Consolidating Law of injunction in patent infringement -Indian Experience

Rushing to get ex party injunction remained the first salvo in the hands of the patentee in India. Section 108(1) allows courts to give relief in suit for infringement inter alia grant “an injunction (subject to such terms, if any, as the court thinks fit).” But that relief is for the activities occurring after a determination of infringement. In fact a successful patent owner can avail two remedies under section 108. He may seek a property-like exclusion in the form of injunctive relief and claim the remedy in the form of financial compensation/Damages.Timing of getting such reliefs is critical as the broadest reading of section 108 allows a patent owner to elect preliminary injunction as its preferred remedy under Rule 39 of Civil Court procedure 1908 (CPC) before the case is put to final trial. The patent law gave a mandated direction to grant an injunction but the grant of such preventive relief was left at the discretion of the court. Thus subjecting grant of such relief to the general provisions on temporary or interlocutory injunction as contained in the CPC and section 37 of the Specific Relief Act, 1963. For the grant of a permanent injunction section 38 of the Specific Relief Act, 1963 applies. In India this was how courts once seemed to view the patent right and grant of interim injunction as a matter of routine if the patentee proves the prime facie case of infringement as it was done in cases of trade mark infringement. Circumstances have changed, however, and they are continuing to change after the Court ruled that “six year rule” is no longer a determinant factor but non-working of patent is relevant in denying injunction. Other factors such as public interest have also being cited as reason for refusal of interim injunction by courts.

“Six year Rule” and Injunction

There is unwritten rule but well settled law in India that a patent cannot be
presumed to be valid unless it is more than six years old. This rule has its roots in
British case Rothwell U. King. [1886 Vol.III. RPC page 379] The counsels in India
invariable relied on “six year rule” to obtain instant injunctions. In V.Manicka Thevar
vs. Star Plough Works, (1965) [AIR 1965 Madras 627 ] Madras court High held that
“an interim injunction will not be granted if the patent which has been obtained by
the plaintiff is a recent one and there is a serious controversy about the validity of
grant of the patent itself. In other words, Courts will not grant an order of interim
injunction if the defendant disputes validity of the grant”. The court also pointed out
that “any patent which is less than six year old is regarded as a recent one”. This ‘six
year rule’ was followed in various cases to obtain the interim injunction till myth of
presumption of validity was served a death knell by Supreme court in 1982.The
Supreme Court of India categorically rejected the argument that there is a
presumption of validity of patent in the case of Biswanath Prasad Radhey Shyam vs.
Hindustan Metal Industries [AIR 1982 SC 1444] and ruled that

“It is noteworthy that the grant and sealing of the patent, or the decision
rendered by the Controller in the case of opposition, does not guarantee the validity
of the patent, which can be challenged before the High Court on various grounds in
revocation or infringement proceedings. It is pertinent to note that this position, viz.
the validity of a patent is not guaranteed by the grant, is now expressly provided
in Section 13(4) of the Patents Act, 1970.”

In Wockhardt Limited vs. Hetero Drugs Ltd., & Ors [2006(32) PTC 65 Madras
(DB)] rule of recent grant suffered a shock when The Division Bench ruled that “the
appellant namely Messrs. Wockhardt Limited is the only company in India got
exclusively market right patent which are for limited period of 5 years and, unless
the same are exercised in the said period, it will be render useless. When this period
of short tenure is sought to be disturbed over the rights by any other party, which
has no prima facie right by virtue of process patent and EMR granted to the
appellant, then the Court has to necessarily prevent the other party, by affording
appropriate relief in favour of the plaintiff by granting the injunction sought for.
In the ‘banana leaf patent’ case Mariappan vs A.R.Safiullah on 30 June, 2008
the Madras High Court shared its bafflement at the ‘six year rule’ and ruled that
“As regards the submissions made by the learned senior counsel appearing
for the appellant in O.S.A.No.263 of 2006 that a patent which is less than 6 years old
can be regarded as a recent one, as held in Manicka Thevar’s case reported in AIR
1965 Madras 327, the said view has lost its significance in view of the latest
development in the field of science and technology. Now, the patent life is
very short in view of new innovations and inventions which are frequently taking
place, wherein a new product is losing its significance and market very quickly.”
Again in the year 2008 in F. Hoffmann La Roche Ltd. Vs. Cipla Limited, [148
(2008) DLT 598,] this “six-year rule” came under criticism of the court to determine
prima facie validity of a patent. The Court ruled that:

“63. One must confess bafflement at the ‘six-year’ rule preventing courts in
India from granting interim injunction. No provision of law or rule was brought to the
notice of the court in support of this practice. The six-year rule appears to have
crept in Manicka Thevar, and subsequently picked up in other judgments to be
developed into a universal rule. The rule can be explained as one cautioning the
courts that patent infringement actions stand on a slightly different footing, (from
other cases) where the courts should not automatically grant injunction on prima
facie satisfaction of infringement, since patents can be challenged, even in defense.
It has to be seen as a rule of caution and prudence rather than a rigid,
ritualistic formula of mathematical application….”

Presumption of validity of patents remained suspect there after unless the
defence failed to invalidate. But the courts invariably consider and look into the
recent grants and old patent while considering the grant of injunction with no
applicability of six year rule.

Non-working of patent in India and denial of injunction

Another factor which worked against the grant of interim injunction was the
non- working/non user of patent. In Franz Xaver Huemer Vs. New Yash Engineers
[AIR 1997 Delhi 79] Division Bench (DB) of High Court of Delhi (DHC) confirmed
Trial court’s Order vacating interim injunction inter alia on the ground of nonuser/
non-working. In Glaverbel S.A. Vs. Dave Rose & Ors [2010 (43) PTC 630 (Del)]
Single Judge (SJ) followed the decision in Franz Xaver Huemer (supra) and ruled
that “The test which has to be applied is whether there is an actual commercial
working/ exploitation of Invention in India..” The court ruled that “no cogent
evidence for commercial working is placed on record except the averments in
various pleadings.” Based on the facts of non-working by plaintiff Ad-interim
injunction was denied. Similarly, in Sandeep Jaidka Vs. Mukesh Mittal & Anr. [(2014)
59 PTC 234 (Del)] SJ of Delhi high court followed the decision in Franz Xaver
Huemer (supra). And ruled that “It is now well settled that if patent has not been
sufficiently exploited in India and there is no user of the said patent in commercially
viable form in India, the court may tilt the discretion in the interim stage in favor of
the defendant and Interim injunction was denied.”

In Novartis Ag And Anr. vs Mehar Pharma And Anr. on 23 December, 2004
[2005 (3) BomCR 191], [2005 (30) PTC 160] Single Judge noted that the plaintiffs
do not manufacture the drug in India and they said they would meet the
requirement of this drug by import. Expressing concern if interim injunction is
granted in favour of the plaintiffs, the manufacturing and marketing network of the
defendants so far as the drug is concerned would be dismantled. The Court further
stated that if due to any problem, the plaintiffs cannot make available the drug in
required quantity in India it obviously will be disastrous for the patients. Court in this
case ruled that “This consequence is foreseeable, therefore in my opinion, the Court
should not pass any interim order which may possibly lead to such a situation.”

Cipla case effect on injunctions

Normally every patent infringement matter for grant of ex party interim
injunction followed the treaded path of general principles governing the temporary
injunction as contained in order 39 rr 1and 2 of the CPC. In F. Hoffmann-La Roche
Ltd. And Anr. vs Cipla Limited on 19 March, 2008 [48 (2008) DLT 598, MIPR 2008
(2) 35] however, Delhi High Court refused to grant interim injunction in public
interest but also observed that “This Court is not unmindful of the fact that if no
equitable balancing order protecting its interest is made at this stage, there is a
likelihood of the plaintiff being prejudiced at the final stage.” And directed the
defendant inter alia to maintain faithful accounts of its sale of the product Erlocip
and file quarterly accounts in the Court.

Applicability of Order 39 of CPC

The order 39 of CPC which deals with interim or temporary injunction in
general also applies to intellection property right violation cases. However, while
taking up injunction matter in pharmaceutical patents courts are over cautious in
applying the general provisions of order 39 of CPC. Recently, in Natco Pharma Ltd
Vs Bristol Myers Squibb Holdings Ireland Unlimited Company& Ors Delhi High Court
DB categorically stated that

“Matters involving alleged infringement of patents constitute a separate species of
litigation. A further sub-species would be those concerning pharmaceutical patents. This is because the law concerning them under the Patents Act, 1970 and other related legislation has peculiar elements that would have to be kept in view by the Court. [Para 29].

This clearly indicates that the courts are reluctant to squarely apply general
provisions under section 37 and order 39 of the CPC in patent right violation
matters. Unsurprisingly, the courts became little sensitive and innovative in the
matters involving alleged infringement of patents. The courts considered patent
infringement particularly those concerning pharmaceutical patents where alleged
infringers were generic manufacturers differently when the matter of interim
injunctions came up for its consideration. Though courts discretion even in such
cases remained tied to the guidelines of the Supreme Court on law of injunction in
general.

Ex Party injunction in patent infringement

In recent decision Delhi high court in Sterlite Technologies Ltd. Vs ZTT India
Ltd did not hesitate to experiment with granting the interim injunction even where
court was not able to form an opinion of prima facial case. The Singe Judge (SJ)
went on further to justify it by giving reason that

“if the defence is of denial of infringement and the defendant proves such
defence, the interim order of restraint against infringement will not cause any harm
to the defendant”. The SJ also observed that “the life of a patent is limited and
further considering the time taken in determination, whether there is infringement of
patent, non-grant of interim injunction often results in, the defendant, even if
ultimately found to have infringed the patent, till the said determination, continuing
to reap fruits of infringement.” The SJ also stressed that “This experimentation, with
interim orders in patent infringement suits, is the need of the hour.”

Unsurprisingly, the courts became little sensitive and innovative in the
matters involving alleged infringement of patents as in this case. In this case SJ
deviated from the guidelines of the Supreme Court on law of injunction as set out in
catena of cases like in Wander v. Antox [(1990) (Supp) SCC 727], Dorab Cawasji
Warden v. Coomi Sorab Warden [(1990) 2 SCC 117], and Seema Arshad Zaheer v.
Municipal Corporation of Greater Mumbai [(2006) 5 SCC 282].

Injunction and appeal

This experiment of SJ was short-lived when similar order was passed by same
Judge in Natco Pharma Ltd Vs Bristol Myers Squibb case. Unlike Sterlite case which
was ex party decision, Nacto Pharma (defendant) in this case was proactive to
contest the grant of the interim injunction and they had filed a caveat. When the
same Judge granted the interim injunction on the same reasoning as in Sterlite the
appeal was preferred. In the appeal DB of Delhi High Court came down heavy on the
reasoning of the Sterlite case and stayed the grant of injunction in Natco case. Court
while returning the case back to the SJ directed that

The learned Single Judge, will after hearing the parties, pass a fresh order uninfluenced by the order in Sterlite Technologies Ltd. (Supra)” The DB agreeing to the possibility of different treatment to patent infringement held that

“Although, there are special features in litigation involving infringement of
patents, that still would not obviate the Court dealing with the question of grant of
interim injunction to record the three important elements as have been stressed in a
large number of decisions of the Supreme Court.”

“Trilogy” of granting Infringement

This decision in fact categorically accepted the courts to became little
sensitive and innovative in the matters involving alleged infringement of patents but
such innovation by the court would not extend its discretion not to record the three
important principle as have been laid down by large number of decisions of the
Supreme Court. The courts considered patent infringement particularly those
concerning pharmaceutical patents where alleged infringers were generic
manufacturers as special category. This perhaps happened as the law concerning
such injunction involved certain public interest provisions under the Patents Act,
1970 which was amended to included product patents for pharmaceuticals in India.
This case re-established that the courts in India should apply the general legal
principle such as “prima facie‟ case, “balance of convenience‟, and “irreparable
hardship or loss even to patent infringement cases for granting ex party injunction.

Conclusion

As the law of preliminary injunction continues to consolidate, the interim
injunctions are becoming more and more difficult to obtain, especially at the first
Courts level. The interim injunctive relief in the patent cases particularly
pharmaceutical block busters are contested on public interest to defy the automatic
grants of injunction. This appears to be a relief for those defending against patent
infringement lawsuits. The silver lining for patentees, however, is that, where courts
are satisfied that the patent is valid and infringed the grant of permanent injunctive
relief is almost automatic. Grant of interim injunction is not a punitive measure but it
is an equity demand in cases where the guidelines set by Supreme Court in cantina
of cases are fulfilled. Even in other cases where interim injunction is not granted due
to public interest issues such as availability of life saving drug the court invariably
direct the defendant to maintain the accounts till the disposal of the suit. It is not
the number of cases where you were able to get favourable injunction but an expert
legal opinion to meticulously craft your evidence to tip the scale of balance of
convenience in your favour be as plaintiff or a defendant. The tests applied by the
courts for grant of interim injunction are not rigid but flexible. The courts are not
averse to be adapted to the relevant circumstances, and not remain rigid and
prescribed. Indian courts are well guided by the guidelines of the Supreme Court in
this matter. The courts are exercising extra caution to deal with the cases relating to
grant of injunction in patent infringement cases. However, where the court falters to
follow the guideline appeal courts are not hesitant to return the cases for decision on
merit based on the well settled guideline. In cases where an ex parte interim
injunction is granted it is for a very limited duration in time, until a hearing can be
convened to give an opportunity of heard to the defendant. This is an area of
jurisprudence which we believe is already consolidated to certain extent. Courts in
India do not hesitate in appropriate cases to grant even Qua timet injunction in
patent cases as well.


Consolidating Law of injunction in patent infringement -Indian experience by DPS Parmar

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Article was first published in Lexology

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