Whether it’s high street retailers selling “inspired” designs or influencers sharing how to “get the look for less”, dupe culture has never been more prevalent.
While not every “dupe” infringes intellectual property rights, businesses selling counterfeit goods continue to pose a significant problem for luxury brands. But once infringement has been established, a key question remains: how should the brand owner be compensated?
A recent decision of the Intellectual Property Enterprise Court in Fendi Italia SRL & Others v Georgia Aldridge & Rolo Fashion Limited provides valuable guidance on that issue.
In English IP litigation, proceedings are often split into two stages. The first determines whether infringement has occurred. If infringement is established, the second stage considers the appropriate financial remedy.
A successful claimant will usually elect between:
Where damages are elected, they are commonly assessed by reference to a combination of:
The claimants, owners of the Fendi, Loewe, Dior and Celine brands, obtained default judgment after establishing that Instagram influencer Georgia Aldridge and her company, Rolo Fashion Limited, had infringed their registered trade marks by selling counterfeit luxury goods.
The defendants operated a retail business sourcing counterfeit products from suppliers only after customer orders were received, rather than holding stock.
At the quantum stage, the claimants sought damages under three heads:
The court noted that the counterfeit goods were sold for, on average, less than 15% of the price charged for the genuine products.
Judge Hacon observed that:
“It would take a naïve consumer to believe that products sold at those price levels are genuine.” Both parties advanced competing methods for calculating the number of infringing sales. The court accepted that assessing damages inevitably involved some estimation but criticised significant weaknesses in both parties’ approaches.
Ultimately, the judge estimated approximately 4,752 infringing sales over the relevant period.
The court estimated that 15% of the defendants’ sales represented sales that would otherwise have been made by the claimants, resulting in approximately 713 lost sales. Using an average profit of approximately £280 per item (provided by the Claimants), damages for lost profits were assessed at £200,000.
That still left 4,039 infringing sales which had not deprived the claimants of a sale.
The court rejected the suggestion that those infringements should go uncompensated simply because they had not caused a direct loss of sales.
Judge Hacon held that those sales nevertheless took unfair advantage of the distinctive character and reputation of the claimants’ trade marks under section 10(3) of the Trade Marks Act 1994. In the absence of evidence supporting a higher royalty, the court applied the user principle and awarded a reasonable royalty of 3% of the defendants’ profits, resulting in a further award of £13,000.
Importantly, the court confirmed that the user principle remains available in trade mark cases even where the trade mark owner would never, in reality, have licensed its marks to the infringer.
The claimants also sought damages for harm to their brands.
However, the court found there was no evidential basis for a separate award.
Judge Hacon considered it more likely that purchasers understood they were buying counterfeit goods rather than genuine luxury products. As a result, there was insufficient evidence that consumers attributed poor quality or poor customer experience to the claimants themselves.
This serves as an important reminder that allegations of brand dilution or reputational damage require evidence; they cannot simply be inferred from the existence of infringement.
This decision is significant for brand owners and practitioners alike.
It confirms that:
As counterfeit goods and online “dupe” culture continue to grow, this judgment provides a useful reminder that valuing intellectual property infringement is rarely straightforward, but where unfair advantage has been taken, the courts will seek to ensure that it does not go uncompensated.
Want to discuss the topics covered in this article? Reach out to Francesca Allport.
Intellectual Property