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The End of Speculation: Why "Guesstimate" Damages Are No Longer Enough in Indian Trademark Law

IP Litigation Update | By M S Sulthan Legal Associates | February 2026

For years, a common strategy in Indian intellectual property (IP) litigation was to file for massive damages based on "back-of-the-envelope" calculations. If a counterfeiter was caught with 1,000 fake units, plaintiffs would often argue, "They must have sold 10,000 units last month," and courts—aiming to deter infringement—would sometimes accept these multipliers.

That era has officially ended. In the recent landmark judgment of B.C. Hasaram & Sons v. Smt. Nirmala Agarwal (2025), the Division Bench of the Delhi High Court laid down a strict new standard: Damages cannot be speculative. You cannot just guess the loss; you must prove it with hard financial evidence.

1. The Case: B.C. Hasaram & Sons v. Nirmala Agarwal

The Background

The dispute involved the trademark "Nayan Jyoti" (eye drops). The plaintiff (Nirmala Agarwal) sued the defendant (B.C. Hasaram) for selling a deceptively similar product, "Amrit Nayan Jyoti."

The Trial Court's Math (The "Old" Way)

The Trial Court ruled in favor of the plaintiff and awarded ₹48.35 Lakhs in damages. The calculation method was surprisingly simple—and, as it turns out, flawed:

A Local Commissioner raided the defendant's premises and seized a specific quantity of infringing goods.
The Court took the quantity seized, multiplied it by the Maximum Retail Price (MRP).
It then assumed this represented one month's sales.
Finally, it doubled that figure (assuming at least two months of sales) to arrive at the final damages figure.

The High Court's Correction

The defendant appealed to the Division Bench of the Delhi High Court, challenging this calculation. The High Court set aside the damages award, calling it "woefully erroneous."

The Court held that the Trial Court had relied on "hypothetical or arbitrary estimations" to fill gaps in the plaintiff's evidence. Just because a Local Commissioner found X amount of goods does not legally prove that the defendant sold Y amount in the past.

2. Key Legal Insight: The "Actual Loss" Standard

The judgment clarifies that Section 135 of the Trade Marks Act, 1999 is not a ticket to unjust enrichment. The Court emphasized three critical points:

Burden of Proof: The plaintiff solely bears the burden of proving the quantum (amount) of damages. You cannot shift this burden to the defendant or the court.
Evidence over Assumption: Damages must be linked to proven injury. This requires audited books of accounts, sales ledgers showing a dip in the plaintiff's revenue, or specific inventory records of the defendant.
Rule 20 Compliance: The Court referenced Rule 20 of the Delhi High Court Intellectual Property Division (IPD) Rules, 2022, which explicitly requires parties to furnish a "reasonable estimate of damages along with supporting documentary evidence."

The Ruling in a Nutshell: "Speculation cannot take the place of proof. Without concrete evidence of actual loss or actual profit earned by the infringer, no damages can be awarded."

3. Actionable Advice: How to Prepare for Litigation Now

This ruling changes the playbook for CFOs, General Counsels, and Litigators. Here is how you must adapt:

For Plaintiffs (Brand Owners)

Forensic Accounting is Mandatory: Before you even file a suit, engage a forensic accountant. You need to show a correlation between the infringer's market entry and your sales dip.
Don't Rely Solely on the Local Commissioner: While a raid establishes infringement, it rarely establishes the scale of past sales. You must use discovery processes (interrogatories) to demand the defendant’s GST filings, bank statements, and e-way bills during the trial.
Preserve "Lost Opportunity" Data: Keep records of failed contracts or cancelled orders that occurred specifically due to market confusion.

For Defendants

Challenge the Math: If a plaintiff demands huge damages, do not just argue "I didn't infringe." Attack their calculation method. Ask: Where is the ledger? Where is the GST return proving this loss?
Separate Your Accounts: If you are accused of infringing on one product line, ensure your financial records clearly separate that product from your legitimate business. This prevents the court from freezing your entire revenue stream.

Conclusion

The B.C. Hasaram ruling is a wake-up call. The Indian judiciary is becoming more sophisticated in its approach to IP damages. While courts are willing to protect brands, they are no longer willing to hand out windfalls based on guesswork. For businesses, the lesson is clear: If you want to get paid for infringement, keep your books in order. In the new era of Indian IP law, math matters as much as the mark.

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