13 November 2010

Assessment of Damages: National Guild of Removers & Storers Ltd v Silveria

This is a very useful authority for the following points:

  • the jurisdiction of the Patents County Court in trade mark infringement and passing-off claims;
  • the basis for assessment of damages for trade mark infringement and passing-off;
  • the basis to be applied where there is no loss of a sale; and
  • the procedure to be followed when the damages awarded exceed the limitation in the claim form.

Background

In National Guild of Removers & Storers Ltd v Silveria (t/a C S Movers) [2010] EWPCC 15 (12 Nov 2010) the claimant was a trade association for a number of businesses in the removal and storage industry. The claimant owned a number of trade marks which it allowed its members to print on their stationery and advertisements. Members were required to pay an annual subscription, to follow a code of practice and comply with awards of the association ombudsmen. Members who left the claimant association were obliged to remove the trade marks from their advertisements and stationery at once. Since it would not always be easy to withdraw an advertisement in circulation in say a trade directory or Yellow Pages the departing member was required to pay a licence fee of £100 per week for so long as the advertisement remained in use. Any former member using the trade marks after that time would have to pay a penalty of £200 per week. Any former member breaching his post-termination obligations was required to pay liquidated damages of £100 per week in addition to the licence fees mentioned above.

Each of the defendants had used the claimant's trade marks when not entitled to do so. The first had never been a member of the claimant's association. The other defendants were former members who continued to use the marks after they had ceased to be entitled to do so. Each of them was adjudged to have infringed the claimant's trade marks and passed itself off as a member of the claimant association. An inquiry was ordered against each of the defendants with directions for disclosure and service of evidence with which none of the defendants complied. The hearing of the inquiry was attended by counsel for the claimant. The defendants were neither present nor represented.

Jurisdiction

Before considering the evidence, Judge Birrs QC made clear that his jurisdiction in trade mark infringement and passing-off derived not from s.287 of the Copyright, Designs and Patents Act 1988 but from the Central London County Court's general jurisdiction to hear actions in contract and tort pursuant to s.15 of the County Courts Act 1984. The court's jurisdiction to revoke a trade mark has been extended by art 4 (1) and (2) of the High Court and County Courts Jurisdiction Amendment Order 2005 (SI 2005 No 587). The court's jurisdiction as to trade marks and passing off was expressly recognized by CPR 63.13 (b) and para 16.1 (12) and (14) of the Part 63 Practice Direction.

Bases for the Assessment of Damages

The judge took as his starting point Lord Wilberforce's principles in General Tire & Rubber v Firestone [1976] RPC 197 that

  • a claimant has the burden of proving its loss
  • the defendants being wrongdoers, damages should be liberally assessed, but
  • the object is to compensate the claimant and not punish the defendants.

Although that was a patent case it had been established in Blayney (t/a Aardvark Jewelry) v Clogau St. David's Gold Mines Ltd [2002] EWCA Civ 1007 (16 July 2002) and Irvine and Others v Talksport Ltd. [2003]EWCA Civ 423 (1 April 2003) that the same principle applied to other intellectual property claims. His Honour concluded:

"In my judgment, as a matter of principle, where a defendant uses a mark without permission and thereby infringes a registered trade mark or commits an act of passing off, that act is capable of damaging the claimant's property in the mark (see s14(2) of the Trade Marks Act 1994) or property in the goodwill attaching to his business. That is so whether or not a lost sale has taken place. It is the same kind of damage as the damage to a patent monopoly caused by an infringing sale which is not a lost sale to the patentee and for which a reasonable royalty is payable. It is an invasion of a (lawful) monopoly. Thus there is no reason in principle why damages should not be available, calculated on a "user" basis for trade mark infringement and for passing off. Of course it will be a question of fact in any given case to decide the amount of such damages."

As the claimant company's rules provided for licence fees, penalties and liquidated damages to be paid by departing members the judge considered it appropriate to award damages on that basis.

The Award

The judgment sets out tabular form the damages and interest payable by each of the defendants.

Court Fees

The claim against one of the defendants had been limited to less than £15,000. As a consequence, the fee for issuing the claim form had been £225. The actual damages awarded exceeded that sum. In order to recover those damages the claim form had to be amended. The judge allowed the claimant to amend its claim upon payment of the difference between the fee for claiming the amount actually awarded and the amount previously paid.

Name of the Court

At para [52] of Alk-Abello Ltd v Meridian Medical Technologies Dey Pharma Lp [2010] EWPCC 14 (9 Nov 2010) Judge Birrs had observed:

"I understand that the Defendants, as American corporations, are concerned that their rights might be decided in a lesser court than the High Court. Perhaps the name "Patents County Court" has put them off. Many observers have suggested that the name should be changed. For a start the court is not concerned only with patents and never has been. It is a specialist IP court staffed by a specialist judge. The special jurisdiction of the court relates to patents and designs (s287(1) of the 1988 Act) and the court is competent to hear the full range of patent cases including cases concerning entitlement, infringement and validity. The court is a designated community designs court (Art 80(2) of Council Regulation 6/2002/EC and art. 2(1)(a)(ii) of the Community Designs (Designation of Community Designs Courts) Regulation 2005 (SI 2005/696)), and the court has jurisdiction in trade mark cases and is a designated community trade mark court (Art 91(1) of Council Regulation 40/94/EC (now Art 95(1) of Council Regulation 207/2009/EC by virtue of reg. 12(1)(a)(ii) of the Community Trade Mark Regulations 2006 (SI 2006/1027). The Patents County Court's jurisdiction in copyright and passing off is recognised in CPR 63.13(1)(a) and PD 63 para 16.1. Thus the report of the Intellectual Property Court Users' Committee Working Group on proposals for reform of the Patents County Court, which led to the new rules now in place, suggested it should be renamed the Intellectual Property County Court.".

The judge observed that National Guild was an example of the court's jurisdiction in trade mark infringement and passing-off despite its name.

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