Claiming damages based on the infringer’s profits sounds attractive because the figure sits on the defendant’s side, but it is also the figure the defendant hides most carefully. Whether this basis succeeds depends on whether the claimant can force sales data into the open with procedural tools.
Legal basis to start from
Profit gained from the infringing act is one of the damages bases in Articles 203 and 204 of the Law on Intellectual Property: the court takes the total profit the defendant earned from selling infringing goods or services as the basis for computing compensation to the rights owner. Profit here means the margin after deducting reasonable direct costs of producing and trading the infringing goods, not the entire revenue, and the claimant bears the initial burden of proving the scale of infringement by channel, time and estimated volume.
How this applies in practice
Three practical proof sources exist. First, evidence the claimant lawfully collects before suing: invoiced test purchases, time-series captures of marketplace shop data, publicly displayed sold quantities and buyer reviews. Second, documents the court requires the defendant and third parties to produce in the case: sales records, receiving-account statements, order data from marketplaces and related tax filings; a defendant refusing to produce or producing dishonestly faces adverse inference when the court estimates. Third, a damage assessment by a qualified organisation, turning scattered data into a profit calculation table with a clear method the judging panel can verify.
What to do next
- Collect the defendant’s public sales data in a time series as soon as infringement is found, because shop data can be deleted once the defendant knows it is watched.
- State specifically during the proceedings a request that the court compel the defendant and the marketplace to produce order and revenue data for the infringing shop in the relevant period.
- Prepare a fallback profit calculation using industry margins if the defendant hides its books, so the court still has an estimation basis instead of falling to a low set amount.
Frequently Asked Questions
How is damages based on the infringer’s profits proven?
Through three layers: the defendant’s sales scale from public data, test purchases and invoices; sales and cash-flow documents the court requires the defendant and third parties such as marketplaces to produce; and a profit calculation prepared by an assessment organisation or the claimant’s expert from that data under a transparent method.
Can the infringer be compelled to disclose its profits?
There are grounds to request it. In a civil case, the court has authority to require parties and related organisations to provide documents and evidence, including the defendant’s sales records and transaction data for determining damages under Articles 203 and 204 of the Law on Intellectual Property. The claimant must make a specific request, not a general one.
What if the profit cannot be proven?
The claimant shifts to alternative bases: estimating profit from public sales data and industry margins, or asking the court to apply the hypothetical licence fee basis. If no basis can be quantified at all, the court sets compensation under Article 205 of the Law on Intellectual Property, capped at VND 500 million.
How does the court estimate the profit?
The court separates the infringing sales revenue, deducts reasonable direct costs the defendant can prove to reach the gross profit from the infringing act, and cross-checks against independent data such as marketplace order counts and assessment results. Revenue the defendant cannot explain is usually treated adversely to the defendant.
This article has been quality-reviewed by the FLAW AI Legal Council