Punitive damages for design infringement in burqini™ swimwear battle but no ordinary damages

Courts have been increasingly open to claims for additional damages (sometimes referred to as punitive or exemplary damages) for infringement of copyright, trade marks, patents and registered designs, and those additional damages can sometimes dwarf the damages awarded for actual loss. But what if no actual damages are awarded? It seems that additional damages can still be awarded even if there are no damages for actual loss, as shown in a recent case over swimwear (Ahiida Pty Ltd v JB Trading Group Pty Ltd [2016] FCCA 3146).

Ahiida Pty Ltd alleged that JB Trading had infringed its registered designs for Islamic swimwear (the renowned burqini™^[1] swimwear) by importing swimsuit sets from China that copied those designs. It claimed compensatory damages for lost profits and damage to its reputation, and additional damages of at least $150,000, but succeeded only in obtaining a smaller award for additional damages.

No damages for lost profit

Ahiida claimed $187,000 for lost profits: $100 each for 1,260 imported burqinis and 610 other garments that were alleged to have been sold or supplied. JB Trading said only commercially insignificant numbers had been sold.

Whatever the actual numbers, Ahiida's problem was that it could not show that buyers would have bought Ahiida's burqini™ swimwear if JB Trading's products had not been available.

The court therefore held that no lost profit had been established.

No damage to reputation

To establish reputational damage, evidence was needed of:

• the singularity of the product, distinctiveness, quality, or some other commercially valuable aspect of Ahiida's reputation; and

• how, and to what extent, the infringing product or conduct complained of damaged that aspect of its reputation.

Despite claiming that its Designs had "caught the attention of the world" and referring to their good reputation in media publications, there was no evidence to support these assertions.

There was also no evidence that:

• its reputation had been damaged by the sale of a commercially insignificant number of infringing garments; or
• that the products embodying Ahiida's designs were so well known that JB Trading's products would be thought to be Ahiida's simply because they are swimming costumes for Muslim women that cover their heads;
• any purchaser of JB Trading's products believed that they were buying Ahiida's products, and being disappointed in the quality.

The Court therefore could not find that the infringing burqini™ swimwear had diminished the reputation of Ahiida's designs or its brand.

Additional damages: yes

Under section 75 of the Designs Act 2003 a court can order additional damages because of the flagrancy of the infringement or any other relevant matters.

Although the Court found that the Respondent's conduct was not flagrant, it took the following factors into account in making an award of additional damages:

• traders entering a new market had a responsibility to be alert to the registered rights of competitors and the restrictions on them that flow from those rights, which JB Trading did not do;
• JB Trading conceded it had infringed Ahiida's design;
• JB Trading failed to make reasonable inquiries as to Ahiida's protection rights when it knew Ahiida was asserting those rights - conduct which was at least cavalier; and
• Ahiida did not clearly assert infringement for some time, nor specify the manner in which it asserted that products embodied its designs, or prove actual loss.

Given these factors, the Court awarded Ahiida $20,000 to reflect the seriousness of the infringement and to deter other would-be infringers.

Lessons learnt

Any trader who wishes to commence the manufacture and sale of new products should consider what intellectual property or internet searches should first be undertaken to familiarise themselves what similar products are on the market and what brand names are being used.

If there are competing products or similar brands, specialist advice should be sought before costs are incurred in manufacturing or importing goods that may infringe another's rights.

Do not ignore a letter of demand that alleges infringement of intellectual property rights and immediately seek advice from an experienced intellectual property lawyer.

Thanks to Anais Menounos for her help in writing this article.