Court of Appeal rules on liability and account of profits in trade mark case
The Court of Appeal has reviewed the law on liability and account of profits in a judgment concerning the BEVERLY HILLS POLO CLUB trade mark (Lifestyle Equities C.V. & Anor v Ahmed & Anor  EWCA Civ 675). The case is one of many that are winding their way through the courts concerning this brand.
In this litigation, the judge at first instance found that the use of SANTA MONICA POLO CLUB infringed the BEVERLY HILLS POLO CLUB mark and devices, and also found passing off. There were a total of 16 defendants in the litigation, including two individuals – Kashif Ahmed and his sister Bushra Ahmed – who were directors of two of the defendant companies.
Following a trial in which the corporate defendants were all found liable, there was a second trial regarding accessory liability of the two individuals and a claim for account of profits. In the meantime, two of the defendant companies went into insolvent administration.
In March 2020, the judge found that both individuals were jointly and severally liable, but were only liable for profits they themselves made from the wrongful acts. This amounted to £779,981.20 and £57,007.60 respectively. (If they had been liable for the whole profits of the company the amounts would have been £3,129,921 and £312,992.)
Court of Appeal judgment
Writing the judgment for the Court, Lord Justice Birss upheld this finding, saying it accorded with the balance of authority: “The liability to account for profits is a liability to account for the profits that the person liable has actually derived from the wrongful conduct which has made them liable in the first place. That accords with the equity of the situation.” In addition, he said, making the accessory liable for profits made by the principal would raise conceptual problems.
The Ahmeds also appealed several aspects of the first instance judgment. The Court confirmed the finding that they were jointly and severally liable, saying that their conduct was deliberate and intentional. It was no defence to say they had no improper motive, that they acted on advice, or that acts of company directors cannot be such as to make them liable as joint tortfeasors for torts committed by the company. The Court also found that the judge was entitled to order an account of profits, rejecting arguments that such an order can only be made where there is improper conduct or bad faith.
However, the Court upheld the Ahmeds’ appeal on two points: first, that Mr Ahmed was not liable to account for the value of a loan to him from the company, as it was not a profit and, second, that the share of their salaries allocated in the account of profits should be paid net of income tax. The result of these two decisions is that the Ahmeds are liable for £78,939.66 and £38,830.94 respectively.
Greenwich Polo Club case
Coincidentally, the BEVERLY HILLS POLO CLUB mark was the basis of a separate claim decided by the High Court just three days later (Lifestyle Equities CV v The Copyrights Group Ltd & Ors  EWHC 1212). In this case, Lifestyle Equities brought a trade mark infringement and passing off claim against seven companies and one individual involved in the management of the Greenwich Polo Club brand, which comprises several signs using those words with the image of polo players. The Greenwich signs were used on goods in Greece, Cyprus and Bulgaria.
The judge, Mr Justice Marcus Smith, made various findings in relation to the role played by each of the defendants. But the crux of his judgment was that there was no infringement as the marks were not similar – the figurative elements were different, the word elements were very different – and therefore no likelihood of confusion: “In my judgment, the reasonably well informed and reasonably circumspect consumer – even reading an unfamiliar alphabet – could not be confused by the marks here in question.” Moreover, he rejected a claim for infringement under Article 9(2)(c): “I had no evidence of any kind of link in the mind of the average consumer and – from the frankly peripheral evidence of reputation provided – I am disinclined to infer that any such link existed, particularly given the very different nature of the signs in issue.”
As the judge had found against the claimants, he did not need to address the possibility of an extraterritorial injunction post-Brexit.
Given the enthusiasm of this particular claimant for litigation, it would not be surprising if this decision is appealed as well.
To find out more about the issues raised in this blog contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - firstname.lastname@example.org
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