On this Blog, we have extensively covered the issue of the Delhi High Court’s tendency to award punitive damages without indicating the legal basis for such awards as well as the court’s propensity to grant such damages on the basis of the ipse dixit of the plaintiff without spelling out the methodology employed for arriving at a given figure.
More specifically, we have noted how the court adopted a flawed arithmetic for awarding punitive damages in the Sholay case, the Honeywell International case and the Toyota Prius case, inasmuch as it arrived at the figure of punitive damages in these cases without explaining the rationale or basis for the figure.
As I recently noted, however, in what can be seen as a much-needed course-correction, the court has begun adopting a more circumspect approach in dealing with such prayers. As opposed to granting heavy damages as a natural corollary of a ruling in the plaintiff’s favour, the court has begun placing the onus on the plaintiff to put forth concrete and tangible material to indicate what losses it has suffered on account of the defendant’s conduct.
This new approach has been further cemented by a recent judgment of the court which is both positive as well as negative. Positive because the court asked the plaintiff to put forth appropriate material for the computation of damages and negative because the court granted punitive damages worth 5 lakh rupees without having the legal powers to do so or explaining the computational methodology for arriving at this figure.
Facts and arguments:
The plaintiff, Super Cassettes industries, contended that the defendant, SCN Sujla Channel, is a cable operator in Rajasthan which heavily uses songs and film extracts to enhance its viewership. According to the plaintiff, in June 2015, when its executive captured on CD and DVD the content being broadcast by the defendant, it realized that a major chunk of the content was copyrighted by the plaintiff and was broadcast without its consent.
Prominent examples of such content include such famous songs as Tere Mast Mast do Nain (Dabangg); Dhinkaq Chika (Ready); and Sadi Gali (Tanu Weds Manu).
The plaintiff contended that it apprised the defendant of its public performance licensing scheme under which it could legally broadcast the infringing content and also sent it a cease and desist notice on 24.8.2015 by which the defendant was requested to seek the requisite license and pay damages worth Rs. 25 lakhs for the infringement of the plaintiff’s copyright.
Since the defendant did not respond to the notice, the plaintiff contended that the defendant’s conduct fell within the four squares of Section 51 of the Copyright Act and the plaintiff is entitled to the grant of damages.
Since the licensing fee charged by the plaintiff is Rs. 18 per month per household, and the defendant has thousands of connections, the plaintiff argued that it was entitled to damages worth Rs. 1 crore in addition to rendition of accounts of profit and delivery of the infringing tapes.
Holding of court:
At the outset, the court noted that the plaintiff has been able to successfully establish that, since it is the owner of copyright in the concerned content, its rights have been violated by the defendant within the meaning of Section 51 of the Copyright Act. Further, since the defendant did not indicate the names of the author or owner of copyright in the films and sound recordings broadcast by it, the court held that it had failed to comply with the statutory command engrafted in Section 52A of the Act.
In light of the fact that the defendant infringed the plaintiff’s rights in a deliberate and calculated fashion and did not even bother to contest the proceedings instituted by the plaintiff, the court held that the grant of damages was warranted.
Thereafter, it articulated the proposition that the aim of such damages would not only be to penalize the wrongdoer but also to recompense the plaintiff for the loss suffered by it and cited landmark cases such as Time Inc. versus Lokesh Srivastava and Microsoft versus Kiran and anr. In support of this proposition.
The court’s next move, however, is what merits attention.
While it acknowledged the fact that the plaintiff’s prayer for the grant of damages has gone unrebutted, it noted that it has not put forth any material that can assist the court in ascertaining what illegal revenue was earned by the defendant by virtue of the infringing content. Holding that the plaintiff’s rate card which indicates the license fee that it charges cable operators for the broadcast of its content is an indicator of the profits that it could have earned, the court held that the same could not take the plaintiff’s case very far in light of the fact that its estimate of 1 crore is founded only upon its bald assertion that the defendant has thousands of customers.
Therefore, the court asked the plaintiff to put forth cogent and reliable evidence to indicate the amount of compensatory damages that it is entitled to owing to the defendant’s conduct and asked the defendant to share with the plaintiff its accounts of profits on the basis of which the plaintiff can compute the same. Finally, it granted punitive damages worth Rs. 5 lakh in the interim.
On the one hand, this verdict, like the Delhi High Court’s verdict in Glaxo Smithkline Pharmaceuticals versus Sarath Kumar Reddy G (which I analyzed here), can serve as a lodestar for courts faced with a prayer for the grant of damages in IP infringement cases. Like the Glaxo smithkline judgment, even though the defendant did not contest the proceedings here, the court effectively safeguarded its interest by scrutinizing the prayer for the grant of damages by applying the same evidentiary standards that it applies for the grant of other reliefs.
On the other hand, however, as Prashant noted while analyzing the Sholay verdict, it is difficult to fathom how the court could have awarded punitive damages while acknowledging the proposition that the plaintiff had failed to establish the amount of compensatory damages that it is entitled to. Only after the court is able to ascertain the actual quantum of the losses suffered by the plaintiff on account of the defendant’s conduct can the court use that figure to arrive at the amount of punitive damages. Ergo, absent the completion of the first stage in this process, the amount of 5 lakh lacks a mathematical substratum.
Further, I am given to understand that this is the first Indian case in which a cable operator has been called upon to pay damages for copyright infringement. Given that the Copyright Act does not envisage the grant of punitive damages, the court’s award also lacks a legal basis and is based on a string of precedents in which the court has created for itself this power out of thin air.
So while I hope that the court will continue to tread the path of awarding compensatory damages only when the plaintiff is able to provide a strong evidentiary basis for its grant, it would do well to acknowledge the absence of a jurisprudential basis for the grant of punitive damages.
Thanks to Prashant Reddy for his valuable inputs.