Patent infringement and recovery of profits in Italy: doctrine of equivalence and requirement of negligence

Does the defendant's state of mind matter
when it comes to damage calculation ...

The IPKat is happy to host the following analysis by Paola De Donato (Darts-ip) on a recent Italian decision concerning damages for patent infringement under Italian law.

The case is: Tribunale di Genova, sentenza 3192/2018.

Here's what Paola writes:

"In December 2018 the Commercial Court of Genua, in deciding upon a case of patent infringement (the decision is available on darts-ip.com - it-gen-00575-15 and here), after having assessed the validity of the patent at issue, stated that the defendants had infringed it by equivalence. 

This decision set two very interesting principles regarding the due damages: 

1) The calculation should consider two criteria: 

• the objective criterion of the consequences of the infringement and 
• the subjective criterion of the liability for the infringement due to each of the defendants. 

The Court awarded damages according to both calculation methods: loss of profits of the right holder and recovery of profits made by the infringer. 

The claimant complained that, from this latter amount, the Court had subtracted the investment costs for research and personnel which the infringer had sustained for developing the infringing product. 

The Court of Genua stated the principle according to which, unlike the case of literal infringement, a product infringing only by equivalence also possesses some original and creative features which shall be considered while calculating the amount of damages. 

2) The Court instead did not award damages as a compensation for the infringement committed by the second and third defendants, because it could be proved neither their negligence nor their wilful misconduct. 

The claimant objected that, according to important case law and doctrine, damages could still be claimed based on the calculation method of recovery of profits, which does not necessarily require the subjective liability for negligence. 

The Court acknowledged that the Enforcement Directive 2004/48/CE does not require the negligent misconduct of the infringer, that the national provision (art. 125(3) c.p.i.) provides that damages are due 'in any event' and that the name of this legal institution itself - restituzione degli utili (lit. repayment of profits) - appears to invoke an objective restorative function. 

... or not?

Nevertheless the Court disagreed with the claimant upon these lines of reasoning: 

a) the legal institution of profit recovery in cases of non-culpable infringement is simply an option granted to national legislature, and not a mandatory principle. 

b) the wording used in the third subsection of the provision: "In ogni caso il titolare del diritto leso può chiedere la restituzione degli utili realizzati dall'autore della violazione, in alternativa al risarcimento del lucro cessante o nella misura in cui essi eccedono tale risarcimento" (In any event, the right holder may demand the return of the profits made by the infringer, as an alternative to compensation for loss of profit or to the extent that they exceed such compensation) strictly refers to the determination of the amount to be awarded in favour of the holder of the right infringed. 

It is difficult to see in the aside "in any event" a reference to the constituent elements of the case, and in particular a reference to the psychological element of the author of the infringement. 

According to the Court, if the legislator had wanted to introduce such a revolutionary element into the system, creating a form of liability that is totally independent from negligence, it would have formulated it explicitly and not through such a cryptical formula. 

Besides, the recovery of profits provided for in the third subsection of article 125 c.p.i. shall not be regarded as conceptually and normatively distinct from the awarding of damages which, according to the first subsection, has itself a not merely compensatory purpose. 

In the opinion of the Court, therefore, the recovery of profits under this provision cannot be separated from the recognition of negligence, which, in this particular case, could not be found and proved regarding the last two defendants."