IP Information & News

Can moral prejudice contribute to damages in an infringement action?

The issue of damages is often on the mind of proprietors when they issue proceedings for infringement of an IP right. Damages are seen to provide compensation for the infringer’s actions and so the calculation of damages is a well debated subject.

Case law on the calculation of damages before the English Court is often focused on financial matters (see Ultraframe (UK) Ltd v Eurocell Building Plastics [2006] EWHC 1344 for patents; and 32Red Plc v WHG International Limited & Ors for trade marks, as examples) and often avoids the more subjective, non-economic matters, such as the moral prejudice that may be suffered as a result of infringement of an intellectual property right. This is understandable as non-economic matters are more difficult to assess due to their ostensibly subjective nature. However, what if a proprietor of an IP right wishes to pursue damages in respect of something more subjective, like the embarrassment caused by an infringement or the trouble caused by the infringer’s bad faith — should that be the case.

The Intellectual Property Enforcement Directive (2004/48) sets out the factors that should be considered when damages are being calculated in respect of infringement of an IP right. Article 13(1)(a) of the Directive states that when damages are set, they should take into account all appropriate aspects, which includes elements other than economic factors, such as the moral prejudice caused to the right holder by the infringement.

The Intellectual Property Enforcement Directive is implemented into law in the UK by Statutory Instrument 2006/1028, which echoes the above sentiment concerning the calculation of damages — that there is a basis in UK law for claiming damages in respect of a moral prejudice caused by infringement of an intellectual property right.

The issue of damages in respect of moral prejudice has also been visited recently by the Court of Justice of the European Union, the highest court in Europe, where it was held (C-99/15) that compensation for moral prejudice can be awarded in respect of infringement of an IP right.

That is to say, there is not only basis in UK statute for the award of damages based on moral prejudice, but also basis in a decision from the highest court in Europe for the award of damages based on moral prejudice.

It remains to be seen whether or not the decision by the Court of Justice of the European Union will have any broader influence in the calculation of damages. What is clear is that the law does provide basis for at least making a claim for damages calculated based on moral prejudice caused by infringement of an IP right.

The precise wording of the law, which will not be restated here for brevity, sets out that such damages may be awarded where appropriate. It is therefore incumbent on proprietors, should they consider themselves to have been morally prejudiced by an infringer, to set out why compensation in respect of such moral prejudice is appropriate — and not be frightened of doing so based on the decisions of what are ultimately lower courts.

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