What factors are considered by judges when deciding the size of damage awards in India?
Binny Kalra: The factors taken into consideration to calculate damages include:
• Profit earned by the defendant.
• Actual or prospective loss caused to the plaintiff’s business and reputation.
• Factors to enhance the aforesaid damages, such as punitive and exemplary damages, include reputational loss, as well as the bad faith of the defendant and the overall effect of the defendant’s infringing activities.
The trend of awarding punitive and exemplary damages started with the decision in Time Incorporated v. Lokesh Srivastav in which the court awarded compensatory damages of INR500,000 (USD$8,200) and punitive damages of INR500,000 for infringement of the Time trademark. In Amar Nath Sehgal v. Union of India, the court observed that compensatory damages may be paid where the acts and commissions of the defendants violate the established rights of the plaintiff.
In software piracy cases such as in Microsoft Corporation v. Kiran, courts have held that where the defendant willfully, intentionally and flagrantly violates the copyrights and trademarks in question, damages must follow for deliberate and calculated infringement.
What types of evidence should brand owners present to support their request for damages?
Pravin Anand: The onus of proof in order to establish the damage incurred as a result of the infringing activity is on the plaintiff.
The evidence to substantiate actual damages must include:
• Price of the infringing goods.
• The time period of business of the defendant.
• Data concerning sales made by the defendant during the relevant time period. This can be established through evidence such as invoices and books of account.
• Percentage of royalty in the concerned industry.
• Quantum of infringing goods seized during the execution of Court Commission.
The evidence to establish damage to goodwill and reputation may include:
• Complaints received, such as those in respect of quality or performance of the products.
• Contracts lost as a result of the infringing activity.
Factors which form evidence to justify grant of punitive or exemplary damages include documents to show knowledge on the part of the infringer and prior relationship with the right holder such as employer-employee, dealership, supplier or distributor.
The aforesaid are just some examples of the type of evidence that may be adduced and the nature of evidence will vary based on the facts and circumstances of a case.
What other forms of judicial relief are available to rights holders?
Anand: At the interim stage, the relief and orders which can be claimed and obtained include:
i) Anton Pillar orders – A Court Commissioner can be appointed by this ex parté order to visit the defendant’s premises and search and seize the infringing goods. These goods may either be taken into custody or left on trust with the defendants after they are sealed. The Commissioner will thereafter file his report to the Court giving details of the proceedings.
In cases where such orders for inspection and preservation of evidence of infringement are necessary, the party may seek appointment of a Court Commissioner. The procedure to appoint a Court Commissioner is provided under Order 26 of the Code of Civil Procedure, 1908. Court Commissioners may be also appointed for a scientific investigation or for making local investigations or for several other purposes.
ii) Mareva Injunction – Courts have passed these orders restraining the defendant from disposing off assets during the pendency of the suit.
iii) Norwich Pharmacal orders – Rights holders can also get Norwich Pharmacal orders, which are orders directing a third party to disclose information. In Souza Cruz v. N K Jain (known as the Hollywood case), the court directed the Commissioner of Customs and Excise at Hyderabad to disclose the complete details of infringing cigarettes being exported to Ukraine.
iv) Discovery – At any time during the pendency of the suit, the court may order the production, upon oath, of such documents as are in the possession or power of a party. For this purpose, the party seeking discovery may file an application requesting the court to direct the other party to provide the requisite information or materials to the applicant. In addition, a party can also seek inspection and discovery of any document relied upon by the opposite side by sending a notice under the Civil Procedure Code, 1908. Further, a party may also make an application to court seeking leave to deliver interrogatories in writing to the opposite party. These interrogatories are answered by the opposite party, by an affidavit within 10 days or within such time that the court may allow.
Following the conclusion of the trial, relief such as permanent injunction is usually claimed. Under Section 135 of the Trade Marks Act 1999 and Section 108 of the Patents Act 1970, the plaintiff is entitled either to damages or to an account of profits. By contrast, under the Copyright Act 1957 Section 56, the plaintiff may be entitled to damages, accounts and even conversion damages, unless the defendant establishes that they were not aware and had no reasonable grounds for believing that copyright was being violated.
Infringing goods, and particularly those which have been seized under an Anton Piller order, are considered case property during the pendency of the suit and if the suit goes to trial, they are liable to be forfeited or destroyed. The plaintiff can seek delivery-up of infringing goods or seek the destruction of the infringing goods.
Kalra: A right holder can also seek a declaration from the Court that the mark is well-known upon conclusion of the lawsuit. Under Section 2 (zg) of the Trade Marks Act, 1999, a well-known trademark in relation to any goods or service, means a mark which has becomes so to the substantial segment of the public which uses such goods or receives such services that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first mentioned goods or services.
Under Section 11(8) of the Act, where a trademark has been determined to be well known in at least one relevant section of the public in India by any court or Registrar, the Registrar shall consider that trademark as a well-known trademark for registration under this Act.
The Trade Marks Registry in India maintains a list, which currently contains 62 marks which have been declared as well-known.
How can rights holders get preliminary injunctions against infringers?
Anand: In order to obtain preliminary relief in the form of a preliminary injunction, the following conditions must be satisfied:
i) the plaintiff has prima facie valid rights and title;
ii) there is, prima facie, an infringement on the part of the defendant;
iii) the balance of convenience is in favor of the grant of an injunction; and
iv) the plaintiff will suffer an irreparable injury if an injunction was denied.
The court will look at the whole case, the strength of the case of the plaintiff and that of the defense, as held in Franz Xaver Huemer v New Yash Engineers. The injunction may be refused where the plaintiff is found guilty of acquiescence or where there has been an unexplained delay in initiating proceedings.
Ex parté injunctions, where no notice is served on the defendants, will be granted where it appears that the object of granting the injunction would be defeated by the delay of giving notice to the defendants.
Are John Doe orders available in India?
Kalra: In India, a John Doe order is generally referred to as an ‘‘Ashok Kumar’’ order. The John Doe procedure is an effective mode of enforcing rights as a Court Commissioner, being an officer of the court, has the power to ascertain the nature of the infringing activity. Once this is obtained, all such infringers may be impleaded as parties to the lawsuit. A John Doe order is passed where on an application made by the claimant, the Court, if satisfied, directs the Court Commissioner to inspect and seize counterfeit products not just from the named defendant but also unidentified defendants who are indulging in counterfeiting activities.
• For example, in 2011, the Delhi High Court in Louis Vuitton Malatier v. Arvind Aggarwal passed a John Doe order, where the plaintiff was granted liberty to execute any number of raids for a period of two months, in a particular market in New Delhi where counterfeit Louis Vuitton products were sold and to implead every party found dealing in such products as defendants in the suit.
What tips do you have for companies looking to protect their brands in India?
Anand: Each case is different and rights holders need to find solutions based on those unique facts. However, rights holders can benefit from taking an active approach to finding and solving problems:
• Keep your eyes and ears open – a few reliable investigative agencies offer genuine leads on counterfeits at affordable rates.
• Prompt action – once a violation comes to the right holder’s attention, it must be acted upon promptly by a cease & desist notice or a lawsuit or as advised.
• Benefits of being proactive – Look beyond issues such a judicial delay as there are huge long term benefits of taking proactive steps against infringers.
India is a large country with great diversity, solutions therefore cannot be boilerplate. Each case is to be assessed based on its facts and creative solutions must explored for the best possible resolution of the dispute.
