IP-2024-000024 - [2024] EWHC 951 (IPEC)

In light of the decision I have reached in respect of Stage 2 above, this issue does not strictly arise. However, in deference to the parties and in case this goes further, I shall set out my assessment of the evidence and the conclusions I would have drawn based on it.

Mr George Reynolds gave evidence that the Defendant would likely achieve approximately 5% penetration of the market and sell up to about 420 units of the Seplou Sheath in the next 12 months (assuming all UAS use is a suction sheath rather than a conventional one). This represents a possible revenue to the Defendant of up to about £52,500 for the period to April 2024. Thereafter, he predicted that the Defendant’s market share would grow by a further 5% in the following 12 months, leading to total possible sales of approximately 900 units to April 2026. The counsel for the Claimant submitted, and I accept, that these forecasts provide sufficient basis for the court to quantify the damage the Defendant would suffer if an injunction was wrongly granted in respect of Period 1.

However, counsel for the Defendant submitted that damages would not be an adequate remedy for Period 2. He argued that this was because it would be very difficult to predict what market share the Defendant would have obtained in the counterfactual if it is wrongly injuncted in the actual. It was said that this difficulty would be exacerbated by the fact that the Claimant would have secured a stronger position in market in the interim by virtue of its extended monopoly, which would reduce the Defendant’s ability to achieve sales once the injunction is lifted. As a result, the sales that the Defendant achieves in the actual once the injunction is lifted after trial could not be a relevant proxy for the sales it would have achieved in the counterfactual. The damages calculation would be further complicated if third parties enter the market after trial and the Defendant loses any first mover advantage over them.

Counsel for the Claimant accepted that it is “slightly more difficult” to quantify the damage to the Defendant in Period 2 if the injunction is wrongly granted than it will be to quantify the damage to the Claimant if the injunction is wrongly refused. However, he submitted that the assessment can still be performed adequately, using the Defendant’s forecasts as a yardstick.

I agree that damages to the Defendant in respect of Period 2 would be more difficult to calculate than the damages to the Claimant. I have considered carefully whether the potential impact of third-party entrants after trial and the loss of the first mover advantage would make damages too uncertain to be adequate on the facts of this case. After some deliberation, I formed the view that it would not, for two reasons. First, the forecasts which Mr Reynolds gives of the Defendant’s sales until April 2026 provide sufficient foundation for the court to make an adequate assessment of the likely sales that the Defendant would have made in the counterfactual. Just as with the Claimant under Stage 2, this makes the damages calculation relatively straightforward, albeit that it may not be perfect. In my judgment, it would not be fair or appropriate to treat the impact of parties’ forecasts on the ability to calculate damages differently. Second, I was struck by the fact that the Defendant’s arguments about losing the first mover advantage were not supported by any evidence. Counsel for the Defendant submitted that I could take judicial notice of the concept of the first mover advantage and that it was a “sure-footed submission” that losing it will cause damage. However, in my judgment whether there is a first mover advantage, and the consequence of losing it, will be a question of fact for each case. If it had been a real concern for the Defendant, it would (and should) have been addressed in evidence.

The Defendant also argued that it would suffer damage in three other ways if an injunction was wrongly granted, and which also could not be adequately compensated in damages. These were: