Certifiably a deterrent…..

In a decision handed down on 13 June 2014, the Federal Court awarded additional damages as a deterrent to trade mark infringement – the first reported case where damages have been awarded on this basis.

In Halal Certification Authority Pty Limited v Scadilone Pty Limited, a wholesale supplier of kebabs was found liable for trade mark infringement after using without permission a logo registered by the Halal Certification Authority. The Authority is in the business of licensing its logo to restaurants and food manufacturers who prepare food in accordance with Islamic law.

The Court calculated ordinary damages as a nominal $10. The Authority did not provide evidence of having suffered any actual loss as a result of the infringement. In some cases, damages are calculated by reference to lost licence fees. But the Court held that this was not an appropriate measure of damages in this case, because the infringer would not have paid for a licence in any event. Fortunately for the Authority, the Court also awarded additional damages under s.126(2) of the Trade Marks Act., being the Authority’s lost licence fees plus a 50% uplift.

Section 126(2) was introduced into the Trade Marks Act as part of the “Raising the Bar” reforms in April 2013. The power to award additional damages has existed under other IP legislation for many years, but trade mark owners had previously been limited to compensation for damage actually suffered.

The Court found that it was appropriate to award additional damages in this case at a rate higher than the licence fees normally charged by the Authority, because an infringer would otherwise in effect “obtain a compulsory licence to use a trade mark subject only to paying for it”. In deciding to apply an uplift of 50%, the Court took into account the flagrancy of the infringement, the conduct of the infringer and the benefit to the infringer of using the Authority’s logo.

The Court also ordered that the infringer publish corrective advertisements in two Islamic newspapers of the Authority’s choice.

The case highlights the value to trade mark owners of the Court’s new power to award additional damages, especially where actual loss is difficult to establish.