proving damages in cases of infringement of intellectual property rights
TRADEMARK INFRINGEMENT DAMAGES IN A GLOBALIZED, …
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94 THE TRADEMARK LAWYER CTC Legal Media TRADEMARK INFRINGEMENT DAMAGES IN A GLOBALIZED, DIGITAL AGE Résumé Pat Breslin, CEO, Breslin Consulting LLC Pat is an economist and expert in IP damages, valuation, and economic and financial analysis. He has over 20 years of experience valuing transactions in litigation and other dispute resolution contexts, and in multiple jurisdictions. IP types valued include patents, trademarks and brands, trade secrets, technology, know-how, and copyrights. Pat was also CEO of a technology firm, RelatableTM, and has extensive IP licensing and negotiation experience in actual arm’s length transactions. He also managed an R&D team and IP portfolio related to software, music and media, and e-commerce solutions. T his article examines interrelationships between trademarks and other forms of IP protection that, together with trademarks, play pivotal roles in global IP disputes. Such interactions appear to expand with globalization and the expanded role of the digital economy. Increasingly, in this dynamic environment, the value of trademarks and other IP is both recognized and disputed. With this backdrop, we analyze current and recent trademark infringement cases and related trends, with a focus on monetary awards and other forms of relief. With IP protection comes enforcement and, potentially, remedies if infringement liability is found and/or IP rights are violated. With respect to enforcement, interactions between trademarks and related IP elements are often seen in jurisdictions from China to the US, and among other countries globally. They also tend to cross – i.e. in the digital economy. In the digital realm, protecting trade and service marks, trade dress and brands for both physical products, and for the digital means of designing and selling them, poses new challenges. Brand survival in a globalizing and digitalized context may depend on a multi-pronged approach, with multiple IP elements often working in combination with trademarks to protect consumers and the business interests of IP owners – as observed in the Jaguar Land Rover Ltd. matter in China, discussed below. Of course, when trademark and related IP rights are infringed (or alleged to), the question becomes, what is the remedy? Along with the new jurisdictional trends noted above may come different answers to this key question. While each inquiry should be case-specific and fact-intensive in any event, not surprisingly, global divergence in general practices is often seen among jurisdictions. Still, IP protection and enforcement practices are evolving and, in notable cases, not all developments are as would be expected. While divergence exists, so too does some convergence. Neither is the norm. We focus on three trademark-related cases, two within China, and one in the US, to illustrate the trends noted above. Let’s begin ‘where the rubber hits the road’ – the landmark decision in Jaguar Land Rover Ltd. v. Jiangling Holdings et al., (March 13, 2019) (JLR v. Jiangling, or JLR). In this decision, JLR prevailed in its claims of unfair competition against Jiangling, whom it accused of copying its design for the successful Land Rover Evoque model SUV – by producing and selling Jiangling’s “Landwind” model. This rare victory for a foreign automaker against an alleged Chinese vehicle design copy is noteworthy. Here, the Beijing Chaoyang District Court applied Article 6.1 of the China 2017 Anti-Unfair Competition Law (AUCL). Previously, JLR had been seeking to pursue patent infringement claims against Jiangling for copying the Evoque’s design. But both companies’ design patents were contested and found invalid under Chinese legal procedures. This, and the fact that JLR later attained a successful judgement related to its trade dress and unfair competition claims, is further testament to the value in maintaining multiple IP assets relating to the same products and/or commercial activity. The cost of confusion: Trademark infringement damages in a globalized, digital age Pat Breslin, CEO of Breslin Consulting LLP, discusses the pivotal roles that trademarks and related IP play in global IP disputes, in the contexts of globalization and the expanding digital economy. Pat Breslin
Transcript of TRADEMARK INFRINGEMENT DAMAGES IN A GLOBALIZED, …
94 THE TRADEMARK LAWYER CTC Legal Media
TRADEMARK INFRINGEMENT DAMAGES IN A GLOBALIZED, DIGITAL AGE
RésuméPat Breslin, CEO, Breslin Consulting LLCPat is an economist and expert in IP damages, valuation, and economic and financial analysis. He has over 20 years of experience valuing transactions in litigation and other dispute resolution contexts, and in multiple jurisdictions. IP types valued include patents, trademarks and brands, trade secrets, technology, know-how, and copyrights. Pat was also CEO of a technology firm, RelatableTM, and has extensive IP licensing and negotiation experience in actual arm’s length transactions. He also managed an R&D team and IP portfolio related to software, music and media, and e-commerce solutions.
This article examines interrelationships between
trademarks and other forms of IP protection
that, together with trademarks, play pivotal
roles in global IP disputes. Such interactions appear to
expand with globalization and the expanded role of the
digital economy. Increasingly, in this dynamic environment,
the value of trademarks and other IP is both recognized
and disputed. With this backdrop, we analyze current and
recent trademark infringement cases and related trends,
with a focus on monetary awards and other forms of
relief.
With IP protection comes enforcement and, potentially,
remedies if infringement liability is found and/or IP rights
are violated. With respect to enforcement, interactions
between trademarks and related IP elements are often
seen in jurisdictions from China to the US, and among
other countries globally. They also tend to cross – i.e. in
the digital economy.
In the digital realm, protecting trade and service marks,
trade dress and brands for both physical products, and for
the digital means of designing and selling them, poses new
challenges. Brand survival in a globalizing and digitalized
context may depend on a multi-pronged approach, with
multiple IP elements often working in combination with
trademarks to protect consumers and the business interests
of IP owners – as observed in the Jaguar Land Rover Ltd.
matter in China, discussed below.
Of course, when trademark and related IP rights are
infringed (or alleged to), the question becomes, what is
the remedy? Along with the new jurisdictional trends
noted above may come different answers to this key
question. While each inquiry should be case-specific
and fact-intensive in any event, not surprisingly, global
divergence in general practices is often seen among
jurisdictions.
Still, IP protection and enforcement practices are
evolving and, in notable cases, not all developments are
as would be expected. While divergence exists, so too
does some convergence. Neither is the norm. We focus
on three trademark-related cases, two within China, and
one in the US, to illustrate the trends noted above.
Let’s begin ‘where the rubber hits the road’ – the
landmark decision in Jaguar Land Rover Ltd. v. Jiangling
Holdings et al., (March 13, 2019) (JLR v. Jiangling, or JLR).
In this decision, JLR prevailed in its claims of unfair
competition against Jiangling, whom it accused of copying
its design for the successful Land Rover Evoque model SUV
– by producing and selling Jiangling’s “Landwind” model.
This rare victory for a foreign automaker against an
alleged Chinese vehicle design copy is noteworthy. Here,
the Beijing Chaoyang District Court applied Article 6.1
of the China 2017 Anti-Unfair Competition Law (AUCL).
Previously, JLR had been seeking to pursue patent
infringement claims against Jiangling for copying the
Evoque’s design. But both companies’ design patents
were contested and found invalid under Chinese legal
procedures. This, and the fact that JLR later attained a
successful judgement related to its trade dress and unfair
competition claims, is further testament to the value in
maintaining multiple IP assets relating to the same
products and/or commercial activity.
The cost of confusion:Trademark infringementdamages in aglobalized, digital agePat Breslin, CEO of Breslin Consulting LLP, discusses the pivotalroles that trademarks and related IP play in global IP disputes, inthe contexts of globalization and the expanding digital economy.
Pat Breslin
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JLR succeeded in overcoming what observers note as the AUCL’s
high hurdles for plaintiffs to prove claims of misappropriation of
trade dress rights. Among the law’s requirements, a plaintiff must show
its own design is distinctive, that the defendant is using it or a similar
design, and that the unauthorized use is likely to confuse consumers.
Regarding remedies, JLR succeeded in obtaining a permanent
injunction against Jiangling further making, displaying and selling
the infringing “Landwind” vehicle. The Court also required Jiangling
to make public statements to limit further confusion to consumers
regarding the copied vehicle.
An undisclosed award of monetary compensation and costs was
also ordered by the Court – certainly a welcome aspect of JLR’s relief
and, in principle, broadly welcome among other IP rights holders.
While the amount of damages awarded in JLR is unknown, the
levels of monetary compensation awarded may be modest in any
event, given prior history with such cases in China. Still, the JLR case
does follow another notable case in China in which monetary
compensation was awarded and disclosed – while other aspects of IP
enforcement typically applied in other countries also prevailed.
August 2017 saw what is regarded as the largest trademark infringement
damages award in China – reported to be USD 1.5 million to US
shoemaker, New Balance. The Suzhou Intermediate People’s Court,
located near Shanghai, decided in favor of the athletic footwear
company New Balance against defendants that misappropriated the
famous slanted “N” logo, affixing it to shoes under competing brands
such as “New Boom.”
The New Balance matter was decided under the “Trademark Law
of the People’s Republic of China”, which took effect in May 2014.
As reported in press coverage of the case, prior to the 2014 law, “the
vast majority of infringement cases were paltry, coming in below the
maximum statutory amount of about $75,000. The new law increased
that to about $450,000, making the New Balance award [of $1.5 million]
particularly significant.”
But the adequacy of this monetary award still comes into question.
According to a copy of the decision obtained by the New York Times,
the Court states that defendants “seized market share from New Balance”
and “drastically damaged the business reputation of New Balance.”
Given these pronouncements of lost market share – with inevitable
effects on sales and profits – as well as other damage experienced by
New Balance, the award of USD 1.5 million would seem unlikely to
be adequate to fully compensate the infringement.
Still, like with JLR, the New Balance case could reflect trademark
enforcement in China moving in the direction of other jurisdictions,
i.e. those with more long-held practices for IP protection. In fact, the
USD 1.5 million award follows an award of USD 500 thousand to
New Balance in April 2017, in a court in the eastern city of Hangzhou.
It was also reported that New Balance has other cases pending in
China, in addition to those producing its significant monetary relief
to date.
Adequate trademark protection in China continues to face several
other challenges. In particular are two major issues: 1) pervasive
(non-business) “squatters” that register trademarks associated with
other foreign brands for speculative reasons – i.e. hoping to sell them
at very high prices, and 2) an array of “subclasses” in the Chinese
trademark registration system. These subclasses allow such squatters
to register trademarks on granular sub-categories of goods before
the companies that own the brands at a higher level can do so. Under
other systems, such underlying product areas would presumptively
enjoy trademark protection under more general, broader registration
categories.
In fact, in 2015 a Chinese court fined New Balance USD 16 million
when it lost a case to an individual who had registered Chinese
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As reported in presscoverage of the case, prior to
the 2014 law, “the vast majority of infringement cases were paltry, coming in below the
maximum statutory amount ofabout $75,000. The new law
increased that to about $450,000,making the New Balance award
[of $1.5 million] particularly significant. ”
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TRADEMARK INFRINGEMENT DAMAGES IN A GLOBALIZED, DIGITAL AGE
words for the name New Balance. While the fine was later reduced to USD 700 thousand, New Balance continued to appeal this case.
While China’s more recent IP enforcement practices show signs of trending closer to those in other large economies, a high-profile trademark dispute in the US alleges practices thought to be more commonly encountered in China. Apparently, trends do not all move in the same direction.
Williams-Sonoma, Inc. v. Amazon.com, Inc., 3:18-cv-07548 (N.D. California) (December 14, 2018)In December 2018, Amazon.com, Inc. was sued for alleged trademark and patent infringement in the Northern District of California by Williams-Sonoma, Inc. (WSI) – a US-based manufacturer and retailer of home products and furniture under various well-known brands, such as West Elm, and Pottery Barn.
For example, the complaint alleges Amazon’s “infringement of [designs, patents], infringement and dilution of its famous federally-registered service mark WILLIAMS-SONOMA… infringement of Plaintiff ’s common law trademarks… [and practicing] unfair competition and false designation of origin.”
It continues by alleging Amazon’s “pattern of trading upon WSI’s goodwill and infringing WSI’s [IP through] unauthorized use of the registered service mark WILLIAMS-SONOMA… proprietary designs and unauthorized commercial manufacture, use, importation, offer for sale, and sale of infringing goods in connection with [WSI products].”
As an example, WSI’s complaint alleges that Amazon.com sales of the “Amazon Orb Chair” infringe its patented design and tradenames associated with its West Elm brand “Orb” chair sold at retail for about USD 300, by offering a “nearly identical” chair at a low price while using a similar “Orb” name.
Also, of note are WSI’s allegations that Amazon is operating an unauthorized online retail business using the name “by Williams-
Sonoma” to sell the unauthorized products, damaging WSI brands
and confusing consumers in violation of US trademark laws.
Here the potential cost of confusion runs quite high. In addition
to injunctive relief, WSI seeks to recover “Defendant’s profits, actual
damages, enhanced profits and damages, and reasonable attorneys’
fees.” Under US trademark law, enhanced damages may be up to
three times the quantum of actual damages.
It is also noteworthy that the complaint seeks “Statutory damages
of up to $2,000,000 per counterfeit mark per type of goods sold by
Defendant.” Indeed, the alleged claims of Amazon’s infringement
concern multiple trademarks on multiple types of goods – which
would potentially multiply the USD 2 million award by the total
number of such cases.
Note that the “per mark… per type of goods” multiple of
USD 2 million exceeds the entirety of the monetary award obtained
by New Balance in its landmark 2017 case in China. Here, there is
apparent divergence in terms of disparities in levels of damages likely
attainable by successful plaintiffs in different jurisdictions.
Nevertheless, examples of recent rulings in China could indicate
more convergence to come, at least with regard to principled
approaches to remedies for trademark infringement and related
questions about the value of IP. And without consistency on
principles, the details of other disparities could remain moot.
Contact: Breslin Consulting LLCAddress: 1200 18th Street NW, Suite 700,
Washington, DC 20036
Tel: (202) 468-9347
Email: [email protected]
Website: www.breslinconsulting.com
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