Patent Infringement - Court Awards Damages Approx. 26 Million USD

Introduction

"Familiarity breeds contempt" is an adage that finds resonance even today. The recent judgment rendered by the Hon'ble Delhi High Court in the matters of Communication Components Antenna Inc. v. Mobi Antenna Technologies (Shenzhen) Co Ltd & Ors., and awarding of damages worth Approx. 26 million USD (INR 217 crores) with interest @ 5% per annum from the date of the judgment till actual realization of the amount in favour of the Plaintiff (Communication Components Antenna Inc.) are pointers in that direction. While Innovation and corresponding exclusivity are the touchstones of patent rights, imitation in technology causes disruptions that are unfair and unethical.

Brief Background of the case:

1. Registration of Patent IN'893

2. Transfer of Ownership

• TenXc Wireless Inc. (erstwhile Plaintiff No.1) company incorporated in Canada having wholly owned subsidiary company TenXc Wireless India Private Limited in India (erstwhile Plaintiff No.2) owned all rights in the patent invention in the suit patent
• In between year 2011 and 2012 erstwhile Plaintiff sold their assets including IN'893 to the present Plaintiff (Communication Components Antenna Inc.)
• The present suit was first filed by erstwhile Plaintiff No. 1 & 2, in year 2010, after the transfer of ownership rights the erstwhile Plaintiffs was substituted by the present Plaintiff by an order dated November 28, 2013¹

Present Issue:

In the recent case of Communication Components Antenna Inc. v. Mobi Antenna Technologies (Shenzhen) Co Ltd & Ors., the Plaintiff is a Canadian company involved in the manufacturing, and selling of cellular base station products and renders service relating to the telecommunication industry. The Defendant (Mobi Antenna Technologies) having headquarters in China is also in the business of importing and offering the sale of Bi- Sector Array Antenna in Delhi.

The suit was filed after Plaintiff No.1 (TenX Wireless Inc., former owner) learned about the infringing acts committed by the Defendants from its sale brochure. The Plaintiffs contended that the Defendant's products bearing numbers MB1800-PSA4-18DE10, MB1800-PSA4-18DT4, MB1800-PSA4-19DE through its brochure that invites potential customers to purchase Antennas and discloses Beam Patterns and other information violates the Plaintiff's Patent No. 240893 (hereinafter referred as IN'893) and the Beam Pattern used by the Defendant is identical to the Beam Pattern of Plaintiff's registered Patent IN'893. Furthermore, Defendant's products disclosed in the brochure infringed both the Method (Claim 1 of IN' 893), Defendant (Claim 12 and Claim 8 of IN' 893), and Product Claim (Claim 10 of IN' 893) of the Plaintiff.

Arguments by Plaintiff

The Plaintiff argued that the novelty of the patent lies in its ability to achieve greater spectrum efficacy by changing the beam pattern and stressed on the fact as to how this invention enables a greater number of subscribers to connect utilizing the same spectrum while maintaining call quality.²

The Plaintiff also highlighted that the distinguishing feature of IN'893 i.e. the beams having an asymmetric beam pattern/shape which is used for optimizing the asymmetrical shape that radically alters the conventional model of symmetric sectorization. The Introduction of asymmetrical beams allows close approximation of: (i) the critical coverage area of the replaced/old sector antenna with (ii) the critical coverage area of the replacing/new sub-sector antenna, along with minimum overlap.

The Plaintiff calculated the damage by using the Total Addressable Market Analysis (TAM Analysis) which was based on consideration of the following aspects:

1. Each individual operator in India;
2. Number of sites each individual operator had;
3. Subscriber growth and count;
4. Spectrum allocation; and
5. Types of Bi-Sector Array Antennas that could be used to address capacity needs.

Quantification of damages was made keeping in mind the following factors:-

1. Market size lost by the Plaintiff in India;
2. Retail price of antennas covered by IN'893 in India from 2007 to 2011.
3. Retail price of antennas covered by IN'893 in Canada and USA in 2011;
4. Retail price of the most basic model of antennas covered by IN'893 in Canada and USA post-2012
5. Cost price to manufacture antennas covered by IN'893 in India and North America.

Calculation of Total Lost Profit:

• Lost Profits for the year 2011

USD 1,350 minus USD 800 = USD 550 (profit per unit to be considered for year 2011 as proved by PW1)USD 550 multiplied by 21,293 = USD 11,711,150 (profit from market size lost in year 2011 based on per unit profit)

• Lost Profits for the years post-2011

USD 1,960 minus USD 800 = USD 1,160 (profit per unit to be considered for years 2012 to 2014)USD 1,160 multiplied 73,417 = USD 85,163,720 (profit from market size lost for years 2012 to 2014 based on per unit profit)

• Total Lost Profits for the years 2011 to 2014

USD 85,163,720 + USD 11,711,150 = USD 96,874,870 (total profit from the market size lost) The total lost profit claimed by the Plaintiff is USD 96,874,870 was claimed. Punitive damages have been claimed to the extent of twice the compensatory damages.

Arguments by Defendant

The Defendant argued their case by stating that they were dragged into the present suit by the Plaintiff to prevent competition.

The Defendant stated that the Plaintiff was unable to prove that the how Claims 1, 10, 12 and 13 were practiced by the Defendant No. 1. It was also claimed by the Defendant that the Plaintiff's invention IN'893 lacked novelty and inventive step and was liable to be revoked under section 64(e) and (f) respectively of the Patents Act, 1970. The Defendant further added that IN'893 should be revoked as it is precluded from being patented under section 3(d) of the Patent Act, 1970.

Additionally, the Defendant claimed that the Plaintiff's method of comparing the Defendant's Antenna patterns over beam patterns using Adobe PDF Editor to prove infringement was incorrect and unreliable.

Court's Order

The Hon'ble Delhi High Court observed that the Defendant No.1 had abandoned the proceedings midway after the issue of validity was decided and Court did not have the benefit of counter arguments and proceeded ex-parte.

Infringement Analysis

Based on the arguments, claims, complete specification, beam patterns and evidences put forth by the parties the Hon'ble court was of the opinion that the Defendant No.1's products infringe Claim 1 and Claim 10 of IN'893 and observed the following with respect to the infringement of IN'893 by Defendant No. 1: ³

1. "a) Beam patterns in the Product Brochures are asymmetrical
2. b) Beam patterns in the Product Brochures are identical to the beam patterns produced from the power and phase weightings in IN'893;
3. c) Beam shape of Defendant's Infringing Products gives feature of "substantial equivalence" of critical coverage area as compared to the critical coverage area of the earlier antennas;
4. d) Impugned products replace or are capable of replacing, three existing 65-degree antennas in a 3-sector configuration as well as in greenfield cellular networks where three 65-degree antennas in a 3-sector configuration could have been used."

Relief

The Hon'ble court passed a decree of permanent injunction in favour of the Plaintiff restraining Defendant No.1 and anyone acting for or on its behalf from manufacturing/making, using, distributing, selling, offering for sale and importing into India any product which infringes the suit patent IN'893 of the Plaintiff, till its expiry.

Damages Awarded

The Hon'ble Court determined that the damages had to be paid on the basis of lost profits and accordingly observed, "The figure of 94,710 cannot be accepted in the absence of any evidence on the actual lost market share and it cannot be concluded with certainty that the entire market share would have come to the kitty of the Plaintiff. Therefore, the reasonable estimate of the lost market share, considering that Plaintiff is a patent holder and looking at the number of base transceiver stations/ tower sites that may have been available in the Indian market, would be half of 94,710 units. Taking the average retail price at USD 1,350 and multiplying 47,355 units with USD 550, this Court awards damages to the tune of USD 2,60,45,250, equivalent of which is Rs.2,17,47,78,375/- at the current US Dollar rate, for the period 2011 to 2014,"⁴

Conclusion

This judgement rendered by the Hon'ble Delhi High Court upholding the rights of the Patent holder and awarding damages not only highlights the Hon'ble Courts commitment in protecting the rights of patentee as well as fostering an environment conducive for innovation and technological advancement but also serves as a deterrent for infringers.

Footnotes

1 Paragraph 7 of CS(COMM) 977/2016

2 Paragraph 15 of CS(COMM) 977/2016

3 Paragraph 77 of CS(COMM) 977/2016

4 Paragraph 89 of CS(COMM) 977/2016

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