Spanish court explains calculations in adidas award

In what is apparently the first occasion on which a Spanish court has given an explanation of the basis for its calculations, the Madrid Provincial Court this September awarded €1,829,969 to adidas for infringement of its well-known ‘three-stripe’ trade mark by D Matteo Jin and three corporate defendants.

In its claim adidas sought recovery of (i) its expenses incurred in investigating the infringement; (ii) loss of profit (this being said to be the price that the infringers would have paid in order to obtain a licence) and (iii) damages for injury to the reputation of its mark as a result of the infringement. As to loss of profits, adidas's expert witness calculated the hypothetical royalty that the defendants would have had to pay to adidas based on

• a variable royalty (an average based on the total sales of infringing products) and
  
• a minimum guaranteed royalty (to be paid regardless of the total sales of infringing products).
  

The court accepted adidas’s argument that a minimum guaranteed royalty should be granted to the trademark holder regardless of the total sales of infringing goods. Considering the factors identified by the expert witness to calculate the minimum guaranteed royalty were reasonable and technically well-founded, the court granted an annual minimum guaranteed royalty of €855,568 (ie, €1,711,136 for two years of infringement), though the issue of the variable royalty was not dealt with since the amount of sales by the defendants was unknown.

The court added that this compensation was separate, cumulative and compatible with other types of compensation set forth by the law. On this basis, with regard to the damage to the reputation of the mark a further sum of €112,398 was awarded.

Source: Leticia Lloret, Grau & Angulo, Madrid, writing for the World Trademark Review.