JULY 2005

An infringement of intellectual property rights gives rise to the remedies of damages, injunctions and account of lost profits.

While the right to claim damages is well established by statute and caselaw, there is no set formula to calculate the exact amount that may be awarded in any case. Further, in the absence of Irish caselaw in this area, much reliance is placed on English court decisions, which are of persuasive effect in this jurisdiction.

Copyright

Regarding breach of copyright, section 127 of the Copyright and Related Acts 2000 states that an infringement of the copyright in a work is actionable by the copyright owner. The award made is a matter usually for the court's judgment and discretion, as Section 128 (1) makes clear:
"The court may, in an action for infringement of copyright award such damages as, having regard to all the circumstances of the case, it considers just".

The measure of damages following on from an infringement of copyright is sometimes said to be a matter which is left "at large" - that the award is a matter for the court's judgment and discretion - Schindler Lifts -v- Milan Debalak (1989) 15 IPR 129. However, it is accepted that the plaintiff will normally seek to obtain the amount by which the value of the copyright of the plaintiff has been diminished. This is often calculated by looking at the volume of sales made by the defendant of the pirated work by way of the unauthorised reproduction and sale - Allied Discount Card Limited -v- Bord Failte [1989] ILRM 811. This approach, however, does not always provide adequate compensation to the plaintiff, even if it has the merit of being simple and compatible with the principles of unjust enrichment. The plaintiff may be able to show that his product was more expensive and had a higher profit margin than the pirated work, so merely giving the plaintiff the defendant's profit may not compensate the plaintiff for lost volume of sales. This is particularly important and some cases hold that where the defendant's product undercuts the plaintiff's product, this should be reflected in the compensation award - Polygram Records Inc -v- Raben Footware Pty. (1996) 35 IPR 426 at 444.

Further, the normal remedies of obtaining an injunction and an account of profits will be available to the owner of the copyright which has been infringed, as is made clear in subsection 3 of section 128:
"In exercising its powers under subsection (1) in addition to or as an alternative to compensating the plaintiff for financial loss, the court may award aggravated or exemplary damages or both aggravated and exemplary damages."

Patents

With regard to patents, the remedies available consequent on a finding of patent infringement are specifically identified in section 47 of the Patents Act 1992 which states that

"the proprietor of the patent in respect of any act of infringement which he alleges is entitled to make a claim -
( a ) for an injunction restraining the defendant from any apprehended act of such infringement;
( b ) for an order requiring the defendant to deliver up or destroy any product covered by the patent in relation to which the patent is alleged to have been infringed or any article in which the product is inextricably comprised;
( c ) for damages in respect of the alleged infringement;
( d ) for an account of the profits derived by the defendant from the alleged infringement;
( e ) for a declaration that the patent is valid and has been infringed by the defendant.

A plaintiff in patent infringement proceedings may claim damages in respect of such infringement under Section 47 (1) (c) or an account of profits derived by the defendant under Section 47 (1) (d). However a plaintiff cannot be awarded both damages and an account for lost profits as section 47 (2) makes clear:

"The Court shall not, in respect of the same infringement, both award the proprietor of a patent damages and order that he shall be given an account of the profits."

Irish courts will tend to follow the principles espoused by English caselaw, whereby damages tend to be compensatory and not punitive. The measure of damages is to be, so far as is possible, that sum of money which will put the injured party in the same position as he would have been in if he had not sustained the wrong. A way of calculating damages in patent infringement proceedings is on the basis of the loss of profits by the proprietor. In cases where the effect of the infringement is to divert sales from the owner of the patent to the infringer, the measure of damages will then normally be the profit which would have been realised by the owner of the patent if the sales had been made by him - The United Horse-Shoe Co. -v- John Stewart (1888) 13 AC 401. If it is not possible to calculate damages on a loss of profit basis, then it should be possible to be compensated on a "notional royalty basis", i.e. the measure of damages payable will be the amount which the defendant would have paid by way of royalty to act legally instead of acting illegally. In Smith, Kline & French Laboratories v Doncaster Pharmaceuticals [1989] FSB 401, damages were assessed on the basis of the difference between the price the infringer would have had to pay in order to lawfully import the products. It does not appear that a claim of exemplary damages is available to a plaintiff except in very exceptional circumstances

Trademarks

The reliefs available for infringement of Trademarks are set out in ss 18 (2) Trade Marks Act 1996:

"In an action for infringement of a registered trade mark all such relief by way of damages, injunctions, accounts or otherwise shall be available to the proprietor as is available in respect of the infringement of any other property right."

An award of damages in Trademark disputes is essentially an attempt to put the proprietor into the same position as if the infringement had not occurred. This means that any damages awarded will be compensatory rather than punitive or exemplary. The methodology used to calculate what compensation is deemed appropriate in the circumstances is often by reference to the "notional reasonable licence" i.e. if the infringer was a licensee under an arms length agreement, what royalty would have been expected - Dormeuil Freres SA -v- Feraglow [1990] RPC 449.

An account of lost profits is an alternative remedy to damages, and being an equitable remedy it is discretionary. It is essentially an accountancy exercise and deprives the defendant of profits made as a result of the infringing activity. When a plaintiff elects in favour of an account of profits, he will in the normal case, get an account of what the defendant expended upon manufacturing the goods, the price received for their sale and obtain an order for the difference - House of Spring Gardens -v- Point Blank Limited [1983] IR 88