Three Wise Men Dominion On Damages For Loss Of Transaction That Never Took Place

Via BAILII the IPKat has simply dredged upward this decision, London General Holdings Ltd together with others v USP plc together with another [2005] EWCA Civ 931, which came upward earlier 3 wise men -- Lords Justice Waller, Laws together with Jacob of the Court of Appeal -- on Friday.

Back inward 2002 LGH was institute liable for infringing copyright inward a document that was intended to live on a template for a novel system of providing extended warranties on goods to consumers past times agency of trust. The affair was referred for an query into damages to the master, who ordered payment of a notional royalty inward abide by of a transaction inward which LGH used a re-create of the document to laid upward its ain draft documentation for a warranty scheme, incorporating a trust mechanism, that it sought to render to a prospective client. The master copy also awarded damages to reverberate the reduction inward the cost that USP had to offering for its services inward social club to secure a contract to render a system to simply about other companionship later LGH had already introduced its infringing document to it. Before the accolade of that contract, but later the reduction inward price, LGH forwarded to that companionship a re-create of USP's document, which was to live on tailored to its needs if they won the contract. The master copy made no accolade inward relation to this on the footing that, past times that time, the trust machinery that lay at the catch of the document had lost its forcefulness equally a negotiating tool. In these proceedings LGH appealed against the accolade of damages inward abide by of the cost reduction. In the final result that the appeal was successful, USP cross-appealed against the amount of the notional royalty awarded.

The Court of Appeal, for whom Laws LJ delivered the nous judgment, allowed both LGH's appeal together with USP's cross-appeal. According to that court, the claimed loss was, equally a affair of principle, beyond the ambit of the protection afforded past times the police describe of copyright. Where the copyright move was a written document, it was a basic regulation that the nature of copyright infringement was the unauthorised purpose of the actual text of the document, non the pirating of the ideas contained inward it. Iin this case, nix inward the discussions leading to the reduction inward cost turned on the actual text of the document itself. It was the sentiment of a trust that had mattered. However, nether the circumstances, the notional royalty should itself live on uplifted.

was impressed past times what Laws LJ said at the cease of his judgment:

"This is, of necessity, a fossil oil together with cause exercise. We are required to pose a value on a transaction which never took house – it is a notional royalty; together with therefore, of course, the show is subjunctive: what this or that political party would convey done inward circumstances which were non genuinely inward Contemplation".

This is a refreshing admission that damages, together with indeed many other IP valuations, are non the production of precise scientific analysis, whatever simply about self-proclaimed experts may state to the contrary.