As tempting as it might be to ignore these threats, your failure to properly deal with one may lead to an award of damages for greater than any actual loss suffered by the owner of the IP.
Section 115 (4) of the Copyright Act, Section 126 of the Trade Marks Act, Section 122 (1A) of the Patents Act and Section 75 (3) of the Designs Act all allow a Court to award “additional damages” over and above the actual loss suffered by the owner of IP.
In many cases these “additional damages” are for a sum significantly higher than the actual damages or loss suffered. At its most extreme, in the case of Zero Tolerance Entertainment v Venus Adult Shops Pty Ltd
Damages of $1 were awarded and additional damages of $150,000 were awarded. The criteria for awarding additional damages included:
(a) the flagrancy of the infringement;
(b) the need to deter similar infringement;
(c) the conduct of the Defendant after the act constituting the infringement or after the Defendant was informed of the alleged infringement; and
(d) any benefits accrued by the Defendant by reason of the infringement.
Other cases where significant additional damages have been awarded are the Rabin Footwear case ($370,000), PC Club Australia ($350,000) and TYN Electronic ($300,000).
As a corporation needs to be directed in its behaviour, those who are the controlling mind of the company, usually the directors, are also liable to personal awards of damages. As was the case in PC Club Australia where an award of additional damages of $150,000 was made against Mr Lee a director of the company.
In each of these cases, how the Defendants responded, or more likely failed to respond, to a cease and desist claim and the manner in which they defended the cases bought against them had a significant effect upon the sum of damages that was awarded against them. Clear legal advice and a strategy on how to handle a cease-and-desist letter are critical to avoiding the effects of these sections of federal legislation.
We recommend that you review all intellectual property held by your company and develop a strategy, to be implemented as company policy, in the event that a cease-and-desist letter is received.
Stephen Jenkins Partner and Head of Intellectual Property at Madison Marcus Law Firm can provide guidance and assistance in developing the correct strategies for you to handle any cease-and-desist letter received.
Partner – Intellectual Property
+61 437 008 253
Madison Marcus Law Firm produced this article. It is intended to provide general information in summary form on legal topics, current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.