India: Court Formulates Parameters For Calculating Damages

Last Updated: 12 April 2007
Article by Manisha Singh

One of the vital features of trademark is its capacity to distinguish the goods or services of one person from those of another. Trademarks are usually coined or invented words. The major impediment connected with the trademark is in preventing deceptively similar marks. Much effort and cost are involved in building up reputation and identity of a mark and its proximity with the business. But ‘deceptively similar marks’ are capable of causing serious damage to the business and reputation of the registrant. The most effective relief awarded to the plaintiff to ward off such treats are in the form of injunction and damages.

But the difficulty in awarding damages is crippled around the criteria or tests, to determine and assess the amount of damages particularly in ex parte proceedings. The Delhi High Court in Infosys Technologies Ltd v. Park Infosys & Ors 2007 (34) PTC 178 (Del.) has formulated certain criteria for accessing damages where the defendant had remained exparte.

Facts of the case

Infosys Technologies Ltd is a public limited company and acclaims worldwide reputation. The expression ‘Infosys’ was coined by them with the aim of distinguishing its goods and services from that of the others. It is there claim that the expression is associated and extensively used by them since inception. Even though Infosys is mainly engaged in IT services and IT solutions, they also offers services and solutions across different industry segments including banking capital market, insurance, healthcare, life sciences, automobiles etc. They have registered the trademark ‘Infosys’ as per the Trademarks Act and are entitled to the exclusive right to use the trademark ‘Infosys’. Infosys Technologies Ltd discovered in or around September, 2004 that Park Infosys were using ‘Infosys’ as a prominent part of their business, trade name and domain name. A legal notice was issued requiring them to cease and desist from any further proceedings. Park Infosys were carrying on data conversion/ data processing division engaged in the business of imparting computer education to engineering students in the training institute of the defendant styled ‘Park College and Engineering Technologies’.

In reply notice, Park Infosys submitted that they have prefixed ‘Infosys’ to the name ‘Park’ in computer related matter and hence not in any way infringed the rights of Infosys Technologies. In furtherance, Infosys Technologies issued a final legal notice, which was not responded and hence Infosys inferred that Park Infosys had abided by the notice. But a later survey conducted by Infosys Technologies, revealed that Park Infosys & Ors. were continuing with the usage of the expression as a prominent part of their trade name and business address. Hence, a suit has been filed against them. However, Park Infosys preferred to remain exparte.


It is alleged and contented by Infosys Technologies that the defendants have deliberately and with mala fide intention of deceiving the public, used the trademark. The trademark adopted is phonetically, visually and structurally similar to that of Infosys Technologies. In order to buttress their argument, Infosys Technologies relied on Intel Corporation v. Dinakaran Nayyar and Ors and Lakshmikant V. Patel v. Chetan Bhat Shah where it was held that the use of the name with a prefix or suffix would cause deception to an unwary purchaser.


The Court held that the Infosys is distinctively associated with the plaintiff and the prefix of the word ‘Park’ does not mark any significance as the word ‘Infosys’ is distinctive of the business and trade of Infosys Technologies and consequently the defendant is clearly guilty of infringement of the trademark.

But, on the question of damages, the Court observed that assessment of damages have to be based on cogent evidence placed on record and the most material evidence that would enable the Court to arrive at a fair assessment would be a true and fair rendition of accounts. But it is obvious that the defendant indulging in such illegal activities would not maintain correct accounts. Then the burden rests on the court to ascertain the probable level of sales of the defendants. But in the present case, Infosys Technologies have not placed any document evidencing the sale of any item by the defendant nor there is any record of fees or charges levied by the defendant. In adjudicating these types of cases the barometer adopted by the courts is, to assess the probable losses sustained by the plaintiff, taking into consideration the sales figure of the plaintiff. The Court distinguished Hero Honda Motors Ltd v. Shree Assuramji Scooters, 2006 (32) PTC 117 [Del.] where it was held that even if the defendant stays away from the judicial proceedings, the plaintiff cannot be deprived of the claim of the damages. The Court in the present case observed

In an action for infringement of trademark, the profits made by the defendant cannot always be the true criterion of the damages awardable to the plaintiff as the defendant’s gain may not always be proportionate to the plaintiff’s loss. However, it is trite that the plaintiff’s loss or defendant’s gain will not be assumed in the absence of proof. The plaintiff is required to prove some distinct damage from the infringement of his trademark by defendant.

The court while formulating the criteria for measuring the damages held that the test for the same should be found by making an assessment of the profits that the plaintiff ought to have made had the offending article had not been introduced by the defendant in the market.

Applying the above said criteria in calculating damages, the court held that Infosys Technologies Ltd had failed to prove that the defendants were able to profit from the either the illegal activities nor that they were able to produce on record any diminution in the sales figures to establish the loss resulted to the plaintiff. Hence, they were denied the claim of damages all the while allowing the injunction.

The precedents set by cases like Hero Honda and Microsoft, has been shivered to an extent by the present case. In those cases the Court came heavily on the defendants with the observation that non-appearance should not act to benefit the defendants. It is expected that the criteria formulated in the present case are likely to undergo further judicial scrutiny.

© Lex Orbis 2007

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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