Ultraframe (UK) Ltd v Eurocell Building Plastics Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Pumfrey |
| Judgment Date | 26 August 2005 |
| Neutral Citation | [2005] EWHC 2111 (Ch) |
| Docket Number | Case No: HC 03 C02313 |
| Court | Chancery Division |
| Date | 26 August 2005 |
[2005] EWHC 2111 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
MR. JUSTICE PUMFREY
Case No: HC 03 C02313
MR. D. ALEXANDER, Q.C. (instructed by Messrs. Hammonds) for the Claimant.
MR. THORLEY, Q.C. (instructed by Messrs. Martineau Johnson) for the Defendants.
Approved Judgment
Digital Transcription by Marten Walsh Cherer Ltd, 27�29 Cursitor St,
London, EC4A 1LT. Tel: 020 7405 5010, Fax: 020 7405 5026.
This is an application for a preliminary payment on account of damages caused to the Claimant by the sale of infringing low pitch conservatory roofs in the context of an inquiry as to damages awarded by the Court of Appeal to the successful patentee (to whom I shall refer as Ultraframe) in an action for infringement of UK patent no. 2300012.
The matter was last before me on 13 July, 2002, six days after the order of the Court of Appeal, when I refused to continue with this application. On that occasion Ultraframe submitted that there was convincing evidence that the ultimate recovery for lost profit on sales would be about �5 million. Further recoverable loss was, it was submitted, of the order of �5 million, and the order for interim payment should reflect that fact.
The matter has now advanced somewhat and Ultraframe has re-calculated its loss of profits on the basis of sales figures provided by the Defendant Eurocell. The claim for lost profit, assuming the accuracy of these figures, which Ultraframe do not presently accept, is that the lost profit claim amounts to some �2.1 million in respect of the period to 30 June, 2005. The losses for the future �that is, lost sales to Ultraframe as a result of Eurocell's continuing in a market built up using the infringing design �is not quantified. I mention this not by way of criticism, but as a helpful reminder that what may, at an early stage in an inquiry as to damages, appear clear and well-supported may, on a proper analysis, be tentative and liable to criticism and substantial adjustment �something which I am obliged to bear in mind when considering this application.
The case is further confused by two particular factors. First, Ultraframe say that they need this money urgently. Eurocell say, in part relying upon this expressed urgency, that Ultraframe's financial condition justifies, first of all, special protection for Eurocell, either in the form of a reduction in the sum which would otherwise be payable or by the imposition of special terms, and, moreover, a fortifying of the cross-undertakings of which Eurocell already has the benefit pending resolution of a possible appeal to the House of Lords.
Normally, after judgment in a Claimant's favour in the Court of Appeal, I would suppose that the factor of urgency and need for the money would in fact operate in favour of making an interim award. But Eurocell have petitioned the House of Lords for permission to appeal, although they have not sought to stay the inquiry. They contend that the fact that they have more than negligible chance of obtaining permission to appeal, and thereafter prosecuting that appeal to a successful conclusion, means that Ultraframe's ability to repay any interim sum paid over on account of damages is a factor that I should take into account either in fixing the sum to be paid, or, at the very least, imposing terms to protect the money in the event that Ultraframe would appear to be unable to repay it.
With the introduction, I can turn to the law. The jurisdiction to make an award of interim damages derives from CPR 25.7(1)(b) so far as this case is concerned. So far as this rule goes in the circumstances of this case in which there is a Judgment for an inquiry, which will result in an order for damages, the only factor I am obliged to take into account by the terms of the rule is contained with Rule 25.7(4) �that the award should not exceed a reasonable proportion of the likely amount of the final Judgment.
While generally recourse to authorities under the former rules of the Supreme Court is inappropriate, it was, I think, common ground �and I agree �that the Judgment of Mr. Justice Robert Walker (as he then was) in Chiron Corp -v�Murex (No. 13) [1996] F.S.R. 153, provides valuable guidance as to the just manner of exercising a discretion as broad as this one. I derive the following propositions from that case, and from consideration of general principles.
Generally, interim payment procedures are not suitable where factual issues are complicated, or where difficult points of law arise;
This does not prevent an award being made even in respect of part of a complex claim if that part can be identified as what Mr. Justice Robert Walker calls 'an irreducible minimum part without venturing too far into the disputed area of fact or law';
It may well be appropriate simply to ignore certain heads of claim altogether while concentrating on those parts of the claim which can be assessed on established principles with some confidence;
While a broad brush approach to detail may be appropriate to an inquiry as to damages (see, for example, Gerber -v�Lectra [1997] R.P.C. 443), at this stage it is also necessary to take a conservative view, however broad the brush employed is.
Even though the rule contains provision to accommodate over-payment, the extent to which comfort can be derived from the though that even if the amount awarded under heads that are considered at the interim stages excessive, the other unconsidered heads can make up for it is strictly limited. Hence, Mr. Justice Robert Walker's reference to 'the irreducible minimum' reflects a fundamental feature of the jurisdiction. All the same, I do not think that the phrase merely suggets that the sums awarded must be undisputed. There is room for a degreeof uncertainty provided that it is treated in a conservative manner.
Since the decision of the Court of Appeal in the Gerber case above, which fills in many of the gaps left by the Judgment of the House of Lords in General Tyre -v�Firestone [1976] R.P.C. 197, the underlying principles are not in much doubt. In a patent infringement action the basic rule is still that stated by Lord Moulton in the etors case [1911] 28 R.P.C. 157 �164.
In summary, as the law has developed, the principles are as follows:
In general, the patentee should be restored to the position he would have been in had no wrong been done, and he will recover loss which is not too remote caused by the infringement and not excluded by public policy;
If the patentee exploits by licensing, there is a price and the infringer pays that price;
Where there is no going rate and yet the patentee cannot show any damage caused by the sale, the infringer still pays a notional royalty fixed as between willing licensor/willing licensee;
Where the patentee can show that he would have made the infringing sale, he is entitled to compensation for not having made that sale, that is, his lost profit;
Where the patentee can show that the infringer's activities have had other economic effects inhibiting his exploitation of his monopoly for example, by obliging him to keep his own prices down or even reducing them he is entitled to compensation in respect of that loss also;
The principle stated extends to permitting the patentee to recover in a suitable case his loss suffered by reason of loss of sales of items not covered by the patent, but whose sale is diminished by the Defendant's sale of infringing items.
In the present case the patentee has in addition to a lost profits claim other claims in respect of price depression, incremental costs of introducing new product, damages for lost sales of ancillary items, and damages for the competitive foothold in the market obtained by the Defendant's sales of the infringing articles, this last head being, in a manner of speaking, damages for wrongfully generating a lasting goodwill. Apart from loss of sales, in respect of which the Defendant accepts that damages are to be payable, albeit not on the basis contended for, and not to anything like the same amount as that for which the patentee contends, there is a flat denial of liability.
Squarely facing up to the limitations of this jurisdiction and to the inadequacy of the evidence in relation to these heads, Mr. Alexander, QC, who appeared for Ultraframe, did not seek a payment in respect of these secondary heads of loss. In my judgment, he was obviously right to take this course, but I further consider that the evidential position in relation to each of them is such that I should not consider them for any purpose, even for the purpose of fixing the amount that is a reasonable proportion of the sum for the purposes of Rule 25.7(4). I agree with Mr. Thorley, QC, for Eurocell, that at this stage my task is to concentrate on the irreducible minimum in respect of lost sales.
There is no full agreement on the lost sales figure. The Defendants contend, for various reasons which are at least plausible, that Ultraframe would only have made about 60 percent of their sales, the remainder of which would fall to be dealt with on the basis of a reasonable royalty which they fix, for no very obvious reason, at 4.5 percent. Ultraframe, on the other hand, proceeds on the basis that every sale made by Eurocell is a sale lost to it, but I am not given a proper assessment of the market, the players in it, and the overall picture as to competitive pressures.
I have found most helpful, and I consider that it is best to proceed upon, the evidence of Mr. Hall, on behalf of the Claimants, where he compares and explains the difference for the figure of �2,104,032 at which he arrives for the lost profits...
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