The Intellectual Property Enterprise Court (IPEC) has recently considered a claim for additional damages by Phonographic Performance Limited (PPL), against the owner of a bar in London for its use of unlicensed music.

The IPEC also dealt with the costs consequences of PPL's unaccepted settlement offer under Part 36.

Judge Hacon was required to re-consider the interplay between s97(2) of the Copyright Design and Patents Act 1988 (CDPA) and Article 13(1) of the Intellectual Property Enforcement Directive 2004/48/EC ('the Directive').

As set out in Absolute Lofts in 2015, the IP rights' holder shall be entitled to claim whichever amount, under either UK or EU law, is higher. It is clear that double recovery of compensation, by virtue of both EU and UK law, should not be available.

In this case the reasonable license fees due to PPL under the Directive were lower than the s97(2) CDPA damages available to PPL as a result of the defendant's flagrant refusal to pay the license fees to PPL, in full knowledge that such fees were due and payable.

In relation to settlement, Judge Hacon held that a costs order made as a result of a party's failure to accept a valid settlement offer under CPR 36 would not be restricted to the cap on damages and costs which applies in the IPEC.

This decision will be welcomed by IP rights' holders who would only be able to claim minimal losses if these were calculated on the basis of a reasonable license fee alone. This case reinforces the Court's view that these losses can be supplemented by s97(2) CDPA damages in the appropriate circumstances.

Again, the Court's approval of an unrestricted costs order under part 36 highlights the consequences and therefore strategic importance of these offers and the potential for such offers to circumvent the caps in place to protect small parties and provide limited costs risks.

Read the IPEC judgment in full