Federal Court of Justice on damages for advertisements infringing IP rights
An intentional or negligent infringement of an IP right causes the infringer to be liable for damages. This is, under German practice, generally accepted also for cases in which the infringement is limited to advertising measures, whereas the ensuing sales are not infringing, particularly as the sold products as such do not fall under the IP right concerned. It has been hitherto an open question whether the amount of damages could depend on the turnover made with the - as such legal - sales.
The German Federal Court of Justice (BGH) has now approved such a turnover-based calculation in trademark law (judgment of 22/09/2021 - I ZR 20/21 - Layher). In the case at hand, the defendant had used the plaintiff's trademark in a mailing campaign and on its website, but not on its merchandise. The BGH approved calculating the damages as fictitious royalties based on the turnover made during the advertising and certain period thereafter to account for the ongoing effect of such advertising. The BGH found it irrelevant whether the advertising led to an increase in sales. This seems conclusive, as royalties in normal trademark license contracts are usually not subject to actual sales increases. However, according to the BGH the lower intensity of an infringement which is limited to mere advertising, as opposed to attaching the infringing sign to sold goods, could somewhat lessen the damages to be paid.