In a long-standing and hard-fought legal battle between Swatch Group, its subsidiaries and Samsung, the UK’s High Court recently handed down its final decision on damages. This follows a referral back from the Court of Appeal after the High Court’s decision to hold Samsung liable for trade mark infringement was affirmed.
With the respective parties backed by their own experts, Swatch Group calculated that it had suffered damages in excess of a staggering $170 million USD, with Samsung’s calculations placing them at the contrastingly low figure of $301 USD. These calculations were based on the principle of “negotiation damages”, which are assessed based on a claimant being deprived of their right to exploit something, in this case several registered trade marks. Samsung argued that these damages could only be assessed on an “economic cost/economic benefit” basis, whereas Swatch Group’s calculations were based on there being an agreed co-branding prior to any infringements occurring, with the $170 million USD figure being the supposed likely cost of Swatch Group licensing its trade marks for use in a co-brand with Samsung.
The presiding Judge, Smith J, largely disagreed with both sets of calculations, stating that Samsung’s calculations did not sufficiently account for the value of Swatch Group’s brands, whereas the Swatch Group’s calculations appeared (unsurprisingly) overinflated and deriving “from the world of fantasy”. Accordingly, Smith J’s calculations of the damages due to Swatch Group took into account the unit price of a Samsung smartwatch, with a royalty rate of 20% on 160,000 co-branded units of Samsung smartwatches (based on the approximate number of downloads of infringing apps) amounting to $7,040,000 USD in damages, plus a flat fee of $10 USD per download totalling $1,600,000 USD, which brought the total damages due to Swatch Group to $11,600,000 USD.
Given the complex nature of the case, whereby Swatch Group adopts a protectionist view on its intellectual property rights and Samsung would not have otherwise sought a licence to use Swatch Group’s trade marks, Smith J’s calculations strike a reasonable middle-ground between the experts’ views and sets out a new relevant test for quantifying negotiation damages. Samsung will undoubtedly be disappointed with the outcome of the damages inquiry, which ultimately evidences the value of rightsholders stringently protecting their brands.
If you have any questions on the above, or if you need any advice or support in respect of your own intellectual property, please do not hesitate to contact the team at McDaniels Law on 0191 281 4000 or legal@mcdanielslaw.com.
