Damages were claimed for the infringement of a patent. The defender had sold 252 infringing machines sold in Java. The Lord Ordinary had given an unexplained award of andpound;1,500, which the Inner House had doubled. The defendant appealed saying that but the pursuer had not shown that he would have made 252 additional sales.
Held: Compensation is to be assessed on the basis of inference, conjecture and the like, by the exercise of sound imagination and the practice of the broad axe.
Lord Shaw said: ‘In the case of damages in general, there is one principle which does underlie the assessment. It is what may be called that of restoration. The idea is to restore the person who has sustained injury and loss to the condition in which he would have been had he not so sustained it. In the cases of financial loss, injury to trade, and the like, caused either by breach of contract or by tort, the loss is capable of correct appreciation in stated figures.
In a second class of cases, restoration being in point of fact difficult–as in the case of loss of reputation–or impossible–as in the case of loss of life, faculty, or limb–the task of restoration under the name of compensation calls into play inference, conjecture, and the like. And this is necessarily accompanied with those deficiencies which attach to the conversion into money of certain elements which are very real, which go to make up the happiness and usefulness of life, but which were never so converted or measured. The restoration by way of compensation is therefore accomplished to a large extent by the exercise of a sound imagination and the practice of the broad axe. It is in such cases, whether the result has been attained by the verdict of a jury or the finding of a single judge, that the greatest weight attaches to the decision of the court of first instance. The reasons for this are not far to seek . . In all these cases, however, the attempt which justice makes is to get back to the status quo ante in fact, or to reach imaginatively by the process of compensation a result in which the same principle is followed.’
As to the Java trade: ‘It is said in such a case: Where is the damage which the patentee has incurred? On the other heads of the case he has obtained his damages; but on this part, which covers a section of trade which in no circumstances he could have touched, he can have sustained no damage, because he would never have sold his patented articles within that section. The duty of an infringer is covered by the principle of restoration, and the patentee has surely been restored to as good a position as he was in before the infringement, or would have been in but for it, if he has been put into the same financial position as he would have occupied in that region of trade where alone he would have been operating.
It is at this stage of the case, however, that a second principle comes into play. It is not exactly the principle of restoration, either directly or expressed through compensation, but it is the principle underlying price or hire. It plainly extends–and I am inclined to think not infrequently extends– to patent cases. But, indeed, it is not confined to them. For wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle, as I say, either of price or of hire. If A., being a liveryman, keeps his horse standing idle in the stable, and B., against his wish or without his knowledge, rides or drives it out, it is no answer to A. for B. to say: ‘Against what loss do you want to be restored? I restore the horse. There is no loss. The horse is none the worse; it is the better for the exercise.’ I confess to your Lordships that this seems to me to be precisely in principle the kind of question and retort which underlay the argument of the learned counsel for the appellants about the Java trade.’
Lord Shaw reviewed the working rules used to estimate the compensation to be awarded against an infringer, a task which he acknowledged would require ‘inference, conjecture and the like’ and involved ‘the exercise of a sound imagination and the practice of the broad axe’ One broader principle applied also, cases that: ‘wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle, as I say, of price or hire. If A, being a liveryman, keeps his horse standing idle in the stable, and B, against his wish or without his knowledge, rides or drives it out, it is no answer to A for B to say: ‘Against what loss do you want to be restored? I restore the horse. There is no loss. The horse is none the worse; it is the better for the exercise.’ He concluded that: ‘If with regard to the general trade which was done, or would have been done by the Respondents within their ordinary range of trade, damages be assessed, these ought, of course, to enter the account and to stand. But in addition there remains that class of business which the Respondents would not have done; and in such cases it appears to me that the correct and full measure is only reached by adding that a patentee is also entitled, on the principle of price or hire, to a royalty for the unauthorised sale or use of every one of the infringing machines in a market which the infringer, if left to himself, might not have reached. Otherwise, that property which consists in the monopoly of the patented articles granted to the patentee has been invaded, and indeed abstracted, and the law, when appealed to, would be standing by and allowing the invader or abstractor to go free. In such cases a royalty is an excellent key to unlock the difficulty, and I am in entire accord with the principle laid down by Lord Moulton in Meters Ld. V Metropolitan Gas Meters Ld. (28 R.P.C. 163). Each of the infringements was an actionable wrong, and although it may have been committed in a range of business or of territory which the patentee might not have reached, he is entitled to hire or royalty in respect of each unauthorised use of his property. Otherwise, the remedy might fall unjustly short of the wrong.’
Judges:
Lord Shaw of Dunfermline, Lord Shand, Lord Kinnear, Lord Atkinson
Citations:
(1914) 31 RPC 104, 1914 SC (HL) 18
Cited by:
Cited – Devenish Nutrition Ltd and others v Sanofi-Aventis SA (France) and others ChD 19-Oct-2007
The claimant sought damages for the losses it had suffered as a result of price fixing by the defendant companies in the vitamin market. The European Commission had already fined the defendant for its involvement.
Held: In an action for breach . .
Lists of cited by and citing cases may be incomplete.
Scotland, Intellectual Property
Updated: 10 May 2022; Ref: scu.276906