French Cour de Cassation Ruling on Defendant's Profits

I've blogged about this case, Carrera SARL et Texas de France SAS v. Muller et Cie, PIBD No. 1112, III, 120 (Jan. 23, 2019), once before (here), after the December 2016 Court of Appeals decision, which held that the plaintiff was not entitled to an award of the defendant's profits.  In January of this year, however, the Cour de Cassation reversed, holding that even though the plaintiff did not practice the patent itself it was entitled, under French law, to have the court consider the defendant's profits as an element of damages.

Here is what I wrote about the Court of Appeals decision in 2017:

Carrera SARL et Texas de France SAS v. Muller et Cie, PIBD No. 1067, III, 170 (Dec. 9, 2016), appears to take the latter view, namely that IP owners are entitled to recover damages for their own losses but not an award of the infringer's profits as such.  If I'm reading the facts correctly, Muller (owner of European Patent 1,067,822 for a "Heating element manufacturing process for heating or cooking apparatus, such heating element and apparatus incorporating it") is a patent holding company that had licensed the patent, royalty-free, to six affiliated companies.  Muller prevailed on liability, but sought to recover an award of the defendants' profits rather than a reasonable royalty.  The district court awarded damages in the amounts of  €327,733 and €280,130, respectively, as well as damages for moral prejudice in the amount of €100,000.  Both parties appealed.  The Court of Appeals, however, rejected Muller's argument that  it could opt for an award of profits, stating (my translation):

Moreover, while it is true that the Law of October 29, 2007, implementing Directive 2004/48, invites the judge to take into account "the benefits realized by the infringer," it does not  authorize the confiscation of those benefits; and this taking into account is limited only to the portion relating to the losses suffered as a result of the exploitation, in order to attain a complete reparation for the loss." 

Furthermore, if I'm reading this correctly, since Muller disavowed any reliance on a reasonable royalties theory, the court also threw out that award; and it also disallowed the award for moral prejudice, concluding that there was no evidence that the infringement caused any harm to Muller's reputation.

Anyway, the Cour de Cassation annuls the Court of Appeals decision on defendant's profits, stating that L. 615-7 of the I.P. Code confers upon the injured party a choice among damages remedies, and that "the existence, for the patent holder, of an economic prejudice resulting from patent infringement is not contingent upon the patent holder itself engaging in the exploitation of the patent" (my translation).  It's not entirely clear to me, however, from the text of the decision and the accompanying commentary by S. Lepoutre and C. Martin, whether this means that the patent holder is entitled to recover all of the profits realized by the infringer as a result of the infringement, or only  if the court should take those profits into consideration in crafting an appropriate compensatory damages award (which, perhaps, could be for less than the entire profits realized as a result of the infringement).

The Cour de Cassation affirmed the finding that there was no evidence that the patentee had suffered any moral prejudice as a result of the infringement.

Many thanks to Pierre Véron for helpful discussion of this case.