The news this week that Nike has settled with Hackney council for £300,000 after "inadvertently" ripping off the Hackney brand is a stark reminder that even the biggest, most brand-aware businesses still make mistakes.
The sportswear giant had produced a range of clothing bearing the London borough's name, and an exact replica of the council's logo. I assume that it was created in the US, but I find it somewhat hard to believe that the use was "inadvertent". Still, I suspect that settling the dispute before court proceedings were issued had its advantages, and it enabled Nike to be able to put their own "spin" on the outcome.
What's interesting about this dispute, is how the parties agreed on £300,000 as the appropriate level of compensation. According to the council, the settlement was based on a licensing royalty arrangement on sales of the range, which included trainers, footballs and t-shirts. Of course, the settlement also included an apology, and payment in full of Hackney's legal costs. [Hackney was represented by Marks & Clerk Solicitors].
The assessment of damages in intellectual property infringement actions is in a slight state of flux following amendments made by the Intellectual Property (Enforcement etc.) Regulations 2006 which came into force on 29 April 2006 although this settlement appears to be consistent.
The Regulations provide that "where an infringer of an intellectual propery right knew, or had reasonable grounds to know that he engaged in infringing activity, the damages awarded shall be equal to the actual prejudice the claimant suffered as a result of the infringement".
In particular, a court is expected to take into account:
(a) the negative economic consequences (including any lost profits) suffered by the claimant and any unfair profits made by the infringer; and
(b) elements other than economic factors, including the moral prejudice caused to the claimant by the infringement.
The Regulations go on to say that where appropriate, damages may be awarded on the basis of the
royalties or fees which would have been due had the defendant obtained
a licence.
Presumably Hackney were prepared to accept Nike's claim that it was indvertent and so there was no "moral prejudice" - or certainly not enough to make it worth going to court over, and we can also assume that £300,000 (all of which is being put towards the development of youth sport in the borough) is a fair reflection of the sales and the sort of figure Hackney might have agreed, if Nike had asked for a licence.
On a final note, Hackney hadn't actually registered its trade mark, although it had been using the mark since the 1960's. As Gregor Grant, the solicitor at Marks and Clerk who handled the case commented:
This case shows that it
really is worthwhile for the public sector to ensure its intellectual
property rights are established. In this case Hackney owned the
copyright in their logo, which dates back to the 1960s. It was not
registered as a trade mark. Non-trading organisations have not normally
been active in protecting logos and other insignia as trade marks, but
this might change. Universities and similar institutions regards their
logos as brands, and there is no reason why this should not also apply
to governmental organisations.