Additional Damages Can Succeed Where Accounting For Profit Fails

The 2007 hit pop single Heartbroken produced by T2 and featuring the British singer Jodie Aysha, has been the subject of recent damages proceedings. The claim followed a 2013 (Patents) County Court ruling that the performer’s rights relating to the vocal track at the centre of the dispute belonged to the claimant – Jodie Aysha – and not the record companies All Around the World Recordings and ANV Records. Ms Henderson (‘Jodie Aysha’ being a stage name) had composed the song lyrics when she was fourteen years old.

A Claim for Damages or Accounting for Profit or Both?

In the 2013 hearing, which concluded that Miss Henderson was entitled to damages, the claimant’s representatives made a number of submissions to the Intellectual Property Enterprise Court. These were notable for the approach taken by the claimant who attempted to claim for both damages and loss of profit (accounting for profit) which are alternative remedies in English law – claimants can seek one or the other but not both.

First the claimant argued that she was entitled to damages for loss as calculated according to the royalties which would have been paid by the defendants had they lawfully entered into a contract for the release of the pop single with the claimant. Additionally, the claimant argued that the defendant should pay damages flowing from the infringing activity – creating and releasing the single without consent – in accordance with the actual prejudice suffered.

The claimant’s representatives also submitted that regulation 3 of the Intellectual Property Regulations, SI2006/1028, and article 13(1)(a) of Council Directive (EC) 2004/48, should be interpreted so as to allow the claimant entitlement to both lost profits and unfair profits (in accordance with the first and second submissions).

The Claimant was Only Entitled to Damages or Accounting for Profit

The court ruled that the claimant was indeed entitled to damages for loss by applying established case law. It held the defendant would hypothetically have been awarded a royalty rate of 6% on earnings payable from sales of the song, less costs, and therefore the claimant was awarded ‘user principle’ damages of £30,000.

However, the court confirmed that, under English law, the remedies of damages and accounting for profit were only available as alternatives. Nevertheless, the court went on to interpret article 13(1)(a) of the Directive as the proposition that, where the claimant would fail to receive adequate compensation for the actual prejudice suffered if damages were to be assessed solely by reference to lost profits, or royalties according to the ‘user principle’, there was discretion to award an additional sum in accordance with the profit the defendant had made from his knowing infringement.

Therefore, as the claimant had suffered a loss, insofar as her name and reputation would have been enhanced by a release of the single, and where the actual release provided unfair profit to the defendant, an additional sum of £5,000 was awarded.

Comment

This result is notable for the fact that the court was prepared to award additional damages in the circumstances but maintained the principle of damages and accounting for profit being alternative remedies in English law.

For specialist intellectual property advice contact Peter Gourri today by email PGourri@rollingsons.co.uk or telephone 0207 611 4848.