The purpose of recognizing and protecting copyright is to encourage and promote activities of creation and motivate innovation in order to develop intellectual assets. Infringing copyright constitutes a direct infringement of intangible assets which are extremely significant not only economic side but also spiritual for authors, and copyright holders. The compensation for damages is one of the civil remedies necessary to protect the rights of authors, and copyright holders.
Determining the amount of compensation for damages caused by the infringement of copyright is similar to that of the intellectual property rights in general. Accordingly, damages caused by acts of infringement of copyright shall consist of: (i) Material loss; (ii) Spiritual loss; (iii) Reasonable costs of hiring attorneys.
1. The material losses
The material losses include property loss, decrease in income and profit, loss of business opportunity, and reasonable expenses for mitigating and remedying the material damage. The damage must be an actual loss. The plaintiff has an obligation to prove “actual losses” caused by acts of infringement of copyright, and the cause-and-effect relationship between the infringement and loss. Specifically, the material loss must be determined in line with the three following bases:
- The total financial losses and the profits that the defendant has gained from the infringement of intellectual property rights, if the plaintiff’s reduction in profits has not been included in material losses;
- The transfer price of intellectual property rights to the extent corresponding to the infringement if the intellectual property rights were transferred to the defendant by the plaintiff under a licensing agreement ;
- Other material losses are calculated by the intellectual property right holder in accordance with the law;
Law on intellectual property in force stipulates specifically and quite flexibly the determination of actual losses for compensation for damages. Nevertheless, in most actual lawsuits, the plaintiff merely requests a specific amount of compensation for damages in the form of “numbers” but does not ask for applying which method is used for calculating the rate of damages. Furthermore, with the specific essence of intellectual assets, proving damages as the basis for requesting compensation is far from easy. In most cases, the plaintiff is impossible to prove damages or completely determine the damages for material losses. In these cases, the damages shall be determined by the Court based on the level of loss, in which the damages shall not exceed VND 500 million.2
2. The spiritual losses
The spiritual losses arise from the infringed moral rights of authors of literary, artistic, and scientific works, which cause damages to honor, dignity, prestige, reputation, and other spiritual loss caused to authors. Depending on each specific case and the level of spiritual damage of a right holder, the court shall decide on the compensation of between VND 5 (five) million and VND 50 (fifty) million.3
3. Reasonable costs of hiring attorneys
Reasonable costs of hiring attorneys are actual and necessary expenses, suitable to nature and complexity of the cases; the skills, and qualifications of attorneys and time volume required to research the case. This kind of cost includes remunerations paid for attorneys and expenses for their travel and accommodation. Remunerations for attorneys are agreed upon between them and their clients in legal service contracts and calculated on the bases and methods for calculation of remunerations specified in the Law on Lawyers. The lawyer fee is one of the unique things in the field of intellectual property regarding compensation for damages. Disputes over intellectual property rights in general and copyright, in particular, are often complicated due to the intangible essence of assets, also having difficulty with proving, assessing the infringement to determine the amount of compensation for damages. Therefore, authors and copyright holders requesting lawyers’ support for protecting their rights is immensely plausible. In addition, the attorney fees regarded as a type of damage are comprehensively reasonable, because the aggrieved parties need to hire attorneys to protect their rights. If there is no infringement of copyright, parties holding rights can utilize normally their intellectual rights and have no reason to request lawyers to protect their rights.
Although Law on Intellectual Property in force stipulates specifically the application of compensation for damages, it has difficulty with proving damages and the cause-and-effect relationship between the infringing behavior and loss. Besides, during the trial, the Court also has different views on determining bases for calculating the amount of compensation for damages. From our perspective, the competent authorities should enhance their competence in judging disputes over the intellectual rights of Vietnamese courts, contributing to improving the efficiency of protecting the intellectual property rights, especially in the context of the present integration.
Disclaimer: This article is for general information only and is not a substitute for legal advice. Apolat Legal is a Vietnamese law firm with experience and capacity to advise on matters related to Intellectual Property Rights and Dispute Resolution. Please click here to learn more about our services and contact our lawyers in Vietnam for advice via email firstname.lastname@example.org.