The court clarified the admissibility of witness statements and established criteria for calculating damages in patent infringement cases.

Table of Content
1. examination of patent infringement and defendants engagement. (Para 1 , 2 , 3 , 4)
2. appeal context and background on patent infringement. (Para 8)

[1] This is an appeal to the High Court Judge (This Appeal) against the learned Senior Assistant Registrars (SAR) assessment of compensatory damages for patent infringement (Assessment). This Appeal raises the following issues:

(1) in an assessment of damages, can a patent owner rely on witness statements (WS) adduced at the trial by merely exhibiting the WS in an affidavit affirmed by a person (other than the witnesses who gave the WS) in support of the assessment? This novel question discusses the purpose of an exhibit in an affidavit, in contradistinction to an averment in the affidavit;

(2) what is the basis to assess compensatory damages for patent infringement under s 60(1) of the Patents Act 1983 ( PA )? In this regard:

(a) whether the Court may consider the royalty or license fee which should be paid by a patent infringer to the patent owner (Royalty Basis). The Royalty Basis is also known as the "User" principle;

(b) should the Court consider the patent owners loss of profit due to the patent infringers sales of the infringing product which the patent owner would have made if not for the patent infringement (Lost Profit Basis)? The Lost Profit Basis has been described as a diversion of patent owners sales by patent infringer;

(c) whether a patent owner can claim for loss of profits caused by "price erosion" (Price Erosion Loss). A patent owner suffers Price Erosion Loss when the patent owner cannot sell the patented product at a desired higher price or is constrained to reduce the price of the patented product because of the lower price of the infringing product. There is no previous Malaysian case on Price Erosion Loss;

(d) can the Court consider the loss of sales of the patented product by the marketing and distribution arms of the patent owner?; and

(e) is a patent owner required to adduce expert evidence in support of an assessment?; and

(3) whether the Court should exercise its discretion under s 11 of the Civil Law Act 1956 ( CLA ) and O 42 r 12 of the Rules of 2012 (RC) to order interest at the rate of 5% per annum on the amount of compensatory damages determined at the Assessment (Assessed Damages) to commence from a date later than the date of the High Courts judgment regarding patent infringement because the plaintiff had been guilty of inordinate delay in applying for directions regarding the Assessment under O 37 r 1(1) RC.

B. Background

[2] The plaintiff company (plaintiff) has registered Patent No MY-137755-A (Patent) under PA regarding a "box file" (Patented Product). A box file is used to keep documents. The Patent concerns box files which can be installed without any tools and have a clip/clamp which holds filed documents.

[3] The 1st defendant company (1st defendant) manufactures stationeries, including box files (1st defendants Products). The 1st defendants Products are marketed, distributed and sold by the 2nd defendant company (2nd defendant) which is related to the 1st defendant. The Assessment did not concern the 3rd defendant, a Director of the 1st and 2nd defendants.

[4] Before the institution of the original action by the plaintiff (Original Action), the 1st defendant produced four types of box files, namely Type 1 to Type 4 (Four Types).

[5] In the Original Action, the plaintiff had claimed that, among others, the sales of the Four Types by all the defendants have infringed the Patent. There was a counterclaim by the 1st defendant to invalidate the Patent (Counterclaim).

[6] After a trial, Azahar Mohamed J (as he then was) decided as follows, among others, on 29 May 2012 (High Courts Decision):

(1) the Counterclaim was dismissed; and

(2) the Original Action was allowed to the extent that the 1st and 2nd defendants had infringed the Patent (Patent Infringement).

[7] The appeal by the defendants to the Court of Appeal against the High Cour

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