Damages in IP Infringement Cases
The tradition of awarding damages to the IP right holder has got a boost as many High Courts have awarded punitive damages in variety of forms apart from monetary compensation.
In a recent judgement of Hon’ble Delhi High Court in Reckitt Benckiser (India) Pvt. Ltd Vs. Mohit Petrochemicals Pvt. Ltd. & Anr, the Hon’ble court passed an order awarding damages of Rs. 1,00,000/-, which was asked to be deposited in the Juvenile Justice Fund by the defendant who was selling hand sanitizers in the market with a trademark ‘DEVTOL’ which was similar to that of plaintiff’s mark ‘DETTOL’. Even the usual stand taken by the defendant that they have taken steps to withdraw all the product from the market with the infringing mark and have stopped selling the same, did not come in the way of the Hon’ble Court to award cost to the Plaintiff.
Also, in another recent judgement in Microsoft Corporation & Ors. Vs. Satveer Gaur & Anr, the Hon’ble Delhi High Court awarded damages of Rs.30,00,000/- to the plaintiff. In this case the defendant was using various software of the plaintiffs in around 200 computer devices without any license. The Hon’ble Delhi High Court concluded that the defendant had been infringing the Intellectual Property of the plaintiff and awarded damages of Rs. 30,00,000/- in favor of the plaintiffs.
Getting an injunction against the infringing product is not the only solution as it only stops the present infringer from infringing the registered IP. The courts have been awarding damages to the plaintiff so that a deterrence can be established amongst the habitual offenders and infringers. It is pertinent to note that the infringers cannot always get away from liability by apologizing or tendering undertakings in the court thereby agreeing to stop the violation of someone’s Intellectual property rights.
It is the most common case where the infringing goods are of the inferior quality and which are usually linked to the original and actual products coming from the original owner of the Trademark. In many cases the inferior quality and defect in the product or service of the defendant are attributed to that of the plaintiff’s product which damages and destroys the brand image built over the years.
Not only monetary benefits but the courts have changed the way of adjudicating commercial matters and have started awarding damages with new methods for social causes and betterment of the general public, environment.
The Hon’ble Delhi High Court, in the matter of Merck Sharp & Dohme Corp. & Anr. Vs. Abhaykumar Deepak & Anr, awarded damage of Rs. 80 lakhs and directed the defendant to plant around 1.5 lac trees using the damage amount across Delhi keeping in mind the low rate of the trees and the bad quality of Air and pollution.
The Hon’ble Bombay High Court, in the matter of Nippon Steel & Sumitomo Metal Corporation Vs. Kishor D Jain & Anr., awarded damages of Rs. 5 Crores, which was ordered to be donated in Kerala Chief Minister relief fund. The damage was imposed on the defendants even when the parties to the case were willing to settle the matter, to set an example for the defendant and also other offenders.
From directing the defendant to perform 50 hours of Community Services at a Senior Citizens home in New Delhi ( The Polo Corporation v Jerry Arora & Ors to installing 150 Spittoons in a Cancer hospital (Dharampal Premchand v Tara Zarda Factory the courts have been awarding variety of damages in the form of eleemosynary activities to be done by the defendants.
The Hon’ble Delhi High Court in the matter of Koninlijke Philips NV & Anr v Amazestore & Ors have stated in its judgment has briefly explained the rue to calculate the damages at Para 40 that:
“40. Keeping in view the aforesaid, this Court is of the view that the rule of thumb that should be followed while granting damages can be summarized in a chart as under: –
#, Degree of mala fide conduct, Proportionate award
(i) First-time innocent infringer, Injunction
(ii) First-time knowing infringer, Injunction + Partial Costs
(iii) Repeated knowing infringer which causes minor impact to the Plaintiff, Injunction + Costs + Partial damages
(iv) Repeated knowing infringer which causes major impact to the Plaintiff, Injunction + Costs + Compensatory damages.
(v) Infringement which was deliberate and calculated (Gangster/scam/ mafia) + willful contempt of court., Injunction + Costs + Aggravated damages (Compensatory + additional damages)”
The courts have followed a particular procedure while calculating the punitive damages for the plaintiffs in the infringement suits. In the judgement of Hon’ble Delhi High Court in Louis Vuitton Malletier Vs. Iqbal Singh & Ors the Hon’ble Delhi High Court awarded damages of Rs. 3,50,000.
The court in this judgement opined that the quantum of damages could be based on loss incurred by the plaintiff or the profits made by the defendants.
Various High Courts of the country have started awarding damages along with granting injunction orders in favour of the owners of the Intellectual Property and have set an example for subordinate courts. The Courts have also tried to explain why punitive damages are necessary in Intellectual Property rights violation matters. Infringement of the Intellectual Property not only cause damage in terms of money but the plaintiff or the owner of the Intellectual Property also suffers from the loss of goodwill and reputation.
The progressive change in the stance of the judiciary by awarding various kinds of damages and compensations as mentioned above in IP matters raises confidence and trust amongst the business fraternity of the nation and also gives a hope and relief to business entities who have invested in India under FDI.