The Cost of Copyright Infringement
If someone steals your idea what can you recover?
Assuming you can prove your idea, invention or design has been copied and is being sold by someone else, there are two options in determining what you can recover.
You can be put back in the position that you would have been in, had the person not infringed or you can recover the profits that he has made.
The profit you would have made is not necessarily the same as the profit the offender may have made. It could be more or it could be less.
Targeting the offender’s profit is generally a lot easier. In discovery, he must disclose the number of units sold, the sale price and the profit made.
What is not so easy is the assessment of your own loss. How many units would you have sold had the breach not occurred?
We were involved in a case involving electronic sheep jetters.[i] It was a small market and in the four years that the offending occurred, the defendant had sold 154 units. This product replaced the defendant’s mechanical jetter. The plaintiff based his claim for $900k on the profit he would have made selling those units.
We, acting for the defendant assessed the plaintiff’s sales to have been 40 units as the plaintiff and the defendant had different marketing strategies, and had the defendant continued with his mechanical jetter, some of his electronic sales would not have occurred. The plaintiff argued his loss per unit was the gross profit but we considered some overhead expenses were variable and some semi-variable. The Court agreed with our assessment of $216k.
We also considered the plaintiff might be entitled to royalties on the units it would not have sold. We set these at 10% of the sales value. Because there were only a few items on the offending jetter that infringed on the copyright, the Court halved our assessment of royalties for an award of damages.
If you need any assistance in quantification of losses from copyright infringement contact John Leonard.