Retail Systems Technology Ltd v P.J. McGuire and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Kelly
• Judgment Date: 02 February 2007
• Neutral Citation: [2007] IEHC 13
• Court: High Court
• Docket Number: [No. 2599 P/2005],[2005 No. 2599 P]
• Date: 02 February 2007

[2007] IEHC 13

THE HIGH COURT

COMMERCIAL

[No. 2599 P/2005]

Retail Systems Technology Ltd v McGuire, Kelly & McGuire Ltd

BETWEEN

RETAIL SYSTEMS TECHNOLOGY LIMITED

PLAINTIFF

and

P.J. McGUIRE, DARRAGH McGUIRE AND KELLY AND McGUIRE LIMITED

DEFENDANTS

COPYRIGHT & RELATED RIGHTS ACT 2000 S128(1)

COPYRIGHT & RELATED RIGHTS ACT 2000 S128(2)

BYRNE v STATIST CO 1914 1 KB 622

COPYRIGHT ACT 1911 S8 (UK)

UNIVERSAL CITY STUDIOS INC & ORS v MULLIGAN 1999 3 IR 407 1999/24/7942

CLARK & SMYTH INTELLECTUAL PROPERTY LAW IN IRELAND 2ED 2005 379 PARA 18.15

GENERAL TYRE & RUBBER CO v FIRESTONE TYRE & RUBBER CO LTD 1975 2 AER 173

AKTIENGESELLSCHAFT FUR AUTOGENE ALUMINIUM SCHWEISSUNG v LONDON ALUMINIUM CO LTD (NO 2) 1923 40 RPC 107

ALLIBERT SA v O'CONNOR & CAN-AM CONTAINERS LTD 1982 2 ILRM 40

BLAYNEY (T/A AARDVARK JEWELLERY) v CLOGAU ST DAVID'S GOLDMINES LTD 2003 FSR 360

GERBER GARMENT TECHNOLOGY INC v LECTRA SYSTEMS LTD 1997 RPC 43

PATENTS ACT 1977 S61(1)(C) (UK)

PATENTS ACT 1977 S61(6) (UK)

LADDIE PRESCOTT & VICTORIA THE MODERN LAW OF COPYRIGHT & DESIGNS 3ED 2000 2 1793 PARA 39.40

BIRN BROTHERS LTD v KEENE & CO LTD 1918 2 CH 281

WATSON LAIDLAW & CO LTD v POTT CASSELS & WILLIAMSON 1914 31 RPC 104

INTELLECTUAL PROPERTY

Damages

Breach of copyright - Inquiry as to damages - Whether entitlement to rely on innocent infringer defence - Principles governing quantification of damages - Whether principles applicable in patent cases applicable in copyright cases - Whether convoyed goods principle applicable - Whether appropriate to award damages in respect of general damage to business - Whether appropriate to award aggravated damages - Blayney v Clogau St. David's Gold Mines Ltd [2002] EWCA 1007, [2003] FSR 360, Gerber Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443 and Byrne v Statist Co [1914] 1 KB 622 followed; Birn Brothers Ltd v Keene and Co Ltd [1918] 2 Ch 281 and Universal City Studios Inc v Mulligan (No 3) [1999] 3 IR 407 considered - Copyright and Related Rights Act 2000 (No 28), s 128 - Damages awarded (2005/2599P - Kelly J - 2/2/2007) [2007] IEHC 13

Retails Systems Technology Ltd v McGuire

The plaintiff claimed that its copyright in an electronic point of sale software product known as "iTouch" had been infringed by the defendants. Liability was conceded and the plaintiff elected for an assessment of damages rather than an account of profits.

Held by Kelly J. that there would be judgment for the plaintiff against the first and second defendants in the total sum of €214,000.

Reporter: R.W

1 Mr. Justice Kelly delivered the 2nd day of February, 2007

The Claim

2 The plaintiff claims that its copyright in an electronic point of sale software product known as "iTouch" has been infringed by the defendants.

3 The plenary summons claims a number of injunctions to restrain such activity. It also claims damages under a variety of headings.

4 As the defendants gave satisfactory undertakings prior to trial, injunctions are no longer sought and this judgment is confined to the claim for damages.

5 The defence delivered on 26 ^th October, 2005, although it offered undertakings and delivery up of the product, maintained a denial of liability. Liability was however conceded by letter on 17 ^th January, 2006.

6 The plaintiff has elected for an assessment of damages rather than an account of profits. It is to that assessment that I will turn presently.

7 A complication arises from the defendants' representation. When the infringements were first discovered the defendants were represented by solicitors. Those solicitors were discharged prior to the commencement of these proceedings. At the early stages of this action the defendants purported to represent themselves. They then engaged a solicitor and counsel who drafted and delivered the defence. That legal representation came to an end on 8 ^th May, 2006. Since that time there has been no professional representation for the defendants.

8 The third named defendant was struck off the register of companies on 25 ^th November, 2005. No relief is now sought against it. The remaining defendants are father and son. At the hearing before me Darragh McGuire (the son) did not appear. His father had no entitlement to appear on his behalf in a formal sense but indicated to me that anything he had to say, whether by way of evidence or submission, was being done on his own behalf and with the knowledge and consent of the second defendant, his son.

The Parties

9 The plaintiff is a Northern Irish company with its head office at Campsie, Eglinton, Co. Londonderry. It was established in 1977. It has 31 employees who are situate in Campsie, Belfast and Dublin. In its early years the plaintiff's business was principally concerned with the supply of conventional cash registers and associated hardware to hospitality and retail outlets. It has always been involved in the development of innovative products in its area of expertise.

10 Towards the end of the last decade the plaintiff began to concentrate on electronic point of sale (EPOS) systems and it is one such system with which this litigation is concerned. I will describe it in some detail shortly.

11 The defendants trade under the style and title of "P.J. McGuire, Shop, Bar and Catering Equipment". They do so from a premises in Lilttleton, Thurles, Co. Tipperary. They supply equipment of the type in suit to retail, hospitality and catering sectors.

iTouch

12 The plaintiffs' iTouch software system consists of a point of sale software module and a "back office" software system. The point of sale module operates a touch screen cash register whilst the back office system assists in cash management and stock control.

13 Historically, retailers used conventional cash registers, whether manual or electric, for all point of sale purposes. In recent years, however, there has been a trend to move to EPOS systems. The conventional cash register market has been in decline for some years whilst there has been substantial growth in the EPOS market. EPOS systems now make up about 60% of the value of the point of sale market. Retailers continue to move from cash registers to EPOS systems.

14 Even if there was complete market saturation with EPOS systems there is still a potential for growth in that market because retailers will need to replace the systems approximately every five to eight years. Thus, there is significant potential for repeat business for vendors of EPOS systems.

15 The EPOS market is not a mass market. It is confined to retailers and the leisure industry. It is that group that is targeted in marketing EPOS products.

Development of iTouch

16 In early 2003, the plaintiff decided to develop its iTouch product. It employed a Mr. Anthony Horrigan as a product development specialist to produce the new software. He did so. iTouch was released in September, 2003. Its development has continued since then so as to meet changing needs. The plaintiff spent in excess of St£300, 000 in developing the iTouch product.

Sales

17 Since its inception the plaintiff has sold its goods in this State. For example, from 1979 to 1998, it had a contract to supply cash registers for all Dunnes Stores outlets in this State and elsewhere. Its average sales over the last five years in the Republic of Ireland have been St£415, 355 per annum. In 2002, 33% of the plaintiffs' total sales were attributable to this State (St£651, 746). In 2004 those figures dropped to 21% of total sales or St£348, 087. In 2005 they had increased to 26% of total sales and amounted to St£354, 988.

18 The plaintiff has a branch office in Dublin and provides after hours support nationwide through staff located in Kilkenny, Kildare, Dublin, Armagh, Down, Donegal and Derry.

19 More to the point as far as this judgment is concerned are the sales of the iTouch product. Since its launch in 2003 the following has been achieved. In the year to March 2004, 12 sites in the Republic of Ireland, accounting for 52 copies of the product, were supplied. In the year to March 2005, 21 sites in this State, accounting for 74 copies were supplied. In the nine months to September, 2005, 37 sites in this State, accounting for 135 copies were supplied.

Defendants Sales

20 After some difficulties in obtaining appropriate discovery from the defendants, eventually sufficient information was obtained to lead to the conclusion that 59 infringing items of software had been supplied by the defendants. The bulk of those sales involved supply, not merely of the software in question, but also the related hardware. I accept the plaintiff's evidence that the iTouch software is normally sold as part of a package with related hardware. Such being the case I am invited to apply the "Convoyed Goods Principle" to the assessment of damages. I will consider the application of such a principle in due course.

21 Before considering the evidence which has been led in support of this claim for damages it is necessary that I should identify the legal principles which are applicable to the task.

Statutory Provisions

22 Section 128 of the Copyright and Related Rights Act, 2000, (the 2000 Act) governs the assessment of damages in this case. That section provides as follows:-

23 2 "1. The court may, in an action for infringement of copyright award such damages as, having regard to all the circumstances of the case, it considers just.

24 2. Without prejudice to any other remedy, where, in an action for infringement of the copyright in a work, it is shown that at the time of the infringement the defendant did not know and had no reason to believe that copyright subsisted in the work to which the action relates, the plaintiff is not entitled to damages against the defendant.

25 3. In exercising its powers under subs. 1 in...