When someone files a lawsuit for a counterfeiting action, usually damages are requested.
You can make reference to Article 2043 of the Civil Code and to Article 125 of the Industrial Property Code.
In this post we talk about:
Article 2043 of the Civil Code provides that:
“Any act committed either with intent or with fault causing an unjustified injury to another person obliges the person who has committed the act to compensate damages”.
Which evidences must be filed
It follows that the person claiming compensation must demonstrate the following three points:
- the infringer committed an act with intent (intentional) or with fault (characterized by negligence, carelessness, incompetence or not complying with laws, regulations, orders or disciplines);
- the damage suffered as a result of the infringement;
- The infringer caused the damage (existence of a causal link between the act of the infringer and the damage)
According to the prevailing settled case-law, the fault of the infringer is presumed when the counterfeiting concerns a registered trademark, because such type of mark is subject to a system of legal advertising.
The unregistered trademark (a trademark which is only used, not filed neither registered) is protected through the rules of unfair competition, so the fault of the infringer is presumed on the basis of article 2600, 3) of the Italian Civil Code, according to which “once verified acts of unfair competition, the fault is presumed”.
Amount of damages
As for the amount of damages, you can refer to the criteria normally used in case of tort liability under the article 2043 of the Civil Code , namely actual damage and lost profit.
Actual damages include all the costs caused by the counterfeiting, including for example legal expenses and advertising expenses, made to neutralize the effects of counterfeiting. It is considered actual damage also the reduction of the brand value as a result of the counterfeiting.
More complicated is the quantification of the “lost profit”, usually made on the basis of three criteria, applied cumulatively and sometimes alternatively:
- the loss of earning of the trademark owner, as a result of counterfeiting;
- royalties which would have been paid by the infringer to the injured if the parties had entered into a license agreement;
- profits made by the infringer as a result of counterfeiting.
The opinion of the Italian Corte di Cassazione
There exists a further criterion for determination of damage, namely article 1226 of the Italian Civil Code, which states:
“If the damage cannot be proven in tis precise amount, it is liquidated by the Court with equitable evaluation”.
Under the rules governing the burden of proof – and in particular Article 2697, paragraph 1) of the Italian Civil Code
“Who wants to enforce a right to a Court must prove its right”
it is required that who is seeking compensation for damages is able to provide proof of damage, for example by showing the data related to lower sales and profits that occurred in the period after the occurrence of counterfeiting.
In this matter, brought to the attention of the Court, the applicant submitted the following question of law:
“Whether it complies with articles 1226 and 2697 of the Italian Civil Code, in the assessment of damages as a result of trademark infringement, to use the criterion of equity, in the absence of any evidence from the trademark owner of the contraction of sales or the loss of earning deriving from the counterfeiting, having as reference the only fact of the sales made by the counterfeiter”.
The response of the Supreme Court was affirmative. More specifically, the Court states that:
“It must be asserted the principle that the damage caused to trademark owner not necessarily consists of a reduction in sales or in a drop in turnover, as it can consist only in a reduction of sales potential and thus consist in a lower sales growth, without a corresponding reduction of sales or drop in turnover compared to the previous years. This happens, in fact, when sales are growing during the examined period and, in such cases, there is not any loss or reduction in sales, while there can be a damage deriving from the reduction of potential sales”.
As for the prescription, you can make reference to article 2947 of the Civil Code, according to which:
“The right to compensation for damage caused by unlawful act shall expire five years from the date on which the event occurred”
“in any case, if the offence is considered by law as a crime and for crime there is a longer prescription, this will also apply to civil action”.
Compensation of damages
Article 125, 1) of the Italian Industrial Property Code provides that:
“The compensation payable to the injured party is paid according to the provisions of article 1223, 1226 and 1227 of the Civil Code, taking into account all relevant aspects, such as negative economic consequences, including lost profits, profits made by the infringer and, sometimes, elements different from economic factors, such as moral prejudice caused to the right holder by the infringement”.
Article 125, paragraph 2; provides that
“judgment stating on payment of damages can put in order the payment in a lump sum determined by the results of the case and presumptions arising from. In this case, however, the loss of profit would not be less than royalties that infringer would have to pay if he had obtained a license for the holder of the right”.
In this way, the Court can overcome any difficulty in quantifying the damage.
Article 125, paragraph 3, finally, states that
“In any case, the holder of the infringed right may request the restitution of profits made by the infringer, as an alternative to compensation for loss of profit or to the extent that they exceed such compensation”.
This criterion, combined with the actual damage, is particularly useful when the owner of the mark suffered small or no decreases of its sales volume as a result of the counterfeiting.
If you have been victims of trademark counterfeiting and you would like a professional advice, get in touch with Eva Troiani law firm.