- ACCOUNT OF PROFITS
Anglo-American courts allow successful claimants, usually as an alternative to
damages, to recover the net profits the infringer has made from the
infringement. This remedy is called “an account of profits” or “an accounting for
profits”; the defendant must account for the profits he has made, and then has
to pay this sum to the claimant.This remedy is optional under TRIPs, Art. 45.2:Members may authorize the judicial authorities to order recovery of
profits ... even where the infringer did not knowingly, or with
reasonable grounds to know, engage in infringing activity.The award measures the defendant’s net gain, not the plaintiff’s net loss.
Indeed, an award may be made even though the plaintiff has made no loss at
all.- The purpose of an account of profits is to prevent the defendant
from enriching himself at the plaintiff’s expense. In calculating
gains, the court may have regard to any value the defendant has
added to the plaintiff’s work
EXAMPLE:In Sheldon v. Metro-Goldwyn Pictures Corp., mentioned earlier under
Infringement, the defendant was found to have infringed the plaintiff’s copyright
by making a movie based on the plaintiff’s play. The plaintiff was awarded an
account of profits against the defendant. The defendant then claimed that the
plaintiff should be awarded only a small part of the defendant’s film profits, since
they were mainly attributable to the defendant’s endeavours, not to the plaintiff’s
relatively unknown play. The Court agreed that the plaintiff should not have the
whole of the defendant’s net profit, but decided that she should be awarded
more than the defendant proposed.Sheldon v. Metro-Goldwyn Pictures Corp., 106 F.2d 45 (U.S. Court of
Appeals, 2ndCircuit, 1939), affirmed 309 U.S. 390 (U.S.: Supreme Court,
1940)JUDGE LEARNED HAND for the Court of Appeals:[P]irated material has been mixed with matter in the public domain. The difficulties of separation
have generally prevented infringers from attempting any apportionment; they have contented
themselves with getting down the net profits as low as possible. ...[When an infringer] makes
no effort to discharge the duty resting upon him, he will be cast for the whole profit. ...The expert testimony was of two kinds, that of producers and that of exhibitors. The questions
put to each were substantially the same: what was the proportion of the gross receipts properly
apportionable to the play? Their answers were in percentages that ran between five and twelve
... Very generally they professed to believe that the controlling factor in the success of a play
was the popularity of the actors – the stars... They thought that the other chief factors were the
166