The Intellectual Property Enterprise Court recently ruled that a social media influencer and her...
The Intellectual Property Enterprise Court recently ruled that a social media influencer and her company must pay damages totalling £213,000 to several manufacturers of designer goods whose trade marks they had infringed.
The influencer and the company had sold counterfeit luxury goods bearing one or more of the manufacturers' trade marks. At an enquiry as to damages for infringement of the trade marks, the manufacturers sought compensation for damage to their brands' reputation, loss of profits due to lost sales, and lost licensing income.
The Court observed that a patentee which has manufactured the product patented can claim for a reasonable royalty on infringing sales where no loss of profit can be established. While noting that damage resulting from trade mark infringement and patent infringement are different, the Court considered that such a claim was also available in law in respect of trade mark infringement. Where customers would never have bought from the trade mark owner – such as for price reasons – but had brought from the infringer, it seemed to the Court that there must be some means of assessing the damage done by that type of infringement.
The Court heard that at least some of the counterfeit goods fell into the category of higher-quality counterfeits, known as 'superfakes'. The Court was not convinced by the manufacturers' argument that the prices of such goods and the higher attention to detail tended to deceive consumers into believing that they were genuine, leading to significant lost sales. On average, the prices of the counterfeit goods were just under 15 per cent of those of the manufacturers' goods, and it would take a naïve consumer to believe that goods sold at those prices were genuine.
From the evidence supplied by the parties, the Court calculated that there had been 4,752 sales of the counterfeit goods over the relevant period. Assuming that 15 per cent of those sales resulted in a lost sale by the manufacturers, the Court adopted a figure of 713 lost sales. At a profit per item of about £280, that amounted to a loss of profits of £199,640, which the Court rounded up to £200,000.
In respect of the 4,039 sales that had not deprived the manufacturers of a sale, there was no evidence on which an appropriate royalty could be based, so the Court assumed that the manufacturers would have charged a bare minimum of 3 per cent of the price of the counterfeit goods. At an average price of £110, that gave rise to a royalty of £13,329, which was rounded down to £13,000.
Turning to the question of damage to reputation, the Court considered that consumers would likely have understood that they were dealing with counterfeit luxury goods being provided by parties of which the brand owner strongly disapproved. There was thus no reason to suppose that they thought that the manufacturers bore any responsibility for the quality of the goods or the conduct of the supplier. The Court found that there was no evidential basis for the claim that there had been damage to the reputation of the manufacturers' brands.