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In a copyright lawsuit, damages may be categorised as follows:
1. Actual/ Compensatory Damages;
2. Exemplary/ Punitive damages; and
3. Conversion Damages.
1. Actual/Compensatory Damages
a) These damages are usually granted by courts in order to indemnify the right holder for loss incurred by due to infringement. They are contingent on factors such as nature of the dispute, loss incurred, intangible factors such as pain, suffering etc.
b) Actual/ compensatory damages may be calculated in various manners, for example on the basis of profits made by the infringer; loss incurred by the right holder; loss of license fees/ royalty etc.
c) The factors taken into consideration while accounting for compensatory/ actual damages are:
d) Where actual/ compensatory damages are calculated on the basis of the loss caused to the plaintiff, lost profit damages are based on an analysis of the additional amount of profits that the right holder would have made had the infringement not occurred. If the right holder can show that in the absence of infringement, he or she would have made the sales made by the infringer, then he or she would be entitled to the profits that would have been made on those additional sales. Lost profits are calculated at the selling price that the right holder would have charged had the infringement not occurred.
e) Calculation of lost profits can result from lost sales (sales the right holder would have made, if the infringer had abstained from infringing actions); Price reductions (price reductions the right holder was compelled to concede to in order to match the infringer‘s prices) and loss of goodwill and reputation due to bad quality of the infringing product/ services.
f) Where the actual/ compensatory damages are calculated on the basis of return of profits made by the infringer, the calculation would be:-
a) Infringer’s profit = Total sale of infringing products/ services – expenses incurred;
b) Infringer’s profit = Total sale of infringing products/ services – margin of profit.
g) Where actual/ compensatory damages are calculated on the basis of loss of royalty/ license fees, a following formulae can be adopted by the aggrieved party: Period x Estimated Rate of Service x Number of goods/Quantum of service = Compensatory Damages.
In the case of Super Cassettes Industries Pvt. Ltd v. HRCN, vide order dated 9 October 2017, the Hon’ble Delhi High Court granted compensatory damages of INR 16,20,000/- (approx. USD 25,000). The case was filed by one of the most reputed music companies in India against a cable operator for broadcasting its copyrighted audio and visual works over their cable network without a license. The Hon’ble Judge calculated compensatory damages on the basis of loss of license fees as follows:
“15,000 (Number of Subscriptions and connections of the Cable Operator) x 18 (Subscription rate/ License fees of the Plaintiff per account, charged at INR 18 per month) x 6 (No of months of infringing activity) = INR 16, 20, 000/-"
2. Exemplary/ Punitive Damages
a) In some cases, exemplary damages may also be granted along with compensatory/ actual damages.
b) The rationale behind awarding these damages is to punish the wrong-doer and deter others from indulging in such unlawful activities.
c) In order to calculate exemplary damages, the test is to first determine the compensatory damages (referred to as the smaller figure). If this is not an adequate solatium to punish the wrong doer, a larger figure is determined.
d) The Indian courts have previously granted both punitive/ exemplary and real damages against the infringers. In Hindustan Unilever Limited Vs. ReckittBenckiser India Limited, 2014 (57) PTC 495 [Del] [DB] the Appellate Court granted punitive damages to the extent of INR 20,00,000/- ((approx. USD 31,000).
The Court Held That:
“66. Rookes v. Barnard,  1 All ER 367, is the seminal authority of the House of Lords, on the issue of when punitive or exemplary (or sometimes alluded to as "aggravated") damages can be granted. The House defined three categories of case in which such damages might be awarded. These are:
a) Oppressive, arbitrary or unconstitutional action of any servants of the government;
b) Wrongful conduct by the defendant which has been calculated by him or her for himself or herself that may well exceed the compensation payable to the claimant; and
c) Any case where exemplary damages are authorised by the statute.
e) The later decision in Cassell & Co. Ltd. v. Broome, 1972 AC 1027 cited at Paragraphs 68 and 69 of Hindustan Unilever Limited, upheld the categories for which exemplary damages could be awarded, but made important clarificatory observations. According to Cassel, in order to calculate exemplary damages, the test is to determine the compensatory damages (referred to as the smaller figure). If this is not an adequate solatium and a larger figure is determined, the total amount should not be in addition but in substitution of small sums.
f) In other words, if the compensation figure is a pinch and you need to deliver a punch, do not make it a pinch and a punch, but only a punch. The second aspect of Cassell v. Broome as also the decision in Hindustan Unilever Limited, is the fact that the damages should never be referred to as a fine being a civil not a criminal remedy, and the amount is going to a private party and not the government.
g) Further, in Williams v. Settle  1 W.L.R. 1072 cited at Para 37 of Rookes v. Barnard, it was held that “Damages are then awarded not merely to recompense the plaintiff for the loss he has sustained by reasons of the Defendant’s wrongful act, but to punish the Defendant in an exemplary manner and vindicate the distinction between a willful and an innocent wrongdoer.”
h) In Hindustan Unilever Limited, the disparaging advertisement was aired 2700 times and therefore exemplary damages were awarded along with the general damages.
3. Conversion Damages
a) Conversion damages are awarded when the court deems the infringing articles to have been the owner's property, which the infringer has, in effect, stolen. The amount of damages is usually referable to the amount that the infringer realised on the sale of the articles.
b) The normal measure for damages for conversion is the market value of the goods converted.
c) While compensatory damages are granted for a wrong done to an incorporeal right, copyright. Conversion damages are for conversion of particular chattels, the infringing copies. The measure of damages is different. In the latter case, the measure is the value of the copies, which by force of the statute are deemed to be the property of the plaintiff, from the mere fact of being brought into existence.
d) In India, conversion damages have been provided as a remedy for copyright infringement and finds a mention under S. 58 of the Copyright Act, 1957 which states “58. Rights of owner against persons possessing or dealing with infringing copies. — All infringing copies of any work in which copyright subsists, and all plates used or intended to be used for the production of such infringing copies, shall be deemed to be the property of the owner of the copyright, who accordingly may take proceedings for the recovery of possession thereof or in respect of the conversion thereof:…”
e) As per the principle of conversion damages as applicable to copyright infringement, the owner of copyright can recover unsold infringing copies and prices of copies actually sold. When the infringing copy is part of the larger work, the assessment of conversion is that percentage of the market value of the copies, which is applicable to that part constituting the infringing matter.
f) It was held in the case of Dharam Dutt Dhawan vs Ram Lal Suri Etc., AIR 1957 Punj 161 that in case of publishing infringed books, the copyright holder is entitled to the accounts relating to the sale of books and the cost of printing and publishing is to be excluded from such accounts.
g) In the case of Gopal Das v Jagannath Prasad, AIR 1938 All. 266 it was held that the infringing copies which were sold, being the property of the copyright owner, entitled the owner to the money for which the infringing copies were sold.
h) As per the case of Sutherland Publishing co. v. Caxton Publishing Company, (1936) 1 All. ER 177,
where the compensation amount awarded overlaps with the conversion damages, conversion damages may not be granted.
4. Nature of Evidence/ Proof Required for Computing Damages
a) In order to compute damages, the following information/ acts may be beneficial:
b) The extent of evidence is dependent upon the subject matter of the lawsuit, the parties involved, extent of infringement etc. In some cases, an investigation prior to filing a lawsuit may also be beneficial to bolster the case against the infringer.
Additionally, successful parties are also awarded nominal costs for expenses incurred in filing the lawsuit unless the plaintiff has filed a vicious suit likely to be rejected in limine. Generally, costs are calculated on the basis of court fees and attorney fees.
Anand and Anand
Prachi Agarwal BSc. LL.B, works in the litigation department of Anand and Anand. She completed her studies at National Law University, India in 2007 and at George Washington University, US in 2008. Ms Agarwal is actively involved in intellectual property litigation practice including patents, trademark, copyright and designs and also provides clients with legal advice in intellectual property law matters. She previously worked at IP law firm Ditthavong, Mori and Steiner, Virginia, US and is licensed to practice in the Commonwealth of Virginia, USA and India.
Managing partner Pravin Anand focuses on intellectual property, litigation and dispute resolution. He completed his law studies in New Delhi in 1979 and has since been practicing as an intellectual property lawyer. Mr Anand has been a counsel in several landmark intellectual property cases involving the first Anton Piller Order (HMV cases); the first Mareva Injunction Order (Philips case); the first Norwich Pharmacal Order (Hollywood Cigarettes case); Moral rights of Artists (Amarnath Sehgal case); Recognition for pro bono work for rural innovators at grass root level (National Innovation Foundation Award - Govt. of India); First order under the Hague Convention (Astra Zeneca case) and several significant cases for pharmaceutical clients such as Novartis, Pfizer and Roche. He is a co-author of two volumes of Halsbury's Laws of India on Intellectual Property and serves on the editorial board of several international intellectual property journals. Mr Anand is also author of the India chapter in Copyright Throughout the World - WEST (Thomson Reuters).
Damages in civil and criminal proceedings are one of the primary and the most important remedy for infringement in intellectual property litigation. These damages are seen as compensation to the right holders absolving them of the loss caused due to infringement; punish the wrong-doers as well as deter potential infringers.