Alfrank Designs Ltd v Exclusive (UK) Ltd & Anor

In an inquiry as to damages for design infringement, lost sales must be established by a counterfactual assessment of the sales the claimant would probably have made absent the infringement. Statistical association alone does not prove that related goods were lost as a consequence of the infringing sale. For convoyed goods, the claimant must show an objectively assessed causative link in the purchaser’s mind between the infringing product and the purchase of the other goods. A reasonable royalty is assessed on the hypothesis of negotiations between a willing licensor and licensee immediately before infringement. The assessment may include the commercial benefit of further sales driven by the licensed product.

The claimant owned unregistered EU and UK design rights in two ranges of dining furniture. Under a Tomlin Order, the defendants accepted infringement and an inquiry as to damages was ordered. The inquiry concerned sales by the first defendant of infringing Modena and Opus tables, corresponding to the claimant’s Canberra and Strasbourg tables.

The issues were the proportion of infringing sales causing lost sales of the claimant’s tables, the extent of any consequential loss of sales of associated furniture, and the reasonable royalty payable for infringing sales that caused no lost sale.

1. The court found that the claimant had not proved that Harveys or the first defendant’s other regular retail customers would have bought equivalent tables from the claimant in the counterfactual absence of the infringing products. The evidence did, however, justify an estimate that 20% of Modena sales would have displaced Canberra sales and 20% of Opus sales would have displaced Strasbourg sales.

2. Loss of convoyed goods requires more than proof of statistical correlation. The claimant must prove, assessed objectively, a causative link in the purchaser’s mind between the purchase of the infringing product and specified associated goods. Applying that approach, the purchase of a dining table drove associated purchases because consumers commonly selected the table first and then bought compatible chairs and other furniture.

3. The reasonable royalty was assessed on the hypothesis of negotiations between a willing licensor and willing licensee immediately before the infringement. The hypothetical parties would have recognised that licensed table sales drove sales of other furniture. Including that benefit did not amount to double counting, because those further sales would not have occurred without the licensed table sales.

4. The royalty was fixed at £100 for each infringing table sold. For the 20% of Modena and Opus sales treated as causing lost table sales, the claimant was entitled to lost profits on equivalent tables together with profits on convoyed goods in the established proportions. For the remaining 80%, it was entitled to the £100 royalty per table.

Not stated in the judgment.