Tuesday, 16 June 2009

Of user damages and Neuberger's Progression

I've spent some time today trying to work out what is the exciting thing about Honda Giken Kogyo Kabushiki Kaisha & Anor v Neesam & Ors [2009] EWHC 1213 (Pat) (13 May 2009), which appeared on Bailii this morning. The substantive case was interesting, being a rare case in which trade mark infringement in the context of parallel imports was alleged (and found to have occurred). But now the parties are arguing about damages: that too is interesting, and there is an important point about user damages in trade mark cases, but here the matter before the court was whether there should be a hearing on preliminary matters relating to the damages.

The point about user damages seems to be worth mentioning, though. One of the four heads of damage under which Honda hoped to recover was a notional royalty on each parallel import bike sold by the defendants. There is no binding authority for such a claim, only the decision of my old commuting companion Master Bowman in favour of the proposition in Roadtech Computer Systems v. Mandata (Management and Data Services Limited) [2000] ETMR 970. The significance of this lack of authority in the present case was that it did not incline the parties to settle. In Reed Executive Plc v. Reed Business Information [2004] RPC 40 (CA), Jacob LJ. said:

"I would only add one further matter in relation to damages. I am by no means convinced that the 'user' principle automatically applies in trade mark or passing-off cases, especially where the 'mark' concerned is not the sort of mark available for hire."

Looking for a willing licensee in a trade mark case is not likely to yield an answer, is it? He went on:

"The ordinary case is one that just protects goodwill. For damages to be awarded on the user principle is close to saying that there is no damage so some will be invented. It is not the same sort of thing as having to pay for use of an invention (the basis of the user principle in patents). At present there is no clear finding that the inquiry should proceed on a user basis. Whether it should do so is a matter for the judge - who thus far has said no more than that he 'apprehends' that a user basis will be used."

The judge (HH Judge Fysh) also made another interesting observation - interesting to me, I mean: there's unlikely to be anything in the judgment that isn't interesting to someone - about Honda's claims. These bikes that they had sold once, and for which they now sought something more. There was, the judge pointed out, a danger of what in the Copyright Tribunal is called "double dipping". I'm grateful to him for giving that expression a little more currency.

As for trials of preliminary points, the judge referred to the well-known case ofSteele v. Steele, CP Rep 106.Well-known to many, no doubt, but new to me. This was a decision of Neuberger J (as he then was), who refused to deal with a point at a preliminary hearing, notwithstanding that the court had ordered the preliminary issue on the basis that the parties had consented to such a course. Neuberger J identified ten questions, known as 'Neuberger J's progression', another expression that I am pleased the judge has given greater currency to, that the court should ask itself before ordering the trial of a preliminary issue. However, in the present case only two or three of them were relevant, and the judge took the view that a hearing would dispose of no more than a small part of the case and would be likely to delay mediation - which is what he thought the parties should have been getting on with.

So, in the end, Honda did not get their hearing, which far from leading to a speedy conclusion of the matters in dispute looked likely to lead to appeal after appeal. What the parties did get was instructions to use best endeavours - and the judge made it clear that second best endeavours would not do - to have their differences resolved in mediation.

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