IP & IT Law Bytes: Design rights: damages inquiry

03 July 2015

Audrey Horton

The Intellectual Property Enterprise Court (IPEC) has assessed damages in a design right infringement action in relation to unregistered EU and UK design rights.

Background

The remedies available for infringement of design right are similar to those available to an owner of copyright, including damages or, as an alternative to damages, an account of the profits made by the defendant.

Facts

A and E were competing furniture wholesalers that sold to furniture retailers. H was a furniture retailer, which had previously been a customer of A and E. E sold two styles of dining tables to retailers including H. H then sold these tables to consumers.

A issued proceedings against E and H on the basis that these tables infringed A’s unregistered EU and UK design rights in two of its ranges of dining furniture. The parties settled the claim.

Following settlement, there was an inquiry as to damages in relation to infringements by E only.

Decision

The court held that, in relation to 20% of the sales of the infringing dining tables by E, A was entitled to the profit that it would have made on the sale of equal numbers of its dining tables of equivalent design, and the profit it would have made from sales of related products. In relation to the remaining 80% of sales, A was entitled to a royalty per table.

The evidence showed that sales of dining tables could drive sales of other pieces of furniture from the same range, and these convoyed sales were shown to have been previously been made in respect of the two dining table designs copied by E. Due to this causative link in the minds of consumers between the purchase of the infringing tables and the purchase of related but non-infringing items, A was awarded damages for loss of profits for the 20% of lost sales, in the proportions shown by A of past convoyed sales.

When determining a reasonable royalty to apply to the remaining 80% of sales of the infringing products, the court took into account the benefit that would be derived by E in licensing A’s dining table designs in respect of the sales of related furniture products that would be driven by the sale of the dining tables. As a result, it was likely that E would have agreed a royalty rate of 25% of its profits in any hypothetical negotiations. In relation to the remaining 80% of sales of the infringing dining tables sold by E, A was entitled to a royalty of £100 per table.

Comment

The IPEC has usefully set out the principles relating to the assessment of damages for infringement of various intellectual property rights in a series of recent cases, including this one. A notable feature of this case was the decision to award additional damages in respect of convoyed sales, which turns on the particular facts. The evidence here showed that sales of the infringed product drove, rather than just accompanied, sales of the convoyed articles. Additional damages in respect of lost sales of associated products cannot be claimed simply because the item in which its vested design rights have been infringed is part of a range of related products. It is necessary to show a causative effect between the sales of the infringed product and sales of the convoyed items.

Case: Alfrank Designs Limited v Exclusive (UK) Limited and another [2015] EWHC 1372 (IPEC).

First published in the July 2015 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.

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