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Shady Business: A Damages Inquiry for Copyright Infringement

Shady Business: A Damages Inquiry for Copyright Infringement

1st June 2021 - Published by Kuits Intellectual Property Team

The recent decision at the Intellectual Property Enterprise Court of F.B.T. Productions LLC v Let Them Eat Vinyl Distribution Limited [2021] EWHC 932 (IPEC) confirmed one of the key points in Intellectual Property Law that it is not enough just to prove that there has been infringement but that there must be a direct cause or link between the infringement and the loss for there to be any form of recovery.

Intellectual Property split trials

Before we get into the background and the outcome of the case, one key difference to note between Intellectual Property Law and other areas of practice is that litigation for Intellectual Property is normally heard by way of a split trial. This means that Intellectual Property disputes are heard over two parts. First, a claimant must prove that an infringement has taken place, secondly, following the decision on infringement, the claimant then must effectively engage in further litigation to demonstrate that there have either been damages which have followed as a consequence of that infringement or that there should be an account of profits.  The benefit of this approach is normally that the Court will grant the owner of the Intellectual Property Rights an injunction, which prevents further infringement and therefore freeing the Court up to consider the financial aspects of the claim which can be decided at a later date.

In practice, parties normally use this time period to agree either damages or profits which are to be paid by the defendant to the claimant, due to the fact that commercially there is more benefit in coming to an amicable resolution than there is in paying further legal fees.

The case

The current case is one following the decision made by Judge Hacon in 2019 which held that Let Them Eat Vinyl Distribution Limited had in fact infringed F.B.T. Production LLC’s copyright in Eminem’s album “Infinite”. The case therefore brought against the defendant was one for copyright infringement.

Following the decision in relation to liability, the claimant elected for an inquiry as to damages and claimed the sum of £288,209.00 which comprised of: (1) the loss of opportunity to licence a third party to exploit the Infinite album, (2) the loss following the licence it would have offered the defendant for the exploitation of the album and (3) the reasonable royalty for actual sales made by the defendant based on the notion of a willing licensee and licensor negotiation.

Loss of opportunity

Following the assessment of the evidence, the Court considered that given the date at which the claimant had become aware of the infringement and the enquiries that it had made in relation to marketing and promotional activities, the claimant did in fact make these plans to promote the album with knowledge of the infringement. Furthermore, the presiding Judge took into account that the infringement of the defendant was not the only infringing activity and therefore it could not be assumed that this particular wrongdoing had caused a loss of opportunity. The claimant’s claim for the loss of opportunity was therefore unsuccessful.

In its evidence, the claimant stated that it would never have licensed the album to the defendant due to the reputation held by it; as it was not a realistic potential licence, the claimant could not claim license fees from that defendant. The claimant’s claim for a potential hypothetical licence was therefore unsuccessful.

The outcome

The damages for a notion of a willing licensee and licensor negotiation were then considered. The actual number of copies sold of the album, 2891, was the basis of the assessment. The presiding judge then embarked on the exercise of considering what a hypothetical licence arrangement would be for a sale in the UK by considering what the cost of a unit would also be at the time the infringement took place. In the end the claimant saw damages awarded of £7,452.50.

Whilst the damages awarded are a fraction of the damages initially claimed, the importance of the case is that there is a clear necessity to prove causation between the infringement and the loss which have occurred. Furthermore, it also appears to be that a claim for a licence may potentially be successfully defended if it can be shown that a licence arrangement would never have taken place in normal events.

Get in touch with an Copyright Infringement Solicitor in Manchester

Please don’t hesitate to contact Senior Associate Humna Nadim in our Intellectual Property Department if you have any questions in relation to the above or need assistance in relation to a similar issue on 0161 838 7816 or email humnanadim@kuits.com

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