The adjudication of damages regarding claims of intellectual property rights infringement is based on the principle of full compensation of the loss, i.e.:
(1) the actual losses regarding decreasing assets of the injured, suffered as a result of the infringement, including expenditures purposefully made to identify the perpetrator of the infringement, e.g. a fee of a detective seeking to find the perpetrator;
(2) unrealised income which could be earned in absence of the infringement. This liability covers only normal (i.e. under a normal cause-and-effect relationship) consequences of acting or refraining from action by the perpetrator causing the loss.
Example:
The perpetrator manufactured and marketed 5 000 items of a product illegally marked with a protected trademark, of which he sold 2 000. Marketing this illegal product occurred at the same time when the right holder marketed the product marked with a legal trademark. Thus, the perpetrator inflicted loss on the right holder, described under (2) above.
If not for the counterfeit trademark goods marketed and sold, the right holder could sell (marketed legally and with the rightfully used trademark) this quantity of his goods, i.e. 2 000 items. The unit profit on the sale of one item was Zl 5.00, and the loss in unrealized profits will thus amount to Zl 10 000.
In addition, the right holder had to, because of the emergence of this illegal "competition", cut production of the work, which resulted in the paying Zl 10 000 in liquidated damages to his suppliers of raw material, and dismissing ten employee persons, paying each a three-month wage as compensation, totalling Zl 1 800. The loss to the injured right holder under direct losses described above in paragraph (1) is thus Zl 11 800.
The two components of loss are under a normal cause-and-effect relationship with infringement on the holder's rights, and hence the total amount of damages will be Zl 21 800.
