Last month (October, 2023) the Delhi High Court granted damages worth 12 lacs to the German footwear brand PUMA, for its iconic leaping cat logo and trademark. Protecting your brand’s intellectual property, such as trademarks, brand-name and logo, taglines and designs are extremely valuable in today’s competitive markets. In this post, Compliance Calendar brings to you details of this landmark judgment in trademark laws, while also highlighting how damages are calculated in cases where a trademark is involved in legal disputes.
1. Appointment of Local Commissioner - As per Indian civil law, courts appoint a Local Commissioner to conduct a preliminary inquiry after a suit is filed in a court of appropriate jurisdiction. At this stage, a court-appointed officer visits the premises of the alleged infringing party and seizes copies of the infringing goods. The inquiry conducted on the premises of the defendant in this case led to forfeiting of several boxes containing shoes and socks with the fake PUMA mark as well as PUMA stickers. The Local Commissioner's report revealed that 'Kumkum Shoes' had generated profits ranging from approximately 18 lakh to 19 lakh through the sale of fake PUMA shoes.
2.Enlisting trademark registration details, revenue and advertising expenditure that lend weight to the mark - Any party alleging claim over a trademark must put forth details of not only the trademark registration granted in India but also highlight global recognition of its mark to consolidate their standing in a court of law. The mark ‘PUMA’, apart from being registered for shoes was also registered for apparel, clothing, sportswear, gloves, caps etc, and generated a cumulative sale worth 1000 crores in India. The petition also enlists more than 51 crores being spent on promotion and advertising, details of Indian as well as global celebrities endorsing the brand and their trademark registration details in different countries.
3.Claiming damages - With this background, the Plaintiff company Puma, claimed general damages as well as compensatory and punitive damages. The court while accepting the claims of the plaintiff noted that the infringing party was certainly aware of the brand equity enjoyed by the ‘PUMA’ mark and has deliberately chosen to manufacture and sell counterfeit products under the said mark and ride piggy-back on the Plaintiff’s goodwill and reputation.
The Trade Marks Act as well as associated High Court rules provide guidance for civil remedies and damages in case of trademark infringement. In this case, the Rule 20 of the Delhi High Court Intellectual Property Rights Division Rules, 2022, states that courts will consider the following factors in determining quantum of damages:
Lost profits suffered by the injured party;
Profits earned by the infringing party;
Quantum of income which the injured party may have earned through royalties/license fees, had the use of the subject IPR been duly authorized;
The duration of the infringement;
Degree of intention/neglect underlying the infringement;
Conduct of the infringing party to mitigate the damages being incurred by the injured party;
In the computation of damages, the Court may also take the assistance of an expert.
Thus, the damages awarded are generally compensatory in nature and aim to compensate a trademark owner for financial as well as reputational loss suffered due to the infringement. In India, the courts necessarily look at aggravating factors such as actual loss suffered, loss of reputation, and the profits gained by the infringing party.
Based on the report prepared by the Local Commissioner carrying out the investigation, it was revealed that the infringing party sold each pair of shoes for 200. Based on an estimate of sale of two hundred pairs of shoes per week, the weekly and monthly sales revenue would be 40,000 and 160,000 per month. Given that the defendant was carrying out this scrupulous activity for two years, the court estimated the total revenue to be
38,40,000. If the costs of raw material etc. are considered to be 50% of the same, the Defendant made profits of approximately Rs.18 - Rs.19 lakhs. In addition, there were no mitigating factors in the present case, which would give any benefit of doubt to the Defendant.
Thus, the Court imposed damages worth 10 lakhs as well as additional costs of 2 lacs, to be paid within eight weeks.
A decree of injunction was passed against the defendant to cease the infringing act of imposing counterfeit trademarks. All available quantities of the shoes with the PUMA mark were required to be handed over to the Plaintiff’s representative.
The Delhi High Court further emphasized that the defendant's utilization of the 'PUMA' mark and logo on substandard products and use of inferior raw-materials not only constituted a breach of PUMA's legal rights, but posed a reputational risk to their associated trademarks. Thus, courts also tilt in favor of awarding punitive damages in addition to statutory damages, in case of wilful violation of a known brand’s trademark by an infringing party.
For the latest updates on trademark filing, trademark registration and trademark violations, consult the legal resources available on our website at Compliance Calendar. You may also consult our in-house legal professionals to ensure that you have the most up-to-date advice on filing for trademarks and pursuing a case for trademark violation in India.