Many rights are conferred on the owner of a trademark, patent, copyright or design. Nevertheless, it is essential for the rights holder to have an effective remedy if his rights are violated, to obtain compensation for the harm suffered. If it is to be complete, this protection must contain mechanisms aiming at ensuring established security for the rights holder. This task is from far from easy and depends on the type of rights concerned.
The decision of the Cour de cassation (“the Supreme Court”) of 8th June 2017 illustrates the fact that it is not sufficient for the right holder to demonstrate that an act of infringement has occurred in order to be awarded damages. The company Cheval Blanc had owned the semi-figurative trademark Cheval Blanc since 1993, covering wine. In 2008, the Cheval Blanc company applied to cancel two trademarks, one of which was the word mark “domaine du Cheval Blanc”, and also sought damages. The Cour de cassation agreed that the “domaine du Cheval Blanc” did infringe the earlier trademark but ruled that forbidding the trademark infringer to use the term “cheval blanc” would suffice to “assure the integral reparation of the prejudice resulting from the counterfeiting of the trademark for the company Cheval Blanc”. This case serves as a reminder that any harm done by an infringement of an intellectual property right must be made good without profit or loss to any of the parties. More precisely, article L-716-15 of the intellectual property Code clarifies the issue of damages in cases of trademark infringement. The article states two methods to determine compensation. In the first method, the jurisdiction in question needs to take 3 matters into considerations:
- The negative economic consequences of counterfeiting, including loss of profit or other loss suffered by the claimant;
- The moral prejudice caused to the defendant;
- The benefit to, or profit made by the counterfeiter, including the intellectual, material, and promotional savings made by the counterfeiter.
The second alternative method can be requested by the claimant. It amounts to awarding a lump sum as damages. This must be greater than the amount of royalties or fees which would have been due had the infringer asked for permission to use the right infringed. The sum does not exclude compensation for moral damage caused to the claimant.
Unlike the United-States where punitive damages and interest can amount to millions of dollars, in France it is essential to give proof that losses correspond to the damage suffered. In cases of copyright, article 13 of the EU directive 2004/48/CE of 29th April 2004 in relation to intellectual property rights states that “ member states shall ensure that, at the aggrieved party’s demand, the competent authorities order the offender (…) to give to the rights holder damages and interest adapted to the harm actually suffered”. The owner of a trademark can also claim redress for moral damage, a point made by the European Court de Justice in Liffers, C-99/15. This decision affirms the desire to provide greater protection for copyright and distinguishes between material damage suffered and moral prejudice suffered by the rights holder; being two independent concepts. However, in practice, and in most cases, calculation of damages by judges is discretionary. Damages are often very modest, and rights holder do not go to the courts hoping to gain money, but rather to obtain an injunction, a decision publication or in order to build an “aggressive” reputation against their competitors.
Assessing the harm caused by infringement of intellectual property rights remains an important economic issue and requires professional support.
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