Jun 30,2022 | 10 min read

Damages in Intellectual Property Law Cases in India

Under The Indian Copyright Act, 1957, Trademarks Act & Patents Act

Damages can be awarded in cases of copyright infringement under the Indian Copyright Act, 1957; however, the party causing such infringement is not liable to pay damages if the defendant proves that at the time of the infringement, he was unaware and had no reasonable grounds to believe that copyright existed in the work. Furthermore, the owner of the copyright is entitled to compensation for the conversion of any infringing copies. In the former case, the measure of damages is the depreciation in the value of the copyright caused by the infringement. The normal measure of damages in the latter case is the market value of the goods converted at the time of conversion.

Furthermore, the copyright holder has the right to treat all infringing copies of his work as his own. Damages for infringement and conversion are not mutually exclusive, but rather cumulative, and in most cases, the plaintiff would be entitled to compensation under both of these categories.The plaintiff is entitled to all of the defendant's profits, even if the plaintiff would not have made that much money himself by exploiting the copyright. 164 To be legally recoverable, the damage must ideally be quantifiable in monetary terms.

Similarly, Section 135 of the Trademarks Act of 1990 refers to damages as a relief in any suit for infringement or passing off of a trademark, wherein the court can only grant nominal damages in some circumstances, such as in the case of certification or collective marks.

When a party claiming damages fails to establish substantial damage, courts typically award only nominal damages. The principles governing the award of damages or accounts of profits are the same in cases of trademark infringement and passing off. Some of the factors to consider when calculating damages are:

1. loss sustained by the plaintiff, resulting from the natural and direct consequences of the infringement,

2. drop in trade of the plaintiff pursuant to the infringing activities of the defendant (and not market forces),

3. impact on the goodwill, reputation resulting from the infringing activities.

In a case of infringement, damages or account of profits may be granted under the Patents Act of 1970, unless it is proven that on the date of the infringement, the defendant was unaware and had no reasonable grounds for believing that the patent existed, or the infringement occurs after a failure to pay any renewal fee within the prescribed period and before any extension of that period, or there has been a usage of the invention prior to the date of the decision allowing the infringement.

In general, damages for patent infringement are calculated on the basis of the pecuniary equivalent of the injury sustained as a natural or direct result of the infringement. In one case where the patentee manufactured and sold a patented article, the court calculated the number of articles sold less by the patentee and the profit he would have made on each article, and the product of the two was determined as the damages. Furthermore, where the patentee tends to licence out the products, the loss of royalties is taken into account when calculating damages.

 

Types of Damages 

The classification of damages is primarily based on the amount of compensation provided to the aggrieved party. Observations in judicial pronouncements lead us to these interpretations, despite the fact that these terms have not been defined under any specific law.

Nominal Damages – As the name implies, the harmed party is awarded a small or symbolic sum for the losses incurred as a result of being able to establish but not provide sufficient proof of any injury or loss.

Compensatory Damages – The Court seeks compensatory damages to return the aggrieved party to its original position as if the loss or injury had not occurred. The Court ensures that the defendant pays for all of his wrongdoing that has harmed the plaintiff's business in this manner.

Punitive Damages – Damages in excess of the injury or loss incurred are awarded based on the defendant's conduct, that is, when he acted wilfully or maliciously. The rationale is to deter wrongdoers and others from engaging in such illegal activities.

 

Important Cases

The Courts have granted nominal and compensatory damages to the aggrieved parties from time to time (again, discretion is with the Judge), but when it comes to punitive damages, the Courts haven't been very liberal. However, the trend appears to be improving. The following cases piqued my interest for a variety of reasons, including the facts, the amount of punitive damages awarded, and the Judge's reasoning.

In Re Time Inc. v. Lokesh Srivastava, the Court granted punitive damages of 5 lacs in addition to the damages for the first time in 2005, stating that it was time to discourage lawbreakers ``who indulge in violations with impunity out of lust for money." The Court also distinguished between compensatory and punitive damages, opining that the latter is intended to deter wrongdoers and others from engaging in such illegal activities. In this case, it was infringement of a magazine's title, so the Court also considered the loss suffered by consumers who purchased the defendant's magazine under the mistaken belief that it was the plaintiff's. In this particular case, the Court awarded exemplary damages in the amount of 10 lacs, and it's worth noting that the suit was decreed ex-parte. The Court considered the plaintiff's evidence and concluded that there was a clear case of infringement by manufacture of similar counterfeit products. 

According to the Court's decision in Tata Sons v. Mohammed Javed, the rationale for awarding damages in cases of infringement of a well-known mark is twofold: to protect companies that invest in brand-building and suffer not only in reputation but also financially, and to protect consumers who pay for a premium product but receive a subpar product.

The courts have since overruled the landmark Time Inc. decision. The case of Hindustan Unilever Limited v. Reckitt Benckiser India Limited, 2014 (57) PTC 495 (Del), concerned a disparaging 30-second advertisement that was widely broadcast across the country. Taking into account the frequency with which the advertisement was aired and the costs incurred by both the plaintiff and the defendant, the court awarded INR 20 lakhs (US $27,000) in actual damages. The court relied on the reasoning in the English cases of Rookes v. Barnard, [1964] 1 All ER 367, and Cassell & Co. Ltd. v. Broome, 1972 AC 1027, in order to determine when punitive damages can be awarded. Furthermore, in overturning the Time Inc. case, the court stated that punitive damages cannot be used as a civil substitute for criminal justice. Instead, the court ruled that punitive or exemplary damages could be awarded in limited circumstances. This includes "wrongful conduct by the defendant calculated for himself that may well exceed the compensation payable to the claimant." Even in such cases, it was decided that punitive damages should be awarded only if actual damages were insufficient to compensate a plaintiff. As a result, the court awarded the plaintiff INR 5 lakhs (US $6,500) in additional punitive damages.

 

Recent Developments

In Whatman International Limited v. P. Mehta and Others, 2019 (78) PTC 51 (Del), the defendants were found to be habitually infringing the plaintiff's registered trademark WHATMAN and related marks for filter papers. Despite an interim injunction, the defendants continued to infringe on the plaintiff's marks despite various undertakings. The court determined that the defendants had a history of using the WHATMAN trademark and related colour scheme repeatedly. It also discovered that their conduct had been repeatedly dishonest over a long period of time, and that they had even made false statements under oath in front of the court. Furthermore, the court agreed with the criticism levelled at the reasoning in the Time Inc. case regarding punitive damages as a form of relief for an overburdened criminal system. Instead, it determined that punitive damages were required due to the defendants' repeated, unremorseful, and wrongful behaviour. The court awarded INR 3.85 crore (US $550,000) in damages.

In another 2019 case, Koninlijke Philips N.V. and Ors. v. Amazestore and Ors., 2019 (78) PTC 618 (Del), the court discussed damages in depth and provided guidelines for awarding proportionate damages based on the extent of the infringer's bad faith. The plaintiffs filed multiple lawsuits alleging infringement of trade dress, design, and copyright rights by the defendants, a conglomerate of multinational corporations involved in the manufacture, import and export, and sale of hair care products such as trimmers. The plaintiffs were able to show that the defendants engaged in a pattern of habitual infringement and contempt of court proceedings, and the court accordingly awarded damages of INR 3.15 crores (US $450,000). The court determined that the degree of deception has a direct impact on the amount and nature of punitive damages that can be awarded in addition to actual damages.

 

Conclusion

The courts' approach to awarding damages has evolved over time. Previously, courts granted actual and punitive damages on the basis of corrective justice and as a civil alternative to criminal action; however, courts have recently shifted to an approach that considers the defendant's conduct as a primary factor in calculating damages. Various High Courts in the country have begun awarding damages and issuing injunction orders in favour of intellectual property owners, setting a precedent for lower courts. The courts have also attempted to explain why punitive damages are required in cases involving intellectual property rights violations. Infringement of intellectual property causes not only monetary damage, but also a loss of goodwill and reputation for the plaintiff or owner of the intellectual property.

However, one thing is certain: if the defendant tries to deceive the courts, the courts will not hesitate to award punitive damages. Effective enforcement in the form of judicial remedies is available, and Indian courts are not afraid to award punitive damages in order to strictly enforce intellectual property rights. We can now expect large-damage decisions in a limited number of cases, depending on the nature of the defendant's conduct and the plaintiff's actions prior to and during litigation.

 

Bibliography

  1. https://copyright.gov.in/Documents/CopyrightRules1957.pdf

  2. https://iprlawindia.org/wp-content/uploads/2021/03/1970.pdf

  3. https://www.indiacode.nic.in/bitstream/123456789/1993/1/AA1999_47trade.pdf

  4. https://www.mondaq.com/india/trademark/823704/evolving-principles-for-award-of-punitive-and-compensatory-damages-in-india

  5. https://www.inta.org/perspectives/a-trend-toward-higher-damages-in-ip-litigation-in-india/

  6. https://nishithdesai.com/fileadmin/user_upload/pdfs/Research_Papers/Law_of_Damages_in_India.PDF

  7. http://yjtrivedi.com/damages-in-ip-infringement-cases/

  8. https://www.mondaq.com/india/trademark/818286/calculating-punitive-damages-in-infringement 


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ABOUT THE AUTHOR


Girija Krishan Varma

Dispute resolution expert: specialize in resolving disputes through mediation, arbitration or litigation. In the quickest possible and cost effective manner. have extensive international and domestic experience in handling cross-border transactions, commercial, construction, intellectual property, corporate,family related personal property and business disputes. I am often appointed as an Arbitrator, Mediator, expert in recovery of damages and intellectual property matters.

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