Case No. IP-2015-000152

102. The Claimants seek compensation for lost profit on each sale of Product made by the Defendant using the Listings. The Defendant admits 1215 such sales. It has not produced any sales figures for the period from July 2012 to the end of 2013, nor from mid-March 2016 to date. The Claimant has estimated these by averaging the sales data across the 26.5 months reported, to come to an average sales figure of 45 flagpoles per month. Accordingly it seeks compensation for a further estimated 810 flagpole sales in 2012 and 2013 and a further 608 flagpoles from mid-March 2016 being 2633 units in total. I am unable to make a finding of the specific date on which the Defendant began to sell Product on the Listing. Mr Coles’ oral evidence was that it was before 18 February 2013. In the absence of any more specific evidence, I will assess the sales from that date, and allow a further 12 months of sales at an estimate of 45 flagpoles per month being an additional 540 units. In respect of sales after mid-March 2016, I have no evidence that the Defendant sold any of the Product from the Listings after this time. The Defendant’s case is that it ceased in mid-March 2016 and Mr Tolofson’s evidence is that at the time he drafted his witness statement of June 2016, sales had ceased. There is no suggestion that they ever started again. On the balance of probabilities I am satisfied that there were no sales after mid-March 2016. Accordingly I find the total number of lost sales is 1215 +540 = 1755 units.103.The profit figure per sale sought by the Claimants has reduced incrementally as the scrutiny upon it has increased by the Defendant. Mr Small describes the evidence upon which the Claimants rely to reach this figure as woeful. Certainly it is true that the profit figure has decreased from £26.55 per unit originally claimed to £20 per unit, then following cross-examination of Mr Tolofson by Mr Small to £15.45 per unit. After close of evidence a concession was made by the Claimants in respect of VAT which brought the figure down further to £14.45 per unit, where it now remains. The Defendant’s evidence is that it has only made a gross profit of £3.29 per item. It has also provided limited financial disclosure to enable this figure to be analysed. Mr Small put this figure to Mr Tolofson who was incredulous and he said that it was “inconceivable that they made that little”.104.The £14.45 profit figure now sought by the Claimants is based on a sale price to consumers of £39.99 plus £4.99 shipping, less a number of specified deductions. Those which the Defendant specifically disputes are: 50p cost of shipping from China (the Defendant says that it pays £1.25); £2.50 actual cost of shipping to consumer from the UK warehouse (the Defendant says that it pays £7.70); and the £5.25 Amazon charge which Mr Coles for the Defendant says he disputes, but did not explain how it was wrong. At no point in Mr Small’s cross-examination or closing submissions, did he submit that the starting point for calculating the profit, i.e. the sale price of £39.99 plus £4.99 shipping was wrong.105.I accept Mr Small’s submission that the constant changes to the figures show that there has been inadequate consideration given to them by the Claimants. I am surprised that they do not know the profit margin they are making on their goods with any degree of accuracy. Mr Small submits that I cannot rely on the Claimants’ figures at all, and I should use the Defendant’s gross profit figure of £3.29 to calculate damages, but that is almost as poorly evidenced, save that I have seen evidence of the Defendant’s shipping costs to customers in the UK in the form of a DHL invoice, which I accept. I also do not know what sales price that gross profit figure of £3.29 is based upon. If it is based on the Defendant’s selling price of £29.99 then it is not very far from the Claimants’ figure of £14.45 based on a selling price of £39.99, for example.106.I am willing to accept Mr Tolofson’s evidence that the Claimants can ship from China for 50p per unit as I have no counter-evidence, and I am willing to accept the Amazon charges because the Defendant is in the position to be able to challenge those in detail and has not done so. The greatest discrepancy is in the figure that Mr Tolofson puts forward for UK shipping compared to the figure that the Defendant has evidenced for its costs. That gives me pause for thought, but on the balance of probabilities I accept Mr Tolofson’s figure. That is because: i)I appreciate that different businesses will achieve different prices for shipping the same thing as it is a competitive market, and much depends on volumes offered and delivery times required; ii)I would expect Mr Tolofson to know if he was making a significant loss on the shipping charged to customers rather than the respectable profit his figure suggests; and iii)If the gross profit figure on a £39.99 selling price was only £9.25, as a £7.50 UK shipping cost would make it, then the Second Claimant would have made a loss on every sale that it made at the reduced price of £29.99. That was not suggested by Mr Tolofson and I consider it inherently unlikely, particularly as he confirmed that the First Claimant is still selling flagpoles at £29.99 plus delivery on Ebay. 107.Accordingly accept the UK shipping cost put forward by the Claimants. For the reasons given below, the Claimants’ pricing during the period was variable and no detailed analysis of what prices were charged when was put before me. Nor was it suggested in the Defendant’s closing submissions that I attempt to establish different loss of profit figures for periods of different pricing. Accordingly I will wield a broad axe and assess the loss of profits at £14.45 per unit x 1755 units being £25,359.75. I award that figure to the Claimants in damages.108.The Claimants also seek damages for the loss of profits the Second Claimant has suffered from having to reduce its price to compete with the Defendant selling product on its Listings. Mr Muir Wood accepts that the evidence on this point is unclear, but reminds me that Mr Coles accepted in cross-examination that the Defendant set its price to undercut the Second Claimant. He submits that £5 per unit sold by the Second Claimant from 2013 to 2015 (being 2998 units) namely a further £14,990, is an appropriate measure.109.Mr Tolofson’s evidence was that the Second Claimant reduced its price down to £29.99 plus delivery from £39.99 plus delivery. Since the Defendant had stopped selling on its Listings, it had increased it again. However, as mentioned, Mr Tolofson’s oral evidence was that the First Claimant had also reduced its selling price for flagpoles on Ebay to £29.99 plus delivery, despite having no similar competition on its listing, and that the price on Ebay remained at £29.99 even at the date of trial. He gave no explanation for this. 110.I have also seen in the trial bundle some analytics produced by Amazon for each Listing showing the different prices at which the flagpoles were listed over various months or years. This shows a significant degree of variation and a picture which is more complex than suggested by the Claimants. It certainly does not show that the price went to £29.99 and stayed there from 2013 to 2015. 111.This evidence, together with the evidence of the First Claimant’s reduced prices on Ebay, mean that I cannot be satisfied: (i) that a reduction in price was entirely attributable to the presence of the Defendant on the Listings; and (ii) that £5 loss of profit figure over all sales from 2013 – 2015 is an accurate measure of that element of the Second Claimant’s price reduction which was attributable to the presence of the Defendant on the Listings. It is for the Claimants to satisfy me of this measure of loss and they have failed to do so. Accordingly I make no award on this head.