A recent judgment from the IPEC provides a warning for anyone pursuing damages claims in IP cases. The process is time consuming, complex and may cost more in legal fees than the ultimate award. There are several bases upon which damages can be awarded.
This case looks at loss of an opportunity and the notional royalty which might have been charged for the use. It also considered whether a damages uplift was justified on the basis of the flagrancy of the infringement. The alternative to damages (an account of profits) was not considered.
What happened?
The dispute concerned infringement of copyright in Eminem’s first album “Infinite” (released in 1996). The claim was brought by FBT Productions (FBT) against Let Them Eat Vinyl Distribution (LTEV), which was making vinyl copies of the album, and other parties. The judge found LTEV liable for copyright infringement (but not secondary infringement) in April 2019.
FBT sought an inquiry into damages, claiming loss of opportunity to license a third party, losses flowing from the licence it would have offered, or a reasonable royalty for actual sales. It also always challenging to prove loss of opportunity. This case was no different....
FBT claimed a total of £288,209. However, following a one-day trial Deputy High Court Judge Ian Karet awarded just £7,452.50 plus interest. Hardly a golden award.
The judge rejected the claim for loss of opportunity, saying the evidence showed that FBT’s own marketing plans continued despite the infringement. He also rejected the claim for loss of licence fees “on the basis that it was FBT's evidence that it would not have offered a licence to LTEV because it was not an attractive potential licensee”.
Turning to the notional royalty claim, he said a hypothetical negotiation would have been for a licence to make 2,891 copies of the work in the UK, and the hypothetical royalty fee would be £2.50 per disc, or just over 32% of the price to dealer (£7.75). This came to £7,452.50.
That sum is a small return, especially given that the decision on damages comes more than two years after the judgment on liability, and the quantum trial involved a barrister and solicitors on both sides as well as four fact witnesses and two experts.
The case is a reminder that, where damages are concerned, a commercial solution that provides a fair outcome and reduces time and money spent on legal proceedings is nearly always preferable.
To find out more about the issues raised in this case including trade mark disputes and filing contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - rosie.burbidge@gunnercooke.com
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