Infringement of Intellectual Property Rights: Remedies

When an IP rights owner’s rights have been infringed, various remedies are available to address the infringement to suit the type of intellectual property infringed and the extent to which the infringer has wrongfully used the rights.

Remedies for Infringement

The rights of an intellectual property owner are different in respect of each type of intellectual property right – copyright, designs, trademarks, patents and confidential information protect different types of assets. These individual areas of protection may also overlap.

There are certain types of Court order which are general to all types of intellectual property.  Thus if a right has been infringed or breached, the Courts will generally:

1. grant an injunction to restrain any future infringement or breach of that right by the defendant - if the defendant does continue to infringe the right in breach of an injunction then he is in contempt of Court and is liable to be sent to prison and/or fined, and if the contemnor is a company, it is liable to be fined, to have its assets taken out of its control and/or to be managed by Court appointed managers); and
2. grant injunctions supportive of this primary injunctive relief to give it better effect to recognise and enforce the rights of the rights owner, such as injunctions requiring the infringer to deliver-up materials which infringe the intellectual property rights and/or destruction of infringing materials; and
3. award sums of money to compensate the owner of the right for any losses suffered by past infringements. The claimant usually has to decide whether he wants his compensation calculated by (1) the damage suffered by the claimant ("an inquiry as to damages" which is usually the loss of profit suffered by the claimant, and often calculated by reference to a royalty which the defendant would have paid if a licence had been granted), or (2) the profits made by the defendant in exploiting the right ("an account of profits"); and
4. award interest on the sums found due upon such enquiry or account from the date upon which the respective loss was suffered or the respective profit was made; and
5. award costs to the claimant for the expense incurred by the claimant in suing the defendant - but intellectual property litigation is no different to other litigation in this respect since the sums recovered by way of costs very rarely reflect the full expenditure by the successful litigant in proving his case.

Availability of Remedies for Infringement

This collection of remedies available to intellectual property rights owners is an impressive suite of potential orders to address and correct unlawful conduct flowing from infringement.

Other than damages or an account of profits, these remedies are aimed to restore the IP owner’s exclusivity of use of the intellectual property rights in question. Courts have also been known to order that the defendant published newspaper and journal advertisements notifying the relevant public of the infringement and the correcting the position.

The remedies are designed to prevent further distribution of infringing goods, to discover where infringing materials originate and to whom they have been sent. These remedies fall under the categories of:

1. remedies for infringement;
2. statutory remedies for delivery up and seizure of infringing goods, and
3. interim relief.

Injunctions

Injunctions may be ordered where a defendant has been found liable for infringement, to give the claimant effective relief from future infringement to restrain the defendant from committing or continuing to infringe the intellectual property of the owner. Importantly, injunctions may be obtained at the outset of legal proceedings by obtaining interim relief where unlawful acts are threatened, whether or not infringing acts have previously taken place.

In some cases, a court will only grant an injunction in respect to those rights that have been infringed (say in respect to a book). In others it may be inclined to grant the injunction in respect to the entire work, without reference to the parts infringed and the parts not infringed. The effect of the latter case is that the defendant will be restricted from reproducing or using the parts of the work which do not infringe the relevant intellectual property.

Injunctions may nevertheless be refused if the defendant has given undertakings not to infringe in the future, or the claimant has conducted itself in a fashion which would disentitle itself to the relief available from the Court. An injunction will almost certainly be ordered where the evidence before the court shows pattern of conduct of the defendant suggests the infringement is likely to reoccur.

Where licences as of right are available to the infringer and the licensor undertakes to take licence, the court is not likely to an injunction. Because injunctions are discretionary remedies, they may be refused by the court on the basis of by acquiescence, laches, delay on the part of the claimant or where the balance of convenience does not favour making the injunction. Even then, the court retains its jurisdiction to make an award of damages or an account of profits in favour of the claimant for the infringing acts of the defendant.

Delivery Up and Destruction

Delivery up is another form of ancillary relief which exists to ensure that the relief granted to the claimant for infringement is effective. English courts have an inherent jurisdiction and statutory jurisdiction to make order for the delivery of articles which infringe the intellectual property rights of the owner.

This relief enables the rights owner to obtain possession of infringing articles for the purposes of destroying of the infringing works or obliterating the infringing parts of the works. This jurisdiction of the court may also be applied for the purposes of obtaining articles or devices used to manufacture infringing articles.

In cases of trade mark infringement, the defendant may be ordered take some equivalent step to delivering up infringing articles, such as erasing trade marks from goods and verifying that the same has been done under oath.

Damages for Infringement

This is the most common remedy sought by IP rights owners whose intellectual property has been infringed. A successful claimant is entitled to damages for any harm caused which flows directly and naturally from the infringement. To be recoverable, the loss claimed must have been caused by the infringement. To put it another way, the infringement must be the effective cause of the loss suffered by the intellectual property rights owner.

The claimant must prove the loss suffered at the hands of the infringer, however the court will usually assume that the acts of the infringer have caused harm. Where the loss suffered in monetary terms is not amenable to quantification by mathematical calculation, the court will do conduct its investigation to arrive at a fair figure to award by way of damages. An infringer who examines a work and judiciously selects the parts of the work and thereby infringes only part of the work, may be found liable for infringing the entire work.

There are several categories of case in respect to the approach the court is likely to take to calculate damages. These broad categories are (1) manufacturers, (2) licensors and (3) others.

Manufacturers

Where the rights owner reproduces and sells articles, the claimant will be entitled to the loss of profit it would have made on the articles sold by the defendant which infringe the rights of the owner. Where the court draws the view that only some of the sales of the defendant would have been lost by the claimant, the court may award a notional license fee for the balance of the articles.

In some cases, a claimant is able to establish that goods or services were often sold with the infringing goods, and those sales have been lost as well. In these circumstances, the court may be inclined to grant damages in relation to the loss of sales of those related goods as well.

Where the defendant is in direct competition with the claimant and the loss suffered extends beyond the mere sales of the goods, such as goodwill and reputation, the court has jurisdiction to award a sum to compensate the claimant for that loss as well.

Recoverable loss may also take the form of loss suffered as a result of:

1. reducing the prices that the claimant is able to levy for use, and/or
2. withdrawing products from sale as a result of the infringing conduct. In these cases, the reduced profits are recoverable as well as the losses suffered on the claimant’s own stock. Damages suffered by a parent company for the infringement the rights licensed by a subsidiary are also recoverable, whether as a capital loss or income.

Licensors

Businesses which grant licences for the use of the intellectual property rights are in a different position to those which manufacture and sell articles embodying infringed intellectual property rights. A court is likely to look to the usual licence fee charged by the owner of the intellectual property rights and treat the defendant as a notional licensee of the intellectual property rights to arrive at a sum per infringement payable by the defendant for its infringement. . In some cases, a court may take the view that the notional licence fee does not properly reflect the damage suffered by the IP rights owner, and inflate the licence fee to a sum which it thinks is more appropriate.

Furthermore, in cases where the extent of the infringement is not ascertainable (such as distribution of copies of films as a result of peer-to-peer file sharing), the court recognises that the claimant may not be in a position to produce evidence of all the sales lost as a result of the infringement. In such cases, the court may be inclined to attribute the loss of sales of the film to the infringer, provided that evidence of the forecasts of the sales of the film and comparable films establish the loss of sales.

Other cases

The facts of the case in question may show that the intellectual property rights owner does not manufacture goods or license the intellectual property rights as part of its business. The underlying principles of awards of damages apply to cases both within and outside the established categories of cases discussed above. Thus the damages suffered by a claimant which does not license its rights or manufacture articles is in the same position other claimants. The court should be provided with relevant evidence in order to properly assess the damages suffered by the particular claimant based on the idiosyncrasies of the cases at hand.

The calculation of an award of damages may be a notional license fee or the cost of obtaining the same goods or services elsewhere.

It may be the case that the claimant has been forced to engage enquiry agents and forensic experts to detect an infringement and the extent of the rights of the infringement. Furthermore, the claimant may have had to incur legal costs making applications to the Court to obtain the identity of infringers, which is frequently the case in respect to infringement of copyright works published on the internet. These costs are also usually recoverable in the form of damages.

Additional Damages

Damages awards are compensatory and not designed to allow the claimant to profit from the infringement of intellectual property rights.

There are cases where the defendant obtains some additional benefit by the infringement of relevant intellectual property rights.

In cases of copyright infringement, the court has jurisdiction to make awards of damages over and above a compensatory basis where the infringement has been committed in circumstances importing flagrant disregard for the rights of the claimant and the defendant has acquired some benefit as a result of the infringement.

For instance, a successful company which trades using entirely using unlicensed, pirated software is not only liable for the infringement of the software by way of an ordinary damages award, but also acquires a benefit of running a business without having paid the usual licence fee for the software. The court may hear submissions on deceit or scandalous conduct which include deliberate and calculated infringement of the copyright of the claimant in its assessment of damages suffered.

Aggravated Damages

Awards of aggravated damages are reserved for defendants infringing intellectual property rights in a high-handed, malicious, insulting or oppressive manner. Awards are assessed separately to compensatory damages. Such awards are rare, and not available in for all types of infringement.

Exemplary damages

Exemplary damages are awarded in addition to compensatory damages in circumstances where the infringement has been committed with a conscious and contumelious disregard for the rights of the owner for the purposes of obtaining advantages which surpass the usual compensatory award of damages. Like aggravated damages, exemplary damages do not form part of the ordinary compensatory damages award, but form a separate award. The jurisdiction of the court to award damages under this head are limited to cases where a precedent exists. Furthermore, the court will have regard for the means of the defendant during the process of assessing an appropriate award.

Closing

Relief for infringement of intellectual property rights are long established remedies, which are adapted to suit the circumstances of each case. Courts will be cautious not allow a defendant to profit from unlawful conduct, but at the same time, avoid making orders which would allow a successful claimant from recovering the same loss twice. The remedies available in any particular case will depend on the circumstances of the case.