Grants of punitive damages signal growing IP protection

By Omesh Puri and Abhigyan Ashok, LexOrbis

Damages, as the name implies, refers to a form of compensation as a result of breach, loss or injury. Punitive damages are pecuniary compensation awarded to punish the at-fault party, particularly for any intentional, malicious or outrageous act and for harming the rights of others.

Omesh PuriAssociate partnerLexOrbis
Omesh Puri
Associate partner

Punitive damages are granted as exemplary damages, which are awarded in addition to actual damages, to discourage any malpractice that is intended to adversely impact the rights of others. Indian statutes lack any express provision for punitive damages, however, the judicial approach in this regard has been appreciable. Judges have recognized the concept of punitive damages, and have awarded them in several cases.

With respect to intellectual property (IP), Delhi High Court granted punitive damages for the first time in addition to compensatory damages in Time Inc v Lokesh Srivastava & Anr (2005), observing that “the time has come when the Courts dealing [with] actions for infringement of trademarks, copyrights, patents etc. should not only grant compensatory damages but award punitive damages also with a view to discourage and 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”.

Abhigyan AshokAssociateLexOrbis
Abhigyan Ashok

This instance was the first time when an Indian court recognized the importance of protecting IP rights through awarding punitive damages, and similar observations have been made in a series of judgments since then.

Proactively handling the menace of piracy, the courts have been granting punitive damages against defendants who were not even present during the trial. In the case of Microsoft Corporation v Deepak Raval (2006), Delhi High Court awarded punitive damages of ₹500,000 (US$7,750) considering the wilful, intentional and flagrant violation by the defendant of the plaintiff’s copyright in its software.

Further, in Microsoft Corporation v Mr Rajendra Pawar & Anr (2007), Delhi High Court stated: “Perhaps it has now become a trend of sorts, especially in matters pertaining to passing off, for the defending party to evade Court proceedings in a systematic attempt to jettison the relief sought by the Plaintiff. Such flagrancy of the Defendant’s conduct is strictly deprecatory, and those who recklessly indulge in such shenanigans must do so at their peril, for it is now an inherited wisdom that evasion of Court proceedings does not de facto tantamount to escape from liability. Judicial Process has its own way of bringing to task such erring parties whilst at the same time ensuring that the aggrieved party who has knocked the doors of the Court in anticipation of justice is afforded with adequate relief, both in law and in equity. It is here that the concept of awarding punitive damages comes into perspective.”

In the recent case of Cartier International AG and Ors v Gaurav Bhatia and Ors (2016), Delhi High court found that the defendants had supplied massive quantities of counterfeits under the plaintiff’s brands (Cartier, Panerai, Vacheron Constantin and Jaeger Lecoultre). Relying on the principle laid down in the case of Time Inc v Lokesh Srivastava & Anr, heavy punitive damages of ₹10 million were awarded.

The inclination of the Indian courts to protect the rights of IP owners seems evident from the above judgments. However, a close scrutiny of the legal regimes governing punitive damages in other jurisdictions reveals that Indian courts seem to lack a set of clear, uniform and tenable parameters for computing the amount of damages to be awarded to an aggrieved party. The courts have granted nominal and compensatory damages from time to time, but when it comes to punitive damages, some Indian courts haven’t been liberal.

However, with various proactive measures taken by the courts in the recent past the trend seems to be changing for the better. Moreover, in the recent case of Bridgestone Corporation v Tolin Tyres Pvt Ltd (2017) in addition to compensation/damages to the tune of ₹3 million, the defendants faced the court’s ire for infringing the Bridgestone trademark. The two top officials of the company were taken into custody for perjury and blatant practices attempting to mislead the court.

The courts’ robust and pragmatic move into previously uncharted territories such as grant of punitive damages and exemplary costs are signs of a realistic and balanced approach in favour of IP owners.

Omesh Puri is an associate partner and Abhigyan Ashok is an associate at LexOrbis.

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