“[4] The case concerns display panels used in shops. Shopfitters often use a wooden wall called a slatwall as a panel on which to construct displays. Today the slatwall is made of MDF and has horizontal slots. Back plates or other shelf fixings can be fitted into the slots in order to secure display accessories such as shelves, brackets and hangers. The merchandise is displayed from the display accessories. The fittings are inserted into the jaws of the mouth of the slot and hooked into the top of an internal chamber of the slot lying behind its mouth. [5] The slots are made by a computer controlled router moving across the width of the panel. A router makes a T shaped slot and leaves visible machined surfaces within the slot having machined away the decorative veneer that generally covers the face of the MDF. Also the edges of the veneer around the mouth of the slot are susceptible to damage as display accessories are hooked in and removed. [6] For these reasons it became standard practice to provide inserts for slots, as protection against damage and to hide the machined surfaces. To an extent the inserts also strengthen the panel. The accessories are then fitted into the inserts rather than being fitted directly into the bare slots. [7] The inserts are made by extrusion. By 2004 the standard inserts used were of two kinds: “slide-in” or “snap-in”
“[51] In deciding whether the defendant has to account for all or only a part of the profits made on a particular venture, I respectfully agree with the view expressed by the Canadian Federal Court of Appeal in Imperial Oil v. Lubrizol that this is a matter of fact and that form must not be allowed to triumph over substance. As I have mentioned above, HC commenced the inquiry arguing that low-iodide acetic acid was a product made directly from the patented process and therefore was an infringement in its own right pursuant to s.60(1)(c) of the Act. Based on this it said that because the whole product was an infringement, therefore all the profits made from it were accountable. Arguments as to whether the product is acetic acid or purified acetic acid hide the real purpose of the account which is to identify what profit has been made by BP by using the patented purification method. The point can be illustrated by the tin whistle example much beloved of patent practitioners. Someone invents a new form of tin whistle. With the aid of his patent agent he obtains a patent. Regrettably, but as is now common, the patent ends with claims of ever greater particularity and narrowness. (Subsidiary claims limited to the patented article made out of plastics material of a particular colour are not unknown.) Claim 1 is for the tin whistle. Claim 10 is for a funnel to which the new tin whistle is connected. Claim 15 is for a battleship with a funnel to which the tin whistle is connected. No doubt none of the subsidiary claims are independently valid over Claim 1 but they are probably not per se invalid. Nor is there any doubt that an injunction or an order for delivery up would be directed to the tin whistle alone rather than the whole battleship. Similarly on an account substance not form counts. What the defendant has to account for is the profit made by exploitation of the invention, i.e. the whistle, not profits made by exploitation of material or activities which are not attributable to the plaintiff's ingenuity, i.e. the rest of the battleship.”
“There the accessories were of a nature capable of being applied to any car, and were certainly capable of being and were in fact dealt with as separate. Here nothing of that sort takes place and the parts incorporating the invention, are, in my opinion, component and essential parts of the meter regulating and controlling – from the Gas Company’s point of view – the most important functions of the meter, that is to say the supply of the exact amount of gas to which the consumer is entitled having regard to the amount he has paid and the current price of gas. In my opinion, the mechanism protected by these Patents is of the very essence of the meter;”
“… the Patents Act is aimed at protecting patentees from commercial loss resulting from the wrongful infringement of their rights. That is only a slight gloss upon the wording of the statute itself. In my judgment, again as a matter of first impression, it does not distinguish between profit on the sale of patented articles and profit on the sale of convoyed goods. So I must look to see whether any such distinction emerges from the case law.”
“Viewing the cases as a whole, I cannot find any rule of law which limits the damages for infringement in a patent case in such a way as to exclude the loss claimed by the patentees in the present case. In General Tire & Rubber Co. v. Firestone Tyre & Rubber Co. Ltd. [1976] R.P.C. 197 at page 214 Lord Wilberforce approved a passage in the judgment of Fletcher Moulton L.J. in the Meters case which concluded: ‘But I am not going to say a word which will tie down future judges and prevent them from exercising their judgment, as best they can in all the circumstances of the case, so as to arrive at that which the plaintiff has lost by reasons of the defendant doing certain acts wrongfully instead of either abstaining from doing them, or getting permission to do them rightfully.’ Beyond that the assessment of damages for infringement of a patent is in my judgment a question of fact. There is no dispute as to causation or remoteness in the present case; nor can I see any ground of policy for restricting the patentees' right to recover. It does not follow that, if customers were in the habit of purchasing a patented article at the patentee's supermarket, for example, he could claim against an infringer in respect of loss of profits on all the other items which the customers would buy in the supermarket but no longer bought. The limit there would be one of causation, or remoteness, or both. But the present appeal, in so far as it seeks to restrict the scope of recovery, should be dismissed.”
“The Central Costs Issue [34] In my judgment the applicable principles are those identified by the Court of Appeal in Hollister inc. v. Medik Ostomy SuppliesLtd (ante) at [74] to [87]. In summary: i) An infringer is entitled to deduct any direct costs associated with the infringement and also any overheads to the extent that they have been increased by the infringement – see [74]; ii) It is not permissible for a defendant to allocate a proportion of its general overheads to an infringing activity – see [85]; iii) The evidential burden rests on the infringer to show that the relevant overheads are properly attributable to the infringing activity – see [85]; and iv) It followed that in any case where a defendant seeks to deduct an element of general overheads it will be for it to prove its business was running to capacity or that but for the infringement it would have sold other products or that its overheads would have been lower if it had not infringed – see [87].” i) An infringer is entitled to deduct any direct costs associated with the infringement and also any overheads to the extent that they have been increased by the infringement – see [74]; ii) It is not permissible for a defendant to allocate a proportion of its general overheads to an infringing activity – see [85]; iii) The evidential burden rests on the infringer to show that the relevant overheads are properly attributable to the infringing activity – see [85]; and iv) It followed that in any case where a defendant seeks to deduct an element of general overheads it will be for it to prove its business was running to capacity or that but for the infringement it would have sold other products or that its overheads would have been lower if it had not infringed – see [87].”
“In proceedings for infringement of a patent damages shall not be awarded, and no order shall be made for an account of profits, against a defendant or defender who proves that at the date of the infringement he was not aware, and had no reasonable grounds for supposing, that the patent existed; and a person shall not be taken to have been so aware or to have had reasonable grounds for so supposing by reason only of the application to a product of the word “patent” or “patented”, or any word or words expressing or implying that a patent has been obtained for the product, unless the number of the patent accompanied the word or words in question.”
“[9] That may be right, but seems to me to ignore policy issues which, although they are not identical to those considered by Warren J, are important for all that. Parties should know where they stand in relation to each side’s arguments by the time the pleadings are closed – not least in the IPEC. If it is a defendant’s case that damages to which the claimant would be entitled if he wins are never going to be available because of s.233(1), this should be made clear in the pleadings for the trial on liability. It may have a significant effect on the way the claimant pursues the proceedings and also the degree to which the claimant may be amenable to settlement. If the claimant succeeds at trial, knowledge of whether an argument is being advanced under s.233(1) might easily affect whether the claimant elects to go for an inquiry or an account of profits. Mr Cuddigan, who appeared for Bristan, argued that if Kohler made the wrong election in the present case, that was its own fault for not taking into account the possibility that Bristan might rely on s.233(1). I reject that. It was Bristan’s choice whether to rely on the subsection and Kohler’s right to know in good time what choice Bristan had made. [10] In this court cards should not be held behind the back of litigants after the case management conference, to be played as and when seems tactically best, or alternatively only when a party notices that a card might be put into play. [11] If Bristan had pleaded reliance on s.233(1), it would have been perfectly legitimate at the case management conference in the substantive proceedings for Bristan to have raised the question whether, as a matter of procedural economy, argument on the point might better be left to the inquiry, if there was to be one. The various arguments now raised by Bristan (summarised above) could have been advanced. The court might have decided they were telling and may have ruled that s.233(1) should be left to the inquiry. There would have been no question of either party concealing part of its case from the other and in particular Kohler would have approached the proceedings in full knowledge of all points being taken against it. [12] It seems to me that just as Warren J felt he had a discretion to allow defences to be raised for the first time at an inquiry (or so I infer from his judgment) and that such discretion should be exercised by reference to policy considerations, I should approach Bristan’s application to rely on s.233(1) in the same way. In my judgment Bristan is not entitled to rely on that subsection for the reasons of policy I have referred to. These are not outweighed by other considerations.”