The Price Of Trademark Infringement Is Rising

Nadaline Webster,

Around the world, there are different rules regarding the award of damages for different aspects of trademark infringement. Most will take into account considerations such as profits from the goods in question and actual losses suffered by the company.

The question of punitive damages is one that has different answers around the globe. Punitive damages are available in the US rather more freely than in Europe. Punitive damages are available in Europe and increasingly applied for however, European courts are reluctant to impose them except in extreme cases.

In any area of law, the question of damages is one that creates difficulties uniformly across courts and regions. A wide variety of factors and considerations will go into any individual award of damages and quantifying a figure is a challenge in almost every scenario. The one thing we can be sure of is that they are rising with new record awards being seen more and more frequently.

China introduced new trademark laws in 2014 which raised the bar for available damages and the results of this have been seen almost immediately.

In 2017, The Chinese courts awarded $1.5 million in damages and associated legal costs against 3 Chinese companies to New Balance - widely deemed to be the largest trademark infringement award to a company based outside China and seen as a positive step forward for foreign trademark owners in China.

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The previous year, a significant award in terms of domestic companies was made. In 2016, the Beijing IP Court awarded damages of RMB 10 million (approximately $1.57 million) to the Meichao Group for trademark infringement by Beijing Xiujie. It is reported that the size of the award was impacted by the defendant's refusal to supply evidence required by the court. Previously, damages had been capped at RMB 450,000 (approximately $70,000).

The US has a long history of rather larger awards.

In 1999, pharmaceutical giant Pfizer was ordered to pay $143 million in damages to British company Trovan Ltd in respect of their use of the mark TROVAN for an antibiotic. The court found the claim that Pfizer were unaware of the prior use of the mark to be unsupported.

However this was topped in 2008 when Adidas AG were victorious against Payless ShoeSource Inc to the tune of $305 million which included a hefty $137 million in punitive damages. Adidas are known to actively protect their famous three stripe brand and lawyers representing them stated that the award may be the largest award to date.

Damages across Europe are a much more complex matter than in the US with courts in different member states operating under sometimes very different systems. Some courts will permit applications for punitive damages but these are difficult to successfully achieve. In the main, damages in respect of commercial loss are the order of the day and awards of costs against the losing party are not standard across the European Union. Calculations of damages are also not standardised with judges having wide discretions in calculating awards.

The area of awards in respect of damages is one that businesses should watch closely. As trademark congestion rises and international business becomes faster paced, the upwards trend in terms of damages means that the risk to business owners of getting it wrong, climb ever higher.

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