Case Study: Original Beauty Technology Company Limited and Others v G4K Fashions Limited and Others
Background
The Claimants in this matter sell bandage and bodycon dresses and other garments under the brands House of CB and Mistress Rocks. At a liability trial held in February 2021, the Defendants, trading under the brand Oh Polly, were found to have infringed a number of unregistered design rights in certain garments.
The infringement related to sales in the UK, EU, and the rest of the world of 15,393 garments covering some 20 garment designs and including various colourways.
Following the liability judgment and their subsequent review of the Island v Tring disclosure, the Claimants sought relief on the basis of an assessment of ‘standard damages’ and ‘additional damages’. Under the ‘standard damages’ claim, it was necessary to consider both (a) the loss of profits suffered by the Claimant and (b) the reasonable royalty that would have been payable on any sales not eligible under the loss of profit claim. The choice between these bases was dependent upon the probability that the customer purchasing an infringing garment was capable of also being a customer of the Claimant.
The calculations of losses and reasonable royalty were complicated by the fact that the price points of the Claimant and Defendant brands were, on the face of it, very different and hence there was a disagreement over the similarity or otherwise of the customers to whom the infringing sales were made. In addition, the prices of the garments varied substantially over time as is normal in the fashion industry.
What did we do?
We reviewed the Defendant’s sales records to confirm the level of infringing sales and then reviewed and verified the loss of profit calculations prepared by the Claimant and calculated the impact on these of the changing prices over time. As part of this exercise, we identified a number of inconsistencies in the Defendant’s Island v Tring disclosure and affidavits.
In addition, we conducted analysis which showed that, while the parties generally had very different price points, there were unusual patterns in the Defendant’s pricing behaviour and closer proximity than apparent in headline prices. These factors were relevant when considering similarity of customer.
In relation to the reasonable royalty, we identified a number of factors which distinguished any hypothetical royalty agreement that the parties may have reached from other typical agreements and set out our calculation of reasonable royalty on this basis.
Finally, we brought our calculations together in a single interactive model which allowed our legal team to identify the effect on the overall claim of key factors: similarity or otherwise of customers, actual selling prices, and the treatment of certain variable costs. In this way, we were able to update our calculations rapidly to take account of any changes in key input parameters.
How we did it?
We worked collaboratively with the legal team defending the case.
We took time to professionally understand the complexities of the case.
We reviewed the source data, analysis and collated this into an easily digestible format, which allowed further analysis and summary. We identified the key drivers of the claim and sought to understand the factors which influenced these, assessing the evidence on each to form an opinion of the likely outcomes.
We researched the level of reasonable royalty that might be expected but, more than this, considered and distinguished the factors which would have influenced a hypothetical royalty negotiation between parties who were ultimately competitors.
Results
As set out in the final judgment, albeit Matthew Geale acted for the Claimants in this matter, Counsel for the Defendants described him as having given “exemplary expert evidence”.
The evidence we provided, alongside the factual evidence called upon by Anna Edwards-Stuart and David Ivison of 11 South Square and Richard Southall, Partner at Mono Law, led to the Judge concluding in favour of the Claimant and awarding both standard damages and substantial additional damages.
Ref: [2021] EWHC 3439
