The Issue

If intellectual property rights are infringed, the rights holder may – as an alternative to compensation for the damages actually suffered or a reasonable royalty – request the surrender of the infringer’s profits.

The first step is to determine the “net profits” of the infringer. According to case law, variable costs for the manufacture and distribution of the infringing products may be deducted, whereas fixed costs may not. This includes administrative costs, directors’ salaries, plant rents, depreciation of fixed assets, etc, since these costs would have been incurred irrespective of the manufacture and/or distribution of the infringing products (4 Ob 182/13p, Grant’s, ecolex 2014/137).

In the decision 4 Ob 213/18d – LED-LENSER, rendered in 2019, the Austrian Supreme Court (OGH) – as far as can be seen – for the first time dealt with the question if and to which extent the infringer’s profits payable to the right holder are to be further reduced in order to appropriately consider the causal nexus between IP infringement and profits made.

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