Maximizing Compensation in IP Cases: A Guide for General Counsel
As stewards of your company's intellectual property (IP), it is paramount that you understand what damages are available and that you seek appropriate compensation when your company’s IP is threatened. In this guide, we'll delve into the actionable steps you can take to maximize compensation for IP infringement, along with some examples that can help you navigate legal actions for IP compensation.
Understanding Available Damages
When pursuing damages for IP violations, it's crucial to understand what types of compensation for IP infringement are available in order to implement effective strategies for IP damages:
Calculating IP Damages in Economic Losses:
Loss of Profits: If an infringing party's actions directly impact your company's revenue, you may be entitled to disgorgement of profits, which means you will be compensated an amount equivalent to the profits lost due to the infringement. For instance, if a competitor uses your trademark on inferior products, resulting in a decline in your sales, you can seek damages reflecting the lost profits.
Reasonable Royalties: In cases where proving actual damages is challenging, courts may award reasonable royalties. This involves determining the amount the infringer would have paid for a license to use your IP legally. For example, if a company uses your patented technology without permission, you can seek royalties equivalent to what you would have charged for licensing.
Statutory Damages:
Trademark and Copyright Cases: Statutory damages provide a predetermined amount per infringement, offering a simpler method of compensation. For instance, if someone reproduces and distributes your copyrighted material without authorization, you may be entitled to statutory damages as specified by law.
Punitive Damages:
In cases of willful infringement or egregious misconduct, punitive damages may be awarded. These damages go beyond compensating for losses and aim to punish the infringing party. For example, if a competitor knowingly uses your patented invention despite being aware of your rights, punitive damages may be warranted.
To give you a better idea of how these damages can be awarded in different types of cases, you will find some practical examples below:
Scenario 1: Trademark Infringement on E-Commerce Platform
A third-party seller on a popular e-commerce platform is using a confusingly similar trademark to yours, causing customer confusion and diverting sales. This gives you the right to pursue compensation for lost profits resulting from decreased sales and brand dilution, and depending on whether the infringement was willful, your best bet would be Pursuing Damages for IP Violations in the form of statutory damages and punitive damages.
Scenario 2: Copyright Infringement by a Competitor
A competitor reproduces and distributes your copyrighted marketing materials without permission, leading to a decrease in your marketing effectiveness and brand reputation, you can claim damages for lost profits and statutory damages for each unauthorized reproduction.
By understanding the available avenues for compensation and leveraging practical examples, you can effectively maximize compensation in IP infringement cases. For personalized legal guidance on protecting your company's IP rights and seeking appropriate compensation, don't hesitate to reach out to our team at Trestle Law here.