Calculating the worth of a copyright claim: "Dappa Dred"

Sullivan v Bristol Film Studios Ltd [2012] EWCA Civ 570 is a decision of the Court of Appeal, England and Wales (Lords Justices Ward, Etherton and Lewison), dating back to 3 May 2012 and on which I had intended to post a note at the time, but then got overtaken by events.

The substantive issue involved a copyright infringement claim by "Dappa Dred" (right), a hip hop artist and rap musician, in respect of a video which had been posted on YouTube for five days and which, it was calculated, would have been seen by the defendant film company's staff plus a maximum of 50 people. Sullivan sought damages of £800,000 for "breach of statutory duty, infringement of copyright and ... loss of a chance". The claim was transferred to the Chancery Division, where its value was assessed at just £50.  The defendant applied successfully to have the claim struck out on the basis that a claim for such a small sum was a disproportionate use of the court's time and resources.

What is interesting is the calculation leading to the conclusion that the claim was worth just £50 rather than the £800,000 initially sought.  The Court of Appeal explained it in detail:

13. The judge then turned to consider the question of damages. He considered the evidence about what had happened during the short period that the video had been viewable on You Tube. There was evidence before him that showed that during the period that the video had been posted on You Tube it had been viewed nearly 100 times. That is not to say that it had been viewed by 100 different people, because You Tube only records "hits" which may be multiple hits by the same person. But the judge concluded that apart from BFS' own personnel a maximum of some 50 people had seen the video. He assumed, in Mr Soloman's favour, that the video in its unfinished state was "derogatory" treatment within the meaning of the CPDA. He reasoned as follows. There were three possible consequences of 50 persons having seen the video. First, having seen its poor quality, they would decide not to buy the record when it eventually came out. On the basis of figures given to him by Mr Soloman the judge decided that Mr Soloman stood to make a maximum of £1.20 for each record sold. The judge was prepared to assume in Mr Soloman's favour that of the 50 people who saw the video, 40 would have bought the record once it had been released but for the poor quality of the video. This would produce for him a recovery of approximately £50. Second it was possible that those 40 people would themselves disparage or bad mouth the video. The judge was not prepared to make that assumption in Mr Soloman's favour since there was no evidence that anyone had done that. Nor is there now. Third, the 50 people might have liked the video so much that they bootlegged it. Again the judge was not prepared to make this assumption in Mr Soloman's favour in the absence of any evidence that this had in fact happened. Again there is no evidence now of any bootlegging. I might also add that there would in any event be a considerable overlap between this way of putting the claim and the first way, because the lost sales attributable to bootlegging would have been to some extent the mirror image of the lost sales due to people not buying the record at all.

14. The judge also said that he was not satisfied that Mr Soloman had put forward any real claim to loss of market potential. 

15. Thus he assessed the maximum possible recovery by Mr Soloman at £50.

Thanks go to Saskia (Consumer Focus) for her observation that this really was a claim that should have gone to a small claims court (the fee of bringing a small claim is about £50), reminding us that the small claims track in the Patents County Court is expected to go operational end of this year.

The largest trademark verdict in US history?

....so say lawyers at Kilpatrick Stockton who apparently helped win a $304 million victory for shoe company Adidas AG late last Monday. According to Kilpatrick Stockton's press release (c/o this blogger's friend Allison Mcdade at Dell):

"Adidas sued retailer Payless ShoeSource Inc. in 2001 in federal district court in Portland, Ore., for selling imitation footwear that looked like Adidas' three-stripe shoes. Following a 15-day trial, a nine-person jury took two days to decide that Payless had violated Adidas' trademarks. Payless claimed its shoes did not violate Adidas' trademark since they featured two and four stripes, not three. But lawyers
for Adidas argued the so-called knockoffs could cause confusion or dilution of Adidas's logo trademark. "Our entire position was that the three-stripe mark was a very powerful and strong brand," says Kilpatrick partner Bill Brewster. Also representing Adidas was partner Charles Henn Jr. and local counsel Stephen Feldman at Perkins Coie. Payless was represented by Lathrop & Gage partner William
Rudy and Spillane Shaeffer Aronoff Bandlow partner John Schaeffer. A spokesman for Lathrop & Gage referred comment to Collective Brands Inc., which owns Payless.
The Topeka-based company said in a statement that it is "reviewing the verdict and assessing its impact." "The company believes that the verdict was excessive and unjustified," the statement said. "The company will ask the court to set aside the verdict and, if it is not granted, intends to take all necessary steps to overturn it."

The trial was just the latest foray into Adidas' battle to enforce its international ownership of the three-stripe logo. On April 10 the European Court of Justice ruled against retailers C&A, H&M and others, whose lawyers argued that stripes were such common symbols they should be available for anyone to use. Gregor Vos and Antoon Quaedvlieg of Amsterdam-based IP boutique Klos Morel Vos & Schaap represent Adidas in that litigation. In the U.S., says Brewster, the Germany-based shoe manufacturer has won settlements over similar trademark claims against about a dozen retailers, including Target. Brewster adds that a pending claim against Kmart headed toward settlement. Kilpatrick, which has represented Adidas for about 15 years on trademark matters, now is preparing for another trademark infringement trial, this time against Wal-Mart. A lawyer for Wal-Mart, though, says the Payless win will have no impact on his trial. "It's similar issues but very different acts," says Baker Botts partner Russell Falconer. "Basically, they're different products at issue and different documents. The cases have nothing in common other than that they're both trademark infringement acts." Trial is scheduled for October."

This blogger notes that the latest ECJ judgement in Adidas's three stripe enforcement program hinted at a favourable result for the brand owner in Europe too.

Damages calculation totalling $4.3 million

Karin Segall of Foley & Lardner LLP writing for World Trademark Report on the recent case of Gucci America Inc v MyReplicaHandbag.com (Case 2008 WL 512789, February 26 2008) highlights that $4.3 million has been awarded by a US Court in a counterfeiting matter. According to Segall:

"The underlying case involved claims by Gucci America Inc, Chloé SAS and Alfred Dunhill Ltd against several defendants for offering a variety of counterfeit products bearing the trademarks GUCCI, CHLOE and DUNHILL."

"In order to determine the amount of statutory damages per type of goods, the court surveyed case law and noted that most judges award well below the maximum on the basis of "per mark per type of goods". Ultimately, the court drew from its own experience in a similar case in which damages in the amount of $100,000 per mark infringed was awarded. Using that number, it awarded $3.6 million to Gucci, as there were six marks infringed and six different types of counterfeit goods (ie, $100,000 multiplied by six marks multiplied by six types of goods). Chloe was awarded $400,000 based on counterfeiting of four marks and one type of product, and Dunhill was awarded $300,000 for three marks and one type of product. Altogether, the defendants were thus jointly and severally liable for a total amount of $4.3 million."