Airconco v DC Air: copyright damages and the notional licence fee in the IPEC Small Claims Track

The High Court has dismissed an appeal by DC Air Conditioning and Refrigeration Limited against a £10,000 copyright infringement award, confirming that where a claimant operates an established licensing business, courts should apply the second General Tire approach to damages rather than defaulting to the cost of commissioning equivalent non-infringing material.

The underlying claim, heard in the IPEC Small Claims Track, concerned website copy produced by Airconco UK Limited to promote its domestic air conditioning installation services. District Judge Johnson found that DC Air had substantially reproduced that text on its own competing website and assessed damages by reference to Airconco's advertised licence fee of £675 plus VAT per paragraph per year. Applying that rate across five equivalent paragraphs over three years of use, she arrived at £12,150 — awarding the full £10,000 claim limit.

DC Air did not challenge the infringement finding but contested the quantum on three grounds: that the licences underpinning Airconco's rate were insufficiently evidenced as voluntary; that the court should have applied the "user principle" approach endorsed in Peninsular Business Services v Citation plc [2004] FSR 17, assessing damages by reference to the cost of commissioning non-infringing copy; and that inadequate weight had been given to evidence from two professional copywriters, who estimated such copy would cost between £465 and £850.

His Honour Judge Hacon, sitting as both a High Court Judge in the Chancery Appeals list and as an Enterprise Judge under CPR 63.19(3), addressed each ground in turn.

On the licences, the court drew on Lord Wilberforce's analysis in General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819, which establishes that previous licence payments may serve as a reliable benchmark only where the circumstances in which they were paid are comparable to the hypothetical bargain the court must construct. DC Air argued that Airconco's invoices reflected payments made under litigation pressure rather than genuine commercial willingness. The court was unpersuaded. Defendants who reconcile themselves to payment after litigation or its threat, and raise no challenge to the advertised rate, provide reasonable evidence of what a willing licensee would pay. Five earlier judgments in which courts had applied Airconco's standard rate further reinforced this conclusion.

The second and third grounds fell away as a consequence. The General Tire framework makes clear that the third approach — estimating a hypothetical royalty from general market evidence — functions as a fallback where neither loss of profit nor an established licence rate is available. Since Airconco had an active and evidenced licensing business, the second approach was plainly the correct one. The copywriter evidence was in any event undermined by the failure of either witness to attend trial for cross-examination, leaving the District Judge free to give it little or no weight.

A procedural dimension to the appeal is also of note. DC Air's solicitors had filed their Appellant's Notice on time but in the wrong court, triggering a sequence of conflicting instructions from court clerks in Liverpool, Manchester and London before the notice was finally accepted 25 days late. Judge Hacon granted relief from sanctions without hesitation, finding that DC Air had acted reasonably throughout and that the delay was attributable to erroneous court guidance rather than any fault on the part of the appellant or its advisers.

On costs, the court applied the IPEC SCT costs regime under CPR 27.14, awarding Airconco £47.50 to reflect half a day of Mr Salmon's attendance at the hearing — the only recoverable head in the absence of unreasonable conduct by DC Air.