Herald of a new era for award of damages

By Abhai Pandey, Lex Orbis IP Practice

It may be appropriate to begin with a quote from a judgment of the Delhi High Court in Time Incorporated v Lokesh Srivastava & Anr 2005 (30) PTC 3 (Del). Interesting, equally insightful and self-explanatory observations of the court states:

Abhai Pandey,lawyer,Lex ORBIS IP Practice
Abhai Pandey
Lex ORBIS IP Practice

“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 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 on them.”

Damages and more

In the case, apart from granting compensatory damages, the court also awarded punitive damages of about US$12,000 (Rs500,000) as claimed by the plaintiff.

In its award the Court went on to say that “had it been even higher this Court would not have hesitated in awarding the same”.

The court was of the view that the punitive damages should be really punitive and not flea bites and quantum thereof should depend upon the flagrancy of infringement.

In Hero Honda Motors Ltd v Shree Assuramji Scooters 2006 (32) PTC 117 (Del), the plaintiff claimed token damages and compensation of about US$12,000 (Rs500,000) and no punitive damages were claimed specifically.

Further, the defendant in the matter opted not to appear before the court and the matter proceeded ex-parte.

Consequently, no evidence or account of profits could be made before the court to ascertain the damages to be awarded.

Despite that, the court held that the plaintiff could not be prejudiced by the act of the defendant in staying away from the court proceedings.

Rather the defendant must suffer the consequences of damages as set out by the plaintiff.

Accordingly, the court awarded the damages as claimed by the Plaintiff.

Growing trend

Another interesting example of the above trend was exhibited in the Microsoft Corporation case 2005 (30) PTC 245 (Del).

In this case, based on the popularity of the plaintiff’s software, the Court adopted an assumptive process whereby it calculated financial loss to the plaintiff on the assumption of sale of 100 computers each year which the defendant loaded with pirated software.

Based on this assumption the Court arrived at and awarded damages and compensation in the sum of about US$45,000 (Rs1,975,000) with interest of 9% per annum from the date of decree till payment.

Cautionary note

However, the above trend is not without caution. It is imperative that the assessment of damages has to be based on cogent evidence placed on record.

The onus of proving damages as well as the facts that caused the damages is upon the plaintiff who is required to adduce the best evidence in support of his case.

The onus was not diluted by fact that the defendant had not appeared in court in the matter.

In Indian Performing Right Society Ltd . Debashis Patnaik & Ors 2007 (34) PTC 201 (Del) the Court held that the most material evidence which would enable a court to arrive at a fair assessment of the gains that have accrued to a defendant by his infringing acts would be a true and fair rendition of accounts by the defendant.

Determining damages

However, a defendant who is indulging in such illegal activities would be unlikely to maintain correct accounts that could be used by the court in the case.

Beyond that, it would not place the material in respect thereof before the court. Therefore, it is left to the court to ascertain the probable level of sales of the defendant by other modes.

In this case the plaintiff Indian Performing Right Society claimed the compensatory damages of about US$3,500 (Rs141,788) as the licence fee due from the defendant. The Society further claimed a sum of about US$46,250 (Rs1,858,211) as punitive damages.

The Court held that claim of punitive damages was grossly disproportionate to the claim of compensatory damages and thus highly excessive.

The court found that an award of about US$7,500 (Rs300,000) as punitive damages to the plaintiff would be fair and justified and being in proximity of double the amount of compensatory damages. It cannot be said to be a mere flea bite.

Abhai Pandey is a lawyer with Lex ORBIS IP Practice, a firm specializing in intellectual property with offices in New Delhi.

LexOrbis ip intellectual property infringement
709/710 Tolstoy House
15-17 Tolstoy Marg
New Delhi – 110 001
Mumbai | Bengaluru
Contact details
Tel: +91 11 2371 6565
Fax: +91 11 2371 6556
Email: mail@lexorbis.com
Website: www.lexorbis.com