Intellectual Property Law Update: Damages for breach of copyright - does the punishment fit the crime?

Intellectual Property
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In Falcon Ltd v Rifai Fashions Pty Lts  (Falcon v Rifai), the Full Court of the Federal Court of Australia made a number of important findings with respect to the operations of ss 115(2) and (4) of the Copyright Act 1968 (Cth ) (Act).

In particular, the court held that a party who succeeds in an action for breach of copyright under s115(1) of the Act, which enlivens an entitlement to damages for breach of copyright:

  1. must make an election to seek either damages or an account of profits under s 115(2), but cannot seek to recover both (confirming the courts traditional approach);
  2. can only claim additional damages under s 115(4) if damages – but not an account of profits – are awarded under s 115(2); and
  3. is not required to show that the wrongdoer’s conduct was malicious or spiteful before becoming entitled to recover additional damages under s 115(4).


The Full Court also overturned the trial judge’s finding that a party must lead evidence to establish the value of its reputation as a starting point before reputational damages will be awarded for breach of copyright. However, given the Full Court awarded reputational damages of only $5,000 in this case, lawyers should advise their clients to lead expert evidence as to the value of their reputation or brand to maximise the recovery of reputational damages at trial.

Facts

Rifai Fashions Pty Ltd (Rifai) imported into Australia counterfeit fashion clothing under the “G-Star” brand from Thailand and China.

Facton Ltd, G-Star International BV and G-Star Australia Pty Ltd (applicants) own various interests in the G-Star brand. For example, Facton is the registered owner of various Australian G-Star trade marks, G-Star International BV is the designer and distributor of G-Star branded clothing, and the owner of the copyright in G-Star logos, and G-Star Australia Pty Ltd is the exclusive distributor in Australia of G-Star products.

In about September 2009, Rifai imported 2,857 items of counterfeit G-Star branded clothing, which it purchased for $35,000. These goods were seized by Customs and destroyed.

Shortly thereafter, the applicants’ solicitors sought and obtained undertakings from Rifai to the effect that Rifai would cease importing, marketing exhibiting in public, or offering for sale the infringing clothing. However, despite the undertakings, Rifai continued to offer for sale and sell the infringing clothing. 

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Adam Rollnik practises in commercial law

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