Evolving principles for award of punitive damages

The principles involved in award of damages in intellectual property (IP) litigation in India have seen much evolution in the recent past. The landscape of the award of punitive damages was aggressively set in January 2005, when a single judge of Delhi High Court in a suit for trademark infringement in Time Incorporated v Lokesh Srivastava and Anr (2005), observed that: “This court has no hesitation in saying that the time has come when the courts dealing actions for infringement of trademarks, copyrights, patents, etc., should not only grant compensatory damages but award punitive damages also with a view to discourage dishearten law breakers who indulge in violations with impunity out of lust for money so that they realize that in case they are caught, they would be liable not only to reimburse the aggrieved party but would be liable to pay punitive damages also, which may spell financial disaster for them.”

The court, relying on Mathias v Accor Economy Lodging Inc (2003), had reasoned that one function of punitive damages is to relieve the pressure on an overloaded system of criminal justice by providing a civil alternative to criminal prosecution of minor crimes and it is often very difficult for a plaintiff to give proof of actual damages suffered by him as the defendants who indulge in such activities never maintain proper accounts of their transactions as it is unlawful. The court had accordingly awarded punitive damages of ₹500,000 (US$7000) to the plaintiff as claimed.

The next sharp turn in the landscape of damages came in 2014, when in the case of Hindustan Unilever Ltd v Reckitt Benckiser India Ltd, a division bench of Delhi High Court overruled the earlier reasoning with respect to punitive damages.

Aprajita Nigam is an associate and Dheeraj Kapoor is a senior associate at LexOrbis.