Flagrant trade mark infringers to pay additional damages

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Previously under the Trade Marks Act, the monetary compensation that a trade mark registration holder was entitled to, if infringement was established, was either:

  • a monetary sum which represented the damage suffered by the trade mark registration holder due to the conduct of the infringer; or
  • payment by the infringer of the profit it gained by engaging in that conduct.
The trade mark registration holder could only choose one of the above types of monetary relief. It could not double dip.

Recent changes (April 2013) to the Trade Marks Act, now also allows a court to award punitive damages in addition to award of normal damages or account of profits. To make this type of award, a court can take into consideration a number of factors, including:

  • the flagrancy of the trade mark infringing conduct
  • a public policy consideration of whether there is need to deter similar types of infringement in future
  • the conduct of the trade mark infringer after it was put on notice of its infringement taking in consideration
  • what benefit was gained by the infringer as a result of its conduct

This change brings the Trade Marks Act in line with ‘flagrancy’ damages already available under the Copyright Act and Designs Act. It is a welcome provision for brand owners and can provide a potential opportunity in the right circumstances for the recovery of further monetary compensation, particularly in the case of professional counterfeiters. The risk of additional damages we have found can also be a useful strategy to negotiate a stronger and more favourable settlement in trade mark disputes for brand owners.

Blatant trade mark infringers beware!

5 reasons why Fixed Fee IP Services is better for your business.

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As you may know, we’ve dropped time based billing. So no more billing in 6 minute increments. Why? Because we don’t want to charge you every time we speak with you or meet with you – we found it was sometimes a barrier to communication. Instead we want to encourage more communication without the client being concerned by the age old question of “how much is this call or meeting costing me?” By removing those cost concerns, it improves client information flow. This in turn improves our understanding of client business objectives, better client collaborations which leads to timely and better results.

We also didn’t feel it was the fairest way of charging you, the client. Charging by time we felt was an outdated methodology. Arbitrarily determined hourly rates multiplied by time spent (no matter how effectively or ineffectively that time was spent) by each member of a professional service provider’s team didn’t match client expectations. Fixed fee pricing however does. Fixed pricing gains greater client trust. It also encourages more collaborative and effective delivery of client valued outcomes.

It’s been nearly 4 years now since we moved to fixed pricing. Client feedback has been fantastic and the increased rate of client referrals has reflected that – so thank you.

Here’s our top 5 reasons why fixed fee pricing makes sense and how it can benefit your business.

1. We don’t charge you for each and every time you talk to us, email us, meet with us or when we simply think about your matter. That’s a direct cost saving for you.
That’s one item you will no longer receive an invoice for – you won’t be charged for an hour meeting with 2 lawyers in the room (each charging you for their 1 hour spent with you). Instead we want to encourage more of these communications and we have done this by removing this cost concern. In fact, once you sign up to a project, those communications are unlimited (even if there are 2 or more lawyers in the room!). Does your current professional service provider charge you for every interaction they have directly with you (reading an email, talking with you)? Well, we don’t. It’s a better approach because it promotes two way information flow. With that knowledge share we can better align our legal strategy to what you value – achieving your commercial needs. This can only mean a better outcome for you.

2. Mutually agreed scope & fixed fees. Lower IP spend too.
At the start of each matter, we use our IP expertise to comprehensively scope your project (at no charge) and then agree in discussions with you on a fixed price for that work. That price will be exactly what you see on your corresponding invoice. No surprises. We think it’s a fairer approach for you. It also means you can budget your IP spend with certainty. We also understand that the market is changing and is no longer willing to pay exorbitant legal fees. We have structured our firm to meet that expectation. We utilise technology and project management methodology to confine firm overheads and expenses to what is necessary. This means we don’t pass on unnecessary overheads and other variables into the price we charge you. With Actuate IP, you get premium and specialised expertise without the big end of town hourly price tag.

3. Sharpens the focus on delivering effective outcomes
Fixed prices eliminate the inefficiencies that can arise with time based billing. What you are charged by your professional adviser should not be based on how much collective time is spent. It should be judged by client value, effectiveness and outcomes. An agreed to fixed pricing approach means there is single minded focus on developing and implementing strategies that deliver a positive commercial outcome for you. We will then dedicate the resources and team members we know will achieve that outcome and you won’t get charged additional for that. In fact, we’re incentivised to get that job done efficiently and effectively. At the end of the day getting results is what you want to see, not how much our time/your money can be spent. Put simply, fixed pricing delivers better value for you.

4. Encourages better communications which means a better outcome
We don’t charge you for communicating with us. Because of that you no longer need to think twice about whether you or someone in your team should pick up the phone and speak with us, email us or meet with us. This can only mean a better outcome for you. It ensures we both stay on the same page and our IP strategies and your commercial goals are aligned. What benefit is there if a delivered outcome is of no commercial use to you?

5. Greater access to IP expertise which also means a better outcome
With a fixed price in place it means your IP needs can be freely discussed internally between several experienced IP experts. This collaboration of expertise means we can develop and plan the strongest IP strategy for your business. This won’t cost you more and once again delivers better value for your business. Another time based professional service based firm would probably charge you for that internal planning session (eg. 3 lawyers x each of their hourly rates X each 6 minute increment spent – that adds up!). We don’t. We’re passionate in what we do and we want to see the right outcome achieved.

The 5 step guide to stopping a competitor infringing your IP (before going to Court!)

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So you’ve come across a competitor copying your brand, design or product. We’ll call them the IP Infringer. Filing legal proceedings in court against the IP Infringer is one path which can be taken to stop their unauthorised conduct. However there are key steps that can and should be taken first to try and avoid this. Following the 5 step guide below, and working with the right legal advisor, will dramatically increase your prospects of favourably resolving your IP dispute earlier.

1. Have a registered right
Having a registered trade mark, a granted patent or a registered design puts you in the box seat. It’s a strong right and often more cost effective than relying solely on reputation-based causes of action. Don’t worry if you don’t have your IP registered right now. Action can still potentially be taken against the competitor now but do take steps to get registered rights for next time.

2. Know the lay of the land
Get a clear assessment of where you stand legally and your prospects of success. There are two aspects you need a clear understanding of. First, do they infringe your IP right? Second, if they do infringe, what is the risk that they might have a defence or counter claim? It is only after you know the answer to both these questions can you then make an informed and sensible business decision about whether you should take action or how far to take your action.

3. Develop a strong legal strategy and know your budget
Once you know the strengths and weaknesses of your legal rights, a tailored legal strategy can and should be mapped out. A well mapped out strategy to the dispute should mean there will be little to no surprises along the way. It should be in line with your business objectives and clearly outline your cost exposure with certainty from start to finish. A good strategy will always keep one eye on settlement opportunities which benefit your business. The strategy itself should create those opportunities.

4. Will it benefit your business to stop the IP Infringer?
This requires you to take a step back and make an objective assessment on whether the IP Infringer is actually damaging your business or, if left unchecked, has the potential to do so in the future. Do you need to send a marketplace signal to your competitors that copying your IP will result in legal action? If the answer is yes and the cost / benefit analysis makes good business sense then step 5 awaits.

5. Put the IP Infringer on notice and show them you mean business
This step starts with a strongly drafted letter of demand which puts the IP infringer on notice of your rights, the consequences of infringing your rights and lists a set of demands which must be complied with in order to avoid legal proceedings. The various strategies mapped out in step 3 above are then implemented to escalate pressure on the infringer to achieve a commercially favourable result for your business. The majority of dispute matters will settle in this phase without the need to file legal proceedings.

What is a good result for your business?
This will differ from business to business and also depend on the motivations for commencing the IP dispute. An example of a typical favourable settlement will be that the IP Infringer ceases the infringing activity, destroys any remaining infringing products / marketing collateral and pays appropriate compensation to you. Depending on the nature of the dispute or nature of the IP Infringer, the compensation obtained can often recoup your legal spend or exceed it.

TAKE AWAY POINTS

  • Go into an IP dispute ‘eyes wide open’ – know your legal position, risks and most importantly costs obtain advice and engage in pre-litigation correspondences eg letter of demand and subsequent correspondence
  • Before making a decision undertake a careful and objective cost / benefit analysis on whether to start a legal dispute. Put another way, will it benefit your business?
  • Take the IP dispute in stages and reassess progress regularly to ensure the IP dispute is still in line with your original strategy and commercial objectives.
  • Always keep one eye on achieving a commercially favourable settlement. A strongly run IP dispute (pre-litigation) should still be designed to create potential settlement opportunities along the way and where a possible avoid litigation.

Changes to the australian customs seizures process

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Beneficial changes for trade-mark owners to the Australian customers seizures process

Changes to the Trade Marks Act 1995 which came into effect 15 April 2013, simplify the custom seizure process and more importantly benefit brand owners. These changes now place the initial onus on the importer of seized goods to make a claim to those goods.

Under the old regime, when the Australian Customs Service seizes allegedly counterfeit goods, if the relevant brand owner of the registered trade mark does not obtain the consent of the importer of those seized goods to forfeit the goods or the brand owner does not otherwise commence litigation for trade mark infringement against the importer, the seized goods are released. This places a great deal of pressure on the brand owner, in terms of time and money, to act quickly at the outset.

The changes to the customs seizure process and the resulting reversal in onus now mean that in order for an importer to make first make a claim to the seized goods, they will need to provide their contact details as well as details of the overseas manufacturer. If they do not do so within the required timeframe, the importer will have been taken to have automatically forfeited the seized goods.

Customs will also have the discretion to provide the relevant brand owner with a sample of the goods. This change will make it a much easier process for the brand owner to make an informed assessment as to whether the seized goods are in fact counterfeit or otherwise (for example parallel imports).

This new regime will be more favourable to brand owners and rightly so. Every year the influx of counterfeit products into Australia causes substantial damage to brand owners and can in some cases pose a risk to consumers (often counterfeit goods are of inferior quality). This new seizure process will likely result in a greater number of seizures being forfeited and allow brand owners to focus their anti-counterfeiting litigation spend against select cases where claims are made and which have the greatest impact.

The 5 step guide to taking your competitor to court for infringing your ip

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It’s a big step starting legal proceedings against your competitor (we will call them the IP Infringer).  Before reaching this stage, you should have already received clear advice on the strength and risks of your case against the IP Infringer. Importantly you should have also received a very clear outline of costs for each of the stages of the litigation (we provide Fixed Fee Litigation Structures). You would have already explored with your legal adviser a number of strategies aimed at reaching a favourable settlement, but for a numberof reasons were unable to. Having a good understanding of the 5 steps below will enable you to navigate your way through the next phase – legal proceedings. Executed in the right way you will also increase your prospects of achieving a favourable settlement before trial.

1. Commence legal proceedings
Sometimes starting legal proceedings against the IP Infringer is a necessary next step. As the aggressor you have the benefit of being in the driver’s seat and controlling the proceedings. Put another way the IP Infringer can’t simply walk away from the proceedings. If the IP Infringer wants out of the proceedings early the reality is that they will need to reach a settlement with you. If that happens you hold the upper hand. The majority of IP proceedings are filed in the Federal Court of Australia or the Federal Circuit Court. At this stage of the proceeding a specialist IP barrister will also be engaged to work alongside your IP lawyer. A barrister is a specialist in court advocacy and he or she appears before the judge at various stages during the proceedings. A good fit between your IP lawyer and barrister is essential. The IP lawyer will do the majority of the leg work to brief the barrister, communicate with the IP Infringer’s lawyers throughout the proceedings and importantly ensure that the litigation strategy remains in sync with your commercial objectives. To start the legal proceedings in the Federal Court, three key documents  are prepared and filed with the court. They are the Application, the Statement of Claim and your Genuine Steps Statement. The first two documents set out the conduct of the IP Infringer, the claim you have against them and what orders (including monetary compensation) you want the court to make in your favour. The Genuine Steps Statement sets out what steps you and your IP lawyer took to attempt the settle the dispute before filing these documents. Once filed and stamped by the court, these documents are then served by your IP Lawyer on the IP Infringer. Once served, the IP Infringer will have an opportunity to prepare and file, in a similar format, their Defence/Response to your claim. Depending on the type of IP infringement case being run, the IP Infringer may also file a cross claim. For example if you commenced patent infringement proceedings, the IP Infringer might cross claim arguing that your patent is invalid. Setting out clearly and accurately your claim in these documents sets the framework and tone for the rest of the proceedings. So it’s important you get these right.

2. Scheduling Conference/Directions Hearing & Mediation
In the early stages of the proceedings, both parties will appear before the judge at a Scheduling Conference or Directions Hearing. At this hearing the judge will set out a timetable of events and actions for the proceeding. In some cases attending the hearing can be avoided if the parties can agree beforehand on an agreed timetable and the judge agrees. In the majority of proceedings the judge will also at this first hearing order that you and the IP Infringer attend a mediation. The mediation is usually scheduled within 3 to 6 months from when you first filed the court documents. A Court Registrar is the appointed mediator and his or her role is to facilitate a settlement between the parties. In our experience, it is at this juncture you have the highest prospects of achieving a commercially favourable settlement. This is because the IP Infringer will know that its legal costs to defend the proceedings through to trial in the event of an unsuccessful mediation will escalate.  Also if you have run your case strongly up until that point, you will have also planted seeds of doubt in the mind of the IP Infringer as to whether they can in fact successfully defend the proceedings or whether it is commercially worth them to do so. A typical settlement you might seek at this juncture would be that the IP Infringer stops the infringing conduct, pays your legal costs to date and pay an amount representative of damages suffered by your business because of their unauthorised conduct. Taking the litigation in stages and focusing on getting to mediation in a strong position is key to increasing chances of achieving a favourable settlement.

3. Discovery & Evidence
Discovery ordered by the judge requires each party to provide relevant documents to the other.  These only relate to documents which are necessary to determine the issues in legal proceedings. The rationale behind discovery is that it will then facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible. Often some limited discovery (usually relating to the sales of the IP Infringer) is ordered by the judge before the mediation. If the dispute does not settle at mediation both parties will need to begin preparing their evidence. This takes the form of affidavits given by persons / witnesses relevant to each of parties’ arguments. Your evidence, known as Evidence in Chief,  will often come from one of the business owners / directors. If your claim is a patent or design infringement case an independent expert is usually also needed. The IP Infringer will prepare their corresponding Evidence in Answer also in affidavit form. If it is needed, you will then have an opportunity to file responding affidavit evidence known as Evidence in Reply. This a critical phase of the litigation, as the evidence you file is what will be relied on at trial and supports your  case against the IP Infringer. It is the cornerstone of your case.

4. Trial & Judgment
The length of the trial will vary depending on the nature of the dispute but often can range between 3 to 7 days. After opening submissions by both parties, your legal team will outline / ‘lead” your evidence first. Some of the witnesses that provided evidence in support of your case will then usually be “cross-examined”. This involves those witnesses answering appropriate questions put to them by the IP Infringer’s barrister. Once this phase is concluded, the IP Infringer will typically also then outline / lead its own evidence.  Your legal team has the corresponding opportunity to cross examine their witnesses with the aim being to scrutinise, find holes and inconsistencies in their evidence. Once this evidence round is completed, closing submissions will be delivered by both parties. The timing of a decision being made by the judge is dependent on their own case loads but is usually between 3 to 6 months.

5. Payment of your legal costs and your damages
If the decision goes your way, the court will typically then order an ‘inquiry as to damages or an account of profits’. It is essentially a separate mini-trial to determine what damage has been suffered by you as a result of the IP Infringer’s conduct or alternatively what attributable profit was made by the IP Infringer. The IP Infringer will also be ordered to pay of portion of your your legal costs incurred from the time of filing the court documents. This portion is calculated to a court scale and typically amounts to 40% to 60% of your legal spend. This legal cost amount could vary depending on the effect of any strategically made offers during the proceeding (a subject for an upcoming article in this series!).

TAKE AWAY POINTS

  • Go into litigation ‘eyes wide open’ – know your legal position, risks and most importantly costs to run the case
  • Before making a decision undertake a careful and objective cost / benefit analysis on whether to start legal proceedings. Put another way, will it benefit your business?
  • Take the litigation in stages and reassess progress regularly to ensure the litigation is still in line with your original strategy and commercial objectives.
  • Always keep one eye on achieving a commercially favourable settlement. A strongly run litigation should still be designed to create potential settlement opportunities along the way. Don’t just blindly barrel on straight through to trial.