Damages on a “user basis” in trade mark infringement

There have been numerous cases where the question of damages on a user basis (or notional licence fee) in trade mark infringement has arisen.

In the case of Dormueil Freres v Feraglow [1990] RPC 449 Knox J would not award an interim payment in respect of damages calculated on this basis as it has been doubted that the user principle is applicable to trade marks. However, Knox J did not decide that such damages were not available at all, but in this instance on an application for an interim payment.

In Irvine v Talksport [2003] EWCA Civ 423 [2003] FSR 35the Court of Appeal dealt with damages, it was stated “as a matter of principle, where a defendant uses a mark without permission and thereby infringes a registered trade mark or commits an act of passing off, that act is capable of damaging the claimant’s property in the mark (see s14(2) of the Trade Marks Act 1994) or property in the goodwill attaching to his business. That is so whether or not a lost sale has taken place. It is the same kind of damage as the damage to a patent monopoly caused by an infringing sale which is not a lost sale to the patentee and for which a reasonable royalty is payable. It is an invasion of a (lawful) monopoly. Thus there is no reason in principle why damages should not be available, calculated on a “user” basis for trade mark infringement and for passing off. Of course it will be a question of fact in any given case to decide the amount of such damages”.

In the case of Gerber v Lectra [1995] R.P.C. 383 Jacob outlined 5 principles of damages. The fifth principle of damage was “Where the claimant has exploited his right by his own sales he can claim lost profit on sales by the Defendant he would have made otherwise, and lost profit on his own sales to the extent that he was forced by the infringement to reduce his own price”. Jacob J. also held that as part of this fifth principle that a Claimant who obtains damages for sales by the Defendant which he has proved would have been made by him in the absence of the infringement, will be entitled to damages on the basis of a reasonable royalty for all the other infringements. With regards trade mark cases it has been doubted whether this particular principle applies to all types of trade mark cases unless the trade mark proprietor had licensed others to use the trade mark and charged for its use.

In the case of Reed Executive PLC v Reed Business Information Ltd [2004] R.P.C. 40 Jacob L.J. said in obiter comments that he was not convinced the user principle automatically applied in trade mark or passing off cases especially where the mark was not licensed out.

It seems that if you can prove loss or you show you have licensed the trade mark in the past you can avail of the user basis in an enquiry into damages for all infringement. But not where you simply use the name and are looking for damages where damages cannot be proved.

By Michael Coyle at Lawdit Solicitors

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