Lifestyle Equities CV & Anor v Santa Monica Polo Club Ltd & Ors

An accessory who is jointly and severally liable for trade mark infringement is not ordinarily liable to account for profits made by the primary infringer where the accessory made no such profit and the claimant suffered no corresponding loss. An account is directed to profits derived by the particular defendant. Remuneration or other benefits received by an accessory may be recoverable to the extent they can be directly linked or apportioned to the infringement. Authorisation requires the grant or purported grant of the right to do the infringing act; mere enablement, assistance or encouragement is insufficient. Common-design liability requires assistance, a common design, and an underlying tort.

The claimants owned trade marks for “BEVERLY HILLS POLO CLUB”. At the first trial, infringement and passing off were established against companies using “SANTA MONICA POLO CLUB” signs, while other claims were dismissed. The second trial concerned whether two directors were jointly and severally liable for the companies’ infringements and, if so, the appropriate account of profits.

The court considered authorisation, common design, the liability of an accessory for profits made by another defendant, apportionment, remuneration, loans, and allowable deductions from the infringer’s profits.

1. Liability for infringement. The court applied the established law on authorisation and common design. Authorisation means granting or purporting to grant the right to perform the relevant act. It does not extend to mere enablement, assistance or encouragement. Common-design liability requires assistance in the commission of the act, assistance pursuant to a common design that the act be committed, and an act constituting a tort against the claimant.
2. Mr Ahmed was the ultimate decision-maker for the relevant companies. His involvement in branding, design, manufacture, pricing and sales established joint and several liability with both relevant companies. Ms Ahmed was liable with one company only to the extent of the House of Brands division. Her isolated signature on a customs document did not establish wider liability.
3. Account of profits. Following the reasoning in Hotel Cipriani v Cipriani Grosvenor Street, [2010] EWHC 628 (Ch), Ultraframe (UK) Ltd v Fielding, [2005] EWHC 1638 (Ch), and Novoship (UK) Ltd v Mikhaylyuk, [2012] EWHC 3586, the court held that there was no equity requiring an accessory to account for profits which the accessory had not made and which did not represent loss suffered by the claimant. The defendants were therefore liable for profits personally received and attributable to the infringement, not generally for the companies’ profits.
4. Mr Ahmed had to account for 10 per cent of his remuneration, apportioned to the infringing business, and for an unpaid loan. Ms Ahmed had to account for 10 per cent of her remuneration. The court rejected the submission that evidential difficulty made apportionment impossible.
5. The companies’ relevant turnover was £7,824,804. Applying a 40 per cent gross margin and making no deduction for general overheads, the relevant profits were £3,129,921.60. The defendants’ alternative liability for that sum was recorded if the court’s legal conclusion on accessory liability for another’s profits was wrong. The court also rejected a submission concerning contribution and applied the principles governing deductions for specific costs and overheads.

The judgment records an earlier first trial, in which infringement and passing off findings were made: [2017] EWHC 3313 (Ch). Permission to appeal was refused and no application for permission to appeal those findings was made. The present judgment determined the remaining liability and remedy issues.