In relation to the claim for losses of unpatented fixed platform hiring, Cantideck accepted that losses for so called "convoyed goods" were recoverable in principle in a patent case ( Gerber ). Mr Abrahams pointed out that in Gerber itself the convoyed sales were goods sold together with the patented products and he argued that Xena were actually seeking to claim for the loss of a chance of a chance, which is not allowed. He argued that in Gerber the court had estimated the lost chance of a sale at 60% and awarded 60% of the profit of the patented goods and the convoyed goods. It did not assess the chance of the convoyed goods separately because that head was only awarded on the basis that it goes with the patented goods. So, he submitted:
Mr Cuddigan called this a novel submission and did not agree with it. In my judgment Mr Abrahams' argument, when it is put as a matter of principle, is not right. By approaching it as a "chance of a chance" the argument sets too much store by one mathematical approach to assessing damages. It may be that there is something about the defendant's sales which means none of them, had they been made by the patentee, would have included the convoyed article or maybe all of them would have but these are all matters of fact open to be proved if necessary or proportionate by one side or the other. If, on the evidence available, there is nothing to distinguish sales which included the convoyed goods from sales which did not then one can say that the overall fraction of the patentee's sales which included convoyed goods reflects a probability for each sale that it would have included convoyed goods. Assuming that chance is a substantial one, then I can see no objection to taking it into account as long as the requirements of foreseeability and remoteness are satisfied. One could equally well divide the patentee's lost chance into two separate lost chances, a lost chance of high value sale of a patented product plus convoyed article (25% on Mr Abrahams' figures) and a lost chance of a lower value sale of a patented product alone (also 25%).
However, although I do not accept Mr Abrahams' argument when it is put as a matter of principle, it seems to me that care needs to be taken with the facts in this sort of case. When a patentee sells two products side by side, one patented and the other not, it does not follow that just because, averaged over a period, a fraction of the customers who bought the patented article also bought the non-patented one, the patentee can claim for sales of the non-patented article. Gerber is clear authority that the scope of recovery is not restricted to activities which themselves constituted infringements but it is still limited by causation and remoteness. As Staughton LJ said (at 456 ln5-15):
Interest
In the legal dispute about interest, Xena contends it is not claiming interest on damages to which the principles in Tate & Lyle and Jaura v Ahmed apply, whereby the interest rate allowed depends on the class of person the claimant belongs to but not to any special position the individual claimant may have been in. Instead Xena says it is claiming interest losses as a head of damage. Xena submits that although hitherto these were not recoverable damages in contract or tort, Sempra Metals decided that they were. Mr Cuddigan referred to the speeches of Lord Hope (paragraphs 16 and 17), Lord Nicholls (paragraphs 74 and 92-100) and Lord Scott (paragraph 132 at p609-B). I accept Mr Cuddigan's submission. Sempra Metals makes clear that a claim for interest losses is maintainable in law albeit that the actual interest losses must be pleaded and proved. There are no special rules in this area (per Lord Nicholls paragraph 95). I reject Mr Abrahams' submission. The aspect of Tate & Lyle relied on by Mr Abrahams is concerned with interest on damages not interest as damages. It is not dealing with a claim for interest losses of the kind sought by Xena.
Moral Prejudice
Article 13 (1) of the Enforcement Directive 2004/48/EC provides for damages to be paid when an infringer knowingly or with reasonable grounds to know engages in infringing activity. In sub-paragraph (a) the article provides that all appropriate aspects are to be taken into account such as unfair profits made by the infringer and " in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the right holder by the infringement ".
Recital 26 of the Enforcement Directive confirms that damages are compensatory and emphasises that " The aim is not to introduce an obligation to provide for punitive damages but to allow for compensation based on an objective criterion …" .
Article 13 has been implemented by Regulation 3 of the Intellectual Property (Enforcement) Regulations 2006. Neither side cited any authority to as how the "moral prejudice" referred to should be addressed.
The witnesses
The claimant called Mr Smith and Mr Constantine.
Mr Smith started working on loading platforms in 2002 at Dorman. He was away from work in 2003 and in 2004 was asked to return as Hire Manager. By then Dorman had been acquired by Xena. He remained at Xena full time until December 2006 but after that was off sick and only returned part time. He returned to full time work at Xena in 2010 and stayed until the administration. He gave evidence about the history of Xena's business and addressed the differences between fixed and rolling platforms. He was unaware of any other source of rolling platforms in the UK save for the parties to this case.
Mr Abrahams criticised his evidence in two respects. One was that in cross-examination Mr Smith said that customers had given him feedback that the patented rolling platforms had advantages. This was relevant to substitution issue (1). It was not in Mr Smith's witness statement and Mr Abrahams put to him that he had made it up on the spot because, given its importance in the case, if it had been true it would have been in his witness statement. I do not accept that criticism. Mr Smith had addressed the differences between fixed and rolling platforms in his evidence. In my judgment he was not inventing his evidence about what customers told him.
Mr Abrahams' second point is more significant. Mr Smith's witness statement refers to a customer called PC Harrington in a section headed "2006". PC Harrington took their business away from Xena to Cantideck and this was a "huge loss" to Xena. As drafted the statement clearly implies that this happened in 2006, as a consequence of a meeting in August 2006. That was not accurate. PC Harrington does appear to have moved from Xena to Cantideck at some later stage but Mr Smith could not say when PC Harrington left Xena. He said the date could be 2007, 2008 or 2009. Mr Smith accepted that PC Harrington only hired a single loading platform from Cantideck in the whole of 2006 and 2007 and that was before the August 2006 meeting. He maintained that the amount of hire business PC Harrington conducted with Xena reduced after the August meeting. I thought Mr Smith was on the whole an honest witness trying to tell the truth but in my judgment the point shows that he did not prepare his witness statement with due care for its accuracy. I will take that into account.
Mr Constantine was a chartered accountant with an impressive business track record. He acquired Xena in 2004 together with a private venture capital fund. His evidence addressed the background to the dispute, Xena's dealings with Cantideck and gave detailed evidence about Xena's finances and the calculations on which this claim is based, including in a third witness statement detailed financial information about Xena's borrowings and interest charges. His first statement also addressed Xena's quality of service, which he described as exceptional.
Mr Abrahams submitted that Mr Constantine was confident, polished, slick and obviously very comfortable in the witness box but that one should not take his apparent authority and confidence as meaning he must be telling the truth. The particular point relied on by Mr Abrahams was the comment that Xena gave "exceptional" service. He submitted that this was not borne out by the facts. The customers Cantideck approached said there were problems with Xena and although Xena had approached customers and had permission to call them, none had been called. Although Mr Abrahams has overstated his point, there is a kernel of substance to it. Mr Constantine was a very confident and sophisticated witness and on financial details I have no doubts about his evidence at all. However Mr Constantine was in no sense a neutral witness and my overall impression of him was that, understandably, he felt very strongly about this case. In my judgment his evidence about Xena's service level was not an objective assessment of the position.
Mr Abrahams also submitted that Mr Constantine's evidence that an increase in rental income to Xena would have been pure profit was wishful thinking, that evidence about discussions with a third party Speedy Hire in 2008 was unbelievable, and evidence about a conversation with Mr Preston about Cranetech, which was contrary to the evidence of Mr Sudborough, was just bizarre. I thought Mr Constantine's evidence about finances was convincing and I reject the submission it was wishful thinking. As for the conversations, what Mr Constantine said Xena was told by Speedy Hire about their relationship with Cantideck conflicts with what Mr Critchley says about that relationship but I do not find it necessary to resolve that debate. As regards Mr Preston, what he is reported to have said conflicts with Mr Sudborough's direct testimony and I prefer to rely on Mr Sudborough. However unless Mr Preston himself gave evidence to contradict what Mr Constantine said about the conversation, this is not a sound basis to undermine Mr Constantine's credibility.
The defendant called Garry Critchley, John Marsh, Jason Sudborough and Paul Abbott.
Garry Critchley's evidence explained how Cantideck began and what happened in the period 2006 and 2007, dealt with the modification of the rolling platforms to render them non-infringing and addressed the correspondence relied on for the moral prejudice argument. He also covered the differences between fixed and rolling platforms, the extent to which one can be used instead of the other, the needs and conduct of Cantideck customers and the factors affecting a decision as to what to hire. Mr Critchley was personally involved in the sale of the 10 rolling platforms to Glencoe in 2007 and he gave evidence about that. He also gave a statement in reply, commenting on Xena's evidence.
In dealing with the points relied on as moral prejudice, Mr Critchley denied that the Mintz Levin letter was misleading. As regards the information provided in the Arnold & Porter letter, in his first witness statement dated 21 st September 2011 which was served pursuant to the Court's order in order to allow the claimant to make an election between an inquiry or account, Mr Critchley stated that Cantideck had dealt in a total of 36 platforms, of which 25 were available for hire and 12 sold outright. He said that he "understood" that this figure differs from the figure in the Arnold & Porter letter and was a result of further internal investigations by himself and his colleagues at Cantideck conducted to ensure the accuracy of the witness statement. The statement also summarised Cantideck's total revenue in 2006 and 2007 from sale and hire of infringing platforms. The total comes to about £280,000 (£119,600 for sales and £161,065.90 for hire). Mr Critchley's main evidence on the inquiry was his second witness statement, dated 26 th September 2012. This makes corrections to the numbers given in the first statement. The totals are now 38 platforms with 13 sold and total revenues of £292,415.90 (£129,292 for sales and £163,123.90 for hire). Shortly before the hearing Mr Critchley provided a fourth statement which explained that 4 invoices for hires for infringing platforms had been put through the company Conquip rather than Cantideck and had been inadvertently missed during the disclosure review. This meant that the total hire revenue should be £164,949.90. That makes an overall total revenue of £294,241.90.
Mr Cuddigan submitted that Mr Critchley was not a satisfactory witness. The Arnold & Porter letter was sent when he was in charge of the relevant part of the business and he had signed off on it. The allegation that the letter was deliberately misleading had been put squarely in the Points of Claim and yet all Mr Critchley said about it in his witness statements was the passage referred to above. In cross-examination Mr Cuddigan put to him that the assertion that there were only 17 platforms was a lie. Mr Critchley said he would not call it a lie and said that they had had a trusted member of staff to pull some of the numbers together and said that subsequent information came to light which the defendants had not been slow to disclose. He had no explanation for the mistake and expressed his regret in relation to it. It was put to Mr Critchley that he must have known that Cantideck had considerably more rolling platforms than that at the relevant time. He did not accept that.
Mr Cuddigan put the correct version of invoice 1340 to Mr Critchley and contrasted it with the version annexed to the letter. He drew attention to the words "Payment received with thanks" on the incorrect invoice. Mr Critchley suggested this was standard wording on all Cantideck invoices before they actually receive payment. His explanation of what he said was Cantideck's business practice did not make sense, did not fit with other documents in disclosure and I do not accept it. In any event Mr Critchley could not offer an explanation for the version of the invoice attached to the letter.
Mr Cuddigan put that the reference to only 4 rolling platforms on hire in the Arnold & Porter letter was another lie, when Cantideck in fact had 27. Again Mr Critchley had no explanation. He expressed regret that he made the mistake. The invoices attached to the letter showed 108 weeks hire when the true figure was almost 900 weeks, thus the invoices attached to the letter were only 12% of the relevant invoices. The rental income was stated to be £13,000 when in fact it was over £110,000. Mr Cuddigan suggested that Mr Critchley must have known this was not true. He replied that he did not take the personal interest that he should have done at the time but once he did, the position was rectified.
Mr Cuddigan submitted that Mr Critchley's evidence could not be relied on save when it amounted to a concession or was corroborated by third parties. Mr Abrahams drew a contrast between Mr Critchley's background and that of Mr Constantine and submitted that Mr Critchley was extremely nervous but not evasive.
In my judgment the information provided to the solicitors and included in the Arnold & Porter letter was an entirely deliberate attempt by someone at Cantideck to mislead Xena as to the scale of the infringements. This involved lying about the numbers of platforms and producing far too few invoices. I can see no room for any other inference than that the invoice 1340 document annexed to the letter was cooked up to present and support that false picture. Anyone with a real knowledge of Cantideck's business in 2006 and 2007 who read the letter in 2010 would think the numbers were far too small.
However my impression of Mr (Garry) Critchley himself was that he was rather naïve. Although he accepted responsibility for the letter in the witness box, I think the truth is that he was either not really engaged with the letter in 2010 or, if he was really responsible for the letter, did not at that stage have a real understanding of what happened at Cantideck in 2006/2007. The defendant companies are a family business. I suspect the key player at Cantideck in 2006 was probably his brother Robert (Rob) Critchley. There was clear evidence that Garry Critchley had a subsidiary role at least in 2006 and in 2007. He was not then involved in general management of the platform business although he did say he knew what was going on. I note that the people Mr Constantine met in May 2007 were Andrew Critchley and Rob Critchley. At some point, I infer well after 2007 but I do not know when, Rob Critchley appears to have stepped down. Garry Critchley said that Rob Critchley was not giving evidence because he was no longer a director of either Cantideck or Conquip.
I conclude that I cannot place reliance on Mr Critchley's uncorroborated evidence save where it amounts to a concession. I think his detailed knowledge of what happened in 2006 and 2007 at Cantideck is based mainly on reconstruction after the event (and after 2010) because although he was present in 2006/2007, his role was a lesser one and he did not have first hand knowledge of much of what went on. That is why the 2010 letter did not set alarm bells ringing with Mr Critchley. The alternative explanation for what has happened now, if Mr Critchley in fact did have an intimate knowledge of Cantideck's business in 2006/2007, would be that he deliberately set out to mislead in the 2010 letter. I prefer the former explanation to the alternative. However in any case someone at Cantideck set out to mislead Xena. Accordingly I can have no confidence on the basis of Mr Critchley's reconstructions save where I can see it in the documents.
The other witnesses called by Cantideck were Mr Marsh, Mr Sudborough and Mr Abbott. Mr Marsh explained that his company Proplant had been a customer of Xena and of Cantideck. He rented platforms for a job in Canary Wharf and explained that the reason he went to Cantideck from Xena was that Cantideck were closer and more convenient. Cantideck were based in the south whereas Xena were in Middlesbrough. The only two companies he knew as sources of rolling platforms were Xena and Cantideck. Although he only gave evidence for a short time, I thought Mr Marsh was a very good witness, giving straightforward evidence with no axe to grind.
Mr Sudborough gave evidence about Cranetech's position. He was also a good witness and Mr Cuddigan did not criticise him.
Mr Abbott's witness statement exhibited evidence from two further customers, Mr Killoran and Mr Shergold. He had prepared the statements from conversations with them. He was cross-examined about the difference between his file note of the conversation with Mr Killoran and Mr Killoran's witness statement (the signed version was dated 5 th October 2012). The statement contained (but the note did not) a paragraph in which Mr Killoran said he was asked to consider a hypothetical question of what he would have done if Cantideck had not had rolling platforms available. He said that if a fixed platform was not suitable then an alternative source would be needed or the construction process might be changed. However, as Mr Cuddigan pointed out, the statement also said earlier that Mr Killoran did not know the difference between fixed and rolling platforms, undermining the utility of the answer to that hypothetical question. Mr Abbott explained that the paragraph came from subsequent emails which had not been disclosed. Mr Cuddigan rightly did not criticise Mr Abbott as a witness. However in my judgment the evidence shows that I can place no weight on the statement of Mr Killoran. He is not prepared to attend for cross-examination, I do not have a complete picture of the contacts between him and the lawyers acting for Cantideck and the statement as drafted invites questions.
It is convenient to deal with the statement of Mr Shergold at this point. Mr Abbott had explained that he spoke to Mr Shergold and prepared a draft witness statement based on the discussions. It turned out that Mr Shergold wanted to be paid for his evidence. He was not and the draft statement was never approved or signed. Although I do not doubt Mr Abbott's genuine belief in the accuracy of the draft he prepared and in the idea that Mr Shergold's answers were uninfluenced by an expectation he would be paid, I am not prepared to place weight on this unsigned, unapproved statement.
Discussion
I will deal with the issues in the order they appear in the list.
(1) Are non-infringing rolling platforms substitutable for Patented Platforms?
I can deal with this point quite shortly because the only non-infringing rolling platforms which were available at any material time were the Cranetech Superdeck platforms imported from Preston in Australia. The fact that Cantideck itself produced a non-infringing form of rolling platform after the event has no impact on the losses caused by its earlier infringing platforms.
Cranetech clearly were a source of rolling platforms, as Mr Sudborough's evidence shows. They had a fleet of 5 Superdeck platforms available in the period 1 st August 2006 to 31 December 2007. Mr Sudborough's evidence in cross-examination showed that they were not heavily used in that period. He accepted the take up for his platforms was 14%. It also appears that Cranetech had sold some rolling platforms to other companies (Vanson and Select Plant Hire). A point about this arose on the pleadings but it was in Mr Sudborough's evidence and in any case I do not think it makes any difference for the reason I will explain.
I am not satisfied that Cranetech's rolling platforms (and for this purpose I include Vanson and Select Plant Hire) had any material impact on the market at the relevant time. The market was undeveloped in 2006 and Xena were making all the running. Mr Marsh, the only customer to give reliable evidence, was only aware of Xena and Cantideck as sources of rolling platforms. There is no evidence from any other customer that they were aware of Cranetech or the others as relevant sources. Mr Critchley knew of Cranetech as a company but he could not say whether he was aware in 2006 that they offered loading platforms. Mr Smith also knew of Cranetech as a company but he was not aware of them as a source of platforms in 2006/2007. Although it is undeniable that Cranetech were a source, in my judgment for all practical purposes the UK market for rolling platforms in 2006 and 2007 was a duopoly between Xena's patented product and Cantideck's infringing product.
In any case on the technical points, I accept Xena's case that the patented rolling platform has a number of advantages. They include the ability to lie flush against the side of a building when retracted, which means that a higher platform in a stack does not obscure the loading space of one below it at all, an extended loading space inside the building and the absence of long constricting side beams. There was a debate about whether customers actually cared very much about these advantages. The stacking advantage is only relevant when one is using a stack and it is clear that many hires were single units but the other advantages apply when a unit is used alone. I am not at all convinced the users of these platforms were as indifferent as Cantideck contend but it does not really matter since in my judgment the relevant customers were only aware of Xena and Cantideck as sources of the products.
(2) What would hire customers of infringing platforms have done if they could not have hired infringing platforms from Cantideck?
Cantideck's case is that customers who could not have hired a rolling platform from Cantideck would have done one of three things: (a) hired fixed platforms from Cantideck, (b) hired rolling platforms from third parties (i.e. Cranetech etc.) or (c) hired fixed platforms from third parties. Mr Abrahams did not press point (c) and I reject point (b) on the facts for the reason I have already given. I am not satisfied the relevant customers knew of any other source apart from Cantideck and Xena. That leaves point (a).
Cantideck contended that in most cases, when they hired a rolling platform, Cantideck's customers actually could have used a fixed one instead and would have done so. It said that its customers, who often came from the concrete frame industry, really could have managed happily with fixed platforms. Cantideck also argued that it enjoyed high customer loyalty and Xena was regarded as providing poor service and poor value for money; customers would have made substantial savings hiring a fixed platform from Cantideck (for about £106 pw) rather than a rolling platform from Xena (£143 pw).
No doubt the process of selling platforms could sometimes involve discussion and meetings between representatives of hirer and the construction contractor but Mr Cuddigan's cross-examination showed that essentially a customer who wanted a rolling platform asked for a rolling platform and if they wanted a fixed platform, that is what they asked for. Apart from anything else since rolling platforms were hired out by both Cantideck and Xena at higher rates than their own fixed platform offering, it would be odd in a cost conscious industry like construction, if customers sought and took a more expensive product when they did not think they needed it. I do not think the difference in price helps Cantideck.
Mr Marsh's evidence was significant on this point. He was a customer of Cantideck and Xena but in fact his position was as an agent for his own clients. His clients were sophisticated operators. It was a matter for his clients to ask Mr Marsh's company to source a fixed or a rolling platform. He was basically familiar with the advantages and disadvantages of the various platforms but he did not get involved because his client would tell him what was wanted. This evidence showed that in dealing with customers like Mr Marsh, Cantideck were not dealing directly with the person making the choice between fixed and rolling platforms.
As regards customer loyalty and levels of service, while I have not accepted Mr Constantine's characterisation of Xena's service as "exceptional", I am not persuaded there is any evidence that Xena's level of service or customer loyalty would have made a material difference save for one matter. The one point is the geographical difference between Xena and Cantideck. That was the only distinction drawn by Mr Marsh between Cantideck's and Xena's service. This favoured Cantideck for jobs in the south of England but I am not convinced it would have been a sufficient reason, if Cantideck were not offering a rolling platform, which is what the customer wanted, for that customer to decide to take a fixed platform from Cantideck instead of obtaining a rolling platform from Xena.
Also to be taken into account is Xena's evidence, which was disputed but I accept, that about 77% of Cantideck's sales were to customers who had been customers of Xena at one time.
In a sense, unless the customer was actually going to construct the chest of drawers arrangement then I can see that in theory it might be technically possible to use a fixed platform instead of a rolling platform but that is not enough to get Cantideck home. I find that Cantideck's customers were asking for a rolling platform because that is what they wanted. It may be true that with the wisdom of hindsight a fixed platform could have done the job but the customers already knew about both items and had already made a positive choice between them. Cost conscious customers, which they were, would already have asked for as few rolling platforms as they thought they needed. In asking for a rolling platform they were asking for a more expensive option. In my judgment they would not have been likely to accept a fixed platform instead. If Cantideck had not been offering rolling platforms to these customers I doubt the customers would even have asked Cantideck for rolling platforms in the first place but in any event I do not think Cantideck would have been successful in hiring out a fixed platform as a substitute for a rolling platform.
It is I think undeniable that there will be a theoretical probability that Cantideck might have substituted or transformed what was originally to be a rolling platform hire into a fixed platform, and so Cantideck would argue I should arrive at a proportion of Cantideck's rolling hire business which represented lost rolling platform hires to Xena, rather than the totality. However I am not persuaded that this fraction is anything other than negligible. I think the fairest assessment of the position is that all of Cantideck's rolling platform hire business was lost business to Xena.
Customers asked for rolling platforms because that is what they wanted. If Cantideck had not been offering infringing rolling platforms to their customers in 2006 and 2007 then the only other realistic possibility was for all of those customers to source those rolling platforms from Xena. That is what they would have done. I reject Cantideck's case on issue (2).
(3) What would customers purchasing infringing platforms from Cantideck have done if they could not have purchased infringing platforms from Cantideck?
Cantideck sold 13 platforms, 10 of which were in the single sale to Glencoe. I am prepared to accept Mr Critchley's uncorroborated evidence that one motivation of Glencoe's was to reduce its tax liability but I do not see how this helps. It means that if Glencoe could not buy the 10 rolling platforms from either Cantideck or Xena then Glencoe would have had to buy some other capital equipment for tax purposes but it does not imply that Glencoe just bought 10 rolling platforms in order for them to sit idly in a builder's yard. I infer that Glencoe bought the rolling platforms because they identified a need for them. That need was satisfied by acquiring rolling platforms from Cantideck. If Cantideck were not able to offer rolling platforms, for the same reasons I have given for issue (2) I find that Glencoe would have hired rolling platforms from Xena. I note the evidence that at the later time when Cantideck modified the Glencoe stock, 3 platforms were still unused. That does not mean Glencoe would never have used them and does not mean their sale to Glencoe did not cause a loss to Xena.
The evidence did not focus on the other three sales and I will approach them in the same way as for the ten sold to Glencoe.
A more difficult question is to assess how much lost hiring of rolling platforms these sales actually caused. Xena's calculation of 100 weeks as a minimum based on the purchase price and rental charges makes sense but it assumes that the purchaser would have always hired a rolling platform for all the occasions on which they used the rolling platform they had bought. This is not necessarily so since one of the advantages of rolling platforms is that they are more flexible than fixed platforms. In other words it makes sense, if one is going to buy a single platform rather than hire platforms (fixed or rolling) on a job by job basis, to buy a rolling platform since it will always be able to do the job. On the other hand if one is hiring platforms job by job then one may not always need the flexibility of a rolling platform, for some jobs a fixed platform is all that would be needed. The customer will only have hired a rolling platform when they actually wanted one.
Thus I do not accept the 100 weeks figure is fair. Each sale caused the customer not to hire a rolling platform for a certain number of weeks and also not to hire a fixed platform for a certain number of weeks. They would have hired the rolling platforms from Xena for the reasons I have already given and whether they would have hired the fixed platforms from Xena is addressed at issue (4).
It is not easy to see how to arrive at a fair way of working out the relative scale of hiring of fixed as opposed to rolling platforms. Doing the best I can with the information available I note that in the relevant period Cantideck hired out 897 weeks worth of rolling platforms and 611 weeks worth of fixed platforms to customers who also hired rolling platforms. Thus customers who did use rolling platforms hired any sort of platform for a total of 1508 weeks of which the usage of fixed platforms represented about 40% of the total. That seems to me to be about right as a fair figure and I will use it to apportion the 100 weeks relied on by Xena. I appreciate that the derivation of the 100 weeks figure itself depends on assumptions about the hire rate but one has to start from somewhere. It is a reasonable figure.
In other words I find that each sale by Cantideck of a rolling platform can fairly be said to have deprived Xena of 60 weeks hire of a rolling platform. Thus all 13 sales deprive Xena of 780 weeks hiring of rolling platforms.
I do not accept that the fact this 60 week period would extend well beyond the end of 2007 is a significant objection. The sales were sales of infringing goods and their effects will have been long lasting. Moreover while I am, as Xena is, prepared to work on the basis that the relevant period is 2006 and 2007, I am far from satisfied that Cantideck has been open or frank about what happened in that time. No documents were disclosed about the modification process. The modification process involved close interaction with Eichinger in Germany and materials passing back and forth, and also involved contacts with Cantideck's customers. I find the idea that it produced no emails, shipping documents, diagrams or any other documents incredible. Mr Critchley said that the process had gone on without documents but I do not accept that. I am only prepared to accept that Mr Critchley genuinely believed there were none because he was really not closely involved in Cantideck at the time and did not have first hand knowledge.
(4) Did Cantideck's hire of infringing platforms cause Xena to lose hires of fixed platforms?
To support the argument that Cantideck's hire of rolling platforms caused Xena to lose hires of fixed platforms, Mr Smith said that Xena provided a one stop shop so new customers attracted by rolling platforms were also likely to hire other loading platforms. He gave an example in which Bovis would hire rolling platforms on a site as main contractor and sub-contractors on the same site would have fixed platforms. Xena also relied on the fact that it was an undeveloped market, that Cantideck promoted fixed and rolling platforms together and that Cantideck's launch into this market was led by its rolling platform, even though it would have been easier to launch with the simpler fixed platform. Mr Critchley accepted this characterisation of Cantideck's launch. Mr Cuddigan's point was that this showed that Cantideck knew and intended that sales of fixed platforms would follow from sales of rolling platforms and that they therefore expected the sales to be related. Thus he said this satisfied the requirement of foreseeability in relating to hiring fixed platforms as a consequence of hiring rolling platforms.
Cantideck did not accept the one stop shop theory and in cross-examination, although not in his statements, Mr Critchley said that he was aware of platforms from different suppliers present on the same site but I am not satisfied he knew about 2006/2007. Mr Smith was cross-examined on the issue. He said he had not seen many sites which contain two different platforms on the same site.
Although Mr Cuddigan's argument for these damages to be included is attractive I do not accept it. The problem is with the detailed facts. This is not a case like Gerber in which a non-infringing item (a CAD machine) interacts with the invention (a CAM machine) nor is it like Fabio Perini v LPC [2012] EWHC 911 (Ch) in which damages were awarded for the loss of a chance of selling an entire tissue converting line even though the invention was for one part of it. In this case fixed platforms and rolling platforms are separate products, used and ordered separately.
Mr Abrahams referred to a particular example. The contractor Morrisroe hired the following platforms from Cantideck in the relevant period:
Mr Abrahams submitted that even assuming that Xena had won the hire of the two rolling platforms for June – September 2007 in SW8, plainly Cantideck won the fixed platform hires lawfully in a way which had nothing to do with rolling platforms. He said there was no basis for any claim to those supplies of fixed platforms. After all these were for four different construction sites and the rolling hire came last.
The only answer to this argument from Xena is to rely on Cantideck's rolling platform led entry to the market in the first place. I do not regard that as a sufficient answer to the point. In my judgment the Morrisroe example shows that it cannot be said that in that case these hires of fixed platforms have been caused by Cantideck's infringement at all. Those fixed platform hires are not transactions which go together with Cantideck's hiring of rolling platforms. The example shows that it cannot be assumed that just because it is true that customers who rented rolling platforms also rented fixed ones from the same source, it follows that hires of fixed platforms went together with hires of rolling platforms. I recognise that for Morrisroe the sequence, with fixed platforms hired before rolling, makes the point particularly stark and in other cases the sequence was the other way round but the argument is not only concerned with chronology.
I can believe that in a case in which a customer wanted a fixed and a rolling platform for the same job and arranged the hire contract at the same time, they might well have sought to hire both platforms from the same source. Insofar as any of Cantideck's hires of fixed platforms fall into that category then Xena's case to claim that fixed hire as a loss would at least get off the ground. However the evidence does not approach the matter in that way. It may be that in amongst the transactions there were a few like this but I did not have my attention drawn to any. I am not persuaded that the fraction of Cantideck's fixed hires which could truly be said to have been hired together with a rolling platform is anything other than negligible. I think the fairest assessment of the position is that none of Cantideck's fixed platform hire business was lost business to Xena. This applies as much to the hires considered under issue (3) as for issue (2). I reject Xena's case on this issue (4).
(5) Would Xena have been able to supply all of Cantideck's customers throughout the infringing period?
Mr Constantine gave detailed evidence about the capacity of Xena to accommodate the extra hiring which would have been involved on Xena's case. An extra installation team would have been needed and that was catered for. There was a possible shortage of rolling platforms in November/December 2007 on Xena's case but Mr Constantine's evidence worked through the details and came to the view that the shortfall was de miminis. He also addressed and did not accept a point made in correspondence about down time for cleaning, repair and transport. Mr Abrahams did not cross-examine this evidence but in closing he invited me to apply my own common sense and find that Mr Constantine was being too optimistic. He submitted that Xena would be bumping against the ceiling of their capacity and would in fact have had problems meeting the demand.
I am not bound by Mr Constantine's opinion on the point but I thought it was entirely credible. Although undertaking all the rolling hire work which the claim involves would have stretched Xena to close to the limit at the end of 2007, I am not satisfied that Xena could not have accommodated it. I will not make a deduction for lack of capacity.
(6) What would Xena have charged Cantideck's customers for platform hire if they had gone to Xena?
By closing I did not understand it to be disputed that a fair rate to take for what Xena would have charged Cantideck's customers for hiring rolling platforms was £143 per week.
(7) What additional costs would Xena have incurred if they had hired platforms to Cantideck's customers?
Mr Constantine's evidence was that apart from the extra installation team, the income from extra hires would have been pure profit. Essentially the point was that as it was a hire business, all of Xena's costs were fixed and so any increased turnover from hiring existing equipment would be clear profit.
The point that was put against this was based on the EBITDA figures. EBITDA means Earnings Before Interest, Taxation, Depreciation and Amortisation. The EBITDA figures in Xena's accounts showed that generally speaking an increase in turnover by Xena did not translate into an increase in EBITDA, quite the reverse. Thus, submitted Mr Abrahams, this showed that in truth an increase in hire business by Xena would not have represented clear profit and I should infer that there were costs which would have increased as well. He said this showed that Xena were never able to turn a large increase in turnover into a big profit.
I do not accept this submission. The argument about EBITDA is too generalised to engage with Mr Constantine's evidence, which I thought was convincing. Mr Cuddigan told me that the extra hire work the claim involves represents about 10% of Xena's overall hire business. Apart from the installation team I find that there would have been no extra costs associated with the increase in hiring of rolling platforms this claim is based on.
(8) Can Xena claim for services provided to Cantideck's customers if they had gone to Xena?
Although Mr Abrahams submitted these losses were too remote, the Points of Defence admitted they were a foreseeable consequence assuming Xena did indeed lose the customer in the first place. The services offered were (i) platform installation, relocation, removal and training, (ii) platform refurbishment and (iii) bespoke associated design. By far the most significant was (i).
There was an argument that the only service routinely charged for was delivery and on that Xena made a loss. That loss has been taken into account. It is clear that the other services relied on were real and although they were not always provided, I reject the argument that they are too remote. They were direct and foreseeable and I accept Xena's case on these losses.
(9) What additional costs would Xena have incurred if they had provided additional services to Cantideck's customers?
The only additional cost is the installation team addressed already. Cantideck submitted the cost of the team would have been higher because Xena could not simply have hired staff at no cost and would not simply have let the additional team go when it was not needed. However Mr Constantine explained that the nature of the employment situation in the north east meant that hiring staff that way was indeed feasible. As for the position after the end of 2007, I am not satisfied any further deduction is needed since the primary focus of the claim is based on what happened in 2006 and 2007 only. At the end of 2007 no further hires arise under head A (issue (2)). The hires taken into account as a result of the sale of rolling platforms under head (D) (issue (3)) will be spread out after the dates of sale and well after the end of 2007, however there is no evidence that the extra team would have been needed in that period.
(10) What is the appropriate notional royalty on Cantideck's infringing sales/hires that would not have gone to Xena?
On the basis of my findings, this issue does not arise. I will say only that I was far from persuaded that Xena's approach to the calculation would have produced a fair reasonable royalty in this case. Cantideck's approach to this assessment was more realistic.
(11) Calculation issues
There were no outstanding calculation issues.
(12) Did Cantideck knowingly infringe the Patent?
It is plain that Cantideck had actual notice in December 2006 and knowledge or reason to believe is accepted from then. Mr Cuddigan did not contend the position at an earlier date mattered.
(13) Was Mintz Levin's letter of 4 June 2008 a deliberate attempt to mislead Xena?
The Mintz Levin letter of 4 th June 2008 was not frank. It did not explain that the products had been modified, but I reject the suggestion that this could be said to be deliberately misleading. It is true that the generality of the undertakings demanded by Cantideck via the letter means that they would also have prevented Xena from asserting an entirely proper claim for back damages against Cantideck's customers but the letter has to be seen in its proper context. It was a reaction to an allegation of patent infringement which was itself unjustified. The product at Ardmore did not infringe. I reject the argument over the Mintz Levin letter.
(14) Was Arnold & Porter's letter of 8 December 2010 a deliberate attempt to mislead Xena?
I have addressed this above. The Arnold & Porter's letter of 8 December 2010 was a deliberate attempt to mislead Xena about the value of this claim.
(15) Should Cantideck pay Xena all its "unfair profits" and further damages for "moral prejudice"?
The Arnold & Porter letter was written three years after the infringing acts in this case and has nothing to do with the damage actually caused to Xena by Cantideck. Any prejudice caused by the letter was not prejudice caused by the infringement. To award damages as a result of this sorry episode would simply be to punish Cantideck. Whatever the scope of the jurisdiction to award damages for moral prejudice might be, I do not believe it covers this case. I will not award any such damages. It is a matter of conduct which falls to be considered when dealing with costs.
(16) What is the appropriate rate of interest?
I have accepted Xena's argument in law that it can claim for interest losses. Mr Constantine gave detailed evidence about Xena's borrowings and interest charges. The sums borrowed by Xena were always more than the total lost income I have arrived at and the weighted average interest rate for all of Xena's borrowings for the period from August 2006 to March 2012 was 10.5%.
Mr Cuddigan submitted that the appropriate rate on the basis of this evidence was 8% compound interest. Mr Abrahams did not challenge that point on the evidence and did not challenge the foreseeability of Xena's interest losses. His argument had been on the law, which I have rejected. I will accept Xena's case on the evidence. The rate should be 8%.
(17) How should interest be applied?
The parties agreed that for the purposes of calculating interest, the fair thing to do was to base it on the whole sum starting from a single date. They did not agree about the correct starting date. The rival candidates ranged between June 2007 (Xena) and August 2007 (Cantideck) on one basis but if the Glencoe sales were included as well (which I have done albeit to a lesser extent than claimed) then Mr Abrahams said the date should be in 2008 because it was a weighted average. I was invited to use my judgment to select an appropriate date.
I have included sales to Glencoe on a proportional basis. It does not seem to me to be fair to run interest from 2008, when most of the infringing activity, even including Glencoe, took place in 2006 and 2007. The date which I think is fair overall is 30 th November 2007.
I asked Mr Cuddigan whether it was necessarily so that these interest losses should have continued up to the hearing, bearing in mind the change in Xena's circumstances when it went into administration. Mr Constantine's evidence about interest only ran until March 2012. That point will need to be resolved after the judgment is handed down.
Heads of damage, calculations
The consequences of my findings are as follows:
A. Rolling platforms, rental customers
I find the increased revenue would have been £128,356.80 (£143 x 897.6 weeks). The only cost to be deducted is the extra installation team cost of £32,500.
B. Fixed platforms, rental customers
I have rejected this head of damages.
C. Services, rental customers
The sum lost is £14,226.96 (£15.85 x 897.6 weeks).
D. Rolling platforms, purchasing customers
The lost income was £111,540 (£143 x 60 weeks x 13 platforms).
E. Services, purchasing customers
The lost income was £12,363 (£15.85 x 60 weeks x 13 platforms).
F. Reasonable royalty
Not relevant.
G. Interest
8% from 30 th November 2007.
H. Unfair profits and moral prejudice
Nil.
Conclusion
By my calculations Xena's total lost income caused by Cantideck's patent infringement is £233,986.76. Interest losses at 8% from 30 th November 2007 must be added.