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11 November 2013
One of the crucial foundations of many current economic systems is the legal regime relating to trademarks. Modern society constantly demands new, safe and efficient quality products. In most cases, these demands can be satisfied only by making important investments in product development. It is therefore essential that the legal system that regulates commercial trademarks ensures that any unfair benefit derived from the unauthorised use of a third party's trademark is avoided.
Any activity that causes damage creates a need for appropriate reparatory mechanisms. A party that infringes a trademark uses something that does not belong to it in order to obtain a benefit. However, if the only legal consequence of such misappropriation is an order that the infringer cease the use of a third party's trademark, without reasonable monetary compensation being imposed, potential infringers may come to expect virtual impunity for such illegal behaviour.
Any person considering engaging in illegal activity is likely to make a cost-benefit analysis of the expenses that might be incurred from such activity, based on the damage caused to the affected party's property. If the infringer's property were affected to a lesser extent, or if judges were systematically to impose low compensation, trademark infringers might conclude that the benefits of breaking the law would be greater than any eventual compensation that they might be forced to pay. Such a situation is likely to promote illegal behaviour in future. Both the law and judges should therefore ensure that real rather than symbolic damages are applied in such cases, thereby discouraging potential infringers of IP rights, especially trademark rights.
In many trademark infringement cases, it is difficult (or even impossible) to assess or determine the amount claimed as damages at the time when the complaint is filed, since that assessment or determination is based on the production of relevant evidence (eg, an accounting expert's report of the defendant's accounting books), and can therefore occur only at later stages in the legal procedure.
On November 18 2012 Division I of the Federal Court of Appeals in Civil and Commercial Matters, in Louis Vuitton Malletier v Guerassimov Alexandre, considered in a reasonable interpretation that one of the situations specified by the Code of Procedure to be applicable in relation to a claim for damages. The relevant section of the code (Section 330(6)) expressly releases the plaintiff from the burden of having to determine the amount to be claimed when such a determination is necessarily and essentially subject to evidence to be produced at a later stage of the legal process.
The defendant had filed a motion to dismiss based on the complaint being defective. This defence is admissible when the complaint does not comply (in form and content) with the legal provisions (eg, when the different entries making up the amount claimed are not detailed in a complaint for damages). The first instance court denied the motion.
The defendant further stated that he was "a small informal merchant... who is not bound to keep accounting books or commercial records", thus making it impossible to obtain an eventual accounting expert's report. However, the appellate court held that the defendant had acknowledged being a merchant and, as such, was under an obligation to:
Therefore, the lack of determination of the amount to be claimed as damages for the unauthorised use of a third party's trademark appears to be admissible – according to the court's criterion – taking into account that this amount could be determined only by means of an accounting expert's report of the defendant's accounting books, which he was bound to keep as a merchant.
For further information on this topic please contact Daniel R Zuccherino at Obligado & Cia by telephone (+54 11 4114 1100), fax (+54 11 4311 5675) or email (email@example.com). The Obligado & Cia website can be accessed at www.obligado.com.
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