Court of Appeal of Paris, Decision of 7 November 2012, No. 11/14297, Quest Technologies, Inc. v. SARL AHT Sud

For the first time since it has exclusive jurisdiction over patent cases, the Court of Appeal of Paris awarded as a compensation for patent infringement all profits made by the infringer to the patent holder.

Before the implementation of the Enforcement Directive No. 2004/48/EC in France, the amount of damages awarded should be equal to the loss suffered by the claimant, in order to fully compensate but not exceed it. However, the French Intellectual Property Code now states that to set the damages, the court needs to take into account the negative economic consequences, "including (…) profits made by the infringer (…) or lost profits of the patent holder, or at a minimum, lost royalties."

On the one hand, compensation based on the lost profits or lost royalties of the patent holder is in line with the French principle that damages are strictly compensatory, leveling the loss suffered by the patent holder as a result of the infringement. On the other hand, the profits made by the infringer are not necessarily equal but might actually exceed the damages suffered by the patent holder.

In the case at issue, Quest Technologies, Inc., the holder of the European patent EP 1216317 for an elastic cordage used as a shoe lace, granted an exclusive licence for the exploitation of its patent on the French market to Distrisud. Quest Technologies claimed that Mr Creton and SARL ATH Sud had infringed its patent by selling extensible laces.

In its decision of 14 May 2009, the Court of Appeal of Paris found infringement of Quest Technologie's European patent.

In its further decision of 7 November 2012, the Court of Appeal of Paris had to set the amount of damages to be awarded to Quest Technologies. The court only took into account the profits made by Mr Creton and SARL ATH Sud, but not the lost profits or the lost royalties of Quest Technologies.

As a consequence of this decision, claimants should always ask the court to order the disclosure of information on the turnover of an infringer; while defendants should shield behind the rule that damages in France are strictly compensatory.