TONY D SULLIVAN v BRISTOL FILM STUDIOS LIMITED

A modest claim should not be struck out merely because its value is small. A court considering strike-out for disproportionate use of resources must ask whether the claim can be determined through a proportionate procedure. The assessment includes the likely recovery, the parties’ costs and the demands on judicial and court resources.

Damages for infringement of intellectual property rights are compensatory. The claimant must prove the loss, although damages may be assessed liberally against a wrongdoer. Where a claimant’s own inflated valuation has prevented proportionate allocation and substantial costs and complexity have accumulated, strike-out as an abuse of process may be justified.

The appellant claimed that the respondent had infringed his copyright, performance rights and moral rights by placing an unfinished music video on YouTube without consent for five days. He valued his claim at £800,000. A district judge found a real prospect of success and allocated the claim to the multi-track, but a deputy High Court judge subsequently assessed the likely recovery at about £50 and struck out the claim as a disproportionate use of court resources.

The appellant challenged the procedure, the power to strike out the whole claim and the assessment of damages. The central issue was whether the claim was properly struck out as an abuse of process because the likely recovery was extremely modest in comparison with the costs, complexity and court resources involved.

1. Appeal dismissed. The deputy judge was entitled to strike out the claim. The appellant accepted that it should not proceed if the recoverable damages were only about £50, and the deputy judge had correctly concluded that any recovery would be extremely modest. Ward and Etherton LJJ agreed with Lewison LJ.

2. The power under CPR Part 3.4 to strike out a statement of case extends to the whole claim. CPR Part 2.2 defines a statement of case as including the claim form as well as the particulars of claim. The alleged shortcomings in notice and conduct of the application caused no procedural injustice and had, in practical terms, been cured by the appeal.

3. The principles governing damages for patent infringement also apply to copyright and other intellectual property infringements. The claimant bears the burden of proving loss. Damages may be assessed liberally because the defendant is a wrongdoer, but their purpose is compensation rather than punishment. The evidence did not support the alleged destruction of the track’s wider marketing potential. Nor was there a credible basis for restitution or disgorgement, because the respondent had not been shown to have profited from the short period of public exposure.

4. A claim is not an abuse merely because its monetary value is small. The court should consider whether a proportionate procedure exists for investigating its merits. The proportionality assessment concerns not only the likely damages and the parties’ costs, but also the judicial and court resources required. The principles in Jameel v Dow Jones & Co Inc [2005] EWCA Civ 75 were applicable, while recognising that defamation claims are procedurally unusual.

5. Had the true value been recognised at the outset, transfer to the Patents County Court or an appropriate county court, followed by proportionate case management, should have been considered. By the strike-out hearing, however, the appellant’s persistently inflated valuation, the costs already incurred and the emerging complexity and length of the proceedings amply justified the exercise of discretion.

6. Lewison LJ further considered that the automatic allocation of these intellectual property claims to the multi-track under CPR Part 63.1(3) did not exclude the general power of reallocation under CPR Part 26.10. Unlike the rules for mercantile and arbitration claims, Part 63 contained no express exclusion of Part 26. This guidance was given for future cases.

1. Court of Appeal (Civil Division): The appeal was dismissed. The strike-out was upheld because the likely recovery was extremely modest and continuation at that stage would have consumed disproportionate party and court resources.
2. Chancery Division, Bristol District Registry: Mr John Jarvis QC, sitting as a deputy High Court judge, struck out the claim on 14 September 2010 as a disproportionate use of court resources, while accepting that it was not bound to fail.
3. District Judge: District Judge Watson had refused summary judgment, transferred the claim to the Chancery Division, allocated it to the multi-track and directed the trial of four preliminary liability issues.