Journal of Intellectual Property Law & Practice Advance Access originally published online on December 8, 2006
Journal of Intellectual Property Law & Practice 2007 2(1):1; doi:10.1093/jiplp/jpl194
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© The Author (2006). Published by Oxford University Press. All rights reserved
Editorial |
Double-dipping
On 2 October last, the US Circuit Court of Appeals ruled in Aero Products International Inc. and Chaffee v Intex Recreation Corp., Quality Trading Inc. and Wal-Mart Stores Inc. that the award by a jury of damages for both patent and trade mark infringement, in respect of the sale of a patented product bearing a trade mark (the ONE TOUCH air mattress), was impermissible because it resulted in part from double accounting. The Court of Appeals allowed the award of patent damages of $5.8 million but set aside the further award of $1 million for trade mark infringement. Curiously, the patent award was itself a permissible form of double damages, being an award of $2.9 million that was doubled to take into account the defendants' wilfulness.This result might seem immediately surprising. Although both patent and trade mark infringement are statutory wrongs that address damage to the commercial interest of their owner, it is beyond dispute that the patent monopoly and the trade mark monopoly operate quite differently within the market place. The patent provides an impenetrable barrier against the use of a ring-fenced product or process by its owner's competitors. A trade mark provides no such barrier but ring-fences the link that a consumer makes between the registered mark and the customer whose choice of purchase is determined by it. Surely, then, infringement of patent and trade mark rights inflict different types of harm and require separate, identifiable techniques for assessing compensation?
The Circuit Court ruling does not deny this proposition but shows that, in result of the pleadings, it had no applicability on the facts. The particulars of loss suffered by the plaintiffs were characterized as loss of sales of air mattresses and the same number of units were wrongfully sold by the defendants irrespective of whether the sales trespassed on the patent right, the trade mark right, or a combination of the two. Had the plaintiffs established that different species of loss arose from infringement of different intellectual property rights (for example, loss of sales simpliciter in respect of the patent, but damage to the goodwill of customers or retailers, or loss of licensing opportunities, in respect of the trade mark), two separate forms of damage would be laid before the court and two separate heads of compensation could have been awarded.
The issue of double-dipping is an important one, and one that is likely to be tested in the laboratory of case law. Variations on the theme arise in at least the following situations and probably very many others.
- An infringing act involves the copying and sale of co-branded products in respect of which, for example, patent or design rights are owned by one party but copyright or trade mark are owned by another.
- An infringing act commences at a time when, for example, a patent is current but continues past its date of expiry and into a period where, by virtue of its highly distinctive appearance, the product formerly protected by the patent is so closely associated with the patentee that he enjoys goodwill in its shape and appearance.
- An infringing act commences at a point at which the plaintiff has no registered right at all and is entitled only to damages for passing off or unfair competition, but continues into a time when a trade mark right based on acquired distinctiveness is applied for and granted.
- A technology is licensed under a patent and an associated know-how licence. The licensee, acting outside the terms of the licence, both infringes the patent and betrays the confidentiality of the know-how.
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