Lilley v DMG Events Ltd [2014] EWHC 610 (IPEC)

Case No CC13P01738[2014] EWHC 610 (IPEC)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 12/03/2014
Before
HIS HONOUR JUDGE HACON
Between
VICTOR GEORGE LILLEYClaimantDMG EVENTS LIMITEDDefendant
The Claimant appearing in person for in personDouglas Campbell (instructed by Thomas Eggar LLP) for DefendantHearing Hearing dates: 27 th February 2014
JudgmentJudge Hacon :
[1]There are two applications before the court, both by the Defendant (“DMG”). The first, by an application notice dated 9 December 2013, is to strike out those parts of the Particulars of Claim and Reply which relate to a claim against DMG for “unlawfully resisting the copyright infringement claim”, pursuant to CPR rule 3.4(2), and otherwise to treat this hearing as a CMC, with proposed directions.[2]The second, by an application notice dated 18 February 2014, is to strike out the statements of case of the Claimant (“Mr Lilley”) in their entirety on the grounds that they are an abuse of the court’s process or are otherwise likely to obstruct the just disposal of the proceedings.[3]Mr Douglas Campbell appeared for DMG. Mr Lilley appeared in person.

Background

[4]This action concerns, for the most part at least, a claim by Mr Lilley for copyright infringement. As will appear, it is not quite that simple but the core of Mr Lilley’s complaint is not complicated. DMG is a company which edits and publishes technical journals, including “Speciality Chemicals” and “Adhesives Technology”. Mr Lilley entered into a contract with DMG to supply a number of articles which appeared in these publications. Mr Lilley says he wrote 37 articles for DMG. DMG is not sure whether this is the right number, but I will assume that it is. DMG published the articles between 1996 and March 2004. Mr Lilley was paid about £400-£500 by DMG for each of these articles, around £14,800 in all.[5]After the articles had appeared in DMG’s publications, DMG authorised two companies, referred to in the pleadings as ‘Thomson Gale’ or ‘Gale Group’ (which I will call “Gale”) and ‘EBSCO’, along with others to publish Mr Lilley’s articles. At the hearing Mr Lilley indicated that DMG had also authorised a third company. That is not clear from his Particulars of Claim, but nothing turns on it.[6]Mr Lilley says that such authorisations were infringements of his copyrights in his articles. He has not sued either Gale or EBSCO (or the third company), but he claims about £798,000,000 in damages from DMG. Mr Campbell said that once other claims were taken into account, the total to which Mr Lilley says he is entitled in this litigation is nearly £1 billion.[7]The timing of the alleged acts of infringement by DMG is of significance since there is a limitation issue. The claim form was issued on 26 April 2012. On the face of it, Mr Lilley cannot complain about authorisations by DMG done before 26 April 2006. If the last of the authorisations was done 2 years or less after the last publication of Mr Lilley’s articles by DMG (in March 2004), all the authorisations complained of are barred under the Limitation Act 1980.[8]DMG is not certain whether the authorisations stopped before 26 April 2006. It is clear, however, that on about 27 July 2006 DMG told Gale to remove any reference to Mr Lilley’s articles from its available publications and on about 19 December 2006 gave the same instruction to EBSCO. This followed the first complaint by Mr Lilley in a letter to DMG dated 22 June 2006. It seems that DMG’s instructions were not complied with by either Gale or EBSCO until December 2006. However the alleged infringement is authorisation, so the window available to Mr Lilley (subject to s.32 of the Act) for alleging infringing authorisation is the 3 months from April to July 2006 for Gale and the 8 months from April to December 2006 for EBSCO. There is apparently no evidence one way or the other as to whether any authorisations took place in that time.[9]It is not completely clear from Mr Lilley’s Reply whether he is relying on s.32 of the Limitation Act 1980. DMG’s Defence not only pleaded reliance on limitation under s.2 of the Act but also pre-empted an allegation under s.32 by denying any relevant fraud, concealment or mistake on DMG’s part. Mr Lilley’s Reply (paragraph 8) seems to join issue with this. I think Mr Lilley is a litigant who will take any available point (as he is entitled to do), so I assume he relies on s.32. Nonetheless no allegation of behaviour on the part of DMG has been advanced, so far as I am aware, which would lead me to suppose that Mr Lilley has any realistic possibility of establishing that the limitation period for any of authorisations by DMG began to run any later than the date on which the authorisation took place.

These proceedings to date

[10]Following the issue of the Claim Form in the Patents Court on 26 April 2012 Mr Lilley served his Particulars of Claim on 9 August 2012. They are substantial, running to 166 pages. The Defence was served on 20 November and the Reply on 31 December 2012.[11]On 8 April 2013 Chief Master Winegarten read the allocation questionnaires and transferred the proceedings to the Patents County Court (“PCC”). Mr Lilley appealed the order for transfer. On 5 June 2013 Mann J dismissed the appeal.[12]Mr Lilley next applied to set aside the order of Mann J. This came before Norris J on 30 July 2013, who affirmed that the proceedings should remain in the PCC and so, now, in the IPEC. During the course of the proceedings DMG volunteered to waive the limit on damages available in the IPEC, so notwithstanding that the case is being heard in this court Mr Lilley remains entitled to claim £798 million or close to £1 billion, as the case may be. “Unlawfully resisting the infringement claim”[13]I will consider first DMG’s application to strike out those parts of Mr Lilley’s statements of case which are based on a claim against DMG that it unlawfully resisted the claim for copyright infringement. DMG understandably submits that English law does not recognise any such tort. Moreover, on 15 March 2013 Roth J struck out a claim by Mr Lilley based on the same alleged tort in similar proceedings brought by him against the Chartered Institute of Management Accountants ([2013] EWHC 1354 (Ch), at [45]). I was told that Mr Lilley sought permission to appeal this order but was refused permission by a decision of Floyd LJ. DMG submitted that I should follow the example of Roth J.[14]Mr Lilley’s submissions throughout the hearing before me were clear, well delivered and seemed to me to have been carefully considered. His response to this part of DMG’s application was straightforward. He said that he makes no claim based on a tort of unlawfully resisting the infringement claim. It was merely a heading he had used for Part 10 of his Particulars of Claim. The tort he was relying in this part of his Particulars was negligent misstatement, as appears from paragraph 1.3 of that Part.[15]I found this a little surprising, though it does not matter. Mr Lilley did not deny that he had pursued a similar claim to the Court of Appeal in the action against the Chartered Institute of Management Accountants. Also, paragraphs 1.3 and 1.5 of Part 11 of the Particulars read to me as if Mr Lilley is relying on ‘resisting copyright infringement’ as a tort which he says has been committed by DMG.[16]In any event Mr Lilley’s submission made things simple in that it would follow that I should grant the order requested by DMG striking out any part of Mr Lilley’s statements of case based on the alleged tort of resisting copyright infringement. I did not understand Mr Lilley to resist such an order. His position was that it makes no difference.

Negligent misstatement

[17]DMG invited me to go further. DMG suggested that one bad cause of action had now been replaced by another and I should strike out Mr Lilley’s statements of case in so far as they relate to negligent misstatement.[18]Mr Lilley is not a trained lawyer and I do not expect him to plead with the precision of counsel. I assume – I have to assume – that Mr Lilley has in mind a claim of the type asserted in Hedley Byrne v Heller [1964] AC 465. That being so, in broad terms he would have to establish a special relationship between himself and DMG and thus(a) that DMG had assumed responsibility for Mr Lilley acting on DMG’s statement and(b) that it was fair, just and reasonable for Mr Lilley to rely on the statement.[19]I asked Mr Lilley to point me to where the relevant statement by DMG was identified in his Particulars of Claim. He directed me to paragraph 1.2.2 in Part 10. This is not obviously part of his pleaded case on negligent misstatement. The document containing the relevant misstatement relied on, Mr Lilley told me, is the one referred to as “*D1 21/12/06 DMG”. He said refers to a letter dated 21 December 2006 from DMG’s solicitors. The statements he relies on are those set out beneath the reference to the letter, namely “(1) This was a flat fee rather than a royalty fee per publication. … (2) DMG is entitled to provide copies to the distributors. … (3) LIS is not now entitled to vary the original agreement and claim royalty payments from DMG” … …[20]‘LIS’ is a reference to Lilley Information Systems Limited, Mr Lilley’s company. I asked to see a copy of the letter itself. Although there were 6 full lever arch files of documents assembled by DMG’s solicitors for the application, the letter was not in any of them. I do not at all criticise DMG’s solicitors: they had no idea this letter had any relevance. Mr Lilley came to court with still further documents but not the letter of 21 December 2006.[21]I think I am entitled to assume that the statements quoted above are Mr Lilley’s best case. It seems to me that those pleaded statements do not disclose a reasonable ground for bringing a claim for negligent misstatement. On the other hand Mr Lilley did not expect to have to argue his case on negligent misstatement. Had he been represented, the absence of a specific pleading of a special relationship between himself and DMG, or reasons that justify such a relationship, would in my view be fatal to Mr Lilley’s case on negligent misstatement. But he is not and therefore I would not strike out a part of the claim when it has barely been explored.[22]That said, should it arise, I would give permission to DMG to make an application in relation to any cause of action other than Mr Lilley’s case on infringement of copyright referred to above. I notice there is a section in the Particulars of Claim headed ‘Attempted Tort of Deceit (Fraudulent misrepresentation)’ which nobody has mentioned. There may be other alleged torts by DMG in the Particulars of Claim I have not spotted.

Mr Lilley’s pleadings

[23]This takes me to a more general point concerning Mr Lilley’s pleadings. I was not always certain from the Particulars of Claim or the Reply exactly how Mr Lilley puts his case. This is in part a matter of his style of pleading and in part due to the length of the statements of case. Mr Lilley is a litigant in person who, admirably, is plainly willing to work hard at researching and expressing all points which he believes he should take. However these proceedings are now in the IPEC. Mr Lilley’s pleadings do not comply with CPR 63.20(1). That rule requires that a statement of case must set out all the facts and arguments relied on concisely. This goes beyond a breach of the rules; it is also a question of fairness. It does not surprise me that DMG is still unsure of the totality of the case it has to meet.[24]If these proceedings were to progress some case management would be necessary. I would be minded to order that Mr Lilley should serve amended Particulars of Claim of a reduced and maximum length which would have to serve as his final pleaded case, subject to an amended Reply in response to any amended Defence from DMG, and subject always to appropriate allowances due to his status as a litigant in person. I would also consider submissions as to whether Mr Lilley is entitled to plead any cause of action other than the main one he relies on: that DMG infringed his copyrights by authorising others to reproduce the copyright works. It seems to me at least arguable that any other cause of action is obviously ill-founded. Alternatively, if any other cause of action is not liable to be struck out, I would consider whether evidence or submissions in support of it satisfy the cost/benefit requirement that apply in this court (PD63 para. 29.2).

Not worth the candle

[25]DMG’s second and broader application is to strike out Mr Lilley’s case altogether. This was under CPR rule 3.4(2)(b) on the ground that it is an abuse of process. DMG relies in particular on Jameel v Dow Jones & Co Inc [2005] EWCA Civ 75; [2005] QB 946 and Sullivan v Bristol Film Studios Ltd [2012] EWCA Civ 570; [2012] EMLR 27.[26]In Jameel Lord Phillips MR said this at [54]:
“An abuse of process is of concern not merely to the parties but to the court. It is no longer the role of the court simply to provide a level playing field and to referee whatever game the parties choose to play upon it. The court is concerned to ensure that judicial and court resources are appropriately and proportionately used in accordance with the requirements of justice.”
The Master of the Rolls took the view that the potential value of a claim to a claimant could be too meagre to justify committing the resources of the court to the action. “[69] If the claimant succeeds in this action and is awarded a small amount of damages, it can perhaps be said that he will have achieved vindication for the damage done to his reputation in this country, but both the damage and the vindication will be minimal. The cost of the exercise will have been out of all proportion to what has been achieved. The game will not merely not have been worth the candle, it will not have been worth the wick. [70] … It would be an abuse of process to continue to commit the resources of the English court, including substantial judge and possibly jury time, to an action where so little is now seen to be at stake.”[27]Of course even where the potential claim in damages (or in an account) is trivial, an action may be justified by the value of an injunction to the claimant. In Jameel the Court of Appeal ruled that no injunction of value to the claimant would be granted. The proceedings were stayed.[28]In Sullivan the Court of Appeal dismissed an appeal from the judge who had struck out a claim for infringement of copyright, performance right and moral right on the ground that the costs of fighting the action were out of all proportion to the amount that the claimant was likely to recover by way of damages – in this case £50. The Court of Appeal applied the principle set out in Jameel but added a qualification. Lewison LJ, with whom Etherton and Ward LJJ agreed, said this at [32]:
“In my judgment in principle a claim like Mr Soloman’s could have been tried in the PCC if its true value had been recognised at the outset. When in future a judge is confronted by an application to strike out a claim on the ground that the game is not worth the candle he or she should consider carefully whether there is a means by which the claim can be adjudicated without disproportionate expenditure. As I have said, in addition to the PCC the claim could also have proceeded in the Bristol County Court.”
[29]Lewison LJ returned to the same theme at [37]:
“Since the small claims track is the normal track for claim which has a value of not more than £5,000, I am inclined to think that the best solution would have been for a small claim for copyright infringement to have been allocated to that track in the Bristol County Court.”
[30]Thus the potential gain to a claimant in litigation can be so trivial that the commitment of the resources of the English court to the resolution of the claim is an abuse of process. There can be no precise tariff for damages below which an abuse is triggered. It will always depend on the circumstances. For instance if the proceedings are heard in the IPEC the commitment of time and resources will be less than would be the case in the High Court and so there can be a lower potential benefit to the claimant without giving rise to an abuse. If the case can be transferred to the small claims track, the potential benefit can be smaller still.[31]I have to weigh the potential benefit to Mr Lilley of his claim for infringement of copyright against the resources of this court that would have to be devoted to his pursuit of that claim. I do not believe that a transfer to the small claims track of the IPEC is an option. Neither party has asked for such a transfer and in fact Mr Lilley is unhappy that the action is not still in the High Court. But even if there had been an application to transfer, I would have refused. Mr Lilley’s pleadings are lengthy and complex and just for this application the documents ran to 7 lever arch files and 2 further files. I do not think that this is a case that would ever be suitable for transfer to the small claims track, see CPR 63.27(3) and 26.8(1)(c) and (f).[32]The authorisations which are the basis of Mr Lilley’s claim for infringement of copyright complained of stopped a long time ago, in December 2006, so there is no value to Mr Lilley in an injunction. The potential benefit to him rests in damages only, which he says are very great indeed.[33]I have to make an assessment of the upper limit of damages to which Mr Lilley would arguably be entitled if he were to prove infringement at trial. I must then decide whether that upper arguable limit warrants the commitment of this court’s resources to Mr Lilley’s claim.

Maximum arguable damages

[34]There is one point of agreement between the parties: that damages should be assessed according to the principles set out by the House of Lords in General Tire and Rubber Company v Firestone Tyre and Rubber Company Limited [1975] 1 WLR 819. The parties were also agreed that those principles could be summarised as three potential approaches to the calculation of damages. Mr Lilley called them ‘Group 1’, ‘Group 2’ and ‘Group 3’. Although these titles do not come from General Tire, for convenience they were adopted by DMG and I will do the same.[35]I should say something more about the three approaches. In doing so I will generalise from the specific facts considered in General Tire, i.e. damages for infringement of a patent claiming a product, to the infringement of IP rights considered more broadly.

General Tire and the 3 approaches to the assessment of damages

[36]Where the owner of the infringed IP right (“the proprietor”) is a manufacturer or otherwise makes a profit from the sale of goods or services protected by the IP right which has been infringed, the loss caused by the infringement is the redirection of sales from those made by the proprietor to sales by the infringer. Damages are therefore calculated by assessing the loss of profit to the proprietor caused by the redirected sales. This is what Mr Lilley calls the ‘Group 1’ approach.[37]‘Group 2’ arises where the proprietor exploits his IP right by granting licences and receiving royalties. The damages due are then the royalty payments that the infringer would have paid to the proprietor had the infringer acted lawfully and taken a licence of the type generally granted.[38]‘Group 3’ arises where the proprietor neither exploits the IP right by selling goods or services nor grants licences under the IP right. In those circumstances the court objectively assesses what would have been paid by way of a royalty on the hypothesis that the proprietor had been a willing licensor and the infringer a willing licensee. Evidence in such cases may come from royalties paid for licences in analogous situations, if available, and/or from all the surrounding commercial facts which would have influenced what the proprietor would have wanted to charge and what the infringer would have been willing to pay.

DMG’s calculation of arguable damages

[39]Neither party suggested that the Group 1 approach was relevant. DMG submitted that there is no basis for a calculation on Group 2 basis either because LIS had not granted comparable licences on the internet. Therefore the court would be thrown back on to the Group 3 approach. What would DMG have paid Mr Lilley for the right to authorise others to publish Mr Lilley’s articles on the hypothesis that Mr Lilley was a willing licensor and DMG was a willing licensee?[40]DMG’s calculation is based on the proposition that DMG would not have paid more to Mr Lilley for a licence to authorise Gale and EBSCO to publish on the internet than DMG would have expected to receive from Gale and EBSCO in return for such authorisation. What DMG was actually paid by Gale and EBSCO is a reliable guide as to what it would have expected to receive.[41]DMG was paid a commission by both Gale and EBSCO based on the number of downloads of the articles each was authorised to publish on its website. No figures are available broken down by reference to particular articles. But there are figures which show the total number of articles from DMG’s publications published by Gale and EBSCO and the totality of how much each of them paid DMG. I can summarise DMG’s calculation as follows:(a) DMG authorised EBSCO to publish 3705 articles between 2000 and 2006, of which 37 (it is assumed) were authored by Mr Lilley, i.e. 1%. DMG was paid $11,662.82 from EBSCO, of which $116.63 is to be taken to have been in respect of Mr Lilley’s articles, about £72 at the current exchange rate.(b) DMG authorised Gale to publish 67,835 articles between 2000 and 2006, of which 37 were authored by Mr Lilley, i.e. 0.05%. DMG was paid $34,785.76, of which $17.39 is to be taken to have been in respect of Mr Lilley’s articles, about £11 at the current exchange rate.(c) This adds up to a payment of £83 in all, and constitutes a ceiling on the sum that DMG would have been prepared to pay to Mr Lilley and thus the maximum damages to which Mr Lilley could arguably be entitled in these proceedings.(d) If assumptions are made which remove from consideration all authorisations done before 26 April 2006 because they are statute barred, the relevant payments to DMG for articles published by EBSCO is $11.73 and for articles published by Gale $3.32, a total of about £9.32 at current exchange rates.

Mr Lilley’s submissions regarding DMG’s calculation of damages

[42]Mr Lilley’s submission in response to DMG’s case on maximum damages was again clear and straightforward. He accepted DMG’s estimate of the ceiling on damages which he might be expected to receive on the Group 3 approach, i.e. willing licensor and willing licensee. He made no criticism of DMG’s calculations or of the figures of £83 and £9.32.[43]Mr Lilley’s argument was that DMG had missed the point. Group 3 was the wrong approach. Mr Lilley submitted it was clear that if he were to succeed at trial, the inquiry would assess the damages due to him by the Group 2 method. The short point he made was that he had licensed the publication of his articles, to DMG for instance, and it followed that the Group 2 method must be applied.

Mr Lilley’s calculation of damages on the Group 2 approach

[44]Mr Lilley took me to his ‘Infringement Calculation Report’ and ‘Infringement Damages Calculation Report’, which respectively constitute Parts 12.2 and 12.3 of the Particulars of Claim. In my discussion of this report below, the letter or numbers in brackets are taken from the first row of each report. This row sets out the figures for the publication of the BPC article in Speciality Chemicals journal. The letters or numbers are there only to clarify what is being referred to. I will refer to the two reports by their part numbers in the Particulars of Claim, i.e. Part 12.2 and Part 12.3.[45]In Part 12.2 the first four columns list Mr Lilley’s articles, identified by subject matter (BPC), the magazine in which they were originally printed (Speciality Chem), the original date of publication (01/02/2000) and the price charged (£300).[46]The fifth column identifies the website on which infringing copies of the article appeared, as authorised by DMG (Allbus).[47]Mr Lilley divides the infringements into ‘First’ and ‘Second Rights Infringements’. First rights infringements were copies which appeared for the first time in all the countries of the world, which he takes to number 195. Only first publication in the UK was licensed (to DMG), so there were 194 first rights infringements. This is shown in column 7. Second rights infringements happened on the web. The sixth and eighth columns assert the start and end dates of the appearance of the article on the website according to Mr Lilley (01/01/2006 and 30/11/2006), the ninth column showing the total number of months (11). Mr Lilley takes each month to be a fresh infringement. Therefore he argues that the total number of second rights infringements are the number of months (11) multiplied by the number of countries (195) giving a total shown in the 13th column (1,951). The final column adds the total of second rights infringements to the number of first rights infringements (194) to give total infringements (2,145).[48]Mr Lilley next took me to his calculations in Part 12.3. The first rights fees are calculated by multiplying the number of first rights infringements shown in column 7 (194) by the original price charged for the article to DMG in column 4 (£300) and then applying a discount of 8% (multiplying by 0.92) to give the figure in the 7th column (£53,544). Mr Lilley explained that he thought a discount was fair because in other countries he would not have obtained 100% of the figure he charged DMG for the UK.[49]The second rights fees are calculated by taking the fee charged per right, shown in the 8th column (£161) and multiplying it by the number of second right fees taken from the previous table (1,951) to give a total figure for second rights fees (£314,111). The first and second rights fees are added to give the figure in the final column (£367,655).[50]The totals in the final column for all articles in all magazines and on websites for the whole world are added, and appear 10 pages later as a grand total of £798,728,820.[51]Mr Campbell had a number of detailed criticisms of these calculations but I do not think it is profitable to go through them.[52]The central flaw in the calculations done by Mr Lilley is that he never granted a licence with royalties calculated on a basis even remotely comparable to the basis used by Mr Lilley in Parts 12.2 and 12.3. Mr Lilly’s reading of General Tire appeared to be that if a successful proprietor licensed the IP right at all, the Group 2 approach applied. Thereafter the infringer had to take the proprietor as he found him and, specifically, had to accept whatever rate of royalty which the proprietor says he would have charged for a licence covering all the infringing acts. That in my view is a misreading of General Tire.[53]Lord Wilberforce (with whom Viscount Dilhorne and Lords Diplock and Kilbranon agreed) said this in the context of the ‘Group 2’ approach to the calculation of damages (at [825]):
“Two classic cases under this heading are Penn v. Jack (1866) 14 L.T. 495; (1867) L.R. 5 Eq. 81 and Aktiengesellschaft fur Autogene Aluminium Schweissung v. London Aluminium Co. Ltd. (No. 2) (1923) 40 R.P.C. 107 . In Penn v. Jack the patentee was shown to have approached all users of the invention and to have successfully required the vast majority to pay him a royalty of 2s 6d per horse power. The defendant was one of the few who refused and it was held that he should pay damages for infringement based on the accepted royalty rate on the basis that he might have expected to have got a licence at the same rate. The Aluminium case contains a clear statement by Sargant J., at pp. 113–114: “… what has to be ascertained is that which the infringer would have had to pay if, instead of infringing the patent, he had come to be licensed under the patent. I do not mean by that that the successful patentee can ascribe any fancy sum which he says he might have charged, but in those cases where he has dealt with his property merely by way of licence, and there have been licences at certain definite rates, there prima facie, apart from any reason to the contrary, the price or royalty which has been arrived at by means of a free bargain between the patentee and the person desiring to use the patented article has been taken as being the price or royalty that presumably would have to be paid by the infringer. In doing that, it seems to me that the court is certainly not treating the infringer unduly harshly; he should at least, in my judgment, have to pay as much as he would in all probability have had to pay had he to deal with the patentee by way of free bargain in the way in which other persons who took licences did in fact pay.”
These are very useful guidelines, but the principle of them must not be misapplied. Before a “going rate” of royalty can be taken as the basis on which an infringer should be held liable, it must be shown that the circumstances in which the going rate was paid are the same as or at least comparable with those in which the patentee and the infringer are assumed to strike their bargain.” “… what has to be ascertained is that which the infringer would have had to pay if, instead of infringing the patent, he had come to be licensed under the patent. I do not mean by that that the successful patentee can ascribe any fancy sum which he says he might have charged, but in those cases where he has dealt with his property merely by way of licence, and there have been licences at certain definite rates, there prima facie, apart from any reason to the contrary, the price or royalty which has been arrived at by means of a free bargain between the patentee and the person desiring to use the patented article has been taken as being the price or royalty that presumably would have to be paid by the infringer. In doing that, it seems to me that the court is certainly not treating the infringer unduly harshly; he should at least, in my judgment, have to pay as much as he would in all probability have had to pay had he to deal with the patentee by way of free bargain in the way in which other persons who took licences did in fact pay.”[54]If the ‘Group 2’ approach is to be applied, the proprietor must show that the earlier licences on which he relies to set damages had royalty rates calculated in the same way as, or at least in a comparable way to, the hypothetical licence which would have made the infringing acts lawful. It is not enough to show that limited licences had been granted for limited royalties. It is also not appropriate to extrapolate the royalty terms of a limited licence on the assumption that a licensee would just have to live with the extrapolation.[55]In the present case, to rely on a ‘Group 2’ basis for calculating damages Mr Lilley would have to have produced at least one example of a licence granted for the publication of one of his articles on the internet in relation to which(a) around £300-400 per month was payable in royalties for ‘first rights’ in one country;(b) the same sum per month, less a discount of about 8%, was payable for first rights publication in all other countries;(c) the sum payable under (b) was to be multiplied by the number of countries in which the article would be accessible on the internet, up to 194 or so countries in all;(d) around £160-185 per month was payable for ‘second rights’ publication in each country;(e) the sum payable under (d) was to be multiplied by the number of countries in which the article would be accessible on the internet, up to 195 or so countries in all.[56]In paragraph 1.2 of Part 6 of the Particulars of Claim Mr Lilley sets out “Examples of hypothetical licences for Web use”. Despite the heading, I take this section to refer to the actual licences on which Mr Lilley relies to support his calculations on the ‘Group 2’ approach. I have not seen the licences themselves but I will assume their royalty terms are as represented in paragraph 1.2. Even on that assumption they do not get anywhere close to indicating that either Mr Lilley or LIS ever granted a licence with royalty terms along the lines I have indicated the preceding paragraph. Mr Lilley claims that in relation to the article ‘Neural Computing’ £97.50 was paid for second rights in the UK, £195 for first right in Norway and £195 for first rights in Denmark. Since it is agreed that a willing licensee would not have paid more than £83 or so to be permitted to authorise publications to the extent that DMG did, I do not accept that the licences referred to in paragraph 1.2 are of a nature to provide any guide to the appropriate damages which DMG would have to pay if found to infringe Mr Lilley’s copyrights by authorising Gale and EBSCO to publish at the time (between two and ten years after first publication) and in the manner they did.[57]I reject Mr Lilley’s submission that the ‘Group 2’ approach would be the basis on which the court would calculate damages due to Mr Lilley if he were to succeed at trial. I have no doubt at all that in an inquiry as to damages the court would investigate what DMG would have paid Mr Lilley on the hypothesis of a willing licensor and willing licensee.

Conclusion

[58]That leaves me with the ‘Group 3’ calculation. Notwithstanding the force of Mr Campbell’s submissions as to the maximum damages that Mr Lilley could arguably be awarded on the hypothesis of negotiation between Mr Lilley as willing licensor and DMG as willing licensee, I had initial doubts that at this stage I could conclude there was no realistic possibility that at trial the court would find that the sum due to Mr Lilley was higher than the maxima advanced by DMG after all relevant considerations had been taken into account, and what is more no realistic possibility that the damages would be sufficiently higher to warrant Mr Lilley having had the right to argue for such damages. I said so to Mr Campbell. His response was that I should be robust in my assessment of the maximum arguable damages.[59]However Mr Lilley then endorsed DMG’s figures for damages, as calculated on a willing licensor/willing licensee basis. In my judgment I must take him at his word. I have no reason not to.[60]Regarding the limitation point, there is no evidence as to when the relevant authorisations by DMG happened. I therefore do not take into account the possibility that all or part of Mr Lilley’s claim may be barred under the Limitation Act. That means the maximum quantum of damages which Mr Lilley could claim is about £83.[61]My best guess is that the trial of this action would take about two days. I also think that to make sure the trial is conducted with clearly defined issues and also to ensure that it does not overrun, a significant amount of case management would be necessary. That might take a day.[62]I do not believe this would be an appropriate use of the court’s resources when the maximum which could ever be at stake is around £83. It would be an abuse of the process. I must consider other litigants with more serious and possibly more pressing claims, the resolution of which would necessarily be delayed by the hearing of the trial of this action and any preliminary hearings in advance of the trial.[63]For that reason I will strike out Mr Lilley’s Particulars of Claim as a whole.

Cited in 4 later judgments