Equisafety Limited v Battle, Hayward and Bower Limited & Anor

An account of profits is distinct from an inquiry as to damages. Once elected, it seeks to strip the infringer’s profits and does not compensate the claimant for its losses. The court must identify the infringer’s actual profit, deduct allowable direct costs and an appropriate share of general overheads, and then attribute only the proportion of profit properly derived from the infringement. Where the infringement did not alone drive the sale, a broad-brush apportionment is required. The court may use different reasonable methods for allocating overheads and should place the evidential burden for claimed deductions on the infringer.

The claimant had succeeded at an earlier liability trial in claims for trade mark infringement and passing off. An injunction was granted and the claimant elected an account of profits rather than an inquiry as to damages. The present trial concerned the amount payable by the first defendant, including the correct sales period, direct costs, general overheads, apportionment of net profit and interest.

The central issues were whether post-rebranding sales remained sufficiently connected with infringing use, what proportion of the defendant’s profit was attributable to that use, and the appropriate interest award.

1. Remedy. The claimant’s election of an account of profits prevented recovery on a damages basis. Loss suffered by the claimant was irrelevant. The account was directed to the defendant’s actual profit from the infringing activity.
2. Sales period and gross profit. The court accepted the defendant’s evidence on the sales and direct-cost figures, including that only 500 mobile phone holders were relevant. Post-rebranding sales were included where the evidence showed that customers had been exposed, or were likely to have been exposed, to the infringing name or packaging. The appropriate gross profit was £24,356.
3. Overheads. The defendant was entitled to deduct an appropriate proportion of general overheads because, without the infringement, it would have sold equivalent goods under other signs. The sales-revenue method was adopted and a broad-brush rate of 14% was allowed.
4. Apportionment. The court rejected the suggestion that all net profit from the goods should be attributed to the infringement. The goods had value independent of the mark and the defendant’s existing brand and product qualities also contributed to sales. Nevertheless, the mark was a significant sales driver. Sixty per cent of the profit after overheads was attributed to the infringement, producing £12,568.
5. Interest. Applying the broad discretion described in Carrasco v Johnson [2018] EWCA Civ 87, the claimant was presumed to have borrowed less had it received the money earlier. Interest was awarded at 2.5% above the average base rate for the relevant period, compounded annually, with the parties directed to agree the resulting sum and order.

The judgment states that liability was determined at an earlier IPEC trial before Deputy Judge Nicholas Caddick KC in December 2021. Battle was found liable for trade mark infringement and passing off, while the claim against its director as a joint tortfeasor was dismissed. An injunction and an account of profits were ordered. The present judgment determined the account.