Compensation of damages due to the infringement of copyrights of the Magistretti-Flou bed
By decision of 18 July 2017 (docket no. 8066/17), the IP Court of Milan sentenced a number of companies to compensate the damages caused to Flou S.p.A. through the marketing of copies of the “Nathalie” bed designed by Vico Magistretti. We have already spoken about the copyright protection of this bed here on this blog with reference to another litigation.
The judgment under consideration is purely focused on the liquidation of damages, of which it analyses the different components, in line with the previous decision mentioned above.
First, the decision states that, in copyright infringement cases, it is not possible to condemn the infringer to return to the copyright holder the profits obtained through the marketing of the counterfeit goods. This possibility, the Judges argue, is provided for other intellectual property rights under art. 125 IP Code (“… the right holder may claim the return of the profits made by the infringer…“), but not for copyrights, for which the applicable rule more generally refers to the need to “take into account the profits made in breach of the right” (art. 158 Copyright Law). This conclusion, which copyright holders will not like, is not widely shared: apart from the different wording, a vice of our legislator that is not new and would be desirable to correct, it must be considered that both provisions were introduced with legislative decree no. 140/06 implementing the same art. 13 of Directive 2004/48/EC, and that there is no reason to grant copyright less protection than that granted to other intellectual property rights.
In any case, the judgment continues, stating that “the court may consider, pursuant to art. 158 Copyright Law in the context of compensation for loss of profit, (also) the profits made by the infringer, insofar as it may be considered that the infringement had a direct effect on such profits”. In this regard, the Judges note, the Accounting Expert Witness appointed by the Court concluded that only part of the sales of the defendants’ beds was due to the infringement of the Magistretti design. In other words, according to the Expert, only a section – albeit consistent – of consumers would choose the defendants’ product, rather than competing products of the same quality, because of the design in question.
The Judges then highlighted that the Expert Witness concluded that the sales of infringing products did not replace the sales of original products; nevertheless, those sales caused “an effect similar to the so-called ‘tarnishment’ in the trademark field, able to negatively affect the sales“, although difficult to measure.
In light of the foregoing circumstances, the judgment, in liquidating the damages by way of equity, concludes that the defendants must pay to the plaintiff, on account of lost profit, 50% of the profits obtained by them through the sale of the infringing products. The Judges also stated that “such a liquidation criteria appears to be preferable in the present case in respect of the possible determination of the reasonable royalty. This latter criterion is in fact envisaged as residual, and in this case it is not appropriate since it appears that Flou Spa has never sublicensed, or appears to consider in its commercial policy to sublicense, the economic exploitation rights on the design of the Nathalie bed.”
In addition, the defendants were sentenced to pay, again by way of equity, € 50,000 for moral damages and € 140,000 for image damages and loss of value of the asset constituted by the design of the Nathalie bed, since the commercialisation of infringing products determined “the need to undertake an advertising campaign for corrective reconstruction of the corporate image deteriorated by the offer on the market of the beds in question“.