The case of Ahiida Pty Ltd v JB Trading Group Pty Ltd [2016] FCCA 3146 shows that compensation can still be awarded even if the owner of a registered design cannot prove it suffered financial damage as a result of the infringement.
Ahiida alleged that JB Trading had infringed its registered designs for the BURQINI swimwear by importing replica swimsuits from China.
JB Trading revealed that it imported 1,260 replica burqinis. However, they claimed that they only sold a small amount of the replicas.
Ahiida claimed $187,000 for lost profits. However, Ahiida could not show that customers would have bought their swimwear if JB Trading's swimwear had not been available.
Ahiida also couldn't prove that the small amount of replicas damaged its reputation because most customers would assume that the replica Burqinis were real Burqinis.
Accordingly, the court held that Ahiida could not establish any lost profits or loss of reputation.
Despite the fact that Ahiida coud not prove any damage was done to its profits or reputation, it still claimed that it should be awarded compensation to act as a deterrent for other would-be copyists. Such a claim is permitted under section 75 of the Designs Act 2003.
The Court agreed and awarded Ahiida $20,000 in compensation for the flagrant infringement of the design by JB Trading.
The Court took into account that JB Trading admitted that it had infringed Ahiida's design, it didn't check for prior registrations before entering the market and it failed to investigate Ahiida's rights when it knew Ahiida was asserting those rights.
Take away messages
If you would like to manufacture and sell a new design of clothing, you conduct some clearance searches first.
If there are competing products already on the market, legal advice should be sought before manufacturing or importing the products.
Legal advice should be sought as soon as possible after receiving a letter of demand. Letters of demand should not be ignored.