Compensation for patent infringement should be calculated on the basis of the market value of the ad

Ebbe Korsgaard vs. POMI ApS and Breum Maskinstation by Bent Jensen, the Supreme Court

Korsgaard is an inventor and owner of a patent and a utility model to a method for the treatment of straw bales with ammonia and an apparatus for folio wrapping of straw bales.

In an infringement action against a machine manufacturer, POMI, and a machine pool, Breum, the parties agreed before the Supreme Court on the questions of validity and infringement, and the Court was consequently only to decide on the question of damages and compensation.

The Court stated that Breum from the date of receipt of Korsgaard’s cease and desist letter was to be considered in bad faith of the infringement with the consequence that continued infringement entitled Korsgaard to a reasonable compensation for the exploitation of the invention.

Korsgaard had never licensed out his invention, and the Court said that the compensation should be calculated on the basis of the royalty rate which Korsgaard reasonably could have requested from his licensees taking into consideration the market conditions.

Finding the royalty scheme contemplated by Korsgaard to be unacceptable by the market, the Court went on to say that the compensation alternatively should be calculated on the basis on the market value to Breum of using machines exploiting the invention compared to other machines. This value was not disclosed by parties, and the Court ordered Breum to pay an estimated compensation in the amount of DKK 36,000 (approx EUR 4,800).

Further, the Court ordered POMI to pay estimated damages for market disturbance in the amount of DKK 300,000 (about EUR 40,000).

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