LOST PROFITS

Background

This case was filed to seek a permanent injunction requested and stop the Defendant from producing, utilizing, selling, putting up for sale, or bringing any goods into India as it infringes upon the patent granted to the Plaintiff for Asymmetrical Beams for Spectrum Efficiency. The Plaintiff also sought damages for lost profits resulting from the Defendant’s alleged violation resulted in their market share and revenue occurred over a period from 2011 to 2014.

Facts

The patent in question was initially filed as a PCT application on March 19, 2007, with the domestic phase application in India filed on August 5, 2008. The patent was granted on June 9, 2010, for the term ending March 18, 2027. TenXc Wireless Inc. formerly held the patent, but its rights were later transferred to Communication Components Antenna Inc., the present Plaintiff.

The infringement was discovered when the Plaintiff discovered Defendant’s sales brochures, containing three products with beam patterns identical to those covered by IN’893. These devices allegedly breached both the method claim as well as the product claim in the subject patent.

Issues

1. Determining the patent violation: Whether the Defendant’s products infringed upon the patent?
2. Calculating lost profits: Extent of loss suffered by the Plaintiff due to the infringement made by the Defendant.

Observations

The Delhi High Court found that the Defendant’s product infringed upon the Plaintiff’s patent technology and the Defendant failed to contest the infringement claims.

The calculation of lost profits was acknowledged by the Court and relied on the shreds of evidence presented by the Plaintiff which included the purchase orders from the United States where similar products were available. The average selling price was USD 1,350, with a cost of USD 800, for a profit margin of USD 550 per unit. The Plaintiff claimed a lost market share of 94,710 units; however, due to a lack of sufficient evidence, the Court determined that it was reasonable to estimate half of this number, resulting in a figure of 47,355. The Defendant’s choice to withdraw from the proceedings and withhold sales records was regarded as an attempt to avoid culpability. This conduct influenced the Court’s decision to rely on the Plaintiff’s estimates and publicly available data.

Decision

The Court awarded damages to the Plaintiff for the loss of market share which is the expected loss of 47,355 units multiplied by the profit per unit (USD 550), for a total loss of USD 26,045,250. Between 2011 and 2014, this amount was converted into Indian rupees, totalling Rs. 217,47,78,375. However, no punitive damages were granted by the Court to the Plaintiff because punitive damages are awarded for damages which are compensatory in nature. According to the Commercial Courts Act,2015 Plaintiff was also awarded with the costs of litigation supporting the notion that the successful side in a commercial litigation should not shoulder the costs. Once infringement is shown, Courts can rightly find that it injured the patentee’s monopoly and assess a fair and reasonable amount of damages. In the absence of specific documents from the infringing party, Courts may assess damages by considering the Plaintiff’s proof and publicly available information. Failure to comply with the directions of the Court or refusal to provide financial records can impact the Court’s decision on calculating the damages.

This decision sets a precedent for future patent infringement lawsuits, particularly in terms of assessing lost profits and determining damages. It underscores the need of maintaining correct financial records and remaining transparent during litigation. Furthermore, it highlights the Court’s willingness to make significant awards based on reasonable estimates in cases where concrete data is lacking due to the Defendant’s failure to comply.

Analysis

This judgment has shown the significance and importance of protecting intellectual property rights and ensuring fair compensation for the infringement. This verdict not only acts as a warning to potential infringers, but also lays the groundwork for future Court proceedings involving similar issues. Firstly, Defendant challenged the validity of the patent because it lacked novelty and inventive steps and requested the Court for revocation of the patent under sections 64(e) and (f) of the Patents Act but the Court later refused to revoke the patent due to lack of merits in the Defendant’s grounds. But the Court under sections 64(1)(h) and (k) of the Patent Act invalidated the patent on the lack of ground of complete specifications. But the Plaintiff appealed this decision and the division bench set aside the initial judgment and held that the patent was not liable for revocation under sections 64(1)(h)(k) of the Patent Act.  The Court also held that the Defendant’s product infringed the right of the patentee who is the Plaintiff because the Defendant’s claim failed to sufficiently prove products replaced any sector antenna as claimed. The Court also directed the Defendants to compensate the Plaintiff adequately if they failed in trial and Delhi High also awarded 217 crores to the Plaintiff as lost profit damages.