Fendi Italia Srl & Ors v Rolo Fashion Limited & Anor [2026] EWHC 1703 (IPEC)

[2026] EWHC 1703 (IPEC)Case No IP-2024-000096
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY ENTERPRISE COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 9 July 2026
Before
HIS HONOUR JUDGE HACON
Between
FENDI ITALIA SRLClaimantsLOEWE S.A.ClaimantCHRISTIAN DIOR COUTURE S.A.ClaimantCELINE S.A.ClaimantLVMH MOËT HENNESSY LOUIS-VUITTON SEClaimantROLO FASHION LIMITEDDefendantsGEORGIA ALDRIDGEDefendant
Approved JudgmentThis judgment was handed down remotely at 11.10am on 9 July 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................HIS HONOUR JUDGE HACON
[1]This is an inquiry as to damages for infringement of the first to fourth claimants’ trade marks (‘the Trade Marks’). Each of those claimants is the owner of a well-known fashion brand and all are under the ultimate control of the fifth claimant.[2]By an Order dated 17 January 2025 judgment in default was granted in favour of the claimants. The defendants have infringed the Trade Marks by selling what the claimants describe as counterfeit luxury goods bearing one or more of the Trade Marks. The first defendant (‘Rolo Fashion’) has infringed as a trading entity. The second defendant (‘Ms Aldridge’) is jointly liable with Rolo Fashion and has also infringed as a sole trader before Rolo Fashion was incorporated.[3]At the request of the parties this is a judgment on the papers. I have received written submissions on behalf of the claimants from Richard Ferguson (Solicitor-Advocate) of Stobbs (IP) Limited and on behalf of the defendants from Richardson Lissack Limited, solicitors. The proceedings[4]The claim form was issued on 15 August 2024. On 3 September 2024 an ex parte freezing injunction was granted. The injunction was continued until trial or further order with the consent of the defendants by an order dated 16 September 2024.[5]The Order of 16 September 2024 included a requirement that by 26 September 2024 the defendants were to provide the claimants with copies of statements of account for the period January to August 2024 from the defendants’ Halifax, Monzo, Crypto and PayPal accounts. Bank statements were disclosed by the defendants, including a PayPal account belonging to Ms Aldridge which revealed 55 payments to a person or entity identified as ‘Xu Qiu Ping’.[6]The order for judgment in default of 17 January 2025 required the defendants to serve on the claimants within 21 days an affidavit disclosing the following to the best of the defendants’ knowledge, exhibiting relevant documents including invoices, purchase orders, emails and bills of lading:(1) the names and addresses of parties by which the defendants have been supplied with infringing goods, including the following specified sources: (a) Xu Qiu (apparently the same person or entity as Xu Qiu Ping), (b) DHgate.com and (c) AliExpress.com;(2) the number of infringing goods received and the prices paid;(3) the names and addresses of the entities to which the defendants supplied infringing goods; and(4) the number of infringing goods sold by the defendants together with the prices charged.[7]On 3 March 2025 the defendants served an affidavit with transaction records relating to the supply of infringing goods from AliExpress.com but nothing else. On 2 May 2025 the claimants made informal Part 18 Requests seeking the further information ordered. The defendants responded on 28 May 2025, appending an export from a WhatsApp group relating to messages exchanged between 25 April 2023 and 2 October 2024. This was in plain-text format, so excluding images. In what I take to have been an explanation of why these messages were not disclosed earlier, the defendants said that Ms Aldridge’s phone had been stolen and that the WhatsApp disclosure had been obtained from another device to which she had access.[8]On 15 December 2025 an order was made giving directions in the inquiry. The pleadings[9]Points of Claim were filed on 26 January 2026. They identify three heads of damage:(1) damage to the reputation of the brands,(2) profits lost as a consequence of lost sales and(3) lost licensing income. The second and third are alternatives although either or both could in principle be damage suffered cumulatively with the first.[10]The Points of Claim provide reasons why damage has been suffered by the claimant due to the defendants’ sales of counterfeit goods but make no attempt to quantify such loss. Quantification is limited to loss of profits.[11]The claimants allege that the disclosure provided by the defendants has been both incomplete and inconsistent in the following respects:(1) No disclosure has been given relating to the supply of infringing goods from DHgate.com.(2) Full disclosure relating to the supply of infringing goods from AliExpress.com has not been provided. The transaction records disclosed do not take into account Ms Aldridge’s trading on her own account since 15 August 2018 (the start of the limitation period) and are not consistent with the WhatsApp messages disclosed. The documents do not indicate which goods supplied bore one or more of the Trade Marks infringed.(3) Transactions with Xu Qui have not been disclosed for any period before 1 January 2024. There has been no evidence or explanation of how orders to Xu Qui were placed, including those identified in Ms Aldridge’s PayPal account.(4) (i) The WhatsApp messages omitted images which would provide relevant information. Posts and messages appear to have been deleted. (ii) Ms Aldridge had said that the WhatsApp messages had been obtained from a device other than her own phone, yet the entries refer to Ms Aldridge as ‘me’, implying that if there was a second device, it and the stolen device were linked to a single phone number for simultaneous access.(5) No disclosure was provided relating to two Instagram accounts: @sourcedfashionuk_ and @sourcedfashionuk2, both of which were, according to the claimants, used to offer for sale and sell infringing goods.(6) The defendants asserted that their business operated exclusively by dropshipping, that is to say fulfilling retail sales by obtaining goods from suppliers only as ordered by customers without holding inventory. Yet the WhatsApp messages contain references to products being ‘in stock’.[12]The Points of Defence for the most part go no further than noting the way in which the claimants’ case is put. They say that Ms Aldridge has no funds of any significance, that the sums in her frozen accounts are effectively at zero and that a judgment debt of any significance would be impossible to pay.[13]However, the defendants address the alleged lack of disclosure on their part. With regard to points (1) to (3) and (5), the Points of Defence say that all documents in the defendants’ possession have been provided. As to point (4)(i), they say that images were deleted by participants, which I understand to be the parties sending the WhatsApp messages. Point (4)(ii) is said not to be understood. On point (6) the Points of Defence say that use of the words ‘in stock’ by Ms Aldridge in WhatsApp messages does not mean that there was any stock.[14]The Points of Defence assert complaints about incomplete disclosure should have been tested by an application to the court for further disclosure. The law[15]No issue arises on the general principles of law which govern the assessment of damages in intellectual property cases, see for example Ultraframe (UK) Limited v Eurocell Building Plastics Limited [2006] EWHC 1344 (Pat) at [47], drawn from Gerber Garment Technology Inc v Lectra Systems Ltd [1995] RPC 383 at first instance and [1997] RPC 443 on appeal.[16]It is well established in patent actions that where a claimant has exploited its patent by manufacture it can claim(a) the lost profit on sales which it would have made had the defendant’s infringement not caused those sales to have been lost,(b) lost profit on sales made by the claimant to the extent that the defendant’s infringing sales caused the claimant to lower its price on those sales and(c) a reasonable royalty on sales by the defendant to which no loss under (a) or (b) can be ascribed, see Ultraframe at [47(v)].[17]An award of a reasonable royalty under (c) is often referred to as an award under the ‘user principle'. In Reed Executive plc v Reed Business Information Ltd [2004] EWCA Civ 159, Jacob LJ, with whom Auld and Rix LJJ agreed, said:
‘[165] I would add only one further matter in relation to damages. I am by no means convinced that the “user” principle automatically applies in trade mark or passing-off cases, especially where the “mark” concerned is not the sort of mark available for hire. The ordinary case is one that just protects goodwill. For damages to be awarded on the user principle is close to saying there is no damage so some will be invented. It is not the same sort of thing as having to pay for use of an invention (the basis of the user principle in patents). At present there is no clear finding that the inquiry should proceed on a user basis. Whether it should do so will be a matter for the judge—who thus far has said no more than that he “apprehends” that a user basis will be used.’
[18]There have been instances since Reed in which the court has found that the trade mark proprietor was in the habit of licensing the trade mark found to be infringed and for that reason damages on the user principle were awarded, see for example National Guild of Removers and Storers Ltd v Jones [2011] EWPCC 4. There was an appeal from that judgment but not on this point. HH

Judge Birss considered Reed (at [13]):

‘Jacob LJ draws a distinction between the ordinary case in which the mark just protects goodwill and another kind where the mark is the sort of mark available for hire. The ordinary cases are those in which the mark is used only by one business to distinguish its goods (or services) from those of all other competitive businesses. So for example to a consumer the trade mark “Flash” means a particular brand of cleaning fluid, nothing more. Competitors do not (I presume) pay the owners of Flash floor cleaner a royalty to use that mark on their own cleaning products. In that case the mark is never available to third parties to use for a fee at all. Jacob LJ's point that awarding user damages is close to awarding damages when there is really no damage at all, relates to that sort of case.’
[19]As implied by Jacob LJ, the damage consequent upon the infringement of a trade mark is not the same in form as that which follows from infringement of a patent.[20]A patentee will monetise its invention by selling protected products and/or by licensing the invention. An infringer causes damage by taking some of the patentee’s market or by forcing the patentee to reduce its prices or by failing to pay due licence fees, or any combination of the foregoing.[21]A trade mark is a signal to the public that the marked goods or services are made available by or with the approval of the owner of the trade mark. An infringer causes damage by interfering with that signal and/or by otherwise exploiting or harming the reputation enjoyed by the mark.[22]Nonetheless, if as a consequence of the infringement customers buy the infringer’s goods or services in place of those marketed by the trade mark proprietor, it would follow that the proprietor has lost sales and can claim the profits lost. I do not understand this to be inconsistent with Jacob LJ’s observations in Reed.[23]Moreover, where customers would never have bought from the trade mark proprietor but did buy from the infringer – for reasons of price for instance – then unless the view is taken that on the facts the trade mark proprietor has suffered no damage whatsoever, it seems to me that some means must be found to assess the damage done by that sort of infringement.[24]In a patent case damages may be assessed on the user principle even where on the facts the patentee would never have granted a licence. In such instances the false but necessary assumption is made that patentee and infringer were a willing licensor and a willing licensee respectively. It is a means of assessing compensation faute de mieux. It is not evident to me why the same should not apply in a trade mark case even where the trade mark proprietor would not have licensed the mark to the infringer. 32Red plc v WHG (International) Limited [2013] EWHC 815 (Ch) was a post-Reed inquiry as to damages for trade mark infringement in which, with the agreement of both sides (by the time of the trial), the user principle was adopted by the court.[25]In the present case the claimants claim damages on the user principle in relation to acts of infringement which did not result in lost sales on the part of the relevant claimant. I will discuss the merits of the claim below but to begin with I take the view that such a claim is available in law. The claimants’ evidence[26]Each side filed evidence. For the claimants there was a witness statement dated 26 March 2026 from Nicolas Lambert, who is Head of Online Brand Protection at the fifth claimant. He sets out information confirming the reputation of the brands under which the first to fourth claimants trade and by implication the reputations of the Trade Marks. None of this is disputed by Ms Aldridge, who provided a witness statement for the defendants.[27]Mr Lambert explains that counterfeit goods can be of lower or higher quality. He says that at least some of those sold by the defendants fall into the category of higher-quality counterfeits, referred to in online communities as ‘superfakes’ or ‘dupes’. He adds that the prices charged and the higher attention to detail tend to deceive the public into believing that they are the genuine branded products and that the counterfeiting industry makes this distinction in online communications, using such terms as ‘1 to 1’ or ‘mirror quality’ to identify high-quality counterfeits. The point of this evidence is to support a primary case advanced by the claimant that sales of a counterfeit product by the defendants in significant part resulted in a lost sale by one of the first to fourth claimants, as opposed to feeding a distinct market.[28]I am not convinced. Mr Lambert provides a helpful table comparing the prices charged by the defendants for their infringing products and the prices charged in each case by the relevant claimant for the equivalent genuine product. The defendants’ prices are consistently and markedly lower, in one instance less than 5% of the third claimant’s price. On average, as shown in the table, the price of the counterfeits is a little under 15% of the price charged by the first to fourth claimants. It would take a naïve consumer to believe that products sold at those price levels are genuine. The online messages from members of the public quoted by Mr Lambert and as expanded upon in the claimants’ written submissions do not seem to me to suggest a belief that the counterfeit products are genuine, rather that they are very good imitations at prices which are much lower than those charged by the claimants.[29]The bulk of Mr Lambert’s evidence goes to the loss of profits by the claimants caused by the acts of infringement, the only head of loss quantified. Loss of profits[30]Mr Lambert starts by estimating the average profit made by the first to fourth claimants on each item sold. He sets out a table showing revenue, profit and operating margins for the years 2020 to 2025 from which he calculates an average sales price per product of £751.67, with an average profit of 38%, giving an average profit of £285.63 for each sale.[31]Mr Lambert’s approach to the number of infringing products sold by the defendants is more involved. As part of the defendants’ disclosure Ms Aldridge provided a transcript of messages exchanged in a WhatsApp group for the period 25 April 2023 to 2 October 2024 (‘the Transcript’). It is exhibited to Mr Lambert’s statement. Mr Lambert identifies 1,311 members within the group. Significantly, he assumes that each member made at least one purchase of a counterfeit item. Over the 17-month period covered by the Transcript, this amounted to 77.12 sales per month. He takes the period over which the claimants could claim damages to be 72 months which, multiplied by 77.12 sales per month, makes a total of 5,552 infringing sales.[32]Mr Lambert then makes three alternative assumptions: that the substitution rate – the percentage of sales made by the defendants which resulted in a lost sale by the first to fourth claimants – was either 10%, 20% or 30%. On those three alternatives, total sales of 5,552 items by the defendants caused the claimants to lose sales of 555, 1,110 or 1,666 products respectively. Multiplying those numbers by the assumed average profit of £285.63 per sale, this gives alternative figures for the total profit lost: £158,524.65, £317,049.30 or £475,859.58.[33]Mr Lambert concludes by stating his understanding that identifying which substitution rate, if any, the court should apply was a matter for submissions. Damage to reputation[34]The claimants’ written submissions rely in addition on what Mr Lambert says about the damage suffered by the claimants to their reputation as a consequence of the defendants’ acts of infringement. Mr Lambert states:
‘58. Counterfeit goods of this type can affect brand reputation by introducing products of variable and uncontrolled quality into the market. They may also influence consumer perception of the relevant brands, including expectations around price, quality and presentation. Where counterfeit versions are offered at prices close to those of authentic products, or promoted as highly similar to genuine goods, the resulting marketplace can impact demand for the genuine items and contribute to dilution of the brand’s distinctiveness. … 60. Purchasing counterfeit goods, particularly where the transaction takes place through informal or unofficial channels, also exposes consumers to a material risk of being scammed. In my experience of online brand protection, sellers operating in these environments frequently use temporary accounts, private messaging apps, or alternative telephone numbers, making it difficult for consumers to verify who they are dealing with. As a result, consumers may pay for goods that are never delivered, receive products that differ significantly from the description provided, or be unable to obtain refunds or exchanges. Because the trading structure is informal and lacks the accountability mechanisms found in legitimate retail settings, consumers have limited practical recourse if they encounter problems with the transaction.’
[35]Mr Lambert then quotes exchanges between Ms Aldridge and purchasers of infringing goods from another source at lower prices than those offered by the defendants. He said:
‘62. This type of incident is damaging to the relevant brand owner because, from a consumer’s perspective, it is closely connected with the wider marketplace in which counterfeit goods are traded. When consumers are drawn into unofficial channels of this kind, including those linked to counterfeit activity, they may associate their negative experiences (including loss of money, non-delivery, or poor quality items) with the brand whose trade marks are being misused.’
The defendants’ evidence[36]Ms Aldridge filed a witness statement replying to Mr Lambert. She says that it was prepared following discussions with her solicitors following service of Mr Lambert’s statement. Ms Aldridge only addresses Mr Lambert’s calculations of the first to fourth claimants’ lost profits and then goes on to offer an alternative approach of her own for calculating profits lost.[37]Ms Aldridge’s single substantive criticism of Mr Lambert’s calculations follows from her statement that only a very small number of the WhatsApp group featured in the Transcript bought a product from the defendants. She says that some bought more than one, but many bought nothing. Ms Aldridge contends that Mr Lambert’s assumption that each member made at least one purchase of a counterfeit item is false, that it fails as a foundation for the rest of his calculations and so those calculations must fall away.[38]Ms Aldridge’s preferred approach starts with the bank statements she disclosed for the period January to August 2024, namely those for her Halifax and PayPal accounts and Rolo Fashion’s Monzo account. She says that these provide a complete and accurate basis for assessing the number of sales of infringing products in the 72 months identified by Mr Lambert. She then says that the most relevant account for that period is the Monzo account, without explaining why. The Monzo statement is exhibited but no statements from the other two accounts are shown. The Monzo statements show deposits of £51,551.14 and payments out totalling £55,002.00.[39]Next, Ms Aldridge relies on the average retail price of the first to fourth claimants’ products, £751.67. She says this gives total sales of 69 items in the 7-month period of January to August 2024, or around 10 sales per month. The figure of 69 sales appears to have come from dividing £51,551.14 by £751.67.[40]I am at a loss to see why the average price charged by the claimants was used. To calculate how many items were sold by the defendants, it would seem that the average price per product charged by the defendants is the relevant price, which Mr Lambert has calculated to be £110. Ms Aldridge does say that the majority of items were sold for far less than £751.67 but Mr Lambert’s table indicates that the highest price was £235 and most products were sold well below that figure. If £51,551.14 is divided by £110, the number of assumed sales would be just over 468, or around 66 sales per month.[41]Returning to Ms Aldridge’s evidence, she uses her figure of 10 sales per month, multiplies that by 72 (the number of months in Mr Lambert’s period for infringing sales), arriving at a total of 720 assumed infringing sales.[42]Finally, Ms Aldridge adopts Mr Lambert’s three alternative figures for the substitution rate: 10%, 20% and 30% and also accepts (at least for her calculation) Mr Lambert’s estimate of the claimants’ average profit per sale: £285.63. Taking the three substitution rates in turn, Ms Aldridge arrives at a total loss by the claimants of £30,565.36, £41,130.72 or £61,696.08. Ms Aldridge concludes by saying that these figures are the best starting points from which the court can make a determination. I am not sure what Ms Aldridge means by starting points. Whatever she means, she does not say which of the three figures is the most reliable. Discussion Loss of profits[43]I begin with the rival approaches to quantifying the loss of profits suffered by the claimants. I fully accept that an inquiry as to damages can in the way of things be imprecise but the uncertainties in the approaches of both sides are many and wide. I agree with the claimants that the defendants should not profit from inadequate disclosure. I do not agree with the defendants’ assertion that the solution was for the claimants to apply for specific disclosure, or perhaps to make a succession of applications, apparently on the basis that this is the correct way to winnow out relevant documents. While I acknowledge that Ms Aldridge was probably at that stage acting as a litigant in person for both defendants, it seems to me that the order for disclosure was reasonably straightforward and it is not at all clear that Ms Aldridge complied with it in a way in which she could and should have done.[44]One point is not in dispute: the claimants have suffered loss under this head. I must therefore attempt to put a figure on it.[45]I do not propose to itemise each of the uncertainties involved in Mr Lambert’s calculations since I agree with Ms Aldridge that a key plank in his reasoning cannot be accepted. No basis has been provided for his assumption that each member of the WhatsApp group bought one product from the defendants. It was for the claimants to provide at least some support for this central part of their case and they did not. On the other hand, neither do I accept Ms Aldridge’s evidence that an unstated but very low number of the group bought a product.[46]Ms Aldridge’s approach has some sound basis. In principle it makes sense to calculate how many sales the defendants made in the 72-month period by taking their income over that time and dividing it by the average price of the goods sold. An obvious defect is that Ms Aldridge relies on one account only without saying why and assumes that the income over the 7 months shown in the statements for that account is representative of the defendants’ income over the 72-month period. However, a large uncertainty is better than the almost complete uncertainty on which Mr Lambert’s calculations are based. Another advantage of adopting Ms Aldridge’s method is that she is willing to accept many of the assumptions made by Mr Lambert in the course of her calculations. These may or may not be unreliable, but she has gone along with them so far as this inquiry is concerned.[47]One point I cannot accept from Ms Aldridge is that the number of the defendants’ sales can be calculated by dividing the defendants’ income by the average price charged by the claimants. I will substitute Mr Lambert’s figure for the average price of the defendants’ products which, as I have said, gives a figure of 66 sales per month. Multiplied by 72, this makes an assumed total of 4,752 sales.[48]Ms Aldridge has elected to accept Mr Lambert’s estimates of the alternative substitution rates and has given no reason to prefer one over the other. Having read the written submissions I am persuaded that the defendants’ probable failure to give proper disclosure and thereby to provide the court with a complete and satisfactory basis on which to calculate damages means that the defendants are not entitled to presumptions in their favour. On the other hand, I find no basis for a high degree of substituted sales. I will assume that the correct figure is 15%. This would mean that sales by the defendants caused the claimants to lose around 713 sales. Using a figure for the claimants’ profit per item of about £280 provides a total loss of £199,640, which I will round up to £200,000. User principle[49]That leaves the 4,039 sales made by the defendants which did not deprive the claimants of a sale. The claimants claim damages for these under the user principle. The claim is pleaded but no evidence from either side has been provided on which the court can base an assessment.[50]The defendants say only that because lost profits can be satisfactorily assessed there is no need to consider what would amount to a reasonable royalty. I fail to see the logic in that since neither side takes the position that every sale by the defendants resulted in a lost sale by the claimants.[51]For reasons discussed below, I see no evidential basis for a finding that the defendants’ sales have had an effect on the reputation of any of the claimants’ trade marks. The question therefore is whether, in respect of sales made by the defendants which neither deprived the claimants of a sale nor harmed the reputation of any of the trade marks, the claimants are entitled to be compensated or alternatively whether the defendants had the right to free use of the infringing signs. The latter is not instinctively the more attractive result.[52]The Particulars of Claim include the allegation that the defendants’ use of their infringing signs took unfair advantage of the distinctive character or repute of the claimants’ trade marks and were thereby acts of infringement under s.10(3) of the Trade Marks Act 1994. While a judgment in default is not a finding of anything on the merits, the defendants have chosen not to challenge any part of the claimants’ case. It seems to me that I must assume that the sales by the defendants which did not result in any lost sale by a claimant or any damage to reputation were still infringing acts under s.10(3) for which the claimants are entitled to compensation due to the defendants’ taking unfair advantage of the distinctive character or repute of the trade marks. The only practical way of assessing it is on the user principle.[53]However, since there is no evidence on which an appropriate royalty can be based, I will assume that the licence royalty which the claimants would have charged was a bare minimum, which I will assess at 3% of the defendants’ selling price.[54]Taking the average selling price to be £110, 4,039 sales would give rise to a royalty of £13,328.70, which I will round down to £13,000. Damage to reputation[55]I find Mr Lambert’s evidence on damage to the reputation of the claimants’ trade marks to be speculative and lacking in support. For the reasons I have stated, the evidence does not suggest that purchasers from the defendants believed that they were buying products sourced from a claimant. More likely, they understood that they were dealing with the commonplace circumstance of counterfeit luxury goods being provided by parties of which the brand owner strongly disapproves. Accordingly there is no reason to suppose that they thought that the claimants bore any responsibility for the quality of the products or the conduct of the supplier.[56]The claimants’ written submissions further base the claim to reputational damage on dilution of the brands and/or tarnishment. The former is based on what is said to have been post-sale confusion. As I have stated, I do not believe that the evidence supports any relevant confusion. With regard to tarnishment, it is said that the defendants’ sales have associated the Trade Marks with the unregulated counterfeit market. This is true in the limited sense that purchasers and potential purchasers of the defendants’ products appear to know that the defendants have created a market which is deliberately run in parallel with the market for the claimants’ goods. This by itself does not lead to the result that the Trade Marks have been tarnished.[57]I find that there is no evidential basis for the claim that there has been damage to the reputation of their trade marks. Regulation 3[58]In the prayer for relief at the end of the claimants’ Particulars of Claim there is a claim for an enquiry as to damages ‘including damages under the Intellectual Property (Enforcement, etc.) Regulations 2006’. The Points of Claim plead that Regulation 3 applies because of knowing and deliberate infringements on the part of the defendants.[59]Regulation 3 provides so far as is material:
‘(1) Where in an action for infringement of an intellectual property right the defendant knew, or had reasonable grounds to know, that he engaged in infringing activity, the damages awarded to the claimant shall be appropriate to the actual prejudice he suffered as a result of the infringement (2) When awarding such damages – (a) all appropriate aspects shall be taken into account, including in particular – (i) the negative economic consequences, including any lost profits, which the claimant has suffered, and any unfair profits made by the defendant; and (ii) elements other than economic factors, including the moral prejudice caused to the claimant by the infringement; or (b) where appropriate, they may be awarded on the basis of royalties or fees which would have been due had the defendant obtained a licence. (3) This regulation does not affect the operation of any enactment or rule of law relating to remedies for the infringement of intellectual property rights except to the extent that it is inconsistent with the provisions of this regulation.’
[60]Regulation 3 is derived from art.13(1) of Directive 2004/48/EC on the enforcement of intellectual property rights. The two provisions are not in identical terms but no difference of significance to these proceedings was identified by either side.[61]My attention was drawn to this paragraph from Henderson v All Around the World Recordings Ltd [2014] EWHC 3087 (IPEC):
‘[82] Art.13 does not seem to cater expressly for the circumstance in which a cynical defendant calculates that his benefit from infringement is sure to outweigh the actual prejudice suffered by the claimant, making infringement an attractive option. I think the answer may be that in such an instance the court would readily infer that the claimant will suffer actual prejudice which goes beyond lost sales, making extra compensation appropriate.’
[62]This does not mean that if there is a finding of cynical infringement then further actual prejudice must always be assumed even when there is no evidentiary basis for it. I take the pleading on Regulation 3 in the Points of Claim to amount to an allegation of cynical infringement.[63]The claimants argue in their written submissions that a further award should be made under Regulation 3 to compensate the claimants for(i) the defendants deriving an unfair advantage from sales of their counterfeit products,(ii) tarnishment and dilution and(iii) the commercial benefit derived by the defendants. The first two are heads of damage which may be compensated by ordinary damages if appropriate. I have found that they are not. The third may or be directed to a claim for unfair profits within the meaning of Regulation 3. If it is, I would need more detailed argument on the meaning of unfair profits and why they arise in the present case before making an award under that head.[64]I make no further award under Regulation 3. Conclusion[65]I will direct that the defendants must pay to the claimants collectively the sum of £213,000. The parties are requested to agree a draft order.