Can you change a claim from profits to damages?
Successful claimants in litigation in the UK can normally choose between (i) an account of profits and (ii) an inquiry as to damages. But what happens if you choose one of these options, and then change your mind?
This question was addressed in the recent judgment of His Honour Judge Hacon in the IPEC (Fit Kitchen Ltd & Anor v Scratch Meals Ltd & Ors). Back in 2020, he found in favour of Fit Kitchen on trade mark infringement and passing off claims, based on its UK trade mark pictured.
Following the publication of the judgment in 2020, Fit Kitchen opted for an account of profits. But, in October 2021, Fit Kitchen changed its mind and sought an inquiry as to damages instead.
The judge was clear that finality was in the public interest and that normally "re-election" is not possible. The only question is whether “there is any matter which would make it unfair to require the claimants to stick with their election, sufficiently unfair such that the court's discretion should be exercised to disapply the usual rule”.
In this case, the claimants (Fit Kitchen) argued that, if they continued with the account of profits and were found to have acted with unclean hands, they would end up with no compensation at all. But the judge found this argument “unattractive”: if they have acted with unclean hands they must deal with the consequences. In any case, the claimants were aware that the defendants were going to allege unclean hands before they made the election.
He also rejected arguments that the claimants lacked information, and that they believed they would gain more from an inquiry than an account. On the latter point, he said:
“it seems to me this will never be a good reason to allow a claimant to change its mind unless the change is soundly based on some good reason such as the emergence of new evidence of which the claimant could not reasonably have been aware at the time of making its election, particularly if it was concealed by the defendant. Nothing of that nature is suggested here.”
The balance of prejudice therefore favoured the dismissal of the application.
The judge also rejected the claimants’ claim to strike out the defendants’ allegation of unclean hands, which was based largely on the argument that the defendants should have pleaded their case in full at the liability stage.
In this case, the judge repeated, the defendants had raised their intention to rely on an allegation of unclean hands well before the election and had in fact tried to do so at the liability trial, but were prevented from doing so.
He concluded: “The prejudice to the defendants, if they are not permitted to advance an allegation of unclean hands, is self-evident. They will be shut out from arguing what they regard as an important part of their case.”
Make up your mind
This judgment is a reminder that, even if you are successful in an IP infringement claim, the work is not done and it is important to carefully consider your strategy.
On the specific question of changing from an account of profits to damages, the judge made it clear that this will only be possible in exceptional circumstances, such as the emergence of new evidence. The argument to dismiss the unclean hands claim was also summarily dismissed.
The result is that the claimants might find it hard to get the compensation they feel they deserve.