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How financially damaging is IP infringement, really?

Oct 22, 2021 | Intellectual Property

Small companies and individuals do not always appreciate or understand just how much damage infringement can occur. Thus, an occasional violation here and there may not seem like cause for concern.

However, any party who infringes on intellectual property rights can cause a great deal of financial troubles and losses for an IP owner. Below, we explain some of these losses.

Profit and licensing losses

When another party sells or distributes protected materials, it can result in lost profits and loss of licensing revenue. Often, parties can estimate these losses by comparing actual numbers to the previous years’ or projections.

However, these calculations are incredibly technical and confusing, so expert witnesses and financial professionals can play a crucial role in determining just how much infringement cost a business.

Enforcement expenses

It takes time, money and staffing resources to tackle legal issues like IP infringement. These are all valuable commodities for a business, and having to direct them away from regular operations can be disruptive and expensive. 

If you need to hire extra workers or pull employees away from other tasks to monitor misuse, track down infringers or seek court orders, that costs money. 

Damage to brand reputation

When consumers buy knockoff goods they believe to be from your business, their negative experiences can ultimately make your company look bad. And when multiple parties infringe on an IP, legitimate products can be considered less valuable.

Legal expenses

Resolving legal matters costs money. Hiring an attorney, filing motions, discovery and hiring experts is costly – but necessary – in stopping infringement and holding third parties responsible.

That said, when IP owners prevail in a case, the courts can order the infringing party to pay their legal fees.

What do IP owners stand to gain?

Considering how much infringement costs businesses, taking every occurrence seriously and acting swiftly to mitigate losses is crucial. 

Depending on the types of infringement, you could pursue compensation for actual losses, including lost profits. Alternatively, you may seek statutory damages, which means a set amount of compensation per infringed work.

Taking legal action against infringers can help you maximize financial recovery after someone infringes on your IP rights. Doing so can help you protect your work, your bottom line and the reputation of your business.

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