Damages in India are traditionally compensatory in nature. However, we find Indian Courts drifting gradually towards the American concept of granting punitive damages. Also known as exemplary damages, the concept is designed to punish for socially deplorable conduct such as fraud or malicious, reckless or abusive action. Being discretionary in nature, they have a deterrent effect. The Indian legal system gave way to the concept for the first time while deciding the case of Common Cause v. UOI [AIR 1999 SC 2979] and has been put to use since then. Revisiting the principle is the case of Adobe Systems Inc. & Anr. v. P. Bhoominathan & Anr. [2009 (39) PTC 658 (Del.)]
Adobe Systems Inc., USA and M/s Microsoft Corporation, USA had filed to seek an order of permanent injunction to restrain the infringement of their copyright, trademarks, passing off, delivery up, rendition of accounts and damages. They contended that the subject matter of infringement were "computer programmes" falling within the scope of Section 2(ffc) of the Copyright Act, 1957 as well as qualifying as a "literary work" under Section 2(o) of the Act. Adobe and Microsoft had sought protection as under Section 40 of the Act, which deals with the Power to extend copyright to foreign works. India and USA are signatories to both the Berne Convention as well as the universal Copyright Convention which forms the basis for such an extension of Copyright. The parties had submitted the copies of their copyright registration certificates as also trademarks held in the respect.
Upon receiving information regarding infringing activities being conducted upon their registrations on the BSA/NASSCOM anti-piracy hotline, Microsoft and Adobe stated that they initiated investigation immediately, to ascertain if infringement was actually being committed vide the use of pirated software by P. Bhoominathan at his premises. Owing to legal rights of both companies being violated, they moved to court.
The Court noted that in pursuance of the interim application for injunction, an ex parte order was passed whereby a Local Commissioner was appointed, who upon inspection seized eighteen (18) hard-drives containing infringing versions of Microsoft' software was found . However, pirated versions of Adobe software were not found therein. In view of this finding, P. Bhoominathan was proceeded against ex parte and was invited to place a written statement on record. Microsoft was asked to lead evidence vide an affidavit.
A written statement was not filed by Bhoominathan but an application seeking permission to discharge the matter was filed and allowed. Bhoominathan was moved against ex-parte yet again and time for filling evidence by way of affidavit was granted. The matter was adjourned repeatedly for filling evidence by way of affidavit.
The Court noted the contents of the affidavit, whereby, amongst other things it was claimed that Bhoominathan would have deprived Microsoft of potential revenue of Rs. 32, 15, 500/- which included profits legitimately accruing to Microsoft. With respect to infringement, the Court opined that giving due respect to the findings of the Local Commissioner infringement could not be denied. Further, the statements and evidence had not been rebutted by Bhoominathan. In this light, Microsoft was said to be entitled to a decree of permanent injunction.
On the aspect of determining damages, the Court took notice of several precedents laid down in law. The judge also observed that India traditionally awarded compensatory damages for loss and damages. The Court noted that damages could be nominal, exemplary/punitive or compensatory in nature. In view of Microsoft' claim to damages, the Court however ordered that a sum of Rs. 5, 00, 000/- be awarded as compensatory damages and a sum of Rs. 5, 00, 000/- as exemplary damages on account of loss of reputation and damage to goodwill.
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