“As in the case of any other tort (leaving aside cases where exemplary damages can be given) the object of damages is to compensate for loss or injury. The general rule at any rate in relation to "economic" torts is that the measure of damages is to be, so far as possible, that sum of money which will put the injured party in the same position as he would have been in if he had not sustained the wrong. (Livingstone v. Rawyards Coal Co. 5 A.C. 25, 39, per Lord Blackburn.) … The respondent did not elect to claim an account of profits: their claim was only for damages. There are two essential principles in valuing that claim: first, that the plaintiffs have the burden of proving their loss: second, that the defendants being wrong-doers, damages should be liberally assessed but that the object is to compensate the plaintiffs and not punish the defendants. (Pneumatic Tyre Co. Ltd. v. Puncture Proof Pneumatic Tyre Co. Ltd. (1899) 16 R.P.C. 209 at p. 215). These elemental principles have been applied in numerous cases of infringements of patents. Naturally their application varies from case to case. Reported authorities, many of which were cited in argument, may be useful as illustrations of judicial reasoning, but are capable of misleading if decisions on a particular set of facts and observations in judgments leading up to such decisions are later relied upon as establishing a rule of law. Nevertheless I think it useful to refer to some of the main groups of reported cases which exemplify the approaches of courts to typical situations. 1. Many patents of inventions belong to manufacturers, who exploit the invention to make articles or products which they sell at a profit. The benefit of the invention in such cases is realised through the sale of the article or product. In these cases, if the invention is infringed, the effect of the infringement will be to divert sales from the owner of the patent to the infringer. The measure of damages will then normally be the profit which would have been realised by the owner of the patent if the sales had been made by him (see The United Horse-Shoe and Nail Co. Ltd. v. John Stewart & Co.,13 A.C. 401.) An example of this is Boyd v. The Tootal Broadhurst Lee Co. (1894) 11 R.P.C. 175 where the plaintiff manufacturers proved that a profit of 7s. per spindle would have been made, and settlements of litigation for lesser rates were discarded. Other patents of inventions are exploited through the granting of licences for royalty payments. In these cases, if an infringer uses the invention without a licence, the measure of the damages he must pay will be the sums which he would have paid by way of royalty if instead of acting illegally, he had acted legally. … In some cases it is not possible to prove either (as in 1.) that there is a normal rate of profit, or (as in 2.) that there is a normal, or established, licence royalty. Yet clearly damages must be assessed. In such cases it is for the plaintiff to adduce evidence which will guide the court. This evidence may consist of the practice, as regards royalty, in the relevant trade or in analogous trades; perhaps of expert opinion expressed in publications or in the witness box; possibly of the profitability of the invention; and any other factor on which the judge can decide the measure of loss. Since evidence of this kind is in its nature general and also probably hypothetical, it is unlikely to be of relevance, or if relevant of weight, in the face of the more concrete and direct type of evidence referred to under (2). But there is no rule of law which prevents the court, even when it has evidence of licensing practice, from taking these more general considerations into account. The ultimate process is one of judicial estimation of the available indications.”
“If it could be shown that successful competition was only possible by using the waste saving invention, we admit that substantial damages might be recovered. But the evidence is that competition was due to other causes and not the infringement, and, therefore, only nominal damages are recoverable. … The second head of infringement is for an “interrupter”, a contrivance to prevent clogging of the machinery at a particular stage. No interrupter was used in the making of several of the cases of nails. The interrupter had nothing to do with the sales. The evidence shows that the greatest fall in price took place at a time before the Defendant’s competition would have affected it …”
“… The actual infringement complained of consists in the sale of cases of nails produced by patent machines, which are admitted to be infringements of the Pursuers’ patents. Every nail thus produced was an infringement of the Pursuer’s patents, the sale of which could have been interdicted, and would give a right of action against all concerned in its production and sale. The question appears to me to arise solely on the assessment of damages. But I think the admissions in this case render unnecessary, and, indeed, irrelevant, an examination into the various parts of the patents. The cases of nails tales quales were infringements, and in so far as these nails, such as they were, interfered with the sale of the Pursuer’s own goods, they were properly the measure of the damages which the Pursuers were entitled to obtain. I say, so far as they interfered with the sale of the Pursuer’s own goods, and while I agree with the Lord Ordinary that the Pursuers can only recover compensation for the actual loss which they have sustained, the estimate of the particular sum which is to be arrived at when assessing compensation for the injury is purely a matter for a jury, and can rarely be made the subject of exact arithmetical calculation. I am satisfied, however, that the boxes and cases of nails sold by the Defenders did, in fact, interfere with the Pursuers’ sale. I am unable to agree with Lord Adam that there is nothing in the proof to show, or make it probable that the Pursuers would have made these sales. I do not say all these sales. I think there is considerable evidence to show that purchasers generally would have sought that particular nail, and I do infer that the Pursuers, but for the intervention of the Defenders, would have effected a large part of these sale. And I certainly find from the evidence that among the competing nails in the market they were not all equally sought after, but that the Pursuers’ nails had a higher reputation. I think it is nothing to the purpose to show, if it is shown, that the Defenders might have made nails equally good, and equally cheap, without infringing the Pursuers’ patent at all. I will assume that to be proved, but if one assumes that the nails which were, in fact, made by the pirated machines injured the Pursuers’ sales, what does it matter if it is ever so much established that the loss which the Pursuers have sustained by the unlawful act of the Defenders might also have been sustained by them under such circumstances as would give the Pursuers no right of action? Your Lordships have to deal with the facts as they exist, and those facts, as I say, are that the Defenders have in derogation of the Pursuers’ rights sold cases of nails which they have no right to sell, and for which to the extent to which they have interfered with the sale of the Pursuers’ patented nails, the Pursuers are entitled to damages.”
“The decision in the patent action and the minute of admission in the present case established beyond question that in selling the Shoe-brand nails the Respondents infringed the Appellants’ rights. The sale of each and all of those nails was unlawful. It appears to be beside the mark to say that the Respondents might have arrived at the same result by lawful means, and that, without infringing the Appellants’ rights, they might have produced a nail which would have proved an equally dangerous rival of the Globe nail. The sole question is, what was the loss sustained by the Appellants by reason of the unlawful sale of the Respondents’ nails? … There remains the other head of damage: loss of sales by reason of the competition of the Respondents. I think the Appellants are entitled to take into account the total quantity of nails sold by the Respondents, and that they are not limited, as the Lord Ordinary held they were, to the period commencing on the 27th of June 1883. Although that was the date on which the Appellants acquired their title to the patents, they succeeded to the rights and to the property of their predecessors in title. Then comes the question to what extent did the wrongful acts of the Respondents operate to prevent sales by the Appellants. I think it would be going too far to say that if the Respondents had not been in the field the Appellants would have sold an additional quantity equal to the amount sold by the Respondents. But considering that the Respondents seemed to have worked the ground occupied by the Appellants, and having regard to the progressive increase in sales during the previous years, and to the fact that the sales of the Appellants and of the Respondents taken together did not largely exceed the Appellants’ sales in 1882, I think it is a fair inference that if the Appellants had been left undisturbed the natural increase of their business would have come near the aggregate of the quantity sold by the Appellants and Respondents together. If it were assumed that but for the interference of the Respondents, the Appellants would have sold 5752 boxes in addition to what they actually sold, their loss, taking the actual prices, would be£611 . I think it would be reasonable to strike off from the amount a moderate percentage as representing sales due to increased activity protected by the rivalry of two competitors.”
“It is not a case like United Horse Shoe and Nail where it was the nails made by the process which the customer wanted. I infer from the report of that case that they were better nails.”
“Although the question whether and to what extent a plaintiff shall have sustained damage by reason of infringement is a question of fact assessed in the light of the broad principles mentioned above, certain methods of determining and assessing loss have been followed. One method is to ascertain whether the plaintiff has actually suffered a loss of sales which would otherwise have been made but for the competition of the infringing product. In cases where the patent holder has a monopoly of the product or its essential means of production, the issue is fairly readily answered since every sale of an infringing copy must have been at the expense of the monopoly. In a legally competitive market the plaintiff must show on the balance of probabilities that some sales have been lost by reason of the infringement, and the extent of such loss. Plainly such issues can be examined in only a general way, hence the frequent judicial observations about such matters being essentially jury issues. Naturally the difficulty of establishing loss does not relieve the plaintiff of the burden of proving loss. It is just that the matters for determination must necessarily be approached in a broad way which seeks to take account of all factors which may reasonably bear on the issue. In cases where the plaintiff cannot show an impact on its own sales by reason of infringement, it has not followed that the tortfeasor can be liable in only nominal damages. In such cases it has been held that the infringer can be liable in damages equivalent to a royalty. The justice of and commercial indications for such an approach are obvious.”
“It is self evident that if the defendant had not infringed the plaintiff could not recover damages. The fact of the matter is that the defendant had infringed and it does not avail defendants to suggest that they might infringe with impunity because if they so wish they might compete lawfully.”
“Infringement of a patent is a statutory tort; and in the ordinary way one would expect the damages recoverable to be governed by the same rules as with many or most other torts. We were referred to Halsbury's Laws of England (4th edn) vol. 12 para 1128 and following, to establish the elementary rules (i) that the overriding principle is that the victim should be restored to the position he would have been in if no wrong had been done, and (2) that the victim can recover loss which was (i) foreseeable, (ii) caused by the wrong, and (iii) not excluded from recovery by public or social policy. The requirement of causation is sometimes confused with foreseeability, which is remoteness. The two are different - see Halsbury para 1141: “1141. Causation in tort. Subject to foreseeability and the principles of public policy it is prima facie necessary and sufficient for a plaintiff to prove that a defendant's wrongdoing was a cause and not necessarily the sole or dominant cause of his injuries, as a matter of physical consequences or common sense, but subsidiary principles associating foreseeability and causation have been evolved in certain categories of concurrent or intervening causes.”
"Much of the discussion, both in the judgment of the Court of Appeal and in argument at the Bar, has assumed that the case is about the correct measure of damages for the loss which the lender has suffered. … I think that this was the wrong place to begin. Before one can consider the principle on which one should calculate the damages to which a plaintiff is entitled as compensation for loss, it is necessary to decide for what kind of loss he is entitled to compensation. A correct description of the loss for which the valuer is liable must precede any consideration of the measure of damages. For this purpose it is better to begin at the beginning and consider the lender's cause of action. … In the present case, there is no dispute that the duty was owed to the lenders. The real question in this case is the kind of loss in respect of which the duty was owed. How is the scope of the duty determined? In the case of a statutory duty, the question is answered by deducing the purpose of the duty from the language and context of the statute: Gorris v. Scott (1874) L.R. 9 Ex. 125. In the case of tort, it will similarly depend upon the purpose of the rule imposing the duty. Rules which make the wrongdoer liable for all the consequences of his wrongful conduct are exceptional and need to be justified by some special policy. Normally the law limits liability to those consequences which are attributable to that which made the act wrongful. In the case of liability in negligence for providing inaccurate information, this would mean liability for the consequences of the information being inaccurate."” “1141. Causation in tort. Subject to foreseeability and the principles of public policy it is prima facie necessary and sufficient for a plaintiff to prove that a defendant's wrongdoing was a cause and not necessarily the sole or dominant cause of his injuries, as a matter of physical consequences or common sense, but subsidiary principles associating foreseeability and causation have been evolved in certain categories of concurrent or intervening causes.” "
“It is not enough that the loss would not have occurred but for the tort; the tort must (for present purposes at any rate) be, as a matter of common sense, a cause of the loss.”
“There is therefore no uniform causal requirement for liability in tort. Instead, there are varying causal requirements, depending upon the basis and purpose of liability. One cannot separate questions of liability from questions of causation. They are inextricably connected. One is never simply liable: one is always liable for something and the rules which determine what one is liable for are as much part of the substantive law as the rules which determine which acts give rise to liability. It is often said that causation is a question of fact. So it is, but so is the question of liability. Liability involves applying the rules which determine whether an act is tortious to the facts of the case. Likewise, the question of causation is decided by applying the rules which lay down the causal requirements for that form of liability to the facts of the case.”