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Trade mark infringement damages – the 'user principle' (finally!)

Written by Michael Coyle on 07 June 2013

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The ‘user principle’ is typically used in patent cases to work out damages owed when the Court cannot calculate the profits lost by the patent right owner caused by the infringement of their patent.  In trade mark law the usual scenario is that where a trade mark proprietor can show that it licences its respective mark in the course of business they can claim a reasonable licence fee for the use of their trade mark (going off their licensing history) as damages.  However, where there has been no history of licensing of the trade mark this option is not available to a proprietor.

Very often the problem in trade mark infringement cases is trying to determine damages.  It can be impossible to account for infringers profits where the equitable remedy is opted for and damages can also be very difficult to show especially on a small scale.  Not being able to use the ‘user principle’ has made it extremely difficult to determine damages in trade mark infringement cases.  Very often a proprietor of a trade mark will issue a claim against an infringer, not for damages, but merely to prevent the infringer from using its mark.  When the case arrives at trial damages can be elusive.

In the recent case of 32Red -v- William Hill, the Court the Judge implemented the user principle when assessing damages in trade mark infringement and had William Hill pay Red32 £150,000.00 in damages.  It was the Judge’s opinion that had the parties arranged a deal for the licensing of Red32’s trade mark, £150,000.00 is the deal they would have struck for the use of the mark in the manner is was used.

The Judge stated that the user principle should be based on ‘objective’ factors and should not be based on the ‘specific characteristics and circumstances’ of the parties to the claim.  So the financial circumstances of the parties are not material... but simply the worth of the use of the mark for the manner the mark was used.

My previous article written on the 'user principle' prior to this Red32 case discusses a number of cases showing the Courts reluctance to impliment the 'user principle'.  The article can be found at: http://www.lawdit.co.uk/news/381/10/Damages-on-a-user-basis-in-trade-mark-infringement and discusses the following cases:

(1) Dormueil Freres v Feraglow [1990] RPC 449;

(2) Irvine v Talksport [2003] EWCA Civ 423 [2003] FSR 35;

(3) Gerber v Lectra [1995] R.P.C. 383; and

(4) Reed Executive PLC v Reed Business Information Ltd [2004] R.P.C. 40   

 By Michael Coyle at Lawdit Solicitors.

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