Proving Damages in Trademark Infringement Cases in Ukraine: Legal Framework and Practical Challenges

Effective economic protection of trademark owners is a foundational function of any intellectual property system. Without it, investment in brand development loses its legal underpinning, and rights holders are left without a meaningful remedy when their marks are infringed. The recovery of damages and statutory compensation are the primary tools through which Ukrainian law gives practical effect to this protection.

The practical reach of these remedies, however, depends on two interdependent factors: the quality of the statutory framework, and the consistency with which courts apply it. Where either is deficient, economic protection of rights holders becomes difficult to achieve. This article examines the existing Ukrainian framework for damages and compensation in trademark infringement proceedings, identifies its principal shortcomings, and proposes legislative amendments designed to improve its practical operation.

Statutory Framework in Ukraine

Damages under the Civil Code

The general definition of damages is contained in Article 22 of the Civil Code of Ukraine, which distinguishes between two categories. The first is actual losses: losses suffered in connection with the destruction or damage of property, and expenses incurred or to be incurred in restoring the infringed right. The second is lost profits: income that the person could reasonably have received under ordinary circumstances, had the right not been infringed.

The Draft Civil Code of Ukraine (Code of Private Law) of 22 January 2026 proposes to introduce a third category – preventive costs – defined as expenses incurred with the aim of preventing a threatened proprietary harm from materialising. This proposed addition reflects a growing recognition that pre-infringement protective measures may constitute a compensable head of damages.

Damages under the Trademark Law

The special statute governing trademark rights in Ukraine – the Law “On Protection of Rights to Marks for Goods and Services” (No. 3689-xii) – provides a specific rule for quantifying damages: the amount of compensation for damages is determined by the court with reference to lost profits or the infringer’s revenue derived from the infringement. This contrasts with the Civil Code’s general regime, which centres on actual losses. The difference is deliberate: the intangible nature of a trademark makes the concept of physical destruction inapplicable, and the infringer’s revenue serves as a more appropriate proxy for the harm caused.

Statutory Compensation

Article 20(2) of the Trademark Law introduced statutory compensation as a remedy that the trademark owner may elect in place of damages. Under this provision, the amount of compensation is determined by the court on the basis of the scope of the infringement, the infringer’s fault, and other relevant circumstances. The statutory floor is the amount of remuneration that would have been payable for a licence to use the mark in question. Where the infringement was unintentional and without negligence, the compensation equals that notional licence fee.

📋 Rationale for the compensation remedy: Statutory compensation was introduced to reduce the evidentiary burden on rights holders by removing the requirement to prove actual loss. The licence fee floor provides a baseline recovery without requiring quantification of harm. In practice, however, as discussed below, the evidentiary challenges associated with establishing the licence fee have significantly limited the remedy’s utility.

Comparative Framework: EU and United States

European Union: Directive 2004/48/ec

The EU framework is governed by Directive 2004/48/ec on the enforcement of intellectual property rights. Article 13 of the Directive establishes the following approaches to the calculation of damages:

• Full compensation, comprising actual loss, lost profits, and, at the claimant’s election, moral harm;
• Licence analogy, where damages are calculated as the sum the infringer would have paid for a legitimate licence;
• Disgorgement of profits, whereby the claimant may recover the infringer’s profits derived from the unauthorised use;
• Punitive or enhanced damages, awarded not merely to compensate the injured party but to deter and punish deliberate infringement.

United States: the Lanham Act

In the United States, damages for trademark infringement are governed by the Lanham Act and the us Code. The available remedies include: recovery of actual damages together with the infringer’s profits; statutory damages within a defined range (generally from usd 1,000 to usd 200,000 per mark per type of goods or services, and up to usd 2,000,000 for wilful infringement); and treble damages in cases of intentional infringement.

📋 Alignment with international standards: Ukrainian law is broadly consistent with EU and us approaches in recognising lost profits, the licence analogy, and infringer’s profits as bases for calculating damages. The principal divergence lies not in the categories recognised, but in the evidentiary standards applied by courts to establish quantum – which remain considerably more demanding in Ukrainian practice.

Methods of Calculating Actual Damages and Lost Profits

The generality of Ukrainian statutory provisions means that calculation methodology must be drawn from expert practice and case law. Two broad approaches are recognised in legal doctrine:

• Rights-holder-side approaches, based on the rights holder’s own commercial documentation and financial records;
• Infringer-side approaches, based on the infringer’s commercial documentation – which the rights holder typically cannot access without court-ordered disclosure.

The most commonly applied method is the price-quantity approach, which treats each unit of counterfeit goods sold as displacing a unit of legitimate product. Its attraction is simplicity and the availability of inputs. Its weakness is that it assumes a direct substitution effect that opponents can challenge: buyers of counterfeit goods may not have purchased the legitimate product at the legitimate price, meaning the displacement assumption may overstate the loss.

More precise methods include the before-and-after approach, which requires valuation of the trademark immediately before and after the infringement – an exercise that is methodologically difficult and cannot isolate the infringement as the sole cause of value change. The but-for approach calculates damages as the difference between the rights holder’s economic position with and without the infringement, requiring retrospective and prospective financial modelling. Both methods demand extensive documentary support, much of which will be in the infringer’s possession.

⚠️ Structural evidentiary problem: The most probative evidence for quantifying trademark damages – the infringer’s sales records, pricing data, and profit margins – is invariably in the possession of the defendant. Even where a defendant provides this data voluntarily, the claimant has no independent means of verifying it. Understated sales figures will produce a correspondingly lower damages award. Ukrainian procedural law provides limited mechanisms for compelling disclosure of this information.

Judicial Standards for Proving Lost Profits

The Supreme Court of Ukraine has articulated demanding standards for the recovery of lost profits in IP cases. The key holdings are as follows.

Grand Chamber sc, 30.05.2018, No. 750/8676/15-ц  The claimant must demonstrate that it was in a position to receive the identified income and would have done so, and that the defendant’s wrongful conduct was the sole and sufficient cause depriving it of that income. Lost profits that are merely theoretically possible do not qualify – only those that were real, foreseeable, and expected under ordinary commercial circumstances.

Sc, 07.11.2018, No. 127/16524/16-ц  A claim for lost profits must be appropriately reasoned, supported by specific calculations and evidence establishing the realistic possibility of the claimant receiving the relevant income but for the defendant’s wrongful conduct.

Sc, 11.11.2021, No. 910/7511/20  Lost profits have a particular character: at the time of the infringement, they represent a potential future loss rather than an existing one, and their quantum can only be established approximately, with some degree of inference. The court must apply the criterion of ordinary commercial circumstances – meaning typical, normal conditions of market operation – and not hypothetically favourable conditions. The compensatory function requires equivalence between the award and the actual negative consequences for the claimant; enrichment of the injured party is not permitted.

⚠️ High evidentiary threshold: The cumulative effect of these holdings is a demanding standard of proof for lost profits claims. The claimant must establish not only that loss occurred, but that the identified income would have been received under ordinary circumstances, that the infringement was the sole sufficient cause of non-receipt, and that the quantum is supported by specific calculations. In trademark cases, where the causal chain from infringement to lost sales is often indirect, this standard is difficult to satisfy.

Evidentiary Challenges in Compensation Claims

As noted above, Ukrainian law requires a claimant seeking statutory compensation for trademark infringement to establish: the scope of the infringement, and the amount of remuneration that would have been payable for authorised use of the mark.

Evidence of the scope of infringement – particularly where the infringement takes the form of sales of counterfeit goods – may include contracts, delivery notes, specifications, payment instructions, invoices, purchase orders, and similar commercial documents. However, all such documents are in the primary possession of the infringer. Even if disclosed, the claimant cannot independently verify their accuracy, and underreported sales figures will directly reduce the compensation awarded.

Establishing the notional licence fee presents a separate difficulty. In most trademark infringement cases, the rights holder has not previously granted a licence for the mark at issue, or has done so on terms that are not directly comparable to the infringing use. Without comparable licence agreements or established market rates, quantifying the fee that would have been payable is a challenge that most rights holders – without specialist economic or IP valuation evidence – are unable to meet.

The combined effect of these evidentiary difficulties is significant: despite the statutory compensation remedy having been available under Ukrainian trademark law for several years, no reported decisions involving successful recovery of trademark compensation under the current statutory framework have been identified.

Legislative Reform Proposal

The practical failure of the existing compensation mechanism under Article 20(2) of the Trademark Law warrants legislative intervention. The current provision – tying compensation to a notional licence fee that is frequently impossible to prove – undermines the remedy’s accessibility and therefore its deterrent effect.

The article proposes that Article 20(2)(3) of the Law “On Protection of Rights to Marks for Goods and Services” be amended to read as follows: “The total amount of compensation shall be determined by the court in the range of 2 to 200 subsistence minima for able-bodied persons, having regard to the scope of the infringement, the infringer’s fault, and other circumstances of material significance.”

✅ Rationale for the proposal: A fixed-range compensation mechanism, analogous to that already available under copyright law (Art. 55(3) of the Law “On Copyright and Related Rights”), would remove the licence fee proof requirement that currently prevents claimants from accessing the remedy. It would preserve judicial discretion within a defined range, and align the trademark compensation framework more closely with established Ukrainian IP enforcement practice.

Conclusion

Ukrainian legislation governing damages and compensation for trademark infringement is broadly aligned with EU and us approaches in the categories of recoverable loss it recognises. The significant problem lies not in the substantive framework, but in the evidentiary standards that Ukrainian courts apply to quantify loss – standards that have developed in general civil and commercial litigation and that create a structurally demanding environment for IP damages claims.

The specific compensation mechanism under the Trademark Law is additionally impeded by its dependence on proof of a notional licence fee that is, in most cases, practically unavailable. The proposed amendment – introducing a fixed-range compensation floor modelled on the copyright law mechanism – would materially improve rights holders’ access to monetary relief in trademark infringement proceedings and strengthen the deterrent effect of civil enforcement.