IPEC awards £213,000 in damages in Fendi-led counterfeit goods case

The UK court awarded £200,000 for lost profits and £13,000 in reasonable-royalty damages, while rejecting claims for reputational harm and additional compensation under the IP Enforcement Regulations.

The UK Intellectual Property Enterprise Court (IPEC) has awarded £213,000 in damages following a counterfeit goods dispute involving Fendi, Loewe, Christian Dior, and Celine, highlighting how courts can assess financial recovery when defendants’ sales records are incomplete.

In Fendi Italia Srl & Ors v. Rolo Fashion Limited & Anor [2026] EWHC 1703 (IPEC), handed down on July 9, 2026, His Honor Judge Hacon assessed damages following a default judgment against Rolo Fashion Limited and Georgia Aldridge, who were found liable for trademark infringement through the sale of counterfeit luxury goods.

The claimants comprised the four luxury fashion brand owners and their ultimate parent company, LVMH Moët Hennessy Louis Vuitton SE. The court awarded £200,000 for lost profits attributable to displaced genuine sales and a further £13,000 in damages calculated using a reasonable royalty for other infringing transactions.

However, the judge rejected the claimants’ arguments that the counterfeit sales had caused compensable reputational damage and declined to award additional damages under the Intellectual Property (Enforcement, etc.) Regulations 2006.

Incomplete disclosure complicates damages assessment

The underlying default judgment was entered in January 2025. The subsequent proceedings concerned the amount of compensation payable rather than whether infringement had occurred. The defendants had been ordered to disclose information about their suppliers, purchases, sales volumes, and prices. The claimants argued that the disclosure was incomplete and inconsistent, citing missing supplier information, incomplete transaction records, and WhatsApp messages that did not include images.

The defendants maintained that they had provided the relevant documents in their possession. Aldridge also argued that the business had made only around 10 sales per month, basing her estimate on records from one bank account. The claimants, meanwhile, estimated that 5,552 counterfeit items had been sold over a 72-month period. Their calculation relied partly on an assumption that every member of a WhatsApp group had purchased at least one counterfeit item.

Judge Hacon rejected that assumption because the claimants had provided no evidence to support it. He also declined to accept the defendants’ substantially lower estimate.

Instead, the judge adopted an alternative calculation based on the defendants’ estimated income and average selling price. He noted that the defendants’ probable failure to provide adequate disclosure should not work in their favor when the court assessed damages.

£200,000 for lost profits

The court estimated that the defendants had sold 4,752 infringing items during the relevant 72-month period. The judge then considered what proportion of those transactions had displaced purchases from the claimants. The claimants had proposed substitution rates of 10%, 20%, or 30%, while the defendants had not identified which rate they considered most reliable.

Judge Hacon selected a substitution rate of 15%, resulting in an estimated 713 lost sales. Using an estimated profit of approximately £280 per genuine item, the court calculated lost profits of £199,640 and rounded the award up to £200,000.

The assessment illustrates the court’s approach to quantifying loss where neither party’s evidence provides a fully reliable picture of the underlying transactions. Although the judge accepted that the claimants had suffered lost profits, he did not accept their original estimate of the number of counterfeit sales.

Reasonable royalty for remaining transactions

The court then considered the remaining 4,039 sales, which had not been treated as displacing purchases from the claimants. The claimants sought compensation under the “user principle,” a method of assessing damages by reference to a hypothetical reasonable royalty for the infringing use of intellectual property.

The defendants argued that a separate royalty award was unnecessary because the court could already quantify the claimants’ lost profits. Judge Hacon rejected that argument, noting that neither party contended that every counterfeit sale had resulted in a lost sale for a claimant.

The judge considered whether compensation could be awarded for the remaining infringing transactions even where no lost sale or reputational harm had been established. He concluded that such a claim was available in law in the circumstances of this case.

The judgment in default had established liability, and the defendants had not challenged the pleaded allegation that their use of the trademarks took unfair advantage of their distinctive character or reputation, contrary to Section 10(3) of the Trade Marks Act 1994.

With no evidence from either side establishing an appropriate royalty rate, Judge Hacon assumed a rate of 3% of the defendants’ selling price. Applying that rate to 4,039 sales at an average price of £110 produced £13,328.70, which the court rounded down to £13,000.

The award demonstrates how the user principle may provide a means of assessing damages for trademark infringement where some transactions cannot be linked directly to lost sales. It does not, however, establish that a reasonable royalty will be appropriate in every trademark dispute.

Reputational damage claim rejected

The claimants also sought damages for harm to their brands’ reputations, arguing that counterfeit products could affect consumer perceptions, dilute brand distinctiveness, and associate the trademarks with the unregulated counterfeit market. Judge Hacon found the evidence speculative and insufficient to establish compensable reputational harm.

The judge was not persuaded that purchasers believed they were buying genuine products. Rather, he considered that consumers were more likely to have understood that they were purchasing counterfeit luxury goods at prices substantially below those charged by the legitimate brands.

Consequently, there was no adequate basis to conclude that consumers would attribute the quality of the counterfeit products, or the conduct of the sellers, to the brand owners.

The court also rejected the arguments concerning dilution and tarnishment. Although purchasers appeared to understand that the counterfeit goods were being sold in a parallel market, the judge found that this association did not, by itself, establish damage to the trademarks’ reputations.

No additional award under IP Enforcement Regulations

The claimants further sought additional compensation under Regulation 3 of the Intellectual Property (Enforcement, etc.) Regulations 2006, arguing that the defendants’ conduct was knowing and deliberate and that their activities had generated commercial benefits.

Judge Hacon declined to make a further award. The judge noted that alleged unfair advantage and reputational damage could be compensated through ordinary damages where appropriately established. However, he had already found insufficient evidence to support the relevant claims.

As for the defendants’ commercial benefit, the judge considered that more detailed argument would have been required on the meaning of unfair profits and why such an award was justified in this case.

The decision therefore provides a useful distinction between the compensation awarded for lost sales and other infringing transactions and the additional damages sought under the Regulations.

Implications for trademark owners

The judgment highlights two practical considerations for brand owners pursuing counterfeit sellers. First, incomplete financial and sales records can make it difficult to quantify damages, but a court may adopt a reasonable alternative calculation where the evidence supports one. In this case, the defendants’ inadequate disclosure weighed against allowing them the benefit of favorable assumptions.

Second, lost profits are not necessarily the only potential basis for recovery. Where infringing transactions cannot be linked to displaced genuine sales, a reasonable-royalty assessment may offer an alternative, provided the legal and evidential requirements are satisfied.

At the same time, the rejection of the reputational-damage claim underlines the importance of supporting allegations of dilution, tarnishment, or other harm with evidence rather than relying on the general risks associated with counterfeiting.

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