Damages for IP infringement: 70 % of infringer’s profits not too much

Besides the decor, these glasses were bought
because you can drink out of them, the Court said...

On October 12, 2012, the Munich District Court found, in case of an imitation of a glass protected by German copyright law, that the claimant is allowed to claim recovery of the defendant’s profits while the defendant is not allowed to deduct more than 30 % from the profits made; the claimant is reported to have recovered some EUR 400,000.00.

Starting with the general rule that infringer’s profits can only be demanded to the extent to which they are obtained as a result of the infringement, the Court argued that this is not a rule of strict causality but rather amounts to an evaluation of the different motives for buying the imitation.  In the case at hand the defendant had challenged the claimant’s argument that the decor of the infringing glasses was the only buying motif.  However, the Court considered the decor of the original to be dominating, with the shape of the glasses and “their character as being made manually and not manufactured by a machine” also being a cause of the purchase decision.  In assessing these facts the Court found a share of 70 % of the purchase decision to be triggered by the decor of the infringing device.

Interestingly, the defendant argued that the claimed and granted profits were up to 20 times higher than the claimant would have received by way of contractual royalties.  However, the Munich Court found that the infringer’s profits are not limited by the amount of a fictive license and may exceed the latter since the “surrender of the infringer’s profits precisely aims to skim off the advantage obtained by the infringer due to the infringing acts”.  Likewise, the Court rejected the defendant’s further argument that the profits made must be reduced “due to an allegedly slight negligence” when committing the infringement.

The decision is of significance because there are voices claiming that recovery of damages under the various approaches – proprietor’s lost profits, infringer’s profits, reasonable royalty – should lead to comparable results.


Thanks to Adrian Kleinheyer (PhD candidate) for spotting this judgment.