How Much Can Trademark Infringement Cost You?

Nadaline Webster,

A recent report from Compumark released the results of a survey of C-Level executives regarding their concerns about trademark infringement. Over the past 5 years, the level of concern has risen significantly with 80% of executives at C-Level now citing it as a problematic area. Trademark Attorneys have frequently stated that client education around the value of IP to a company and the need to properly clear and protect their trademarks has been an issue. Those two, previously disparate, points of view are increasingly aligned.

There are obvious aspects to a trademark infringement case that can damage a company - the loss of a brand, accompanying loss of sales, delays in getting your product back out into the marketplace and the oftentimes significant cost of a re-brand. However, there are other satellite issues which can arise and they can take the price of getting it wrong to dizzy new heights. Factors such as negative publicity in a social media world and legal fees can carry a heavy price tag.

In May of this year, a notable trademark infringement case in Ireland underlined that point. Nualtra Ltd, a nutritional supplement company based in the Irish Midlands city of Limerick, launched a nutritional supplement drink called NUTRIPLEN  and sought an EU trademark registration for such. Two other associated EU registrations were sought for NUTRIPLEN SMOOTHIE and NUTRIPLEN PROTEIN. All 3 applications are now invalid.

These attempted registrations were challenged by Nutrimedical BV, owners of an existing EU registration NUTRIPLETE  (licensed and assigned to Aymes International in the UK) also a nutritional supplement drink but one marketed directly to medical professionals rather the general public. The goods and services description includes the phrase "the aforesaid goods for use under medical supervision". At the onset of proceedings, Nualtra Ltd selected a new name of ALTRAPLEN and rebranded their products including ALTRAPLEN COMPACT  and ALTRAPLEN PROTEIN.

The discovery hearing in May 2016 brought to light some unsettling issues on the part of one of the plaintiffs prompting Mr. Justice Max Barrett in delivering his judgement to write "our courts may be temples of truth, but few within them are saints". These issues were settled with a payment to Nualtra Ltd of €101,000 and payment of associated legal costs. A July 2016 application to remove the remaining matters from the commercial lists was refused by Mr Justice Brian J. McGovern.

The final judgement on the infringement matters was delivered by Mr Justice Twomey on 2nd May 2017. He noted that no actual losses had been demonstrated by the plaintiffs. Instead they relied on evidence providing a valuation of the license fee that would have been imposed if Nualtra Ltd were to have obtained a license to use the trademark NUTRIPLETE for the time period. The figure supplied was in the order of €260,000. Nualtra Ltd supplied evidence to show that no profits had been acquired from the use of the NUTRIPLEN mark during the period and judgement was delivered that €35,000 was an appropriate sum to award to the plaintiffs.

However, the issue of the legal fees involved in the various actions brought the dangers of infringement into sharp relief. In his judgement, Mr. Justice Twomey wrote, "There does seem to this Court something perverse about the fact that a damages claim by the plaintiff for a maximum of €260,000, which has led to an award of €35,000 in damages, could cost over €2 million in legal fees and almost put the defendant company out of business and which could have led to the loss of jobs."

He did mention some hope for trademark owners (and indeed all civil litigants) regarding legal fees in referencing the "Review of Civil Litigation Costs: Final Report" by Lord Justice Jackson in the UK. The review recommends the introduction of providing limitations and caps on legal actions and associated fees to prevent financial issues impeding access to justice or disproportionate fees to an action causing irreparable harm.

While these developments may be some time in the future and have distinctly different time frames and arrangements in different jurisdictions, the discussions around these developments are reason for optimism. In the interim, with increasing globalisation and increasing volumes of trademark registrations creating more trademark issues than before, keeping abreast of cases from around the world and the difficulties and costs that can be associated with them, seems like a good idea!

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