Purple chairs in reception with side view of corridor

"Loss" in Translation

31 October 2018. Published by Ben Mark, Legal Director and Dani Barnes, Associate

IPEC judge lifts costs cap of £25,000 for an inquiry as to damages

Background

The Claimant, Link up Mitaka Ltd operates a translation and interpretation service in the UK and the EU under the trade marks ‘THEBIGWORD’ and 'thebigword' (the Trade Marks). The First Defendant, Language Empire Ltd, is a UK business also providing translation and interpretation services in the UK and the Second Defendant, Yasar Zamen, is the sole director and shareholder of the First Defendant (the Defendants).

In August 2010, the First Defendant, registered two similar domains www.thebigwordtranslation.co.uk and www.bigwordtranslation.co.uk (the Websites).  Between May and December 2014 these websites went live and displayed a similar logo ‘Big World Translation’. The Websites also contained text that suggested the sites were linked to the Claimant.

The Claimant issued and served proceedings on 10 March 2017 alleging trade mark infringement and passing off.

On 4 May 2017, the Claimant obtained judgment in default after no Acknowledgment of Service or Defence was filed. The court order provided for an inquiry as to damages or an account of profits and the transfer of the domain names to the Claimant.

Decision

On October 9 2018 Her Honour Judge Melissa Clarke, upon determination of the issues, awarded damages of £142,044 to the Claimant. HHJ Clarke considered the defendants' evidence as unreliable and gave an untrue picture of the level of enquiries made on the websites during the 34 month period in operation. It was considered that the Defendants conduct both at trial and during the inquiry process was intended to hinder the Claimants effort to quantify the claim, and the Courts efforts to fairly and justly assess damage. The Judge found that if there had been no sales, there would be no reason to make those efforts.

The two key issues determined in the inquiry were:

  1. Did the Defendants (or others acting as their agents) make any sales of translation and/or interpretation services as a result of enquiries made from potential customers who had visited the Websites?

  2. Was the Claimant deprived of the sales identified at Issue 1 above? If not, what is the reasonable royalty that would have been payable on those sales as between a willing licensor in the position of the Claimant and willing licensee in the position of the First Defendant (and if and to what extent a reasonable royalty would have included an amount to reflect the matters set out at paragraphs 21-22 of the Points of Claim)?

Assessment of Damages

The challenge for the Judge was that there was a lack of information from the Defendants in order to determine the actual loss. The Claimants evidence was that the conversion rate of enquiries to sales was around 75%.  The judge accepted this evidence and fairly assumed that the Defendants would have also converted a similar number of enquiries to sales. Other relevant evidence was that there was a 50% increase in the Claimants websites traffic after the Websites were taken down. However, any figures that derived from this would be purely speculative.

The Judge considered that the only starting point to quantify sales over the 34 month period was to use the limited information provided by the Defendants over a 9 month period which they alleged did not convert to sales. The Claimant provided an estimated value of each enquiry provided and applied their profit rates for 2016, this amounted to £28,200. The Judge divided the figure by 9 (months) and multiplied by 34 (months), giving the total of £106,533. In addition, the Judge also agreed to a 33% uplift of this figure to account for the likelihood that the real value given over the 9 months was not accurate, and the expected repeat work from having built relationships with the clients.

Conclusion

This is a rare decision from the IPEC in which the Judge made the decision to lift the costs cap of £25,000 for an inquiry as to damages due to the unreasonable conduct of the Defendants and their abuse of the process. This decision is also a useful reminder as to how the IPEC approaches an inquiry as to damages and the factors that they consider where the information is limited.