Montres Breguet SA & Ors v Samsung Electronics Co Ltd & Anor

Negotiation damages for intellectual-property infringement are compensatory. They compensate the owner for the economic value of the right to control use, rather than the infringer’s profit or the owner’s provable loss. The court should identify, on an ex ante basis, the specific licence needed to make the defendant’s intended conduct lawful. It should avoid hindsight and should not impose a broader licence than the conduct requires. Genuine comparable transactions are the best evidence of price. Where no market or comparables exist, bargaining positions and unquantified economic-benefit calculations may be unreliable. The assessment may be broad-brush, but must remain rationally defensible and evidence-based. Here, compensation for app-store display and downloaded watch-face use was assessed at US$11.6 million.

This was a quantum trial following findings that Samsung had infringed the claimants’ trade marks through watch-face applications made available in the Samsung Galaxy App store. Liability was determined in [2022] EWHC 1127 (Ch) and affirmed by the Court of Appeal in [2023] EWCA Civ 1478. The claimants sought negotiation damages of about US$170 million. Samsung’s expert assessed the loss at US$301. The central issue was how to value the licence that Samsung would hypothetically have obtained before the infringements, including app-store display and downloaded watch-face uses, while avoiding hindsight and an overbroad co-branding assumption.

Disposition and reasoning

The claim for negotiation damages was determined by assessing compensation at US$11,600,000.

1. Nature of the remedy. Negotiation damages are compensatory, not restitutionary or punitive. They compensate the economic value of the owner’s right to control and exploit property. The remedy is available for trade mark infringement even where the claimant cannot prove corresponding financial damage and the defendant’s direct revenue is negligible. This was consistent with the principles in Watson Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104, General Tire and Rubber Company v Firestone Tyre and Rubber Company [1975] 1 WLR 819 and Morris-Garner v One Step (Support) Ltd [2018] UKSC 20.
2. Hypothetical licence. The starting point was the specific licence Samsung needed, ex ante, to make its intended conduct lawful. The licence had to cover all relevant infringements, including Store Display Infringements and Dial Branding Infringements. The counterparties were the claimants and Samsung. Samsung could not reduce the assessment by relying on the separate licensing needs of app developers or users. Later events could inform the parties’ expectations, but could not be used to tailor the fee precisely to what ultimately occurred.
3. Valuation evidence. Genuine comparable arm’s-length transactions were the best evidence of price. No reliable comparables existed here. A bargaining-position analysis and an economic-benefits approach based only on direct revenue and measurable brand damage would not produce a reliable valuation. The court had to do its best on the evidence, applying a broad brush while ensuring that the result was rationally defensible.
4. Application. The claimants’ expert valued a full hardware and software co-branding arrangement, which was wider than the rights Samsung needed. Samsung’s expert confined the analysis to actual downloads and valued the Store Display Infringements at nothing, which was too narrow and impermissibly retrospective. The court assessed US$7,040,000 for downloaded watch-face use and US$10,000,000 for Store Display Infringements, producing a total of US$11,600,000.

• High Court (Chancery Division) — liability was determined in the Liability Judgment, [2022] EWHC 1127 (Ch) .
• Court of Appeal — the liability decision was affirmed, [2023] EWCA Civ 1478 .
• High Court (Intellectual Property List) — the present quantum decision assessed negotiation damages at US$11,600,000, [2026] EWHC 2228 (Ch) .