Geography Reference
In-Depth Information
in IPR cases.
39
It noted that in some countries right holders often cannot
recover in full the compensation appropriate to an infringement, or the full
costs that the right holder has borne to redress the infringement. Different
methods were also found to be used to calculate lost profits. To deal with
variations in damages calculation, it recommended that Member States 'should
provide that lump-sum damages, reflecting all negative economic consequences
that the rightholder has been reasonably found to have suffered, are available at
the rightholder's discretion at least as an alternative to any lost profits that can
be proved'.
40
Calculation of damages
The second paragraph of Art 13(1) of the Enforcement Directive provides that
when the judicial authorities set the damages:
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(a)
they shall take into account all appropriate aspects, such as the negative
economic consequences, including lost profits, which the injured party has
suffered, any unfair profits made by the infringer and, in appropriate cases,
elements other than economic factors, such as the moral prejudice caused
to the right holder by the infringement; or
(b)
as an alternative to (a), they may, in appropriate cases, set the damages as a
lump sum on the basis of elements such as at least the amount of royalties
or fees which would have been due if the infringer had requested
authorisation to use the IPR in question.
Recovery of profits
Article 13(2) provides that where the infringer did not knowingly, or with
reasonable grounds, engage in infringing activity, Member States may lay down
that the judicial authorities may order the recovery of profits or the payment of
damages, which may be pre-established.
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Account of profits is a useful remedy in trade mark and GIs counterfeiting
cases, where the purchaser of a counterfeited product would be under no
illusion as to its legitimacy, given its price, quality or the place where it was
being offered for sale. As a consequence, it would be difficult to say that the
purchaser had been diverted away from a much higher-priced genuine product
and thus that compensatory damages were appropriate.
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Similarly, it would be difficult to quantify the reputational harm suffered by a
brand-owner from the sale of cheap imitations. Taking the profits made by the
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39
European Observatory on Counterfeiting and Piracy,
Damages in Intellectual Property Rights
, (2010), accessed
at http://ec.europa.eu/internal_market/iprenforcement/docs/damages_en.pdf.
40
Ibid, at 5.
