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Refusal of Exemplary Damages on Infringement of Well-known Trademarks

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Ms. Justice Gupta, departing from the decision of the Delhi High Court in Time Incorporation v. Lokesh Srivastava, refused a punitive damage award in the case Christian Louboutin SAS v. MR. Pawan Kumar & Ors. In this case, the plaintiff, with a trademark of distinctive nature was recognized by the Trade Mark Office all around the world, which gained immense international recognition and trans-border reputation in India. The defendants, who are in the business of selling women’s shoes and accessories, which also carry the business through social media platforms, used the Trade Mark of the plaintiff in selling their ladies shoes, which was confirmed through further investigation. Plaintiff prayed for a permanent injunction, restraining the defendants from, manufacturing, selling, offering for sale or directly or indirectly dealing with the same goods bearing the plaintiff’s Trade Mark which is identical or deceptively similar to the plaintiff mark.

The plaintiff contended that their Trade Mark, that is, a shoe with a red sole clearly identifies the product of the plaintiff and distinguishes it from the goods of every other person and thus became the signature of the plaintiff. They also pointed out evidence to substantiate its claim that its Trade Mark is distinctive and well-known.

The Delhi High Court by taking into consideration the facts and circumstances of the case restrained the defendants from using the plaintiff’s impugned Trade Mark. The Court deciding ex parte observed that, since the Trade Mark of the plaintiff enjoys substantial Goodwill and Transborder reputation, it can be considered as a well- known trademark. The Court also made reference to a plethora of cases in order to arrive at whether to or not to grant punitive damages against the defendants. And by relying upon the decision of the same Court in Hindustan Unilever Ltd v. Reckitt Benckiser India Ltd, the Court concluded that it is not reasonable to grant punitive damages in the matters of Intellectual Property. Rather by taking into consideration 3 categories of compensations under Rooks v. Barnard and 5 principles in Cassel & Co. v. Broome, exemplary or punitive damages has to be granted. Relying upon the above reasons and the turnover of the defendant, the Court award for a compensation of 2.08 Lakhs against two sets of defendants in general or compensatory damages plus another 8.63 Lakhs in legal fees, court fees, and associated expenses.

Well-known Trade Marks, as defined under the Trade Mark Act means a mark which has become so to the substantial segment of the public which uses such goods or receives such services. Initially, no such provision as to the protection of well-known trademark exists and so reliance was upon the common law remedy of passing off. The first case, which emerged in this respect, was Daimler Benz v. Hybo Hindustan, wherein, this Court considered the Plaintiff mark to be well known on account of Transborder reputation and Goodwill. On the same ground was Whirlpool Co. & Anr. V. N.R.Dongre decided. Later, following the requirement in General Assembly on Trade & Tariff (GATT), a set of new laws to handle well-known marks and related issues were enacted. With regard to the newly enacted provisions, the Delhi High Court decided the case Indian Shaving Products Ltd v. Gift Pack & Anr, by taking into consideration the factors determining the reputation of the mark, that is, duration, extent and geographical area of any use of the trademark. On similar grounds, this Court decided the case, Manico Ltd v. Madhu Gupta.

The next aspect considered was with regard to the award of punitive damages. Affirming the decision of this Court in Hindustan Unilever Ltd v. Reckitt Benckiser India Ltd, Delhi High Court refused to award punitive damages, against the reasoning of the same Court in Time Incorporation v. Lokesh Srivastava. Damages, being one of the forms of relief, the general rule in the fixation of the sum to be given should be as close as possible to that amount which will put the injured party in the same position as he would have been, if he had not sustained the wrong for which he is getting compensation. It is granted at the discretion of the Court, from the usual practice of compensatory damages and it is awarded in addition to the compensatory damages.

A breakthrough in the field of awarding punitive damages happened in the case, Time Incorporation v. Lokesh Srivastava, where Court awarded both compensatory and punitive damages. Upholding this decision, came a plethora of decisions, mainly by this Court, thereby the justification laid in this case became the ‘vertebrae’ for the grant of punitive damages in IP related issues. Some of those decisions such as Microsoft Corp v. Deepak Raval and Hero Honda Motors Ltd v. Shores Assurance reflected upon the motive behind granting punitive damages. In all these decisions, the point highlighted was that the justification for granting punitive damages is to deter the wrongdoers and the like-minded so that in such cases they would, not only be liable to reimburse the aggrieved party but would also be liable to pay punitive damages, which may spell financial disaster to them.
Subsequently, came the decision of the same Court in Hindustan Unilever Ltd. V. Reckitt Benckiser India Ltd, departing from the decision of the Time Incorporation v. Lokesh Srivastava.

The propositions made by this Court in the aforesaid case were as follows:

  • Punitive damages are that damages which can be awarded in addition to the general compensatory damages and cannot substitute it.
  • It expressly overruled the decision of Time case, that, punitive damages would more effectively be awarded in civil cases and that, otherwise, would overburden the criminal system. It acknowledges that, IP statutes includes within it, criminal punishment including fines and if a civil award travels beyond by awarding punitive damage, it would not happen, in cases where the plaintiffs are unable to prove general damages, but the Court, in the absence of a Criminal Conviction, determines that it wants to curb actions that involve a criminal propensity.
  • The basic objective in such cases is to avoid an ad hoc judge-centric award of damages without deciding and compensating for the injury caused by the plaintiff.

The aforesaid reasoning was affirmed by this Court once again in this case. Such a decision was much needed in order to restore the balance of Delhi High Court in awarding damages. However, such a decision has not entirely shut the entire doors of granting punitive damages. Rather, it emphasized upon the circumstances under which exemplary damages can be awarded, thereby clarifying that such damages cannot be granted for the violation of IP rights as IP laws do not provide for the grant of such damages.
Thus, it can be concluded that, Court considers trans-border reputation, spillover effect, honest and concurrent use, extensive use and concurrent use, extensive use, and advertisement etc. to determine a particular mark as well-known and the enactment of such provisions led to considerable change in the nature of the Indian market, as many foreign big brands get attracted to the foreign policies adopted in this respect. And that in case of an infringement of a well- known trademark or for that matter, of any IP related issues, it would be unreasonable to grant punitive damages without the aggrieved party getting compensated.

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Refusal of exemplary damages on infringement of well-known trademarks. (2018, October 08). GradesFixer. Retrieved December 4, 2022, from https://gradesfixer.com/free-essay-examples/refusal-of-exemplary-damages-on-infringement-of-well-known-trademarks-2/
“Refusal of exemplary damages on infringement of well-known trademarks.” GradesFixer, 08 Oct. 2018, gradesfixer.com/free-essay-examples/refusal-of-exemplary-damages-on-infringement-of-well-known-trademarks-2/
Refusal of exemplary damages on infringement of well-known trademarks. [online]. Available at: <https://gradesfixer.com/free-essay-examples/refusal-of-exemplary-damages-on-infringement-of-well-known-trademarks-2/> [Accessed 4 Dec. 2022].
Refusal of exemplary damages on infringement of well-known trademarks [Internet]. GradesFixer. 2018 Oct 08 [cited 2022 Dec 4]. Available from: https://gradesfixer.com/free-essay-examples/refusal-of-exemplary-damages-on-infringement-of-well-known-trademarks-2/
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