Supreme Court reduces Puma's damages for trademark violation

In Fakta A/S v Puma AG Rolf Dassler Sport (Case 81/2010, May 31 2012), the Supreme Court has reduced the amount to be paid to Puma as compensation and damages for trademark violation.

Fakta, a chain of retail stores, had been selling trainers displaying a logo that was similar to Puma's so-called 'form strip' trademark. Fakta acknowledged that it had violated Puma's trademark rights. Fakta had bought 6,750 pairs of shoes, sold 1,688 pairs and destroyed the rest. This had resulted in a gross profit of Dkr11,044.

Having evaluated the situation, the Maritime and Commercial Court ordered Fakta to pay Dkr250,000 in compensation and damages. The court based its decision on the following:

• the number of shoes sold;
• Puma's loss in sales; and
• a disturbance of the market, which Fakta has instigated against Puma by:
  • selling shoes of inferior quality fitted with a logo which was almost identical to Puma's form strip; and
  • advertising the infringing shoes in a newspaper which was circulated to 1.9 million households.

Furthermore, the court ordered Fakta to pay Puma Dkr61,000 in costs.

The Supreme Court reduced the amount to be paid as compensation and damages to Dkr25,000.

The Supreme Court's reasoning was as follows.

Fakta sold 1,688 pairs of the violating shoes, generating a total turnover of Dkr156,872 and thereby obtaining total profit of Dkr11,044, including value added tax.

The court found that Puma's rightful claim for reasonable compensation according to Section 43(1)(1) of the Trademarks Act must be based on this turnover. Puma had not proven that its claim for compensation surpassed 10% of Fakta's turnover generated from the offending shoes.

Fakta sold its shoes for Dkr99 for the ladies' model and Dkr79 for the girls' model. Puma sells its shoes in retail outlets at a much higher price. In addition, Puma's shoes are of a higher quality. Therefore, this could lead to only limited confusion in terms of quality and price.

Immediately following Puma's objections, Fakta ceased selling its shoes. Puma failed to produce information about falling shoe sales. Consequently, the Supreme Court did not find reason to award Puma compensation for further damages due to a decline in sales as stipulated under Section 43(1)(2) of the Trademarks Act.

The court held the effect of Fakta's advertising and sale of the infringing shoes, which may have caused a possible disturbance of the market, to be extremely limited.

Having assessed the situation, the Supreme Court found that Puma's claim for compensation and damages could not surpass the Dkr25,000 which Puma had already received from Fakta. Consequently, Puma did not have any right to further payment.

Puma was ordered to pay Dkr84,450 in costs for both proceedings.

Mads Marstrand-Jørgensen, Norsker & Co, Copenhagen