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Cite as: [2013] EWPCC 1

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Neutral Citation Number: [2013] EWPCC 1
Case No: 1CL70035

IN THE PATENTS COUNTY COURT

Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
18/01/2013

B e f o r e :

HIS HONOUR JUDGE BIRSS QC
____________________

Between:
XENA SYSTEMS LIMITED
Claimant
- and -

(1) CANTIDECK
(2) CONQUIP INDUSTRIAL

Defendants

____________________

Hugo Cuddigan (instructed by DMH Stallard LLP) for the Claimant
James Abrahams (instructed by Arnold & Porter (UK) LLP) for the Defendant
Hearing dates: 9th, 12th November 2012

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    His Honour Judge Birss QC :

    Contents

    Topic Paragraph
    Introduction 1
    The heads of damage claimed 21
    The issues 39
    The law 41
    The witnesses 51
    Discussion 72
         (1) Are non-infringing rolling platforms substitutable for Patented Platforms? 73
         (2) What would hire customers of infringing platforms have done if they could not have hired infringing platforms from Cantideck? 77
         (3) What would customers purchasing infringing platforms from Cantideck have done if they could not have purchased infringing platforms from Cantideck? 86
         (4) Did Cantideck's hire of infringing platforms cause Xena to lose hires of fixed platforms? 93
         (5) Would Xena have been able to supply all of Cantideck's customers throughout the infringing period? 100
         (6) What would Xena have charged Cantideck's customers for platform hire if they had gone to Xena? 102
         (7) What additional costs would Xena have incurred if they had hired platforms to Cantideck's customers? 103
         (8) Can Xena claim for services provided to Cantideck's customers if they had gone to Xena? 106
         (9) What additional costs would Xena have incurred if they had provided additional services to Cantideck's customers? 108
         (10) What is the appropriate notional royalty on Cantideck's infringing sales/hires that would not have gone to Xena? 109
         (11) Calculation issues 110
         (12) Did Cantideck knowingly infringe the Patent? 111
         (13) Was Mintz Levin's letter of 4 June 2008 a deliberate attempt to mislead Xena? 112
         (14) Was Arnold & Porter's letter of 8 December 2010 a deliberate attempt to mislead Xena? 113
         (15) Should Cantideck pay Xena all its "unfair profits" and further damages for "moral prejudice"? 114
         (16) What is the appropriate rate of interest? 115
         (17) How should interest be applied? 117
    Heads of damages - calculations 120
    Conclusion 121

    Introduction

  1. This is an inquiry into damages for patent infringement. Mr Hugo Cuddigan appears for the claimant (Xena) instructed by DMH Stallard. Mr James Abrahams appears for the defendants instructed by Arnold & Porter.
  2. Xena owns European Patent (UK) No. 1 392 939 ("Rolling platform"). The invention is a kind of loading platform used in the construction industry. In the process of constructing a large building, loading platforms are installed temporarily in order to allow materials to be loaded on and off by crane. In the past this job was done by scaffolding but by the early 2000s dedicated loading platforms were in use. One kind of platform is a "fixed" platform. A fixed platform is little more than an open topped metal box which is fitted into the open side of a building with a part sticking out beyond the side of the building to allow access by the crane. A "rolling" platform is different because it rolls in and out of the side of the building. Both fixed and rolling platforms can be used alone or in groups. A group of rolling platforms can be installed one above the other up the side of a building. The units can be rolled in and out like a chest of drawers. Obviously a group of fixed platforms cannot be installed that way since the higher platforms would impede access to the lower ones.
  3. The invention is an improved kind of rolling platform. One of the debates in this case related to the advantages of the invention and I will deal with that in context below.
  4. The patent application was filed on 24th May 2002 claiming priority from 25th May 2001. It was granted on 21st June 2006.
  5. In 2006 Xena was the market leader in loading platforms in the UK. It hired out both fixed and rolling platforms. The rolling platforms were in accordance with the patent.
  6. There was a single competitor in relation to rolling platforms, a company called Cranetech. Cranetech offered two kinds of rolling platforms over time, neither of which was covered by the patent. Initially Cranetech made and sold its own product, called Rollerdeck. The last three Rollerdecks were sold in early 2006. Then Cranetech started selling and hiring an Australian made rolling platform called Superdeck. This began in August 2006 and continued throughout 2007. The extent of Cranetech's impact on the market is an issue to be addressed below.
  7. Both defendants are unlimited companies run by the Critchley family. The second defendant, Conquip, was by 2006 an established company in the construction industry selling and hiring equipment to contractors. In 2006 it decided to enter the market for loading platforms and set up Cantideck as a vehicle for that business. Conquip bought a rolling platform from Xena. Xena did not normally sell rolling platforms but made an exception in this case because the terms of the sale were that the platform would be exported and would not come back into the UK. Conquip (or Cantideck, the distinction does not matter for this purpose) sent the rolling platform to a German company (Florian Eichinger GmbH) and asked them to copy it. Eichinger made copies of the platform and shipped them back to the UK. Cantideck started hiring and selling the platforms to customers. Since they were copies of the Xena platforms, just as the Xena platforms fell within the scope of the patent, so the Cantideck platforms infringed the patent. Cantideck also dealt in fixed platforms.
  8. On 5th July 2006 David Brown, then MD of Xena emailed Rob Critchley, Operations Director of Conquip. Xena thought that Conquip had hired a Xena platform for use on a UK site (to a customer called Getjar). The email states that this was regarded as a serious breach of contract. The email also states that Xena understood that Conquip were actively marketing Xena's platform for sale or hire and states "as you are aware we hold the patent for this equipment". The email ends by requiring Conquip to cease using all Xena products. Rob Critchley's reply states that Conquip do not sell or hire Xena platforms in the UK and states that the product they distribute was made in Germany. Mr Brown replied, still on 5th July, that the platform was an exact copy of the Xena unit and is in contravention of Xena's patent. Mr Brown asked for the identity of the manufacturer and warned Rob Critchley that Xena took this seriously and would take "all necessary steps" regarding patent infringement. There was no reply to this email. On 4th December 2006 Mr Brown sent another email to Rob Critchley, pointing out that the manufacturer had not been identified, stating that Xena regarded Conquip as acting in breach of contract and in infringement of the patent, and stating that solicitors had been instructed.
  9. On 16th February 2007 Cantideck's patent attorneys Mintz Levin wrote to Xena about the patent. The letter asserts that until December 2006 Cantideck had been unaware of the patent. The letter also states that Cantideck believes the patent is invalid and will file an opposition against it at the European Patent Office before 21st March 2007, when the nine month opposition period expires. The letter ends by stating that Cantideck has decided to modify its rolling platforms in a particular way and that Mintz Levin has advised that the modified platforms would not infringe the patent.
  10. In May 2007 Simon Constantine, the Chairman of Xena arranged a meeting with Andrew Critchley, Managing Director of Conquip and Robert Critchley at the defendants' site. Mr Constantine noticed there were 20 rolling platforms on site. The Critchleys denied that their platform infringed the patent and stated they would invalidate the patent at the EPO. They also denied any knowledge of copying of the Xena platform by the company they claimed had made their platforms, which they said was a Czech company. Mr Constantine's view later was that this statement about the Czech company was a careful play on words because it was true that after the initial stock produced by Eichinger, later platforms were indeed made by a Czech company for Cantideck. Although Eichinger directly copied the Xena platform, the Czechs had not been given the Xena platform to copy directly, they had copied Eichinger's platform.
  11. Later in 2007 Cantideck started modifying their stock of rolling platforms. The modifications were similar to but not the same as the one proposed in the March 2007 Mintz Levin letter.
  12. On 12th May 2008 Xena wrote to a contractor called Ardmore Construction stating that a rolling platform it had purchased was an infringement of the patent. The platform was in fact a modified Cantideck platform. On 4th June 2008 Mintz Levin wrote to Xena stating that the letter to Ardmore was a groundless threat of infringement proceedings. The threat was groundless because the platforms did not infringe. Mintz Levin accused Xena of deliberately misleading Cantideck's customers and demanded undertakings from Xena not to make threats of patent infringement. Xena says that the Mintz Levin letter itself was misleading because although the modified platforms did not infringe, the letter takes no account of the fact that Cantideck had indeed been infringing in the past.
  13. Xena's patent attorneys replied on 18th June and then on 3rd July 2008 to the effect that the accusation of infringement was made in good faith and, in the July letter, produced a November 2007 photograph of a Cantideck rolling platform which was different from the one described in Mintz Levin's June letter and did indeed infringe. The correspondence continued, debating the point that the photograph had nothing to do with Ardmore, but the correspondence ended on 31st July when the Opposition Division of the EPO dismissed Cantideck's opposition to the patent and upheld it in a slightly amended form.
  14. Cantideck appealed to the EPO Technical Board of Appeal but the appeal failed. The patent was upheld in an amended form in September 2010 and on 11 November 2010 Xena's solicitors DMH Stallard wrote a letter before action to Cantideck in relation to the Cantideck rolling platform which had appeared in the photographs taken in November 2007. As the letter said, it seemed clear that at least prior to the date of the photograph Cantideck was engaged in infringing activities.
  15. On 8th December 2010 Cantideck's solicitors, Arnold & Porter, wrote to DMH Stallard. The letter offered undertakings not to infringe, stated that all rolling platforms had been modified so as to be non-infringing by December 2007 and offered 3,237.48 in damages. The basis for the damages calculation was explained in the letter. The letter stated that Cantideck had dealt in no more than 17 platforms which infringed the patent prior to modification. Of those 17 platforms, 13 had been sold to third parties and four were hired out in the relevant period. Figures were given and "all documents" in Cantideck's custody were annexed to the letter. Cantideck's total income from sales and hire is said to be 107,916 and the damages offered were essentially based on a 3% royalty. One of the documents annexed is a sales invoice No. 1340 for 10 platforms dated 31st August 2007 and marked "payment received with thanks". The price per unit is shown as 7,638.00.
  16. The figures provided in Arnold & Porter's letter are wrong. In fact Cantideck had 38 platforms in the relevant period, not 17, and its income was much more than the figure stated. The revenue from sale and hire of rolling platforms in 2006 and 2007 was just under 300,000. Moreover the true sales invoice for the sale of the 10 platforms shows that they were sold for 10,000 each.
  17. Proceedings were issued in the Patents County Court on 7th April 2011. As a result the Patents County Court (Financial Limits) Order 2011 (SI 1402/2011), which came into effect on 14th June 2011, does not apply to this claim (see paragraph 3(a) of that Order). In August 2011 the defendant submitted to judgment on liability with directions for a damages inquiry. The case management conference on the inquiry took place in April 2012. The directions permitted each side to call evidence from no more than 3 customers to address certain points.
  18. In May 2012 Xena was placed into administration.
  19. The inquiry was conducted on 9th and 12th November 2012. The claimant called evidence from Mr Smith, who had been General Manager of Xena from 2010 until the administration and from Simon Constantine. Although Xena had contacted customers, it did not call any customer witnesses. The defendants' principal witness was Garry Critchley, a director of both Cantideck and Conquip. The defendants also called evidence from John Marsh of Proplant, a customer of both the defendants and the claimant, as well as Jason Sudborough, founder and CEO of Cranetech. In addition the defendants relied on statements made by two further customers, Christopher Killoran and Rob Shergold. These were relied on as hearsay statements exhibited to a witness statement of Paul Abbott, a solicitor at Arnold & Porter.
  20. From now on it is convenient to refer to the defendants simply as Cantideck and I will do so below.
  21. The heads of damage claimed

  22. The damages claimed can be broken down as follows:
  23. A. Rolling platforms, rental customers;

    B. Fixed platforms, rental customers

    C. Services, rental customers

    D. Rolling platforms, purchasing customers

    E. Services, purchasing customers

    F. Reasonable royalty

    G. Interest

    H. Unfair profits and moral prejudice

  24. These are addressed below.
  25. A. Rolling platforms, rental customers

  26. Xena's case is that every hire of an infringing rolling platform by Cantideck in the relevant period (2006-2007) was a lost hire to Xena. Cantideck hired out 25 infringing platforms for a total of 897.6 weeks (213.8 in 2006 and 683.8 in 2007). There were very few variable costs which would have been associated with that increased hiring work and so nearly all the revenue which would flow from this work is a loss to Xena. Xena's average rental price was 143 per week and so the base sum of 128,356.80 (30,573.40 + 97,783.40) is claimed.
  27. Xena's case was that it had the capacity, using its existing stock of equipment, staff etc. to absorb all that extra hiring work throughout the period save that for the period from 1st July 2007 until the end of the year, to accommodate the extra business, Xena would have needed to hire an additional installation team for a cost of 32,500 for the half year. There was also a point about the number of platforms which would have been needed in November and December 2007.
  28. Cantideck's primary answer to all this is that if it had not been entitled to offer its rolling platforms, it was still offering and would have been entitled to offer its fixed platforms and would have done so to all the customers who took a rolling platform. Cantideck says that most customers did not in fact need a rolling platform and that fixed platforms were substitutable. Thus Cantideck contends no hires of rolling platforms were lost to Xena at all. This issue was debated before me as a question of fact. It may involve a point of law in the application of United Horseshoe Nail v Stewart (1888) 13 App Cas 401 but Mr Cuddigan argued the issue on the facts and reserved the right to argue the point of law if this case went on appeal. Mr Abrahams did not object to that course and I do not have to decide whether the argument is open to Cantideck in law. I will assume that it is and decide the facts.
  29. Cantideck also contends that customers wanting rolling platforms could have obtained them from Cranetech.
  30. B. Fixed platforms, rental customers

  31. Xena says that where possible customers obtain their platforms from a single source and so customers who hired rolling platforms from Cantideck would also typically hire fixed platforms too. Xena says this business would have gone to it had Cantideck not hired its rolling platforms. The invoices disclosed show that in the period Cantideck rented out fixed platforms for a total of 611.6 weeks to customers who also hired rolling platforms. Xena's average weekly price for a fixed platform was 137 and so Xena claims 83,789.20 in lost fixed platform rental.
  32. Cantideck point out that this argument depends on customers going to Xena for rolling platforms in the first place if they were unavailable from Cantideck, which Cantideck denies would have happened for the reasons given for point A above. Cantideck also says this point fails on the facts in any event and takes a point of law. The legal point is that Cantideck says that Xena's argument for these damages involves aggregating two losses of a chance, as Mr Abrahams put it "a chance of a chance", and is not allowed in law. A further point (or perhaps another way or making the same point) is that although Cantideck accepts points A, C, D and E would be foreseeable heads of loss if Xena did in fact lose customers (which is denied), this fixed platform loss would not have been foreseeable.
  33. C. Services, rental customers

  34. Xena says for all the rolling platforms hired out by Cantideck, not only would Xena have hired its rolling platform to those customers (point A above) but it would also have sold various services. These come to a net loss of 15.85 per week (22.97 per week aggregate lost profit on the services less 7.12 per week transportation costs). This comes to 14,226.96 (15.85 x 897.6 weeks).
  35. D. Rolling platforms, purchasing customers

  36. Xena's case in relation to the 13 rolling platforms sold by Cantideck is as follows. Xena only hired its platforms out and so would not have made the sales made by Cantideck. Xena says these purchasing customers must have anticipated a high level of usage of rolling platforms and so must have expected a favourable rental rate of 100 per week from Cantideck. Thus since the purchase price was 10,000 per platform the customer must have anticipated well in excess of 100 weeks use. So Xena claims lost rental income on 100 weeks hiring per rolling platform sold by Cantideck. This comes to 185,900 (13 x 143 x 100). This extra rental was still within Xena's capacity. Although the 100 week period would extent well beyond the end of 2007, Xena contends that this is a fair assessment overall given the various other assumptions being made. For example Xena has not challenged the idea of generally considering only the 2006-2007 period on the inquiry even though Cantideck has produced no documents to substantiate the assertion that all infringements stopped at the end of 2007.
  37. Cantideck's case on the sale point is that for 10 of the 13 units sold, the motives of the purchasing customer (Glencoe) were such that they wanted to make a purchase for tax reasons and so hiring platforms instead was not an option. Cantideck also says that when the purchased platforms were returned by Glencoe for modification to be rendered non-infringing sometime before the end of 2007, only 7 had been used. Finally Cantideck raises the same issues as for the rental case: if no rolling platform could be bought customers would have bought fixed platforms or bought rolling platforms from Cranetech etc..
  38. E. Services, purchasing customers

  39. Xena makes the same claim for lost services revenue in relation to the rolling platforms sold by Cantideck as it does for the rented rolling platforms. Xena says they would have gone with the 100 weeks lost hiring of rolling platforms, making a claim of (100 weeks x 13 platforms x 15.85 net lost revenue) = 20,605.
  40. F Reasonable royalty

  41. To the extent that Xena are unable to prove that Cantideck customers for rolling platforms would have hired them from Xena, a royalty is claimed on Cantideck's sales or rentals. Cantideck does not dispute this point in principle. The argument is about the proper rate. Xena claims a rate equal to 50% of Cantideck's profits for such rentals or sales. Cantideck contends a fair rate would be 3.8% of its gross sale or hire price.
  42. G Interest

  43. The argument over interest raised a dispute of law. Xena's case is that it is not simply claiming interest on the sums due under s69 of the County Courts Act 1984 but rather it is claiming, as a distinct head of damages, interest losses it has suffered as a matter of fact. That loss is interest which Xena had to pay because it was at all material times borrowing sums in excess of those claimed in this inquiry. It was paying interest on those borrowings at rates in excess of 8% and but for the infringing acts the interest on sums equivalent to the sums claim in damages for heads A to F would not have been paid. Damages equal to 8% of the sums above are claimed on this basis. Xena says these are foreseeable losses since it was foreseeable that it would be subject to borrowing. Xena submits that in Sempra Metals v Inland Revenue Commissioners [2008] 1 AC 561 the House of Lords decided that this kind of damage was in principle recoverable for breach of contract and in tort.
  44. Cantideck contended that Xena were only entitled to interest at the usual commercial rate applied under the relevant Act, i.e. 1% over the clearing bank base rate. Cantideck relied on Tate & Lyle v GLC [1982] 1 WLR 149 and Jaura v Ahmed [2002] EWCA Civ 210 and submitted that Xena were wrong about Sempra Metals.
  45. H Unfair profits and moral prejudice

  46. Xena submits that in addition to the damages calculated under the heads above, a further sum by way of damages can be awarded for unfair profits and moral prejudice under the Enforcement Directive. This raises a point of law. Cantideck denies that such damages are recoverable at all.
  47. On the facts Xena relies first on Cantideck's knowledge of the patent as a prerequisite for moral prejudice damages and not a matter of moral prejudice itself. The two matters of "moral prejudice" relied on are (i) the Mintz Levin letter of 4th June 2008 and (ii) the 8th December 2010 letter from Arnold & Porter, both of which are said to have been deliberate attempts to mislead Xena as to the facts of the defendants' activities. Xena says that Cantideck has made profits in respect of their sales and hiring of rolling and fixed platforms and in selling services and the court should award all these profits, which are unfair profits, to the claimant in addition to the normal damages claimed.
  48. Cantideck denies knowledge of the patent but did not argue the point after December 2006, which Mr Cuddigan contended was sufficient for his purposes. Cantideck disputes that the Mintz Levin correspondence was misleading at all but accepts that the Arnold & Porter letter was misleading, albeit not deliberately. However Cantideck offered no concrete explanation for how the Arnold & Porter letter came to be produced. Mr Abrahams apologised for it on behalf of his clients and submitted that while there may be consequences in costs if Xena's case on the letter is accepted, that did not justify a claim for damages.
  49. The issues

  50. The parties distilled out a comprehensive list of the issues which fall to be decided. The list is:
  51. ACTUAL LOSS ISSUES

    (1) Are non-infringing rolling platforms substitutable for Patented Platforms?

    (2) What would hire customers of infringing platforms have done if they could not have hired infringing platforms from Cantideck?

    (3) What would customers purchasing infringing platforms from Cantideck have done if they could not have purchased infringing platforms from Cantideck?

    (4) Did Cantideck's hire of infringing platforms cause Xena to lose hires of fixed platforms?

    (5) Would Xena have been able to supply all of Cantideck's customers throughout the infringing period?

    (6) What would Xena have charged Cantideck's customers for platform hire if they had gone to Xena?

    (7) What additional costs would Xena have incurred if they had hired platforms to Cantideck's customers?

    (8) Can Xena claim for services provided to Cantideck's customers if they had gone to Xena?

    (9) What additional costs would Xena have incurred if they had provided additional services to Cantideck's customers?

    NOTIONAL ROYALTY ISSUE

    (10) What is the appropriate notional royalty on Cantideck's infringing sales/hires that would not have gone to Xena?

    CALCULATION ISSUES

    (11) Calculation issues

    "UNFAIR PROFITS" AND "MORAL PREJUDICE" ISSUES

    (12) Did Cantideck knowingly infringe the Patent?

    (13) Was Mintz Levin's letter of 4 June 2008 a deliberate attempt to mislead Xena?

    (14) Was Arnold & Porter's letter of 8 December 2010 a deliberate attempt to mislead Xena?

    (15) Should Cantideck pay Xena all its "unfair profits" and further damages for "moral prejudice"?

    INTEREST ISSUES

    (16) What is the appropriate rate of interest?

    (17) How should interest be applied?

  52. Since both sides directed their submissions to this list, I will use the same approach.
  53. The law

  54. There was no dispute about the overall legal approach to assessing damages in a patent case. Both sides referred to General Tire v Firestone [1975] 1 WLR 819. In that case Lord Wilberforce identified the following general principles at 824C-E:
  55. i) "As in the case of any other tort the object of damages is to compensate for loss or injury."

    ii) "The general rule at any rate in relation to 'economic' torts is that the measure of damages is to be, so far as possible, that sum of money which will put the injured party in the same position as he would have been in if he had not sustained the wrong."

    iii) "the plaintiffs have the burden of proving their loss".

    iv) "damages should be liberally assessed but that the object is to compensate the plaintiffs and not punish the defendants."

  56. Lord Wilberforce identified three well known categories, a manufacturer losing sales, a licensor losing licensing revenue and the third category in which a notional reasonable royalty rate must be estimated. Xena contend it is in the first category, about which Lord Wilberforce said:
  57. "Many patents of inventions belong to manufacturers, who exploit the invention to make articles or products which they sell at a profit. The benefit of the invention in such cases is realised through the sale of the article or product. In these cases, if the invention is infringed, the effect of the infringement will be to divert sales from the owner of the patent to the infringer. The measure of damages will then normally be the profit which would have been realised by the owner of the patent if the sales had been made by him (see United Horse-shoe and Nail Co. Ltd. v. John Stewart & Co. (1888) 13 App. Cas. 401). An example of this is Boyd v. Tootal Broadhurst Lee Co. Ltd. (1894) 11 R.P.C. 175 where the plaintiff manufacturers proved that a profit of 7s per spindle would have been made, and settlements of litigation for lesser rates were discarded."
  58. The parties also referred to Gerber v Lectra [1995] RPC 383 (at first instance) and [1997] RPC 443 (in the Court of Appeal). Gerber illustrates the general overall approach in which one starts with the total infringing sales made by the defendant and then estimates the quantity of those infringing sales which the patentee would in fact have made. In relation to those sales a sum for that loss is awarded. Gerber also demonstrates that in calculating the losses for lost sales, marginal costs are deducted although fixed overheads will not be. So it is not correct to refer to the sum as "lost profit", it is actually "lost income" (Staughton LJ at p458 ln45-52). For the remaining infringing sales, which the patentee would not have achieved, a notional reasonable royalty under Lord Wilberforce's third category will be awarded.
  59. In relation to the claim for losses of unpatented fixed platform hiring, Cantideck accepted that losses for so called "convoyed goods" were recoverable in principle in a patent case (Gerber). Mr Abrahams pointed out that in Gerber itself the convoyed sales were goods sold together with the patented products and he argued that Xena were actually seeking to claim for the loss of a chance of a chance, which is not allowed. He argued that in Gerber the court had estimated the lost chance of a sale at 60% and awarded 60% of the profit of the patented goods and the convoyed goods. It did not assess the chance of the convoyed goods separately because that head was only awarded on the basis that it goes with the patented goods. So, he submitted:
  60. "For example, if the chance of the patentee selling the patented item was 50%, and the chance of selling the convoyed goods was 50% in any case where patented goods were sold, the right award is 50% of the profit on the patented goods and not a further award of 25% of the convoyed goods.
    This is because where the sale of the patented item gives the seller a mere chance to sell other goods, that is too remote []. Otherwise a supermarket that sold an infringing item would have to pay damages in respect of every lawful item in the shop."
  61. Mr Cuddigan called this a novel submission and did not agree with it. In my judgment Mr Abrahams' argument, when it is put as a matter of principle, is not right. By approaching it as a "chance of a chance" the argument sets too much store by one mathematical approach to assessing damages. It may be that there is something about the defendant's sales which means none of them, had they been made by the patentee, would have included the convoyed article or maybe all of them would have but these are all matters of fact open to be proved if necessary or proportionate by one side or the other. If, on the evidence available, there is nothing to distinguish sales which included the convoyed goods from sales which did not then one can say that the overall fraction of the patentee's sales which included convoyed goods reflects a probability for each sale that it would have included convoyed goods. Assuming that chance is a substantial one, then I can see no objection to taking it into account as long as the requirements of foreseeability and remoteness are satisfied. One could equally well divide the patentee's lost chance into two separate lost chances, a lost chance of high value sale of a patented product plus convoyed article (25% on Mr Abrahams' figures) and a lost chance of a lower value sale of a patented product alone (also 25%).
  62. However, although I do not accept Mr Abrahams' argument when it is put as a matter of principle, it seems to me that care needs to be taken with the facts in this sort of case. When a patentee sells two products side by side, one patented and the other not, it does not follow that just because, averaged over a period, a fraction of the customers who bought the patented article also bought the non-patented one, the patentee can claim for sales of the non-patented article. Gerber is clear authority that the scope of recovery is not restricted to activities which themselves constituted infringements but it is still limited by causation and remoteness. As Staughton LJ said (at 456 ln5-15):
  63. "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."

    Interest

  64. In the legal dispute about interest, Xena contends it is not claiming interest on damages to which the principles in Tate & Lyle and Jaura v Ahmed apply, whereby the interest rate allowed depends on the class of person the claimant belongs to but not to any special position the individual claimant may have been in. Instead Xena says it is claiming interest losses as a head of damage. Xena submits that although hitherto these were not recoverable damages in contract or tort, Sempra Metals decided that they were. Mr Cuddigan referred to the speeches of Lord Hope (paragraphs 16 and 17), Lord Nicholls (paragraphs 74 and 92-100) and Lord Scott (paragraph 132 at p609-B). I accept Mr Cuddigan's submission. Sempra Metals makes clear that a claim for interest losses is maintainable in law albeit that the actual interest losses must be pleaded and proved. There are no special rules in this area (per Lord Nicholls paragraph 95). I reject Mr Abrahams' submission. The aspect of Tate & Lyle relied on by Mr Abrahams is concerned with interest on damages not interest as damages. It is not dealing with a claim for interest losses of the kind sought by Xena.
  65. Moral Prejudice

  66. Article 13 (1) of the Enforcement Directive 2004/48/EC provides for damages to be paid when an infringer knowingly or with reasonable grounds to know engages in infringing activity. In sub-paragraph (a) the article provides that all appropriate aspects are to be taken into account such as unfair profits made by the infringer and "in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the right holder by the infringement".
  67. Recital 26 of the Enforcement Directive confirms that damages are compensatory and emphasises that "The aim is not to introduce an obligation to provide for punitive damages but to allow for compensation based on an objective criterion ".
  68. Article 13 has been implemented by Regulation 3 of the Intellectual Property (Enforcement) Regulations 2006. Neither side cited any authority to as how the "moral prejudice" referred to should be addressed.
  69. The witnesses

  70. The claimant called Mr Smith and Mr Constantine.
  71. Mr Smith started working on loading platforms in 2002 at Dorman. He was away from work in 2003 and in 2004 was asked to return as Hire Manager. By then Dorman had been acquired by Xena. He remained at Xena full time until December 2006 but after that was off sick and only returned part time. He returned to full time work at Xena in 2010 and stayed until the administration. He gave evidence about the history of Xena's business and addressed the differences between fixed and rolling platforms. He was unaware of any other source of rolling platforms in the UK save for the parties to this case.
  72. Mr Abrahams criticised his evidence in two respects. One was that in cross-examination Mr Smith said that customers had given him feedback that the patented rolling platforms had advantages. This was relevant to substitution issue (1). It was not in Mr Smith's witness statement and Mr Abrahams put to him that he had made it up on the spot because, given its importance in the case, if it had been true it would have been in his witness statement. I do not accept that criticism. Mr Smith had addressed the differences between fixed and rolling platforms in his evidence. In my judgment he was not inventing his evidence about what customers told him.
  73. Mr Abrahams' second point is more significant. Mr Smith's witness statement refers to a customer called PC Harrington in a section headed "2006". PC Harrington took their business away from Xena to Cantideck and this was a "huge loss" to Xena. As drafted the statement clearly implies that this happened in 2006, as a consequence of a meeting in August 2006. That was not accurate. PC Harrington does appear to have moved from Xena to Cantideck at some later stage but Mr Smith could not say when PC Harrington left Xena. He said the date could be 2007, 2008 or 2009. Mr Smith accepted that PC Harrington only hired a single loading platform from Cantideck in the whole of 2006 and 2007 and that was before the August 2006 meeting. He maintained that the amount of hire business PC Harrington conducted with Xena reduced after the August meeting. I thought Mr Smith was on the whole an honest witness trying to tell the truth but in my judgment the point shows that he did not prepare his witness statement with due care for its accuracy. I will take that into account.
  74. Mr Constantine was a chartered accountant with an impressive business track record. He acquired Xena in 2004 together with a private venture capital fund. His evidence addressed the background to the dispute, Xena's dealings with Cantideck and gave detailed evidence about Xena's finances and the calculations on which this claim is based, including in a third witness statement detailed financial information about Xena's borrowings and interest charges. His first statement also addressed Xena's quality of service, which he described as exceptional.
  75. Mr Abrahams submitted that Mr Constantine was confident, polished, slick and obviously very comfortable in the witness box but that one should not take his apparent authority and confidence as meaning he must be telling the truth. The particular point relied on by Mr Abrahams was the comment that Xena gave "exceptional" service. He submitted that this was not borne out by the facts. The customers Cantideck approached said there were problems with Xena and although Xena had approached customers and had permission to call them, none had been called. Although Mr Abrahams has overstated his point, there is a kernel of substance to it. Mr Constantine was a very confident and sophisticated witness and on financial details I have no doubts about his evidence at all. However Mr Constantine was in no sense a neutral witness and my overall impression of him was that, understandably, he felt very strongly about this case. In my judgment his evidence about Xena's service level was not an objective assessment of the position.
  76. Mr Abrahams also submitted that Mr Constantine's evidence that an increase in rental income to Xena would have been pure profit was wishful thinking, that evidence about discussions with a third party Speedy Hire in 2008 was unbelievable, and evidence about a conversation with Mr Preston about Cranetech, which was contrary to the evidence of Mr Sudborough, was just bizarre. I thought Mr Constantine's evidence about finances was convincing and I reject the submission it was wishful thinking. As for the conversations, what Mr Constantine said Xena was told by Speedy Hire about their relationship with Cantideck conflicts with what Mr Critchley says about that relationship but I do not find it necessary to resolve that debate. As regards Mr Preston, what he is reported to have said conflicts with Mr Sudborough's direct testimony and I prefer to rely on Mr Sudborough. However unless Mr Preston himself gave evidence to contradict what Mr Constantine said about the conversation, this is not a sound basis to undermine Mr Constantine's credibility.
  77. The defendant called Garry Critchley, John Marsh, Jason Sudborough and Paul Abbott.
  78. Garry Critchley's evidence explained how Cantideck began and what happened in the period 2006 and 2007, dealt with the modification of the rolling platforms to render them non-infringing and addressed the correspondence relied on for the moral prejudice argument. He also covered the differences between fixed and rolling platforms, the extent to which one can be used instead of the other, the needs and conduct of Cantideck customers and the factors affecting a decision as to what to hire. Mr Critchley was personally involved in the sale of the 10 rolling platforms to Glencoe in 2007 and he gave evidence about that. He also gave a statement in reply, commenting on Xena's evidence.
  79. In dealing with the points relied on as moral prejudice, Mr Critchley denied that the Mintz Levin letter was misleading. As regards the information provided in the Arnold & Porter letter, in his first witness statement dated 21st September 2011 which was served pursuant to the Court's order in order to allow the claimant to make an election between an inquiry or account, Mr Critchley stated that Cantideck had dealt in a total of 36 platforms, of which 25 were available for hire and 12 sold outright. He said that he "understood" that this figure differs from the figure in the Arnold & Porter letter and was a result of further internal investigations by himself and his colleagues at Cantideck conducted to ensure the accuracy of the witness statement. The statement also summarised Cantideck's total revenue in 2006 and 2007 from sale and hire of infringing platforms. The total comes to about 280,000 (119,600 for sales and 161,065.90 for hire). Mr Critchley's main evidence on the inquiry was his second witness statement, dated 26th September 2012. This makes corrections to the numbers given in the first statement. The totals are now 38 platforms with 13 sold and total revenues of 292,415.90 (129,292 for sales and 163,123.90 for hire). Shortly before the hearing Mr Critchley provided a fourth statement which explained that 4 invoices for hires for infringing platforms had been put through the company Conquip rather than Cantideck and had been inadvertently missed during the disclosure review. This meant that the total hire revenue should be 164,949.90. That makes an overall total revenue of 294,241.90.
  80. Mr Cuddigan submitted that Mr Critchley was not a satisfactory witness. The Arnold & Porter letter was sent when he was in charge of the relevant part of the business and he had signed off on it. The allegation that the letter was deliberately misleading had been put squarely in the Points of Claim and yet all Mr Critchley said about it in his witness statements was the passage referred to above. In cross-examination Mr Cuddigan put to him that the assertion that there were only 17 platforms was a lie. Mr Critchley said he would not call it a lie and said that they had had a trusted member of staff to pull some of the numbers together and said that subsequent information came to light which the defendants had not been slow to disclose. He had no explanation for the mistake and expressed his regret in relation to it. It was put to Mr Critchley that he must have known that Cantideck had considerably more rolling platforms than that at the relevant time. He did not accept that.
  81. Mr Cuddigan put the correct version of invoice 1340 to Mr Critchley and contrasted it with the version annexed to the letter. He drew attention to the words "Payment received with thanks" on the incorrect invoice. Mr Critchley suggested this was standard wording on all Cantideck invoices before they actually receive payment. His explanation of what he said was Cantideck's business practice did not make sense, did not fit with other documents in disclosure and I do not accept it. In any event Mr Critchley could not offer an explanation for the version of the invoice attached to the letter.
  82. Mr Cuddigan put that the reference to only 4 rolling platforms on hire in the Arnold & Porter letter was another lie, when Cantideck in fact had 27. Again Mr Critchley had no explanation. He expressed regret that he made the mistake. The invoices attached to the letter showed 108 weeks hire when the true figure was almost 900 weeks, thus the invoices attached to the letter were only 12% of the relevant invoices. The rental income was stated to be 13,000 when in fact it was over 110,000. Mr Cuddigan suggested that Mr Critchley must have known this was not true. He replied that he did not take the personal interest that he should have done at the time but once he did, the position was rectified.
  83. Mr Cuddigan submitted that Mr Critchley's evidence could not be relied on save when it amounted to a concession or was corroborated by third parties. Mr Abrahams drew a contrast between Mr Critchley's background and that of Mr Constantine and submitted that Mr Critchley was extremely nervous but not evasive.
  84. In my judgment the information provided to the solicitors and included in the Arnold & Porter letter was an entirely deliberate attempt by someone at Cantideck to mislead Xena as to the scale of the infringements. This involved lying about the numbers of platforms and producing far too few invoices. I can see no room for any other inference than that the invoice 1340 document annexed to the letter was cooked up to present and support that false picture. Anyone with a real knowledge of Cantideck's business in 2006 and 2007 who read the letter in 2010 would think the numbers were far too small.
  85. However my impression of Mr (Garry) Critchley himself was that he was rather nave. Although he accepted responsibility for the letter in the witness box, I think the truth is that he was either not really engaged with the letter in 2010 or, if he was really responsible for the letter, did not at that stage have a real understanding of what happened at Cantideck in 2006/2007. The defendant companies are a family business. I suspect the key player at Cantideck in 2006 was probably his brother Robert (Rob) Critchley. There was clear evidence that Garry Critchley had a subsidiary role at least in 2006 and in 2007. He was not then involved in general management of the platform business although he did say he knew what was going on. I note that the people Mr Constantine met in May 2007 were Andrew Critchley and Rob Critchley. At some point, I infer well after 2007 but I do not know when, Rob Critchley appears to have stepped down. Garry Critchley said that Rob Critchley was not giving evidence because he was no longer a director of either Cantideck or Conquip.
  86. I conclude that I cannot place reliance on Mr Critchley's uncorroborated evidence save where it amounts to a concession. I think his detailed knowledge of what happened in 2006 and 2007 at Cantideck is based mainly on reconstruction after the event (and after 2010) because although he was present in 2006/2007, his role was a lesser one and he did not have first hand knowledge of much of what went on. That is why the 2010 letter did not set alarm bells ringing with Mr Critchley. The alternative explanation for what has happened now, if Mr Critchley in fact did have an intimate knowledge of Cantideck's business in 2006/2007, would be that he deliberately set out to mislead in the 2010 letter. I prefer the former explanation to the alternative. However in any case someone at Cantideck set out to mislead Xena. Accordingly I can have no confidence on the basis of Mr Critchley's reconstructions save where I can see it in the documents.
  87. The other witnesses called by Cantideck were Mr Marsh, Mr Sudborough and Mr Abbott. Mr Marsh explained that his company Proplant had been a customer of Xena and of Cantideck. He rented platforms for a job in Canary Wharf and explained that the reason he went to Cantideck from Xena was that Cantideck were closer and more convenient. Cantideck were based in the south whereas Xena were in Middlesbrough. The only two companies he knew as sources of rolling platforms were Xena and Cantideck. Although he only gave evidence for a short time, I thought Mr Marsh was a very good witness, giving straightforward evidence with no axe to grind.
  88. Mr Sudborough gave evidence about Cranetech's position. He was also a good witness and Mr Cuddigan did not criticise him.
  89. Mr Abbott's witness statement exhibited evidence from two further customers, Mr Killoran and Mr Shergold. He had prepared the statements from conversations with them. He was cross-examined about the difference between his file note of the conversation with Mr Killoran and Mr Killoran's witness statement (the signed version was dated 5th October 2012). The statement contained (but the note did not) a paragraph in which Mr Killoran said he was asked to consider a hypothetical question of what he would have done if Cantideck had not had rolling platforms available. He said that if a fixed platform was not suitable then an alternative source would be needed or the construction process might be changed. However, as Mr Cuddigan pointed out, the statement also said earlier that Mr Killoran did not know the difference between fixed and rolling platforms, undermining the utility of the answer to that hypothetical question. Mr Abbott explained that the paragraph came from subsequent emails which had not been disclosed. Mr Cuddigan rightly did not criticise Mr Abbott as a witness. However in my judgment the evidence shows that I can place no weight on the statement of Mr Killoran. He is not prepared to attend for cross-examination, I do not have a complete picture of the contacts between him and the lawyers acting for Cantideck and the statement as drafted invites questions.
  90. It is convenient to deal with the statement of Mr Shergold at this point. Mr Abbott had explained that he spoke to Mr Shergold and prepared a draft witness statement based on the discussions. It turned out that Mr Shergold wanted to be paid for his evidence. He was not and the draft statement was never approved or signed. Although I do not doubt Mr Abbott's genuine belief in the accuracy of the draft he prepared and in the idea that Mr Shergold's answers were uninfluenced by an expectation he would be paid, I am not prepared to place weight on this unsigned, unapproved statement.
  91. Discussion

  92. I will deal with the issues in the order they appear in the list.
  93. (1) Are non-infringing rolling platforms substitutable for Patented Platforms?

  94. I can deal with this point quite shortly because the only non-infringing rolling platforms which were available at any material time were the Cranetech Superdeck platforms imported from Preston in Australia. The fact that Cantideck itself produced a non-infringing form of rolling platform after the event has no impact on the losses caused by its earlier infringing platforms.
  95. Cranetech clearly were a source of rolling platforms, as Mr Sudborough's evidence shows. They had a fleet of 5 Superdeck platforms available in the period 1st August 2006 to 31 December 2007. Mr Sudborough's evidence in cross-examination showed that they were not heavily used in that period. He accepted the take up for his platforms was 14%. It also appears that Cranetech had sold some rolling platforms to other companies (Vanson and Select Plant Hire). A point about this arose on the pleadings but it was in Mr Sudborough's evidence and in any case I do not think it makes any difference for the reason I will explain.
  96. I am not satisfied that Cranetech's rolling platforms (and for this purpose I include Vanson and Select Plant Hire) had any material impact on the market at the relevant time. The market was undeveloped in 2006 and Xena were making all the running. Mr Marsh, the only customer to give reliable evidence, was only aware of Xena and Cantideck as sources of rolling platforms. There is no evidence from any other customer that they were aware of Cranetech or the others as relevant sources. Mr Critchley knew of Cranetech as a company but he could not say whether he was aware in 2006 that they offered loading platforms. Mr Smith also knew of Cranetech as a company but he was not aware of them as a source of platforms in 2006/2007. Although it is undeniable that Cranetech were a source, in my judgment for all practical purposes the UK market for rolling platforms in 2006 and 2007 was a duopoly between Xena's patented product and Cantideck's infringing product.
  97. In any case on the technical points, I accept Xena's case that the patented rolling platform has a number of advantages. They include the ability to lie flush against the side of a building when retracted, which means that a higher platform in a stack does not obscure the loading space of one below it at all, an extended loading space inside the building and the absence of long constricting side beams. There was a debate about whether customers actually cared very much about these advantages. The stacking advantage is only relevant when one is using a stack and it is clear that many hires were single units but the other advantages apply when a unit is used alone. I am not at all convinced the users of these platforms were as indifferent as Cantideck contend but it does not really matter since in my judgment the relevant customers were only aware of Xena and Cantideck as sources of the products.
  98. (2) What would hire customers of infringing platforms have done if they could not have hired infringing platforms from Cantideck?

  99. Cantideck's case is that customers who could not have hired a rolling platform from Cantideck would have done one of three things: (a) hired fixed platforms from Cantideck, (b) hired rolling platforms from third parties (i.e. Cranetech etc.) or (c) hired fixed platforms from third parties. Mr Abrahams did not press point (c) and I reject point (b) on the facts for the reason I have already given. I am not satisfied the relevant customers knew of any other source apart from Cantideck and Xena. That leaves point (a).
  100. Cantideck contended that in most cases, when they hired a rolling platform, Cantideck's customers actually could have used a fixed one instead and would have done so. It said that its customers, who often came from the concrete frame industry, really could have managed happily with fixed platforms. Cantideck also argued that it enjoyed high customer loyalty and Xena was regarded as providing poor service and poor value for money; customers would have made substantial savings hiring a fixed platform from Cantideck (for about 106 pw) rather than a rolling platform from Xena (143 pw).
  101. No doubt the process of selling platforms could sometimes involve discussion and meetings between representatives of hirer and the construction contractor but Mr Cuddigan's cross-examination showed that essentially a customer who wanted a rolling platform asked for a rolling platform and if they wanted a fixed platform, that is what they asked for. Apart from anything else since rolling platforms were hired out by both Cantideck and Xena at higher rates than their own fixed platform offering, it would be odd in a cost conscious industry like construction, if customers sought and took a more expensive product when they did not think they needed it. I do not think the difference in price helps Cantideck.
  102. Mr Marsh's evidence was significant on this point. He was a customer of Cantideck and Xena but in fact his position was as an agent for his own clients. His clients were sophisticated operators. It was a matter for his clients to ask Mr Marsh's company to source a fixed or a rolling platform. He was basically familiar with the advantages and disadvantages of the various platforms but he did not get involved because his client would tell him what was wanted. This evidence showed that in dealing with customers like Mr Marsh, Cantideck were not dealing directly with the person making the choice between fixed and rolling platforms.
  103. As regards customer loyalty and levels of service, while I have not accepted Mr Constantine's characterisation of Xena's service as "exceptional", I am not persuaded there is any evidence that Xena's level of service or customer loyalty would have made a material difference save for one matter. The one point is the geographical difference between Xena and Cantideck. That was the only distinction drawn by Mr Marsh between Cantideck's and Xena's service. This favoured Cantideck for jobs in the south of England but I am not convinced it would have been a sufficient reason, if Cantideck were not offering a rolling platform, which is what the customer wanted, for that customer to decide to take a fixed platform from Cantideck instead of obtaining a rolling platform from Xena.
  104. Also to be taken into account is Xena's evidence, which was disputed but I accept, that about 77% of Cantideck's sales were to customers who had been customers of Xena at one time.
  105. In a sense, unless the customer was actually going to construct the chest of drawers arrangement then I can see that in theory it might be technically possible to use a fixed platform instead of a rolling platform but that is not enough to get Cantideck home. I find that Cantideck's customers were asking for a rolling platform because that is what they wanted. It may be true that with the wisdom of hindsight a fixed platform could have done the job but the customers already knew about both items and had already made a positive choice between them. Cost conscious customers, which they were, would already have asked for as few rolling platforms as they thought they needed. In asking for a rolling platform they were asking for a more expensive option. In my judgment they would not have been likely to accept a fixed platform instead. If Cantideck had not been offering rolling platforms to these customers I doubt the customers would even have asked Cantideck for rolling platforms in the first place but in any event I do not think Cantideck would have been successful in hiring out a fixed platform as a substitute for a rolling platform.
  106. It is I think undeniable that there will be a theoretical probability that Cantideck might have substituted or transformed what was originally to be a rolling platform hire into a fixed platform, and so Cantideck would argue I should arrive at a proportion of Cantideck's rolling hire business which represented lost rolling platform hires to Xena, rather than the totality. However I am not persuaded that this fraction is anything other than negligible. I think the fairest assessment of the position is that all of Cantideck's rolling platform hire business was lost business to Xena.
  107. Customers asked for rolling platforms because that is what they wanted. If Cantideck had not been offering infringing rolling platforms to their customers in 2006 and 2007 then the only other realistic possibility was for all of those customers to source those rolling platforms from Xena. That is what they would have done. I reject Cantideck's case on issue (2).
  108. (3) What would customers purchasing infringing platforms from Cantideck have done if they could not have purchased infringing platforms from Cantideck?

  109. Cantideck sold 13 platforms, 10 of which were in the single sale to Glencoe. I am prepared to accept Mr Critchley's uncorroborated evidence that one motivation of Glencoe's was to reduce its tax liability but I do not see how this helps. It means that if Glencoe could not buy the 10 rolling platforms from either Cantideck or Xena then Glencoe would have had to buy some other capital equipment for tax purposes but it does not imply that Glencoe just bought 10 rolling platforms in order for them to sit idly in a builder's yard. I infer that Glencoe bought the rolling platforms because they identified a need for them. That need was satisfied by acquiring rolling platforms from Cantideck. If Cantideck were not able to offer rolling platforms, for the same reasons I have given for issue (2) I find that Glencoe would have hired rolling platforms from Xena. I note the evidence that at the later time when Cantideck modified the Glencoe stock, 3 platforms were still unused. That does not mean Glencoe would never have used them and does not mean their sale to Glencoe did not cause a loss to Xena.
  110. The evidence did not focus on the other three sales and I will approach them in the same way as for the ten sold to Glencoe.
  111. A more difficult question is to assess how much lost hiring of rolling platforms these sales actually caused. Xena's calculation of 100 weeks as a minimum based on the purchase price and rental charges makes sense but it assumes that the purchaser would have always hired a rolling platform for all the occasions on which they used the rolling platform they had bought. This is not necessarily so since one of the advantages of rolling platforms is that they are more flexible than fixed platforms. In other words it makes sense, if one is going to buy a single platform rather than hire platforms (fixed or rolling) on a job by job basis, to buy a rolling platform since it will always be able to do the job. On the other hand if one is hiring platforms job by job then one may not always need the flexibility of a rolling platform, for some jobs a fixed platform is all that would be needed. The customer will only have hired a rolling platform when they actually wanted one.
  112. Thus I do not accept the 100 weeks figure is fair. Each sale caused the customer not to hire a rolling platform for a certain number of weeks and also not to hire a fixed platform for a certain number of weeks. They would have hired the rolling platforms from Xena for the reasons I have already given and whether they would have hired the fixed platforms from Xena is addressed at issue (4).
  113. It is not easy to see how to arrive at a fair way of working out the relative scale of hiring of fixed as opposed to rolling platforms. Doing the best I can with the information available I note that in the relevant period Cantideck hired out 897 weeks worth of rolling platforms and 611 weeks worth of fixed platforms to customers who also hired rolling platforms. Thus customers who did use rolling platforms hired any sort of platform for a total of 1508 weeks of which the usage of fixed platforms represented about 40% of the total. That seems to me to be about right as a fair figure and I will use it to apportion the 100 weeks relied on by Xena. I appreciate that the derivation of the 100 weeks figure itself depends on assumptions about the hire rate but one has to start from somewhere. It is a reasonable figure.
  114. In other words I find that each sale by Cantideck of a rolling platform can fairly be said to have deprived Xena of 60 weeks hire of a rolling platform. Thus all 13 sales deprive Xena of 780 weeks hiring of rolling platforms.
  115. I do not accept that the fact this 60 week period would extend well beyond the end of 2007 is a significant objection. The sales were sales of infringing goods and their effects will have been long lasting. Moreover while I am, as Xena is, prepared to work on the basis that the relevant period is 2006 and 2007, I am far from satisfied that Cantideck has been open or frank about what happened in that time. No documents were disclosed about the modification process. The modification process involved close interaction with Eichinger in Germany and materials passing back and forth, and also involved contacts with Cantideck's customers. I find the idea that it produced no emails, shipping documents, diagrams or any other documents incredible. Mr Critchley said that the process had gone on without documents but I do not accept that. I am only prepared to accept that Mr Critchley genuinely believed there were none because he was really not closely involved in Cantideck at the time and did not have first hand knowledge.
  116. (4) Did Cantideck's hire of infringing platforms cause Xena to lose hires of fixed platforms?

  117. To support the argument that Cantideck's hire of rolling platforms caused Xena to lose hires of fixed platforms, Mr Smith said that Xena provided a one stop shop so new customers attracted by rolling platforms were also likely to hire other loading platforms. He gave an example in which Bovis would hire rolling platforms on a site as main contractor and sub-contractors on the same site would have fixed platforms. Xena also relied on the fact that it was an undeveloped market, that Cantideck promoted fixed and rolling platforms together and that Cantideck's launch into this market was led by its rolling platform, even though it would have been easier to launch with the simpler fixed platform. Mr Critchley accepted this characterisation of Cantideck's launch. Mr Cuddigan's point was that this showed that Cantideck knew and intended that sales of fixed platforms would follow from sales of rolling platforms and that they therefore expected the sales to be related. Thus he said this satisfied the requirement of foreseeability in relating to hiring fixed platforms as a consequence of hiring rolling platforms.
  118. Cantideck did not accept the one stop shop theory and in cross-examination, although not in his statements, Mr Critchley said that he was aware of platforms from different suppliers present on the same site but I am not satisfied he knew about 2006/2007. Mr Smith was cross-examined on the issue. He said he had not seen many sites which contain two different platforms on the same site.
  119. Although Mr Cuddigan's argument for these damages to be included is attractive I do not accept it. The problem is with the detailed facts. This is not a case like Gerber in which a non-infringing item (a CAD machine) interacts with the invention (a CAM machine) nor is it like Fabio Perini v LPC [2012] EWHC 911 (Ch) in which damages were awarded for the loss of a chance of selling an entire tissue converting line even though the invention was for one part of it. In this case fixed platforms and rolling platforms are separate products, used and ordered separately.
  120. Mr Abrahams referred to a particular example. The contractor Morrisroe hired the following platforms from Cantideck in the relevant period:
  121. (a) One fixed platform for a job in postcode TW8 from 1-15 September 2006,
    (b) One fixed platform for a job in WC1E from 4 December 2006 to 19 January 2007,
    (c) One fixed platform for a job in EC2V from 17 May to 13 August 2007,
    (d) Two rolling platforms for a job in SW8 from 29 June to 14 September 2007.
  122. Mr Abrahams submitted that even assuming that Xena had won the hire of the two rolling platforms for June September 2007 in SW8, plainly Cantideck won the fixed platform hires lawfully in a way which had nothing to do with rolling platforms. He said there was no basis for any claim to those supplies of fixed platforms. After all these were for four different construction sites and the rolling hire came last.
  123. The only answer to this argument from Xena is to rely on Cantideck's rolling platform led entry to the market in the first place. I do not regard that as a sufficient answer to the point. In my judgment the Morrisroe example shows that it cannot be said that in that case these hires of fixed platforms have been caused by Cantideck's infringement at all. Those fixed platform hires are not transactions which go together with Cantideck's hiring of rolling platforms. The example shows that it cannot be assumed that just because it is true that customers who rented rolling platforms also rented fixed ones from the same source, it follows that hires of fixed platforms went together with hires of rolling platforms. I recognise that for Morrisroe the sequence, with fixed platforms hired before rolling, makes the point particularly stark and in other cases the sequence was the other way round but the argument is not only concerned with chronology.
  124. I can believe that in a case in which a customer wanted a fixed and a rolling platform for the same job and arranged the hire contract at the same time, they might well have sought to hire both platforms from the same source. Insofar as any of Cantideck's hires of fixed platforms fall into that category then Xena's case to claim that fixed hire as a loss would at least get off the ground. However the evidence does not approach the matter in that way. It may be that in amongst the transactions there were a few like this but I did not have my attention drawn to any. I am not persuaded that the fraction of Cantideck's fixed hires which could truly be said to have been hired together with a rolling platform is anything other than negligible. I think the fairest assessment of the position is that none of Cantideck's fixed platform hire business was lost business to Xena. This applies as much to the hires considered under issue (3) as for issue (2). I reject Xena's case on this issue (4).
  125. (5) Would Xena have been able to supply all of Cantideck's customers throughout the infringing period?

  126. Mr Constantine gave detailed evidence about the capacity of Xena to accommodate the extra hiring which would have been involved on Xena's case. An extra installation team would have been needed and that was catered for. There was a possible shortage of rolling platforms in November/December 2007 on Xena's case but Mr Constantine's evidence worked through the details and came to the view that the shortfall was de miminis. He also addressed and did not accept a point made in correspondence about down time for cleaning, repair and transport. Mr Abrahams did not cross-examine this evidence but in closing he invited me to apply my own common sense and find that Mr Constantine was being too optimistic. He submitted that Xena would be bumping against the ceiling of their capacity and would in fact have had problems meeting the demand.
  127. I am not bound by Mr Constantine's opinion on the point but I thought it was entirely credible. Although undertaking all the rolling hire work which the claim involves would have stretched Xena to close to the limit at the end of 2007, I am not satisfied that Xena could not have accommodated it. I will not make a deduction for lack of capacity.
  128. (6) What would Xena have charged Cantideck's customers for platform hire if they had gone to Xena?

  129. By closing I did not understand it to be disputed that a fair rate to take for what Xena would have charged Cantideck's customers for hiring rolling platforms was 143 per week.
  130. (7) What additional costs would Xena have incurred if they had hired platforms to Cantideck's customers?

  131. Mr Constantine's evidence was that apart from the extra installation team, the income from extra hires would have been pure profit. Essentially the point was that as it was a hire business, all of Xena's costs were fixed and so any increased turnover from hiring existing equipment would be clear profit.
  132. The point that was put against this was based on the EBITDA figures. EBITDA means Earnings Before Interest, Taxation, Depreciation and Amortisation. The EBITDA figures in Xena's accounts showed that generally speaking an increase in turnover by Xena did not translate into an increase in EBITDA, quite the reverse. Thus, submitted Mr Abrahams, this showed that in truth an increase in hire business by Xena would not have represented clear profit and I should infer that there were costs which would have increased as well. He said this showed that Xena were never able to turn a large increase in turnover into a big profit.
  133. I do not accept this submission. The argument about EBITDA is too generalised to engage with Mr Constantine's evidence, which I thought was convincing. Mr Cuddigan told me that the extra hire work the claim involves represents about 10% of Xena's overall hire business. Apart from the installation team I find that there would have been no extra costs associated with the increase in hiring of rolling platforms this claim is based on.
  134. (8) Can Xena claim for services provided to Cantideck's customers if they had gone to Xena?

  135. Although Mr Abrahams submitted these losses were too remote, the Points of Defence admitted they were a foreseeable consequence assuming Xena did indeed lose the customer in the first place. The services offered were (i) platform installation, relocation, removal and training, (ii) platform refurbishment and (iii) bespoke associated design. By far the most significant was (i).
  136. There was an argument that the only service routinely charged for was delivery and on that Xena made a loss. That loss has been taken into account. It is clear that the other services relied on were real and although they were not always provided, I reject the argument that they are too remote. They were direct and foreseeable and I accept Xena's case on these losses.
  137. (9) What additional costs would Xena have incurred if they had provided additional services to Cantideck's customers?

  138. The only additional cost is the installation team addressed already. Cantideck submitted the cost of the team would have been higher because Xena could not simply have hired staff at no cost and would not simply have let the additional team go when it was not needed. However Mr Constantine explained that the nature of the employment situation in the north east meant that hiring staff that way was indeed feasible. As for the position after the end of 2007, I am not satisfied any further deduction is needed since the primary focus of the claim is based on what happened in 2006 and 2007 only. At the end of 2007 no further hires arise under head A (issue (2)). The hires taken into account as a result of the sale of rolling platforms under head (D) (issue (3)) will be spread out after the dates of sale and well after the end of 2007, however there is no evidence that the extra team would have been needed in that period.
  139. (10) What is the appropriate notional royalty on Cantideck's infringing sales/hires that would not have gone to Xena?

  140. On the basis of my findings, this issue does not arise. I will say only that I was far from persuaded that Xena's approach to the calculation would have produced a fair reasonable royalty in this case. Cantideck's approach to this assessment was more realistic.
  141. (11) Calculation issues

  142. There were no outstanding calculation issues.
  143. (12) Did Cantideck knowingly infringe the Patent?

  144. It is plain that Cantideck had actual notice in December 2006 and knowledge or reason to believe is accepted from then. Mr Cuddigan did not contend the position at an earlier date mattered.
  145. (13) Was Mintz Levin's letter of 4 June 2008 a deliberate attempt to mislead Xena?

  146. The Mintz Levin letter of 4th June 2008 was not frank. It did not explain that the products had been modified, but I reject the suggestion that this could be said to be deliberately misleading. It is true that the generality of the undertakings demanded by Cantideck via the letter means that they would also have prevented Xena from asserting an entirely proper claim for back damages against Cantideck's customers but the letter has to be seen in its proper context. It was a reaction to an allegation of patent infringement which was itself unjustified. The product at Ardmore did not infringe. I reject the argument over the Mintz Levin letter.
  147. (14) Was Arnold & Porter's letter of 8 December 2010 a deliberate attempt to mislead Xena?

  148. I have addressed this above. The Arnold & Porter's letter of 8 December 2010 was a deliberate attempt to mislead Xena about the value of this claim.
  149. (15) Should Cantideck pay Xena all its "unfair profits" and further damages for "moral prejudice"?

  150. The Arnold & Porter letter was written three years after the infringing acts in this case and has nothing to do with the damage actually caused to Xena by Cantideck. Any prejudice caused by the letter was not prejudice caused by the infringement. To award damages as a result of this sorry episode would simply be to punish Cantideck. Whatever the scope of the jurisdiction to award damages for moral prejudice might be, I do not believe it covers this case. I will not award any such damages. It is a matter of conduct which falls to be considered when dealing with costs.
  151. (16) What is the appropriate rate of interest?

  152. I have accepted Xena's argument in law that it can claim for interest losses. Mr Constantine gave detailed evidence about Xena's borrowings and interest charges. The sums borrowed by Xena were always more than the total lost income I have arrived at and the weighted average interest rate for all of Xena's borrowings for the period from August 2006 to March 2012 was 10.5%.
  153. Mr Cuddigan submitted that the appropriate rate on the basis of this evidence was 8% compound interest. Mr Abrahams did not challenge that point on the evidence and did not challenge the foreseeability of Xena's interest losses. His argument had been on the law, which I have rejected. I will accept Xena's case on the evidence. The rate should be 8%.
  154. (17) How should interest be applied?

  155. The parties agreed that for the purposes of calculating interest, the fair thing to do was to base it on the whole sum starting from a single date. They did not agree about the correct starting date. The rival candidates ranged between June 2007 (Xena) and August 2007 (Cantideck) on one basis but if the Glencoe sales were included as well (which I have done albeit to a lesser extent than claimed) then Mr Abrahams said the date should be in 2008 because it was a weighted average. I was invited to use my judgment to select an appropriate date.
  156. I have included sales to Glencoe on a proportional basis. It does not seem to me to be fair to run interest from 2008, when most of the infringing activity, even including Glencoe, took place in 2006 and 2007. The date which I think is fair overall is 30th November 2007.
  157. I asked Mr Cuddigan whether it was necessarily so that these interest losses should have continued up to the hearing, bearing in mind the change in Xena's circumstances when it went into administration. Mr Constantine's evidence about interest only ran until March 2012. That point will need to be resolved after the judgment is handed down.
  158. Heads of damage, calculations

  159. The consequences of my findings are as follows:
  160. A. Rolling platforms, rental customers

    I find the increased revenue would have been 128,356.80 (143 x 897.6 weeks). The only cost to be deducted is the extra installation team cost of 32,500.

    B. Fixed platforms, rental customers

    I have rejected this head of damages.

    C. Services, rental customers

    The sum lost is 14,226.96 (15.85 x 897.6 weeks).

    D. Rolling platforms, purchasing customers

    The lost income was 111,540 (143 x 60 weeks x 13 platforms).

    E. Services, purchasing customers

    The lost income was 12,363 (15.85 x 60 weeks x 13 platforms).

    F. Reasonable royalty

    Not relevant.

    G. Interest

    8% from 30th November 2007.

    H. Unfair profits and moral prejudice

    Nil.

    Conclusion

  161. By my calculations Xena's total lost income caused by Cantideck's patent infringement is 233,986.76. Interest losses at 8% from 30th November 2007 must be added.


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