METHODS OF DAMAGE CALCULATION IN I.P.

LITIGATION

1. INTRODUCTION

The increased development in technology and the growth of competition in the market
have led to a number of issues in the intellectual property cases. As a consequence, a number of
big and small companies both have been struggling to fight back instances of infringement and
violation of their IP interests. The Indian Courts have been confronted with a number of cases
where the I.P. holders have asserted their exclusive rights over different subject matters and have
also claimed for damages in cases of infringement of their rights and interests. In such
circumstances, it becomes difficult for the Courts to establish the extent of infringement and the
related compensation or damages that shall be awarded to the aggrieved person. Calculating
compensation in intellectual property litigation is therefore, an issue of utmost importance. The
rights owner has the right to deprive the infringer of the unjust enrichment that has accrued to
him as a result of his infringing activities. With special emphasis on Intellectual property cases,
this gives the remedy of an account of profits being available to the right holder: these are the
profits made by the infringer as a result of his infringement. 1 Since the infringement would have
lead to significant loss and damage to the right holder, he is given the remedy to undo or lessen
the damages by means of claiming certain compensation from the infringer. However, it is
pertinent to note here as to what shall be the basis of award of such damages. Also, it is
necessary to consider the fact as to how far these damages could undo the loss suffered by the
right holder.

In cases of Intellectual Property infringement, the right holder has both, civil and criminal
remedies available. In cases where the right holder seeks to claim criminal remedies, the courts
may award either order for imprisonment of the infringer or impose fines. However, civil
damages are one of the most essential, most sought after and important remedies for

1
LexisNexis (In Partnership with Squire Sanders), Civil and Criminal Remedies for Intellectual
Property Infringement, Available at:
http://www.squirepattonboggs.com/~/media/files/insights/publications/2013/11/civil-and-criminal-
remedies-for-intellectual-
pro__/files/civilandcriminalremedies/fileattachment/civilandcriminalremedies.pdf (Last Accessed:
02/04/2016)

Page | 1
infringements of intellectual property rights. This is because damages serve both as
compensation to the right holder for the economic loss that results from an infringement, and
also as a deterrent to would-be infringers. 2

The primary purposes served by the award of damages in IP matters are:

• Compensation: To undo or substitute the loss or damage suffered by the IP holder and
to put him back in the place where he would have been had the infringement not taken place.

• Deterrence: The practice of the courts in awarding damages is directed towards serving
as a threat as well as to discourage the infringers and the would-be infringers.

By means of damages, the IPR holder can plead for compensatory relief in the form of an
award of damages. The aim of an award of damages is to compensate the IPR holder for the
infringement of his rights. The grant of a monetary sum is intended to place the person back , as
far as practicable, in a position where he would have been had there been no infringement. 3 The
valuation of damages in IP cases is not really a matter of finance, but more of equity and law. It
is due to this reason that the courts are not generally concerned with the kind of approach
adopted in calculating the damages, but are rather concerned with the fulfillment of the
compensatory or punitive objective of awarding damages. There are also certain compensatory
damages which merely aim at two things: the General Damages (the amount needed to restore
the fair market value of the property to its owner); and Special Damages (resulting from the
circumstances after the loss or harm has occurred). 4

2
European Observatory on Counterfeiting and Piracy, ‘Damages in Intellectual property’, Available at:
http://ec.europa.eu/internal_market/iprenforcement/docs/damages_en.pdf (Last Accessed:
03/04/2016)
3 1
Supranote
4
Akshat Pande, “Valuation of Intellectual property Assets”, 2010, Eastern law Bookhouse, New Delhi
Pg-105.

Page | 2
2. ECONOMIC SIGNIFICANCE OF AN INTELLECTUAL PROPERTY

The fact that the concept of intellectual property has come into existence is in itself an
explanation of the economic relevance that it bears. There were certain intangible properties that
required certain degree of protection so that the ones who put in their labor and hard work in
creation of those intangible assets could enjoy the fruits of their labor. For instance, the concept
of copyright came into being with the advancement of technologies and the coming in of printing
press, when it became easy for the people to copy the works and produce copies of the same. The
need and importance of something known as copyright was then realized so as to ensure that the
creator of the work does not lose his control over the work and so that a third person does not
freely enjoy the benefits and profits of someone else’s work.

Thus, there emerges a strong need for protecting one’s intellectual property. Some of
these reasons are:
 To accord protection to a work/ subject matter for the exclusive use of it by its
creator /inventor.
 leverage business by making the most beneficial use of one’s intellectual property
 To advance legal recognition to intellectual property
 To enable the enforcement of exclusive rights with regard to the intellectual property in
the court of law
 To ensure incentive for further development
 Since an intellectual property is in itself a huge source of information, it requires special
protection.
 It is a source or the root for further developmental work by third party
 To encourage fair and healthy competition in the market and to encourage fair trading
 To contribute to economic development. 5

5
Federation of Indian Chambers of Commerce and Industry (FICCI), “Introduction to Intellectual
Property Rights and their Economic Importance”, Available at:
http://ipindia.nic.in/whats_new/Introduction_IPR_Economic_Importance.pdf (Last Accessed:
01/04/2016)

Page | 3
For each form of specific intellectual property there is a separate level of relevance and
economic importance. For instance, in trademark cases, the entire business of the right holder
may be at stake where an exorbitant amount of input might have been invested in establishing the
brand name and the allied infrastructure. In cases of Patent litigation, the matters are even more
aggravated especially with regard to pharmaceutical sector where millions and billions of rupees
are in issue. The costs incurred in R&D, manufacturing, registration of companies and expenses
incurred in getting patents, the goodwill and market reputation, etc. are all at stake. In cases of
designs also, a lot of commercial aspects are into consideration. Since the competition in the
market is growing with every passing day and the technological advancement shave enabled and
started in assisting infringement by different means, there is a strong need to protect the
intellectual property from the scope of infringement.

3. THE LEGAL FRAMEWORK IN INDIA PROVIDING FOR AWARD OF DAMAGES

IN INTELLECTUAL PROPERTY CASES:

 The Trademark Act, 1999:

“Relief in suits for infringement or for passing off.—

The relief which a court may grant in any suit for infringement or for passing off referred to
in section 134 includes injunction (subject to such terms, if any, as the court thinks fit) and at
the option of the plaintiff, either damages or an account of profits, together with or without
any order for the delivery-up of the infringing labels and marks for destruction or erasure.” 6

 The Copyright Act, 1957:

“Civil remedies for infringement of copyright.—

Where copyright in any work has been infringed, the owner of the copyright shall, except as
otherwise provided by this Act, be entitled to all such remedies by way of injunction,

6
Section 135(1) of The Trademark Act, 1999

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 damages, accounts and otherwise as are or may be conferred by law for the infringement of
a right: Provided that if the defendant proves that at the date of the infringement he was not
aware and had no reasonable ground for believing that copyright subsisted in the work, the
plaintiff shall not be entitled to any remedy other than an injunction in respect of the
infringement and a decree for the whole or part of the profits made by the defendant by the
sale of the infringing copies as the court may in the circumstances deem reasonable.” 7

 The Patents Act, 1970:

“Reliefs in Suits for Infringement:
The reliefs which a court may grant in any suit for infringement include an injunction
(subject to such terms, if any, as the court thinks fit) and, at the option of the plaintiff, either
damages or an account of profits”8

 The Designs Act, 2000:

“(1) If any person acts in contravention of this section, he shall be liable for every
contravention-

(b) if the proprietor elects to bring a suit for the recovery of damages for any such
contravention, and for an injunction against the repetition thereof, to pay such damages as
may be awarded and to be restrained by injunction accordingly…” 9

 The Geographical Indications of Goods (Registration and Protection) Act, 1999:

“The relief which a Court may grant in any suit for infringement or for passing off
referred to in section 66 includes injunction (subject to such terms, if any, as the Court thinks
fit) and at the option of the Plaintiff, either damages, or accounts of profits, together with or
without any order for the delivery-up of the infringing labels and indications for destruction
or erasure.”10

7
Section 55(1) of The Copyright Act, 1957
8
Section 108(1) of The Patents Act, 1970
9
Section 22(2)(1)(b) of The Designs Act, 2000
10
Section 67(1) of The Geographical Indications of Goods (Registration and Protection) Act, 1999:

Page | 5
 The Plant Varieties Protection and Farmers Rights Act, 2001:
“The relief which a court may grant in any suit for infringement referred to in Section 65
includes an injunction and at the option of the plaintiff, either damages or a share of the
profits.”11
Almost all intellectual property legislations in India have made a provision for the award of
damages as a civil remedy in cases of infringement. However, the limits of award of damages
have not been prescribed in any of these legislations.

4. APPROACHES IN CALCULATING DAMAGES IN IP LITIGATION

In countries like China, the calculation of damages is done based on several factors like: the
actual loss to the right holder due to the infringement behavior; the profit gained by the infringer
due to the infringement; the reasonable licensing fee or royalty charges that might have been
paid to the IP holder if a license or agreement was made in that behalf; the amount discretionally
decided by the Judge within the statutory amounts, etc. However, apart from these factors, there
are a number of issues that needs consideration. One such factor is the type of evidences that
should be produced before the Courts in order to establish the extent of infringement and the
consequential and appropriate damages that should be awarded in IP infringement cases. Some
of the methods of calculating and estimating damages in IP litigation are:

 The profits gained by the infringer:

The most common means of estimating damage in IP matters is by the evaluation of the profits
made by the infringer. The Plaintiff normally adopts the approach of calculating the total profit
of the infringer arising out of the infringing act. Method of calculation is: “profit per infringing
product by the total sales equals to the total amount of profit” 12 made by the infringer.

11
Section 66(1) of The Plant Varieties Protection and Farmers Rights Act, 2001
12
Mike Chen, “What Evidences are needed to obtain High Damages in IP Litigation”, Available at:
http://www.mondaq.com/x/394704/Copyright/What+Evidence+is+Needed+to+Obtain+High+Dam
ages+in+IP+Litigation (Last Accessed: 01/04/2016)

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[Profit per Product X Total Amount of Infringing Products = Total Amount Of
Damages]

Hence, two factors which are: the total amount of infringing products and the profit of the
products play the vital role to the amount of compensation or damages. This is one of the most
widely used approaches by the Courts in deciding damages. However, in such an approach, the
Courts may ignore or neglect the other forms of loss or damage suffered by the right holder.
These may be the damages in the form of harm to the goodwill and market reputation; the loss to
the other stakeholders in the vertical chain of agreements like the distributors or suppliers or
exclusive license holders, etc. Also, it is difficult to adduce the evidence in respect of the total
number of infringing products of the infringer and the profit earned by him on each product.
The plaintiff has the remedy of either opting for damages or for account of profits. He
cannot claim for both the remedies simultaneously. They are not cumulative, but alternate
remedies. However, the remedies of damages or on accounts of profits may be granted in
addition to the remedy of injunction.13

 Actual loss of the IP owner:

By means of adopting this approach, the courts decide the quantum of damages depending
upon the total amount of reduction or drop in the sales volume of the IP owner resulting from
the infringement of the IP Holder’s rights. The courts shall also take into consideration the
reasonable amount of profit that the IP Holder might have made on each product. On the
basis of this analysis, the Courts shall proceed to determine the amount of damages to be paid
by the infringer. However, in such cases, it is sometimes difficult to ascertain the actual loss
and whether such loss has been caused only due to the act of infringement or also because of
other relative market factors. Thus, this approach may not necessarily be appropriate and
accurate.

 Based on Royalty / License Analogy:

13
V.K.Ahuja, “Law Relating to Intellectual Property Rights”, 2007, Lexisnexis Buttorworths Wadhwa,
Nagpur, Pg – 494.

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 This is also one of the most common forms of approach adopted by the Courts in deciding
the damages. In case of an infringement, the court would proceed to determine as to if there
had been a license in existence, what would have been the rate of royalty to be paid to the
right holder. This would largely depend upon the type of the right concerned, the nature and
circumstances if the act of the infringer, the scope and period of validity of the license, etc. 14
It is also known as the ‘Relief from Royalty’ rule. Under this approach, the damages are based
upon a hypothetical license agreement wherein the parties would have agreed upon a
negotiated license fee. The underlying principle for this method of calculation is that the
infringer should not stand at a better position than a licensee who sought for a license in a
legitimate manner. However, it is pertinent to note that in such a situation, the intention of
the right holder is totally ignored and the negative burden of a non-existing and non-agreed
upon license is casted upon the IP Holder. The fact that the proprietor may not, in fact, have
granted a license to the infringer is irrelevant.15 The fact that the IP holder may have licensed
out his intellectual property at a much higher price is totally ignored under this approach and
a forced rate of royalty is fixed by the court to decide the quantum of damages. Also, to
conclude upon a fair rate of royalty, the right owners shall have to produce evidences to
prove the value of the actual existence and amount of royalty, along with the value of the
intellectual property itself.

 Statutory Damages:
This is where the statute itself provides for the range of statutory damages that may be
awarded in IP infringement cases. Generally, the statutes do not provide for a fixed sum of
damages that are to be awarded in civil cases. However, certain limit to the imposition of
penalties has been given under the Intellectual Property Laws. For eg.: Chapter XII of The
Trademarks Act, 1999 provides for the term of imprisonment as well as the extent of fine that
can be imposed upon the infringer in a number of circumstances, depending upon the nature
of infringement. Similarly, Chapter XX of The Patents Act, 1970 specifically deals with
14
Managing Intellectual Property, “Calculating Damages in IP Litigation”, Available at:
http://www.managingip.com/Article/3538214/Calculating-damages-in-IP-litigation.html (Last
Accessed: 03/04/2016)
15
Dr Clemens A. Heusch, Dr Matthias F. Meyer, “Calculation of Damages for Infringement of IP
Rights”, Available at: http://www.twobirds.com/en/news/articles/2005/calculation-of-damages-for-
infringement-of-ip-rights (Last Accessed: 02/04/2016)

Page | 8
 penalties. It prescribes the extent of the term of imprisonment as well as the limit of
imposition of fines. However, it is pertinent to consider here that not all provisions define the
limits of fine that can be imposed. Certain provisions merely suggest that a particular act may
be “punishable with imprisonment for a term which may extend to X years, or with fine, or
both.”

 Reasonable Expenses:
In addition to the compensation for damages calculated in either of the foregoing manners,
the right holder may also claim for compensation in respect of the reasonable expenses
incurred in getting the IP rights enforced. This may include the incidental expenses incurred
by the right holder in getting his rights enforced.

5. THE LEGAL AND TECHNICAL ISSUES IN CALCULATING DAMAGES

In IP litigation matters, a number of legal as well as technical issue come before the
Courts in deciding the quantum of damages to be awarded to the right holders in cases of
infringement. As a common and convenient practice, a number of Courts merely proceed to
decide the damages on accounts of profits. This implies that the Courts merely rely upon the
profits earned by the infringer and award proportional damages in favor of the right holder.
Although the proportion of compensation and damages in IP cases appears to be increasing in a
number of countries, compensation for most of IP cases continues to remain inappropriate and
low. It is due to these reasons that a number of right holders are discouraged and restrained to
get their rights enforced.

Further, the issue of what kind of the evidences shall be given in IP matters to obtain the
higher compensation is a topic of great value. This issue is pertinent to be considered here as
there are a number of evidences that may be given in IP matters. Some of them might even be
crucial or confidential information that the proprietor may not necessarily wish to disclose. It is
particularly in cases of patent litigation matters where the right holder himself may land in a
situation where he may be compelled to produce evidences that eventually deter the economic
fruitfulness his invention. Same is in the case of trade secret related disputes. Apart from such

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circumstances, there may be several other issues concerning evidences. Evidences may include:
expert opinion, digital or electronic evidences; documentary evidences like affidavits, news
reports, contracts, invoices, books of accounts, registration certificates; or even circumstantial
evidences, etc. Thus, it is necessary for the right holder to first identify the value of each
evidences being brought before the court, and also to ascertain the viability and the consequences
of producing that evidence before the Courts.

In practice, the compensation which is based on the actual loss of the right holder due to
infringement behavior is not always reliable. Even though the right holder may adduce evidences
to substantiate the evident fall of its sales or profit, the Court usually considers that the decrease
may not necessarily be an outcome of the infringement, but due to other factors and market
forces. The lack of authoritative and trustworthy data and third party corroboration are the main
reasons that this kind of evidence is not generally preferred by the Courts. 16

It is also pertinent to note that while awarding damages in IP cases, a multitude of factors
have to be considered which are sometimes ignored by the Courts. For instance, the reasonable
expenses incurred in investigation and identifying the infringement, the expenses incurred in
taking legal action against the infringer, and the expenses incurred in rectifying the infringement.
The proprietor may not necessarily be able to recover a proportional amount of damage in
relation to the infringement. This is because some courts are reluctant to award damages which
are difficult or impossible to quantify, despite the loss being visible and apparent. These are
some of the practical issues that are faced by the courts while deciding matters relating to IP
which imply that there are certain economic benefits of an IP that can never be recovered, and
which continue to vest with the infringer despite the right holder being a successful party at the
litigation. As a consequence, the right holder himself is at a disadvantaged position than the
infringer eventually. Such a situation serves as an economic incentive for those who engage in
infringement litigation so as to cause economic harm/loss to the right holder and his right on his
intellectual property.17

16 12
Supranote
17 2
Supranote

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 Another major issue in IP litigation matters is the fear that the validity of the IP may in
itself be called into question and shall be detrimental to the right holder’s interest if the same
results in an affirmation of invalidity. Thus, it is sometimes considered risky for the registered
proprietors of Intellectual Property also to enter into IP litigation, as it would not only deny the
grant of damages, but would also worsen the situation of the right holder.

Apart from these issues, certain other issues that are faced by the courts in determining
damages are:

 Difficulty in calculating and awarding compensation accurately: the general approach

is to evaluate and determine the quantum of damages based upon the profits that would
have been accrued to the right holder in the absence of the infringement. However, it is
generally difficult to prove the probable profit in all IPR cases. There are chances of
inaccurate result of the estimation of lost profits.
 Chances of miscalculation: the courts are commonly seen to make a lump-sum calculation
so as to compensate for the loss of profits to the right holder. Such awards may be based on
the concept of a hypothetical license fee, “reasonable royalty” or “equitable remuneration”,
which may be a lower amount, such as “estimated” or “hypothetical royalties”. Thus, the
end result need not always be accurate.
 Certain losses may remain unacknowledged and unaddressed: right holders may not be
compensated for other incidental negative economic consequences resulting from an
infringement, apart from the loss of profits. In actual practice, several factors may never be
considered. There are many types of consequential damage that can result from an
infringement – reputational damage, price declines, damage to the distinctiveness or value
of a trademark, and the like – which are rarely taken into account or compensated. 18
 Damages for non-harm are generally not available: With regard to the non-economic
harm that may be suffered by the right holder due to the infringement, there is generally no
or very less compensation available. Not all Courts appreciate the fact that certain moral
rights or mental peace may have been jeopardized due to the infringing act of the infringer.
Such factors remain unaccounted for in IP litigation matters while deciding the damages.

18 2
Supranote

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 Costs of legal proceedings are not compensated in full: The costs of investigating and
identifying infringement, the expenses of initiating legal proceedings, and remedying an
infringement and getting the rights enforced are often not taken into consideration. Even if
they are, the costs awarded are nominal. For example, the costs of storage and destruction
of seized goods are sometimes placed on the right holder himself.
 Infringers may stand at a better position even after a successful litigation by the Right
Holder: in cases where the infringer has been able to conceal certain profits made by it, or
has in any manner benefitted from the infringement, he may stand at a better position than
the right holder himself who may not be able to get the actual deserving amount of
damages from the courts.
 The limited authority of Court to gather evidence: The Courts are restricted and bound
to form an opinion based solely upon the evidence placed on record before the Court for its
perusal. In certain cases, the Court may even call for records and for evidences like the
books of accounts. However, in certain situations, the Court cannot extend its powers to
collect evidence by itself. For instance, in case of Trademark infringement where the issue
of deceptive similarity has to be established to place liability on infringer and decide
damages, the court may consider a survey conducted by the parties or a third party. But in
absence of such evidence, the Court cannot itself proceed to conduct a Survey to establish
facts of likelihood of confusion or cross-border reputation or deceptive similarity, etc.
 Limited evidences in cases of online infringement: With the advancement and growth in
technology, copying, reproducing, reverse engineering, sale of products and services
through internet, and disseminating information have become extremely easy. These
advancements and the widespread use of internet and technology have made establishing
the fact of infringement and liability of infringement certain important issues. For instance,
in case of sale of infringing products through a website, where the website does not provide
for the contact details or communication address of the owner, it becomes difficult to
identify the infringer himself and also to gather evidence with regard to the same so as to
evaluate his extent of liability. There may even arise a situation where the right holder is
not acquainted with the name of the infringer, or the address of the infringer so as to make
any legal communication like service of summons, issue of legal notice, etc. Similarly, in
case of an online infringement with regard to a copyrighted work, where a work has been

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 made available to the public through a website, and where multiple users have downloaded
a copy of the same work, it becomes difficult to establish the extent of infringement and
also to order for destruction of infringing goods. Thus, it becomes difficult to calculate the
appropriate amount of damages.

6. THE JUDICIAL RESPONSE:

As a traditional rule, the common remedy available in trademark infringement cases is

an injunction under the Code of Civil Procedure, 1908. However, with the growing concerns
with regard to the monetary and economic loss suffered by the right holders, the Indian Courts
have started granting both compensatory and punitive damages as a remedy emerging from
tortuous liability.19
In Adobe Systems, Inc. and Anr. v. Mr. P. Bhoominathan and Anr.,20 the Plaintiff
was involved in developing software programs. The plaintiff alleged that the Defendants were
using pirated software programs of plaintiffs thereby, infringing copyrights/trademarks of
plaintiffs. Thus, the Plaintiff proceeded to file the Suit for permanent injunction restraining the
infringement of copyrights, trademarks, passing off, delivery up, rendition of accounts,
damages, etc. As evidence, the Local Commissioner seized hard drives from the defendant
containing infringing software of the plaintiff. Since the Defendants deprived the plaintiff’s
potential revenue by using pirated software, the Court considered it appropriate to not only
grant compensatory damages but also award punitive damages to discourage law breakers who
indulge in violations. The court held that financial damages were caused not only to plaintiffs
but also caused deception to public at large. Therefore, a sum of Rs. 5 lacs awarded to the
plaintiff as compensatory damages and a sum of Rs. 5 lacs as punitive/exemplary damages as
well as damages on account of loss of reputation and damage to the goodwill. It was primarily
held that “Punitive damages in addition to compensatory damages are to be awarded in cases

19
Astha Negi and Bhaskar Jyoti Thakuria, “Principles Governing Damages in Trademark
Infringement”, Vol.15 374-379 JIPR (2010), Available at:
http://nopr.niscair.res.in/bitstream/123456789/10213/1/JIPR%2015(5)%20374-379.pdf (Last
Accessed: 01/04/2016)
20
2009(39)PTC658(Del)

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involving infringement of trade mark, copyrights, patents etc. to deter a wrong does from
indulging in such unlawful activities.”

In Time Incorporated v. Lokesh Srivastava21, the Court awarded a total damage of Rs

16 Lakhs which consisted of the compensatory and punitive damages for infringing the
trademark ‘TIME’. This amount included the damages for loss of reputation as well as interest.
The Court held that “The award of compensatory damages to a plaintiff is aimed at
compensating him for the loss suffered by him whereas punitive damages are aimed at
deterring a wrong doer and the like minded from indulging in such unlawful activities.
Whenever an action has criminal propensity also the punitive damages are clearly called for
so that the tendency to violate the laws and infringe the rights of others with a view to make
money is curbed. The punitive damages are founded on the philosophy of corrective justice
and as such, in appropriate cases these must be awarded to give a signal to the wrong doers
that law does not take a breach merely as a matter between rival parties but feels concerned
about those also who are not party to the list but suffer on account of the breach. In the case in
hand itself, it is not only the plaintiff, who has suffered on account of the infringement of its
trade mark and Magazine design but a large number of readers of the defendants' Magazine
also have suffered by purchasing the defendants' Magazines under an impression that the
same are from the reputed publishing house of the plaintiff company.” The Court further held
that “the time has come when the Courts dealing actions for infringement of trademarks, copy
rights, patents etc. should not only grant compensatory damages but award punitive damages
also with a view to discourage end 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.”

In Capitol Records, Inc. v. Thomas-Rasset22 an order for damages was awarded in

favor of the plaintiff wherein the matter related to online file sharing between several

21
2005(30)PTC3(Del)
22
692 F.3d 899 (8th Cir. 2012)

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recording companies and Jamie Thomas - Rasset. The Court ordered for a compensation of
$2,20,000 to be paid to the plaintiff on account of infringement committed by the Defendant.

In Indian Performing Right Society Ltd. v. Debashis Patnaik and Ors.23 the Court
held that “Compensatory damages to a plaintiff is aimed at compensating the plaintiff for the
loss suffered by him, whereas the punitive damages are aimed at deterring a wrong doer and
the like minded from indulging in such unlawful activities."
"Whenever an action has criminal propensity, the punitive damages are awarded so
that the tendency to violate the laws and infringe the rights of others with a view to make
money is curbed.”

7. CONCLUSIONS AND RECOMMENDATIONS:

In IP litigation matters, there are a number of issues that are faced by the courts in calculating
damages. These issues include factors like: absence of strictly and precisely defined limits of
damages that may be imposed; the difficulty in proving the actual loss suffered by the right
holder; the difficulty in adducing evidences with regard to infringement of IP; the long duration
of litigation and the costs incurred in the same; lack of harmonized remedies and extent of
damages; the lack of expertise resulting in conflicting opinions on the same facts and issues; no
fixed approach in calculating damages; loopholes in statutes where no clear statutory damages
are prescribed; the issues of online infringement; reluctance in applying criminal remedies to IPR
cases; use of sham litigation to cause harm to the business or goodwill of the right holder; etc.

Under such circumstances, there is a strong need to revive the existing legal framework
so as to ensure total protection for the right holder. The State shall make policies to ensure the
following things:
 That right holders are able to recover the complete injury and loss suffered due to the
infringement. The laws should provide for complete indemnification of the right holder
especially in cases where the infringer is aware that his acts are infringing. Any sort of direct,

23
2007(34)PTC201(Del)

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indirect, consequential, ancillary, or whatever sort of loss that may be suffered by the right
holder should be made good to him, irrespective of whether the infringing act was carried out on
a commercial scale or not.
 There should be a fixed amount of damage that may be payable in cases of infringement,
especially in copyright and trademark cases. An excessive amount of damage may in itself serve
as a deterrent for the would-be infringers. Also, this may not be an unreasonable or biased step
towards the infringer, as the ultimate purpose of any Intellectual Property protection is to
safeguard the interests of the IP holders and to limit infringement.
 There shall be strict and stringent provisions in the legislations to provide for not only
damages for infringement, but also for provisions like destruction of the infringing goods at the
expense of the infringer; payment of a fixed percent of extra damages for mental agony caused to
the right holder, etc.
An analysis of the legal provisions under the Indian statutes and the judicial approach in
estimating damages suggests that the Indian courts have now accepted the grant of all-
encompassing damages to be an appropriate remedy in civil cases of IP infringement. This is
evident from the fact that the Courts continue to award exorbitant penalties and damages in IP
litigation matters, especially with regard to trademark and patent infringement cases owing to the
commercial and economic significance of these forms of IP and because these Intellectual
Properties involve great input from the right holder and great stakes in the market.

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