Friday, 20 August 2010

Moral damages cannot be assumed as an automatic consequence of counterfeit merchandise

A Brazilian Superior Court of Justice has held that the marketing of counterfeit merchandise does not necessarily cause damage to an image.

Grêmio Football Porto Alegrens, a football club, brought a case against Beneduzi Jachetti, a company marketing products under the name of the football club. An interim order and seizure of the counterfeited products were sought. The club also requested compensation for material and moral damages. The Court of the State of Rio grande do Sul upheld the interim order but the compensation for moral damages was dismissed.

Grêmio appealed arguing that the sale of fake products do not promote the image of the sports club, and it was evident the moral damage suffered, since it would be presumed to harm the reputation of the entity. However, the Terceira Turma do Superior Tribunal de Justiça (STJ) and under the rapporteur of the case, Minister Sydnei Benetti, rejected the arguments explaining that despite all the reasoning presented by the plaintiff – regarding the damage to the image, “the facts actually make up material damage and do not necessarily cause damage to the image." For the minister, the case at issue did not lead to the conclusion that the fans and the general public were associating the brand of the club with the counterfeited (bad quality) products. Nevertheless, he added that “damage to an image can indeed be compensated, but losses were not in evidence in this case”. Affixing the brand in these products - hypothetically of poor quality, “does not induce the consumer to think that Gremio Football Porto Alegrense produces bad stuff, unworthy of respect.”

The sentence, which became final on that point, ordered the company Beneduzi Jachetti Ltd to compensate for ‘material’ damages only.

Marketing unofficial merchandise causes economic damage to the right holders, but does it produce moral damage? I will have to agree with the STJ in saying that there are circumstances when this could happen but this need to be proven by the plaintiff – what do you think?

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