that files or information are transferred from one computer to another over a telecommunications network.
[33] The second effect is that one computer remotely controls another. I do not accept this as a fair characterisation of what is going on. If one computer really was exercising control over another in some way that might be a genuine technical contribution but all that is happening here is one computer is sending an email message to another. That is not control at all. The first email message includes machine readable instructions directed to the remote computer. But this is not something these inventors have contributed to the art at all. Conventional examples of emails which include code which can be executed by the computer receiving the message were mentioned at the hearing. An example can be found in figure 5 of one of the cited prior art documents (US Application 2006/0059129 A1). Mr Beresford submitted that this conflicted with the acceptance by the examiner that the claim was novel and non-obvious. I do not agree. Those matters apply to the claim as a whole, that is to say the entire combination of features. The point here is a different one, i.e. that the idea of an email message containing machine readable instructions as a contribution to the art in this case is wrong. The computers in the claim are not operating in a new way and the third signpost does not assist the applicant.
[34] The fourth effect relied on is said to be that the remote control and transmission is achieved in a manner which does not require a continuous connection between the two computers. This is said to be a solution to the problem of the need for continuous connections described in the patent. The Hearing Officer dealt with this point in paragraph 28 of the Decision (quoted above). He characterised the use of email not as solving the problem but as circumventing it."
Looking at the invention overall, His Lordship concluded at paragraph [41]:
"In substance the claim relates to computer software running on conventional computers connected by a conventional network. The task the software performs moves data from one computer to another using a conventional technique for carrying out that task, i.e. email. The context in which this arises is that accessing remote computers via continuous connections can be problematic but this is not a technical solution to those problems, it avoids them, but does so using a conventional technique. The claim has been found to be novel and inventive by the examiner and in that sense it makes a contribution of some kind to the art, but the applicant has been unable to identify anything which this claim can fairly be said to contribute which has a technical character. In my judgment this claim is to unpatentable subject matter and is contrary to s1(2) of the Act / Art 52 EPC."
The Appeal
Lantana appealed to the Court of Appeal on grounds that Lord Justice Kitchin summarized in paragraphs [61] to [63] of his judgment:
"[61] ............ Birss J fell into error in the following fundamental respects. First, in considering the computer program exclusion from patentability, he failed to consider the claimed invention as a whole and instead dissected it into various components and then dismissed them one by one as irrelevant to the issue of technical contribution on the ground that each was known at the priority date. This, Mr Beresford continued, was wrong in law and that, in assessing the technical contribution, the judge ought rather to have taken into account the whole combination of features specified in the claim, and all of the technical effects that combination provides, regardless of whether those features and effects were new or old.
[62] Second, and in consequence, Birss J wrongly disregarded features of the claim because he considered they were not novel and so did not form part of the contribution.
[63] Third, when eventually Birss J did consider the claim as a whole, he wrongly reasoned that the invention uses the conventional technique of email for moving data from one computer to another. This was inconsistent with the position taken by the Comptroller in not raising a novelty or inventive step objection. The judge ought to have found that the invention does provide a technical contribution because, using novel and inventive processing, it generates emails, transfers files from one computer to another across a telecommunications network, and does so by causing the local computer to control the remote computer, all with the advantageous consequence that a user may work at a local computer on a document stored at a remote computer without the need for a continuous internet connection."
The First Ground
Lady Justice Arden dealt with Lantana's first submission shortly at  paragraphs [31] and [32]:
["31] ...... In my judgment, the judge could not determine whether there was a relevant technical step outside the computer program without breaking the invention down into its constituent parts. In fact he also looked separately at the whole of the invention as well, but his assessment overall does not assist Lantana. He summarised his views on the invention overall as follows:
'In substance the claim relates to computer software running on conventional computers connected by a conventional network' (judgment, paragraph 48).
[32] This was the correct approach in law: see HTC v Apple at paragraphs [46] and [48] ......"
Although Lord Justice Kitchin accepted Lantana's submission that
"it is the claim as a whole which must be considered when assessing the contribution which the invention has made, and that it is not permissible simply to cut the claim into pieces and then consider those pieces separately and without regard to the way they interact with each other" 
he could not accept that Mr Justice Birss had wrongly dissected the claim into various components as Lantana had suggested. It was true that he did consider the invention by reference to various signposts and that he also addressed each of the alleged technical effects relied upon by Lantana but he could not be criticized for taking that course for that is what he had been asked to do. Further, he then stood back and considered the claim as a whole. His analysis led him to conclude that the presence of machine readable instructions in an email directed to a remote computer was not new at the priority date. Further, the invention consisted entirely of software running on a conventional computer arrangement, and the computers themselves were not operating in a new way. The increase in reliability resulted from the use of email rather than a new method or system of communication. Overall, the invention avoided the problem of accessing a remote computer by a continuous connection, but it did so by using a conventional technique. The judge was right to conclude that the overall contribution which the invention had made was therefore wholly within excluded subject matter and was not technical in nature.

The Second Ground
Lord Justice Kitchin said at paragraph [69] that Mr Justice Birss was required to identify the actual contribution made by the invention, and that is precisely what he and the hearing officer sought to do. The judge did not fall into error. At paragraph [38] Lady Justice Arden said:
"In the second step, the relevant technical step was the fact that the computers communicated with each other, but they did so in a way which was unquestionably conventional, namely via the internet, so the judge was right to hold that this was not a relevant technical contribution. He had to look to see if the remaining steps made a relevant technical contribution."
The Third Ground
Both Lady Justice Arden and Lord Justice Kitchin rejected rejected Lantana's submission that the judgfe;s reasoning conflicted with the hearing officer's. Lady Justice Arden observed that there was no technical contribution outside the computer program. The transfer of data and recovery of the file by an automatic email were not inventive steps in themselves.

Lady Justice Gloster agreed with both Lady Justice Arden and Lord Justice Kitchin. Thus, the Court of Appeal upheld Mr Justice Birss's decision.

Comment
Lady Justice Arden reminds us at paragraph [53] that it is not the fact that an invention relates to a computer program that renders it un-patentable. The exclusion is not so worded. It is worded as a partial exclusion. The invention must make some technical contribution over and above that provided by the program itself, such as an improvement in the working of the computer. Her judgment reviews many of the decisions of the English courts (and in passing the Boards of Appeal of the European Patent Office) many of which I have written about in this blog and sets out the methodology for identifying a technical contribution. It was not the first decision to do that but it is one of the clearest. I have often thought when writing case notes on those decisions that this must be the case that settles the issue for good but then a case like this one comes on and goes all the way to the Court of Appeal.

If anyone wants to discuss this case, software patents or excluded matter in general he or she should give me a ring during office hours on 020 7404 5252 or message me through my contact form.

Further Reading
13 May 2013 Jane Lambert Software Patents: HTC Europe Co Ltd v Apple Inc
2 Jan 2012  Jane Lambert  Patentability of Computer Programs: Halliburton Energy and Protecting Kids
17 Jan 2010 Jane Lambert Patents: Fisher Rosemount Systems Inc.'s Application
16 Jan 2009  Jane Lambert  Software Patents: January Patents Limited's Application
29 Dec 2008 Software Patents: New Guidance from the IPO
11 Nov 2008 Jane Lambert Patents: Software Protection after Symbian and Bilski
9 Oct 2008 Jane Lambert  Software Patents: Here we go again
23 Feb 2007 Jane Lambert  Patents: More Macrossan Fallout
19 Feb 2007 Jane Lambert Patents: The Macrossan Aftermath
13 Feb 2007 Jane Lambert  Patents: Macrossan v Controller-General of Patents, Designs and Trade Marks
5 Apr 2006 Simon Hart  Patents: Re Macrossan's Application - Guest Contribution by Simon Hart
14 Sep 2005 Jane Lambert  Software Patents Revisited
30 Aug 2005  Jane Lambert  Software Patents: Call for EP Resolution

08 November 2014

Inquiries as to Damages in the Intellectual Property Enterprise Court: The National Guild of Removers and Storers Ltd v Statham and Others





The National Guild of Removers and Storers is a trade association for the removal industry. According to its website
"The Guild's priority has always been, and remains, consumer protection in an industry where there are no specific laws to protect the moving public"
and its efforts in  respect of consumer protection have been recognized by Which.  As a result the Guild has a good reputation among the public making it advantageous to become a member.  The Guild has a number of trade marks which it allows its members to reproduce on their stationery, marketing literature and websites for so long as they remain members of the Guild.

When a remover ceases to be a member of the Guild it is required to remove the trade mark and references to the Guild immediately. If it fails to do so the Guild sues it for trade mark infringement or passing off. The Guild has brought a number of infringement proceedings over the years against its former members and the damages that have been awarded to it have been quite heavy.   I have blogged about two of those cases in Assessment of Damages: National Guild of Removers & Storers Ltd v Silveria 13 Nov 2010 and Why we needed to reform the Patents County Court: Deakin and National Guild 8 March 2011.

In The National Guild of Removers and Storers Ltd v Statham and Others [2014] EWHC 3572 (IPEC) (5 Nov 2014) the Guild claimed damages of £26,866.77 from a husband and wife removal firm in Wrexham which had omitted to remove a reference to the Guild in their listing on a third party website.  That entry had remained unnoticed between 2010 and 2013. The partners of that firm, Mr and Mrs Statham, said that
"the relevant pages of the website were only ever viewed by four unique users, all on the same day (25 March 2013), and these users and thus the only people who ever saw the pages were NGRS's employees and its lawyers and .... the Stathams arranged for the removal of the representations on the same day they received the letter before action, 15 April 2013."
The Guild did not accept that that was the case and argued that it would have made no difference even if it were and that the defendants had to pay the going rate.  Mr and Mrs Statham did not resist an application for summary judgment under CPR Part 24. Mr Justice Birss ordered an inquiry as to damages which came on before His Honour Judge Hacon.

Judge Hacon reviewed his predecessor's judgments in Silveria and Jones but declined to follow them. He reminded himself of the principles for determining the royalty that would have been agreed between a wiling licensor and willing licensee negotiating at arms' length which I listed in Inquiries as to Damages in the Intellectual Property Enterprise Court: Henderson v All Around the World Recordings Ltd. 5 Nov 2014. Applying those principles he directed himself as follows:
"The hypothesis with which I must begin is that immediately before the termination of the Stathams' membership on 13 October 2010 they entered into negotiations with NGRS for a licence to cover the use which the Stathams made of the NGRS name over the next two and a half years. Since both sides are to be taken to be willing to enter into a licence, I must assume that both would have been conciliatory to that extent."
He reasoned that the claimants would not be less than the annual membership fee and that the defendants would have accepted a licence on those terms.  As the defendants had been charged no more than  £1,800 per year for membership of the Guild the judge awarded damages at £5,200.

Judge Hacon's methodology is simple, systematic, fair and grounded in authority. It will not be easy to challenge on appeal.  Should anyone wish to discuss this judgment or the assessment of damages in general  he or she should call me on 020 7404 5252 during normal office hours or message me through my contact form.

05 November 2014

Inquiries as to Damages in the Intellectual Property Enterprise Court: Henderson v All Around the World Recordings Ltd.

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I last discussed this litigation in Success Fees and ATE Premiums in the Patents County Court: Henderson v All Around the World Recordings Ltd 4 May 2013. I set out the basic facts in my case note:
"This was an action for infringement of a performer's rights which Judge Birss QC (as he then was) decided in Henderson v All Around the World Recordings Ltd and Another [2013] EWPCC 7 (13 Feb 2013).......  She had not been entirely successful and the costs of an unsuccessful copyright claim and half the costs of an application were awarded against her but she had succeeded overall."
The claimant had entered a conditional fee agreement with specialist solicitors and counsel because it was the only way she could bring this litigation. Her total costs and disbursements including success fees and after-the-event premiums would have been £232,676.20 had they been allowed but Judge Birss QC (as he then was) awarded her only £52,484.25.It followed that the balance would have to come from whatever moneys she might receive on an inquiry as to damages or an account of profits.

It is worth explaining at this stage to readers who are not lawyers and indeed lawyers who do not practise in England or Wales or specialize in intellectual property law non-specialist lawyers that intellectual property cases usually proceed in two stages in this country.  The first stage is the determination of liability which may require a hearing with oral evidence from witnesses known as a "trial". The second stage, which typically takes place a year after trial, is the assessment of the money that is due to the claimant which may be damages (compensation for his loss) which are determined at a hearing called an "inquiry" or an account of profits (surrender of the wrongdoer's ill gotten gains).  It is a fundamental principle of English law that a successful claimant can have damages or an account of profits or not both. The claimant will, of course, opt for the remedy that brings him more money but in most cases he will not know or even care what that is until after trial,   In this case, the claimant opted for damages.  Judge Birss QC ordered an inquiry which came on before His Honour Judge Hacon in Henderson v All Around the World Recordings Ltd [2014] EWHC 3087 (IPEC) (3 Oct 2014).

When a judge orders an inquiry he usually directs the claimant to serve points of claim on the defendant pursuant to paragraph 5 of PD40A - Accounts, Inquiries etc.  These are a type of pleading or statement of case where the claimant sets out his claim for money.   They are ordered because pleas for damages tend to be very short in the claimant's particulars of claim. The formula that I tend to use goes something like this:
"The claimant has suffered loss and/or damage as a result of the defendant's wrongdoing the precise nature and full extent of which can only be determined upon an inquiry."
It is usually necessary to prove that the defendant has suffered some kind of loss or damage at trial especially in causes of action like passing off where damages is one of the elements of the cause of action but there is no need to go into any detail.  The only exception is where the claimant seeks additional damages in a copyright, rights in performances or design right claim because paragraph 22.1 of the Part 63 Practice Direction - Intellectual Property Claims ("PD63") requires these to be pleased in the particulars of claim.

In this case the claimant claimed damages under the following heads:

(1)  Loss of royalties from a record deal other than one with the defendant record company;
(2)  Further damages under reg. 3 of The Intellectual Property (Enforcement, etc.) Regulations 2006 SI 2006 No 1028 ("the enforcement regulations"); and
(3) additional damages pursuant to s.191J (2) of the Copyright, Designs and Patents Act 1988 ("CDPA").

In his skeleton argument and oral submissions the claimant modified the first head into a claim for
"royalties that would have been paid had there been a licence which would have made the infringing acts lawful, negotiated between willing licensor and willing licensee, sometimes called the 'user principle')."
Before the inquiry the judge struck out allegations in the points of claim seeking damages for "unfair profits" under the enforcement regulations since that was tantamount to a claim for profits as well as damages which (as I have observed above) is not allowed in English law and additional damages since she had not pleaded those in her particulars of claim as required by para. 22 .1 of PD63.  The claimant applied for the allegations to be restored and as the defendant had addressed both points in its skeleton argument the judge allowed argument on both points which is perhaps just as well for we now have a definitive statement of the law on those points from Judge Hacon.

As to the general law relating to inquiries as to damages the judge referred to his previous decision in SDL Limited v Next Row Limited [2014] EWHC 2084 (IPEC) at paragraph [31]:
I derive the following principles from authorities in relation to an inquiry as to damages:
(1) A successful claimant is entitled, by way of compensation, to that sum of money which will put him in the same position he would have been in if he had not sustained the wrong, see Livingstone v Rawyards Coal Co. (1880) 5 App.Cas., 25 per Lord Blackburn at 39.
(2) The claimant has the burden of proving the loss, see General Tire and Rubber Company v Firestone Tyre and Rubber Company Limited [1976] RPC 197, at 212.
(3) The defendant being a wrongdoer, damages should be liberally assessed but the object is to compensate the claimant, not punish the defendant, see General Tire at p.212.
(4) The claimant is entitled to recover loss that was (i) foreseeable, (ii) caused by the wrong and (iii) not excluded from recovery by public or social policy, see Gerber Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443, at 452.
(5) In relation to causation, it is not enough for the claimant to show that the loss would not have occurred but for the tort. The tort must be, as a matter of common sense, a cause of the loss. It is not necessary for the tort to be the sole or dominant cause of the loss, see Gerber at p.452.
(6) An inquiry will generally require the court to make an assessment of what would have happened had the tort not been committed and to compare that with what actually happened. It may also require the court to make a comparison between, on the one hand, future events that would have been expected to occur had the tort not been committed and, on the other hand, events that are expected to occur, the tort having been committed. Not much in the way of accuracy is to be expected bearing in mind all the uncertainties of quantification. See Gerber at first instance [1995] RPC 383, per Jacob J, at 395-396.
(7) Where the claimant has to prove a causal link between an act done by the defendant and the loss sustained by the claimant, the court must determine such causation on the balance of probabilities. If on balance the act caused the loss, the claimant is entitled to be compensated in full for the loss. It is irrelevant whether the court thinks that the balance only just tips in favour of the claimant or that the causation claimed is overwhelmingly likely, see Allied Maples Group v Simmons & Simmons [1995] WLR 1602, at 1609-1610.
(8) Where quantification of the claimant's loss depends on future uncertain events, such questions are decided not on the balance of probability but on the court's assessment, often expressed in percentage terms, of the loss eventuating. This may depend in part on the hypothetical acts of a third party, see Allied Maples at 1610.
(9) Where the claim for past loss depends on the hypothetical act of a third party, i.e. the claimant's case is that if the tort had not been committed the third party would have acted to the benefit of the claimant (or would have prevented a loss) in some way, the claimant need only show that he had a substantial chance, rather than a speculative one, of enjoying the benefit conferred by the third party. Once past this hurdle, the likelihood that the benefit or opportunity would have occurred is relevant only to the quantification of damages. See Allied Maples at 1611-1614."
In addressing the claimant's first head of damage as actually argued. the royalties that would have been negotiated between a willing licensor and willing licensee negotiating at arms' length, the judge reminded himself of the principles which Mr Justice Arnold had listed in  Force India Formula One Team Limited v 1 Malaysia Racing Team Sdn Bhd  [2012] RPC 29, [2012] EWHC 616 (Ch):
"(i) The overriding principle is that the damages are compensatory: see Attorney-General v Blake at 298 (Lord Hobhouse of Woodborough, dissenting but not on this point), Hendrix v PPX at [26] (Mance L.J., as he then was) and WWF v World Wrestling at [56] (Chadwick L.J.).
(ii) The primary basis for the assessment is to consider what sum would have [been] arrived at in negotiations between the parties, had each been making reasonable use of their respective bargaining positions, bearing in mind the information available to the parties and the commercial context at the time that notional negotiation should have taken place: see PPX v Hendrix at [45], WWF v World Wrestling at [55], Lunn v Liverpool at [25] and Pell v Bow at [48]–[49], [51] (Lord Walker of Gestingthorpe).
(iii) The fact that one or both parties would not in practice have agreed to make a deal is irrelevant: see Pell v Bow at [49].
(iv) As a general rule, the assessment is to be made as at the date of the breach: see Lunn Poly at [29] and Pell v Bow at [50].
(v) Where there has been nothing like an actual negotiation between the parties, it is reasonable for the court to look at the eventual outcome and to consider whether or not that is a useful guide to what the parties would have thought at the time of their hypothetical bargain: see Pell v Bow at [51].
(vi) The court can take into account other relevant factors, and in particular delay on the part of the claimant in asserting its rights: see Pell v Bow at [54]".
To these he added the following additional principles listed by Mr Justice Newey in 32Red Plc v WHG (International) Ltd and Others [2013] EWHC 815 (Ch) (12 April 2013):
"(vii) There are limits to the extent to which the court will have regard to the parties' actual attributes when assessing user principle damages. In particular
(a) the parties' financial circumstances are not material;
(b) character traits, such as whether one or other party is easygoing or aggressive, are to be disregarded [29]-[31].
(viii) In contrast, the court must have regard to the circumstances in which the parties were placed at the time of the hypothetical negotiation. The task of the court is to establish the value of the wrongful use to the defendant, not a hypothetical person. The hypothetical negotiation is between the actual parties, assumed to bargain with their respective strengths and weaknesses [32]-[33].
(ix) If the defendant, at the time of the hypothetical negotiation, would have had available a non-infringing course of action, this is a matter which the parties can be expected to have taken into account [34]-42].
(x) Such an alternative need not have had all the advantages or other attributes of the infringing course of action for it to be relevant to the hypothetical negotiation [42].
(xi) The hypothetical licence relates solely to the right infringed [47]-[50].
(xii) The hypothetical licence is for the period of the defendant's infringement [51]-[52].
(xiii) Matters such as whether the hypothetical licence is exclusive or whether it would contain quality control provisions will depend on the facts and must accord with the realities of the circumstances under which the parties were hypothetically negotiating [56]-[58]."
Applying these principles the judge considered the negotiation that might have been conducted between the parties immediately before the recording of the claimant's performance was released. He reminded himself that the claim was merely for infringement of the claimant's performance right and not her copyrights in the words or music.  Both sides would have wanted an agreement but the defendant was in the stronger bargaining position.  The judge considered comparable negotiations that the claimant had entered and concluded that the claimant would have received a 6% royalty on sales of her recording less costs.  He assessed her damages under the user principle at £30.000.

As I said earlier, it is a fundamental principle of English law that a successful claimant can claim damages or an account of profits but not both. The claimant argued that reg 3 (1) (a) of the enforcement regulations which requires the court to take account of "any unfair profits made by the defendant" had changed that rule. His Honour rejected that contention for the following reasons. First, the enforcement regulations are intended to implement Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights OJ L 196/16 2.6.2004. Art 13 (2) of that directive makes clear that states can provide provide for the recovery of profits as an alternative to an inquiry as to damages. Secondly. courts have continued to apply the rule that damages are alternatives since the directive came into effect.

In the judge's view reg 3 (1) (a) was intended to allow a court to award an additional sum related to the profit the defendant has made from knowing infringement. Such a case might arise
"if the defendant made no direct financial profit from the infringement – so an account of profits would be of little use – but his business expanded in volume and/or in reputation on the back of loss-leader infringements. For the claimant, aside from losing sales there would be a likelihood of further loss because of the expansion of a competing business. The expansion would not constitute a profit by the defendant in the usual direct sense, but it would be a contingent profit nonetheless and an unfair one."
His Honour considered that the present case provided an example of unfair profits as contemplated by the regulation in that she was not given proper recognition for her performance the credit having gone to another artiste. For that loss the judge awarded her another £5,000.

The judge declined to reverse his order striking out the additional damages claim. However, he observed that this was a case where justice required an additional award of £5,000 and that had already been made under reg 3 (1) (a). The claimant's total damages were therefore £35,000.

This is a very useful case that will no doubt be relied on frequently. It analyses reg 3 of the enforcement regulations and the directive that it implements and should prevent fresh attempts to inflate damages claims by reliance on the reference to "unfair profits". Secondly, it formulates all the principles that the court should take account when calculating a notional royalty between willing licensor and licensee bargaining at arms' length. Thirdly, it is a salutary reminder of the need to plead additional damages whenever they are required.   Should amplification or clarification of any point be requited readers should call me on 020 7404 5252 during office hours or fill in my contact form at any time.