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You are here: BAILII >> Databases >> Intellectual Property Enterprise Court >> Absolute Lofts South West London Ltd v Artisan Home Improvements Ltd & Anor [2015] EWHC 2608 (IPEC) (14 September 2015) URL: https://www.bailii.org/ew/cases/EWHC/IPEC/2015/2608.html Cite as: [2015] EWHC 2608 (IPEC) |
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CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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ABSOLUTE LOFTS SOUTH WEST LONDON LIMITED |
Claimant |
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- and - |
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ARTISAN HOME IMPROVEMENTS LIMITED DARREN MARK LUDBROOK |
Defendants |
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Thomas Jones (instructed by Schofield Sweeney LLP) for the Defendants
Hearing date: 23 July 2015
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Crown Copyright ©
See also: [2015]
EWHC
2632 (IPEC)
Judge Hacon :
Background facts
Quantum under the user principle
The law
1. Member States shall provide appropriate sanctions and remedies in respect of infringements of the rights and obligations set out in this Directive and shall take all the measures necessary to ensure that those sanctions and remedies are applied. The sanctions thus provided for shall be effective, proportionate and dissuasive.
2. Each Member State shall take the measures necessary to ensure that rightholders whose interests are affected by an infringing activity carried out on its territory can bring an action for damages and/or apply for an injunction and, where appropriate, for the seizure of infringing material as well as of devices, products or components referred to in Article 6(2).
3. Member States shall ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right.
The user principle in this case
Additional damages and the Enforcement Directive
Mr Ludbrook's knowledge
"(d) Planet Create orally contracted with Mr Darren Ludbrook of Artisan on or around February 2010 to create a website. The images used on this occasion were to the best of our clients knowledge and belief, supplied by Mr Ludbrook. Our client has done other work for Mr Ludbrook and similarly, it is either Mr Ludbrook or one of his colleagues who have directly supplied all the images."
Whether s.97(2) of the 1988 Act still applies
[8] The disparities between the systems of the Member States as regards the means of enforcing intellectual property rights are prejudicial to the proper functioning of the Internal Market and make it impossible to ensure that intellectual property rights enjoy an equivalent level of protection throughout the Community. This situation does not promote free movement within the internal market or create an environment conducive to healthy competition.
[9] The current disparities also lead to a weakening of the substantive law on intellectual property and to a fragmentation of the internal market in this field. This causes a loss of confidence in the internal market in business circles, with a consequent reduction in investment in innovation and creation. Infringements of intellectual property rights appear to be increasingly linked to organised crime. Increasing use of the Internet enables pirated products to be distributed instantly around the globe. Effective enforcement of the substantive law on intellectual property should be ensured by specific action at Community level. Approximation of the legislation of the Member States in this field is therefore an essential prerequisite for the proper functioning of the internal market
[10] The objective of this Directive is to approximate legislative systems so as to ensure a high, equivalent and homogeneous level of protection in the internal market.
(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.
1. Without prejudice to the means which are or may be provided for in Community or national legislation, in so far as those means may be more favourable for rightholders, the measures, procedures and remedies provided for by this Directive shall apply, in accordance with Article 3, to any infringement of intellectual property rights as provided for by Community law and/or by the national law of the Member State concerned.
The Enforcement Directive and the 2006 Regulations
3. (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.
1. Member States shall ensure that the competent judicial authorities, on application of the injured party, order the infringer who knowingly, or with reasonable grounds to know, engaged in an infringing activity, to pay the rightholder damages appropriate to the actual prejudice suffered by him/her as a result of the infringement.
When the judicial authorities set the damages:
(a) they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the rightholder by the infringement;
or
(b) as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question.
[26] With a view to compensating for the prejudice suffered as a result of an infringement committed by an infringer who engaged in an activity in the knowledge, or with reasonable grounds for knowing, that it would give rise to such an infringement, the amount of damages awarded to the rightholder should take account of all appropriate aspects, such as loss of earnings incurred by the rightholder, or unfair profits made by the infringer and, where appropriate, any moral prejudice caused to the rightholder. As an alternative, for example here it would be difficult to determine the amount of the actual prejudice suffered, the amount of the damages might be derived from elements such as the royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question. The aim is not to introduce an obligation to provide for punitive damages but to allow for compensation based on an objective criterion while taking account of the expenses incurred by the rightholder, such as the costs of identification and research.
Unfair profits
"[79] … One interpretation of art.13(1)(a) would require the court always to take into account the profit made by the defendant from his knowing infringement and to make an award commensurate with that profit. But I do not think that is right. If profits are automatically unfair because they have been derived from acts of knowing infringement, the defendant in such cases will virtually always have the benefit of unfair profits. This would imply that whenever knowledge is established, the claimant is almost bound to be entitled to a bonus on top of damages for loss of profit, the quantum of the bonus increasing presumably in proportion to the profit that the defendant has made – it is not easy to discern what the correct proportion would be. I do not believe that this would be consistent with the overriding aim in art.13(1) of paying the rightholder damages appropriate to the actual prejudice suffered as a result of the infringement. Neither would it be consistent with the aim of avoiding punitive damages.
[80] I think art.13(1)(a) must contemplate something else, namely that wherever the court reaches the view that the claimant would not receive adequate compensation for the actual prejudice he has suffered if damages were to be assessed by reference to lost profits, moral prejudice and expenses (part of art.13(1)(a)), or royalties according to the 'user principle' (art.13(1)(b)), or an account of profits, there is flexibility under art.13(1)(a) to award an additional sum related to the profit the defendant has made from knowing infringement.
[81] This would arise, for example, if the defendant made no direct financial profit from the infringement – so an account of profits would be of little use – but his business expanded in volume and/or in reputation on the back of loss-leader infringements. For the claimant, aside from losing sales there would be a likelihood of further loss because of the expansion of a competing business. The expansion would not constitute a profit by the defendant in the usual direct sense, but it would be a contingent profit nonetheless and an unfair one.
[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."
The application of the Enforcement Directive to this case
Section 97(2) of the 1988 Act
Conclusion