Royal Courts of Justice
Strand, London
Friday, 10th May 2002
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Before:
Between:
Claimant
-and-
Defendants
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Robert Onslow (instructed by Langleys) for the claimant.
James Counsell (instructed by Bevan Ashford) for the first defendant.
The second defendant appeared in person.
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1. This judgment is on an inquiry as to damages in a copyright infringement action. The claimant is SPE International Limited (“SPE”), which appeared by Mr Robert Onslow. The first defendant is Professional Preparation Contractors (UK) Limited (“PPC”), which appeared by Mr James Counsell. The second defendant is Mr John Glew, who represented himself.
2. I tried the issue of liability in 1999. The representation then was as it is now save that Mr Glew appeared by counsel, Mr James Gibbons. I gave my judgment on 15 July 1999, and a transcript has been obtained. It sets out the background to this inquiry, and I do not intend to repeat more than is necessary to make this judgment intelligible on a stand-alone basis.
3. The action is set in the field of shotblasting. The copyright is in the design drawing (No. 0001) for a 20” mobile blast cleaning machine called an SP20. It is used for cleaning and preparing concrete and steel floors and other surfaces. I described its operation in the opening paragraph of my earlier judgment:
Metal shot is fed from a hopper through an impeller onto the blades of a motor driven blast wheel which are within a blast chamber which is angled towards the surface to be cleaned like the right limb of a ‘V’. The blades rotate at speed and propel the shot at high velocity in a fan or cone shape down the blast chamber on to the area to be cleaned, which is within a blast zone at the bottom of the chamber. The shot then bounces off the surface and, together with the debris generated by the cleaning process within the blast zone, is swept, by vacuum and kinetic energy, up an angled reclaim duct forming the left limb of the ‘V’. At the top of the ‘V’, the reclaim duct bends to the right into a separator unit, where a fan disperses the debris into containers and the shot is returned via a deflector plate into the hopper for a repeat of the cycle.
4. Philip Mansfield is the controlling shareholder and managing director of SPE and he designed the SP20 in 1983. He assigned the copyright in drawing 0001 to SPE in 1996, together with all accrued rights of action in respect of any infringements. SPE’s business includes the selling and hiring of SP20s, and the machine has been a success. SPE is based in Dunholme, near Lincoln.
5. SPE’s original directors and shareholders were Mr Mansfield, Mr May and Mr Glew (the second defendant). Mr Glew had access to drawing 0001. Mr May was later bought out, and Mr Mansfield and Mr Glew remained the sole working directors, each with a 50% shareholding. By 1991, Janice Glew (Mr Glew’s wife) had also acquired a shareholding.
6. Mr Mansfield and the Glews split up in 1991, and they executed a deed governing their parting on 3 June 1991. It recited that Mr and Mrs Glew had agreed to sell their SPE shares to Mr Mansfield for £218,455.66. Mr Mansfield made an immediate payment of £100,000 for all Mrs Glew’s shares and for 1,685 of Mr Glew’s shares. He was to pay the balance of £118,455.66 by 36 monthly instalments and Mr Glew was to transfer his remaining 2,250 shares when it had been paid in full. Until then, he was to retain them as security for the balance. Mr and Mrs Glew entered into a three-year restrictive covenant against competing within a 250-mile radius of SPE’s Dunholme premises with “the business of abrasive industrial cleaning or the supply of parts used in conjunction with abrasive industrial cleaning equipment as now carried on by SPE.” Mr Mansfield later decided that Mr Glew was breaching this covenant, and so he stopped the instalments. I found that “[t]here is obviously a good deal of bad feeling between Mr Mansfield and Mr Glew, ...”.
7. The first defendant, PPC, is a competitor of SPE. SPE’s case was that Mr Glew was closely involved with PPC’s operations, although Mr Glew denied that. There was and is no dispute that his daughter, Tracey, plays a material part in running PPC. Neither Mr nor Miss Glew gave evidence at the liability trial. PPC was sued on the basis that it had infringed the copyright in drawing 0001 by copying it and making SP20 machines substantially to the design of the copied drawing. Mr Glew was sued as being a party to a joint design to infringe SPE’s copyright.
8. I said on page 11 of my judgment that “there is no dispute that PPC did copy drawing 0001 and did manufacture certain machines substantially to the design of its drawings so created. PPC has hired out such machines.” At other points in the judgment, I similarly referred to the fact that PPC had made machines (i.e. in the plural) from the copied drawings and it was undoubtedly my understanding at the trial that PPC was not disputing that it had made more than one such machine. PPC’s case on this inquiry is, however, that it only ever made one machine from the copied drawing, one it says it destroyed in 1996, the year in which the writ was issued and three years before the trial. By contrast, SPE’s case is that, over the years, PPC made six such machines. It is, however, fair to note that the precise number of machines PPC made was not in issue at the liability trial. The issue was whether drawing 0001 was sufficiently original to entitle SPE to copyright protection in respect of it: and the defendants’ case was that it was not.
9. The dispute as to originality arose because the defendants claimed that, in making drawing 0001, Mr Mansfield had copied drawings of blast machines manufactured by the Tighe group of companies. He had worked as the manager of Tighe’s Autoblast Division for several years until about 1982, indeed it was during this period that he came to know Mr Glew. Mr Mansfield kept several Tighe drawings of blast machines after leaving Tighe. In his oral evidence at the trial, he denied that he had traced or copied anything from them when designing the SP20, but I found that to be untruthful and that, in part, he had copied drawing 0001 from the drawings of others. But I also found that he made his own contribution to the design of various parts of the SP20 and said, at page 22 of my judgment, that “his design of all these parts of the SP20 did involve a sufficient degree of skill and effort by him to confer on drawing 0001 as a whole a quality which made it different from any predecessor drawing of a mobile blast machine and which gave it that element of originality which was requisite to entitle it to copyright protection.”
10. I found against PPC on liability for infringement, saying I find established the allegations of infringement both by copying the drawing and by making machines to the design of SPE’s drawing” (again, I referred to machines). I also found liability to be established against Mr Glew and said this at the end of my judgment:
... Mr Glew’s role in PPC is somewhat imprecise. He is not an appointed director, although the evidence satisfied me that from the start he has taken a close interest and positive role in its activities as well as providing an initial £30,000 capital. The evidence provides at least some basis for a conclusion that he may have been a de facto director of PPC, although I would not be prepared to make such a finding on the evidence I heard. In this context, I should perhaps add that I accept that Tracey Glew played a real management role in PPC’s affairs: it does not appear that she was merely her father’s nominee.
... I find that Mr Glew provided drawing 0001 to PPC for the purpose of enabling PPC to copy it. I find that he also played a positive role in connection with that copying exercise, to the extent that he was present when the copying was done and made suggestions about it. He was, therefore, I find, a party to a joint design with others to infringe copyright by copying drawing 0001, and I find that he played a part in actually carrying out that joint design. In my judgment, that is sufficient to fix him with liability as a primary infringer. Further, Mr Jackson’s evidence as to the general nature of Mr Glew’s activities at PPC and Mr Coulson’s evidence as to Mr Glew’s instructions to him for the manufacture of machines satisfy me, on the balance of probabilities, that Mr Glew also directed the manufacture of machines by PPC which involved infringements of the copyright in drawing 0001. Whatever his precise status within PPC - which I consider was probably a much more central one than he wished to be apparent to Mr Mansfield - I find, therefore, that he played a direct part in PPC’s infringing activities; and that SPE has also established liability for infringement against him.
11. Once more, I there again referred to the “manufacture of [infringing] machines by PPC.”
12. On 28 July 1999, I heard over half a day’s argument as to the form of the order following the giving of judgment. Each side accused the other side of having acted untruthfully in the litigation. The defendants’ counsel emphasised that I had found that Mr Mansfield had untruthfully exaggerated the degree of the skill and effort he had applied in the creation of drawing 0001. Mr Onslow, for SPE, submitted that PPC had originally pleaded an untruthful defence, and I shall come shortly to the basis for that submission.
13. I ruled on the consequential argument on 30 July 1999. The copyright was due to expire the following day. I declined to order a delivery up and forfeiture to SPE of any infringing machines or drawings held by PPC. I exercised my discretion against awarding SPE an account of profits against PPC. In this, I was primarily influenced by my finding that Mr Mansfield had attempted untruthfully to mislead the court into believing that SPE had a better case than it actually had, and I had taken a poor view of that and of his evidence as a whole. I confined SPE to a claim for damages for infringement, but I declined also to order additional damages under section 97(2) of the Copyright, Designs and Patents Act 1988. I ordered the defendants to pay half of SPE’s costs. My order as drawn (wrongly dated 28 July instead of 30 July 1999) ordered as against both PPC and Mr Glew that “[t]here is to be an inquiry as to damages for infringement of copyright.”
14. The action moved at a leisurely pace towards the inquiry, SPE serving its points of claim on 23 May 2001. The inquiry occupied just over six days of court time as compared with its two-day estimate, the latter a triumph of optimism over reality.
15. SPE’s case is that PPC made six infringing machines between 1991 and 1999. It claims damages under three heads. First, that each machine represented a lost sale to PPC, and it claims damages in respect of the profit it would have made if, instead of infringing SPE’s copyright, PPC had bought six SP20s from SPE. The amount depends on when each sale would have taken place, which in turn depends on when PPC made each of its machines, about which SPE has no precise information. Its claim under this head is between £67,384.92 and £94,624.92, depending on the dates. SPE asked at the trial for permission to amend its claim to add a claim for lost profit on the spare parts it says it would also have sold to PPC, but I refused permission.
16. The second head is for SPE’s lost profit on sales of shot-blasting services to third parties. Its point is that PPC used the six machines to provide services to customers who would otherwise have used SPE. The amount claimed is essentially the fruit of guesswork by SPE, and is said to fall between £78,000 and £157,000.
17. The third head is for a reasonable royalty for the use of the six machines. It is suggested that this should be assessed as a percentage of the turnover of each machine, alternatively a percentage of gross profit, alternatively by reference to a fixed sum per square metre cleaned by the machines.
18. The second and third heads of claim are alternatives to the first, and Mr Onslow accepts that there is also a potential for an element of double recovery under heads two and three, for which an appropriate credit may need to be given.
19. PPC disputes all three bases on which SPE claims damages, but there is also the prior, and fundamental, dispute as to whether SPE only ever made and used one infringing machine, or whether it made and used six. I must deal with that issue first and make my findings on it. Having done so, I can turn to the question of damages. PPC has given no disclosure relating to the use by it of six machines, or as to the profit earned by such use - for the logically consistent reason that it denies that it has had any such use or profit. I understand it has not even given any disclosure relating to the use made of, and profit derived from, the one machine to which it admits.
20. PPC admits that in about 1991 it manufactured one infringing machine (“machine X), which it used until 1996 when it was scrapped as beyond its useful life. (By “infringing machine”, I mean a machine built in infringement of SPE’s drawing, not one that PPC has ever admitted was an infringing machine). It also admits having had four other 20” machines over the years, which SPE does not suggest are infringing machines: (i) an SP20 acquired from Precision Polyurethane Moulding Limited (“PPM”) in 1991; (ii) a body of an SP20 acquired in 1991 from Croblast; (iii) a machine PPC built in 1996 to a different design (“machine B”); and (iv) a refurbished SP20 which it acquired from Respol in January 1999. The machines referred to in (i) and (ii) were originally acquired by Lees Surface Preparation (Lincoln) Limited (“Lees”), which I referred to in my earlier judgment, but it ceased trading and PPC acquired its assets, including these two machines.
21. PPC’s present stance that it only made one infringing machine is surprising, because at the liability trial it appeared both to accept and assert that it had made more. (Of course, its case was that none was an infringing machine, but it lost that argument).
22. It is worth looking at PPC’s pleaded stance at the liability trial. Paragraph 8 of the statement of claim (served in June 1996, the year when PPC now says it scrapped machine A) pleaded that PPC had made numerous machines substantially copied from SPE’s drawing 0001 and that photographs of them appeared in PPC’s brochures. Paragraph 10 pleaded that PPC had possessed and hired out its infringing machines. Paragraph 8 of PPC’s defence (served in September 1996) admitted that its brochure showed pictures of its blast machines, but it said that all the machines there shown were SP20 machines which had been made and sold by SPE itself and which now belonged to PPC. It was simply denying having built any of the machines in suit itself.
23. Instructions to that effect can only have come from PPC. SPE was sceptical about that defence and sought particulars of it. The essence of PPC’s response was to repeat paragraph 8. It was that (a) SPE’s case was that the machines in PPC’s brochure were infringing copies of the SP20, whereas (b) they were in fact SP20s which PPC had lawfully acquired and (c) the best particulars PPC could give as to how it had acquired them was that it had purchased them from Lees in about 1991.
24. As I have said, Mr Onslow submitted after judgment on the liability trial that that case was an untruthful one (I make clear that there was and is no suggestion of any impropriety on the part of PPC’s solicitors or counsel, who were no doubt acting in good faith on the basis of PPC’s instructions). The submission was founded on the fundamental change in PPC’s pleaded case as contained in an amended defence it served shortly before the liability trial. There, for the first time, PPC admitted that it “had made its own mobile blast machines from drawings [it had produced].” It then pleaded in paragraph 8(a) that (as I interpret it) two of the machines shown in its brochure were SP20 machines originally sold by SPE; and in paragraph 8(b) that (as I interpret it) four machines shown in the brochure were made by PPC from its own drawings. It denied that its drawings were copies of anything original in SPE’s drawing 0001 or that any of its machines were made in infringement of SPE’s copyright.
25. So finally, and belatedly, PPC acknowledged the real issue in the case. It accepted it had built machines (plural) and that they were shown in its brochure, but its case was that their manufacture had not involved any infringement of SPE’s copyright in drawing 0001. There was no suggestion that there was any difference between the design of the machines so built.
26. Of course the liability trial was not concerned with the precise number of’ machines that PPC had made to the design and had used. That would only become relevant if SPE succeeded on liability. Nevertheless, evidence was led by SPE that PPC had made and used several allegedly infringing machines. This evidence was unchallenged by PPC in cross-examination. David Bennett is a welder fabricator, who was by 1999 employed by SPE, but who had formerly worked, since October 1997, for PPC. He referred to the fact that PPC had manufactured infringing “machines,” which were very similar to SPE’s machines, and that he had carried out minor modifications to them. He referred to there being “four 20 inch machines available for use and one old main body.” He also said that he never produced any machines during the time he was at PPC. It is not unambiguously clear that he was asserting that all four machines he referred had been made by PPC, and it is possible that the four he refers to include the SP20 bought from PPM.
27. Anthony Coulson was also an SPE employee by 1999, but had worked part-time for PPC in 1995 and full-time in 1996. He said he had been employed on the manufacture of 20” machines. He was referring to machines of the type I held to be infringing ones, and his evidence was that he built them by copying machines PPC already had and by using drawings he was given. He said that PPC had three 20” machines when he started his employment and that he manufactured two or three machines whilst with them. He said that one machine was stripped down and the bodywork used on another machine, and that there were five 20” machines available for use when he left.
28. As I have said, the precise number of infringing machines was not in issue at that stage; and had PPC won the liability trial, it would have been irrelevant. I find it difficult, however, to believe that PPC had formed the view that the liability issue was one on which it simply could not lose, and it did not even seek permission to appeal against my decision. Were it to lose, as it did, the number of infringing machines would obviously be relevant to quantum, yet no challenge was made to SPE’s evidence that PPC had made not just one machine, but more. Nor did PPC even formally assert that it did not accept that evidence. The only explanation for that omission now is that it was not relevant to the issues at the liability trial.
29. As to paragraph 8 of the amended defence, PPC’s case now is that it was another mistake. Miss Glew said in re-examination at the inquiry (she gave no evidence at the liability trial) that the reference to two machines in paragraph 8(a) of the amended defence was a reference to two photographs of one machine, namely the SP20 acquired from PPM in 1991. She said that the apparent reference to four machines in paragraph 8(b) was in fact a reference to four photographs of machine A, which had been scrapped in 1996. She said in further cross-examination on this point that she had taken two of the four photographs. These photographs do not, in fact, obviously identify the same machine, since one shows a machine with the mark “PPC’ on its side, whereas the other does not. The answer to that, said Miss Glew, was that they were taken at different times. I record that Miss Glew’s evidence about the amended pleading had been anticipated by a letter of 15 June 2001 from PPC’s solicitors, Bevan Ashford, to SPE’s solicitors, Langleys. This pointed out that the alleged error in the amended defence had been recently discovered at a conference with counsel and the clients. If it really was an error, it was a surprising one. The amended defence was PPC’s second attempt at stating its case, it was directed at abandoning the hitherto - as it seems to me - untruthful defence and at pleading one which actually met SPE’s case. If, as PPC now asserts, it only ever built one machine to the design of the drawings it pleaded, that is something about which PPC can have been in no doubt; and it would have been the easiest thing so to have instructed Bevan Ashford when the amended defence was being drafted, and for Bevan Ashford and counsel to have understood.
30. There is, however, another difficulty about PPC’s apparent change of case. One of the exercises carried out in advance of the liability trial was an inspection by Keith Millard, an engineer retained by SPE, of PPC’s machines. The purpose was, according to Mr Millard’s report of 3 April 1998, “to ascertain ... the origin of the machines’ design, construction and uniqueness.” He reported that Mr Smith of PPC arranged with him that two machines would be made available for inspection and that drawings would be produced for other machines not also available for inspection. He was welcomed at the inspection by both Miss Glew and Mr Smith. He was taken to a segregated area where he was shown one complete machine with the weld mark “C on it and also the initials “PPC”. He was also shown three segments of a stripped machine.
31. In his report, Mr Millard described the complete machine (which was grey), and the essence of his conclusion was that it was a copy of an SP20 with minor dimensional and other variations. His opinion was that it was “essentially the same design and of extremely similar construction to the SPE Model SP20. I would go so far as to say it has been copied and with the passing of time has been dimensionally modified on evolutionary grounds to minimise wear.” He gave evidence at the liability trial in accordance with his report, save that he withdrew a particular opinion that he had expressed on page two of his report, relating to the segments of the stripped machine. At the time he inspected, PPC’s pleaded case was that all the machines shown in its brochures were SP20s. But his evidence was to the effect, and I accept, that it was not an SP20 that he saw at PPC, but a copy of one with certain variations. It was not suggested to him in cross-examination at the liability trial that he had been busily inspecting an SP20, although that was what, in re-examination at the inquiry, Miss Glew said he had been doing. She said she had showed him the machine acquired from PPM. She said she understood she had to show him the two machines in the PPC brochure, although according to her evidence, one of those machines, machine A, had been scrapped two years before. But she said that the separate segments she also showed him were from that scrapped machine.
32. Despite Miss Glew’s evidence at the inquiry, to which I come later, I find that the machine that Mr Millard inspected in 1998 was an infringing copy of an SP20 machine. This means, and I find, that contrary to PPC’s case on this inquiry, PPC did not make only one infringing machine, machine A. In 1998, it also had at least one more infringing machine. The evidence of Messrs Bennett and Coulson at the liability trial also suggested that PPC had made more than just two infringing machines. As I shall explain, the defendants have, however, both argued that I can and should pay no regard to that evidence on this inquiry, a matter to which I shall return.
33. At the inquiry, SPE called other witnesses who gave evidence that PPC had, over the years, made and used more infringing machines than the single machine A. Mark Jackson is employed by SPE as a machine operator and is familiar with the SP20. He had previously worked for PPC as a machine operator. He was there for’ four years, leaving in June 1998. He said in his witness statement that PPC had four 20” blast machines, which he described as one original and three copies. He did not know where the original came from but said that PPC manufactured the copies. He said he helped to build them, his part being to cut out the shapes for the required parts, which were then welded together. He said that PPC had a copy of SPE’s drawing and that the copies were copies of the SP20. He said they were copied from the original and from the drawing.
34. Mr Jackson said that, once manufactured, he and the other PPC machine operators used them at various sites round the country for different customers. They used to do up to 100 hours a week, over at least six days a week. He said he and the other operators would repair and service the machines between jobs. He said most of the jobs were surface blasting of concrete and that they did anything between 500M2 and 1500M2. He described how a company called Respol owned an SP20 and needed a new blast cabinet for it. Respol delivered its machine to PPC and Mr Jackson says that he, Paul Igo and Justin Glew (Tracey Glew’s brother) fitted to it a blast cabinet PPC had made for one of its own machines. He said that PPC kept the old Respol blast cabinet.
35. Mr Jackson referred to an occasion when he was working for SPE at a site in Liverpool. He also saw PPC working there, using a 20” machine. He described how he distracted the PPC employees, so as to enable a colleague of his, Charles Hackney, to take photographs of the PPC machine. He said the machine looks as if it has a new blast cabinet, but the rest looks original. He cannot say whether he manufactured it, but it looks similar to an SP20 machine. He said that he spoke to Mr Mansfield before taking the photographs, who did not ask him to take them but did say that photographs might help SPE’s case on this inquiry. The essence of Mr Jackson’s evidence is that he decided of his own initiative to obtain the photographs. He said he even bought a disposable camera with which he later took some more photographs of the machine.
36. Mr Jackson’s evidence cannot be said to have been wholly unshaken in cross-examination. His original explanations became confused in it, and with it his evidence as to precisely how many 20” machines PPC had at any particular time. He explained that he started working for PPC in 1993, when they had just one machine. He said he was then sacked, at which point they had two machines, and said that he knew that the new one was built by PPC. He was re-employed by PPC in about 1995, at which time they had three machines, including the original. He said he recalled helping to make the machines and said words to the effect that “we built them in the back shed.” But it became very unclear as to what, if any, manufacturing work he had in fact done in relation to any of the machines. He explained that although in one week they worked 121 hours, the average was nearer 70 hours, including travelling time. He insisted that the suggestion that he should take the photographs of the PPC machine was one that he put to Mr Mansfield, rather than the other way round. At least one aspect of Mark Jackson’s evidence, relating to a strictly unconnected matter, demonstrated that he is not a wholly truthful man and is equal to lying if he believes it in his interest to do so.
37. Robin Jackson, Mark’s brother, also gave evidence. He too is an SPE employee, but had previously worked for about 3.5 years as a labourer for PPC. He said in his witness statement that he was familiar with PPC’s 20” machines as his job involved pulling the ducting for the operator while the machine was moving - known as “bagging.” He said he also operated the machines himself. He said that Justin Glew worked in the workshop making the blast cabinets for the machines, and that he would help him by cutting the steel out. The cabinets would then be fitted to the PPC machines. He gave evidence of an occasion in January 2001 when he was working for PPC at West Thurrock. He says he decided to take some photographs of the 20” machine he was operating because - somewhat improbably, it appears to me - he wanted “to show my brother, David Jackson, what I did.” Apparently - in my view, even more improbably - his brother “wanted to show [them to] his mates.” He produced the photographs, being of a 20” machine. He said the blast cabinet on it was two months old when the photograph was taken, the rest of the machine was original. This was just about the same time as his other brother, Mark, was also busy photographing PPC’s 20” machines, but Robin Jackson said he had only discovered that the day before he gave evidence. He said that when he left PPC (in January 2001), they had six 20” machines. Five would ordinarily be running and one was a spare. He said PPC - in particular, Justin Glew - manufactured them. He said he saw a blueprint for an SP20 machine when he, Robin Jackson, helped Justin Glew manufacture parts. In cross-examination, Mr Jackson said that four of the six machines were already there when he started working for PPC in 1998. He said he knew that PPC had built them, because Justin Glew had told him that he had made them all. He denied that he took the photographs as part of a deal to help SPE’s case.
38. The Jackson brothers would, by any standards, rank low on a rating as to witness quality. Another witness called by SPE was Alan Franklin. I regarded him as a rather better witness. He too is employed by SPE, as a surface preparation operator. His employment started in September 2001. Before then, from 11 November 1999 to 6 September 2001, he was employed by PPC as a shot blaster/driver. He mostly operated 20” machines, hand grinders and planers. His line manager was Keith Fogg (an ex-SPE employee, to whose evidence I will come) and it was he and Mr Glew -and occasionally Tracey Glew - who told him what to do. He worked up to seven days a week and up to 14 hours a day. He would be operating blast machines for between six and 12 hours. He said he was sometimes contracted to work up to 42 hours at a time just to get the job done. He was expected to blast between 250M2 and 2500M2 per job.
39. He could not remember exactly, but believed that PPC had six 20” machines when he started in 1999, and he was sure they had six when he left in 2001. He is familiar with the SP20 and said the machines he was using at PPC were identical in almost every respect, with some minor differences in the shaping of the top plate and blast cabinet. He said he saw Justin Glew making a 20” machine using a blueprint with “SPE’ printed on it. Mr Franklin said that he too assisted with the refurbishing of blast machines. He remembered refurbishing his own on one occasion and three or four others on other occasions. He said John Glew often played a part on these occasions, by giving advice as to how to do certain things. Mr Franklin said he was responsible for servicing his own machine. He said his machine was taken out of service on three occasions for a complete overhaul, which usually took about two weeks.
40. In cross-examination, Mr Franklin explained that he regarded his employment at PPC as “a rollercoaster ride”, he had various disagreements and was sacked. He said that during his time at PPC it had the ability to make parts by way of replacement of worn out parts. He did not know where the PPC machines had originated. He said they had had so many bits added over the years you could not identify the original machine. He said that whereas the SPE machines looked as if they had been made professionally, the PPC machines looked as if they had been made in a garden shed. He said that Justin Glew made not just one machine, as he had said in his witness statement, but that he built several machines from scratch. He was positive PPC had six machines.
41. Mr Millard also gave evidence at the liability trial. He was instructed by SPE to re-visit PPC’s premises in 2001 to inspect a 20” machine. His task was to see if it was - as PPC claims - the same one he had inspected in 1998, a machine which PPC claims (wrongly, as I have found) to be an SP20. Miss Glew made a video recording of the inspection, which was played during the evidence. Mr Millard inspected the machine and said in his statement of 12 September 2001 that it was not the same machine he had examined in 1998. He identified three obvious differences: the colour (it was lime green, whereas the 1998 machine was grey); the identification mark ‘W’ was now missing from the reclaim chamber top wall, and the absence of obvious signs of grinding or distress to that part of the machine; and a variation in the cone truncation around the motor. He also said the machine shown in Mark Jackson’s photographs was similar to the one he inspected, but its marking showed it to be a different machine.
42. In his oral evidence, Mr Millard explained that he knew SPE well and had developed the first body of its SP20. He said his 1998 inspection lasted about 75 minutes, and that his 2001 one about five or six minutes. He had a drawing with him on the latter occasion, he made certain measurements and he finished the inspection with no doubt as to his conclusion. He raised no objection with Miss Glew to being videoed, but became unhappy about it as the inspection went on. He asked Miss Glew if he could remove some paint to see if the machine had once been the same colour as the 1998 machine (which was grey). He was not refused permission, but her reply was that it had never been silver [sic], which Mr Millard regarded as confirmation that it was not same grey machine he had inspected in 1998 and so he did not remove any paint. He referred to various other differences in the 2001 machine as compared with the 1998 machine. These included a variation in the design of the reclaim hopper, and the oil tank was different. The latter could not readily be explained as being a replacement item to the 1998 machine as oil tanks do not ordinarily wear or need replacing. The 1998 machine had had a large motor and a modification to the hopper to accommodate it. The 2001 machine had no such modification to the hopper and also had a smaller motor: the latter could have fitted under the original hopper.
43. There were aspects of Mr Millard’s evidence (relating to matters other than the identification of the machine) which were somewhat unsatisfactory, but I nevertheless accept his evidence that the machine he inspected in 2001 was different from the one he inspected in 1998. It find it was also an infringing machine, and so, contrary to PPC’s case - and leaving aside for the moment the other evidence I heard - I find that, by 2001, PPC had made at least three infringing machines: machine A, and the two which Mr Millard inspected.
44. Mr Mansfield also gave evidence for SPE. His evidence did not go to the number of infringing machines PPC has made, but he did venture to say something about whether SPE would have sold SP20s to PPC if approached to do so. Its essence, in his witness statement, was that it would, if asked, have been willing to do so. He was cross-examined about his attitude towards Mr Glew and PPC, and there is no doubt that when in 1992 he formed the view that Mr Glew was breaching his restrictive covenant and was involved with PPC, he went to considerable trouble to find out what was going on. It appears that in November 1991 SPE did sell some spare parts to PPC, but the evidence which I heard both at the liability trial and at this one satisfied me that, once he had decided that Mr Glew was breaching the restrictive covenant, Mr Mansfield became and remains vindictively obsessed by pursuing what appears to be some sort of vendetta against Mr Glew and PPC. I heard evidence from Keith Fogg about this. He was an employee of SPE for 14 years from 1983 to 1997, and now works for PPC. He said in his witness statement that “Ever since PPC was up and running Mr Mansfield would do anything to get back at PPC and Mr John Glew. ... Every year he would tell his employees that he was going to close down PPC. ... Mr Mansfield is obsessed on destroying Mr Glew and PPC for whatever reason I don’t know. He is also a very vindictive man, my own experience, he came down to my own home after I had left SPE and said ‘I will make sure that you never work again.”’ Mr Fogg’s role at SPE included pricing work and giving quotations. He also said in his witness statement, and confirmed in cross-examination, that Mr Mansfield’s instructions to him were to undercut PPC at any cost. Mr Mansfield denied this, or that he had ever had any wish to close PPC down, but I accept Mr Fogg’s evidence. Mr Counsell’s cross-examination of Mr Mansfield demonstrated the remarkable lengths to which he was prepared to go in his attempts to frustrate Mr Glew’s competing activities. He admitted in cross-examination that he would not have sold SP20s to Mr and Mrs Glew but said that he would have “relished” the opportunity of selling them to Tracey Glew. But any purchase by Tracey Glew would not have been a personal purchase, it would have been by PPC, whereas - as he admitted - Mr Mansfield believes Mr Glew is behind PPC. Mr Mansfield said he would still have been prepared to sell machines to PPC. He said he did not know that Mr Glew was behind PPC, and so he would have given PPC the benefit of the doubt -although he then also said that he knew that Mr Glew was helping PPC.
45. I have no hesitation in rejecting Mr Mansfield’s evidence that he would ever have sold, or been willing to sell, SP20s to PPC. It is a convenient stance for him to adopt in this inquiry since it may, so he hopes, enable him to obtain a crippling judgment against PPC. But what I learnt of Mr Mansfield at the liability trial and at this inquiry causes me to conclude that he is a ruthless man, for whom truth and honesty are not virtues he holds in the highest regard. I regard this part of his evidence as untruthful and I do not accept it.
46. Tracey Glew gave evidence at the inquiry trial and was cross-examined. She annexed to her witness statement a copy of the statement she had made on 18 March 1999 for the liability trial, although she of course did not give evidence at it. Her evidence in chief in her first witness statement for the inquiry (made in February 2001) was that PPC had only ever made two 20” machines, machines A and B (the latter being to a fundamentally different design from SP20s). She denied that PPC had ever made spare parts for machine A, since they were “widely available from commercial outlets and, furthermore, were not detailed in [SPE’s drawing 0001]”. She claimed that over the years PPC had “Purchased in the open market (although not from [SPE]) as they refused to supply us from mid 1991 onwards) a number of [machines manufactured by SPE including SP20s].”
47. In her witness statement for the liability trial (made in March 1999), Miss Glew stated in paragraph 11 that “in the last two years [that is, since 1997], we have started to manufacture and sell specialist surface preparation machinery on a small scale.” She did not specify what type of machinery that was. Although she claimed that she ran PPC on a daily basis with Mr Ken Smith, she said her father, Mr Glew (the second defendant), “who has many years practical experience and knowledge of the business has certainly provided assistance to [PPC] over the years, particularly since 1994.” The significance of that date is that it marks the expiry of the three-year covenant to which Mr Glew was previously subject. She explained that she does not operate or repair surface preparation equipment, but is familiar with the machines and their requirements. She also said that “We have expanded during that time and now have a permanent staff of some 25 people who are involved in the operation, construction and repair of all types of Surface Preparation machinery.” I comment, however, that not one of them was called as a witness to describe the number or types of 20” machines which PPC uses and whether or not any of them were or were not made by PPC - despite the fact that this was to be a central issue in the inquiry. Miss Glew also explained the existence of the bad relations between PPC and SPE since about 1991, and how SPE sought to prevent PPC from obtaining spare parts for the two ex-SPE machines she says PPC had.
48. After referring to the fact that about 30 other companies also use SP20s, Miss Glew also said this in her 1999 statement:
It is common practice throughout the industry for spare parts for mobile blast machines to be obtained from third parties other than the original manufacturers, particularly since many such spare parts are common to and usable in machines from different manufacturers. Additionally, it is common practice amongst Companies like ours which are engaged more or less full time in contract hire of machines to repair damaged components themselves or to manufacture the necessary parts themselves. We have utilised both alternatives for the SPE 20 machines which we own. (My emphasis).
49. Miss Glew’s 1999 statement is particularly interesting for what it does not say. In paragraph 15, she referred again to PPC’s venture since 1997 into the field of the manufacture of shot blasting machinery. She also there - and consistently with the point she now makes about the errors in paragraph 8 of the amended defence -referred to the fact that “The two machines referred to and shown in our hire brochures were utilised to promote out contracting services.” She does not, however, say what those two machines are, she does not explain that one was the home-made machine A, and she also makes no mention of machine B, built in 1996 to a different design. She admits that SPE’s drawing 0001 “was utilised in the preparation of a number of drawings by [PPC]” and continued by saying in paragraph 16:
... we were at pains to ensure that any copyright or other rights belonging to Mr Mansfield were not infringed. At no stage did [PPC] set out to manufacture a mobile blast machine which breached copyright or other legal protection belonging to any third party; and we always considered (and still do) that in producing our own mobile blast machines we have not infringed copyright. Certainly there is no question of our deliberately setting out to breach any such rights. (My emphasis).
50. Those observations are typically imprecise, but can at least be said to amount to an admission of the manufacture of plural machines. Nowhere in her 1999 statement does Miss Glew say that the only machine PPC built according to the design of the SPE drawing was machine A. She does not mention that machine.
51. Miss Glew made a further witness statement in October 2001 for the purposes of the liability inquiry. It is in part directed to emphasising the bad blood which has existed since 1991 between Mr Mansfield (and SPE) and the Glew family (and PPC). This has, she says, extended to placing difficulties in the way of PPC acquiring spare parts for their SP20 machines, including discouraging third parties from dealing with PPC. The evidence is directed towards meeting SPE’s claim in this inquiry that it would have been willing to sell SP20s to PPC, and in his evidence Mr Mansfield had asserted that it would. I have already made my finding on this issue. Miss Glew also made another witness statement, in November 2001. Its purpose was to identify the three SP20s which PPC admits it has acquired. 1 have earlier detailed the dates when it did so.
52. In cross-examination, Miss Glew displayed some ignorance of the details of these three acquisitions. She had said in chief that the PPM machine was purchased for £6,000 and the Croblast machine £9,973, but became unsure whether they had in fact been bought for that price, although they are shown at that cost figure on a draft PPC fixed asset schedule. She said that Mr Enderby had been the purchaser of these machines for Lees (whose assets PPC acquired) and that when he left the accounts were in a mess. She explained that the Croblast machine was not a complete machine, it was just a body needing electrics. She said that the PPM machine was in a similar condition when bought and also needed restoring, which she said she believed was done by Lees.
53. She was asked when it was that PPC began to manufacture spare parts, to which she replied that it had never done that. In view of what she had said on that subject in her witness statement (quoted in paragraph 48 above), that was a surprising reply, but she then went on to say that PPC had never manufactured spare parts for 20” machines, but had for machines of other dimensions. Given that she admits that PPC had the ability to manufacture machines A and B - both 20” machines - she was driven to accept that it had the ability to manufacture spare parts, but asked “why should we?” Her evidence was to the effect that PPC had acquired from others the parts for those two machines, but she could not say from whom. She could not say where the invoices were for the purchase of the necessary spare parts. She was asked in particular where the invoices were for the parts used for the manufacture of machine B in 1996. She did not know and said that Mr Onslow would have to ask PPC’s financial director. But Mr Onslow was not given that opportunity, since PPC did not call him as a witness. She had not herself asked for the invoices. She was unable to say what the cost to PPC of its manufacture of machines A and B would have been, but said that PPC’s technical director would know. Her evidence that the parts for these machines were purchased from others did not square with a statement from PPC’s solicitors, Bevan Ashford, in a letter of 22 December 2000, that: “... our clients manufactured two 20” machines; but ... it is not possible to identify the cost of manufacture since such was undertaken as part of general fabrication by our clients’ employees.”
54. Miss Glew was referred to a further statement by Bevan Ashford in that letter that “[machine B] had been substantially modified so that it now bears little substantive resemblance to a SPE20 machine.” It was put to her that machine B was originally similar to the SP20, but had been changed. She could not comment on that, although she did say that she thought that machine B was a completely different machine. She said that at the moment PPC had four 20” machines.
55. Miss Glew was adamant that the machine Mr Millard inspected in 1998 was the PPM machine - although no-one had suggested that to him at the liability trial. She was asked whether she had thought to invite Mr Millard to inspect machine B -which she says is quite different - and said she was not asked to. She insisted that the machine he inspected in 2001 was the same as the one he inspected in 1998. She said she had required the removal of the welding mark “4” from its place on that machine (so explaining why Mr Millard noted its absence) and had the mark put on some different place on it - one she could not identify. This was, she said, in some way motivated by SPE’s policy of photographing PPC machines - although she could not explain what practical purpose the removal of the identification marks was supposed to achieve. To the question whether the old plate with the mark ‘W’ was still lying about somewhere, Miss Glew could not say. She said that her understanding was that, by 2001, the machine had a different oil tank and that her understanding was that this was because the size of the motor had been changed. As PPC claims only to have four 20” machines, it might be thought that Miss Glew would have explained to Mr Millard the apparent differences between this particular machine as it was in 1998 and as it was in 2001 - otherwise he might well come to the conclusion, as he did, that in 2001 he was in fact looking at a different machine. But no, she said she made a positive decision not to tell Mr Millard of the changes since 1998. She could not say why the hopper had been changed since 1998, since the adoption of a smaller motor would not have explained it.
56. Miss Glew disagreed with Mark Jackson’s evidence that infringing machines were made in the back shed. She said PPC does manufacture its own range of equipment by buying in parts and assembling them - but not 20” machines. She said Mark Jackson was a lying and cheating individual, who would have no knowledge of what machines were being made. She said he was not qualified or employed to cut out parts or to use the PPC equipment to do so, there were only limited times when he would be in the workshops doing maintenance on his own machines and PPC was not insured for him to cut out shapes. She disagreed with Robin Jackson’s evidence about PPC having six 20” machines. She said he does not know what the true position was, and that the figure had been given to him by someone else. She disagreed that he had played any part in making blast cabinets for the 20” machines. She said the workshop manager, Max Coghlan, would not have allowed it. She said that PPC has about 25 employees of whom there are 15 on the shop floor, of whom about six are qualified to operate 20” machines. None gave evidence, nor did Mr Coghlan.
57. Miss Glew also disagreed with Mr Franklin’s evidence as to PPC having six 20” machines. She said he would have known exactly how many machines it had, but that he had been sacked and she considered he had a grudge against PPC. She similarly disputed what Mr Coulson had said at the liability trial as to the number of 20” machines PPC had made and used. She did not know whether he too bore a grudge against PPC. She similarly disagreed with what Mr Bennett had said on the subject at the liability trial. She said that Mr Mansfield had asked all these people to make their statements.
58. As I have said, Mr Coulson and Mr Bennett both gave evidence at the liability trial, including unchallenged evidence of the number of infringing machines PPC had made. I have summarised that evidence. On 8 May 2001, Master Bowman gave directions for the trial of the inquiry, including a direction that “Each party shall serve on every other party any further written statements on which it intends to rely by 4.00 pm on 1st August 200l.”
59. Shortly before the trial of the inquiry, Langleys informed Bevan Ashford that a decision had not yet been made as to whether to call Messrs Coulson and Bennett. No fresh witness statements from them had been served. A few days later, Langleys wrote that they did intend to call them. At the trial, both Mr Counsell and Mr Glew objected to that. They submitted there had been no fair prior warning of such an intention and they said they would be prejudiced, in particular because they had had no opportunity of obtaining the personnel files of the two witnesses, which might be of relevance to a fair cross-examination of them. For reasons I gave in a ruling at the time, I refused permission to SPE to call either of Mr Bennett or Mr Coulson. At the time I so ruled, I considered that the effect of my ruling would be that there would be no evidence before me from either Mr Bennett or Mr Coulson as to the number of infringing machines.
60. Mr Onslow then pointed out that it was not as simple as that. Both gentlemen had already given evidence at the liability trial, when they had confirmed the truth of their witness statements served for the purposes of that trial. Part of that evidence -which was unchallenged - went to the number of infringing machines, an issue relevant to the present inquiry. He said that he would be submitting in his closing speech that I could not simply ignore that evidence, although he accepted that the absence of any cross-examination on those issues was a matter I could and should take into account when assessing what weight to attach to it. In the light of Mr Onslow’s declared intentions as to the evidential contributions of Messrs Coulson and Bennett - a matter on which I did not propose to rule at that stage - I told Mr Counsell and Mr Glew that they could, if they wished, cross-examine these two witnesses on a “de bene esse” basis. By that I meant that, if Mr Onslow’s proposed submission proved to be correct, then the defendants would at least have had the opportunity of cross-examining the two witnesses as best they could. If it did not, then their evidence, including any cross-examination, could and would be left wholly out of account. Neither Mr Counsell nor Mr Glew took up the offer and so Messrs Coulson and Bennett were not cross-examined.
61. I consider that Mr Onslow’s submission is correct. This action has been made the subject of a split trial, one part confined to liability and the other to damages. In principle, it appears to me that if a witness gives oral evidence at the first part of a split trial, that is and must be evidence in the action as a whole, and it must be equally admissible at the second part of the trial. There may of course, in any particular case, be a question as to the weight to attach to that evidence in the latter part. For example, in this case the defendants could have indicated at the liability trial that they wholly disputed the evidence as to the number of allegedly infringing machines about which Messrs Coulson and Bennett claimed to speak but that, since that evidence was irrelevant to the issue of liability they did not propose to take up time in cross-examining on it. They could further have indicated that they reserved their position on that until the damages inquiry (if any). If the defendants, had adopted that course, then I doubt whether the court would attach very much, if any, weight at the inquiry to the untested evidence given by the witnesses at the liability trial, although strictly speaking it appears to me that that evidence would still be admissible at the inquiry. But if, for example, the defendants had cross-examined Messrs Coulson and Bennett on the subject at the liability trial, then it seems to me that their evidence would not just be admissible on the subsequent inquiry, it would also be likely to be highly relevant.
62. Nothing like that happened in this case, and I have explained what did. In the circumstances, I consider that the evidence given by Messrs Coulson and Bennett on the number of machines is admissible on the present inquiry. I do, however, also consider that I ought to assess its weight with some caution. It goes to a matter which is now squarely in dispute, but which was strictly irrelevant at the liability trial. Importantly, it was not tested by cross-examination at that trial, an omission which can be explained - perhaps somewhat benevolently - as referable to its then irrelevance.
63. Mr Counsell submitted that SPE’s evidence in support of its case that PPC made six such machines was wholly unsatisfactory. He was critical of Mr Millard’s evidence, but I have earlier made my findings on it. He was also critical of the evidence of the Jackson brothers and of Mr Franklin, and part of the criticism was to the effect that there were grounds for an inference, or at least a suspicion, there had been some improper collusion between Mr Mansfield and these witnesses with regard to what the latter would say in support of SPE’s case. I reject this suggestion, which amounts to an assertion of a dishonest conspiracy to give perjured evidence, and I regard it as unfounded.
64. Mr Counsell also criticised the vagueness of these witnesses’ evidence as to the number of machines, and here he was on stronger ground. The picture they all painted was a vague one, and at the end of the evidence I was left with some uncertainty as to precisely what it amounted to in terms of the numbers of infringing machines. There is also some risk that the numbers of machines the various witnesses referred to might have included one or other of the genuine SP20s which PPC had.
65. I find, first, that Miss Glew was untruthful in her assertion that the only infringing machine PPC ever made was machine A. I found her evidence overall to be inconsistent, unsatisfactory and unreliable and there were times in it when I consider she was simply saying whatever appeared to be convenient to PPC’s case. It also appears to me improbable that, having gone to the lengths of making machine A - which PPC claims it did in all innocence - PPC would not also have made further machines as well. Why stop at just one? Secondly, I find also, as I have said, that both in 1998 and in 2001 Mr Millard inspected two further - and different - infringing machines. By 2001, therefore, PPC had manufactured a total of at least three such machines. Mr Bennett’s untested evidence supports a conclusion that by about 1997 or 1998 PPC had perhaps three infringing machines (its other machine being a genuine SP20), and of course by this time machine A had been scrapped. Mr Coulson’s similarly untested evidence is that he built two or three 20” machines, and that there were five 20” machines at PPC when he left it at about the end of 1996. On the footing that one was a genuine SP20, that supports a conclusion that four may have been infringing machines. Mr Mark Jackson’s evidence would appear to support the conclusion that at most PPC had made three infringing machines by June 1998. Robin Jackson said that PPC had four 2T machines in 1998 and six in 2001. By 2001, PPC had also acquired the Respol machine. Mr Franklin said that PPC had six 20” machines both in 1999 and 2001.
66. Overall, I regard the evidence as to the number of machines PPC made over the years as unsatisfactory, but I consider that it tends to support a conclusion that it made at least three, and probably four, infringing machines. Since the copyright expired on 31 July 1999, I am anyway only concerned with the number of machines it had made and used by then. With some hesitation, I find that it had made and used four infringing machines by then.
67. On 8 May 2001, Master Bowman permitted the parties to adduce expert evidence “on the issue of loss suffered by [SPE]”. SPE’s chosen expert was Brian Dean MBE, who produced a lengthy report on 12 October 2001. PPC’s expert was David Griffin, who produced his report on 5 December 2001.
68. Mr Counsell submitted at an early stage of the hearing that I should rule Mr Dean’s report to be admissible. He advanced cogent reasons, but I decided that I should permit Mr Dean’s evidence to be given, without prejudice to Mr Counsell’s right to argue again in his closing speech that I should ignore it as inadmissible. Mr Counsell duly renewed his submission and levelled a merciless attack on Mr Dean’s qualities as an expert. For the most part I regarded them as well-founded. With respect to Mr Dean, I doubt if there has often been an expert less expert than he.
69. Mr Dean’s main difficulty is that he has no relevant expertise . He is an ex RAF officer, who no doubt has a specialised knowledge and experience of many fields of human endeavour, but they do not include the field of shot blasting. The only experience he does have of that field is confined to work he has done for SPE since late 2000 as a management consultant. His role in that capacity has been to examine operations in SPE’s contracting arm, its office procedures, productivity and incentive schemes. Despite this shortcoming, he nevertheless purported to express views as to the practice in the industry, which I do not regard him as qualified to express. Nor does he have any accountancy qualifications or experience such as to qualify him to express views on the approach to the calculation of SPE’s loss in this case.
70. Although Mr Dean’s report is described as prepared by him, it in fact purports to be the report of an organisation called “DMC”, which is a consultant agency run by Mr and Mrs Dean. It appears that his wife - who apparently has some legal qualifications - was originally going to be the author of the report, and be the SPE expert, but she was called back into reserve service by the RAF, which posed a difficulty. The result was that there was a meeting in May 2001 between Mrs Dean and Langleys (at which Mr Dean was not present), at which it was decided that Mr Dean should instead be the expert, and he was later told of this. He then had a 30-minute meeting with Mr John of Langleys and Mr Mansfield, at which he says he was advised that the scope of his task was to produce a report on his findings as to SPE’s loss as advised by Langleys.
71. Mr Dean made no note of the instructions he was given, because he said there was no need - he said he had a fairly good memory. There is no record of any instructions he was ever given, and he said he did not make one because no-one told him he should do so. He wrote letters seeking information supposedly relevant to his report, but did not think to keep copies of them - since no-one told him to. That omission also represents the most astonishing ignorance of the most basic professional practice. Even Mr Onslow was driven to say in his closing written submissions that “No doubt the Court is amazed at the extraordinary way in which this report came to be prepared e.g. the failure to keep copies of letters etc. It is probably because Mr Dean is wholly inexperienced in Court procedure, and received insufficient guidance from the legal advisers.” Mr Dean’s ignorance in what was required of him was compounded by the fact that, until he gave evidence, he had never heard of, let alone read, Part 35 of the CPR. Beyond being told that he had should try to be impartial and fair, he received no guidance from anyone as to what was required or expected of him as an expert. As a result, he approached and performed his task with manifest incompetence.
72. As for Mr Dean’s report itself, much of its work had in fact been done not by him, but by his wife. He cannot be said to be independent of SPE, since he has been and is remunerated generously for his past and continuing role as a consultant to SPE: according to Mr Mansfield, SPE pays or has paid Mr Dean “thousands”. His evidence itself displayed a lack of independence, and betrayed that he really regarded his primary role as being to present and defend SPE’s case.
73. I was referred by Mr Counsell to the decision of Evans-Lombe J in Liverpool Roman Catholic Archdiocesan Trustees Inc v. Goldberg (No. 3) [2001] 1 WLR 2337. Having regard to the criteria there identified as the requisites which need be satisfied for evidence to be admissible as expert evidence, I conclude that Mr Dean’s report and evidence fail the test. The reality is that he was simply someone chosen by SPE to act on its behalf as an advocate of its case. To the extent that he advanced and purported to prove factual matters in his report, his evidence was largely hearsay, going to matters of which he has no first hand knowledge, and in respect of which no admissions had been made by PPC. To the extent that he expressed opinions, they were on matters in respect of which he had no relevant expertise. I hold that his evidence is inadmissible.
74. That leaves SPE in some difficulty in the proof of damage. Its first head of claimed loss is based on the proposition that each infringing machine represents a lost sale to SPE, and it claims damages in respect of its lost profit on such sales. I have, however, already found that SPE would in no circumstances have sold SP20s to PPC, and so I conclude that SPE has failed to establish any loss under that head. I regard it as wholly unreal to assess SPE’s loss by reference to its failure to make particular sales it would never have made.
75. The second head of claimed loss is based on SPE’s lost profit on the provision by PPC of shot-blasting services to customers who, SPE claims, would otherwise have employed the services of SPE. That case is dependent on Mr Dean’s report and evidence. It follows from my findings about Mr Dean that there is no admissible evidence supporting that head of claim.
76. If I am wrong in my total rejection of Mr Dean’s evidence, his evidence on this part of the case anyway fails to satisfy me on the probabilities that PPC’s infringements have resulted in work being diverted to PPC which would otherwise have gone to SPE. The work in Mr Dean’s report relating to this was apparently done not by him, but by Mrs Dean. She apparently originally selected 24 of SPE’s customers from whom work was believed to have been lost. Mr Dean was unable to say whether she had any help from SPE in that connection. For some unexplained reason, Mrs Dean then chose to slim that number down to 11 customers, and Mr Dean said that she had been helped in that connection by the SPE staff, by Mr Mansfield’s sister and by someone else. That work was done before Mr Dean took over as the proposed expert, but he collated the information and documents his wife had obtained. Mr Dean prepared an analysis of SPE’s business with the selected 11 companies over the years 1989/90 to 1998/99. This was supposed to identify business lost to PPC.
77. The schedule Mr Dean prepared is an unimpressive one. It reveals, for example, that SPE did work for Hamilton between 1989 and 1991, thereafter none until 1994/95 after which it did a steady flow of work until 1998/99. That does not appear to provide any grounds for an inference that work was lost to PPC in the intervening years. It may just mean that Hamilton was shopping around. In the case of Pola, the schedule shows that SPE did work amounting to £1,097.56 gross for it in 1989/90 and thereafter none at all. Lees started its operations in mid-1991 and PPC took over its operations later that year, so that it is not obvious that Pola’s work, such as it was, was lost to PPC. In the case of Total Protection, SPE’s case is almost comical. SPE did no work for this company during any of the years 1989/90 to 1993/94 inclusive. By then, PPC was up and running, and it was in 1994/95 that SPE started working for Total Protection, a contact it maintained until 1998/99, albeit that its volume of work appears to have declined over those years. That does not appear to suggest any diversion of work to PPC, as Mr Dean conceded: he said he had not noticed this. But Mr Counsell’s cross-examination of Mr Dean also demonstrated that the schedule was materially inaccurate and that, in compiling it, Mr Dean had ignored a number of invoices and had not even checked to see whether others related to 20” machines. Overall, his evidence in cross-examination on this part of his report demonstrated the incompetent, unprofessional and unquestioning manner in which he had embarked on the exercise, and I attach no weight to his views. SPE’s second head of claim also fails.
78. That leaves the third head on which SPE claims damages, that is damages equivalent to a notional royalty for PPC’s use of the four infringing machines. There is no dispute by Mr Counsell that, in principle, it is open to the court to award damages on this basis against a copyright infringer. He submitted, however, that it is always necessary for the claimant to adduce evidence justifying the basis on which the notional royalty, and thus the damages, are to be assessed. He referred to General Tire and Rubber Company v. Firestone Tyre and Rubber Company Limited [1976] R.P.C. 197, and in particular to Lord Wilberforce’s speech at page 213:
3. In some cases it is not possible to prove either ... that there is a normal rate of profit, or ... that there is a normal, or established, licence royalty. Yet clearly damages must be assessed. In such cases it is for the plaintiff to adduce evidence which will guide the court. This evidence may consist of the practice as regards royalty, in the relevant trade or in analogous trades; perhaps of expert opinion expressed in publications or in the witness box; possibly of the profitability of the invention; and any other factor on which the judge can decide the measure of loss. Since evidence of this kind is in its nature general and also probably hypothetical, it is unlikely to be of relevance, or if relevant, of weight, in the face of the more concrete and direct type of evidence referred to under (2). But there is no rule of law which prevents the court, even when it has evidence of licensing practice, from taking these more general considerations into account. The ultimate process is one of judicial estimation of the available indications.
79. Lord Wilberforce then cited a passage from the judgment of Fletcher Moulton LJ in Meters Ltd v. Metropolitan Gas Meters Ltd (1911) 28 R.P.C. 157, at 164-165, and continued:
A proper application of this passage, taken in its entirety, requires the judge assessing damages to take into account any licences actually granted and the rates of royalty fixed by them, to estimate their relevance and comparability, to apply them so far as he can to the bargain hypothetically to be made between the patentee and the infringer, and to the extent to which they do not provide a figure on which the damage can be measured, to consider any other evidence, according to its relevance and weight, upon which he can fix a rate of royalty which would have been agreed.
80. Mr Counsell submitted that SPE has failed to make out its case under this head for the assessment of damages on the basis of a notional royalty. He says there is no evidence that there has ever been any arrangement for the payment of royalties in the shot blasting industry. 81. Mr Counsell acknowledged that there are certain letters in evidence, produced by Mr Dean, which may be read as suggesting otherwise. One is a letter dated 21 June 2001 from Jack Tighe Limited, another Lincolnshire shot blasting company. It is addressed to Mrs Dean, care of SPE. It is headed “Royalty Payments” and reads:
Further to your recent enquiry regarding the above, I do recall that my company did pay some kind of licence fee/levy when operating shot blasting machines similar to the SPE 20” model, however, the precise mechanics of these fees evade me. You will appreciate that it was some 20-30 years ago when we operated these machines.
82. Two further letters, also produced by Mr Dean, are from American companies. One, dated 5 July 2001, is from Chuck Prucha of North American Operations. It is also addressed to Mrs Dean and purports to confirm that some time in the past Goff Corporation had licensing agreements with World Wide Blast Cleaning (“WWBC”) and Wheelabrator. The licences permitted Goff to make and sell mobile blasting machines and the letter asserts that Goff paid royalty fees paid on gross sales for the machines it made. The other letter is dated 17 July 2001 and is also addressed to Mrs Dean. It is from Charles Lake, the vice president of Southwest Industrial Services, and states that Mr Lake was an officer of Power Blast, in Oklahoma, a company which also had a licence agreement with WWBC. He says that Power Blast paid royalty fees to WWBC for machines manufactured or parts sold by Power Blast, and also for work carried out by Power Blast using machines manufactured under licence. He wrote that ‘The manufacturing and sales royalty fee was 8% on all gross sales. For each square foot of surface area we blast cleaned using machines manufactured by us under license, we paid [WWBC] a royalty fee of 3 cents.”
83. Mr Counsell submitted that these letters provided no admissible evidence of the existence of royalty arrangements in the shot blasting industry. Because of the Deans’ unusual approach to these things, there is no evidence of the nature of the inquiries eliciting them, and there was no scope for exploring in cross-examination the assertions made in them. In any event, the letters refer to arrangements allegedly made in the past, and are no guide to current practice. He pointed out that Miss Glew was unchallenged in her evidence that she had never come across any like licensing arrangement in the United Kingdom. In addition, George Boulton gave evidence for PPC. He has considerable experience in the blast cleaning industry and said that he too had never come across any arrangement in the United Kingdom or Europe under which a royalty was paid to the manufacturer or vendor of a mobile shot blasting machine. He acknowledged, however, that he had heard some years ago of some such arrangement existing in the USA. Antony Andrews also has long experience in the shot blasting industry, and he too gave evidence that he has never heard of such an arrangement in the United Kingdom.
84. Mr Dean’s opinion on this subject is interesting. For reasons given, he has no knowledge or experience himself of any royalty arrangements in the shot blasting industry. But he relies on the three letters as justifying the existence of such arrangements. He then set out certain so-called “basic parameters,” which he followed with various alternative assumptions as to the extent of the use of the infringing machines and as to the basis on which royalties might be calculated. The ultimate result was that he advanced the somewhat startling view that appropriate compensation by reference to a notional royalty lies within a range of about £104,000 to about £7.8 million, depending on which of a variety of suggested alternative calculations is adopted. The opinion of the Mr Griffin, PPC’s expert accountant, was that a royalty arrangement in the shot blasting field was an unlikely one for anyone to want to enter into. However, if they did, he - somewhat reluctantly - favoured the view that, of the possible alternatives, a royalty payment by reference to the time the machine was deployed was likely to be the most favourable one, although it would involve complicated calculations.
85. The evidence does not establish that there is a practice in the United Kingdom for the licensing of shot blasting machines to licensees in consideration of a royalty. That being so, Mr Counsell submits that there is simply no basis for the assessment of any damages in favour of SPE at all.
86. I have to say that I find that submission an unattractive one. The absence of any evidence as to a relevant licensing arrangement does not mean that such an arrangement is an impossible one. In principle, I can see no reason why a notionally willing licensor and a like licensee should not come to an arrangement for the licensing of a shot blasting machine in consideration of the payment of a royalty calculated on some appropriate basis. The fact that there is no solid evidence that this has been done before does not mean that it cannot be done at all. Equally, if someone makes an unauthorised use of another’s machine for his own purposes, I can see no good reason why he should not pay proper compensation for the damage occasioned to the other’s property right by the unlawful use so made. Compensation by reference to a notional fee for the unauthorised use would, in my view, ordinarily be regarded as a fair and proper basis on which to provide compensation. For the court to refuse any compensation at all simply because there was no evidence that machines of that sort had ever been licensed out for a royalty would appear to me to involve a denial of justice. In Watson, Laidlaw & Co. Ld. v. Pott, Cassels, and Williamson [1914] 31 R.P.C. 104, Lord Shaw said at page 119 that “... wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle, as I say, either of price or hire.” He had also said earlier, on page 118, that “The restoration by way of compensation is therefore accomplished to a large extent by the exercise of a sound imagination and the practice of a broad axe.”
87. In this case, my rejection of Mr Dean’s evidence means that SPE is left seriously short of material by way of proof of its loss under this head. But even with that evidence, it has real difficulties in the way of proof, since there is still no safe or reliable guide as precisely when the four infringing machines were made, or as to their respective use over the years until the expiry of the copyright on 31 July 1999, or as to how a fair royalty rate might be calculated. However, SPE’s failure - and to some extent inability - to adduce better evidence than it has ought not, in my view, to mean that it should simply be left to recover nothing, which is what Mr Counsell and Mr Glew urged. PPC’s manufacture and use of its infringing machines has involved a damage to SPE’s property right and is analogous to the unauthorised use of another’s property. The admissible evidence I have heard satisfies me that SP20s are valuable, and potentially very profitable, machines, and that PPC made intensive use of its infringing copies over a period of about seven or eight years. In principle, SPE must be entitled to compensation for that, and I can see no reason why I cannot and should not assess it by reference to a notional royalty payable under a notional licence agreement. The evidence leaves me short of information enabling me to make a precise calculation, and I can inevitably only adopt a somewhat rough and ready one. That may work to SPE’s disadvantage, since I also consider that I should err on the side of under-compensation. But inadequate compensation is better than none. In the circumstances of this case, I propose to take a broad axe and assess a sum of damages by reference to a notional royalty which will (a) reflect the uncertainty of the extent of the use of the infringing machines made by PPC, and (b) will also give PPC the benefit of any doubts in the calculation. I assess the damages payable to SPE by PPC and Mr Glew at £40,000.
88. I add that Mr Glew played only a small role in the inquiry, confining himself to asking a few questions of Mr Dean, and some strictly irrelevant questions of Mr Mansfield. He gave no evidence. In his closing written submissions he made the point that there was no evidence implicating him in the damage which was the subject of the inquiry. In my view, it was not open to Mr Glew to make that point. In my judgment after the liability trial I found that he was a party to a joint design to infringe SPE’s copyright and that he also directed the manufacture of the infringing machines. I have earlier (in paragraph 10) set out the passage in which I made those findings, and my order of 28 July 1999 simply directed - as against both defendants - an inquiry as to damages. Mr Glew did not seek to appeal against my earlier judgment, and I do not consider that it was down to SPE to prove on the inquiry that each infringing act relied on was committed not just by PPC but also by Mr Glew personally. Mr Glew fought and lost that battle in 1999. The inquiry was solely concerned with the quantum of loss that his and PPC’s infringing acts had caused.