In a landmark judgment on Patent Law in India, the Delhi High Court has granted an unprecedented amount of INR 217 Crores as compensatory damages for lost profits to the Plaintiff, namely Communication Components Antenna Inc., a Canadian enterprise (“CCAI”), against Mobi Antenna Technologies (Shenzhen) Co. Ltd., a Chinese Corporation (“Mobi”). This is perhaps the first judgment from Indian Courts where damages for lost profits of such magnitude have been granted by a Court in India.
In the detailed judgement, the Hon’ble Court found the Defendants to be infringing the Plaintiff’s intellectual property rights in Indian Patent No. IN240893 (“IN240893”). Having found infringement, the Hon’ble Court relied on the principle that the “patentee’s loss need not be the infringer’s gain”, and accepted CCAI’s evidence of “projected market” share that was lost by CCAI due to the infringing activities of Mobi. The Hon’ble Court extensively relied on the pleadings and evidence led by both the parties in arriving at its conclusions of infringement and damages.
This judgment provides insight into the nature of evidence to be led to establish a case for lost profits based on a hypothetical reconstruction of market in a classical “but-for” scenario. This judgment provides much-needed assurance to right-holders that “infringement does not pay”, and that there is a “pot of gold at the end of the rainbow” for the right-holder.
The Court was hearing a patent infringement suit filed by CCAI against Mobi concerning infringement of IN240893, titled ‘Asymmetrical Beams for Spectrum Efficiency’ relating to telecommunication antennas and the method of deploying the same in cellular communications networks.
CCAI led evidence through two witnesses. The first witness who was the Chief Technical Officer with the predecessor-in-interest of CCAI during the relevant time period of infringement. The second witness of CCAI was Mr. Dennis Nathan, who was the President of CCAI.
Mobi led evidence through one technical witness, namely, Mr. Ramesh Garg, who was the Dean, Faculty & Admin and Visiting Professor at IIT, Ropar, an eminent and premier technical institute of India.
INVALIDITY CHALLENGE Mobi had challenged the validity of IN240893 on various grounds, including lack of novelty, lack of inventive step, non-patentability, amongst others.
After multiple rounds of litigation, the Delhi High Court rejected the multifarious grounds for invalidity taken by Mobi against IN240893.
After having lost its challenge to the validity of IN240893, Mobi stopped appearing before the High Court to address arguments on infringement and damages. Accordingly, final arguments on infringement and damages proceeded ex-parte, i.e., in the absence of Mobi.
As a precursor to the infringement analysis, the Hon’ble Court embarked on an exhaustive claim construction of the claim terms as used in IN240893. The Hon’ble Court extensively relied on the evidence led by the parties in this regard. Relying on the judgment of the Supreme Court of India in Bishwanath Prasad v. Hindustan Metal Industries, reported at (1979) 2 SCC 511, the Hon’ble Court held that “[f] or the purpose of claim construction, it is settled law that claims are to be read along with the description”.
Relying on the interpretation of multiple claim terms, the Hon’ble Court then proceeded to carry out the infringement analysis. For this purpose, the Hon’ble Court relied on the evidence of CCAI’s witness, who had compared the beam patterns produced from the power and phase weightings given in IN240893 with the beam patterns of Mobi’s antenna products, as available in Mobi’s Product Brochures.
The Hon’ble Court heavily relied on the cross examination of witnesses of both parties, given that both parties had led evidence on questions of infringement through expert witnesses, and had undergone lengthy cross examination. Relying on the findings of the Hon’ble Delhi High Court in Merck Sharp & Dohme Corporation v. Glenmark Pharmaceuticals Ltd., reported at 2015 SCC OnLine Del 12580, the Court noted that in cases relating to patent infringement and counterclaim of invalidity, the “…court has not to super impose its view over and above the technical experts…”.
Based on the claims, complete specification, beam patterns, evidence of the parties, the Hon’ble Court concluded that Mobi’s antenna products infringed Claim 1 and Claim 10 of IN240893.
AWARD OF COMPENSATORY DAMAGES
Firstly, the Hon’ble Court noted the submission of CCAI that it is settled law in the US (see Coupe v. Rover, reported at 15 S. Ct. 199) and UK (see Cassell & Co. Ltd. v. Broome, reported at (1972) A.C. 1027) that a patentee’s loss needs not be infringer’s gain. Based on this principle, the Hon’ble Court noted CCAI’s submission that Hon’ble Courts can “grant damages for projected losses even though this ‘projected market’ may not have been captured by the infringer”.
Subsequently, the Hon’ble Court comprehensively relied on the granular evidence led by CCAI in respect of:
Having considered the evidence led by CCAI, and the absence of any evidence by Mobi to rebut the computation presented by CCAI, the Court estimated the lost market share of antennas covered by IN240893 to be 47,355 units, and the profit per unit to be US$ 550. Accordingly, the Hon’ble Court arrived at a figure of US$ 26,045,250, as the lost profit for CCAI, which is equivalent to Rs.217,47,78,375/- at the current US Dollar rate, for the period 2011 to 2014.
The Hon’ble Court also granted actual legal costs incurred by CCAI in terms of the judgment of the Supreme Court of India in Uflex Limited v. Government of Tamil Nadu, reported at (2022) 1 SCC 165.
This judgment is a watershed moment in Indian jurisprudence as regards grant of compensatory damages for lost profits. This judgment provides muchneeded answers to the burning question in all IP litigation – “What damage can be recovered by the plaintiff from the defendant”? It is an open secret that establishing a projected market loss is replete with complexities. In such a case, a hypothetical reconstruction of the market would have to be carried out to ascertain the extent of damage caused to the plaintiff, which would be based on a “but for the defendant” scenario. Although all proofs of damage are to some extent speculative, and require a dive into the “would have” world, damages have to be proved by a preponderance standard that looks to what most likely would have occurred if the infringer’s activities had not existed.
This judgment is expected to lend guidance on the evidentiary standards of assessment and grant of compensatory damages on the basis of lost market share.
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