A pragmatic approach to Damages – Intellectual Property Case Study

Courts in India, hearing intellectual property disputes traditionally have been conservative in granting punitive/aggravated/exemplary damages, while limiting itself to actual damages in intellectual property disputes.  The Hon’ble Delhi High Court has gradually started building jurisprudence to work towards set norms which can ensure that infringers are burdened with punitive damages apart from actual damages.

The Hon’ble Delhi High Court in Koninklijke Philips N.V. & Anr. Versus Amazestore & Ors and in Koninklijke Philips N.V. & ANR. Versus Amitkumar Kantilal Jain & Ors. in a decision passed on April 22, 2019, enshrined some of the principles which a Court ought to look into while granting punitive damages. The commercial suit was brought by Philips towards infringement of its registered design in respect of its beard trimmers as well as infringement of the copyright in the artistic work on the product packaging of such trimmers.

In the captioned matter the Defendant’s amongst which were the brand owner of the infringing product chose not to appear before the Court despite being duly served with a summons and even refused to accept service of the summons while being in contempt of the injunction order passed in the suit. Furthermore in order to evade the injunction order, the brand owner also deliberately changed its modus operandi and kept changing the model numbers of the trimmers and routed the impugned products through another entity after the suit was instituted and the order of injunction was passed. The Defendant’s made such efforts solely to escape detection.

The Court, while holding that the Plaintiff’s were entitled to a decree of permanent injunction against the Defendants restraining infringement of registered design of the beard trimmer on account of deliberately imitating the shape and configuration of the Plaintiff’s beard trimmers as well as entitled to a decree of permanent injunction restraining infringement of copyright, passing off and unfair competition on account of unauthorised and brazen reproduction of the Plaintiffs’ literary and artistic work in the form of copying the product literature, promotional material and packaging of such beard trimmers, also held that they were entitled to compensatory damages as well as aggravated/exemplary damages.

While the Plaintiff computed the compensatory damages that were due on account of such blatant infringements of its copyright in the design as well as copyright in the literary and artistic work as well as common law rights in the trade dress of the trimmers, it also prayed for aggravated/exemplary damages while referring to Hindustan Unilever Limited v. Reckitt  Benckiser India Limited which inter alia held “67….Furthermore–and perhaps  most crucially–the punitive element  of  the  damages  should  follow  the  damages  assessed otherwise (or  general)damages;  exemplary  damages  can  be awarded  only  if  the  court  is ―satisfied  that  the  punitive  or exemplary  element  is  not  sufficiently  met  within  the  figure  which they have arrived at for the plaintiff‘s solatium.”

• 2019(78)PTC618(Del) ¹
• 2014  (57)  PTC 495  [Del]  [DB] ²

  While awarding compensatory damages as claimed by the Plaintiff’s, the Court also held that the Plaintiffs are entitled to aggravate/exemplary damages of a total of Rs 1 Crore over and above the compensatory damages on account of the degree of mala fide conduct which has a direct impact on the quantum and nature of damages that could be awarded in addition to a claim for actual/compensatory damages. The Court again referred to the Hindustan Unilever Limited(supra) which in turn relied upon Rookes v. Barnard which laid down three categories of cases in which punitive/exemplary damages might be awarded, one amongst which is “(b) Wrongful conduct by the defendant which has been calculated by him to make profit for himself which may well exceed the compensation payable to the claimant;”. The Court observed that Rookes v Barnard(supra) further goes onto elucidate category(b) as follows :

1. Cases  in   the   second   category  are  those  in   which   the Defendant’s  conduct  has  been  calculated  by  him  to  make  a profit  for  himself  which  may well  exceed  the  compensation payable to the plaintiff

2. Where  a  Defendant  with  a  cynical disregard  for  a  Plaintiff’s  rights  has  calculated  that  the money  to  be  made  out  of  his  wrongdoing  will  probably exceed  the  damages  at  risk,  it  is  necessary  for  the  law  to show that it cannot be broken with impunity

3. Exemplary  damages  can  properly  be  awarded whenever it is necessary to teach a wrongdoer that tort does not pay

   The Court further went onto observe that Rookes v. Barnard(supra) specifically states that the award of aggravated damages is justified when the Court finds the conduct of the Defendant to be extremely mala fide and wanton and proceeded to craft a rule of thumb that should be followed while granting damages which was summarised in the following chart :-

While clarifying that the chart is illustrative and is not be read as a statutory provision, it was observed that the Courts are free to deviate from the same for good reason.

The Court held that the mala fide actions of the Defendants prove that they fall in the last category in the chart hereinabove and that compensatory damage is inadequate to punish the Defendants for their outrageous conduct and therefore to deter them from repeating it, the Court awarded some larger sum, i.e. aggravated/exemplary damages.

This positive and pragmatic approach augurs well for intellectual property owners, as now the Courts seem ready and willing to not only grant permanent injunctions but also burden Defendants with actual/compensatory damages as well as exemplary/aggravated damages in fit and deserving cases.

The Court thereafter proceeded to hold that the Plaintiffs are further held entitled to actual costs of litigation including lawyer’s fees.

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