In a recent resolution dating 8 June 2010 (appeal no. 293/2009), the “Audiencia Provincial de Madrid” (Court of Appeals of Madrid) has explored the concept of “reasonable royalty” and how it can be calculated.

The case involved two Spanish companies acting in the field of alcoholic beverages, more specifically in the trade of “cava” (sparkling wine, but not to be confused with champagne!). The respondent was found liable of infringement as it misused the claimant’s 3D marks over a certain shape of a bottle.

The Court ruled that, failing the claimant of a licensing policy (in fact, it has proven it never granted a license), it was admissible to construe a “reasonable royalty rate” consisting in the sum of three different parameters:

a)      an “entrance fee” (calculated by the Court in Euro.- 40.000, whilst the expertise brought by claimant appraised it in Euro.- 150.000). It is interesting to note that respondent (infringer) unsuccessfully alleged that these types of fees are applicable to franchise agreements, but not to trademark licenses.

b)      an annual fixed fee (calculated in Euro.- 12.000), plus

c)      a variable annual fee over sales.