“We refer to your second letter dated12 October 2021 , wherein you state that “ the issue of which factory makes which garments is utterly irrelevant to any issue still in dispute in these proceedings”
“However, the latest Infringing Garment in time was first offered for sale on25 June 2018 , which is only 10 days after the claim form and particulars of claim were sent to the registered address of the First to Third Defendants. By the time of the service of the original Defence in January 2019, the Defendants had stopped selling 66 of the 87 garments then complained about.”
“8. I have previously provided evidence on the number of units sold, the gross profits per item and estimated net profits per item for the designs referred to in these proceedings as D2, D4, D12, D13, D35, D61, D85, D87 and D91 in my affidavit of2 May 2021 [his Island Records affidavit]. I have also provided evidence on the number of units sold and the gross profits per item for the designs referred to in these proceedings as garments D1, D6, D15, D27, D41, D48, D54 and D57 in my third and fourth witness statements, dated22 July 2021 and18 August 2021 respectively. The methodologies used at the time to calculate these figures can also be found in the respective affidavit and witness statements. 9. The Defendants were directed by the Order of the Deputy Judge dated30 July 2021 to use our best endeavours in the time available to ensure that the figures provided for gross profits (with respect to garments D1, D6, D15, D27, D41, D48, D54 and D57) were as accurate as possible. I complied with the30 July 2021 Order to produce figures to the best accuracy possible in the time provided. However, I am now in a position to state various financial figures with greater certainty .”
“The Program has allowed me to record (in the Spreadsheet) the number of units sold, gross profit per item and net profit per item for each of the Infringing Garments with greater confidence than previously possible .”
“As soon as [Dr] Branney realised the [ Island Records ] affidavit contained incorrect figures, he corrected them by serving his 5th statement which referred to the accurate numbers in the spreadsheet provided under cover of CEA Notice.”
“However, I consider Dr Branney’s failing here to be maladroit, rather than malevolent. He had not designed the garments in issue - Ms Henderson had. He was working from documents and from Ms Henderson’s explanations. He ought to have been more careful before signing the statement of truth, but I do not consider that this means I should discount his evidence completely. Counsel for the Claimants described Dr Branney’s evidence as that “of a person willing to say whatever needed to be said to achieve his objective.”
“Further, by the time of the service of the original Defence in January 2019, [the Defendants] had stopped selling 66 of the 87 garments then complained about. That is not the behaviour of a cynical infringer with no regard for the law that should be punished out of all proportion to the scale of the infringements.”
“Q: It is right, is it not, Dr Branney, that in the course of this litigation, the Defendants have stated that they have stopped selling some of the garments even though they did not accept that those garments were infringing the Claimants’ rights; correct? A: That is correct, my Lord. … Q: …this is paragraph 19G we have just been looking at. What you are saying here is that it is not entirely fair for the Claimants to say that the Defendants did not cease copying their designs until after these proceedings were launched because in fact, you say, the last infringing garment in time was only launched shortly after the claim was issued; correct? A: That is correct. Q: That by the time the original Defence was served you had in fact stopped selling 66 of the 87 infringing garments then in issue; correct? A: My Lord, that is correct.”
“Subject to those corrections, are the contents of this statement true to the best of your knowledge and belief?”
“With the benefit of hindsight, my firm should have appreciated that the later sales meant that paragraph 76 of the Original Defence was wrong, we should have brought this to the attention of the Claimants promptly and we should not have included the last sentence of paragraph 19G of the Amended Defence to the Points of Claim. ”
“I must explain why I think the attempt to approximate real people to the notional [person] is not helpful. It is to do with the function of expert witnesses in patent actions. Their primary function is to educate the court in the technology - they come as teachers, as makers of the mantle for the court to don. For that purpose it does not matter whether they do not approximate to the skilled [addressee]. What matters is how good they are at explaining things.”
“Girl I got a dress from Oh Polly for$63 that was$180 on House of CB…” “Seeing as OhPolly copy all of HouseOfCb designs, are their clothes good quality?” “Wish @ohpoly would put as much effort into makin their website work properly as it didn’t take people’s money & cancel orders, as it did into copying designs from House of CB” “Oh Polly … just COMPLETELY copy House of CB designs…” “Oh Polly just rip off House of CB designs…” “Oh Polly fully copying House of CB designs”
“(i) Damages are compensatory. The general rule is that the measure of damages is to be, as far as possible, that sum of money that will put the claimant in the same position as he would have been in if he had not sustained the wrong. (ii) The claimant can recover loss which was (i) foreseeable; (ii) caused by the wrong; and (iii) not excluded from recovery by public or social policy. It is not enough 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. (iii) The burden of proof rests on the claimant. Damages are to be assessed liberally. But the object is to compensate the claimant and not to punish the defendant. (iv) It is irrelevant to a claim of loss of profit that the defendant could have competed lawfully. (v) Where a claimant has exploited his patent by manufacture and sale he can claim (a) lost profit on sales by the defendant that he would have made otherwise; (b) lost profit on his own sales to the extent that he was forced by the infringement to reduce his own price; and (c) a reasonable royalty on sales by the defendant which he would not have made. (vi) As to lost sales, the court should form a general view as to what proportion of the defendant’s sales the claimant would have made. (vii) The assessment of damages for lost profits should take into account the fact that the lost sales are of “extra production” and that only certain specific extra costs (marginal costs) have been incurred in making the additional sales. Nevertheless, in practice costs go up and so it may be appropriate to temper the approach somewhat in making the assessment. (viii) The reasonable royalty is to be assessed as the royalty that a willing licensor and a willing licensee would have agreed. Where there are truly comparable licences in the relevant field these are the most useful guidance for the court as to the reasonable royalty. Another approach is the profits available approach. This involves an assessment of the profits that would be available to the licensee, absent a licence, and apportioning them between the licensor and the licensee. (ix) Where damages are difficult to assess with precision, the court should make the best estimate it can, having regard to all the circumstances of the case and dealing with the matter broadly, with common sense and fairness.”
“(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 v Lectra 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.”
“The ultimate process is one of judicial estimation of the available indications.”
“In short one cannot expect much in the way of accuracy when the court is asked to re-write history.”
“18. In Force India Formula One Team Limited v 1 Malaysia Racing Team Sdn Bhd[2012] EWHC 616 (Ch) ;[2012] RPC 29 Arnold J considered Wrotham Park damages, i.e. of the type awarded in Wrotham Park Estate Co Ltd v Parkside Homes Ltd[1974] 1 WLR 798 . In Force India damages for breach of a restrictive covenant in a contract were taken to be the amount of money which could reasonably have been demanded by the claimant for a relaxation of the covenant. Arnold J identified the following principles (at [386]): “(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 LJ, as he then was) and WWF v World Wrestling at [56] (Chadwick LJ). (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]”
“In relation to fixing the royalty for a licence of right, Dillon LJ said in Allen & Hanburys Ltd’s (Salbutamol) Patent[1987] RPC 327 that the position of the patentee as manufacturer is not to be taken into account (at 378-379). Fox LJ agreed, though Woolf LJ dissented (at 384-386). Moreover Dillon LJ (with both of the other members of the court) was of the view that the royalty need not be such that the licensee would find it commercially worthwhile to sell. Mr. Floyd submitted that there may be a conflict here between the reasonable royalty for damages and the royalty which might be fixed by the Comptroller. In particular he suggested that when I came to fix the appropriate rate of royalty I should take into account the position of Gerber as manufacturer. I do not agree. One is here considering a notional bargain about sales the patentee would not make. Whether one considers that in advance of the infringement or after seems to me to make no difference (Mr Floyd suggested it did). I do not see why the patentee could reasonably insist on his lost profits on transactions he would not have made. … 7. Royalties on Sales Gerber would not have made I have held that there would have been 11 of these. To these should, it is agreed, be added the 2 Irish sales. Gerber are entitled to a reasonable royalty. This is really a court-imposed notional bargain. I have held that Gerber’s lost profits would be irrelevant - because the negotiation does not cover lost Gerber sales. … As to how the “available profits” were to be split, absent the extra profits from spares etc. it was agreed that the split would be 25% to the patentee. Gerber’s expert suggested that this ought to be doubled because the licensee would be competing, leading to a royalty of 50% of the licensee’s sales revenue. As I have indicated I think this wrong - we are here talking about the non-competing sales.”
“The circumstances of the parties and any actual negotiations As explained above, the hypothetical negotiation is conducted as an objective exercise between persons who are assumed to act reasonably. Hence, the court must ignore personal characteristics such as the easygoing nature of one party or the aggressive approach of another. Courts also treat as a personal characteristic the financial position of the parties. Hence, an impoverished defendant cannot avoid an assessment of a significant licence fee on the basis that they would not be able to pay a licence fee that is more than that for which a claimant could reasonably have demanded simply because the defendant might have the resources and willingness to pay a larger amount.”
“My Lords, this passage is, in my opinion, unsupportable in law or in fact. In law it rests upon the hypothesis that what has to be considered, in measuring the loss a patentee sustains through an infringement, is some bargain struck between some abstract licensor and some abstract licensee uncontaminated by the qualities of the actual actors. But that is not so. The ‘willing licensor’ and ‘willing licensee’ to which reference is often made (and I do not object to it so long as we do not import analogies from other fields) is always the actual licensor and the actual licensee who, one assumes, are willing to negotiate with the other - they bargain as they are, with their strengths and weaknesses, in the market as it exists.”
“28. Accordingly, although I see the force of what Mr Mann said in paragraph 13 of his judgment, it should not in my opinion be treated as being generally applicable to events after the date of breach where the court decides to award damages in lieu on a negotiating basis as at the date of breach. After all, once the court has decided on a particular valuation date for assessing negotiating damages, consistency, fairness, and principle can be said to suggest that a judge should be careful before agreeing that a factor which existed at that date should be ignored, or that a factor which occurred after that date should be taken into account, as affecting the negotiating stance of the parties when deciding the figure at which they would arrive. 29. In my view, the proper analysis is as follows. Given that negotiating damages under the Act are meant to be compensatory, and are normally to be assessed or valued at the date of breach, principle and consistency indicate that post-valuation events are normally irrelevant. However, given the quasi-equitable nature of such damages, the judge may, where there are good reasons, direct a departure from the norm, either by selecting a different valuation date or by directing that a specific post-valuation-date event be taken into account.”
“This is the reason why the actual profit made from an infringement or the actual use made from the tort are irrelevant.”
“So a trend is a particular configuration of a garment (because generally it is rarely a specific dress): square necklines with straps; or y-neck with a harness; or ruched asymmetric hemmed skirt . Those are the types of things that all major fashion brands will jump on to capitalise on a trend. Our customers want to be seen in a trend the more they see it on others - they want to be seen as “trendy”.”
“This is really a court-imposed notional bargain. I have held that Gerber’s lost profit would be irrelevant - because the negotiation does not cover lost sales.”
“The hypothetical negotiation is between the actual parties, assumed to bargain with their respective strengths and weaknesses.”
“Gerber’s expert suggested that this ought to be double because the licensee would be competition, leading to a royalty of 50% of the licensee’s sales revenue. I have indicated I think this is wrong - we are here talking about the non-competing sales.”
“The participants to the negotiation therefore have, generally speaking, all the real priorities and concerns of the real claimant and the real defendant, and their hypothetical negotiation takes place against a background matrix of the real facts which would have been in their minds at the relevant time.”
“41. That ties in with article 3(2) of the Directive which states that remedies must be “effective, proportionate and dissuasive”
“[31] It is admittedly possible that, in exceptional cases, payment for a loss calculated on the basis of twice the amount of the hypothetical royalty will exceed the loss actually suffered so clearly and substantially that a claim to that effect could constitute an abuse of rights, prohibited by art.3(2) of Directive 2004/48. It is apparent, however, from the Polish Government’s observations at the hearing that, under the legislation applicable in the main proceedings, a Polish court would not be bound in such a situation by the claim of the holder of the infringed right.” 42. It may be, therefore, that a particularly egregious award of exemplary damages would amount to an abuse of rights.”
“92. The remaining, and final, question is to fix a sum for additional damages. On this I was cited no authority and given very little by way of submissions, Mr Richards inviting me to make a substantial award of£50,000 , and Mr Keay suggesting a modest uplift of 5% of the ordinary damages, but neither putting forward any particular analysis to justify their figures. 93. In those circumstances I can do nothing else than select a figure. I propose to award£25,000 which seems to me adequate to mark the seriousness of the infringement.”