Experience Hendrix Llc & Anor v Times Newspapers Ltd

Damages for infringement of intellectual property rights depend on how the rights-holder exploits the property. Where the claimant is actively pursuing a project to exploit the rights, the appropriate measure is compensation for loss actually caused by the infringement. A notional licence fee is appropriate principally where the claimant does not commercially exploit the rights or where loss cannot otherwise be assessed.

Article 13(1) of the Directive permits assessment by reference to actual prejudice, including lost profits, rather than a hypothetical licence fee. Loss suffered outside the United Kingdom is recoverable where it was caused by infringement of United Kingdom rights, subject to ordinary principles of causation and remoteness.

The claimants owned or asserted rights in recordings and performances from a 1969 Royal Albert Hall concert by The Jimi Hendrix Experience. The defendant distributed approximately 1.3 million copies of inferior-quality recordings as a free CD with The Sunday Times in September 2006.

Following an earlier summary judgment establishing infringement, the trial concerned the inquiry as to damages. The principal issues were whether the defendant had reasonable grounds to know that its conduct was infringing, whether the claimants’ losses should be assessed by actual loss or a notional licence fee, whether worldwide consequential losses were recoverable, and what loss was caused by delay to the claimants’ planned project.

1. Knowledge and additional damages. The defendant had reasonable grounds to know that distribution of the CD infringed the claimants’ copyright and performer’s property rights. The material supplied by the claimants before distribution provided reasonable grounds for concluding that their title was valid. The defendant’s failure to investigate the competing title claims justified criticism, but did not establish actual knowledge or reckless indifference. Additional damages under the Copyright, Designs and Patents Act 1988 and article 13(1) were therefore inappropriate.
2. Causation. Distribution of the CD caused the claimants to suspend their Royal Albert Hall project. That decision was not too remote merely because the defendant had relied on a licence supplied by an intermediary. The claimants were entitled to suspend the worldwide project while obtaining a declaration resolving the competing title issue. They were, however, required to mitigate their loss by proceeding with reasonable diligence once the issue had been resolved.
3. Measure of damages. Applying General Tire & Rubber Co. v Firestone Tyre & Rubber Co. Ltd. [1975] 1 WLR 819, the court held that the loss-sustained approach applied. The claimants were engaged in a joint venture to exploit the rights, and the project had been suspended because of the infringement. A notional licence fee would not fairly reflect the circumstances, particularly since the claimants would not have authorised the use of the illicit recordings.
4. Territorial scope. The claimants could recover worldwide economic loss caused by infringement of their United Kingdom rights. The statutory territorial limits on the rights did not prevent recovery of consequential loss suffered abroad, subject to causation, remoteness and the rule against double recovery.
5. Assessment. The evidence did not support the large projected profits claimed. The court found that the project would probably have launched in September 2007 and that the infringement caused a twelve-month delay, ending in September 2008. The recoverable underlying receipt was assessed at $5.8 million, comprising $3 million from the film, DVDs and CDs and $2.8 million from other exploitation. The loss was the value of delayed receipt, calculated using US base rate plus 1%, with the detailed calculation to be undertaken by counsel and their advisers.

First-instance inquiry as to damages following summary judgment for the claimants on infringement. The judgment records that Warren J entered the summary judgment order dated 11 March 2008.