Under the Industrial Property Law, a rights holder may demand that an infringer surrender any benefits obtained unlawfully by way of trademark infringement. In practice, calculating the amount of profits can be challenging. While the amount of profits should be calculated on a case-by-case basis, there are some general principles and issues that should be considered.
The term 'benefits' should be understood broadly and, theoretically, may include more than the infringer's actual financial gains. However, the value of benefits must be established during the proceedings. As the profits must be somehow measurable, in practice, rights holders usually claim the return of financial profits obtained from the sale of goods and services bearing the infringing trademark. For this reason, it is worth focusing on the methods for calculating the return of such financial profits.
The general principle seems simple: to calculate the amount of unlawfully obtained benefits, the net profit relating to the infringement, understood as the amount that the infringer actually gained with relation to the infringement must be calculated. The rights holder is not required to:
- prove the amount of loss that it suffered due to the infringement; or
- link its loss to the benefits that the infringer enjoyed.
Theoretically, the simple subtraction of totality of income and costs relating to the infringement should be sufficient. Unfortunately, deciding the amount of the benefits is usually a much more complex exercise.
Although there can be many case-specific problems, there are some general issues of which rights holders should be aware. The first is a rights holder's lack of precise knowledge regarding the amount of benefits obtained by the infringer. Despite the fact that an infringer generally always holds relevant data, Polish law obliges the claimant to specify the amount of benefits in a statement of claim. The IP Enforcement Directive includes:
- a requirement to grant IP owner information claims against the infringer; and
- measures obliging the infringer to disclose relevant data.
However, documents may be requested only during the main infringement proceedings. Therefore, before taking legal action, the rights holder must rely on other sources of information, such as market surveys or its own experience. The rights holder may modify its assessment during the proceedings. Nonetheless, the inaccurate assessment of the benefits may cause:
- the rights holder to bear excessive costs of proceedings (the court fees are calculated in proportion to the amount claimed); or
- the remaining part of the claim to be time-barred (eg, when the assessed amount is too low).
Further, some well-established methods of avoiding the problem of prescription of claims during main proceedings have recently been questioned by the Supreme Court.
Another significant problem is establishing which of the infringer's costs should be considered when calculating the amount of profit. It is commonly agreed that direct costs (ie, the cost of materials and labour) should be subtracted from such income. However, it is unclear whether indirect and overhead costs (eg, general employee costs, rent, financing, management and headquarter services) should be considered, especially when the infringing product was one of many products offered by the infringer. Some commentators argue that costs which the infringer would have incurred if the infringement had not taken place should not diminish the value of the unlawfully obtained benefits. Conversely, others believe that overhead costs should be subtracted proportionally from the income earned.
As the assessment of costs and calculations is challenging, the courts tend to rely on expert opinions when calculating the amount of unlawfully obtained benefits from a trademark infringement. The parties are allowed to comment on the expert's opinion and suggest methods of calculation. Convincing the court-appointed experts of the parties' arguments is often a crucial part of determining the amount of benefits, but may also become problematic if a given expert does not share the rights holder's position.
As outlined above, calculating the amount of benefits in trademark infringement proceedings is challenging and may cause the proceedings to take much longer and become more complex. Conversely, the amount of pecuniary compensation received by the rights holder can often be significantly greater than in case of claims for damages. Demanding the surrender of unlawfully obtained benefits can be rewarding, provided that rights holders are aware of the potential problems and are prepared to solve them before and during the court proceedings.
For further information on this topic please contact Szymon Gogulski or Mikolaj Skowronekat Soltysinski Kawecki & Szlezak by telephone (+48 22 608 7000) or email ([email protected] or [email protected]). The Soltysinski Kawecki & Szlezak website can be accessed at www.skslegal.pl.