ASSESSMENT OF DAMAGES IN TRADEMARK DISPUTES – RECENT DEVELOPMENTS

• Author(s): Mayank Grover, Pratibha Vyas
• Date: 14-May-2025
• Post in: Trademarks

The globalization of economies has drawn trade circles closer, empowering multinational corporations to expand their reach across borders. This expansion has allowed access to products worldwide, transcending geographical barriers for consumers. However, amidst this global expansion, the risk of trademark misuse and infringement has amplified significantly.

Trademark infringement arises when an entity uses a trademark that is either identical or deceptively similar to another party's goods and services, thereby infringing upon the exclusive rights bestowed upon the registered trademark proprietor. This infringement is addressed through statutory remedies crafted to protect registered trademarks. Conversely, passing off occurs when an entity falsely represents its goods or services as those of another, often resulting in confusion among consumers and it serves as a common law remedy against deceitful practices. Both trademark infringement and passing off aim to mitigate consumer confusion and preserve the goodwill of the trademark owner, differing in their legal footing and application. However, the primary challenge in both scenarios lies in quantifying or awarding damages, which entails evaluating the extent of harm suffered by the trademark owner.

QUANTIFICATION OF DAMAGES

In India, Courts undertake a pivotal role of determining appropriate damages to be awarded in intellectual property infringement disputes. Courts consider various factors tailored to each circumstance, such as the severity of the infringement, the extent of financial losses incurred, impact on the plaintiff's reputation or market share and any unjust enrichment gained by the defendant. Sometimes, parties themselves propose desired compensation for infringement or passing off, prompting Courts to meticulously examine the evidence, legal precedents and the extent of harm caused to arrive at a fair judgment.

Trademarks are protected under the Trademarks Act, 1999 without a specific definition of damages. Section 135 of the Trademarks Act empowers Courts to grant relief to an aggrieved party for infringement or passing off. This relief includes injunction, damages or an account of profits, sometimes coupled with orders for surrendering infringing labels and marks for destruction or erasure.

In awarding damages, the Courts not only safeguard the right of the parties involved but also consider broader contextual factors, including the impact of infringing products on public health and safety, and the necessity of imposing higher costs to deter habitual offenders or prevent mala fide attempts to exploit another’s goodwill and reputation.

Rule 20 of the Delhi High Court Intellectual Property Rights Division Rules, 2022 specifies the procedure for seeking damages or an account of profits in intellectual property disputes, requiring parties to furnish a reasonable estimate of damages along with supporting documentary or oral evidence. Additionally, the Rule outlines following factors that the Court must consider when determining the quantum of damages:

1. Lost profits suffered by the injured party.
2. Profits earned by the infringing party.
3. Quantum of income which the injured party may have earned through royalties/license fees, had the use of the subject IPR been duly authorized.
4. Duration of the infringement.
5. Degree of intention/neglect underlying the infringement.
6. Conduct of the infringing party to mitigate the damages being incurred by the injured party.

The Court in computation of damages may also take the assistance of an expert as provided under Rule 31 (Panel of Experts) of these Rules.

CLASSIFICATION OF DAMAGES

Compensatory Damages: These damages are awarded to the aggrieved party that has suffered losses due to the defendant's infringing activities. The calculation of these damages is based on several factors, including the defendant's business tenure, sales made during the infringement period, profit percentages, and the actual loss incurred by the plaintiff. It is incumbent upon the plaintiff to substantiate the claimed amount and the method of calculation used, ensuring it can withstand judicial scrutiny.

Punitive Damages: These damages, also referred to as exemplary damages, are awarded to punish a defendant for egregious conduct and to deter the defendant and others from engaging in similar activities in the future. The primary aim is to punish habitual offenders and prevent such conduct.  Courts have used terms like 'aggravated damages' and 'exemplary damages' interchangeably with punitive damages. Following the decision in Hindustan Unilever Limited v. Reckitt Benckiser India Limited, the term 'punitive damages' has been replaced with other terms.

Nominal Damages: These damages are awarded when the plaintiff establishes that an injury was suffered due to the defendant's wrongful conduct but cannot substantiate a compensable loss. Typically, these damages of a nominal amount are intended to symbolically acknowledge the defendant’s wrongdoing.

JUDICIAL DEVELOPMENTS

In computation of damages, Courts have adopted numerous principles for awarding of damages in cases of trademark infringement or passing off suits.

In Hero Honda Motors Ltd. v. Shree Assuramji Scooters [125 (2005) DLT 504], the Delhi High Court granted a permanent injunction against the defendant for using the plaintiff’s mark HERO HONDA and logo, as well as for selling goods in packaging identical or deceptively similar to that of the plaintiff. The Court awarded plaintiff a sum of Rs. 5 lakhs as damages and the costs for the proceedings.

The Delhi High Court in Hindustan Unilever Limited v. Reckitt Benckiser India Limited [207 (2014) DLT 713] held that punitive or exemplary damages should only be awarded in cases falling within the specific categories outlined in Rookes v. Barnard [(1964) AC 1129], as affirmed in Cassell & Co. Ltd. v. Broome [(1972) AC 1027]. The Court emphasized the necessity of awarding punitive damages only when general damages are insufficient to account for the punitive element, ensuring proportionality and proper assessment of harm. It critiqued the Times Incorporated v. Lokesh Srivastava [116 (2005) DLT 569] judgment for advocating punitive damages in intellectual property cases without sufficient basis, reiterating that damages should remain a civil remedy aimed at compensating the plaintiff rather than punishing the defendant as in criminal law. The Court also highlighted the need for developing clear standards for awarding punitive damages in economic torts.

In SanDisk LLC v. Transton [(2018) DHC 3103], the plaintiff filed a suit for trademark infringement and passing off seeking damages for a sum of Rs. 1,00,01,000/- towards loss of sales, reputation and goodwill caused by the activities of the defendants. The Delhi High Court awarded compensatory damages for a sum of Rs. 33,16,320/- based on value of seized goods and the estimated duration of the defendant’s business activities. However, following the precedent set in Super Cassettes Industries v. HRCN Cable Network and Hindustan Unilever Limited v. Reckitt Benckiser India Limited, the Court ruled that the plaintiffs were not entitled to punitive damages.

In Whatman International Limited v. Paresh Mehta & Ors. [(2019) 257 DLT 472], the Delhi High Court granted permanent injunction to the plaintiff as the defendants committed infringement of the plaintiff's trademark and impinged on their rights deliberately, consciously and wilfully for a period spanning over 25 years. The Court applied the principles laid down in Rookes v. Barnard and awarded Rs.1.85 crores to the plaintiff as exemplary, aggravated and punitive damages.

The Delhi High Court following the Division Bench judgment of Hindustan Unilever Limited, delivered a landmark judgment in Koninlijke Philips N.V. & Anr. v. Amazestore & Ors. [260 (2019) DLT 135] regarding the infringement of copyright, design and trademark as well as passing off and unfair competition. The Court laid down the basic principles to be followed while awarding damages in case of intellectual property infringement. Drawing on precedents from Rookes v. Barnard (supra) and Cassell & Co. Limited v. Broome (supra), the Court emphasized that the nature and amount of damages are directly linked to the degree of malicious intent involved. The ruling affirmed that exemplary damages are justified in cases where the defendant intentionally infringes upon someone's rights, knowing that the profits gained from the wrongful act are likely to surpass the damages owed to the victim. The Hon’ble Court laid down following set of guidelines to be followed while granting damages:

In Tata Sia Airlines Limited v. Shenzhen Coloursplendour Gift Co. Ltd. [2022 SCC Online Del 2662], the Delhi High Court imposed damages and costs quantified at Rs.20 lakhs on the defendant for selling infringing products, highlighting the critical nature of national and international security concerns, especially in industries like aviation.

In Blue Heaven Cosmetics Pvt. Ltd. v. Shivani Cosmetics [290 (2022) DLT 614], the Delhi High Court awarded Rs.10 lakhs as damages and 2 lakhs as costs to the plaintiff due to the sale of counterfeit cosmetic products, emphasizing upon the importance of maintaining quality standards, particularly in products like eyeliners used around sensitive areas such as eyes.

In Starbucks Corporation v. Teaquila A Fashion Cafe [(2022) 91 PTC 620], the Delhi High Court while granting permanent injunction in favour of Starbucks, rejected its claim for damages of Rs.13 lakhs, as the claim was based on an assumption of sale of 400 beverages without sufficient evidence. Considering that infringement had been established on the defendant’s part, the Court awarded notional damages to the tune of Rs. 2,00,000/- in favour of plaintiff.

In Sangeetha Caterers and Consultants LLP v. Hotel Sangeethaa Pure Veg [2023 SCC Online Mad 6371] the plaintiff sought a permanent injunction against the defendant from infringing on their registered trademark ‘SANGEETHA’ and from operating a restaurant business under the name ‘HOTEL SANGEETHAA’. The plaintiff requested the Court to direct the defendant to surrender all infringing materials for destruction and to award damages for sum of Rs. 25,00,000/-. The Madras High Court granted permanent injunction and awarded litigation costs to the plaintiff and directed the defendant to surrender all materials. However, with regard to damages, Court was of the view that the plaintiff had not provided sufficient evidence to substantiate their claim and therefore, no damages could be awarded.

In Aero Club v. M/S Sahara Belts [2023 DHC 8423], the Delhi High Court granted a permanent injunction against the defendant from manufacturing, selling, offering for sale, advertising or selling any products bearing the ‘WOODLAND’ word mark, label and ‘TREE’ device mark or any other mark identical or deceptively similar to plaintiff’s mark. The Court awarded damages to the tune of Rs. 10,00,000/- and costs of Rs. 1,00,000/-

In Boeing Company and Anr. v. Advance Technologies and Ors. [(2023) 301 DLT 279], the Delhi High Court granted a permanent injunction against the defendants from infringing on the trademark/logo and copyright, restrained the proprietor of Defendant No.1 from impersonating to be an employee of Boeing, and passing off goods and services as those of the plaintiffs. The Court awarded damages for sum of Rs. 3,00,000/- and cost of Rs. 2,00,000/-.

In Tata Sons Private Limited and Ors. v. Tushar Fulare [2024 SCC Online Del 374], the plaintiffs sought permanent injunction, damages and rendition of accounts against the defendant for copyright infringement of their distinctive trade dress and packaging, as well as infringement of a well-known trademark ‘TATA’ and ‘tata Water Plus’. The defendant argued that no injunction should be directed with respect to the mark ‘ZINC WATER PLUS’ and its trade dress, as these were very generic words. However, the Court passed a summary judgment, granting plaintiff an injunction against the defendant as their branding was similar to that of plaintiff. Additionally, the Court awarded damages of Rs.50,000/- in favour of plaintiff, along with the actual costs in accordance with the Commercial Courts Act, 2015, the Delhi High Court (Original Side) Rules, 2018 read with Intellectual Property Division Rules, 2022.

In Visakha Chemicals v. Bindal Food Products [2024 SCC Online Del 2589], the Plaintiff had filed a suit asserting ownership of trademarks "ROCHAK" and "AM PACHAN" along with exclusive right to their packaging and trade dress. The Plaintiff alleged that Defendant were selling similar products under Plaintiff's trademarks, leading to trademark infringement and passing off. The Defendant contended that "ROCHAK" and "AM PACHAN" were generic terms and thus, not eligible for trademark protection but failed to substantiate their claims with sufficient evidence. The Delhi High Court granted a permanent injunction and awarded nominal damages amounting to Rs. 3,00,000/- against the Defendant over the intellectual property rights of ayurvedic medical products. Additionally, the Court awarded actual costs in accordance with the Commercial Courts Act, 2015, the Delhi High Court (Original Side) Rules, 2018 read with Delhi High Court Intellectual Property Division Rules, 2022.

In Kabushiki Kaisha Toshiba v. Tosiba Appliances Co. [2024 SCC Online Del 5594], the plaintiff sought permanent injunction and damages of Rs. 25,00,000/- to restrain the defendant from unlawfully using their trademark “TOSHIBA” as “TOSIBA”, which was deceptively similar and likely to confuse consumers due to the marks being visually and aurally identical. The Delhi High Court granted permanent injunction, ruling that the defendant's use of the mark constituted infringement and awarded nominal damages of Rs.15,00,000/- as compensation for the duration of the infringement. However, the Court declined to grant the full amount claimed along with punitive damages as it was based on assumptions of the plaintiff. Additionally, the Court directed that the plaintiff's actual costs be recoverable from the defendant under the provisions of the Commercial Courts Act, 2015.

In Lifestyle Equities CV and Ors. v. Amazon Technologies, Inc. and Ors. [2025 DHC 1231], the plaintiffs instituted a suit before the Delhi High Court seeking a decree of permanent injunction and damages for infringement of their registered trademark “Beverly Hills Polo Club” (BHPC) against Amazon Technologies Inc. (Defendant No.1); the retailer- Cloudtail India Pvt. Ltd. (Defendant No.2) who sells the products on the e-commerce platform www.amazon.in which is operated by Amazon Sellers Services Pvt. Ltd. (Defendant No.3). None of the three Defendants disputed the rights of the Plaintiffs in BHPC trademark, including their registration under Class 25 which deals with apparel products. Defendant No.1 and 2 stated that the impugned logo is not being used in a trademark sense. Defendant No.3 claimed that it is merely an intermediary and that alleged listings, which the Plaintiffs objected to, have been removed and further undertook that whenever there are future listings bearing the infringing device mark, the same shall be removed, as and when directed by the Court.

The Delhi High Court observed that all three defendants which were closely interlinked with each other sought to project that they were independent of each other with an intent to avoid fastening of liability and dissipate the consequences of infringement. Further, in e-infringement cases, the biggest challenge would first be in fixing responsibility on each of the parties. There are complex questions which arise including issues relating to intermediary liability, entitlement to safe harbour protection, as also jurisdictional issues. The multi-layered nature of e-commerce has made it increasingly difficult to identify, attribute liability and effectively enforce IP rights, necessitating clear legal frameworks to address the evolving challenges posed by online trademark infringement.

The Court observed that, unlike in typical trademark infringement matters where damages require approximation, in the present dispute, the existence of a comprehensive Trademark License Agreement entered into between the Plaintiffs and major brands which were the licensee for India and neighbouring markets provided sufficient basis for computation of damages. Accordingly, the Court granted a decree of permanent injunction, restraining the Defendants from using the infringing mark and Defendants were held liable for wilful infringement of trademark and were directed to pay Rs. 336 crores as compensatory damages, against Rs. 1,260 crores claimed, along with Rs.3.23 crores towards litigation costs.  The Court declined to grant Plaintiff damages sought on account of loss of goodwill, reputational harm, and loss of opportunity to enter into a joint venture/ pursue an IPO, holding that such claims were speculative and unproven. Amazon has recently filed an appeal challenging the said order before the Division Bench of the Delhi High Court.

CONCLUSION

The evolving landscape of intellectual property infringement disputes in India underscores a robust commitment by the judiciary to uphold the sanctity of intellectual property rights. Recent judgments reflect a balanced approach in awarding damages, taking into account factors such as severity of infringement, degree of malafide conduct and the financial losses suffered by the aggrieved party. This approach marks a significant shift towards not only compensating those harmed but also deterring future misconduct through punitive damages.

Quantifying damages is no easy feat in the modern era of proliferated e-commerce and necessitates a meticulous examination of various factors. Courts need to rigorously evaluate lost profits, the duration of infringement and the actions of the infringer to ensure a fair and just outcome. Legal principles established in landmark cases like Hindustan Unilever Limited and Koninlijke Philips, have provided clarity and guidance on the assessment of damages, facilitating an environment conducive to innovation and fair competition. This clarity not only benefits current litigants but also sets important precedents for future cases, thereby safeguarding the integrity of brands and commerce.