Case: TS &amp; B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151 ; (2007) 158 FCR 444
Outcome: cited
method of assessment focuses on an applicant's lost profit. The method was explained by Finkelstein J in TS &amp; B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151 ; (2007) 158 FCR 444 at 495-6 as follows: "The plaintiff must show that he has lost sales to the defendant as a result of the infringement and quantify the loss suffered. This requires the court to explore the counter factual hypothesis of the contracts the plaintiff would have obtained absent the infringement and the costs associated with them. Necessarily the process will involve a degree of speculation, but that is no bar to recovery. The claim is not for loss of revenue but for loss of profits. The profits to be calculated are the lost net profits. By net profits I mean revenue less all costs including variable and indirect costs, but not including income tax. Care must be taken to ensure that costs savings are brought to account. If a plaintiff sells less of his products he will have less costs and that should be treated as a gain to be offset against the lost revenue which forms the basis of the computation of lost profits. The plaintiff is also entitled to recover indirect losses (such as damage to goodwill) as long as the cause is the infringement, the loss is foreseeable and is not unduly speculative. It will often be impossible to be precise in the calculation of lost profit. If needs be, the calculation can be rough and ready, with the benefit of any doubt favouring the plaintiff". In the present case, this assessment will involve an attempt to identify the number of infringing sales, the value of the sales, and the profit margin which Deckers would have secured on those sales. There will then be a need for discounts to be applied to take account of the possibility that not all of the purchasers of the counterfeit products would necessarily have bought more expensive genuine products and the reduction in Deckers' costs as a result of not having to meet the additional orders. Allowance will also need to be made for the loss of goodwill associated with the inferior quality of the counterfeit footwear. It is necessary to begin with an attempt to gauge the extent of the sales of the counterfeit products which were manufactured on Hepbourne's premises and distributed from those premises. The unchallenged evidence tendered by Deckers establishes that, during relevant times, the following sales of footwear (sourced from the Roper Street factory) occurred: In addition, Ms Ezzat deposed that she had been responsible for sales of boots to the value of $177,776.66. Victoria Vaysman admitted that she had sold counterfeit footwear worth approximately $300,000. Neither of these witnesses provided an estimate of the total number of pairs of boots sold by them. An estimate may be made. The 15,000 pairs which were sold by Leah Farley yielded approximately $1,800,000, an average of approximately $120 per pair. The 6,700 pairs sold by Dianne Sommer yielded approximately $735,000, an average of $110 per pair. The difference is explicable by reference to variations in the prices charged for different styles of boots. If an estimate of $115 is applied as the average cost of boots sold by Ms Ezzat she sold about 1,546 pairs and Victoria Vaysman sold some 2,609 pairs.