An International Guide to
Patent Case Management for Judges

12.7.2 Compensation for damages and prejudice

Infringements of exclusive patent rights entitle the injured party to compensation for the detriment suffered as a result. Given its impact on the parties concerned, and importance in principle in the context of patent disputes, the compensation to be ordered requires especially careful consideration. Plaintiffs often find it useful to support their claims for compensation with expert opinions, the preparation and subsequent assessment of which entail the considerations described below.

12.7.2.1 Requirements for generating the obligation to compensate

In certain cases, as defined by law, the basis for compensation is purely objective. But in others, the amounts to be assessed are a function of culpability.

If the infringement consists of a person manufacturing or importing a patent-protected object or using a patented process without the patent owner’s prior consent, that person must in any case be held liable for the damage and prejudice caused.¹⁰⁰ The only condition required to establish liability is an objective one: the person must have committed the conduct described to incur the obligation to compensate. According to case law on this point,¹⁰¹ the manufacturer’s awareness of the invention through the public registry must be presumed.

On the other hand, if the infringement consists of any act of exploitation other than those indicated in the previous paragraph, an additional premise will determine whether compensation may be ordered: the person responsible must have acted knowingly, culpably or negligently. In this scenario, the date from which the obligation to compensate is reckoned is that on which the patent owner requests cessation of the infringing activity, such that the infringer has then been notified – of the existence and nature of the exclusive right and of its infringement – and yet has taken no heed of those facts. This represents a classic case of knowing infringement. The infringer may then avoid a compensation order by heeding the patent owner’s reasonable and justified request, but not if they resist that request and persist in their conduct.

12.7.2.2 Extent of compensation

Compensation for damage and prejudice may include the actual damage suffered by the patent owner (or licensee as the case may be) and the loss of revenue resulting from the infringement of an exclusive right.¹⁰² The damage must in principle be established by the plaintiff. However, as explained in STS 263/2017, courts are authorized in each particular case to assess whether the damage concerned has necessarily resulted from the unlawful conduct.

Damages can also be claimed for investigation costs incurred to provide reasonable evidence for the court that the infringement alleged has in fact been committed. Such costs may include those incurred to purchase an infringing product for analysis, to obtain registry certificates and to pay for reports by hired private detectives.

The patent owner may also require compensation for the prejudice suffered as a result of the loss of reputation of the patented invention caused in any way by the person infringing the owner’s rights, in particular through defective manufacture or unsatisfactory presentation of the invention on the market.

The remuneration the patent owner has received from other persons working the same invention in any other manner must be deducted from the compensation to be paid by the person who has produced or imported the invention without the owner’s consent.

12.7.2.3 Criteria for the calculation of lost profits

The party injured by the infringement can apply rules facilitating the calculation of compensation claimable from the infringer using one of the following methods, at the injured party’s discretion (one or the other must be chosen; they may not be combined).

The first method consists of calculating the negative economic consequences suffered, in one of two ways: (a) based on the profits the injured party would foreseeably have earned from the patented invention without competition from the infringing version; or (b) based on the profits earned by the infringer from working that patented invention. The profits are calculated by subtracting from the revenues generated or anticipated, the costs directly connected with the manufacture and/or sale of the product subject to the exclusive right – but not fixed or structural costs unrelated to exploitation of that product, since the aim is full compensation for the injured party. The deductible expenses are those directly and exclusively dedicated to the infringing activity, that is, costs that it would have been necessary to incur directly and exclusively to earn the profits associated with the infringement of another’s right. What must not be deducted are structural costs not directly attributable to exploitation of the good or service targeted by infringement but which rather contribute, on a shared basis, to sustaining the overall activity of the enterprise.

The calculation of lost profits may also take into account, to the extent deemed reasonable by the court, the profits obtained from working other objects of which the patented invention constitutes an essential part from a commercial point of view. The invention is deemed to be an essential part of goods from a commercial point of view when its incorporation constitutes a determinant factor in the demand for those goods.

The second method for calculating the compensation claimable from the infringer is based on the possibility of requiring the payment of hypothetical royalties. This is a legal fiction that provides a reasonable means of quantifying the profits lost by the plaintiff, based on the amount the person infringing the patent would have paid to the owner for a license allowing him to work the patent legally. In fixing the amount, special consideration has to be given, inter alia, to the economic importance of the patented invention, the remaining term of the patent at the time infringement commenced and the number and type of licenses granted at that time. A fair price for such royalties, based on a proven, market-based approach to estimating such a price, may be taken into account in determining this amount.

Both of these methods are moreover compatible, irrespective of the applicable regulatory text, with claims for compensation of moral prejudice (consistent with the interpretation of the Court of Justice of the European Union in its judgment of March 17, 2016 (C-99/15) with respect to Article 13 of the EU Enforcement Directive) which are to be admitted even where economic prejudice has not been proven. And the right to file such claims is not exclusive to natural persons, case law having found that legal persons may also claim moral damages in cases where their prestige has been affected, since the right to self respect and a good name or reputation is not exclusive to natural persons.¹⁰³