The May 16 judgement of the Delhi High Court in Communication Components Antenna v. Mobi Antenna Technologies got every litigant’s antennas up for its imposition of damages of INR 217 Crores on the defendant! In a 83 paged decision authored by Justice Jyoti Singh, the judgement (hopefully) ends a 14 year old patent infringement dispute between TenXc Wireless Inc. (whose patent was later acquired by the present plaintiff- Communication Components Antenna INC) and Mobi Antenna Technologies (the defendant). The suit patent is titled “Asymmetrical Beams for Spectrum Efficiency” (IN 240893) and is used to allow a larger number of subscribers to use the same spectrum and connect, without distorting the quality of a call. A true embodiment of the globalized world- US/Canadian plaintiff(s) battling against a Chinese defendant, in an Indian Court, the decision is being discussed for perhaps being the first to compute lost profits for the plaintiff on such magnitude. However, there seems to be no commentary on the methodology adopted for calculating these damages, especially on the Court’s extensive reliance on estimates submitted by the plaintiff. In this post, I shall take a look at this issue and raise some pressing questions on the same, along the way.
The Calculation
The judgement deals with two issues- whether the suit patent was infringed by Mobi Antenna, if it did then what shall be the damages payable to Communication Components. I’m not dealing with the infringement analysis for the purposes of this post. After determining that the Mobi Antenna has infringed the suit patent, the Court proceeded to calculate the damages for Communication Components.
For this, the Court relied on the estimated loss of profits submitted by the plaintiff because of the defendant’s presence in the market selling the infringing goods. Considering that the defendant abandoned the proceedings mid way after stating that it didn’t sell any unit of the impugned product for 2011-2014 period, the Court relied on whatever information was available on record. The above logic for calculation of damages has been justified by the Court in Strix v. Maharaja (covered here).
The Court relied on a 2011 Total Addressable Market Analysis (“TAM Analysis”) projecting the estimated sales by the plaintiff by 2015 in India. This was prepared by one of the witnesses, for TenXc’s board and their prospective investors on the Indian Market. As per this Analysis, the plaintiff submitted that it would have lost a market size of 94,710 antennas from 2011 to 2014 (21,293 antennas in 2011 and 73,417 antennas in 2012-2014). On these estimated numbers of units lost in the Indian market, the plaintiff used the average manufacturing and retail prices incurred by them in the US and Canada to compute a lost profit of USD 550/ unit in 2011 and USD 1160/ unit in 2012-2014. Multiplying this per unit lost profit with the number of units for the relevant time period, the plaintiff demanded USD 96,874,870 as the total lost profit from the defendant.
The Calculation (Mistakes?)
The decision notes that there was no “evidence on the actual lost market share” of the plaintiff and the Court refused to accept that the entire market share would have “come to the kitty” of the plaintiff (Para. 89 of the judgement). Presumably as their way of reconciling this, the Court then proceeded to grant compensatory damages by slashing the number of units sold by half i.e. 47,355 and multiplying it with the estimated 2011 profit – (USD 550) to come to USD 2,60,45,250 (the decision is also unclear on why it picked USD 550 and not USD 1160). It then applied the current USD rate and converted the amount to INR 2,17,47,78,375 for damages in 2011-2014. It is pertinent to note that the decision has neither explained why it has applied the current USD rates for damages from 2011-14 nor explained why the estimate is limited to the 2011-2014 period.
Compensatory Damages or Notional Damages?
As said above, the Court justified its decision by relying on Strix v. Maharaja and on the fact that the defendant abandoned the proceedings mid way. While I understand that Mobi Antenna perhaps dug their own grave by abandoning the dispute after vigorously contesting the validity of the suit patent (Interestingly it abandoned the dispute after its expert disagreed with the cited prior arts to challenge the validity of the suit patent (see para- 87 of the judgement)) I am still not sure about the reference to the Strix case. Firstly the Court here has merely copy pasted excerpts from the decision leaving it on the wisdom of the reader to figure out its application in the present case. Importantly, the Court seems to have omitted the part where the Strix judgement has identified “notional damages” and “compensatory damages” as different. Theoretically, the Strix decision pertains to awarding a “notional damage” where the amount is calculated on the basis of information available on record. The Court in the present case has also done that- relying solely on the 2011 TAM Analysis, but has seemingly miscategorized it as “compensatory damage”.
[Sidenote: The stars of defendants in the Indian patent disputes are seriously misaligned when it comes to expert witnesses. In the Ericsson- Lava case, the expert witness was not made a party to the confidential club, and in the present case, the expert witness for the defendant himself said that he doesn’t agree with any of the cited prior art.]
Is the Calculation of Damages Reasonable and Fair?
Nitpicking aside, in the Strix case, the Court has expressly held that the damages are to be calculated on a “reasonable/ fair basis”. But I am not sure if imputing the retail prices of goods as in the US is a reasonable or fair basis to determine the damages. The Court was cautious enough to hold that the plaintiff may not be the only one supplying all the relevant antennas in India (Para. 89), however, it did not discuss the quantum of antennas actually exported to India for calculation of damages. Most importantly, the expert evidence also is based on an “estimate” (see page no. 21 of the judgement) and it doesn’t disclose anything on actuals. Also, it is pertinent to note that the defendant did file affidavits claiming that it hasn’t sold any goods from 2011 to 2015, to which the Court brushed aside by saying that it was “surprising” to see this. What does “surprising” mean here? If the Court is convinced that the defendant lied in its affidavit, shouldn’t they be held accountable for that under the relevant law? If the Court doesn’t think so, then shouldn’t these affidavits be considered while calculating the damages, as not doing so will essentially require defendants to pay INR 217 Crores for not selling any infringing product!
I also tried to look for relevant information about the working of suit patent from the IP India website and while the result page displays that the patent was worked from 2010 to 2020, information after 2020 is not available. Furthermore, there are no documents available for all the years except for 2017, 2018, and 2019, wherein the revenue incurred to the plaintiff was worth INR 34,04,40,000 (2017), INR 113,89,62,093, (2018) and for 2019, the form states that no new orders were placed but previous orders were delivered by the plaintiff, without stating any numbers.
Delays and Reservations
Apart from calculation of damages, the judgement also throws light on another issue with adjudication of disputes in India. As said above, the decision comes after 14 years from the date of its initiation and interestingly the judgement was reserved twice- once in 2022 (pdf) and another time earlier in May, 2024 (pdf). It is pertinent to mention here that the decision does not state the date of reservation, which goes against the spirit of the Supreme Court’s suggestion in Anil Rai vs State of Bihar, wherein the Court held that the date of reserving the judgement can be stated alongside the date of pronouncement. In IP cases, reserving decisions for long has already been controversial (as seen in the product by process patent case here).
The decision does set a solid example for the defendants who are not sincere in contesting their claims, but perhaps in setting the example for one party, it overlooked whether the plaintiff was actually aggrieved/ deserving of the magnanimous damages or if the infringement was worth it. This decision may have ended the chapter of the dispute between Communication Components and Mobi Antenna, but the story about the infringement of the suit patent seems far from over. Giving a sneak peek of what’s yet to come, in para 92 of the Judgement, the Court refused to grant a certificate of validity to the plaintiff u/s 113, expressing its inability to do so considering that the judgement was passed ex-parte and keeping in mind another pending case where the validity of the suit patent has been challenged (see here) before a coordinate bench of the Court- Communication Components Antenna Inc. v. Rosenberger Hochfrequenztechnik GmbH & Co. KG & Ors. (CS(COMM) 653/2019).
