Ripping off merchandise sold to supporters of the Crusaders rugby team cost one entrepreneur $50,000 in payment of profits made. The Supreme Court refused to award further damages to the true merchandiser as compensation for lost business opportunities.
Back in 2006, a company called Resport Ltd was held in breach of copyright when it produced toy swords and toy trumpets for sale to Crusader supporters. This merchandise had the status of “artistic works” under copyright law. A company called Tiny Intelligence Ltd held copyright.
Resport was ordered to hand over all stocks it held and to compensate Tiny Intelligence $50,000 as an assessment of the profit made on the merchandise sold.
There was evidence that Resport copied Tiny’s products not caring whether that amounted to a breach of copyright or not. Given the flagrant breach, Tiny Intelligence argued it was entitled to more than just an account of profits made. Lost revenue amounted to an opportunity cost – the cost of expanding its existing business relationships with the potential for new products and a bigger business.
The Supreme Court ruled that any award of additional damages would amount to a penalty or fine – exemplary damages. This was possible where there had been a flagrant breach of copyright, but by asking for an account of profits Tiny Intelligence was barred from also getting exemplary damages.
The two categories of damages have separate origins. Exemplary damages come from common law and are intended as a form of punishment and as a warning to others. An account of profits is derived from equity. Historically, the two categories of damages are not allowed in tandem.
Tiny Intelligence v. Resport Ltd – Supreme Court (8.04.09)
08.09.005