A Possible Solution to the Difficulty in Quantifying Damages Claims in Counterfeit Goods Cases

The words of Coco Chanel: “If you want to be original, be ready to be copied” ring more true today than ever.

According to the 2018 Global Brand Counterfeiting Report, the total value of counterfeit products globally is expected to reach 1.8 trillion dollars in 2020.

In South Africa the situation is no different with counterfeit goods worth billions of Rand being seized every year.

The sale and distribution of counterfeit goods causes immense harm to brand holders, both from a monetary and reputational perspective.

In terms of the Trade Marks Act, brand holders are entitled to seek compensation from counterfeiters in the form of damages or a reasonable royalty resulting from the unauthorised use of their trade marks.

However, in practice, quantifying such damages or royalties is a near impossible task. The main reason for this is that most counterfeiters are uncooperative in disclosing their dealings in counterfeit goods.

Therefore, the question is what can a brand holder do to secure sufficient information to quantify its damages or royalty claim. A solution may be found in Section 11 of the Counterfeit Goods Act.

In essence, this section allows a brand holder to apply to Court, without notice to the counterfeiter, for an order authorising the sheriff to attach and preserve all evidence relevant to the brand holder’s damages or royalty claim against the counterfeiter, before such claim is even instituted.  A computer expert may be authorised to accompany the sheriff for the purpose of extracting relevant evidence from electronic devices found in the counterfeiter’s possession.

Therefore, Section 11 affords the brand holder the element of surprise and may be a very effective way to secure vital evidence required to quantify a damages or royalty claim.

Adams & Adams

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