We previously reported that Louis Vuitton (“LV”) had been awarded statutory damages of S$200,000 against a seller of “upcycled” products derived from authentic LV products, which were found to be counterfeits. On appeal, in Louis Vuitton Malletier v Ng Hoe Seng [2026] SGCA 22, the Singapore Court of Appeal more than doubled the award and, in the process, further elucidated the principles governing the assessment of statutory damages in the trade mark counterfeiting context in Singapore.
This is helpful – especially in this new age of upcycling – to give brand owners a better idea of the measure of damages potentially recoverable in an infringement action, which will be key when making decisions whether to commence action and as to election amongst the available remedies.
What was the appeal about?
The High Court’s decision below marked the first time the Singapore courts considered the status of upcycled products, and is notable for its finding that dealing with such products could constitute trade mark counterfeiting under the Singapore Trade Marks Act 1998 (“TMA”), giving rise to liability for statutory damages. For a discussion of that decision, see here. For a discussion of the legal status of upcycled products in Singapore (and a bad frog joke), see here.
This aspect of the decision was in LV’s favour and so did not form part of the appeal. Instead, LV appealed against the quantum of statutory damages awarded, arguing that the Judge had wrongly interpreted the provisions of the TMA which prescribe maximum limits for statutory damages.
(The sky’s not) The limit for statutory damages
The relevant provision is section 31(5)(c) TMA which provides that in an action involving the use of a counterfeit trade mark, if the claimant elects to receive statutory damages, he is entitled to receive such damages “(i) not exceeding $100,000 for each type of goods or service in relation to which the counterfeit trade mark has been used; and (ii) not exceeding $1 million in aggregate, unless the claimant proves that the claimant’s actual loss from such infringement exceeds $1 million”.
The Judge had held that the S$100,000 limit applied to each type of goods (regardless of the number of counterfeit marks applied to those goods); whilst the aggregate limit of S$1 million applied to each action. He rejected LV’s argument that the first limit applied to each counterfeit mark used in respect of each type of goods (e.g., as five marks were used on the upcycled phone cases, the applicable limit for this type of goods would be five times of S$100,000, or S$500,000); and that the second limit applied to each counterfeit mark used.
The Court of Appeal endorsed the Judge’s interpretation, finding it to be in-line with both the plain words of section 31(5)(c) TMA (which does not mention “per mark”) and the legislative purpose of Singapore’s statutory damages regime.
With regard to the latter, after considering the rationale for the other remedies available for trade mark infringement under section 31(5) (i.e., ordinary compensatory damages and an account of profits), the Court of Appeal concluded that the legislative purpose of the statutory damages regime should operate within the same principles. This purpose is said to be two-fold: to both compensate the claimant and deter the defendant and other potential infringers. At the same time, the Court of Appeal stressed, it is not to punish the defendant.
For this reason, given that statutory damages are not meant to be punitive, the Court of Appeal held that the dual purpose of the regime “must be achieved within boundaries that bear a reasonable relationship to the harm caused to the claimant or the benefit derived by the defendant”. In other words, the quantum of statutory damages awarded must be a reasonable approximation of either of these two measures.
This led the Court of Appeal to conclude that LV’s proposed “per mark” interpretation cannot be correct as it may potentially allow a claimant to recover damages that substantially exceed both measures, thereby resulting in a punitive effect. This is on the reasoning that the use of more marks on the same type of goods should not ordinarily affect the number of infringing goods sold nor the loss suffered by the claimant. That said, the number of counterfeit marks may still influence the assessment, being relevant to the determination of the “flagrancy” of the infringement. See further discussion in the next section.
Finally, the endorsed approach is also said to be consistent with how the Singapore (and UK) courts have assessed ordinary damages for trade mark infringement – which has never been on a “per mark” basis. The US approach by which the maximum limit for statutory damages is determined based on two multipliers – both “per type of goods or services” and “per counterfeit mark”, was distinguished on the basis that this language is explicit in the US statute.
Approach to assessing statutory damages
The Court of Appeal then went on to unravel the four non-exhaustive factors set out in Section 31(6) TMA which the courts are to consider when assessing statutory damages, as follows:
- Flagrancy of the infringement – Relevant considerations include the number of counterfeit marks used; number of types of goods; scope of the defendant’s operations (e.g., whether he was a retailer, manufacturer, importer or distributor); and the way the defendant advertised his goods, with use of the claimant’s name to promote the goods and representation of the goods as being authentic said to be aggravating factors.
- Loss the claimant has suffered or is likely to suffer – One key question here is whether the parties’ respective fields of business activities give rise to direct competition. The Court of Appeal agreed with the Judge that in cases of this nature, the claimant was unlikely to suffer significant lost sales, because most consumers who chose to buy counterfeit goods would likely have been aware that they are not genuine because of the price disparity. So, in such cases, damage to the claimant’s exclusivity, reputation and goodwill are likely to be more relevant.
- Benefit accrued to the defendant – This may be measured by estimating the defendant’s increased profit margins attributable to the use of the counterfeit marks, and the advantage he gained by free-riding on the quality associated with the claimant’s marks.
- Need to deter other similar instances of infringement – This includes both general deterrence and specific deterrence. The former requires awards that will discourage similar conduct by other potential infringers, and may take into account the prevalence of counterfeit luxury goods and the ease with which online platforms facilitate infringement; whilst the latter considers the defendant’s conduct.
The Court of Appeal observed that the Judge did not give a breakdown or otherwise explain how he arrived at his award of S$200,000 and took the view that a more principled approach was warranted, with due regard given to the different types of goods. The Court of Appeal took a 3-step approach:
- First, on the facts, taking into account the Respondent’s conduct (labelling his goods as “LV” products and misrepresenting them as being made from authentic materials, and his evasive and uncooperative conduct throughout the proceedings); the need for general deterrence given that the LV brand is widely counterfeited and the increased ease of marketing and selling counterfeit items with the use of technology; and the fact that even though the Respondent’s sales appeared to be relatively modest, the true scale of his operations were unclear, the Court of Appeal found that statutory damages should provisionally land on the higher side of the mid-point of the per type of goods limit (i.e., S$50,000).
- The nine different types of counterfeit goods the Respondent had dealt with were then grouped into four broad categories, based on factors such as the quantum of the Respondent’s sales or advertising; the price disparity between his goods and the same type of products without the counterfeit marks; and whether LV deals in the same type of goods. The Court of Appeal emphasised that these considerations for grouping the goods are not exhaustive but are only the most relevant in the present case.
- A figure was then assigned to each of the four categories – ranging from S$30,000 for cigarette cases (for which there was only one instance of infringement and which LV did not appear to sell); to S$70,000 for phone cases, key cases and pouches / purses (for which there was extensive use of the counterfeit marks, many instances of infringement, high profit margins for the Respondent, and which are goods which LV also dealt in), arriving at a total award of half a million dollars.
The Court of Appeal noted that there was a measure of imprecision to the exercise given the dearth of evidence regarding the defendant’s activities and the broad approach to assessment based on the factors in section 31(6) TMA, but that this is as principled an approach it was able to take in the circumstances.
Are we all packed and ready to roll?
Not quite, it seems!
The Court of Appeal has provided spades more clarity as to how statutory damages are to be assessed, but one area for which more guidance is needed is on how it is to be determined that goods or services are of the same “type” for determining the limit under the first limb of section 31(5)(c) TMA.
First, “type [of goods or services]” is not defined or explained in the TMA. In the decision, each of phone cases, phone bags, card wallets, key cases, pouches/purses, just to name a few, were found to be different types of goods. All these items fall under Class 18 of the Nice Classification (for trade mark registration purposes), which makes it clear that goods or services which fall within the same class can be taken separately.
A quick look at U.S. cases suggest that a similar approach is adopted there. As mentioned, in the US, “per type of goods or services” is similarly a multiplier for determining the maximum limit for statutory (albeit only one of two multipliers). For instance, In Nike Inc. v. Variety Wholesalers, Inc., 274 F. Supp. 2d 1352 (S.D. Ga. 2003), a counterfeiting case, the court awarded Nike $900,000 in statutory damages, taking each of shirts, sweatshirts, sweatpants and socks to be different types of products.
Based on these narrow examples, the courts appear to be prepared to take a relatively narrow, disaggregative approach. A closer look into U.S. authorities will be helpful to elucidate the relevant touchstones – is this based, e.g., on the functional distinctiveness of the items, trade practice (in terms of how the trade itself classifies these products), consumer perceptions, or something else?
In practice, it seems that the Singapore courts will be prepared to accept reasonable disaggregation particularly where the issue is not challenged by the defendant. Indeed, based on the Court of Appeal’s Judgment, that appears to have been the case here, which would explain why there was no elaboration on this issue.
What can a brand owner do to maximise his award of statutory damages?
As alluded to above, in cases involving the counterfeiting of trade marks in Singapore, the claimant can elect to receive ordinary damages (which requires the claimant to prove his loss), an account of profits (which are based on the defendant’s profits) or statutory damages. A key benefit of statutory damages is that they can be awarded even in the absence of proof of either the claimant’s loss or the defendant’s profits.
This could lull ill-advised brand owners into a false sense of security – believing that all’s in the bag once they have obtained judgment on liability and elected statutory damages. Not so!
Recall the Court of Appeal’s conclusion that the quantum of statutory damages awarded must be a reasonable approximation of either one of two bases – the harm caused to the claimant OR the benefit derived by the defendant. This suggests that even though there are other factors under section 31(6) TMA that the court is to consider (e.g., flagrancy of the infringement and the need for deterrence), the claimant’s loss and defendant’s gain are the overarching factors which would influence the total award.
In many, if not the vast majority of, counterfeiting cases, the defendant is likely to be absent or uncooperative or simply unable to produce reliable records of his sales and profits made. If the evidence on the harm caused to or loss suffered by the claimant is also poor or non-existent, the court could have trouble identifying the basis upon which to ground a respectable award of statutory damages.
To get to the point, brand owners who hope to improve their lot will do well to ensure that cogent evidence of the harm or loss they suffered from the infringing activity is before the court. If it is tricky to show diverted sales for reasons the Court of Appeal mentioned, then at least proof of efforts made to build their reputation and goodwill, and as to the exclusivity of their brand, should be adduced.
This article is produced by our Singapore office, Bird & Bird ATMD LLP. It does not constitute legal advice and is intended to provide general information only. Information in this article is accurate as of 8 May 2025.
For further information, please contact:
Pin-Ping Oh, Partner, Bird & Bird
pin-ping.oh@twobirds.com
