INTELLECTUAL PROPERTY ENTERPRISE COURT
ON APPEAL FROM THE SMALL CLAIMS TRACK
Fetter Lane, London, EC4A 1NL
B e f o r e :
| THE NATIONAL GUILD OF REMOVERS & STORERS LIMITED
|(1) CENTRAL MOVES LIMITED
(2) SCOTT RUST
Scott Rust appeared on behalf of First Defendant/Respondent and on his own behalf
Hearing date: 21 November 2017
Crown Copyright ©
Judge Hacon :
"Central Moves UK Ltd
Removals and storage. National and International. BAR and GUILD MEMBERS
The reference to BAR is to another trade organisation of which CMUK was a member and which plays no part in this appeal.
Grounds of Appeal
Liability of Central Moves
(1) The District Judge should have found that Central Moves was liable for passing off.
Extended liability of Mr Rust
(2) He should have found that Mr Rust's liability as joint tortfeasor with CMUK continued after CMUK stopped trading until CMUK was dissolved in April 2011.
(3) The District Judge approached the assessment of damages in the wrong way by applying the user principle. He should instead have based the assessment solely on the terms under which use of the NGRS name was licensed and in particular the post-termination fees due under those terms.
(4) If, contrary to ground (3), the District Judge was entitled to assess damages on the user principle, he should not have based his assessment on figures derived from NGRS v Statham. He wrongly arrived at a figure which constituted his view of what Central Moves should have paid for the relevant hypothetical licence, as opposed to the sum it would have paid.
(5) Costs were wrongly awarded on the basis that the claim had always been in the Small Claims Track. Until 28 May 2015 it was in the Multi-Track and costs up to then should have been awarded accordingly.
Liability of Central Moves
"The general principle that no-one can profit from the fraud of another emerged in equity. Lord Eldon said in Huguenin v Baseley that 'it was against conscience, that one person should hold a benefit, which he derives through the fraud of another'".
" I also do not consider that Central Moves' use of the www.centralmovesuk.com domain name of itself could result in a misrepresentation. A domain name is akin to an address. It tells a user's web browser where certain information can be found on a network, much as a business' street address indicates to a user where business may be found in a town. Consider the situation where an NGRS member placed advertisements which included the street address of his business premises. If the NGRS member then sold the premises to a purchaser who was not an NGRS member, would the purchaser become liable for passing off merely by operating from that street address? It seems unlikely."
Extended liability of Mr Rust
"I do not think there is a real prospect that the Court of Appeal would interfere with the decision of a specialist judge on the assessment of damages (necessarily an imprecise operation), given the following:
1) The judge awarded the claimants damages of £5,400 which is based on the generous assumption that the defendants would have paid the highest figure which the evidence showed that they actually charged for full membership in a situation where the defendants had made extremely limited and inadvertent use of the logo. He could equally well have chosen a much lower figure for annual membership, increased it by reference to the run off rates and arrived at a figure of the same order.
2) It is not arguable that the hypothetical negotiation would yield a figure based on the run-off rates (£26,866.77) and the claimants rightly no longer contend for this figure. Instead the claimants now seek a figure of £10,500 (not contended for below and coincidentally £500 in excess of the open offer made by the defendants at the time the defence was filed). It is not clear to me on what basis they calculate this figure.
3) Overall, it is not clear to me that £10,500 is any more clearly justified than the figure at which the judge arrived."
"These are very useful guidelines, but the principle of them must not be misapplied. Before a 'going rate' of royalty can be taken as the basis on which an infringer should be held liable, it must be shown that the circumstances in which the going rate was paid are the same as or at least comparable with those in which the patentee and the infringer are assumed to strike their bargain."
"3 In some cases it is not possible to prove either (as in 1) that there is a normal rate of profit, or (as in 2) that there is a normal, or established, licence royalty. Yet clearly damages must be assessed. In such cases it is for the plaintiff to adduce evidence which will guide the court. This evidence may consist of the practice, as regards royalty, in the relevant trade or in analogous trades; perhaps of expert opinion expressed in publications or in the witness box; possibly of the profitability of the invention; and of any other factor on which the judge can decide the measure of loss. Since evidence of this kind is in its nature general and also probably hypothetical, it is unlikely to be of relevance, or if relevant of weight, in the face of the more concrete and direct type of evidence referred to under 2. But there is no rule of law which prevents the court, even when it has evidence of licensing practice, from taking these more general considerations into account. The ultimate process is one of judicial estimation of the available indications. The true principle, which covers both cases when there have been licences and those where there have not, remains that stated by Fletcher Moulton L.J. in Meters Ltd. v. Metropolitan Gas Meters Ltd. (1911) 28 R.P.C. 157, 164165: though so often referred to it always bears recitation.
'There is one case in which I think the manner of assessing damages in the case of sales of infringing articles has almost become a rule of law, and that is where the patentee grants permission to make the infringing article at a fixed price in other words, where he grants licences at a certain figure. Every one of the infringing articles might then have been rendered a non-infringing article by applying for and getting that permission. The court then takes the number of infringing articles, and multiplies that by the sum that would have had to be paid in order to make the manufacture of that article lawful, and that is the measure of the damage that has been done by the infringement. The existence of such a rule shows that the courts consider that every single one of the infringements was a wrong, and that it is fair where the facts of the case allow the court to get at the damages in that way to allow pecuniary damages in respect of every one of them. I am inclined to think that the court might in some cases, where there did not exist a quoted figure for a licence, estimate the damages in a way closely analogous to this. It is the duty of the defendant to respect the monopoly rights of the plaintiff. The reward to a patentee for his invention is that he shall have the exclusive right to use the invention, and if you want to use it your duty is to obtain his permission. I am inclined to think that it would be right for the court to consider what would have been the price which although no price was actually quoted could have reasonably been charged for that permission, and estimate the damage in that way. Indeed, I think that in many cases that would be the safest and best way to arrive at a sound conclusion as to the proper figure. But I am not going to say a word which will tie down future judges and prevent them from exercising their judgment, as best they can in all the circumstances of the case, so as to arrive at that which the plaintiff has lost by reason of the defendant doing certain acts wrongfully instead of either abstaining from doing them, or getting permission to do them rightfully.'" (Italics added)
(1) A claim started in or transferred to the Intellectual Property Enterprise Court will be allocated to the small claims track if
(a) rule 63.13, but not rule 63.2, applies to the claim;
(b) the value of the claim is not more than £10,000;
(c) it is stated in the particulars of claim that the claimant wishes the claim to be allocated to the small claims track; and
(d) no objection to the claim being allocated to the small claims track is raised by the defendant in the defence.
(3) If either
(a) the requirements of rule 63.27(1)(a), (b) and (c) are satisfied, but in the defence the defendant objects to the claim being allocated to the small claims track; or
(b the requirements of rule 63.27(1)(a) and (b) are satisfied, but not (c), and in the defence the defendant requests that the claim be allocated to the small claims track,
the court will allocate the claim to the small claims track or the multi-track in accordance with Part 26 (case management preliminary stage). For that purpose the court will send the parties a directions questionnaire and require them to file completed directions questionnaires and to serve them on all other parties within 14 days.
(1) Part 27 (small claims) and Part 45 Section VI (fast track trial costs) contain special rules about
(a) liability for costs;
(b) the amount of costs which the court may award; and
(c) the procedure for assessing costs.
(2) Once a claim is allocated to a particular track, those special rules shall apply to the period before, as well as after, allocation except where the court or a practice direction provides otherwise."
(1) Any costs orders made before a claim is allocated will not be affected by allocation.
(a) claim is allocated to a track; and
(b) the court subsequently re-allocates that claim to a different track,
then unless the court orders otherwise, any special rules about costs applying
(i) to the first track, will apply to the claim up to the date of re-allocation; and
(ii) to the second track, will apply from the date of re-allocation.
(1) Where the court is assessing costs on the standard basis of a claim which concluded without being allocated to a track, it may restrict those costs to costs that would have been allowed on the track to which the claim would have been allocated if allocation had taken place.
"CPR r.46.11(2) governs the position in respect of costs prior to allocation. It provides that if a claim is allocated to the small claims track, then the small claim track costs provisions apply before allocation as well unless the court or a practice direction provide otherwise. If a claim is re-allocated from another track to the small claims track, then CPR r.46.13 applies and small claims track costs will only apply from re-allocation unless the court orders otherwise.