Equisafety Limited v Battle, Hayward and Bower Limited & Anor
[2023] EWHC 1821 (IPEC)
Lifestyle Equities CV and another v Ahmed and another
15 May 2024
[2024] UKSC 17
Supreme Court
A company infringed a trademark. Its directors were sued for the profits. The court said the directors weren't liable because they didn't know about the infringement and didn't personally make extra money from it. Their salaries and loan weren't considered profits.
Key Facts
- •Lifestyle sought an account of profits against the Ahmeds, directors of Hornby Street, for trade mark infringement.
- •Hornby Street, not the Ahmeds, directly infringed Lifestyle's trademarks.
- •The Ahmeds were alleged to be accessories to the infringement.
- •The lower courts awarded Lifestyle an account of profits based on a portion of the Ahmeds' salaries and a loan.
- •The appeal questioned whether an innocent accessory could be liable for an account of profits and whether the Ahmeds' salaries and loan constituted profits.
Legal Principles
To be liable for an account of profits for trade mark infringement, a defendant must have knowingly infringed the plaintiff's rights.
Colbeam Palmer; Edelsten v Edelsten; Slazenger & Sons v Spalding & Bros; Moet v Couston.
An account of profits aims to prevent cynical infringement by disgorging profits made by knowingly infringing another's rights, acting as a deterrent.
Colbeam Palmer; McGregor on Damages
A wider rationale for an account of profits is to uphold the purpose of intellectual property rights: rewarding creativity and innovation by allocating profits to the owner, regardless of whether infringement was deliberate or innocent. The infringer is treated as if they conducted the business on behalf of the claimant.
Hollister Inc v Medik Ostomy Supplies Ltd; Robert Stevens, The Laws of Restitution.
Only profits made by a defendant, not profits made by another, are recoverable in an account of profits. Ordering a defendant to account for another's profits would be akin to a penalty or fine, not restitution.
Hotel Cipriani SRL v Cipriani (Grosvenor Street) Ltd
A dishonest assistant can be liable for their own profits, but not for the profits of the primary wrongdoer.
Ultraframe (UK) Ltd v Fielding; Novoship (UK) Ltd v Mikhaylyuk; Hotel Portfolio II UK Ltd v Ruhan
In trade mark infringement (and similar areas), the relevant profit is that directly attributable to the infringement; not all profits from the related business.
Colbeam Palmer; My Kinda Town Ltd v Soll; OOO Abbott v Design & Display Ltd
Outcomes
Lifestyle's appeal dismissed; Ahmeds' appeal allowed.
The Ahmeds lacked the requisite knowledge of infringement to be liable as accessories. Further, the lower courts wrongly included the Ahmeds' salaries and a loan as profits.