The Intellectual Property Laws Amendment (Raising the Bar) Act 2012, along with new section 126 of the Trade Marks Act 1995, provided the power to Courts to make an award for additional damages (also known as punitive damages) in respect of trade mark infringement.

This amendment brought the Trade Marks Act 1995 into line with other intellectual property regimes such as the Copyright Act 1968 and the Patents Act 1990. This article takes a look  at two recent cases in which punitive damages were awarded in respect of trade mark infringement.

Halal Certification Authority v Scadilone

In Halal Certification Authority Pty Limited v Scadilone Pty Limited [2014] FCA 614, the Federal Court found a kebab wholesaler, Quality Kebabs, and two other kebab shops liable for trade mark infringement after supplying restaurants with meat certified as halal using certificates which included a logo registered by Halal Certification Authority Pty Limited without its permission.

The Halal Certification Authority sought a  range of remedies opting for damages under the Trade Marks Act rather than an account of profits. In some cases, damages are calculated by reference to lost licence fees. The Court held that in this case it was unlikely that Quality Kebabs or the restaurants would have entered into a licensing arrangement. Accordingly, the Court held that there were no ‘lost’ licence fees. Moreover, there was no evidence to support the damages claim based on loss of value or reputation. The Court therefore only awarded the Halal Certification Authority $10 nominal damages.

Fortunately for the Halal Certification Authority, the Court used its new powers to award $91,005 in additional damages against Quality Kebabs. Various factors were taken into account in determining the amount of the additional damages, in particular the continued infringement after the notice, and the “arrogant attitude that he would continue getting away with his misconduct for as long as possible”  of the Director of Quality Kebabs. The amount was assessed at 150 percent of the annual wholesale certification fee for the two years of the infringement. 

Vertical Leisure and Anor v Skyrunner and Anor 

In another case (Vertical Leisure Limited & Anor v Skyrunner Pty Ltd & Anor [2014] FCCA 2033),the Federal Circuit Court awarded $300,000 in additional damages as a punitive measure to reflect the flagrancy of the Respondents’ conduct. The Respondents had been selling dancing poles and related materials, and reproducing the Applicants’ X-POLE (stylised) trade mark and copyright in an instructional manual and DVD, as well as in brochures and images without the authority of the Applicants on various websites including eBay. The Respondents took no part in the proceeding. In default, the Court found that the Respondents had infringed Vertical Leisure’s trade marks, copyright, and had engaged in misleading and deceptive conduct as well as passing off.

The Court noted there can be no “double dipping” and, “where damages are awarded under the Copyright Act, there can be no entitlement to damages for the same conduct for breaches of the Trade Marks Act, the Australian Consumer Law or passing off”. As the Respondents did not participate in the proceedings, there was no evidence of the number of infringing products that had been sold to evaluate compensatory damages. However, the Court awarded $94,800 as compensatory damages ($44,800 in lost profit and $50,000 for damage to reputation).

The award of $300,000 additional damages was based on the flagrancy of the infringement, the continuing infringing conduct despite being repeatedly put on notice, as well as the “need for deterrence to prevent similar infringements of trademark and copyright … particularly so in the case of exercise equipment where if inferior products are sold consumers are at risk”.

Finally, the Court noted that additional  damages are of a punitive kind and therefore financial gain is unnecessary. Substantial award of additional damages was made to “mark the Court’s recognition of the opprobrium attached to the defendants conduct”.

The cases above illustrate the value of the Courts’ power to award additional damages, especially where actual loss is difficult to establish.