Compensation for copyright infringement: Calculation

Compensation for copyright infringement helps authors and legal owners protect their rights and receive adequate compensation when their works are used illegally. Understanding how to calculate damages helps determine the appropriate compensation level, ensuring fairness and deterring violations. Applying the correct calculation method also helps increase the likelihood of success when claiming compensation before a court or competent authority.

Principles for determining damages due to intellectual property copyright infringement

According to Article 204 of the Law on Intellectual Property 2005, damages due to copyright infringement that are compensated include material damage and mental damage, specifically:

• Material damage including property losses, loss of income, profits, loss of business opportunities, reasonable costs to prevent and remedy damages;
• Mental damage includes losses of honor, dignity, prestige, reputation and other spiritual losses caused to authors of literary, artistic and scientific works; performers.

The level of damage is determined on the basis of actual losses suffered by the intellectual property rights holder due to acts of intellectual property infringement.

How to determine the extent of damage

Clause 1.3 Section I Part B Joint Circular No. 02/2008/TTLT-TANDTC-VKSNDTC-BVHTT&DL-BKH&CN-BTP dated April 3, 2008 clearly stipulates that a loss is only considered an actual loss if all three of the following grounds are present:

• Material or spiritual benefits are real and belong to the person who suffers damage: Material or spiritual benefits are the result (product) of intellectual property rights and the person who suffers damage is the person who has the right to enjoy those material or spiritual benefits;
• The damaged person has the ability to gain material or spiritual benefits: The damaged person can achieve (obtain) such material or spiritual benefits under certain conditions, if no infringement occurs;
• There is a reduction or loss of benefits of the damaged person after the infringement occurs compared to the ability to achieve such benefits without the infringement and the act is the direct cause of the reduction or loss of such benefits.

Determination of the level of material and mental damage:

1. Physical damage

Includes the following types of losses:

• Property loss: The person suffering damage must determine the value of the intellectual property object at the time of infringement, such as the value of the infringed trademark or patent.
• Decrease in income and profits: Determined through income and profits before and after being infringed, including: Income from direct exploitation of intellectual property objects (for example, profits from manufacturing patent products); Income from rental of intellectual property objects (for example, rental of computer programs, cinematographic works); Income from licensing rights (for example, patent transfer fees)…
• If actual income did not decrease but would have increased without the infringement, the difference is also counted as damages.
• Loss of business opportunities: Including loss of the ability to exploit intellectual property objects, loss of leasing opportunities, rights transfer or other business opportunities such as negotiations, investment cooperation, and trade promotion.
• Reasonable costs to prevent and remedy damage: Including legal costs and violation handling costs.

2. Mental damage

Occurs when the moral rights of the author or owner of an invention, industrial design, or layout design are violated, causing damage to their honor, reputation, trust, or loss of credibility.

Basis for determining compensation for copyright infringement

Pursuant to Article 205 of the Law on Intellectual Property 2005, amended by Clause 11, Article 2 of the Law amending Law on Insurance Business and Law on Intellectual Property 2019, the bases for determining compensation for copyright infringement are prescribed as follows:

In case the plaintiff can prove that an act of intellectual property infringement has caused him or her material damage, they has the right to request the Court to decide the compensation level on one of the following grounds:

• Total material damages calculated in money plus the profits that the defendant has earned due to the act of infringing intellectual property rights, if the plaintiff’s reduced profits have not been included in the total material damages;
• The price for transferring the right to use an intellectual property object assumes that the defendant is transferred by the plaintiff the right to use that object according to the contract to use the intellectual property object within the scope corresponding to the act of infringement committed;
• Material damage according to other calculations provided by the intellectual property rights holder in accordance with the provisions of law;
• In cases where the level of compensation for material damage cannot be determined according to the above grounds, the level of compensation for material damage will be determined by the Court, depending on the level of damage, but not exceeding five hundred million VND.

In case the plaintiff can prove that an act of intellectual property infringement has caused mental damage to him/her, he/she has the right to request the Court to decide on a compensation level within the limit of five million VND to fifty million VND, depending on the level of damage.

In addition to the compensation for material and mental damages mentioned above, intellectual property rights holders have the right to request the Court to force organizations and individuals who commit acts of infringing intellectual property rights to pay reasonable fees to hire a lawyer.

You can refer to the basis for determining the level of compensation for intellectual property rights infringement in Clause 2, Section B, Joint Circular No. 02/2008/TTLT-TANDTC-VKSNDTC-BVHTT&DL-BKH&CN-BTP dated April 3, 2008.

Consulting on compensation for copyright infringement at Long Phan Consulting Company

Copyright is an important right that protects creative works such as literature, art, science, computer software, television shows, movies,… When copyright is infringed, the owner can claim damages. At Long Phan Consulting Company, we provide in-depth consulting services to help customers protect their rights and claim reasonable compensation.

Our services include:

• Determine the level of damage based on legal grounds.
• Drafting compensation claim documents to send to competent authorities.
• Representing customers to negotiate and negotiate compensation with the violating party.
• Instruct customers to sue in court if necessary to protect their rights.

Frequently asked questions about compensation for copyright infringement

The following questions will help customers better understand the regulations on compensation for copyright infringement:

In case there are multiple co-owners of copyright, how is the compensation divided?

The division of compensation is carried out according to the agreement of the co-owners, or according to the proportion of each person’s contribution.

Is the public disclosure of information about copyright infringement considered a form of compensation for moral damages?

Yes, public disclosure of information about infringement can help restore the rights owner’s honor and reputation, and can therefore be considered a form of compensation for moral damages.

What factors affect the level of compensation for moral damages?

Influencing factors include: the extent of damage to honor, prestige, reputation, the scope of influence of the violation, and the attitude of the violating party..

What methods are there to determine the value of damages when the copyrighted work has not yet been put into business?

In these cases, the valuation must be based on similar works already on the market, or the valuation results of professional organizations.

Are there any cases where the violating party can reduce the compensation level?

When the violating party has proactively limited and overcome the consequences of the violation, or when they have other mitigating circumstances.

For which work is mental damage considered serious damage?

Usually the works are related to cultural and historical values, works of noble humanity.

In case the infringing party declares bankruptcy, will the copyright owner have priority in receiving compensation?

In this case, compensation payment must comply with the provisions of bankruptcy law.

Are there any cases where the violating party is exempt from compensation liability?

Force majeure cases or other objective causes are not the fault of the violating party

Conclude

Compensation for copyright infringement helps intellectual property rights owners protect their legal interests, recover financial losses, and maintain the commercial value of their works. Correct calculation of damages not only ensures fairness but also prevents continued infringement. Long Phan Consulting Company provides solutions and supports determining reasonable compensation levels. Contact 0906735386 for detailed advice!