Aldi Stores v Dunnes Stores

• Jurisdiction: Ireland
• Judge: Mr Justice Cregan
• Judgment Date: 15 March 2016
• Neutral Citation: [2016] IEHC 256
• Docket Number: [2013 No. 13177 P]
• Court: High Court
• Date: 15 March 2016

BETWEEN

ALDI STORES (IRELAND) LIMITED

AND

ALDI GMBH & CO. KG

PLAINTIFFS

AND

DUNNES STORES

DEFENDANT (No. 3)

[2016] IEHC 256

[2013 No. 13177 P]

THE HIGH COURT

COMMERCIAL

Intellectual Property – European Communities (Misleading and Comparative Advertising) Regulations 2007 – Art. 13 of the Directive 2004/48/EC – Infringement of trademark – General damages – Account of profits Difference between general and special damages

Facts: Following the judgment of the High Court fixing liability of the defendant in a trademark infringement proceedings initiated by the plaintiffs against the defendant, the defendant now sought an order requiring the plaintiffs to make an election between an inquiry into damages or an account of profits in the damages module of the said proceedings. The plaintiffs contended that they were entitled to claim both general damages as well as an account of profits. The defendant contended that since an account of profits was an equitable remedy, it was not available as a matter of right as the damages were. The defendant also asserted that the plaintiffs' reliance on art. 13 of the Directive 2004/48/EC on the Enforcement of Intellectual Property Rights was misplaced.

Mr. Justice Cregan refused to grant the desired reliefs to the defendant. The Court observed that the rule of election merely required the plaintiff to inform the Court about the type of remedy, the plaintiff waned to claim; however, choice of one type of remedy would not mean that he was precluded to claim the other remedy. The other remedy would still be available to the plaintiff as an alternative. The Court opined that the rationale behind the rule of election was to ensure that the plaintiff was not being over-compensated in a manner which was detrimental to the interests of the defendant. The Court held that it should seek to interpret the domestic law in a manner which was consistent and compatible with the Directive. The Court observed that the words 'all appropriate aspects''and 'negative economic consequences' as mentioned under art. 13 (1) of the Directive 2004/48/EC should be read conjunctively, and thus, the said Directive permitted the national courts to consider both economic and non-economic consequences arising out of an infringement proceedings. The Court held that rule of law required that a plaintiff could make an election between an inquiry as to special damages or an account of the defendant's profit and the plaintiff's claim to general damages was not affected by the rule of election. The Court held that since the award of general damages were uncertain, being dependent upon the discretion of the Court unlike the award of special damages which involved mathematical calculation, a plaintiff could never make an informed election between an unknown amount and a known amount on an account of profits, thus, he was entitle to claim both general damages as well as an account of profits.

JUDGMENT of Mr Justice Cregan delivered on 15th day of March, 2016

Introduction

1 The defendant in these proceedings has brought an application for an order requiring the plaintiffs to make an election between (i) an inquiry into damages or (ii) an account of profits in the damages module of these trademark infringement proceedings. This application raises issues about the nature of an 'election' in such cases, about whether a plaintiff must make an election between an account of profits or general damages and at what stage of the proceedings a plaintiff must make such an election.

Background

2 In these proceedings the plaintiffs sought orders to restrain the defendant from infringing their trademarks and from engaging in misleading comparative advertising under the European Communities (Misleading and Comparative Advertising) Regulations 2007 ( S.I. No.774/2007).

3 By order of the High Court (Kelly J.) dated the 10th day of March, 2014 the High Court, on consent, made an order for a split trial on liability and quantum.

4 The liability module was at hearing before me for several weeks and on 9th day of June, 2015, I delivered my judgment in respect of the liability issues in these proceedings.

5 The defendant then indicated that it wished to appeal that decision to the Court of Appeal. The defendant also brought an application to stay the hearing of the damages module pending the appeal on the liability issue. This was opposed by the plaintiffs who indicated that they wished to have the damages module determined as soon as possible. In my second judgment of 21st day of July, 2015, I decided, for the reasons set out in that judgment, that the Court would case- manage the module on damages until it was ready for hearing but that the damages module would not in fact be heard until after the appeal on the liability issue had been determined by the Court of Appeal.

6 Subsequently I made further directions in relation to the furnishing of further particulars of loss and damage and directions in relation to discovery.

7 The defendant has now brought this application requiring the plaintiffs to make an election between its claim for damages or an account of profits in the damages module in these proceedings. It is agreed between the parties that this application should be heard and determined before the Court can proceed to determine the two discovery applications in this matter.

The Pleadings

8 In the Amended Statement of Claim delivered on 5th September, 2014 the plaintiffs plead in the prayer for relief inter alia:

'(V) An inquiry as to damages for, and/or an account of profits in respect of, the infringement of the marks together with an order for payment of all sums due to the plaintiffs'

9 The defendant's amended defence delivered on 3rd October, 2014 at para. 18 pleads that:

'The plaintiffs are not entitled to the reliefs claimed in the statement of claim or at all'.

10 On 10th November, 2015, pursuant to the direction of the Court, the plaintiffs furnished further particulars of damage (after the liability issue had been heard and determined). These further particulars state inter alia as follows:

'In accordance with the directions of the court made herein on 3rd November 2015, the Plaintiffs set out below the particulars of their claim for general damages and their claim for an account of profits.

GENERAL DAMAGES

1. The plaintiffs claim general damages and moral prejudice having regard to the very significant reputation and goodwill attaching to the Marks which are extremely well known in Ireland and internationally which reputation and goodwill were seriously damaged by the defendant's infringement.' (Other particulars are then set out).

ACCOUNT OF PROFITS

2. The learned Trial Judge found that the banners and the shelf edge labels constituted a separate infringement. The Defendant benefited significantly from this infringement in that it enabled the defendant to retain customers at its stores and acquire new customers. In principle therefore the plaintiffs are entitled to an account of profits in respect of all sales of the defendant's products in stores where the banners and shelf edge labels were on display during the campaign. However entirely without prejudice to the judge's finding and to the plaintiff's entitlement to claim an account of profits on that basis the plaintiffs are prepared to confine their claim to an account of profits to those sales of products by the defendant which were the subject of a specific comparison with the plaintiff's products during the period ('the Period') during which the shelf edge labels and banners were on display.' (The pleadings also provide further particulars of this matter).

11 The defendant served a notice for further and better particulars of these particulars dated 17th November, 2015 and the plaintiff furnished such further particulars dated 24th November, 2015.

12 The plaintiffs' claim therefore consists of two separate and discrete headings of loss. These are:

(1) A claim for general damages and

(2) An account of profits.

Exchange of correspondence

13 The first letter in relation to this matter appears to be a letter dated 9th October, 2015 from Vincent and Beatty solicitors to the defendant's solicitors stating that the plaintiffs wished to pursue a claim for general damages and an account of profits. The letter also states:

'Our clients do not intend pursuing any claim for special damages including loss of profits.'(Emphasis added).

14 On 16th October 2015 the defendant's solicitors replied stating:

'We note that you state in your letter that your clients wish to pursue a claim for 'general damages and an account of profits'. This is the first time that your clients stated that they intend to pursue both a claim for damages and to seek an account of profits. Up to now your clients stated that they intended to elect between either general damages or an account of profits.'

15 The letter also asked the plaintiffs to clarify whether the plaintiffs intended to elect between pursuing a claim for damages or seeking an account of profits and, if the plaintiffs did not intend to make such an election, to clarify the basis upon which they contended that they were entitled to pursue both a claim for damages and an account of profits.

16 On 23rd October, 2015 the plaintiffs responded stating that they intended to pursue a claim for both general damages and an account of profits, as they were entitled to do, having specifically pleaded both of these reliefs in their statement of claim.

17 On 29th October, 2015 the defendant's solicitors replied stating that they were not aware of any legal basis upon which the plaintiffs were entitled to both reliefs. They stated:

'In addition the attempt to draw a distinction between "general damages" and "special damages", given the particular...