In my earlier posts (here and here), I discussed the position of law on injunctions, the requirements for grant of temporary injunction and relevant cases with respect to trademarks in India. So let’s assume that we managed to restrain the defendants from using our trademark, what next? We want the defendants to pay (literally) for what they did and compensate our losses, to the maximum possible extent. This sum of money claimed as compensation for loss or injury is what we refer to as damages. Legally speaking, it is the monetary compensation awarded the Court in a civil suit to the aggrieved party for wrongful conduct of the other party.

Types of Damages

The classification of damages is primarily based on the extent to which the aggrieved party is compensated. Though these terms haven’t been defined under any specific law, observations in judicial pronouncements lead us to these interpretations.

Nominal Damages – As the name suggests, the aggrieved party is awarded a small or symbolic sum for the losses incurred on being able to ONLY establish but not provide sufficient proof of any injury or loss.

Compensatory Damages – By way of compensatory damages, the Court seeks to restore the aggrieved party to its original position as if the loss or injury had not occurred. By this way the Court ensures that the defendant pays for all his acts of wrongdoing which had an adverse impact on the plaintiff’s business.

Punitive Damages – Damages in excess of injury or loss incurred are granted based on the conduct of the defendant, that is to say that when he has acted in a wilful or malicious manner. The rationale is to deter a wrong doer and the like-minded from indulging in such unlawful activities.

Section 135(3) of the Trademarks Act

The laws of interpretation provide that when there is a clear provision of law, no further interpretation is required. Section 135(3) of the Act states that the Court shall not grant relief by way of damages except nominal damages where,

  • the infringement is of a certification or collective mark
  • the defendant can prove that he was unaware of the mark and had no reasonable ground to believe that the plaintiff was the registered owner of the mark or was using the mark;
  • the defendant on being aware of the mark, forthwith ceased to use the mark.

Therefore, rightly so, no punitive or compensatory damages should be imposed if one can prove that there was no knowledge of the mark or that one has ceased to use the mark on being aware.

Relevant Cases – Punitive Damages

The Courts have granted nominal and compensatory damages to the aggrieved parties (again, discretion lies with the Judge) from time to time, however, when it comes to punitive damages the Courts haven’t been very liberal. But the trend seems to be changing for the better. I found the following cases to be interesting on various counts – facts or extent of punitive damages granted or rationale of the Judge.

In Time Inc. v. Lokesh Srivastava, the Court for the first time in 2005 unhesitatingly granted punitive damages to the tune of 5 lacs in addition to the damages and stated that it was time to discourage law breakers ‘who indulge in violations with impunity out of lust for money’. The Court also brought out the distinction between compensatory and punitive damages and opined that the latter is aimed at deterring a wrong doer and the like minded from indulging in such unlawful activities. In this case, it was infringement of the title of a magazine and so the Court also took into consideration the loss suffered by consumers for purchasing the defendant’s magazine under the impression that it was that of the plaintiff.

In this particular case, the Court granted exemplary damages amounting 10 lacs (the highest I’ve come across but if you know of something else let me know) and what is interesting was that the suit was decreed ex-parte. The Court took into consideration evidence advanced by the plaintiff and concluded that it was a clear case of infringement by manufacture of similar counterfeit products.

From the view taken by the Court in Tata Sons v. Mohammed Javed, it can be said that the rationale behind awarding damages is two-fold where there has been infringement of a well-known mark – to protect the companies which invest in brand-building and suffer not only in reputation but also financially AND to protect the consumers who pay for a premium product but get an inferior product.

(For those of you interested in reading the latest cases, here a few links – Disney Case, Schweppes Case)

At the end of this three-part post on injunctions and damages, it is certain that if there is a will, there is a way. However, knowing the reality of Indian Courts (which we hope will change soon) it can sure take a long time but it might just be worth your time and money!

This article has been authored by Nikita, an IP Law practitioner.

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