The premier weekly newspaper for the legal profession in Ontario
Issue link: https://digital.lawtimesnews.com/i/50256
Law Times • February 22, 2010 An online resource tool 1.800.263.3269 ntitled-6 1 1/28/10 4:34:45 PM Focus On INTERNATIONAL/CROSS-BORDER LAW India cracks down on IP violations High court begins awarding punitive damages to plaintiffs BY JULIUS MELNITZER For Law Times I ndia, a common law country whose modern legal system has strong roots in the British tradition, shares the concept of punitive damages with many of its commonwealth brethren. "Punitive damages are known to all common law systems but they are rather more confi ned in most jurisdictions compared to what we're seeing coming out of the United States," says David Wingfi eld, an international litigation partner at WeirFoulds LLP in Toronto. Confi ned is one thing; unrecogniz- able is another. Consider, for example, that punitive damages are becoming more common in India, where they are known as exemplary damages. But historically, Indian courts have been conservative in awarding damages of any kind. Many judges are sensitive to the fi nancial impact of punitive damages while recognizing their utility. "Th ese judges have been extremely creative and innovative in designing new remedies to suit the complex social and economic environment of the country," says Pravin Anand, managing partner of Anand and Anand in New Delhi. "For the most part, these remedies, which are in the nature of community service, are a softer approach." In India, damages in several intellectual property cases include: • Ordering a chewing tobacco manufac- turer found liable for intellectual prop- erty violations to install 150 spittoons in Hyderabad hospitals. • Compelling infringing defendants to work with Microsoft Corp., the plain- tiff , in anti-counterfeiting campaigns, including participating in seminars ad- vocating for the legal use of software. • In a case involving the Ralph Lauren company, making defendants undergo 30 days of community service in an old- age home and an orphanage. Whether the softer approach will do the job punitive damages are supposed to do remains to be seen. But in the area of intel- lectual property enforcement, where India, like many developing nations, is somewhat lacking, the mere fact that punitive damag- es now pass judges' lips has been welcome news for Canadian and other foreign com- panies doing business in India. "I have historically tried to have my clients avoid the Indian courts whenever possible because the results have been too unpredictable, and litigation can be tied up procedurally to the point where the commercial disputes at issue are no longer While the damage amounts awarded seem modest in the U.S. context, they are a significant deterrent in India, says David Wingfield. relevant," says Shaalu Mehra, chairman of Perkins Coie LLP's India practice. "But the pattern of punitive damages that has emerged in IP cases may be indicative of a trend that sees Indian courts adopting western-style jurisprudential approaches as the country is forced to adopt the in- dustrial world's business practices." It's been a long time coming. "From Indian independence in 1947 to 2005, a period of nearly 58 years, there were no reported cases on damag- es in IP litigation in India," Anand says. "Since then, the Delhi court alone has granted punitive and exemplary dam- ages in more than 50 cases." According to Anand, three factors are motivating the courts. "Firstly, piracy is increasing and un- less there is deterrence, it cannot be sub- stantially curbed," he says. "Secondly, the costs of litigation are also increasing, and if the plaintiff has had to come to court, he must be compensated. And thirdly, there is a lot of pressure on the criminal justice delivery system, which could be relieved by making the civil remedy for IP viola- tions more attractive to plaintiff s." Although damages in India are tra- ditionally compensatory in nature, the concept of punitive or exemplary dam- ages has always existed in the country's common law. But because the propor- tionality of punishment has been an important principle in the system, it was only in 1993 that the Supreme Court of India came around to actually making such an award in the celebrated case of Common Cause v. Union of India. In that case, the court found that a government minister had acted Visit us online! canadianlawyermag.com & lawtimesnews.com Fresh content delivered weekly. Canadian Lawyer | Law Times | 4Students | InHouse www.lawtimesnews.com Online Ad 1/8 5X.indd 1 12/16/09 9:59:00 AM oppressively in making petrol pump al- lotments in favour of certain people for extraneous reasons and awarded about $100,000 in punitive damages. Th e decision came somewhat short of stimulating a plethora of punitive dam- ages awards but it did establish fi rmly that relief in this form was available. As is the case in the United States, Common Cause established that punitive damages were appropriate for deplorable conduct like fraud and malicious, reckless, abu- sive, and oppressive behaviour. Still, injunctive relief remained the pri- mary remedy in IP cases. Th at changed in 2005 with the Delhi High Court's ruling in Time Inc. v. Lokesh Srivastava. Th e U.S.- based magazine sued a Hindi-language Indian magazine for copying its distinctive red cover design. Time also complained that the magazine's title, Sanskaran, was a transliteration of the English word "time." Declaring that the time had come for granting punitive and exemplary damages in IP matters, the court awarded roughly $10,000 in compensatory damages and $12,500 in punitive damages to Time. "Th is was the Indian courts' fi rst recog- nition of the importance of protecting the IP rights of western countries in particu- lar," says Wingfi eld. "And while the actual amounts of the award may seem modest in the U.S. context, they represent a sig- nifi cant deterrent in the context of the domestic Indian economy." Indeed, Indian judges have commented favourably that punitive damages on the scale being awarded were adequate deter- rents because they could "spell fi nancial disaster" for aff ected defendants. Since Time, a host of multinational concerns, including Microsoft, Adobe, Yahoo, Cartier, Autodesk, Hilton, adi- das-Salomon, and the Scotch Whisky Association, have been the benefi ciaries of punitive or exemplary awards in copy- right, trademark, and patent cases. Still, until recently the trend has re- mained fairly subdued on international legal radar screens. Th e publicity sur- rounding the recent case of Adobe Sys- tems Inc. v. Bhoominathan, however, has moved it to higher ground. Th is may be because two software giants, Microsoft and Adobe, were in- volved as plaintiff s in the copyright in- fringement suit. Th e case also dealt with the widespread international problem of the alleged illicit pirating of two of the world's ubiquitous software brands. After receiving word that someone in India was copying their software and resell- ing it, Microsoft and Adobe applied to the Delhi High Court for an inspection order. Th e subsequent raid found 18 hard drives containing infringing versions of Microsoft software, although it did not turn up any pirated copies of Adobe products. Evidence at trial established that the defendant's activities would have deprived Microsoft of potential revenue amounting to about $70,000. Th e court ordered pay- ment of roughly $10,000 to compensate the plaintiff for lost profi ts and an equal amount for punitive damages. As it turns out, Microsoft has been in the vanguard of U.S. companies seeking to enforce IP rights in India. In 2006, the company claimed punitive dam- ages of $10,500 in the case of Micro- soft Corp. v. Deepak Raval, a matter that also involved copyright infringement. In agreeing to the award, Justice Arjun Sikri of the Delhi High Court showed an acute awareness of the danger pre- sented by widespread IP violations. "In the present case, the claim of pu- nitive damages is [for $10,500] only, which can be safely awarded," he wrote. "Had it been higher even, this court would not have hesitated in awarding the same. Th is court is of the view that punitive damages should be really pu- nitive and not fl ea bite, and quantum thereof should depend upon the fl a- grancy of the infringement." Th e diffi culty is that not all Indian judges feel that way given the examples of punitive damages noted above. "Th e important caveat is that it is pri- marily the Delhi High Court, rather than courts throughout the country, who are granting punitive damages," Anand says. "We need to spread the culture to other courts, too." LT PAGE 9