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Singapore: Landmark Decision on Determining Statutory Damages

In Converse Inc. v. Ramesh Ramchandani et al., Converse had elected to request an award of statutory damages after an interlocutory judgment had found Mr. Ramchandani liable for infringing Converse’s high-cut Chuck Taylor All Star canvas shoes. Accordingly, the High Court of Singapore was given the unfamiliar task of assessing the amount of statutory damages to be awarded under Section 31(5) and (6) of the Trade Marks Act.

In 2004, the Trade Marks Act was amended to include statutory damages as an alternative measure for situations where it was difficult to prove actual losses or obtain an account of profits. This addressed the frustrating situation where a plaintiff would be deprived of adequate compensation because of an infringer’s refusal or failure to cooperate.

The introduction of Section 31(5) to the Trade Marks Act gives the court broad discretion to award the appropriate amount of damages, with a prescribed maximum amount of SGD 100,000 for each type of infringing good or service. Section 31(6) lays out the factors that the courts must consider when determining the amount of damages to be awarded. The flagrancy of the infringement, the loss suffered by the plaintiff, the benefit accrued by the defendant and the need to deter other similar instances of infringement are factors for the courts to consider.

Applying these factors to the factual matrix of this case, the court first considered the loss suffered by the plaintiff in combination with the benefits accrued by the defendants. Both tangible and intangible factors were taken into account, including loss of reputation of the plaintiff’s brand and loss of potential profits. Second, the flagrancy of the offense was considered. This involved an examination by the court of the conduct of defendant Ramchandani and the role he played in enabling the infringing activities. Last, the court considered the need to deter infringement. Interestingly, the court decided that well-known brands were more deserving of protection, because, after the plaintiff had spent millions of dollars in promotional activities, it was tempting and easy for counterfeiters to ride on the plaintiff’s efforts and deprive the plaintiff of the fruits of its labor.

In conclusion, the court decided that an award for the maximum amount of SGD 100,000 would be appropriate as compensation to Converse. (Converse Inc. v. Ramesh Ramchandani et al., [2014] SGHCR 11 (May 23, 2014).)

This precedent opens up an alternative and cost-effective measure that brand owners may consider in situations where it is difficult to account for lost profits.
This article first appeared in the INTA Bulletin. For further information please visit http://www.inta.org/INTABulletin/Pages/INTABulletin.aspx.