Disgorgement and 'Licence Fee Damages' in Contract

Introduction The recent English Court of Appeal case of Experience Hendrix v PPX Enterprises Ltd is the latest to consider the law concerning the liability of a contracting party in respect of the profits of a breach of contract, following the decision of the House of Lords in Attorney-General v Blake. The issue is of practical importance and theoretical interest. In this note I will outline what I argue is the best interpretation of Blake and its theoretical basis, and consider its implications for Hendrix. I will deal first with the claim for all the profits of a breach, and then with the lesser claim for some fraction of the defendant’s benefit, conceived of as a sort of deemed licence fee or quid pro quo for breach. The former was described in Blake and Hendrix as an “account of profits”, but I will refer to it as “disgorgement”. The latter I will refer to as “licence fee damages”. I will argue that these are distinct types of claim, although in Blake and Hendrix they were regarded as variants of a single type of claim.