Enforcing Trade Mark Against Cybersquatter Resulting in Record Costs and Damages Awards

An international linguistic services company found a third-party website using its brand selling services. The team at Virtuoso Legal investigated, finding a competing company had set it up and had been siphoning business through the site. This was a cybersquatting and trade mark infringement case, resulting in a record cost and damages award. Click to read more.

Link Up Mitaka Ltd (t/a Thebigword) v Language Empire Ltd & Anor.

Maintaining a presence online is important to any contemporary business. For those who operate predominantly online this is especially important. Large scale companies can often find that bad actors will utilize their brand (whether onsite, or within the domain name, for example) in order to divert trade and enquiries. This is a phenomena known commonly as “cybersquatting”.

Virtuoso Legal’s client, Link Up Mitaka Ltd. (trading as “thebigword”) is a Leeds-based translation and transcription business with a global reach. thebigword successfully brought a claim against Rochdale-based competitor, Language Empire Limited (“Language Empire”), and company director Yasar Zaman for use of its registered trade marks for “thebigword” on a series of web domains and passing off in relation to online activity dating back to 2010.

In this case, the Virtuoso Legal team achieved a record-breaking award of damages, in excess of £140,000 (more than double the amount sought) against Language Empire. For the first time in the history of the Intellectual Property Enterprise Court (“IPEC”), they also successfully obtained a costs award of £98,000, which was close to four times the usual cost cap of £25,000, due to the Defendants’ unreasonable conduct.

Background

Upon receipt of the pre-action correspondence from Virtuoso Legal, the Defendants (Language Empire) failed to reply. The offending websites were taken down shortly after this letter was received. However, taking down the offending websites was not enough, there was still the question of the damage caused by Language Empire.

The Virtuoso Legal team prepared and served Particulars of Claim in March 2017, which alleged that the Defendants’ creation and maintenance of the websites had deliberately infringed thebigword’s trade marks and as such passed off the websites as belonging to the Claimant – in order to divert prospective customers from the Claimant to the Defendant. thebigword successfully obtained judgment on infringement and elected for an inquiry as to damages in the matter and served points of claim.

The issues brought to this inquiry were:

1. Whether the Defendants (or agents of) made any sales of translation and/or interpretations as a result of enquiries made from potential customers who had visited the websites;
2. If so, the reasonable royalty that would have been payable on those sales was a willing licensor in the position of the thebigword and willing licensee in the position of Language Empire;
3. Whether thebigword was entitled to an award of damages in respect to the Defendants’ unfair profits – and if so an assessment of those damages.

The Damages Decision

Her Honour Judge Clarke found against the Defendants; and in doing so sought to identify the “sum of money which will put him (the Claimant) in the same position he would have been if he had not sustained the wrong.”

Judge Clarke noted from thebigword’s evidence that there was a 50% increase in website traffic on thebigword’s own website after the infringing websites had been taken down. It was noted that a significant proportion of traffic would have made an enquiry on the website, of which some 75% would have been converted into sales.
In total, Judge Clarke awarded damages of £142,044 – including an uplift of 33% as a result of an undervaluation of the value of lost sales to thebigword as a consequence of the infringing websites.

Her Honour Judge Clarke then ruled on the costs and whether or not to lift the usual cap of £25,000.  In this case, the instances the judge stated that the Defendants had indulged in “dishonesty and obfuscatory” that were so numerous that she chose to use her general discretion and broad powers in relation to costs provided to her by CPR 44.  As such, she ordered that the Defendants pay to thebigword the sum of £98,260 plus interest of £1446.98.

Record Breaking Costs

This was a rare case – the facts of the case, particularly in relation to the Defendants’ conduct, was fairly unique. Indeed, a number of claimants have sought to invoke this ruling, but failed to achieve the same result. For more in depth information relating to HHJ Clarke’s decision on costs, read the costs judgment here.

The judge warned other Litigants by stating:

“Litigants in IPEC must understand that conduct which amounts to an abuse of the processes of the court will cause them to lose the benefit of the protection that the Scale Costs Scheme gives them.” 

Language Empire’s Failed Appeal

In 2018, Language Empire and Yasar Zaman sought to appeal HHJ Clarke’s decision on the basis that Judge Clarke had: “erred in law in finding that the Defendants had abused the Court’s process”. However, this was refused permission by the Court of Appeal. In particular, the Right Honourable Lord Justice Floyd, sitting in the Court of Appeal, had refused Language Empire’s appeal on both grounds. In particular:

Ground 1 – "the judge correctly directed herself as to the ingredients of an abuse of process and made properly reasoned conclusions as to why the applicants’ conduct had been one. She made findings in the course of her main judgment that, quite apart from giving dishonest evidence, Mr Zaman had gone to extreme lengths to hide the extent of the infringement. This court would have no basis for interfering with the judge’s factual conclusions and therefore with her conclusion on costs."

Ground 2 – "This is an attempt to ask this court to re-evaluate the evidence heard by the judge without the benefit of hearing the witnesses. The judge was faced with the difficult task of attempting to assess damages in the face of the deliberate obfuscation of the applicants. It is inevitable that she will have done so liberally and by making use of inferences open to her on the evidence."

As a result, “the appeal would not have a real prospect of success and there is no compelling reason for the court to hear it.”

Conclusion

Ultimately, the judgments represented another landmark success for Virtuoso Legal’s litigation team – who having guided thebigword through an incredibly challenging litigation, secured their client a ground-breaking result.