Commercial Court of Brussels Rules on Calculation of Damages in Counterfeiting Case

On 23 June 2011, the Commercial Court of Brussels (the “Court”) handed down a judgment in which it shed an interesting light on the elements taken into account for the calculation of damages awarded to the a trade mark holder to compensate for the sale of counterfeit products.

In the case at hand, Converse Inc. (“Converse”), the holder of several trade marks for shoes, hats and clothing, filed an action for damages and handing over of profits against Blue Factory International NV (“BFI”), the director of BFI, Mr. Vereecken, and Brighton International Ltd. (“Brighton”). Brighton had imported a shipment of counterfeit Converse shoes originating from China to Belgium and had sold the bulk of the shipment to BFI. Subsequently, Mr. Vereecken had sought buyers for the shoes which were eventually sold to the German company Media System GmbH. BFI and Brighton had used fake statements of authenticity in order to demonstrate the allegedly authentic nature of the goods.

The Court decided that the defendants had infringed Converse’s trade marks. Pursuant to Article 2.21 of the Benelux Treaty of 25 February 2005 regarding Intellectual Property (Benelux-Verdrag inzake de Intellectuele Eigendom/ Convention Benelux en matière de propriété intellectuelle – the “BCIP”), the Court ordered the infringers to pay damages to Converse. As regards the calculation of those damages, the Court held that Converse incurred – amongst others – the following damage due to the trade in counterfeit shoes by the defendants: damage to reputation, loss suffered, lost profit, loss of market share, moral damage, devaluation of the commercial value of the trade marks and costs of research and litigation. According to the Court, the damage was all the more considerable given that the customers were deceived with regard to the origin of the shoes.

The Court added that an exact calculation of the injury suffered based on the above elements was impracticable and therefore decided to award a lump sum. Article 2.21(2).b of the BCIP provides that, instead of calculating damages on the basis of all appropriate aspects, the damages can be fixed as a lump sum. Interestingly, the Court further detailed the elements that determined the level of the lump sum. It held that:

  • the more distinctive a trade mark, the greater the damage;
  • the higher the degree of similarity between the original and counterfeit goods, the greater the damage;
  • an eye-catching positioning of the infringing signs results in greater damage;
  • the more an infringing sign is used, the greater the damage;
  • the higher the market value of the original products, the greater the damage; and
  • the more the trade mark holder invests in advertising its trade mark, the greater the damage.

In view of these principles, the Court estimated the damage suffered by Converse at EUR 50.00 for each traded pair of infringing shoes. Further, the Court ordered the defendants to transfer to the trade mark holder the profits made from the infringing products in accordance with Article 2.21(4) of the BCIP.