OOO Abbott (a Company Incorporated in the Russian Federation) and Another v Design & Display Ltd and Another
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Hacon,Judge Hacon: |
| Judgment Date | 04 September 2014 |
| Neutral Citation | [2014] EWHC 2924 (IPEC) |
| Docket Number | Case No: CC12P01174 |
| Court | Intellectual Property Enterprise Court |
| Date | 04 September 2014 |
[2014] EWHC 2924 (IPEC)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
His Honour Judge Hacon
Case No: CC12P01174
Chris Aikens (instructed by Gordons Partnership LLP) for the Claimants
Thomas St Quintin (instructed by Appleyard Lees) for the First Defendant
Hearing date: 24th July 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This an account of profits following the judgment of Birss J dated 30 May 2013, [2013] EWPCC 27, in which he found that the Claimants' European Patent (UK) No. 1 816 931 ("the Patent") was valid and had been infringed by the defendants.
Birss J described the invention claimed in the Patent in the following way:
"[4] The case concerns display panels used in shops. Shopfitters often use a wooden wall called a slatwall as a panel on which to construct displays. Today the slatwall is made of MDF and has horizontal slots. Back plates or other shelf fixings can be fitted into the slots in order to secure display accessories such as shelves, brackets and hangers. The merchandise is displayed from the display accessories. The fittings are inserted into the jaws of the mouth of the slot and hooked into the top of an internal chamber of the slot lying behind its mouth.
[5] The slots are made by a computer controlled router moving across the width of the panel. A router makes a T shaped slot and leaves visible machined surfaces within the slot having machined away the decorative veneer that generally covers the face of the MDF. Also the edges of the veneer around the mouth of the slot are susceptible to damage as display accessories are hooked in and removed.
[6] For these reasons it became standard practice to provide inserts for slots, as protection against damage and to hide the machined surfaces. To an extent the inserts also strengthen the panel. The accessories are then fitted into the inserts rather than being fitted directly into the bare slots.
[7] The inserts are made by extrusion. By 2004 the standard inserts used were of two kinds: "slide-in" or "snap-in". As the name suggests slide-in inserts were slid into place from the edge of the slat wall. They were made of aluminium. They could be T-shaped, corresponding to the T shaped cross-section of the slot or else they could be L-shaped, using only the top arm of the slot. A problem with slide-in inserts was that if the edge of the slatwall was not accessible, for example at a corner, there is no room to slide the insert into place. Snap-in inserts solve this problem by being inserted from the front with a spring action. Because they needed to be compressible, they were made of PVC instead of aluminium.
[8] The invention in this case is a snap-in insert made from a resilient metal like aluminium."
Following judgment Birss J made an order for Island Records disclosure. The Claimants (whom I shall refer to collectively as "Abbott") elected for an account. On 27 February 2014 I gave directions. The list of issues which the parties had identified for resolution at this trial of the account, scheduled to the Order of that date, were as follows:
(1) What was the length in metres of clip in aluminium extrusions which were found to infringed [the Patent] that was sold by each Defendant in the relevant period and at what sales price?
(2) Are the Claimants entitled to claim the profits which accrued to either Defendant as a result of the sale of slatted panel sold together with the clip in aluminium extrusions?
(3) If issue 2 is determined such that the Claimants are entitled to claim profits resulting from the sale of slatted panel sold together with the clip in aluminium extrusions, what were the quantities of such sales by each Defendant in the relevant period and at what sales price?
(4) What were the gross profits made by the Defendants from the sales determined under issues 1 and 3?
(5) What are the allowable costs that the Defendants are entitled to deduct from the profits determined under issue 4?
(6) From what date was the First Defendant aware, or had reasonable grounds for supposing, that the Patent existed for the purposes of section 62(1) of the Patents Act 1977?
Things have moved on since then – in particular Abbott and the Second Defendant settled their differences so this account goes ahead against the First Defendant ("Design & Display"). However it will still be convenient to take those issues in sequence, amending them as necessary to deal with the points left in dispute between Abbott and the First Defendant.
How the panels and inserts are made and sold
Design & Display manufactures and sells retail equipment, including display panels for use in shops. The evidence of Clive Lloyd, managing director of Design & Display, was that its primary business was as a joiner for shopfitters, making bespoke items of shop furniture, which Mr Lloyd called 'equipment'. This equipment included displays, some of which had slatted panels (sometimes referred to as slatboards or slatwalls) sold both in standard sizes and as custom-sized panels. These were the panels with horizontal slots into which the aluminium inserts could be introduced – in the case of the infringing inserts, introduced by a snap-in process. Shelves or hangars for displaying the goods could then by located into the inserts.
In the relevant period Design & Display sold the slatted panels in two ways. First, it sold the panels with inserts separately for subsequent assembly by the customer. At the trial these were referred to as 'unincorporated' panels and inserts. Secondly, Design & Display sold pre-assembled displays of which the panels with inserts were part. These were referred to as 'incorporated' panels and inserts. In addition, some unincorporated inserts were sold without slatted panels.
Design & Display did not itself make the inserts but purchased them from an aluminium extruder in the form of lengths which were cut into sections to make the individual inserts. The panels were purchased in the form of plain MDF panels into which the slots were machined by Design & Display.
Mr Aikens, who appeared for Abbott, handed up a table which sets out the quantity of inserts and panels sold by Design & Display, costs, gross profits and expenses with Design & Display says may be deducted from the gross costs. I understand these figures to be agreed subject to the points in dispute. It is therefore enough for me to decide the outstanding issues and I can leave the parties to calculate the relevant sums due.
Issue 1: Length of aluminium clip extrusions sold
The parties are agreed as to the length and price of unincorporated inserts sold. The remaining point under this head concerns only incorporated inserts. Design & Display was unable to provide equivalent figures for incorporated inserts because invoices for equipment supplied were not always broken down to identify the components, specifically the inserts, and the inserts specified were not always those actually supplied.
Design & Display's approach, therefore, was to calculate the difference between the lengths of extrusions bought and the lengths sold as unincorporated inserts. No stock was left so the difference was taken to be the starting point for lengths of extrusions sold as incorporated inserts. From this Design & Display proposed two deductions. The first was 10% because of scrap created when cutting the inserts to fit sales displays. The second, also 10%, was to reflect the discount which Design & Display says it applies to the price of inserts incorporated into displays.
Abbott's first objection was that these were arbitrary figures presented by Mr Lloyd with no firm basis for them. Secondly, in relation to the second discount, Mr Lloyd's evidence was that the joinery side of the business was the profitable side and therefore, Abbott argued, it was not appropriate to assume the insert part of this business was run less profitably than the business in unincorporated inserts.
It was not disputed that there would be some sort of wastage when cutting the aluminium extrusions to fit panels. Mr Lloyd's estimate was 10% and I accept that evidence.
Regarding the second discount on the other hand, his evidence was that it was 'probable' that some form of discounting would have arisen in relation to the sales of incorporated inserts (Lloyd I, ¶10). No clear reason was given. This seems to me to be an insufficient basis for assuming that Design & Display's profits were lower for sales of incorporated inserts when compared to equivalent profits from sales of unincorporated inserts.
In relation to profits from sales of incorporated inserts I therefore allow the first 10% deduction but not the second.
Issue 2: Whether Abbott are entitled to profits from slatted panels
The law
In an inquiry as to damages for infringement of an intellectual property right the defendant is of course not required to compensate the claimant for damage which was not caused by the infringement. Likewise in an account of profits, the defendant is not accountable for profits which were not caused by the infringement – such as the profits generated by a business of the defendant causally independent of the infringing business.
This was discussed by Laddie J in Celanese International Corp. v BP Chemicals Limited [1999] RPC 203. The judgment was found later to be wrong in relation to the costs that a...
To continue reading
Request your trial
-
Design & Display Ltd v OOO Abbott and Another
...one day, and that included live evidence, although no expert accounting evidence was adduced. It is from Judge Hacon's judgment ( [2014] EWHC 2924 (IPEC)) that this appeal is brought. 3 In his judgment on liability ( [2013] EWPCC 27) Birss J described the background to the invention: "[4] ......
-
Ooo Abbott and Another v Design & Display Ltd and Another
...(collectively referred to as "Abbott"). This followed the trial of an account of profits and my judgment of 4 September 2014, [2014] EWHC 2924 (IPEC) ("the first account judgment"). 2 Earlier HHJ Birss QC had found that Abbott's European Patent (UK) No. 1 816 931 ("the Patent") was valid a......
-
Design & Display Ltd v OOO Abbott and Another
...one day, and that included live evidence, although no expert accounting evidence was adduced. It is from Judge Hacon's judgment ( [2014] EWHC 2924 (IPEC)) that this appeal is brought. 3 In his judgment on liability ( [2013] EWPCC 27) Birss J described the background to the invention: "[4] ......
-
Ap Racing Ltd v Alcon Components Ltd
...when a Canberra or Strasbourg table was sold. Alfrank had to satisfy the burdens of causation and remoteness generally (see Abbott, [[2014] EWHC 2924 (IPEC)], at [23]–[25]). [32] I agree. By way of an example, even if a supermarket claimant were to prove beyond doubt that for every packet ......