In Australian IP infringement proceedings, a successful plaintiff must elect between two mutually exclusive monetary remedies: damages (compensation for the plaintiff's own loss) or an account of profits (disgorgement of the defendant's gain). The election is binary and, once made, generally irrevocable. The conceptual distinction sounds clean in the textbooks; the execution is considerably more difficult, which is why practitioners elect damages in the substantial majority of contested matters despite account's theoretical attractions.
Damages and account of profits operate on entirely different principles. Damages ask what loss the plaintiff suffered as a result of the infringement. Account of profits asks what the defendant made from it. As Windeyer J explained in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25, an account strips the defendant of profits derived from use of the plaintiff's property right, without reference to any loss the plaintiff has sustained. The plaintiff is, in that sense, standing in the defendant's shoes rather than asserting its own position.
The statutory foundations vary across regimes. Copyright Act 1968 (Cth) s 115 provides for both damages and account of profits as alternative remedies in an infringement action. Patents Act 1990 (Cth) s 120 establishes the right to bring patent infringement proceedings, with damages and account available as remedies under the scheme. Trade Marks Act 1995 (Cth) s 122 sets out conduct that does not constitute infringement, which practitioners should attend to before the remedy question arises at all: a defendant who establishes a s 122 defence extinguishes the infringement, and with it any remedy.
The incompatibility between the two monetary remedies is doctrinal, not merely procedural. A plaintiff cannot elect both because they rest on different foundations: one is compensatory, the other restitutionary. Courts have permitted a period of discovery before requiring election, on the sensible basis that the plaintiff needs access to the defendant's financial records to make an informed choice.
Account is not automatically available simply because infringement is proved. The defendant's state of mind matters, though the degree to which it matters varies by statute.
Under the Copyright Act, the innocent infringer defence in s 115(3) removes the court's power to award damages against a defendant who proves it was unaware of, and had no reasonable grounds for suspecting, copyright subsistence. Account of profits under s 115(2) is not subject to the same restriction. An innocent infringer can therefore still face an account, which occasionally produces a counterintuitive tactical position: the defendant who claims innocence to avoid damages may nonetheless be exposed to disgorgement of whatever it made from the infringement.
Patent and trade mark infringement proceedings each carry their own knowledge-related considerations.
In practice, the defendant's conduct remains relevant even where knowledge is not formally required. A blatant infringer who generates substantial profits at the plaintiff's expense is precisely the scenario where account has genuine strategic pull: the plaintiff's loss may be modest or hard to quantify, while the defendant has demonstrably profited. The difficulty is execution.
The core problem with account is apportionment. The High Court addressed this directly in Dart Industries Inc v Décor Corporation Pty Ltd (1993) 179 CLR 101, confirming that a defendant is only required to disgorge profits properly attributable to the infringement, not its total profits from the relevant product or business activity. Where the infringing feature is one of many elements contributing to the defendant's commercial success, as is common in patent and design cases involving complex products, the plaintiff faces the burden of demonstrating what proportion of the defendant's profit flowed from the infringement specifically.
That burden is substantial. The defendant's accounting records are rarely structured around the infringing activity, cost allocation is contestable, and defendants will invariably argue that non-infringing elements (brand, distribution, unrelated product features) drove most of the revenue. The expert accounting exercise is expensive, time-consuming, and uncertain in outcome. Courts have discretion in how they approach apportionment, which adds another variable.
Against that backdrop, damages are often more tractable. The plaintiff's lost sales, reasonable royalty, or price erosion can be modelled on more familiar forensic accounting principles. Additional damages under s 115(4) of the Copyright Act remain available where infringement is flagrant, providing a supplement that can close much of the gap between compensatory damages and theoretical disgorgement. In trade mark and patent matters, established royalty rate evidence often provides a reliable damages floor that account cannot match for predictability.
Timing of election is its own consideration. Practitioners generally defer election until after discovery so that the defendant's profit position is actually known, rather than speculated upon. There is no tactical advantage in electing account early unless the plaintiff has solid intelligence that the defendant's profits substantially exceed any calculable loss.
Habeas tip: Search Habeas for Federal Court judgments filtering by "account of profits" and "apportionment" in IP matters, particularly decisions post-Dart Industries, to build a current picture of how courts approach profit allocation methodologies across patent, copyright, and trade mark regimes. Habeas indexes Federal Court, Full Federal Court, and High Court decisions across all Australian jurisdictions.
Habeas indexes over 300,000 Australian legal documents, including the full run of Federal Court and appellate IP decisions on remedy election and apportionment. Practitioners researching the current state of account of profits methodology across trade mark, patent, and copyright regimes can run that research directly on the platform.
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