Design & Display Ltd v Ooo Abbott & Anor

An account of profits for patent infringement strips profits legally derived from use of the invention. It does not compensate the patentee or punish the infringer. Where an infringing component forms part of a larger product, the court must apportion the profit unless the invention drove the sale or was an essential ingredient in creating the whole product.

General overheads may be deducted where they would have supported alternative, non-infringing business but for the infringement. Operating at maximum capacity is not a threshold requirement. A deduction is excluded where the overheads would have been incurred anyway and the infringing sales would not have been replaced by lawful sales.

The appellant manufactured display panels incorporating aluminium inserts which infringed a patent for a resilient metal snap-in insert. Birss J held the patent valid and infringed in [2013] EWPCC 27. The patentees elected an account of profits instead of damages.

HHJ Hacon subsequently held in the Intellectual Property Enterprise Court, [2014] EWHC 2924 (IPEC), that the account extended to the whole profit on panels sold with infringing inserts. He also refused deductions for general overheads.

The appeal concerned whether the profits on composite panel-and-insert products required apportionment and when general overheads could be deducted from the gross profit attributable to infringement.

1. Appeal allowed and matter remitted. The Intellectual Property Enterprise Court had misdirected itself on both apportionment and overheads. The existing findings did not enable the Court of Appeal to calculate the accountable profits, so the account was remitted for determination.

2. Under section 61(1)(d) of the Patents Act 1977, an account is confined to profits legally derived from the infringement. Its purpose is to prevent unjust enrichment, not to punish the infringer or compensate the patentee. The court must identify the substance of the invention and determine the profit earned through its use. The scope of the invention for remedial purposes need not coincide with the literal scope of the patent claims.

3. The relevant inventive concept comprised the insert's resilient metal material, its particular shape and its interaction with the panel permitting it to snap into place. The earlier liability judgment had not determined the inventive concept for the account. It had addressed claim construction and obviousness, which were different issues.

4. The judge had erred by asking whether the insert and panel were sold together, rather than how much of the composite product's profit was derived from infringement. The mere fact that the two items were sold together did not make the whole profit attributable to the invention. Where the infringing insert did not drive the sale, the profit had to be apportioned. Full recovery remained possible if the IPEC found that the invention was an essential ingredient in creating the whole product.

5. General overheads may be deducted where, absent the infringement, they would have sustained alternative non-infringing manufacture or sales. Maximum-capacity operation is not a threshold condition. A deduction is denied where the overheads would have been incurred in any event and the infringing sales would not have been replaced by lawful sales. The infringer bears the evidential burden.

6. On remittal, the IPEC was to decide whether exceptional circumstances under Part 62.23 of the Civil Procedure Rules permitted further material. Otherwise it was to reach the best conclusion possible on the existing evidence.

1. Court of Appeal (Civil Division): In [2016] EWCA Civ 95, unanimously allowed the infringer's appeal and remitted the account of profits to the Intellectual Property Enterprise Court.
2. Intellectual Property Enterprise Court: In [2014] EWHC 2924 (IPEC), HHJ Hacon included the whole profit on panels incorporating infringing inserts and refused deductions for general overheads.
3. Patents County Court: In [2013] EWPCC 27, Birss J held the patent valid and infringed. The patentees then elected an account of profits rather than damages.