The Court of Milan on the application of the problem-and-solution approach and the assessment of damages

(Ihe original Italian version is also published on Diritto 24 – Il Sole 24 Ore)

A recent ruling in a patent infringement case (no. 8356/15) gave the Court of Milan the opportunity to reiterate its position on the application of the so called “problem-and-solution approach” and on the criteria for the assessment of damages. Both issues have already been discussed on this blog, here and here respectively.

The problem-and-solution approach was of course used by the judges to assess the inventive step of the invention. Based on this method, the Court noted, “the closest prior art” must first be determined, i.e. the prior art that is the most promising starting point for a development leading to the invention at issue, which normally has the greatest number of features in common with the claimed invention, or which requires the minimum modifications to arrive at the claimed invention. After that, one should detect the features distinguishing the claimed invention from that prior art (the “distinguishing features”). Then, one must identify the “objective technical problem” solved by the distinctive features of the invention and the skills of the skilled person, to check whether the latter, starting from the closest prior art, would have solved the objective technical problem in an obvious way, and would have come trivially to the claimed invention, possibly by combining the teachings of the closest prior art with another different prior art or with the general teachings of the technical field of the claimed invention”. In conclusion, “if the skilled person could not get unambiguous indications from the prior art towards the solution claimed, it must be concluded that the patent meets the requirements for the inventive stage“.

In the case at issue, also on the basis of the application of the above criterion, the Court ascertained the validity of the enforced patent and its infringement. The Court then enjoined the infringer from all forms of production and marketing of counterfeit products (i.e. joints), fixing a penalty of 50 euro for each joint commercialised in violation of the injunction, and also ordering the infringer to withdraw from the market and destroy the joints it still possessed.

The Court then moved on to determine the damage caused by the infringer to the patent holder. To this end, the judges applied art. 125 IP Code, which identifies three criteria for the assessment of damages: i) the right holder’s lost profit and consequential damages; ii) the reasonable royalty that the infringer would have paid if they had obtained a regular licence to commercialise the product (which criterion constitutes an alternative way to determine the right holder’s lost profit); iii) the infringer’s profit, alternatively to the right holder’s lost profit or insofar as they exceed it.

In the case at issue, the judges noted, the infringer had started to produce the counterfeit products based on the orders of a client who previously bought the original products from the patent holder. The client had then diverted towards the infringer the orders previously directed to the patent holder. “It follows that in fact the patent holder“, in the absence of the infringement, “would have achieved the income deriving from the sale to that client of the patented goods” which had instead been sold by the infringer. “There are therefore appropriate elements, even circumstantial evidence, to suggest that a causal link exists between the sales of the infringer and the potential loss of sales of the patent holder“.

In light of the foregoing, damages were calculated primarily on the basis of the patentee’s lost profits, by multiplying the patentee’s profit margin on each product by the number of products sold by the infringer. At that point, the judges verified the possibility of granting the patent holder also the infringer’s profits exceeding its lost profit, as duly requested by the patentee (being it necessary, for that purpose, a specific request by the patent holder). In this regard, the judges pointed out, however, that the right holder’s lost profit “is significantly higher than the infringer’s profit, so that the provision on the restitution of the infringer’s profits is not applicable“.