Trademark infringement - overheads not deductible

Posted: 15th November 2012

In a case involving parallel importation and unauthorised re-packaging of medical products, the Court of Appeal has ruled on the correct methods of calculation to be employed when assessing profits made from trade-mark infringements.

The owners of the trade marks (the claimants) had sought an account of profits after the parallel importer (the defendant) brought large quantities of the claimants’ goods into the UK and repackaged them for sale on the domestic market before re-applying the claimants’ registered trade-marks. There would have been nothing objectionable in that activity had the defendant given the claimants’ notice before marketing the re-packaged products and supplied them with a sample.RCJ

The defendant admitted infringement of the claimants’ trade-marks and the latter elected for an account of profits, rather than for an assessment of damages. The High Court assessed those profits on the basis that more than 58,000 infringing products had been sold but allowed a deduction not only of the direct costs associated with the importation and sale of the products but also to reflect a proportion of the defendant’s general overheads.

In allowing the claimants’ appeal, the Court of Appeal held that they were entitled to an account of the net profits made by the defendant from the infringements. There was no basis for challenging the judge’s assessment of the number of infringing products sold; however, in calculating net profits, the judge had erred in allowing the defendant to deduct a proportion of its general overhead costs.