The case is Strix Ltd v. Maharaja Appliances Limited, CS (Comm) 403/2018 and CC 54/2009 (Delhi High Ct. Oct. 20, 2023). Swaraj Paul Barooah recently published a post on the decision on SpicyIP, titled Delhi High Court Directs Maharaja to Pay a King’s Ransom in a Patent Infringement Suit, which I commend to readers’ attention. The patent in suit, which expired in 2015, covered liquid heating vessels having a control system that switches off the electrical heating element when the water boils; if I understand correctly, the point of novelty was the control system, which the patent owner manufactured and sold at an average price of 270 INR during the period in question. The owner filed suit in 2008, and the court granted a preliminary injunction in 2009; the period of infringement was said to be the two-year period 2007-09. Patent infringement cases can take a long time to make their way through the Indian court system, and as Mr. Barooah points out this is “one of the few patent cases where a decree has been issued by the court after an interim injunction.” Much of the decision centers on substantive issues of infringement and validity, but in keeping with the subject matter of this blog I’ll focus just on damages.
According to the decision, the defendant’s counsel sought leave to withdraw at some point in the past, and the defendant itself “has also chosen to stay away from the proceedings” (para. 68) and has not produced any accounts. Thus, the court has to do its best to award compensation based on a very limited record. Ultimately, the court awards a reasonable royalty based on the following estimates:
1. According to a press clipping from October 2007, the defendant, which the court refers to as “one of India’s leading home appliance companies,” had an annual turnover of 180 crores. (A crore = 10 million INR = 100 lakhs.) The defendant sold 18 types of products, two of which were kettles, one of which included the infringing feature. Thus, “[i]f the turnover is broadly divided amongst the 18 product categories, each product category could have a turnover of Rs. 10 crores. However, considering that kettles may not be one of the most expensive product categories, the annual sales of kettles are taken at Rs. 5 Crores and divided into the two models of keels sold by the Defendant. The sale of the infringing Kettles would constitute on an average Rs. 2.5 crores per year i.e., a total of Rs. 5 Crores for two years” (para. 80.)
2. According to an invoice produced by the plaintiff, “the sale price of one kettle is Rs. 1,400/- in the retail market” (para. 81).
3. “The average price of the Plaintiff’s patented control as per the Plaintiff’s written submissions is around Rs. 270/-“ (id.).
4. Dividing the estimated turnover of infringing kettles of 5 crores (50 million INR) by the sale price of infringing kettles (1,400 INR) gives us approximately 35,700 infringing kettles.
5. Multiply 35,700 infringing kettles by the average price the plaintiff charges for its patented product (270 INR) gives us 9,639,000 INR.
6. The court then reduces this a bit, stating “Considering this is a broad estimate only calculated for the retail market and not considering all the relevant market conditions, damages of Rs.50,00,000/- are awarded in favor of the Plaintiff” (para. 82).
The court added on 3,144,925 INR as fees and costs, bringing the total to 8,144,925 INR (about US $97,000), and further stated “said amount shall be paid to the Plaintiff within three months, failing which, the Plaintiff would be entitled to recover the said amount along with 7% simple interest from the date of pronouncement of this judgment” (para. 84).
A few observations follow. First, this case makes me think of analogous situations in which a defendant defaults, the plaintiff wants monetary compensation and not just injunctive relief, and the court has to somehow calculate appropriate damages. I’ve started looking at some U.S. cases on this topic and will report back when I have a bit more to go on. (My sense is that this doesn’t happen all that often, though, at least not in U.S. patent law.) Second, it also makes me think of German law, under which courts sometimes make use of the concept of "free discretion" (nach freier Überzeugung) to estimate patent damages under § 287 of the Code of Civil Procedure, as discussed in Markus Schönknecht, Determination of Patent Damages in Germany, 43 IIC 309, 311-13 (2012). As I have previously noted, "[a]ccording to Schönknecht, in Germany “[t]he injured party is not required to prove the exact amount of its damage; rather, it is sufficient if it presents a factual basis on which the court can establish ‘at least a rough estimate’ of the damage.” Schönknecht, supra, at 312 (citing Federal Supreme Court (Tolbutamid), 1980 GRUR 841, 842, translated in 11 IIC 763, 764 (1980))." Third, for me a case like this also highlights the need for patent laws to authorize awards of interest, preferably compounded, starting from an early enough date to make the plaintiff whole. Here, the defendant in effect has had the use of approximately US $100,000 for 14 years, without interest, which seems unfair to the patent owner.
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