For manufacturers faced with the prospect of suing competitors for patent infringement the recent decision of Jacob J in Gerber Garment Technology Inc v Lectra Systems Ltd and Lectra Syst-mes SA (as yet unreported) offers welcome encouragement.It is easy for practitioners to forget just how daunting the prospects of a contested High Court patent action can be.

The act of issuing proceedings leads to the inevitable defence and counterclaim for revocation and sometimes nasty surprises in the form of obscure prior art references.

Once begun, proceedings can take many years to conclude.In addition to this the patentee will be obliged to invest a great deal of its own management time and effort, for which it will receive no compensation.What will the patentee get out of all of this? In cases where the patentee is entitled only to recover damages calculated on the basis of a reasonable royalty the principles are well established (General Tire and Rubber Company v Firestone Tyre and Rubber Company Ltd [1976] RPC 197).

The position of a manufacturer suing for damages on a loss of profits basis has been less certain.

Perhaps because of this, and the cost involved in testing the principles before a court, there has been a marked lack of recent case law on the subject and none at all since the decision of Falconer J in Catnic Components Ltd v Hill & Smith Ltd [1983] FSR 512.The fundamental principle, of course, is that the court should try to put the injured party in the same position as it would have been in if it had not sustained the wrong.

But how far does this go? How far if at all is the right to recover damages limited by the wording of the patent claims? Can a patentee recover for anything other than lost sales of the patented item itself?In Gerber, proceedings were issued in 1987.

Liability issues were determined at first instance in the course of two trials in 1993, the results of which were appealed (unsuccessfully) to the Court of Appeal.

In the meantime the inquiry got underway in December 1993 and was resolved at first instance in April 1995, almost exactly eight years after proceedings were first issued.The results of the hearing on the inquiry gave some vindication for effort and cost involved.

The plaintiff sought damages for infringement of two 1949 Act patents r elating to key aspects of the design of a revolutionary automated fabric cutting system.

Both patents had expired by the time the inquiry commenced.

The only issue, therefore, was the extent of the plaintiff's entitlement to damages.

The plaintiff claimed for:(i) lost profits on sales of machines that it would have made in the absence of the defendants' infringing activity;(ii) damages resulting from the depression of the prices of its own machines;(iii) lost profits on the sale of spare parts, service contracts and CAD systems to be used in conjunction with the machines;(iv) 'springboard' damages, ie damages resulting from the goodwill derived from the early and unlawful entry of the defendants into the UK market.As a further complicating factor, during the period of infringement the plaintiff conducted its business in the UK through wholly owned subsidiary companies which, at different times, acted as agents and distributors.

Neither of these companies was an exclusive licensee and much of the loss was suffered by them.Perhaps the most interesting issues in the case concerned the claims for 'parasitic' damages at (iii) and (iv) above.

The defendants argued that these losses fell outside the scope of the monopoly granted by the patent and were therefore irrecoverable.

They relied on Catnic and the Court of Appeal decisions in Polaroid v Kodak [1977] RPC 379 and Corruplast v George Harrison [1978] RPC 761.Both Polaroid and Corruplast concerned interlocutory injunctions and the relevant statements in the judgments of the Court of Appeal were obiter.

In Polaroid, Buckley LJ said: 'Each patent is designed to protect the monopoly granted by that patent.

This, I think, appears from the form of the grant, in which the command against infringement contained in it is expressed to be "to the end that the patentee may have and enjoy the sole use and exercise and the full benefit of the said invention".

The patent is not, in my opinion, intended to protect the patentee in the enjoyment of any other subject matter.'Buckley LJ was also sitting in Corruplast and expressed a similar view in that case.Until Gerber, Catnic was the only decision directly on the point.

In Catnic the plaintiff claimed that in addition to damages for lost sales of its patented lintels it had suffered lost sales of non-patented lintels because the practice in the building trade was for builders to buy all their lintels from the same source.

This argument was rejected by Falconer J, who adopted the dicta in Polaroid and refused to award damages for lost sales of the non-patented lintels.In Gerber, Jacob J declined to follow Catnic.

He summarised the position as follows:(i) one must distinguish between the wrong and the damage flowing from it;(ii) any damage which forseeably flows from the wrong is recoverable;(iii) in some cases there may be policy reasons for restricting damages even where the damage forseeably flows from the wrong.He considered that the losses claimed by Gerber were forseeable and flowed from the infringements.

He also considered that policy considerations favoured the plaintiff.

By selling infringing machines the defendants would also establish a closed market for their own spares and service contracts: 'If that benefit were large enough it might pay the defendant to commit the wrong.

Suppose, for instance, that the ongoing value of service contracts was much greater than the value of the original sales.

Then, since exemplary or additional damages are not available it would pay to infringe.

I think this is a very powerful policy reason for holding that these damages are recoverable.'The judge awarded damages under all the heads claimed, including 'springboard' or, as Jacob J termed them, 'accelerated entry' damages.On the subsidiary companies point the judge also found in favour of the plaintiff.

In so doing he followed the December 1994 decision of the Court of Appeal in George Fischer (Great Britain) Ltd v Multi Construction (so far unreported).In Gerber (as in George Fischer) the defendants argued that to allow recovery of subsidiaries' losses would be to go behind the corporate veil and thus offend the rule in Foss v Harbottle.

The court disagreed.

The loss of value in the subsidiaries represented direct loss suffered by the plaintiff by reason of the dimunition in value of its shareholdings in them.

In the absence of special factors, such as tax losses, none of which were found to exist in this case, '...every dollar of which the subsidiary is deprived, deprives the parent of a dollar's worth of subsidiary'.The decision in Gerber is an important development for patentees.

It is a clear indication that, in awarding damages for patent infringement, the courts will give due recognition to the full commercial value of an invention and will not be limited by the narrow wording of patent claims.The confirmation of a plaintiff's right to claim for the losses of its subsidiaries is also important given the practice followed by many groups of companies where intellectual property rights are vested in parent or holding companies that trade in the UK only through their wholly owned subsidiaries.