Geography Reference
In-Depth Information
7.66
The general principles of damages computation in an IPR infringement action
are usefully summarised by Kitchin J in a patent infringement case:
Ultraframe
(UK) Ltd v Eurocell Building Plastics Ltd & Anor
,
37
where he stated that 'the
general principles to be applied in assessing damages for infringement of patent
are now well established':
38
(i)
Damages are compensatory. The general rule is that the measure of damages is to
be, as far as possible, that sum of money that will put the claimant in the same
position as he would have been in if he had not sustained the wrong.
(ii)
The claimant can recover loss which was (i) foreseeable, (ii) caused by the wrong,
and (iii) not excluded from recovery by public or social policy. It is not enough
that the loss would not have occurred but for the tort. The tort must be, as a
matter of common sense, a cause of the loss.
(iii)
The burden of proof rests on the claimant. Damages are to be assessed liberally.
But the object is to compensate the claimant and not to punish the defendant.
(iv)
It is irrelevant that the defendant could have competed lawfully.
(v)
Where a claimant has exploited his patent by manufacture and sale he can claim
(a) lost profit on sales by the defendant that he would have made otherwise; (b)
lost profit on his own sales to the extent that he was forced by the infringement to
reduce his own price; and (c) a reasonable royalty on sales by the defendant which
he would not have made.
(vi)
As to lost sales, the court should form a general view as to what proportion of the
defendant's sales the claimant would have made.
(vii)
The assessment of damages for lost profits should take into account the fact that
the lost sales are of 'extra production' and that only certain specific extra costs
(marginal costs) have been incurred in making the additional sales. Nevertheless,
in practice costs go up and so it may be appropriate to temper the approach
somewhat in making the assessment.
(viii)
The reasonable royalty is to be assessed as the royalty that a willing licensor and a
willing licensee would have agreed. Where there are truly comparable licences in
the relevant field these are the most useful guidance for the court as to the
reasonable royalty. Another approach is the profits available approach. This
involves an assessment of the profits that would be available to the licensee,
absent a licence, and apportioning them between the licensor and the licensee.
(ix)
Where damages are difficult to assess with precision, the court should make the
best estimate it can, having regard to all the circumstances of the case and dealing
with the matter broadly, with common sense and fairness.
7.67
However, it should be noted that although this may summarise the situation in
the UK, the practice of awarding damages in IPR cases varies between
countries. For example, the European Observatory on Counterfeiting and
Piracy, found varying standards in EU Member States for the award of damages
37
[2006] EWHC 1344 (Pat).
38
Citing
Gerber Garment Technology v Lectra Systems
[1995] RPC 383 (HC) and [1997] RPC 443 (CA).
