Damage compensation for claims for trademark infringement

A trademark owner who wants to act against infringement of his trademark rights will normally ask the court to impose a prohibition against further trademark infringement. But there are various other claims that the trademark owner can use to enforce his rights. Dutch intellectual property lawyer Hidde Reitsma discusses the possibility of damage compensation for trademark infringement based on a classical case about counterfeit designer clothing.

Determination trademark rights infringement

The clothing brand Abercrombie & Fitch (hereinafter: A&F) had filed a lawsuit against a group of persons which had counterfeit clothing with the A&F mark made in China and then illegally imported this in the EU. The gang was caught when one of the persons involved offered a consignment of counterfeit clothes to a private detective engaged by A&F. The court had no trouble deciding that the gang had infringed A&F’s trademark rights.

Claim for damage compensation for trademark infringement

The court still had to address, among others, the damage compensation claimed. This claim is important, after a prohibition on the infringing acts. Initially A&F claimed separate follow-up proceedings to determine the damages, but now wanted to claim an amount in advance, based on an estimate. Follow-up proceedings to determine the damages have their advantages if the damages are not yet certain and it is expedient to first determine legal liability.

Court: damages estimate not sufficiently specific

A&F estimated the damages by using an amount of €50 for each infringing item of clothing. Assuming (an estimated number of) 75,000 items of clothing, the damage would be in total €3,750,000. However the court found that the damage amount of €50 for each item of clothing was insufficiently specified. The respondents rightly pointed out that this amount is not in proportion to the normal margins on retail prices of the A&F products. Therefore the court found that the damages will have to be determined in follow-up proceedings.

Collective liability and several liability

A&F also claimed that all respondents should be held liable for damage compensation. According to them, this is a case of collective liability. Collective (joint and several) liability applies if one party of a group causes wrongful damage and the chance of this should have prevented the rest of the group to operate as a group. The court agrees with A&F on this point. Although one of the defendants was clearly the brain behind the detailed plan to have counterfeit goods produced and imported, the other members of the groups coordinated their actions and were aware of the unlawful nature of their conduct. Therefore the ‘hangers-on’ can also be blamed.

Surrender of profits for infringement of trademark rights

Apart from damage compensation, A&F also claimed surrender of profits. In cases of trademark infringement in bad faith, the trademark owner is in principle entitled to the profits of the infringement. However, damage compensation and surrender of profits cannot accumulate to the extent that the damages claimed are loss of profit. In that case the claimant would be compensated twice and thus in actual fact benefit. Whether that is the case here shall have to be determined when the surrender of profits is assessed in the follow-up proceedings to determine the damages.

Legal costs for Dutch enforcement intellectual property rights

Finally, about the legal costs. In proceedings for enforcement of intellectual property rights, the actually incurred legal costs shall be paid by the infringing party. This is in deviation from the rule that the legal costs are granted based on fixed amounts. Therefore the legal costs claimed by A&F of almost €200,000 are granted almost entirely.