Intellectual Property Enterprise Court

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN THE INTELLECTUAL PROPERTY ENTERPRISE COURT

		Royal Courts of Justice Rolls Building 7 Rolls Buildings Fetter Lane London EC4A 1NL
		14 November 2013

Mr. Recorder Alastair Wilson QC:

1. The First Claimants in this action ("Redcrier") conduct a business in the provision of training manuals for care home staff in the UK. The subject of their business is sometimes called the Redcrier Silver Box training system, because the manuals are supplied to subscribing care homes in a cabinet prominently labelled with the words: "The Silver Box". A substantial upfront fee is paid by care homes for an initial subscription, and further fees are paid for updates to the manuals. As part of the service, Redcrier's customers are supplied with what I understand to be exam papers (or maybe their online equivalent) for care home staff. These are marked by Redcrier, who then post out certificates to those who pass the exams.
2. The business was originally founded by Mr. Redrup, the Second Defendant, but he sold it to Mr. Seville in 2007. Mr. Redrup continued to be closely involved in the business (though, according to him, there were some intermissions due to ill-feeling between him and Mr. Seville) until Mr. Redrup resigned at the beginning of December 2011, after which there was a mass exodus of half Redcrier's staff, who joined Mr. Redrup.
3. Mr. Redrup set up the First Defendant ("CCT") in January 2012 to conduct a business directly competing with Redcrier. No restrictive covenant has been relied on forbidding him to do so; had CCT and its staff set about writing a new set of manuals straight away, and marketed them alone, there could have been no objection to their activities. This is, however, not what they did. On the contrary, they copied the Redcrier manuals, updated them in some or all cases, and CCT was able to start trading in them more or less immediately, though I do not know the exact date on which they started.
4. Around October 2012, CCT distributed a flyer offering to provide Redcrier customers with what amounted to a seamless transfer to CCT's upgrade service, even offering to correct exam papers previously distributed by Redcrier. (The flyer incidentally makes it clear that CCT had made a similar offer previously, in March 2012.) The flyer contained allegations about the manner in which Redcrier conducted their business, which led Redcrier to include libel and trade libel claims in this action. Complaint is also made about the use in the flyer of a photograph of the Silver Box, the copyright in which was vested in Mr. Seville.
5. On 10 January 2013 these proceedings were started. The proceedings were issued out of the Queen's Bench Division on account of the libel claim, notwithstanding the fact that a copyright claim is assigned to the Chancery Division. A defence was filed on 26 March 2013, accompanied by an application, inter alia, to strike out the copyright parts of the action, on the ground that such a claim should have been started in the Chancery Division. This latter point went no further: on 10 May 2013 the whole action was transferred by Master McCloud to the PCC. A CMC was fixed for 31 July 2013 and Redcrier (but not Mr. Seville) launched an application for summary judgment, which was fixed to come on at the same time.
6. On 31 July 2013 the application for summary judgment and the CMC came before me for a half-day hearing.
7. As the case then stood in relation to the manuals, Redcrier had published five editions before CCT started their business, and the Particulars of Claim asserted ownership of the copyright in all of them. CCT disputed the existence of copyright on the basis of lack of originality, partly on the basis that the Redcrier manuals had been derived from third party sources and partly, so far as later editions were concerned, on the basis that each later edition was too closely based on its predecessor to have any independent copyright. CCT also challenged Redcrier's title to copyright in the first four editions of the manuals because Mr. Seville was the owner of any copyright in those editions. Redcrier were unable to answer this latter point, and since the application for summary judgment was made by Redcrier alone, this gave rise to a difficulty for them. This defect in Redcrier's title was, in part at least^[1], sorted out in the course of the hearing by means of the speedy execution of a short assignment from Mr. Seville to Redcrier, but there was no available time to continue the hearing and it was adjourned to a further hearing, which took place before me on 8 October 2013.
8. By the time of the resumed hearing, CCT had admitted that it had infringed copyright in the Manuals, without distinguishing between the various editions and they had abandoned the "copying from a third party" point. Accordingly they agreed to submit to the usual relief.
9. Mr. Redrup, however, does not admit that he is liable as a joint tortfeasor. It was agreed that the issue of his liability would have to be tried later, which prompted CCT to seek to postpone any enquiry (or account) against them until after the trial of the action against Mr. Redrup, submitting that it would be wrong for the Court to be put in a position where it might have to conduct the same enquiry (or account) twice against different Defendants. This raised interesting questions of law and procedure, but in the end the parties very sensibly agreed that such questions would be avoided if the issue of Mr. Redrup's liability as a joint tortfeasor were to be tried at the same time as the enquiry (or account). I will so order.
10. The issues of libel and trade libel arising from the flyer referred to above will have to be the subject of a separate trial, and the parties have agreed appropriate directions for that.
11. The only outstanding matters on which I must now rule are Redcrier's application for an interim payment of damages and the question of costs.

Interim Payment

12. CPR Rule 25.7 provides (so far as relevant here):

"(1) The court may only make an order for an interim payment where any of the following conditions are satisfied –

(a) the defendant against whom the order is sought has admitted liability to pay damages or some other sum of money to the claimant;

(b) the claimant has obtained judgment against that defendant for damages to be assessed or for a sum of money (other than costs) to be assessed;

(c) it is satisfied that, if the claim went to trial, the claimant would obtain judgment for a substantial amount of money (other than costs) against the defendant from whom he is seeking an order for an interim payment whether or not that defendant is the only defendant or one of a number of defendants to the claim;

(d)…

(4)^[2] The court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment."

13. As to the amount of such an interim award, there is a certain asymmetry about the nature of the jurisdiction conferred by CPR 25.7. Given the fact that there is going to be a delay before damages are finally determined, there is a risk that by the time they are, a Defendant will be unable to pay any excess due beyond the interim payment. Conversely, however, if a Defendant is ordered to pay too much by way of an interim award, there is a risk that the Claimant will be unable in due course to repay the excess. It is not obvious why the amount of the interim award should be calculated so as to lay all this risk on the Claimant rather than upon the Defendant, who is, by this time, a proven wrongdoer, or at least that the risk should be shared between them. There is provision in CPR 25.8(2) for repayment in the event of an overpayment, but the natural reading of CPR 25.7(4) is that the amount awarded should not be more than what is likely to be awarded at the hearing, and the authorities demonstrate that the amount of an award should be calculated in a way that makes a repayment very unlikely to occur.
14. For example, in Nuttall v Fri-Jado [2010] EWHC 1966 (Pat), Kitchin J. (as he then was) considered the application of CPR 25.7 to a claim for lost profits damages for patent infringement, and said:

"10. CPR 25.7 provides that the Court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment. In Ultraframe (UK) Ltd v Eurocell Building Plastics Ltd [2005] EWHC 2111 (Ch) Pumfrey J. provided the following guidance as to the matters the court should take into account in determining what, if any, order to make:

'1. Generally, interim payment procedures are not suitable where factual issues are complicated, or where difficult points of law arise;

2. This does not prevent an award from being made even in respect of part of a complex claim if that part can be identified as what Robert Walker J. calls "an irreducible minimum part without venturing too far into the disputed area of fact or law";

3. It may well be appropriate simply to ignore certain heads of claim altogether whilst concentrating on those parts of the claim which can be assessed on established principles with some confidence;

4. While a broad brush approach to detail may be appropriate to an enquiry as to damages (see, for example, Gerber Garment Technology Inc v Lectra Systems Ltd [1997] R.P.C. 443 ), at this stage it is also necessary to take a conservative view, however broad the brush employed is.

5. Even though the rule contains provision to accommodate over-payment, the extent to which comfort can be derived from the thought 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 Robert Walker J.'s reference to "irreducible minimum" reflects a fundamental feature of the jurisdiction. All the same, I do not think the phrase merely suggests that the sums awarded must be undisputed. There is room for a degree of uncertainty provided that it is treated in a conservative manner.'

11 In my judgment, the task of the court can be expressed rather more simply as being to ascertain what sum it can safely be assumed the claimant will recover in any event."

15. In the event, Kitchin J. did not take into consideration for CPR 25.7 purposes a claim for damages based on loss of profits, because the evidence on the point was too conflicting. He based his award on a 5% royalty of the Defendant's infringing sales receipts, that being a "conservative" royalty for the sort of goods in issue, and the total amount ordered being "a sum which … it can safely be assumed Nuttall will recover in any event".
16. Redcrier has put in a calculation of what it could claim by way of damages, although they have not yet opted as between an enquiry as to damages or an account of profits, because they have not yet had the conventional disclosure to enable them to opt as between an account of profits or damages. It might be said that it is premature to make any interim award until they do so, though CPR 25.7 is clearly drawn in wide enough terms to cover accounts of profits as well as enquiries as to damages. The point was not taken before me, however, presumably because the Defendants took the sensible view that Redcrier would hardly opt for an account of profits unless the likely outcome would be even more favourable to them than an enquiry as to damages. In any case, the authorities demonstrate that a party who is suing on alternative claims is entitled to invoke the CPR 27.5 jurisdiction if the Court is satisfied that one way or another the Claimant will recover a substantial sum (see, for example, JSC BTA Bank v Ablyazov [2012] EWHC 783 (Comm)).
17. There are three ingredients in the make-up of Redcrier's claim:

a. Damages for infringement of copyright in Redcrier's photographs which had been fairly prominently displayed on the flyer referred to above.

b. Damages for loss of upgrade business, in cases where Redcrier's existing upgrade customers had been diverted into taking upgrades from the Defendants.

c. Damages arising from the sale of infringing manuals to new customers.

18. In relation to the latter two categories, Redcrier's calculation claimed damages continuing for some years beyond the period of actual infringement, on what might be called a "springboard" basis. In all three categories, they also sought what they called a "statutory uplift" of 100%, in view of what they said was the flagrant character of the infringements.

The photograph

19. The photograph in issue was a photograph of a silver box which formed part of the get up of Redcrier's business. The photograph was used very prominently on the flyer referred to above, obviously for the purpose of rubbing in the message of the flyer that the Defendants were keen to take over business from Redcrier, providing exactly the same service but with, they asserted in the flyer, greater efficiency.
20. This is not an aspect of the case in which it is claimed that there was any specific loss of profits on the part of Redcrier, and damages will therefore be assessed in due course on the conventional "leave and licence" basis.
21. The Defendants have made an open offer of £50 damages. Mr. Seville contends for a figure of £1500, and seeks a 100% uplift on top of that to take account of what he says was the flagrant nature of the infringement.
22. The photograph is intrinsically a fairly trivial one, for which in the ordinary way no willing buyer would pay, and no willing seller could expect to receive, a very large licence fee. In this particular case, however, the photograph represented a significant feature of Redcrier's goodwill and the Defendants must have wanted to use it in their flyer in order to catch for themselves some of the benefit of that goodwill. Of course in such circumstances Mr. Seville would never really have granted a licence at all, but I have to proceed on the basis that the parties were hypothetically willing to negotiate a licence agreement. The recent judgment of Newey J. in 32Red v WHG [2013] EWHC (Ch) 815 has considered in depth the factors which can, and those which cannot, be taken into account when hypothetically conducting the relevant negotiation, though the ultimate message is that everything depends upon the particular facts of a case, and the most important facts are the economic ones. The dependence of cases on their particular facts is illustrated by the decision in Irvine v Talksport [2003] EWCA Civ 423, where the Court of Appeal increased a relatively modest award (£2,000) for a relatively modest advertising campaign (the distribution by post of 1000 mildly amusing unsolicited promotional packs incorporating the Claimant's photograph as if he was endorsing the product): the Court of Appeal held that the evidence demonstrated that the Claimant was a person who could demand and get £25,000 for an endorsement, and need not be expected to do it for less. By way of contrast to that particular result, very recently, in Eaton Mansions v. Stinger [2013] EWCA Civ 1308, the Court of Appeal observed that the relevant negotiation is one aimed at achieving a licence fee for the quantum of wrongdoing that actually occurred, not some hypothetical amount of wrongdoing that the parties might have had in mind at the time of the negotiation.
23. In the circumstances of the present case, I do not consider it right that the starting point should be a relatively trivial sum appropriate to the infringement of a relatively mundane copyright photograph. Even if that were the starting point, I have not been provided with any evidence as to what such a relatively trivial sum would be, though I suspect it would actually be significantly more than £50.
24. In the absence of any evidence as to an appropriate figure, it might be said that I am being asked to pluck a figure out of the air, and that I should not perform such an exercise on an application for interim damages. It seems to me, however, that I know enough about the circumstances of the present case to be able to say that a figure of £50 damages is far less than is likely to be awarded in due course, given in particular the fact that the photograph was to be used as part of a campaign to persuade the Claimants' customers to move over to the Defendants. I do not consider that a figure of less than £750 would be likely to be awarded when damages are finally assessed, and I will order that sum to be paid to Mr. Seville as an interim award.
25. As to flagrancy damages, section 97(2) of the Copyright, Designs and Patents Act 1988 provides as follows:

97 (2) The court may in an action for infringement of copyright having regard to all the circumstances, and in particular to—

(a) the flagrancy of the infringement, and

(b) any benefit accruing to the defendant by reason of the infringement,

award such additional damages as the justice of the case may require.

26. Although the infringement of copyright in the photograph was particularly flagrant, the benefit to the Defendants may not have been very great (if their evidence is true that the flyer was not widely distributed). Given that in my view the notional licence negotiation takes into account the purpose for which the photograph was intended to be used, and that this gives rise to a very considerable increase in the notional royalty, I do not think it right at this stage in the proceedings to increase the award above the figure of £750 referred to above.

Loss of update income

27. I was told at the most recent hearing that CCT does not dispute that it took some update business from Redcrier. Had Redcrier retained such customers they would, of course, have received the income generated by such business, subject to any natural wastage.
28. According to the Defendants' flyer, CCT had already sought in March 2012 to persuade at least some Redcrier subscribers to transfer their upgrade business to CCT, and there is no reason to suppose that they had not been doing to more or less continuously thereafter: given their wholesale copying of the Redcrier manuals, this was the most obvious source of business for them. To what extent they had updated the Redcrier manuals after their departure from Redcrier or took with them the latest updates already written on Redcrier's behalf is not clear, but in my view it makes little difference to the claim of infringement: it is now admitted that the CCT manuals as originally supplied were infringements, and it is clear from the evidence discussed below that at least some infringing manuals were being supplied even as recently as September 2013.
29. It appears that the infringement continued for some time. Although the Defence originally asserted that infringement had stopped by March 2012, this was not true. The Amended Defence has a list attached to it of the dates which the Defendants now say they stopped infringing the copyrights in particular manuals. The latest date on that list is 8 August 2012. Even that, however, appears to be seriously misleading. I have been shown a schedule prepared by Mr. Clay on the basis of comparisons he has made between the Redcrier Manuals and the manuals supplied at various dates by the Defendants to some of their customers. This records his conclusion that, for example, a set of 21 CCT Manuals supplied to "Carehomes of Distinction" as late as 26 November 2012 were nearly all infringements (with one exception – "Mental Capacity Act 2005"). Mr. Clay even found one manual ("Introducing Person Centred Approaches") supplied to a customer on 30 September 2013 which he regarded as an infringement.
30. I must, however, treat Mr. Clay's schedule with some care. It was not provided until very recently to the Defendants and was not accepted by them as correct, though this is not in itself a conclusive reason for ignoring the Schedule: the Defendants have a history of not accepting matters which they must have known were true, and the false claim in their original Defence that all their manuals distributed after March 2012 were non-infringing does not inspire confidence in their credibility.
31. More significantly than that, however, Mr. Clay's criteria for judging infringement are not necessarily wholly reliable: The set supplied to Carehomes of Distinction included three Manuals ("Basic Emergency Care", "Assisting and Moving Individuals" and "Food Hygiene and Safety") which have the same compilation date (and are therefore presumably the same) as equivalent manuals listed elsewhere in Mr. Clay's schedule as having been supplied to different customers as well. In the hands of those other customers, they were accepted by Mr. Clay as non-infringing. These may, however, have been borderline cases. In most instances Mr. Clay reached the same conclusion as to whether a particular edition was infringing or non-infringing, and Mr. Clay demonstrated one example from his schedule to me ("Infection Control", edition dated 28 June 2012) which appeared to be virtually identical to the Claimant's manual.
32. As to the date when infringement may have stopped, the clearly infringing edition of the Infection Control Manual was supplied to another customer, "Abingdon Court", on or after 18 January 2013, along with a few more in relation to which Mr. Clay alleges infringement, and also several admittedly non-infringing manuals.
33. In my view a safe and conservative approach to the issue of infringement of copyright in the manuals is that infringement continued at least until mid-January 2013, albeit on a diminishing scale. It may very well be that it continued longer, but I will approach the case on this conservative basis. Assuming that infringement started in January 2012, this means that there was a period of about 1 year of infringement.
34. As to the number of diverted customers, the Claimants assert that prior to the Defendants' activities, they only lost a few customers every year, but taking that into account they calculated that they lost a net 19 to the Defendants in each of the relevant tax years 2011-12 and 2012-13. The Defendants responded that the Claimants' calculations were fallacious in that a lot more customers dropped out annually due to natural wastage than was accounted for in the Claimants' calculations, but I do not set much store by that: the Defendants' credibility on points such as this is low, and if they had wanted to they could have provided clear evidence of exactly how many of the Claimants' customers moved over to them for upgrades and the dates on which they did so. In due course they will have to do so in the course of the enquiry. Another difficulty with the figures I have been given relate to total losses in two tax years. Assuming for present purposes that the period of infringement was about 1 year (from January 2012 to January 2013), I do not know how these lost sales were distributed as between the period of infringement and the later period of possible non-infringement when the Defendants no doubt continued to capture business from the Claimants. Taking into account the fact that I have not been provided with very full evidence on the Claimants' side either, it seems to me that an appropriately conservative figure for lost customers during the period of infringement is 30.
35. As to the amount of loss per customer, the Claimants say that customers paid £218 p.a. for their service, but accept that from that must be deducted various costs, including the costs of administering the exam system referred to above (which they had omitted from the first version of their calculations). The Defendants say that a figure for general overheads should also be deducted but that is wrong in principle: such costs had already been covered by the business which the Claimants retained. Taking into account the figures I was shown, it seems to me that a suitably conservative figure for lost profits per customer per annum is £150.
36. The Claimants further say that each lost customer represents a loss of profits extending over more than one year. I accept that it is likely that this is so, but I must also take into the account what seems to me the likelihood that the Defendants would have captured at least some of the lost customers after they had started to trade lawfully. Taking, this time, a conservative but somewhat broad brush approach, it seems to me unlikely that the Claimants will be held to have lost less than an average two years upgrade business per lost customer.
37. Putting those figures together, my assessment of an appropriate interim payment is based on a conservative estimate of 60 lost customer-years at a lost profit of £150 each, leading to a total figure under this head of £9,000.

Defendants' sales of new Manuals

38. There is no doubt that, since they started their business, the Defendants have also found new customers who have contracted to buy the infringing Manuals.
39. They signed up 92 new customers in the period January-August 2012. (This figure is taken from the Defendant's evidence, and accordingly I can take it that it is certainly not an under-estimate.) That amounts to 11.5 sales a month during that period, and in my view it is reasonable to proceed on the assumption that a similar number of new customers would have been found in the whole period of 1 year which I am assuming for present purposes to be the period of infringement. That gives a total of 138 new customers during that year.
40. The Claimants invited me to proceed on the assumption that they would have made all these sales instead of the Defendants, and that they are entitled to loss of profits damages in relation to each one of them.
41. It does not seem to me right to make any such assumption. I was told that the Claimants have about a 5% share of the relevant market, and I cannot see why they should have expected to gain 100% of the new business gathered by the Defendants. The Claimants contended that were it not for the infringements of copyright, none of their sales staff would have followed Mr. Redrup, because they would have had nothing to do, and accordingly they would have stayed with the Claimants, making all the relevant sales for the Claimants. At this stage in the proceedings I do not consider that I should accept this contention, which is based on numerous unproven assumptions.
42. Nevertheless, I do consider that it is reasonable to work even for present purposes on the assumption that the Claimants would have gained at least some of this new business were it not for the Defendants' infringing competition, and to assume that they lost profits on 7 sales (i.e. about 5% of 138). Once again, such profits will in due course be assessed without taking into account general overheads.
43. As to the quantum of such lost profits, a conservative view of the figures I have been shown suggests that it is unlikely to amount to less than £1,000 per customer. I also consider it appropriate to add a notional figure in respect of the next year's profits on updates for each such customer, namely £150. This leads to a total of £8050.
44. As to the remaining 131 customers, the Claimants are entitled to a notional royalty on each infringing manual sold, though as the proportion of infringing manuals declined, the amount of royalty would decline accordingly. In conducting the notional hypothetical negotiation referred to above, it seems to me that the Claimants would have been in a position to demand (and the Defendants would have been willing to pay) quite a high royalty rate, because they needed to have a set of manuals in order to enter the market. The Claimants would have been able to negotiate a royalty representing a significant proportion of the Defendants' profit margin. Of course the Defendant's profit margin for this purpose is not comparable to the Claimants' profit figure used for the purposes of §§42-43 above, because general overheads would need to be taken into account. In my view it is unlikely that the relevant royalty figure is going to be assessed in due course at less than an average of £150 per customer, leading to a total of £19,650.
45. In the result, therefore, I shall order the First Defendant to pay by way of interim payment:

a. The sum of £750 to Mr. Seville, and

b. The sum of £36,700 to Redcrier (being the total of £19,650, £8,050 and £9,000.)

The Liability of the Second Defendant

46. At present there is no finding of liability as against the Second Defendant. Accordingly the above order can be made only against the First Defendant.

Costs

47. CPR 63.26 provides as follows in relation to Enterprise Court proceedings:

"(1) Subject to paragraph (2), the court will reserve the costs of an application to the conclusion of the trial when they will be subject to summary assessment.

(2) Where a party has behaved unreasonably the court may make an order for costs at the conclusion of the hearing".

48. Common sense, though not the express words of the rule, dictates that when an action comes to an end against a party because of a successful application for summary judgment, or because, say, the Defendant caves in at the time of a CMC, the Claimant should be entitled to a costs order straight away, because there never will be a trial. I note that this is what happened in the PCC, where an equivalent rule applied, in Active Photonics v Solo Thermal Imaging [2013] EWPCC 9. Nor, as I see it, should it make any difference that one part of the action (in this case, the libel and trade libel claims) will be proceeding to a trial in due course. It may well be that the PCC or EPIC costs awarded in the meantime will count against the overall costs cap if the Claimant is awarded its costs at the trial, or that some costs may be awarded in favour of the Defendants at the trial, but that does not seem to me to be a reason for depriving the Claimant of an immediate costs order in the present circumstances, any more than it is a reason from depriving the Claimant of an immediate enquiry as to damages (or account of profits).
49. The Claimants' costs claim falls into two sections:

a. High Court costs incurred prior to the transfer of the action into the PCC in May 2013, and

b. Costs incurred in the PCC and to some extent in the EPIC.

50. The Defendants were only given Schedules of the Claimants' costs on the day of the hearing, and given the other matters they needed to deal with at the hearing, it does not seem to me that they had a fair opportunity to consider it. Although I will decide some issues of principle now, and will state below my provisional views as to the individual sums to be awarded, before making a final ruling on the amounts to be awarded, I will give the First Defendant an opportunity to respond in writing to the amounts claimed in the schedule or mentioned below, within one week of this draft judgment reaching them. The Claimants may respond within 3 days, and I will consider the matter without a further hearing (unless either side insists on an oral hearing).
51. As to the costs in the High Court prior to the transfer to the PCC in May 2013, the Claimants' costs schedule lists costs under the sentence "We deal first with the costs of the copyright infringement claims in the High Court". The listed items, however, contain references to the pleadings (without any indication that only some fraction of the costs of the pleadings are attributable to the copyright claim) and such matters as "detailed review of the whole case". In the absence of any breakdown of the High Court costs as between costs incurred specifically in relation to one cause of action or the other, it seems appropriate for present purposes to assign them up to the end of March 2013 as to ? each as to the separate causes of action, and ? for general costs applicable to both. At this stage in the proceedings it seems to me appropriate to award the Claimants the ? figure notionally attributable exclusively to the copyright claim, i.e. £3,687.83. The various points addressed to me by the Defendants, such as their objection to the fact that this action was originally started in what they say was the wrong division, can be dealt with in due course when the general costs of the action come to be adjudicated upon at the conclusion of the action.
52. As from the end of March 2013, the proportion of costs attributable to the copyright claim must in my view have increased significantly. This was partly due to the Defendants taking detailed points on the title to, and existence of, copyright in the Claimants' manuals, all of which have been superceded by the Defendants' belated admission that they have infringed copyright in the latest (5th) editions of the Claimants' manuals. It was also due to the Defendants' untruthful pleading in §16 of their Defence that any infringement had stopped in March 2012. All this forced the Claimants to do a great deal of work investigating the position, and comparing the various editions of their manuals with what they were able to discover about what Defendants had been distributing. Such work is inherently very time consuming, but as the Defendants chose to plead their case, it was necessary. In my view it is reasonable as from March to the moment of transfer of the proceedings into the PCC to award the Claimants 75% of their costs of the proceedings during that period, that is to say £11,842.13.
53. As to the costs in the PCC (or the EPIC), the matter is greatly simplified by the various stages, and the costs caps associated with them, prescribed in CPR PD 45 section VI §§3.1- 3.2, together with Table A. Since the pleadings were completed in the High Court before the transfer of the action no stage costs associated with them can be awarded, and there is no provision in the rules to deal with any amendments to the pleadings made after the date of transfer.
54. Three items were, however, particularly relied upon by Mr. Clay as coming within the scope of my jurisdiction:

a. Attendance at a case management conference:	£2,500
b. Making or responding to an application:	£2,500
c. Preparing witness statements:	£5,000

55. The hearing before me was a combined CMC and application for Summary Judgment, but in my view having regard to the very different nature of these applications there is no reason in principle why the two caps of £2,500 should not apply individually. Mr. Clay contended that the witness statements prepared for the purposes of these hearings counted as an additional stage, with an additional £5,000 cap. I do not agree. It seems to me that the caps of £2,500 applicable to the CMC and to other applications are intended to include any evidence prepared for those purposes. The cap of £5,000 for the preparation of witness statements is intended to cover those intended for use at the trial.
56. Mr. Clay's Schedule of Costs showed that very substantially more than the total of the relevant caps had been incurred in relation to the CMC and the summary judgment application. So far as the latter is concerned, the Claimant has succeeded. Although I do not doubt that some of the very large costs they incurred could be reasonably disputed, I cannot see how the end result would result in an award of less than the relevant cap of £2,500, particularly bearing in mind the unnecessary extra work which was required as a result of the Defendants' pleading. Given that there will now be no trial in relation to the matters covered by the summary judgment, there is no reason why the relevant sum of £2,500 should not be awarded straight away. As to the CMC, however, the action proceeds in relation to some matters (and even the liability of the Second Defendant remains to be considered, albeit not at the trial but at the time of the enquiry as to damages). In my view the costs of the CMC should not be dealt with today, but should await the outcome of the trial (and the issue of the Second Defendant's liability).
57. Accordingly, as to costs, I order that the First Defendants should pay to the Claimants the sum of £18,029.955 (that is to say £3,687.83 + £11,842.125 + £2,500).
58. The parties have been able, subject to my adjudication of the above matters, to agree a form of order, and it is accordingly not necessary for me to deal with the many other points which were canvassed in the course of the hearing before me.

Note 1    A possible difficulty in relation to the calculation of damages nevertheless arises from the fact that Mr. Seville was the owner of the copyrights in the versions 1-4 manuals at the time of most, if not all, of the Defendants’ infringing acts. This is dealt with below.    [Back]

Note 2    Strangely, the version of the CPR on the Internet does not have Rules 27.5.(2) or (3), though some commentators on Rules 27.5.(4) and (5) refer to them as Rules 27.5.(2) or (3).    [Back]