Original Beauty Technology Company Ltd v G4K Fashion Ltd

JurisdictionEngland & Wales
CourtChancery Division
JudgeDavid Stone
Judgment Date20 December 2021
Neutral Citation[2021] EWHC 3439 (Ch)
Docket NumberCase No. IL-2018-000105

[2021] EWHC 3439 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

INTELLECTUAL PROPERTY LIST (ChD)

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

Before:

David Stone

(sitting as a Deputy Judge of the High Court)

Case No. IL-2018-000105

Between:
(1) Original Beauty Technology Company Limited
(2) Linhope International Limited
(3) Retail Inc Limited (in liquidation)
Claimants
and
(1) G4K Fashion Limited
(2) Claire Lorraine Henderson
(3) Michael John Branney
(4) Oh Polly Limited
Defendants

Ms Anna Edwards Stuart and Mr David Ivison (instructed by Mono Law Limited) for the Claimants

Mr Chris Aikens (instructed by Fieldfisher) for the Defendants

Hearing dates: 25, 26, 27 and 29 October 2021

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.

David Stone (sitting as a Deputy Judge of the High Court):

1

Damages inquiries are rare in intellectual property cases. This case may help explain why. What ought to have been a comparatively simple exercise of trying to put the Claimants into the position they would have been in had the infringement not occurred became marred in detail and side issues. This judgment is therefore of necessity longer than I would wish.

2

The Claimants (by which I mean the First and Second Claimants, the Third Claimant being in liquidation and taking no part in proceedings) sell bandage and bodycon dresses and other garments under the brands House of CB and Mistress Rocks. House of CB competes with the Defendants (where it is necessary to distinguish between them I will do so), who also sell bandage and bodycon dresses and other garments, but under the brand Oh Polly. 15,393 Oh Polly garments sold by the Defendants infringed unregistered design rights owned by the First Claimant. The Claimants therefore sought damages under three heads:

(a) their lost profits on garments which, but for the Defendants' sales, would have been made by the Claimants;

(b) a reasonable royalty on the Defendants' sales not covered by (a) above; and

(c) additional damages pursuant to my earlier finding that the Defendants' infringement was flagrant.

3

Before me, the parties referred to (a) and (b) above as “standard damages” and (c) as “additional damages”. The Defendants denied that lost profits damages were payable at all. The Defendants accepted that a reasonable royalty was payable, but they valued that royalty at approximately £15,000, or £1 per infringing Oh Polly garment. The Defendants also accepted that additional damages were payable, but they said that I should order no more than a 20% uplift on the reasonable royalty, which they submitted is approximately £3, 000, or 20p per infringing Oh Polly garment. On the other hand, the Claimants submitted that they should receive approximately £275,000 in standard damages, to be “topped up” to approximately £500,000 with additional damages to reflect the flagrancy of the infringement. Thus, the parties were far apart.

Background

4

This is the ninth judgment I have given in these proceedings. I do not set out here all the relevant background, which can be found in those earlier judgments. For present purposes, it is sufficient to record as follows.

5

After a trial over eight days, on 24 February 2021 I gave judgment in relation to the alleged infringement of UK unregistered design rights ( UKUDR) and Community unregistered design rights ( CUDR) in 20 selected garments (the Selected Garments) out of a total of 91 garments, which rights the Claimants said were infringed by the Defendants. That judgment can be found at [2021] EWHC 294 (Ch) (the Main Judgment). I found that seven of the Selected Garments infringed both UKUDR and CUDR, and that 13 infringed neither right. I dismissed the passing off claim. I set out below some of my other findings from that judgment relevant to this damages inquiry.

6

A form of order hearing took place on 1 April 2021: I gave a short ex tempore judgment (which can be found at [2021] EWHC 836 (Ch)) rejecting the Defendants' request for declarations of non-infringement. An issue arose after the form of order hearing in relation to the various colourways of some of the seven infringing Selected Garments, and I dealt with that in a judgment which can be found at [2021] EWHC 953 (Ch). I dealt with a further issue relating to costs where a Part 36 offer has been made: that judgment can be found at [2021] EWHC 954 (Ch). Following the Claimants' election of a damages inquiry in relation to the infringing Selected Garments, I heard a CMC on 24 June 2021. I allowed the Claimants to amend their pleadings for the reasons set out at [2021] EWHC 1848 (Ch). Following these amendments, the Defendants then admitted that a number of the further pleaded garments infringed.

7

The Claimants' Points of Claim in the damages inquiry were served on 20 August 2021. Points of Defence were served on 7 September 2021. There was a hearing before me on 10 September 2021 at which I ordered the Claimants to provide responses to the Defendants' Request for Further Information dated 24 August 2021: that was duly done on 17 September 2021. Also on 10 September 2021, I refused the Defendants' request to institute the disclosure pilot and refused most of the Defendants' requests for specific disclosure. That judgment can be found at [2021] EWHC 2555 (Ch). The Court of Appeal refused the Defendants' application for permission to appeal.

8

On 1 October 2021, I refused the Defendants' application to vacate the hearing of this damages inquiry, for the reasons set out at [2021] EWHC 2632 (Ch). The Court of Appeal refused the Defendants' application for permission to appeal.

9

On 15 October 2021, I refused the Defendants' application for specific disclosure in relation to this damages inquiry: see [2021] EWHC 2748 (Ch).

10

The inquiry was heard remotely at the request of the parties, over five days. The parties used the CaseLines database so that documents were available electronically to the court and to witnesses. The Claimants were represented by Ms Anna Edwards-Stuart and Mr David Ivison of counsel (instructed by MonoLaw) and the Defendants were represented by Mr Chris Aikens of counsel (instructed by Fieldfisher).

11

For ease of reference, each garment in the proceedings has a number. The Claimants' garments in which they assert UKUDR and CUDR are pre-fixed with the letter C. Where a part design is claimed, an asterix is used. The Defendants' garments which are alleged to infringe mostly have the corresponding number, prefixed with the letter D (thus, D2 was alleged to infringe design rights in C2 etc). The evidence occasionally used the names of the garment (the Claimants' garments having girls' names, and the Defendants' garments being named with puns or plays on words).

Fact Witnesses

12

The Claimants relied on two witnesses of fact.

Joanna Richards

13

Ms Joanna Richards is actively involved in running the House of CB business. She primarily gave evidence in relation to her views on a hypothetical negotiation for a reasonable royalty, and the impact of the dispute on the Claimants. Ms Richards had also given evidence at the liability trial: she was cross-examined in that trial, and at this inquiry. Counsel for the Defendants submitted that Ms Richards “was a thoroughly unhelpful witness”, but said further that, “for the most part”, that was not her fault. He submitted that her role at House of CB was limited, and that she did not make key decisions in relation to the business. Even if these submissions were true, I do not consider that this criticism can be made of Ms Richards. I found her to be an honest witness, doing her best to assist the court. The areas where counsel for the Defendants said she lacked knowledge turned out to be largely irrelevant to the issues to be determined in the inquiry.

14

Further, on 21 October 2021, the Defendants' solicitors wrote to the Claimants' solicitors in the following terms:

“We refer to your second letter dated 12 October 2021, wherein you state that “the issue of which factory makes which garments is utterly irrelevant to any issue still in dispute in these proceedings”.

For the avoidance of doubt our clients reject this proposition. We hereby put you on notice that at trial we will be asking Mr Waters and/or Ms Richards where each of the garments were manufactured and about the relationship between the factory (or factories) and the Claimants. It appears from their evidence that they already know of such matters, but if they do not, we ask that they have that information available to them at trial.”

15

The Claimants' solicitors did not respond to this letter, which was issued one clear day before the inquiry began.

16

Under cross-examination, it became apparent that Ms Richards did not know which garments were manufactured at what factory. She had not researched the issue in order to be able to answer the Defendants' questions. Ms Richards gave evidence that the factories concerned made the decisions on where garments were to be manufactured, and they had all closed more than two years ago.

17

Counsel for the Defendants criticised Ms Richards trenchantly for “not check[ing] where the garments were manufactured even though she knew [the Defendants] wished to have that information”. Counsel for the Claimants submitted that I should reject this criticism of Ms Richards: witnesses should be cross-examined on their evidence, she submitted, and Ms Richards had given none in relation to the factories. It...

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    ...it: General Tire and Rubber Company v Firestone Tyre and Rubber Company [1975] WLR 819, 826; Original Beauty Technology v G4K Fashion [2021] EWHC 3439 (Ch), §75. iii) Where the defendant's wrongdoing has created uncertainties, those should where necessary be resolved by making assumptions ......

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