The team is joined by Guest Kats Rosie Burbidge, Stephen Jones, Mathilde Parvis, and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Hayleigh Bosher, Tian Lu and Cecilia Sbrolli.

Thursday, 2 March 2017

Corks popping following account of profits decision

What do you do when a defendant fails to participate in proceedings relating to an account of profit for trade mark infringement? Rely upon uncontested evidence and raise a glass of celebratory champagne of course!

Background

The recent High Court decision of Champagne Louis Roederer (CLR) v J Garcia Carrion SA & Others [2017] EWHC 289 (Ch) has a number of quirks in its factual matrix. The dispute involves a claim for infringement of Roederer's UK and CTMs for the word CRISTAL. The Defendant, JGC, described as a very substantial Spanish producer of wines and other beverages, had previously been found liable for trade mark infringement in relation to its cava marketed and sold under the name "Cristalino" (see previous IPKat post here). 

JGC's profits - not Cristal clear
Following the finding of infringement at trial,  Rose J, ordered JGC to give Island Records v Tring disclosure to enable Roederer to elect for an account of profits or an inquiry as to damages, and the order was duly served on JGC.  JGC's legal director indicated in a phone call to Roederer's legal counsel that the order would be complied with, but there was no such compliance, no further communications from JGC, and JGC took no part in the account of profit proceedings. 

Given the vacuum of material from JGC, Roederer's legal team pieced together evidence concerning JGC's likely profits from a number of sources.  These included material from proceedings in the Commercial Court in Brussels, the UK IPO, the US District Court of Minnesota, and also from Asda and Morrison's supermarkets who had supplied the infringing product in the UK (Asda and Morrison are Defendants in these proceedings but settled the dispute with Roederer).  Roederer elected to have an account of JGC's profits.  Roederer submitted expert evidence from an accounting expert in addition to the source materials.

Issues before the Court

In assessing JGC's profits, the Court considered the following issues:

Cristal - created for Tsar Alexander II
1. Discount for sales under JGC's "Arte Latino" brand?  At some point in 2007, JGC marketed its cava under the "Arte Latino", non-infringing brand, but reverted to the Cristalino label once it realised it was losing clientele.  The precise time periods involved for these non-infringing sales and quantities of product sold were uncertain.  Should JGC's estimated profits be discounted to reflect sales that may have been made during the relevant period under a non-infringing brand?  The Court concluded on the basis of the evidence available from Asda and Morrison that it was likely that sales of the non-infringing brand had continued in the UK until end of Q1 2008, and accordingly deducted that volume of sales in calculating JGC's profits.

2. Determination of profit obtained by JGC as result of infringing sales

In determining JGC's likely gross profit, the Court relied upon (confidential) evidence from the Minnesota proceedings.  The Court noted that JGC had only itself to blame if the very limited evidence put forward by Roederer turned out to be inaccurate.  Roederer's evidence was unchallenged and accepted by the Court.  There was no deduction of JGC's gross profits to reflect overheads attributable to the infringing activity.  Given that the burden of proving that relevant overhead are attributable to the infringing activity lies with the infringer, the Court concluded that there was no basis upon which it could make such an allocation.  Further, and following on from the decision in Jack Wills Ltd v House of Fraser Stores Ltd [2016] EWHC 626, the Court refused to make any deduction to JGC's profits in relation cases where the infringement did not 'drive' the sale - there was no evidence to sustain a finding that sales had been driven by factors other than infringement.  JGC's profits derived from infringement were assessed at €1,332,844.64.

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