A major study of legal practice in design copying cases shows that the level of damages is too low, unpredictable, and undermines rights holders’ faith in the legal system.
Copying has become a sad reality for many designers. The Rights Alliance, with support from UBVA, has mapped the economic consequences of copying, reviewed relevant legal practice and discussed solutions to the problem at a seminar for the design industry back in November.
Weakened legal security
An analysis from Hjarn v. Zernichow, Cph Facilitation, for the Rights Alliance highlights the economic consequences of design copying. Despite the infringements causing major financial losses for both the designer and society, 7 out of 10 people who have experienced being copied do not take legal action. This is even though the surveyed designers themselves estimate that the infringement causes a significant loss in terms of finances, lost goodwill and lost motivation.
One of the underlying reasons is that designers find it confusing to take legal action and fear that this will have further consequences for their work. During the Rights Alliance’s design seminar, it was also highlighted that many designers find it difficult to understand the impact of taking legal action and that it is too financially burdensome to go through the process.
See an overview of the main findings of the study here (in danish).
It is profitable to copy others
This confirms Professor Thomas Riis’ analysis of case law, which shows that financial compensation awards in cases are unpredictable, which reduces the preventive effect and makes rights holders refrain from enforcing rights through the court system.
Read Thomas Riis’ report on financial compensation here.
At the same time, financial compensation is rarely commensurate with the damage caused by the infringement. As an infringer, you can be convicted and still end up earning more than you have to pay in compensation. This is shown by the Rights Alliance’s review of legal practice from 2004 onwards, where the financial compensation in 38% of cases was lower than the infringer’s profit.
Current legal practice needs to change
The insights from the studies and the industry emphasize that there is a significant need for initiatives to ensure predictability and a fair level of compensation in design infringement cases. Therefore, the Rights Alliance is now launching an effort to address the challenges with legislation and legal practice.
Maria Fredenslund, CEO of RettighedsAlliancen, says:
“It is a major problem that creative people and companies in the design industry have no real opportunity to protect their rights, and in many cases it is profitable to infringe the designs of others. That’s why we urgently need improved legislation and initiatives to increase fairness in litigation and make it more attractive to seek redress for design infringement. Our design seminar marked the first step in this direction and we look forward to working closely with both the design and legal industries on this effort.”
Key findings
- The awarded remuneration and damages are unpredictable and too low. As a result, the preventive effect is lacking and design rights holders lose the incentive to take legal action.
- In 38% of cases, it is profitable to copy someone else’s design even if you are sentenced to pay financial compensation (Civil cases of infringement of a physical design in the Danish courts, 2004-).
- At least 3 out of 10 design rights holders have been victims of design infringement.
- 7 out of 10 designers who have had their design infringed choose not to take legal action, primarily because it is unmanageable.
- The perceived loss for the individual infringed design rights holder is between approx. 381.000 kr. – 3.640.000 kr on average.
- The socio-economic loss is estimated at DKK 1.9 – 2.4 billion over a 5-year period, of which the state loses a total of approximately DKK 478 million in VAT revenue.
The data and studies cited were obtained and conducted at the request of the Rights Alliance, as part of a larger effort to uncover gaps in legislation and legal practice regarding infringement of intellectual property rights. The project is funded by UBVA.