Ultraframe (UK) Ltd v Eurocell Building Plastics Ltd & Anor

Damages for patent infringement are compensatory. The claimant must prove loss that was foreseeable, caused by the infringement and not too remote. The assessment may be broad where precision is impossible, but the claimant must establish the factual basis of the loss.

Recoverable loss may include lost profits, price depression, a reasonable royalty on sales that would not otherwise have been made, and foreseeable loss from associated products. A defendant cannot avoid the consequences of infringement by arguing that it could have competed lawfully. However, each head of loss must be proved. Mitigation expenditure is recoverable only where the decision to incur it was reasonably attributable to the infringement.

This was an inquiry as to damages following infringement proceedings concerning a patent and unregistered design rights relating to conservatory roof systems.

At trial, Lewison J held that the patent was valid but not infringed, while finding infringement of certain unregistered design rights. The Court of Appeal, by a majority, held that the patent was infringed and otherwise upheld the decision: [2005] EWCA Civ 761. An injunction followed, and Pumfrey J ordered an interim payment of £800,000.

At the inquiry, the design-right claim was treated as subsumed within the patent claim. The principal issues were the quantity of infringing sales, lost sales, price depression, royalty, alleged loss of sales of other products, continuing losses and mitigation costs.

The court awarded damages for lost profit on lost Ultralite 500 sales, an 8% royalty on infringing sales that did not represent lost sales, price depression, limited post-infringement losses caused by price depression and market disruption, and interest at LIBOR plus 1%. The claims for loss of sales of dual-pitch products and the costs of developing the Elevation product failed.

1. Compensatory principles. Damages were to place the claimant, so far as possible, in the position it would have occupied without the wrong. The claimant had to prove foreseeability and causation, but the assessment could be made broadly and liberally where exact calculation was impossible. The purpose was compensation, not punishment.
2. Lost sales. It was irrelevant that Eurocell could have competed lawfully with a non-infringing product. The relevant question was the loss caused by the unlawful sales. The evidence established that Eurocell would have continued distributing Ultralite 500 but for the infringement. The court estimated that 120,000 square metres of Pinnacle 500 sales represented lost Ultralite 500 sales.
3. Price and royalty. Pinnacle 500 had contributed to the depression of Ultraframe’s prices, although other competitive pressures also operated. The resulting loss was foreseeable and caused by the infringement. A reasonable royalty of 8% was appropriate for the remaining 15,000 square metres of sales.
4. Associated products. Loss of dual-pitch sales was not established as caused by the infringement or as foreseeable. The claimant had to prove the factual basis of any convoyed or associated-product claim, notwithstanding the court’s ability to assess damages broadly.
5. Continuing losses and mitigation. Some continuing price depression and market disruption were recoverable, but the evidence did not establish a continuing springboard loss based on Eurocell’s withdrawal from the market. Elevation development costs were not recoverable because the claimant had not shown that infringement was the overriding or dominant reason for the expenditure.

1. Court of Appeal: The patent was held infringed and the other findings were otherwise upheld by a majority: [2005] EWCA Civ 761. An injunction was granted on 7 July 2005.
2. High Court (Patents Court): The inquiry assessed damages following the appellate infringement decision.