John Khalil Khawam And Co Vs K Chellaram And Sons (Nigeria) (1960)
LawGlobal-Hub Lead Judgment Report
The plaintiff in the case in the High Court of Lagos has appealed to this Court against the amount of £2,000 damages awarded him in a claim by him for £50,000 damages for the infringement by the defendant company of his Registered Design on textile piece goods bearing his Registered Design No. 459477. The defendant company also filed a cross-appeal against the judgment of the learned trial Judge. The relief sought in the cross-appeal is that the judgment of the learned trial Judge be set aside or in the alternative that damages awarded be reduced to nominal damages. The plaintiff/appellant is a trader in textile goods and an importer of textile goods from Japan and other countries. The defendant/respondent, a big trading house in Nigeria, trades in various goods including textile goods and is also an importer of goods from Japan and other countries. The plaintiff, among other designs, designed a pattern from the African ‘lie and dye” design, with typical “motifs” common to the Nigeria “adire” cloths designed with herringbone stripes, stars and repetition of circles peculiar to many “adire” clothes but with peculiar arrangements of the motifs which made it original
The plaintiff having made this design, on the 4th January 1957, registered it in the Manchester Branch of the Design Registry of the Patent Office in Manchester in accordance with the provisions of the Registered Design Act, 1949 and obtained a certificate granting him a monopoly of the design for 5 years with a right of renewal for another 10 years.
During the month of January 1957, he imported into Nigeria from Japan 1,000 pieces of the material which he sold at 50s a piece of ten yards making a profit of 15s per piece. By the end of that year he had imported 9,841 pieces in all. About the month of November, 1957, the defendant/respondent company had imported into Nigeria cloth of a similar design but inferior in quality which was selling at 38s per piece. The plaintiff/appellant was forced to drop his selling price from 50s to 43s per piece and later to 34s per piece to compete with the intruder into his market. The defendant/respondent company asserting, as it did, that the design is an open design in Japan, placed on order with Gosho Company, the same company in Japan which printed the plaintiff/appellant’s design, the same design on inferior materials. The goods were shipped to Nigeria and sold at a wholesale price of 38s per piece of ten yards. The plaintiff/appellant as the registered proprietor of the design promptly called the attention of the defendant/respondent company to the infringement of his design and later instituted an action in the High Court of Lagos for an injunction to restrain the defendant/respondent from selling the particular textile goods; he claimed damages for the infringement and also claimed the delivery up of the goods with the defendant/respondent company for destruction. Judgment was entered in his favour in terms of the writ but with £2,000 damages.
The plaintiff is dissatisfied with the damages awarded in his favour and has appealed. The ground of appeal argued is mainly directed on principles to be followed in awarding damages.
On the other hand, the defendant/respondent company filed a cross-appeal and the grounds of appeal filed and argued are as follows:
1. “That the learned trial Judge misdirected himself on the evidence before him in holding that the design was new or original.
2. That the learned trial Judge misdirected himself on the evidence in holding that the defendant was not an innocent infringer.
3. That the learned trial Judge erred in law in awarding general damages against the defendant being an innocent infringer.
4. In the alternative the damages awarded against the defendant were excessive.”
It seems convenient, and I shall deal first with the cross appeal.
Mr. Bickersteth, arguing the cross-appeal, abandoned the first ground. Arguing the 2nd and 3rd grounds together, he submitted that although the learned trial Judge in his judgment referred to section 9 of the Registered Design Act 1949 and also to section 3 of the United Kingdom Designs (Protection) Ordinance, Cap.221, he failed, however, to apply the statutory tests that it would be sufficient for the defendants to rely on either section 9 of the English Act or section 3 of the local Ordinance. Section 9 (1) of the Registered Design Act 1949 reads:
9 (1) “In proceedings for the infringement of copyright in a registered design damages shall not be awarded against a defendant who proves that at the date of the Infringement he was not aware, and had no reasonable ground for supposing, that the design was registered; and a person shall not be deemed to have been aware or to have had reasonable grounds for supposing as aforesaid by reason only of the marking of an article with the word “registered” or any abbreviation thereof, of any word or words expressing or implying that the design applied to the article has been registered, unless the number of the design accompanied the word or words of the abbreviation in question.”
and section 3 of the United Kingdom Designs (Protection) Ordinance, Cap. 221, reads:-
3. “The registered proprietor of a design shall be entitled to receive any damages in respect of any infringement of copyright in a design from any defendant who proves that at the date of the infringement he was not aware nor had any “reasonable means” of making himself aware of the existence of the registration of the design.”
Mr. Bickersteth argued that either of these statutory provisions granted protection to the defendants in this case, and that the learned Judge was wrong in his assumption that the defendant must have seen the plaintiff’s design and decided to order it since it was clear that Gosho Company brought the design to the Japan Office of the defendants and it was an open design in Japan.
It appears to me that for the defendants to claim the protection afforded by either the English Act or the local Ordinance, they must satisfy the Court that they had no reasonable means of finding out whether or not the design had been registered. It was argued that protection is claimed under the English Act.
The wording of the English Act refers to “reasonable ground” the local Ordinance states “reasonable means.” There is, to my mind, no conflict between the two; If there is, it is clear that the local Ordinance will prevail. The earlier English Act spoke of “reasonable means” but it was amended to read “reasonable grounds.” In Nigeria “reasonable means” is still the criterion; this may be due to the fact that the registration has to be carried out in the United Kingdom. Whatever it is, it hardly affects this case where the defendants did nothing although they had every means of finding out from the Design Registry in Manchester whether or not this particular design, which incidentally carries a number, has been registered. The submission that since the registration of the design was refused in Japan was enough for the defendants to assume that the design could not be registered in the United Kingdom, I reject without further comments.
The findings of the learned trial Judge that the defendants have failed or neglected to make necessary investigations which a prudent company having a branch in Manchester would have made in the circumstances and cannot there fore claim any protection as an Innocent purchaser are, In my view, justified by the evidence before him, and these two grounds of the cross-appeal must fall.
There remains grounds 3 and 4. On the cross-appeal, Mr. Bickersteth argued that the estimate of damages was not based on the right principle and was not based on evidence. It was submitted that there was no evidence before the Judge to show categorically how much the plaintiff lost; nor was there evidence or basis for the calculation of loss per year.
The arguments on these two grounds of the cross-appeal were met by Mr. Bernstein’s arguments on the quantum of damages awarded. His argument in the main was on the principles on which the amount of damages is to be computed.
On the quantum of damages, the learned trial Judge said:-
“It is true that the plaintiff had had to reduce the price of his cloth twice and finally he had to dose down. There is however no evidence before me of how much the plaintiff actually lost in the transaction. The claim for special damages therefore fails. I now come to the items of general damages. I do not take Into consideration the fact that the plaintiff is entitled to two renewals of the period of copyright of five years each, as these renewals are in any case subject to some conditions prescribed by section 8(2) of the Act.
“The plaintiffs ordered in all about 10,981 pieces from January to the end of 1957 and had only a few pieces left at the time of the action. It is clear that cloth of the design had a phenomenal sale and a very good market. The defendants impress me as rather callous and indifferent to the result of their action. I have considered all the circumstances of this case and will fix the general damages in this case at £2,000 taking still a lenient view of the conduct of the defendants and in particular the fact that I do not know exactly how much the plaintiff lost.’ Added to these, is the fact that the defendants sold within a month 500 pieces of the 880 pieces which arrived for them from Japan.
The first question I have to ask myself is whether the learned Judge has proceeded on an erroneous principle in his assessment of damages. I am of the opinion he has. What has to be ascertained is the pecuniary loss the plaintiff has sustained by the wrongful acts done to him by the defendants; the plaintiff is entitled to be compensated for the injuries he has suffered by reason of the wrongful act of the defendants.
In the case Pneumatic Tyre Company Ltd. v. The Puncture Proof Pneumatic Tyre Company Ltd. 15R.P.C. 405 at p.406, Wills, J., said:-
“As far as the case permits the amount of loss must be proved; but ff it can be proved that the necessary consequence of an injurious act is to damage the reputation of the patented article or process, as to interfere with the general and extended use, very substantial damages might be received, though it might be impossible to put a figure on the loss.”
As the learned trial Judge in the present appeal found, the plaintiff has suffered considerable loss and damage. By reason of the defendants’ infringement, he had to reduce his prices and cloth which was sold at 50s per piece at a profit of 15s on the piece was reduced first to 43s and later to 34s, thus selling at a loss. Subsequently, he had to close down and the anticipated profits for ten years of renewal for which he held a copyright was lost to him. The learned Judge said he did not take this into consideration in awarding damages: it would appear, however, that he took into consideration the fact that the defendants sold 500 pieces of their cloth in one month, which was also a loss of profit to the plaintiff. At that time from the evidence of the plaintiffs witness, J.K. Khawam, a total of 1,897 pieces of cloth had arrived for the plaintiff in addition to what he had left at the time for sale. These were all sold at reduced prices of 43s and later 34s per piece. In considering measure of damages, Swinfen Eady, J., in the case Leeds Forge Company Ltd. v. Deighton’s Patent Flue Company, 25 R.P.C. 209, at p.212, put the matter as follows;-
“In considering the question of the amount of damages, it must be borne in mind that the measure of damage is the loss which the plaintiffs have actually sustained as the natural and direct consequence of the defendants’ act; consequently, the damages will be the estimated loss of profit incurred by the plaintiffs by reason of the sale by the defendants of articles which infringe plaintiffs’ patent, whether such loss of profit in respect of any flue is attributable to diminished profit obtained on articles manufactured by the plaintiffs or to the plaintiffs having lost all profit by reason of the defendants having made the articles. The burden is upon the plaintiffs to prove the damage they have sustained and they can only recover upon the facts proved. What the plaintiffs actually claim is the amount of profit they would have made if they had sold, at their original prices, all the flues they did sell, and all the infringing flues sold by the defendants, after giving credit for the profit they actually made on the flues sold by them. It is quite manifest that in estimating the damages in a case of this kind, fair and just allowances must be made and many matters must be taken into consideration. Mathematical accuracy is absolutely impossible.”
The evidence before the learned trial Judge conclusively established that about 2,000 pieces of the cloth imported by the plaintiff were, after the defendants’ infringement, sold at a reduced profit of 7s per piece for a time and later at an actual loss of 1s per piece until the plaintiff had to close down. This amounts to roughly a loss of an amount between £1,000 to £1,300: added to this was the loss of 15s profit per piece on the 500 pieces sold by the defendants. This resulted in a loss of a total of £375. It would appear that taking all these into consideration the learned Judge has arrived at the figure of £2,000 which, in my view, appears on the evidence before him, a fair assessment. But the copyright had another four years to run; then the plaintiff is entitled to two renewals of five years each of their copyright. I would estimate the damages for the two 5-year periods of renewal (10 years) at £500.
In conclusion, I reject the submission made by Counsel in the cross-appeal that the plaintiff is only entitled to nominal damages. I would therefore dismiss the cross-appeal. I would allow the appeal by varying the damages awarded in favour of the plaintiff as follows,
£2,000 general damages as awarded by the learned trial Judge: £500 damages for the two 5 year periods of renewal. Total: £2,500.
Costs to the appellant on the two appeals assessed at 80 guineas.
I agree with the order proposed, but I should like to say a further word about the recovery of damages in an action of this nature in Nigeria. Sections 2 and 3 of the United Kingdom Designs (Protection) Ordinance (hereinafter referred to as the Ordinance) reads as follows:-
“2. Subject to the provisions of this Ordinance the registered proprietor of any design registered in the United Kingdom under the Patents and Designs Act, 1907 to 1932, or any Act amending or substituted for those Acts shall enjoy in Nigeria the like privileges and rights as though the certificate of registration in the United Kingdom had been issued with an extension to Nigeria.
3. The registered proprietor of a design shall not be entitled to recover any damages in respect of any infringement of copyright in a design from any defendant who proves that at the date of the infringement he was not aware nor had any reasonable means of making himself aware of the existence of the registration of the design:
Provided that nothing in this section shall affect any proceedings for an injunction.”
It is agreed that the Registered Designs Act, 1949 (hereinafter referred to as the Act) is an Act substituted for the Patents and Designs Acts, 1907 to 1932, and sections 2 and 3 of the Ordinance thus give Khawam the same privileges and rights in respect of his registered design as if the certificate of registration in the United Kingdom had been issued with an extension to Nigeria, but do not entitle him to recover damages from a defendant who proves the matters referred to in section 3. What then is the effect of section 9 of the Act, which exempt an innocent infringer from liability for damages if he proves certain matters which are different from, but not Inconsistent with, those set out in section 3 of the Ordinance? If it is to be regarded as abating the privileges and rights conferred by registration, then in Nigeria it will afford a defence to a claim for damages additional to that afforded by section 3 of the Ordinance. The right given by registration under the Act is set out in general terms in section 7 of the Act. It is there described basically as an exclusive right to make or deal in various ways with any article in respect of which the design is registered. Neither that section nor any other lays down expressly what remedies for infringement of the right are to be available, but, as I have already said, section 9 exempts an innocent infringer from liability for damages, while not affecting the power of the court to grant an injunction.
When the Ordinance was enacted in 1936, section 33 of the Patents and Designs Act, 1907, contained provision in relation to patents similar to that contained in section 3 of the Ordinance, but the corresponding provision relating to designs in section 54 (1)(b) of the Act was as follows:-
“54(1) Before delivery on sale of any articles to which a registered design has been replied, the proprietor shall:
(b) cause’ each such article .to be marked with the prescribed mark, or with the prescribed words or figures, denoting that the design is registered; and if he fails to do so the proprietor shall not be entitled to recover any penalty or damages in respect of any infringement of his copyright in the design, unless he shows that he took all proper steps to ensure the marking of the article, or unless he shows that the infringement took place after the person guilty thereof knew, or had received notice of the existence of the copyright in the design.”
If this applied in Nigeria, it is hard to see what room there could be for the application of section 3 of the Ordinance, and I conclude that it was not intended that it should apply. This indicates that the expression “privileges and rights” in section 2 of the Ordinance does not introduce the provisions of the U.K. Acts restricting that a defence under section 9 of the 1949 Act is not available in Nigeria.
Even If I am mistaken in this, I agree that a defence has not been made out either under the Ordinance or the Act. Chellarams have certainly not proved that they had no reasonable means of making themselves aware of the existence of the registration of the design. They have an office in Manchester, and It has not been suggested that they could not have had a search made in the Manchester Registry, or that a search would not have revealed the existence of the registration. As to whether they have proved that they had no reasonable ground for supposing that the design had been registered, the evidence of their chief witness as to fact, Naraindas Ladharam, justified the finding of Coker, J., that “either the defendants are completely reckless or their office in Japan having seen the designs of the plaintiffs after the manufacture of Exhibit C decided to and did order for actual reproduction of the plaintiffs’ design on cheaper material with inferior dye and with the avowed purpose of wrecking the market for the plaintiff’. They have not, on either alternative, established a defence under section 9 of the Act.
As regards the quantum of damages, I agree that Coker, J., applied a wrong principle in refusing to allow anything for the right of renewing the copyright for a further ten years. Even on the basis adopted by Coker, J., it may well be that other Judges would have awarded a larger sum, but 1 cannot say that on the evidence he made any other manifest error in, principle. The Court may take judicial cognizance of the fact that fashions change in textile designs as in most other things, and no attempt was made to give any evidence of the life of a successful design in cotton-piece goods. I support the variation proposed.
MBANEFO, C.J. (E.R):
Appeal of plaintiff allowed: damages increased.
Cross-appeal of defendants dismissed.
Other Citation: (1960) LCN/0875(SC)