Monday, August 12, 2013

Interesting French case on damages

I just came across Waters Corp. et Waters SAS v. Hewlett-Packard GmbH et Agilent Technologies Deutschland GmbH, Cour d'appel de Paris, Oct. 5, 2011, PIBD No. 954, III, 56.  The patent in suit was the French portion of EP No. 0 309 596, titled "Dispositif de pompage pour délivrer un liquide à haute pression" (which I would translate as "pumping device for delivering a liquid at high pressure").   There is a more detailed write-up from Véron & Associés here, along with links to the case in French and English, which appeared shortly after the case was handed down, but here is my somewhat briefer summary.

The case seems reasonably straightforward to me in its analysis of lost profits and reasonable royalties under French law, a topic I discuss in my book at pages 264-66, 269-70.  As for lost profits, the court first determines the masse contrefaisante, that is, the number of infringing sales multiplied by the sales price.  It then estimates how many of these sales the plaintiff would have made and multiplies that figure by its estimate of the plaintiff's relevant profit margin.  The case presented a few wrinkles, though.  First, the defendants argued that the plaintiff Agilent Deutschland (which succeeded to the interest of its assignor, Hewlett-Packard Deutschland, which had settled) wasn't entitled to any lost profits because it didn't exploit the patent in France.  The court rejected this argument, because the German company made sales in France through an affiliated French concern from 2000 to 2002.  Second, the plaintiff was entitled to lost profits on certain accessories and replacement parts, based on an estimate of customer carryover rates (taux de report).  Third, the plaintiff was entitled to a reasonable royalty for infringing sales it couldn't show that it would have made in France from 1997 to 2002; in this regard, the court accepted an expert's proposal of a 12% royalty rate.  The court also affirmed "springboard damages" (l'effect tremplin) in the amount of €100,000, based on the benefit the defendants would have enjoyed after the period of infringement due to, e.g., repeat business.   

One interesting defense argument the court rejected was based on article L613-9 of the French IP Code.  In English translation, this reads:   

To have effect against others, all acts assigning or modifying rights deriving from a patent application or a patent must be entered in a register, known as the National Patent Register, kept by the National Institute of Industrial Property.  
However, an act may have effect, prior to entry, against parties who have acquired rights after the date of such act, but who had knowledge of the act when acquiring the rights. 
In the present case, Hewlett-Packard had assigned the patent to Agilent on October 29, 1999, but the assignment wasn't recorded until August 21, 2000.  The defendants argued that they weren't liable for damages for that interim period of time, but the court rejected this argument on the ground that the article isn't intended to immunize infringing acts committed during the period of time before the assignment is recorded.  That seems to make sense.  Though I haven't researched the issue--and according to the Véron & Associés write-up, there was case law supporting the position the court rejected--I would assume that article L613-9 is intended to protect good faith purchasers of patent rights, somewhat akin to U.S. Patent Act section 261, which in relevant part reads "An assignment, grant, or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage."       

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