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You are here: BAILII >> Databases >> England and Wales High Court (Patents Court) Decisions >> Ultraframe (UK) Ltd v Eurocell Building Plastics Ltd & Anor [2006] EWHC 1344 (Pat) (09 June 2006) URL: https://www.bailii.org/ew/cases/EWHC/Patents/2006/1344.html Cite as: [2006] EWHC 1344 (Pat) |
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CHANCERY DIVISION
PATENTS COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
Ultraframe (UK) Limited |
Claimant |
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| - and - |
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| Eurocell Building Plastics Limited Eurocell Profiles Limited |
Defendants |
____________________
Mr Roger Wyand QC and Mr Douglas Campbell (instructed by Martineau Johnson) for the Defendants
Hearing dates: 21-24, 29-30 March, 26-28 April, 1-2 May 2006
____________________
Crown Copyright ©
The Honourable Mr Justice Kitchin:
Introduction
Ultraframe
") is one of the market leaders and sells a number of modular systems, one of which is called Ultralite 500. Until 2002, the defendants (collectively "Eurocell") were one of the largest distributors of Ultralite 500 systems. In that year they began to make and sell their own system called Pinnacle 500.
Ultraframe
thereupon sued Eurocell for infringement of patent no. 2,300,012 and of unregistered design rights in the panels, some components and the whole assembly of the Ultralite 500 system. The trial of the action came before Lewison J. In his main judgment [2004] EWHC 1785 (Ch), [2005] RPC 111, Lewison J held that the patent was valid but not infringed. He also held that the Pinnacle 500 panels and whole assembly infringed
Ultraframe
's unregistered design rights. In a supplementary judgment Lewison J held that it was legally possible for a defendant to undertake, pursuant to s.239 of the Copyright Designs and Patents Act 1988, to take a licence under s.237 even though at the time of the undertaking rights in the design had expired. The effect of this is to limit the amount of damages which can be claimed for infringement of unregistered design right to twice the royalty fixed by the comptroller.
Ultraframe
made an application for payment of damages on account. The application was heard by Pumfrey J who ordered Eurocell to pay to
Ultraframe
£800,000 by way of an interim payment.
Background
Types of conservatory
"4. Mr Savage,Ultraframe
's expert, explained the background to the industry in his initial report. He did so in non-technical language; and I adopt his summary, which was not challenged. There are three basic types of conservatory.
"Dual pitch" conservatories
5. These are the best recognised types of conservatory with a ridge and dual pitch roof. These roofs tend to look elegant and expensive, but involve substantially more components than lean-to roofs and take more time to fabricate, and so are more expensive. A common type of dual pitch roof was in 1992 (and still is) the "Victorian" style roof.
"Steep lean-to" conservatories
6. This expression describes lean-to (mono-pitch) roofs of between around 10° to 30°. These fairly common roofs can and should be distinguished from the more specialised "low-pitch" conservatory roofs. Because lean-to conservatories are rather easier to install and are cheaper than dual pitch roofs, they are often favoured by less experienced fabricators. However, the options are generally far more limited with this type of roof, and they do not tend to look as attractive. Some early lean-to conservatories were little more than glorified carports.
Low-pitch roofs of less than around 5°
7. In the early stages, 5° was really the lower limit of these roofs, since the materials used (slab polycarbonate sheets for example) were not guaranteed for use at an angle less than this. The angle was limited by a number of things, but particularly rain-water run-off. Serious problems result if rain-water starts to pool on the roof and whether it does or not will depend on a number of factors, such as the stiffness of the panels and so on.
8. The last of these three roof types began to grow in the early 1990s because the first two roof types were less than ideal for a number of applications. For example where the wall to which the roof will be affixed is of fairly low height, for example a bungalow wall, it is not possible to use a "steep lean-to" roof. This is because the height of such a conservatory at the house wall needs to be substantially higher than the height of the conservatory at its eaves. It is also difficult to use a dual pitch roof, since the conservatory will then have to have a box gutter running between it and the bungalow, which is expensive in the short term and often troublesome in the long term. A solution was the use of low-pitch lean-to roofs with pitches of 5° or even less. These could start at the highest point of the bungalow wall and yet maintain an acceptable internal height up to the eaves. In 1992/3 the market for low pitch roofs had not really been tapped.
9. Just like the dual pitch conservatories before them, low-pitch conservatory roofs were initially fabricated on site by builders who would cut and fit all the components. This would preferably be done using timber and glass for example. Gradually builders began to try and "botch" together roofs using plastic profiles from vertical window systems and the glazing bars from the systems that were being and had been developed at the time for dual pitch roofs, ( i.e. modular component systems for use in conjunction with plain glass sheets) with polycarbonate sheets.
10. Then manufacturers began to produce modular roofing panel systems to make putting together low-pitch roofs easier. These panels would normally be attached to each other, rather than via glazing bars or timber beams for example. However, these roofs were still the poor relations of Victorian-style systems. They tended to be fairly basic in appearance (often looking a bit like the corrugated iron or plastic sheeting you find on carports, very basic lean-to structures, etc) and certainly nobody seemed to have given a great deal of thought to the aesthetics.
11. The design considerations for the different types of roof differed from each other. Designing a dual-pitch conservatory is a bit like designing a half- timbered or a steel framed building. The framework provides the structural rigidity and strength, and then the walls are filled in. In the same way in a dual pitch conservatory (particularly the later, modular component types), extruded aluminium components provide a framework into which sheets of glass, etc fit. Calculating the necessary thickness of the structural components for example is a straightforward calculation of I-values, etc. With modular panels as used in the later low-pitch roofs on the other hand, it is the roof panels themselves that provide the strength and stiffness in the roofs. Whilst there were often stiffening members added, the calculations of how thick the panels needed to be, etc is a complicated one, particularly because of the hollow ducted nature of the panels. The principle of the two types of roof from a structural point of view is therefore rather different, although naturally most of the factors that must be taken into consideration, ( e.g. wind loads, snow loads, etc) remain the same."
Ultraframe
with a product called Ultralite 250.
Ultralite 500
"125. Even if individual features of the design were unoriginal or commonplace (which I return to later), the overall assembly was neither. Mr Savage put it as follows:
"I believe that the Ultralite 500 system was groundbreaking because it was really the first time that a designer had designed a system specifically for low-pitch conservatory roofs and had given any great thought to the whole package of the roof, including the panels, the top caps and end caps and so forth. Those roofs made with 'modular' panels before this date had not been designed as a whole package in which each component complemented the others. The assembly of the Ultralite 500 system as a whole has an expensive feel-it was a substantial step forward from what was previously available."
"To me in 1992 (and even today) the whole design of the Ultralite 500 system and the individual elements of it, stood out immediately (and still stand out) from the alternatives that were available."
126. Based on the examples of contemporary designs that I was shown, I agree with this."
The success of Ultralite 500
Eurocell
Ultraframe
's leading customers and distributors. As one of the main distributors of Ultralite 500, Eurocell were receiving, at the beginning of 2002, a discount of 26% on the
Ultraframe
published prices.
Ultraframe
, saw it on the Eurocell stand at the Glassex exhibition he thought they were exhibiting Ultralite 500. It was only on close inspection of the guttering that he appreciated that they were not.
"Pinnacle 500 will be in direct competition with the Ultralite 500 system byUltraframe
, which is currently sold through Eurocell's network of Trade Counters, with total purchases amounting to £2.4m per year, and an external sales value of £3m. This will utilise approximately 30% of the machine and tool capacity enabling us to increase our market share."
Hall 1, fig 2.1 – based on sales of Pinnacle 500 admitted by Eurocell
Ultraframe
's design right. In the end, Lewison J decided that the attempt to design around the unregistered design right failed.
Scale and consequences of infringement
Ultraframe
, calculated, on the basis of Eurocell's disclosure, that over that period they sold 10,420 roofs amounting to 135,403 SQM (square metres), with a sales value of some £5.8 million. There is a slight difference between the experts as to the precise figure. Mr Plaha, the expert witness called on behalf of Eurocell, suggested it should be some 134,261 SQM. He made a deduction from the figures in the sales ledger because he believed they include a small quantity of inter-depot transfers. Mr Hall believed that he had not been provided with sufficient information as to why the sales should be excluded. The difference is small and was not explored in evidence. In the light of the approximations which I have to make later in this judgment I think that an appropriate starting point is to take a figure of 135,000 SQM.
Ultraframe
contend that there has been a substantial under disclosure and that Eurocell have deliberately concealed large quantities of sales. In any event, loss of profit on these infringing sales is one of the major heads of damages claimed.
Ultraframe
's pricing policy. Eurocell launched Pinnacle 500 at a price about 10% below that of Ultralite 500. Eurocell suggest that the price was determined by "market conditions". However, it is clear that Pinnacle 500 was intended to compete directly with Ultralite 500. Further, there is no evidence that it was priced by reference to any other product. In all the circumstances I think it a reasonable inference that the intention of Eurocell in undercutting the price of Ultralite 500 was to persuade customers to move to Pinnacle 500.
Ultraframe
contends that as a result of this pricing activity it was unable to raise the price of the Ultralite 500 product and was instead forced to reduce the price to retain its market share.
Ultraframe
also contends that the inevitable effect of the infringing activity has been that customers have moved away from
Ultraframe
and built up a commercial relationship with Eurocell who have been able to promote and present themselves as independent suppliers of a complete range of products (a "one-stop-shop"), and so attract those who seek a single supplier of related products, here Pinnacle and Pinnacle 500.
Synseal
Ultraframe
because Synseal is a competitor of both
Ultraframe
and Eurocell. The discount enabled Synseal to offer Lo-Pitch at a list price some 13% below Eurocell's list price.
Ultraframe
contends that there was no obvious benefit to Eurocell in supplying to a competitor at such low prices and, moreovcr, that no satisfactory explanation has been provided for the fact that Synseal has apparently only made limited sales despite these very low prices.
Ultraframe
submits that the only rational explanation is that Eurocell have sold a good deal more Pinnacle 500 product to Synseal than they have disclosed, with the result that
Ultraframe
has suffered further loss of profit and a further downward pressure on its prices. In June 2005 Synseal began selling its own low pitch product called Global 600.
Elevation
Ultraframe
developed a new product called Elevation. It contends it took this step to compete with Pinnacle 500 and in an attempt to recapture some of the market and mitigate its loss. It says that having attempted, over a period of time, to meet the competition by advertising and promotional activity, it really had no alternative. Eurocell had, overnight, converted what had been a unique product into a generic product by creating two new, apparently independent, sources for it (that is to say Pinnacle 500 from Eurocell and Lo-Pitch from Synseal). In the circumstances it was forced to develop a new design and it duly did so.
The Capex/Boxlite document
"Reasons for this include
- More widely available and cheaper roofs (K2 and Global) and complete conservatories (BHD and Cestrum) that were not lean-to's.
Ultraframe
was "locked out" of one of the industry's major distributors Eurocell who simultaneously launched a copycat product at a list price slightly less than Ultralite's and with an ability to give greater discretionary discounts.
- Consumers, or a percentage of them, were voting with their feet and choosing the (perceived to be) more aspirational duo pitch Victorian.
- Consumers buying at the budget end of the market have been able to choose from a wider range of installation routes, including internet, catalogue, merchants, plastics specialists and, of course, the large DIY retail chains, B&Q and Wickes rather than through professional home improvement companies (our main route).
- Product weaknesses
Only 1 colour glazing option, 10-year warranty only on white. Perceived colour matching & brittleness issues. Cannot use blinds on PVC product.
New building regulations may render the existing panel product obsolete (PVC fire hazard)."
Ultraframe
's marketing department. It contains further background material upon which Eurocell rely. In particular it describes the Ultralite 500 and Victorian systems and continues:
"Each product is aimed at a different segment of the market but there is significant overlap. Concern has been expressed that market demand for lean-to's is softening and, due to competitive pressures,Ultraframe
's share of the market is declining. This will be challenged later.
The twin issues of a softening market and declining market share are major drivers to this project plus the requirement to make Ultralite 500 compliant with the anticipated changes in Building Regulations in 2005 (fire performance, means of escape)."
Ultraframe
mounted a substantial attack on the contents of these documents, suggesting that the conclusions they contain did not reflect reality. I have no doubt that those conclusions conflict with the views of Mr Allen and Mr Richardson. Nevertheless, the documents are detailed and were prepared by a team specifically set up to consider a new product. That team included Mr Hanson who, as Mr Allen accepted, did spend a significant amount of time talking to customers and knew what he was talking about with respect to competitor products. In my judgment the Capex document is a valuable contemporaneous record and represents a considered view of the low pitch market. I will deal with the impact of these documents on the specific heads of claim later in this judgment.
Heads of damage and issues for determination
Loss of profit
Ultraframe
contends that 'but for' the infringement Eurocell would have continued selling Ultralite 500. Further, until mid-2002 Eurocell were one of the largest distributors of Ultralite 500. As a result, they had an existing customer base to which they supplied the infringing and visually and functionally almost indistinguishable Pinnacle 500 product. Therefore, Ultrafame says, every sale of the infringing product made by Eurocell represents a sale lost to
Ultraframe
. It contends that it is difficult to imagine a stronger case of 100% one-for-one replacement of sales.
Ultraframe
's lost profit on each sale was. Two broad issues arise. First, what net price would have been achieved on the lost sales of Ultralite 500 products? This is an important question and it gives rise to a further and substantial head of damage because
Ultraframe
contends that it had to reduce its prices to meet the threat presented by the infringement, as elaborated below. Secondly, what costs need to be deducted from the net price to calculate the margin?
The royalty to be paid on the sales that
Ultraframe
would not have made
Ultraframe
would not have made the sales then it is accepted that a reasonable royalty is payable on the remainder. However, there is a dispute as to what that royalty should be. At a rather late stage
Ultraframe
has suggested 17.5%. Eurocell say 5% is more realistic, particularly bearing in mind the nature of the invention and that the licence is only in respect of sales that
Ultraframe
would not have made in any event.
Price depression on sales which
Ultraframe
did make
Ultraframe
's existing customer base, Pinnacle 500 was priced at approximately 10% less than the price of Ultralite 500 and maintained at that price throughout the period of infringement.
Ultraframe
contends that in order to be able to compete effectively in the market it was forced to reduce the price of Ultralite 500 by giving larger discounts and rebates and not implementing any price increases. This translates into substantial sums since it affects all of the Ultralite 500 products sold by
Ultraframe
, not just those it would have sold through Eurocell.
Ultraframe
has not been able to increase its prices after infringement ceased last July. They point to the fact that
Ultraframe
alleges that the product forms its own distinct market sector and that but for the infringement it would have had 80% of the sales in this sector. If there were not increased competition in a declining market such a monopoly position would have enabled
Ultraframe
to re-establish its prices once Eurocell were out of the market. This
Ultraframe
has failed to do.
Loss of sales of other products
Ultraframe
contends Eurocell provided to customers an alternative and attractive source (in fact, with Synseal, two sources) of a product that is perceived to be the same as Ultralite 500. As a result they attracted customers who formerly purchased from
Ultraframe
. These customers have taken the opportunity to review and, in a substantial number of cases, remove their business for dual pitch products from
Ultraframe
.
Ultraframe
has therefore lost sales of other conservatory products it would have made but for the infringement.
Ultraframe
's claim that the market for low pitch roofs is independent of the market for any other conservatory products. They also say that
Ultraframe
has not adduced any evidence from any customer to support the argument and further, they have analysed records of their customers' purchasing habits which demonstrates that the argument fails on the facts.
Ongoing losses
Ultraframe
argues that it is continuing to suffer from the effects of the infringement despite the grant of the injunction in July 2005. It says it has failed to recover any significant portion of the market and has not been able to increase its prices. Accordingly it is continuing to suffer loss of sales, from price depression and loss of sales of other dual pitch products. It estimates that the effect may last for 2 to 3 years.
Ultraframe
's trading position as evidence of the market's general decline. They also point to the fact they have effectively withdrawn from the low pitch market, having only sold some £70,000 worth of a product made by a company called Wendland since the date of the injunction.
Costs associated with the mitigation of damage
Ultraframe
claims the loss it sustained in designing and developing the new roof system called Elevation to address the fact that the infringing Pinnacle 500 product had come to market. It says the evidence is clear – the invasion of the Ultralite 500 market by Pinnacle 500 was the cause for the development of the Elevation product which commenced in August 2003.
Interest
Ultraframe
is entitled to interest at the rate of LIBOR + 1%. Eurocell say that it should be at the 3 month rate. I did not understand that to be disputed.
Legal Principles
i) Damages are compensatory. The general rule is that the measure of damages is to be, as far as possible, that sum of money that will put the claimant in the same position as he would have been in if he had not sustained the wrong.ii) The claimant can recover loss which was (i) foreseeable, (ii) caused by the wrong, and (iii) not excluded from recovery by public or social policy. It is not enough that the loss would not have occurred but for the tort. The tort must be, as a matter of common sense, a cause of the loss.
iii) The burden of proof rests on the claimant. Damages are to be assessed liberally. But the object is to compensate the claimant and not to punish the defendant.
iv) It is irrelevant that the defendant could have competed lawfully.
v) Where a claimant has exploited his patent by manufacture and sale he can claim (a) lost profit on sales by the defendant that he would have made otherwise; (b) lost profit on his own sales to the extent that he was forced by the infringement to reduce his own price; and (c) a reasonable royalty on sales by the defendant which he would not have made.
vi) As to lost sales, the court should form a general view as to what proportion of the defendant's sales the claimant would have made.
vii) The assessment of damages for lost profits should take into account the fact that the lost sales are of "extra production" and that only certain specific extra costs (marginal costs) have been incurred in making the additional sales. Nevertheless, in practice costs go up and so it may be appropriate to temper the approach somewhat in making the assessment.
viii) The reasonable royalty is to be assessed as the royalty that a willing licensor and a willing licensee would have agreed. Where there are truly comparable licences in the relevant field these are the most useful guidance for the court as to the reasonable royalty. Another approach is the profits available approach. This involves an assessment of the profits that would be available to the licensee, absent a licence, and apportioning them between the licensor and the licensee.
ix) Where damages are difficult to assess with precision, the court should make the best estimate it can, having regard to all the circumstances of the case and dealing with the matter broadly, with common sense and fairness.
The witnesses
Ultraframe
:
Mr Richardson
Ultraframe
plc, the parent company of the claimant,
Ultraframe
. He gave evidence on a number of aspects of the technical background to the products in issue. He also gave evidence in relation to the development of Elevation and the Capex document. This evidence was the subject of substantial criticism by Eurocell. It is said that his evidence was an attempt to put a "spin" on the document, that he was determined to "rubbish" virtually everything in it and that he only grudgingly accepted that he only had a peripheral involvement with the project. In the result, it is submitted, Mr Richardson is not a witness in whom I can feel much confidence. I formed the view that Mr Richardson was concerned to make every point he could to support the position of
Ultraframe
but overall I think the criticisms are unjustified. I believe that he gave his evidence honestly and that he truly held the opinions he expressed. Nevertheless, it became apparent that, despite being the witness asked to address the Capex document, he had no involvement with its creation or approval and his only involvement with the Elevation project was at the outset. These are important matters to take into account when assessing his evidence on the subject.
Mr Allen
Ultraframe
until October 2004. Since then he has been based in the USA as Vice President, Sales and Marketing of Four Seasons Solar Products LLC, a related company. I found him to be a straightforward and truthful witness. However, he was unable to give any evidence as to the state of the low pitch market in this country after the date of his departure.
Mr Wallis
Ultraframe
, a qualified accountant and member of the Institute of Chartered Accountants of England and Wales. He gave evidence as to the sales values and volumes of Ultralite 500 and as to overheads and the costs of Elevation. He did not have direct experience of the markets in issue. He gave his evidence clearly and honestly.
Mr Hall
Ultraframe
. He is a Fellow of the Institute of Chartered Accountants in England and Wales and a Managing Director at AlixPartners Ltd where he specialises in the provision of forensic accounting and accounting expert witness services. It is suggested that I should take care with Mr Hall's evidence because he was concerned more to defend the assertions of
Ultraframe
than to test them. I do not accept this criticism. In my judgment Mr Hall gave his evidence objectively and I have found it to be of considerable assistance.
Mr Bateman
Mr Beasley
Mr Plaha
The heads of claim
Ultraframe
.
A. Loss of profit
Issue A 1: How much Pinnacle 500 was sold?
Ultraframe
has mounted a major attack in this figure and maintain that, in truth, sales were substantially greater. The attack has four limbs which I will refer to as (a) "the Redshaw evidence", (b) Mr Davies' e mail query, (c) packaging scrap and (d) Synseal.
The Redshaw evidence
Ultraframe
says that this reveals that Eurocell sold twice the quantity of Pinnacle 500 they have disclosed.
Ultraframe
for an interim payment, and since then BDO had independently verified them. Nevertheless, he explained that he had provided the table of stock days for Mr Redshaw and that, on reviewing them, he realised there was a mistake in the way the figures were collated which was attributable to the use of their new "SAP" computer system. In particular, the figures included movements within the warehouse and out of the warehouse to branches. There was thus a double counting.
Ultraframe
says the explanation is straightforward: Mr Beasley was lying. The difficulty with this is that
Ultraframe
's explanation is not satisfactory either. Eurocell only rarely split packs and, in so far as they do so, this happens in the shop, not in relation to the product in stock.
The sales ledger
Ultraframe
say it must be assumed that it had successfully passed through the extruder and was in a form suitable to be delivered.
Ultraframe
great concern. It contended that the product sold under the CRS codes represented external sales which had not been disclosed. Eurocell responded that the CRS codes related to components used to produce the Pinnacle 500 kits and that these were all internal sales.
Ultraframe
did not accept this explanation. It wanted access to the records to check the position. In the event both sides agreed this would not be possible without a substantial adjournment. Accordingly I did adjourn the hearing to enable
Ultraframe
to conduct the necessary further investigations.
Ultraframe
in closing. Mr Beasley's explanation was that at the time he was busy drafting his last witness statement. I have reached the conclusion that this was not unreasonable, when seen in context. After the adjournment a meeting took place on 31 March 2006 at the premises of Eurocell. Mr Hall and Mr Davies were given all the information they requested. A long stream of enquiries from Mr Davies followed, which Mr Beasley responded to promptly. It was only the final e-mail, the 11th overall, sent at the end of the day on 12 April, that he failed to answer. In the meantime
Ultraframe
's solicitors had been pressing Mr Beasley for a witness statement. They repeated this request on Thursday 13 April, immediately before the Easter weekend. The witness statement was duly prepared and served on Wednesday 19 April. Mr Beasley was on holiday from Friday 21 April until Monday 24 April. He got down to dealing with the e mail on Tuesday 25 April and was cross examined the following day.
Ultraframe
submitted, a whole series of errors have been made. First, the CRS products were incorrectly priced on the SAP system. Second, three large invoices were issued to rectify this error. But these invoices wrongly used the PPP codes. Third, instead of simply issuing invoices to effect the price correction, volumes were added to the PPP transactions. Fourth, when the figures are corrected, this produces prices for the PPP products which are too high and these are only reduced by taking into account credit notes which were issued in the wrong volumes.
Ultraframe
contends that this catalogue of errors is so extensive and so improbable that the only possible conclusion is that 102,500 SQM of roof panels were indeed made and supplied by Eurocell Profiles to Eurocell Plastics in 2004 and then sold on to customers.
Packaging scrap
Ultraframe
points to a gap between the volume of roof sheet produced according to the production records and the volume sold according to the sales records. It says that the difference cannot be accounted for by scrap and that it represents undisclosed sales.
Ultraframe
estimate it at 65%. Mr Beasley explained that Eurocell had a great deal of problems with scrap and this was one of the reasons which ultimately led to the decision to buy in the extrusion from Rotamould. He supported this by reference to two particular facts. The first was that in 2004 Eurocell granulated (a way of disposing of scrap) nearly 50% of the plastic they had bought that year. Secondly, in that same year Eurocell Profiles made a loss of £375,000 on its extrusion business whereas in 2003 it had made a profit of £285,000. That represented a worsening of £660,000 which, at an average price of £22 per square metre, equated to about 30,000 SQM of lost production.
Synseal
Ultraframe
says that there was more to the relationship with Synseal than has been disclosed and that it probably relates to additional sales or disposals of Pinnacle 500 or essential components for the product.
Matters relied upon by Eurocell
Ultraframe
's patent rights. In this regard it is to be remembered that it was in 2004 that Lewison J held the patent valid but not infringed and capped the damages for design right infringement. It was only after the decision of the Court of Appeal in June 2005 that Eurocell knew they were liable for patent infringement.
Conclusion on quantities
Ultraframe
cause for deep suspicion. I have also formed the view that the approach adopted by Mr Beasley and Eurocell in dealing with the matters raised has been less than satisfactory. In my judgment Mr Beasley has, at times, been too casual in his approach and has offered explanations without taking adequate steps to ensure they are correct and do not need qualification. Further, even now there is no satisfactory explanation which explains all the figures before me. Nevertheless, I do not accept that Mr Beasley was a dishonest witness. Moreover, it seems to me that greater weight should be attached to the records of the external sales and supplies than to the irregularities associated with the internal accounting between Eurocell Profiles and Eurocell Plastics. The six matters I have referred to above are, to my mind, powerful indicators that the sales figures disclosed are correct. In the light of all the evidence I am not persuaded that Eurocell have engaged in a conspiracy to hide sales. Doing the best I can on all the materials before me I have reached the conclusion that Eurocell have only sold and supplied the 135,000 SQM disclosed.
Issue A2: What proportion of Eurocell's sales would
Ultraframe
have made?
Ultraframe
say that had it not been for the infringement Eurocell would have continued to distribute Ultralite 500. Eurocell dispute that is a correct approach. They say that just as it is not permissible for an unsuccessful defendant to say that he could have avoided infringement by selling a non infringing device, so also it is not permissible for a claimant to say that had it not been for the infringement the defendant would have continued to distribute the patented product.
Ultraframe
once they had developed a product which was for practical purposes the same as Ultralite 500 and a substitute for it. That new product, Pinnacle 500, was designed to compete directly with Ultralite 500. This shows that Eurocell had no intention of abandoning the market or designing a different kind of product. I heard no evidence from Eurocell to suggest that they might have left the market altogether, save an acceptance by Mr Allen that there was a certain tension between
Ultraframe
and Eurocell once Eurocell launched their Pinnacle dual pitch product. To my mind this does not begin to raise any real doubt that Eurocell would have continued to distribute Ultralite 500 had it not been for the infringement. In all the circumstances I reject the submission of Eurocell and conclude that, but for the infringement, Eurocell would have continued to buy and distribute Ultralite 500.
Ultraframe
would have made.
Ultraframe
contends that every sale of Pinnacle 500 is a lost sale of Ultralite 500 because Pinnacle 500 was designed to compete directly with Ultralite 500 and was a virtually identical product. Eurocell simply replaced Ultralite 500 with Pinnacle 500 and then sold it in the same way through the same sales channels at a reduced price. They competed vigorously with all trade channels used by
Ultraframe
and took sales off
Ultraframe
and
Ultraframe
's other distributors, as was their intention. In all the circumstances I was invited to accept the proposition that all sales by Eurocell represent lost sales by
Ultraframe
.
Ultraframe
's argument ignores the fact that the market was in decline, that there were other competing products available in the low pitch market, such as the Everlite and L2 product from K2, and also low price Victorian conservatories from the wider conservatory market. Eurocell say that they succeeded in this difficult market situation by selling at a price some 10% lower than the price charged by
Ultraframe
. This is an issue which I discuss further in considering the issue of price depression. But it is a factor which indicates that had Eurocell simply carried on selling Ultralite 500 they would not have achieved the same number of sales of Pinnacle 500 which they did and accordingly it cannot be said that this is a case of one-for-one replacement of sales.
Ultraframe
. This, it is contended, shows that it is not a case where it can be said that all sales of Pinnacle 500 have been at the expense of sales of Ultralite 500. Again, I believe that this point also has some force and is another factor I must take into consideration.
i) Pinnacle 500 sales made to customers who had previously bought Ultralite 500 from Eurocell;ii) Pinnacle 500 sales made to customers who had previously bought Ultralite 500 from
Ultraframe
; and
iii) Pinnacle 500 sales to customers not in either of the categories above, that is to say new customers.
Ultraframe
dropped substantially during the infringing period. Many stopped buying altogether and those that did not bought at a reduced net price. The inference to be drawn from this is that, but for the infringement, they would have continued to purchase Ultralite 500 from
Ultraframe
.
Ultraframe
would have made but for the infringement, either directly or through Eurocell.
Ultraframe
would have made all the sales falling in categories i) and ii) but only a proportion of those in category iii). As to this latter category, he assumed that only a proportion (some 60%) represent lost Ultralite 500 sales based upon an adjusted market share estimate. He arrived at a total figure for lost sales of 100,637 SQM. Thus the difference between the experts is only some 34,000 SQM.
i) Category i): 56,700 (42% of 135,000)ii) Category ii): 10,800 (8% of 135,000)
iii) Category iii): 67,700 (50% of 135,000)
Ultraframe
than Mr Plaha has allowed and estimate the figure at 52,500 (or just under 80% of the sales in category iii). Overall therefore I estimate that 120,000 SQM of the sales of Pinnacle 500 represent lost sales of Ultralite 500.
| Lost sales (SQM) | 2002 | 2003 | 2004 | 2005 | Total |
| Eurocell customers | 4,500 | 25,300 | 18,700 | 8,200 | 56,700 |
Ultraframe customers |
300 | 2,500 | 4,800 | 3,200 | 10,800 |
| Other customers | 1,100 | 14,400 | 19,800 | 17,200 | 52,500 |
| Total | 5,900 | 42,200 | 43,300 | 28,600 | 120,000 |
Issue A3: Would all the lost sales have been made through Eurocell (at the appropriate discounted net price)?
Ultraframe
argues that the actual price received by
Ultraframe
would have depended upon the customers to which it made the sales. Eurocell was a high volume and high discount customer. Lower volume customers and stockists did not receive the same level of discount with the result that
Ultraframe
's profit on such sales was greater.
Ultraframe
contends that only a proportion of the lost sales would have been made through Eurocell and the rest would have been made to other customers. For this purpose it refers to the three categories of lost sales identified by Mr Hall. It contends that it would have made sales in category i) to Eurocell and sales in category ii) to customers other than Eurocell. As for category iii), it contends that these should be apportioned and that the margin on these should be weighted according to Eurocell's share of
Ultraframe
's Ultralite 500 sales prior to the infringing period (that is to say, 85.24% (customers excluding Eurocell) - 14.76% (Eurocell)).
Ultraframe
received was less when it sold to a high volume distributor it saved money on other overheads. This is a point I consider in more detail later in this judgment.
Ultraframe
is essentially correct in that it is appropriate to address the issue by reference to each of the categories of customer.
Ultraframe
accepts that sales in category i) would have been made to Eurocell. As for the other categories it seems to me that, just as Eurocell acquired customers who would not have purchased either Pinnacle 500 or Ultralite 500 but for their aggressive pricing policy, so also they must have acquired customers for Pinnacle 500 who would otherwise have bought Ultralite 500 from one of
Ultraframe
's other distributors. Therefore I think it is a reasonable approximation to say that
Ultraframe
would have made the sales in category ii) to customers other than Eurocell. As to category iii), it seems to me to be unduly favourable to
Ultraframe
to distribute these in accordance with Eurocell's share of
Ultraframe
's Ultralite 500 sales prior to the infringing period (that is to say, 85.24% - 14.76%). A significant reason for my finding that
Ultraframe
would have made so many sales in category iii) was my acceptance of
Ultraframe
's submission that, but for the infringement, Eurocell would have continued to distribute Ultralite 500. In all the circumstances I estimate that 50% of the sales in category iii) would have been made to Eurocell and 50% to other customers.
Issue A4: What net price per SQM would have been achieved on the lost sales of Ultralite 500 products?
Ultraframe
would have made a proportion of the lost sales through Eurocell and a proportion to other customers. Secondly, it is wrong to base any calculation of
Ultraframe
's lost profit upon the prices it achieved in the face of the competition from Pinnacle 500. Thirdly, it is therefore necessary to consider the price that
Ultraframe
would have achieved had there been no infringement. This last and important question raised a number of hotly disputed issues between the parties. In particular:
i) WouldUltraframe
have increased its prices in 2003 but for the infringement and, if so, by how much?
ii) Did the infringement cause price depression and, if so, by how much?
iii) If
Ultraframe
had put up its prices in 2003 would this have had an effect on the number of sales it would have made but for the infringement?
Ultraframe
that the presence on the market of Pinnacle 500 had a serious and detrimental impact on its pricing plans. He explained that in 2003
Ultraframe
increased the price of all its products save for Ultralite 500 by between 2-5%. He said that, had it not been for Pinnacle 500,
Ultraframe
would have applied a similar price rise to Ultralite 500. Instead, and because of Eurocell's infringing activity, the net price of Ultralite 500 was gradually reduced over the period of infringement in an attempt to retain
Ultraframe
's market share.
Ultraframe
support this argument by pointing to the fact that the market was growing in 2003, as illustrated by the following graph (taken from the updated Fig.4.2 of exhibit MH1):
Fig 4.2 from MH1: Combined sales of Ultralite 500 and Pinnacle 500 (updated to include Elevation) – years to September
Ultraframe
submit there is no reason why it would not have increased its price of Ultralite 500 in line with its other products. Moreover, a price rise at the top end of the range (that is to say 5%) would have been supportable. It also points to the fact that Eurocell evidently thought the market was sufficiently strong to incur the costs of developing a copy product.
Ultraframe
was forced to reduce them to meet the competition posed by Pinnacle 500 and the same product sold by Synseal under the name Lo Pitch. This gradual reduction in price is illustrated below:
Fig 5.1 from MH1: Comparison of Ultralite 500 and Pinnacle 500 average net sales price (updated for rebates) excluding Eurocell
Ultraframe
submit that this graph dramatically illustrates the impact of the infringement upon the price of Ultralite 500. Absent Pinnacle 500,
Ultraframe
would have been the controlling party in the market and able to determine prices. Pinnacle 500 was targeted directly at Ultralite 500 but sold at a substantial discount. This required
Ultraframe
to reduce its prices to retain its market share. As Mr Allen explained,
Ultraframe
was obliged to offer customers price concessions to ensure that it did not lose further business. The suggestion that there was pressure on the market is belied by the fact that the net price of Pinnacle 500 remained constant.
Ultraframe
has painted only half of the picture. First, whilst it is true to say that volumes of sales increased (taking into account sales to Eurocell) in the years to September 2003 the net price that
Ultraframe
was receiving on the same basis (that is to say including sales to Eurocell) decreased in the years to 2001 and 2002 reflecting the fact that
Ultraframe
was indeed increasing its volumes of sales but that the degree of discount offered to Eurocell meant that, overall, its net sales price was falling as shown by the graph below (taken from SP1:8.12):
Price of Ultralite 500 including rebates: Source SP1:8.12
Ultraframe
did increase its list prices for other products by 2-5%. However, that did not mean that the net price received by
Ultraframe
, taking into account discounts and rebates, increased by the same amount, if at all. Indeed it seems that over the period between 2002 and 2005
Ultraframe
lost some 40% of its turnover. I was provided with no information as to the net prices achieved over this period and it is quite possible they were reduced in an attempt to preserve the shrinking market.
Ultraframe
for Ultralite 500 in 2002 occurred despite the fact that the list price was increased by in excess of 3%.
Ultraframe
to Synseal's Global product in 2004 because of the prices it was being charged. This is confirmation of what one would expect, namely that in this market there is a relationship between price and sales volume.
Ultraframe
has apparently not been able to increase its prices since July 2005 when the infringement ceased. This again suggests that Ultralite 500 and Elevation are suffering from continuing competition. In particular, it is notable that K2 held approximately 13% of the low pitch market by September 2005 (and indeed generally over the period of infringement) – a share which was about the same as that held by Pinnacle 500.
Ultraframe
intended to reduce the price of Ultralite 500 as part of the introduction of Elevation in 2004. I believe that it is right to do so because, as I shall explain, I am not satisfied that
Ultraframe
is entitled to claim from Eurocell the costs incurred in connection with the launch of Elevation or that the introduction of Elevation is properly attributable to the presence on the market of Pinnacle 500.
Ultraframe
has established that, but for the infringement, it would have been able to increase its average net price in the year to September 2003. I believe that the market conditions were such that it is much more likely that its net price would have fallen slightly below that of the previous year. Had it increased its prices then I believe that would have been reflected in a loss of sales volume.
Ultraframe
would have achieved on lost sales to customers other than Eurocell (Hall category ii)).
Issue A5: What costs need to be deducted from the net price to calculate the margin?
Ultraframe
has adopted a simplistic approach to the profit margins and has made no real attempt to identify all the costs that would accompany an increase in turnover. In particular, Eurocell say that adjusting correctly for distribution, warehousing and packaging makes a substantial difference to the overall figures claimed. Further, adjusting correctly for tooling depreciation makes a further difference of almost 1% of the selling price.
Ultraframe
relies do not show all the variable costs which would have been incurred had the additional sales been made and that they do not comply with the widely accepted Statement of Standard Accounting Practice 9 ("SSAP9"). They recognise that in the nature of things it is not possible to come up with a precise figure for the variable costs and that short of doing a detailed investigation of
Ultraframe
's entire accounting system the best that can be done is to take a broad brush approach.
Ultraframe
management accounts. These set out the material, labour and distribution costs actually incurred. However they include costs for the whole family of Ultralite products. Accordingly, Mr Hall excluded all volumes and costs not related to Ultralite 500. He did so on the basis of materials provided to him by Mr Wallis. I have no doubt that this was the correct approach in principle.
Ultraframe
's overheads were likely to be similar to those of Eurocell and they were higher; second, that the Supply Chain Council has produced a document suggesting that distribution costs are, for consumer packaged goods, generally much higher. The latter point was abandoned in cross examination. As to the former, it seems to me that there is an inherent difficulty in comparing costs incurred in two separate businesses unless it is shown that they are conducted in substantially the same way. Further, the incremental costs in making more deliveries may depend, for example, upon the extent to which lorries are generally filled. Mr Wallis explained that the relevant cost drivers for
Ultraframe
are the number of deliveries and miles covered. Further,
Ultraframe
's average trailer fill is only about 34% suggesting considerable additional capacity. Nevertheless, I accept that one point which Mr Wallis drew attention to in cross examination, namely that Eurocell distribute to 50 branches whereas
Ultraframe
distributes to hundreds of customers with thousands of deliveries, would suggest that
Ultraframe
's distribution costs should be higher than those of Eurocell when in fact they are substantially lower.
Ultraframe
has not had to replace tooling used for Ultralite 500 and the evidence does not show that additional tooling costs would have been incurred as a result of making the additional sales.
Ultraframe
accounts. This appears to show a substantial saving in indirect cost in the year 2005 over the year 2002, once inflation is taken into account. Mr Wallis explained aspects of this reduction and he also pointed out that it was far from clear that the allowance for inflation was accurate. I nevertheless gained the impression that at least a proportion of these costs have been saved as a result of the lower sales of Ultralite 500. Further, Eurocell made much of some evidence of Mr Allen in cross examination. He explained that
Ultraframe
was "neutral" as to whether Ultralite 500 was sold direct to an installer or through a distributor. Sales through a distributor produced less revenue but the margins achieved might be the same because of savings in overheads. He referred specifically to efficiencies in distribution and account management. In the light of this evidence Eurocell submit that it is wrong for
Ultraframe
to claim a greater margin on sales made to customers other than Eurocell. Clearly, it was said, there must be other costs associated with sales made to smaller outlets which Mr Hall's calculations did not take into account.
Issue A6: What is the appropriate royalty on the assumption that not all sales of Pinnacle 500 are lost Ultralite 500 sales?
Ultraframe
is therefore entitled to a royalty on the remaining 15,000 SQM.
Ultraframe
suggest it should be 15-17.5%.
Ultraframe
says that a 50:50 split of gross profits would likely be agreed between a willing licensor and willing licensee bearing in mind the nature of the product and the market in issue. This, Mr Wallis says, would produce a rate of 15-17.7%.
Ultraframe
would not have made. Further, I think that a 50:50 split of profits estimated at 35% is not realistic. Overall, I think a reasonable figure for the royalty is 8%.
Issue B: Reduction in net sales price – Price depression
Ultraframe
was obliged to reduce its prices to retain its market share. In the circumstances I believe that
Ultraframe
has suffered a loss on sales of Ultralite 500 which is recoverable from Eurocell. That loss was both foreseeable and caused by the infringement. It amounts to the difference between the price
Ultraframe
achieved on sales of Ultralite 500 and the price it would have achieved but for the infringement.
Issue C: Loss of sales of other products
Ultraframe
contends that that the infringement has caused the loss of sales of other products, specifically
Ultraframe
dual pitch products, in addition to the loss of sales of Ultralite 500. This is a major head of claim amounting to a total of some £1.9 million.
Ultraframe
lost established customers who switched suppliers as a result of Synseal being able to offer a competing low pitch roof system.
Ultraframe
's skeleton argument at trial. It is contended that sales of the infringing product have enabled Eurocell and Synseal to offer what appear to be their own complete ranges of conservatory roofs and thus supply customers not just with the infringing product but with other roofing products (such as dual pitch roofs) as well. Accordingly
Ultraframe
has lost sales of other products in addition to sales of Ultralite 500.
Ultraframe
. Three of those 45 were excluded: one became insolvent and two developed their own products. Losses amounting to some £1.9 million are claimed in respect of the remaining 42 customers.
Ultraframe
to Eurocell for dual pitched roofs.
Ultraframe
, but did not buy these products from Eurocell.
Ultraframe
contends that although precise calculation is difficult it was entirely foreseeable and intended by Eurocell not only that they would take
Ultraframe
customers for low pitch products but that by offering a complete range they would attract
Ultraframe
customers for dual pitch products and so cause
Ultraframe
damage.
Ultraframe
has not shown that the losses were caused by the infringement and any losses which have been suffered were not foreseeable.
Ultraframe
case is founded upon what it calls "two indisputable facts". First, it was part of Eurocell's plan that the launch of Pinnacle 500 would attract customers away from
Ultraframe
. I accept this as a general proposition. I have no doubt that in launching Pinnacle 500 Eurocell hoped and intended to take as much business as possible from
Ultraframe
and, in particular, to retain as much as possible of the business it had hitherto conducted as
Ultraframe
's distributor.
Ultraframe
. In the end I understood Mr Allen to say that he had no evidence to support the one-stop-shop theory other than that he believed customers would take their other business to Eurocell for convenience and service, and that this was his "feeling".
Ultraframe
lost the dual pitch business of Ayrshire to Synseal because it was able to offer a competing low pitch roofing system. In fact, however, Ayrshire went to Synseal for its dual pitch roofs but to Eurocell for its low pitch roofs. This does not, to my mind, support the position taken by Mr Allen. Moreover, the press releases relating to Ayrshire produced by Mr Richardson suggest that Ayrshire switched to Synseal for the dual pitch Global product because it was cheaper. Ayrshire had found that its prices for
Ultraframe
's dual pitch were not competitive with the result that its sales were falling.
Ultraframe
and will begin by considering the 13 customers who purchased Pinnacle 500 and Pinnacle from Eurocell.
Fig 5.2: Percentage sales (using 2002 as a base year) of dual pitched roofs to
Ultraframe
customers who did not purchase Pinnacle 500 compared to those who did purchase Pinnacle 500
Ultraframe
.
Ultraframe
but did not buy them from Eurocell did so as a result of their decision to buy Pinnacle 500. This can have nothing to do with a one-stop-shop. The only instance that was explored to any degree in the evidence was Ayrshire and, for the reasons I have given, this has not been shown to have anything to do with Pinnacle 500. The graph the subject of Mr Hall's fig. 5.2 is no more persuasive in relation to this class of customers than it is in relation to those customers who bought dual pitch roofs and Pinnacle 500 from Eurocell.
Ultraframe
has failed to establish that it has lost any significant sales of dual pitch products to Eurocell as a result of the infringement. When properly considered in the context of the Eurocell trade channels the one-stop-shop argument does not support the conclusion that Eurocell intended or expected to secure sales of dual pitch product to customers of
Ultraframe
. Further, the evidence taken as a whole does not support the conclusion that Eurocell have in fact made sales of dual pitch products as a result of the infringing sales of Pinnacle 500. On the contrary, I believe the weight of the evidence is that Eurocell have not secured such sales as a result of the infringement.
" 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."
Ultraframe
has not shown that its loss of sales of dual pitch products has been caused by the infringement. Moreover, and in so far as there may have been some losses in particular cases, albeit not established, I do not believe that any such losses were foreseeable. I have not accepted that by providing a one-stop-shop in their branches Eurocell were intending to or expected to take dual pitch business away from
Ultraframe
. Furthermore, in all the circumstances of this trade, it has not been shown that Eurocell ought reasonably to have foreseen that that would be the consequence of their actions. This head of the claim therefore fails.
Issue D: Losses arising post infringement
Ultraframe
claims that the damage it suffered during the period of infringement has continued after the grant of the injunction. Accordingly it claims damages in respect of continuing losses resulting from (i) the continuing effects of price depression, (ii) on going lost profit on sales of Ultralite 500, and (iii) on going lost profit on sales of related products.
Continuing effects of price depression
Ultraframe
claims that it is suffering continuing losses estimated at £1.1 (based on a 2% price increase) to £1.3 million (based on a 5% price increase) per annum as a result of the price depression caused by the infringement. Mr Allen and Mr Richardson estimated that it will continue to suffer from the effects of the infringement for a period of two to three years, although they gave no real explanation as to how they arrived at this figure. It is also accepted by Eurocell that
Ultraframe
has not put up its prices since the grant of the injunction.
Ultraframe
has not put up its prices since the grant of the injunction are twofold: first, competition from K2 and Synseal (with the launch of its own low pitch roof called Global 600), and the low price Victorian roofs referred to in the Capex document; second, the fact that to do so would compromise its pricing for its new product Elevation.
Ultraframe
has suffered damage caused by price depression beyond the date of the injunction. However, the estimates given by Mr Hall are, on my findings, far too high. Further, I think it is excessive to extend these losses for more than a limited period. In this regard I am conscious that I have no evidence as to current market conditions or what steps
Ultraframe
has actually taken to try and lift its prices. In all the circumstances I have reached the conclusion that a reasonable sum to award to
Ultraframe
for continued losses resulting from price depression is £300,000. I have reached this figure taking into account the difference between £44 and the net price (including rebates) actually achieved and the sales figures for Ultralite 500 in the year to June 2005.
On going lost profit on sales of Ultralite 500
Ultraframe
says that it is continuing to suffer the effects of the infringement in that its sales of Ultralite 500 have not increased since the injunction. An analysis by Mr Hall shows that there has not been any discernable increase in the level of Ultralite 500 sales since that time. As at 30 November 2005, only two of the 50 lost Ultralite 500 customers had returned to
Ultraframe
. Moreover, it says that it will take time to replace such a long established and significant distributor as Eurocell.
Ultraframe
has recovered. This gives a claim for total continuing annual loss of between £0.7 million (based on a 2% price rise) and £0.8 million (based on a 5% price rise).
Ultraframe
's trade. In short,
Ultraframe
is suffering because Eurocell has withdrawn from the market and is not selling Ultralite 500, not because it previously sold Pinnacle 500. In addition it must be remembered that the market has been in overall decline and this has been reflected in a general drop in
Ultraframe
's sales.
Ultraframe
's trade channels and customer connections. It is, I think, relevant that Eurocell seized a market by selling a virtually identical product at a significantly lower price. Further, by selling it on to Synseal at a substantial discount they effectively provided a further independent source of the same product but under yet another brand name. This disruption must have continued for a period after the infringement ceased and I did not understand this to be seriously disputed by Eurocell. But how do I put a value on it? The parties suggested that I must make an estimate. All I can do is attribute a portion of the lost business for a further limited period of time to this effect. Taking due account of my conclusions as to the loss of business that
Ultraframe
suffered during the period of the infringement I estimate the damage at £200,000.
On going lost profit on sales of related products
Ultraframe
is not entitled to claim in respect of such losses during the period of the infringement. For like reasons it is not entitled to claim in respect of the period after the infringement came to an end.
Issue E: Costs associated with the mitigation of damage
Ultraframe
seeks the development costs of Elevation amounting to some £1.5 million, taking into account an offset of £250,000 that it says it would have incurred in developing Ultralite 500. It claims it is entitled to this sum because it developed Elevation in an attempt to mitigate its damage. It recognises that the attempt has not been successful but says it was nevertheless a proper and reasonable step to take.
Ultraframe
contends that I should conclude that the overriding and dominant reason for developing Elevation was the competition from Pinnacle 500. It would not have been launched but for the infringement. Eurocell contend the opposite, that the development would have gone ahead without the infringement and that this is shown by the Capex document.
Ultraframe
.
Ultraframe
in April 2004 on the basis of the Capex document. A large number of key personnel signed it, including Mr Allen and Mr Hanson (on behalf of the Marketing Director). Mr Richardson did not sign it. Nevertheless he was the person who gave evidence about it in chief. As Mr Richardson explained to me, the Board authorised the capital expenditure on the project and that authorisation would have been given on the basis of the contents of the document. Following that authorisation the money could be and was spent.
Ultraframe
has chosen not to lead evidence as to the basis upon which the Board decision was taken. All I have is the evidence of Mr Richardson, who was not involved, and the evidence of Mr Allen, who was involved but gave no evidence about the decision making process other than to say that he had not read the document and only asked the one question to which I have referred. All of the other reasons given in the Capex document are, on their face, perfectly plausible reasons for authorising the expenditure on Elevation. In my judgment
Ultraframe
has simply not made out its case under this head.
Issue F: Interest
Ultraframe
is entitled to interest. The parties are agreed that the appropriate rate is LIBOR + 1%.
Conclusion
Ultraframe is entitled to damages for lost profit on lost sales of Ultralite 500, a royalty of 8% on sales of Pinnacle 500 that do not represent lost sales, damages for price depression, damages for losses post infringement caused by price depression and disruption of the market and interest. The parties will need to carry out calculations in accordance with my findings. I will hear further argument if necessary and as to the appropriate form of order.