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Tuesday, 2 February 2016

Inquiry as to damages: no longer a rare avis?


Brian Whitehead, at Kempner & Partners, has provided an edifying summary regarding the increased feasibility of
electing an inquiry as to damages in connection with patent litigation.

"AP Racing (a subsidiary of a leading motorsport and performance car brake manufacturer, Freni Brembo), brought a claim for patent infringement against Alcon Components Limited. The claim concerned a patent protecting AP Racing’s leading RadiCal family of calipers. The RadiCal calipers represented a huge step in high-performance caliper design on their release in 2007. When released in 2007 and, unlike previous generations of calipers, which were small and symmetrical in appearance, the RadiCal family are as large as space permits, but with much removal of unnecessary metal, leading to a highly asymmetric appearance. This innovation gives the calipers significantly improved lightness and stiffness over previous generations. Uptake of the calipers in high end motor racing was rapid, including in Formula 3 and NASCAR.

AP Racing’s market position was challenged by, Alcon, which introduced a similar family of calipers Indeed, from 2009 Alcon replaced AP Racing as the supplier of calipers to a number of NASCAR teams. In January 2014, the Court of Appeal ruled that AP Racing’s patent was valid, it having already been held by the Patents County Court to be infringed by a number of Alcon’s NASCAR calipers. AP Racing elected for an inquiry as to damages, the hearing of which took place in the Intellectual Property Enterprise Court in December 2015.

HHJ Hacon’s decision following that hearing has now been handed down. The judge held that every single caliper sale made by Alcon’s US distributor after the date of publication of the patent was a lost sale by AP Racing. AP Racing was therefore entitled to recover the profit it would have made on each of Alcon’s sales. Furthermore, AP Racing also recovered the profits it would have made on the other equipment likely to have been sold alongside the calipers. In total, AP Racing has been awarded damages of just under £0.5 million, plus interest and costs.

Until quite recently, inquiries as to damages were rare, as they had a reputation for being long and costly – instead, parties typically sought to settle the financial compensation aspects of IP disputes following a finding of infringement. Since the availability of the more streamlined procedure in the IPEC, accompanied by the cap on recoverable costs in that court, inquiries have become much more commonplace. Parties are now able to obtain a judicial ruling on points of dispute (typically which, if any, of the defendant’s sales represent a sale lost by the claimant, and what, if any, other products and services would have been sold alongside those lost sales) in a relatively low-cost manner, and without the risk of a large adverse costs award. This represents another means by which the IPEC improves access to justice for litigants, particularly for small and medium enterprises."

Kempner & Partners served as counsel for AP Racing.

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