ABSTRACT
Lord Shaw: In my opinion, the case does raise sharply an important question as to the assessment of damages in patent cases, and with that question I proceed to deal. It is probably a mistake in language to treat the methods usually adopted in ascertaining the measure of damages in patent cases as principles. They are the practical working rules which have seemed helpful to judges in arriving at a true estimate of the compensation which ought to be awarded against an infringer to a patentee. 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. This is necessarily accompanied by 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, my Lords, 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 – such as the value of testimony at first hand, down to even the nuances of its expression, and they include, of course, the attitude and demeanour of the witnesses themselves. 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. In patent cases the principle of restoration is in all instances to some extent, and in many instances to the entire extent dependent upon the same principle of restoration. The patentee may show that the trade done by the infringer would have been his (the patentee’s) trade, and he is entitled in such cases to be restored against the action of the infringer; and he may adopt, in liquidating that principle in money, an alternative course. He may say, ‘I shall accept the
profits which have been made by the infringer in this trade which ought to have been my trade’; or he may take the other head of the alternative and say, ‘The illicit opposition to, and interference with, my own trade caused me damage. I lost profit which I would have otherwise made in it; I lost business connection; the development of my business on its natural lines was interrupted by my being driven by these acts of piracy out of sections of my own trade’. These and other things may be heads of damage ... in the course, however, of deciding cases, certain expressions have been used by learned judges, which, according to the contention, are to the effect, or truly mean, that if the patentee chooses the latter course, namely, to reckon up his claim under heads of damage, he is limited, so to speak, by the principle of restoration. Phrases, for instance, have been used, which it is said imply that the entire measure of his damage is the loss which he has incurred of the trade done in the pirated articles ...
