The Appeal is listed for hearing with a clear understanding given to the parties that the Appeal will be taken up for final disposal at the stage of admission hearing.
2. Accordingly, parties have addressed their submissions based thereon.
3. The Appellant-plaintiff filed a suit for declaration that the defendant No. 1 is not entitled to manufacture, sell, use etc. or offer for sale the product patented in favour of plaintiff titled as “GSWR and Spiral Lock Systems bearing Patent Nos. 196240 and 201177” respectively and also for a perpetual injunction to the effect as described above.
4. By way of consequential relief, the plaintiff has also prayed for damages in a sum of Rs. 5,00,000-00, with a further decree for rendition of accounts of profit and delivering to plaintiff all the products and systems used in violation of the patent.
5. The plaintiff has complained that the cause of action for filing of the suit arose in or about December, 2005, when the plaintiff came to know that the defendant No. 1 is manufacturing, selling, using and/or offering for sale the product in violation of and infringement of patented product systems owned by the plaintiff. Since violation and infringement is recurrent, the suit is filed, as can be seen from para 39 of the plaint where plaintiff has referred to the cause of action.
6. Insofar as specific grounds leading to the cause of action are concerned, it is averred in paragraph No. 27 of the plaint that the violation has become obvious in the light of what has been averred in paragraphs 25 onwards, quoting specific instance of Tender Notice No. 925/06 dated 9th December, 2006, referred to in brief as “Secunderabad Tender”, Tender Notice dated 3rd November, 2006 referred to in brief as “Bangalore Tender” and Tender Notice dated 11th September, 2006 referred to as “Bubneshwar Tender.”
7. The facts further reveal that the defendant No. 1 is found to be the lowest tenderer in relation to Secunderabad and Bangalore tenders, and furtherance to implementation of this work, the defendant No. 1 is manufacturing, selling and offering for sale the patented-based system and product. The product manufactured, sold and/or supplied by the defendant No. 1, according to plaintiff, is visually identical/deceptively similar to plaintiff's patented product, and plaintiff has tried to demonstrate it from photographs.
8. In the said suit filed on 30th March, 2007 or thereabout, the plaintiff filed an application for temporary injunction under Order 39, Rules 1 and 2, read with section 151 of Civil Procedure Code, which has been dismissed by the impugned order dated 18th June, 2007, against which present Appeal has been filed, which was circulated for the first time on 14th August, 2007, and upon order of notice before admission and appearance of the respondents, it has come up for final disposal as noted in the opening para.
9. In support of the appeal, plaintiff has strongly urged the nature of exclusive right that is available to the plaintiff under section 11A of the Patents Act, 1970. According to plaintiff, basic philosophy underlining the concept of patenting and creating exclusive right with solitary exception carved out under section 100, namely that the Govt. would be entitled “to use” the patented product or processes for its own use, meaning thereby the use must be by the Government by its own. According to plaintiff, this does not include purchases of the product or processes, or when the product or process is admittedly done by any other person and is in infringement at the behest of the Government, it ought be done only on the basis of due written authorization which has to be expressed and not implied. According to the appellant, the Government too is not exempt from a liability to compensate the patent owner under Sub-section (3) of section 100 of the Patents Act, 1970.
10. On facts of the case, according to the appellant, the Indian Railways, while giving work, was conversant about existence of the patent rights of the plaintiff. Therefore, in the tender document, Railways made it abundantly clear that the product being supplied was (1) manufactured by Garware Wall Ropes Ltd., i.e, plaintiff, or any other manufacturer (page 137 of the paper-book), (2) supply was to be backed up by proper indemnity by the defendant No. 1 to the Indian Railways against all claims towards damages, cost, royalty in relation to any license that may be necessary for manufacture and supply of the product, the subject-matter (page 122 para 15.1), (3) duty to pay royalty was on the contractor, i.e, defendant (page 76). Meaning of all these stipulations is that not only that the Union of India wanted not to ‘use the patented product itself’, but to buy it and for that purpose tender was floated and it was the duty of the seller and supplier to abide by and be answerable to the responsibility/liability towards royalty, license and consequent indemnity.
11. Sum effect of these stipulations, which are important covenants in the contract, is that if the defendant No. 1 is using the patented system or selling the patented product of the manufacturer named in the tender or otherwise, the liability in relation to all statutory obligations would be that of the defendant No. 1, and defendant No. 1 had full notice of these matters, since the tenders allotted to the defendant No. 1 have been signed by the defendants in token of acceptance of those terms.
12. Learned Advocate Mr. Valsangkar relied upon various judgments of Indian Courts as well as Courts in United States. The Judgments relied upon are, namely:—
(1) K. Ramu v. Adyar Ananda Baghavan Muthulakshmi Bhavan, MIPR 2007 (1) 0352, (2) Telemecanique and Telemecanique & Controls (I) Limited… v. Schneider Electric Industries Sa…., 2002 (24) PTC 632 (Del) (DB), (3) Midas Hygiene Industries (P) Ltd. v. Sudhir Bhatia, (2004) 3 SCC 90, and (4) Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries, (1979) 2 SCC 511 : AIR 1982 SC 1444.
13. Learned Advocate Mr. Valsangkar has also relied on various other judgments, however, those are considered to be not relevant at this stage.
14. The purpose and focus of reliance on above referred judgments is:—
(a) to demonstrate that the violation essentially follows damages;
(b) there cannot be implied authorization and it has to be express and written;
(c) the stipulation of authorization has to be construed so as to be liberal in favour of the person in whose favour patent is registered and not in favour of the Government, and
(d) sale of patented product or patented processes to the Government will fall outside the scope of authorization to manufacture etc.
15. The Indian judgments are relied upon to demonstrate the absoluteness of rights which follows by virtue of registration of patent and the onus of proof in the event of an action for revocation of patent and the defence etc. is on the defendants.
16. Learned Advocate Mr. Sunil Manohar, who appeared in support of the order, defended the Appeal more or less on the same lines on which the application for temporary injunction was defended, and relying upon two reported judgments, namely:—
(1) Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries, (1979) 2 SCC 511 : AIR 1982 SC 1444, and (2) Monsanto Company v. Coramandal Indag Products (P) Ltd., (1986) 1 SCC 642 : AIR 1986 SC 712.
urged that:—
(a) Fact of registration of patent is not like an unassailable rock.
(b) The statute pre-supposes inventiveness, scientific research etc., before issuance of patent and the and this needs continue to co-exist notwithstanding the fact of grant of registration.
(c) It can be established in an action towards infringement as a defence that the product or processes is innovative, nor research-based and that the processes and the product pre-existed.
(d) Though the averments in the plaint do indicate that the product was intended to overcome ‘the problems faced in past’, it does nowhere exhibit that the product and processes, subject-matter, is the invention and research of the plaintiff.
(e) It does not suffice saying that the plaintiff has research and development department and that they have registration of the patent in question.
(f) In fact, the product, in question, is already in use and the techniques referred to therein are so obvious and simple enough to be known by common men.
17. According to Mr. Manohar, the suit is bad for:—
(1) non-specifications of the product in the plaint and filing of Registration Certificate is not sufficient;
(2) Sub-section (3) of section 100 of the Patents Act provides for a remedy of damages which is one amongst the reliefs sought in the plaint against the defendant No. 1 and not against the Central Government;
(3) Central Government is not a party against whom remedy under Sub-section (3) of section 100 lies;
(4) Section 47 of the Act pre-supposes exclusion of absoluteness;
(5) The action of injunction is belated, when, as indicated in the plaint, cause of action accrued “to the knowledge of plaintiff” in December, 2005, and the tender was accepted in December, 2006, and the action has been taken in March, 2007, and
(6) The plaintiff's act of acquiescing with the allotment of tender disentitles the plaintiff from getting any relief on the grounds of delay, laches, estoppel and the remedy by way of damages being available and availed.
18. Limited questions, that arise for consideration, are:—
(a) Whether the plaintiff has made out a prima facie strong case of existence of patented product in its favour, and can file a suit for injunction to prevent infringement and recurring breach?
(b) Has plaintiff prima facie demonstrated that there is infringement by defendant No. 1?
(c) Has the defendant No. 1 made out a case that it has got prima facie strong defences available against plaintiff's claim of infringement under section 107 of other provisions of the Patents Act, 1970?
(d) Has the defendant No. 1 demonstrated that the plaintiff has alternate remedy of damages under sub-section (3) of section 100?
19. Plaintiff's reliance is on the fact of registration of patents, which entitles the plaintiff to absolute right by virtue of section 48, subject to exceptions. According to the plaintiff, the exceptions are not absolute and they do create an embargo on the rights of the patent holder, however, casts upon the Government a corresponding duty and obligation as well. These two exceptions are:—
(1) that the patented product ought to be used by the Government or on behalf of the Government “merely of its own use”, or may be used by any person for the mere purpose of experiment or research, including imparting of instructions to pupils, and
(2) the Government may or any person authorized in writing by the Government for the purpose, free of any royalty or remuneration to the patentee, use patented product, processes etc., such use is, however, subject to agreement as to the terms thereof and in absence of agreement as may be decided by the High Court.
20. According to plaintiff, in a suit for revocation or in defence, in an action towards infringement, the onus to prove the claim for revocation or defence is on the person so claiming revocation or claiming that the holder of patent has nothing innovative or a base of research.
21. Based on collective effect of the background of legal provisions, the fact of registration and the plaintiff's pleadings that the product, in question, is their own work of research, according to plaintiff, a very strong case on merit has been made out by the plaintiff, and the trial Court erred in declining to grant the relief sought for, which be granted by this Court by allowing this Appeal. According to the plaintiff, the infringement was proved by the very fact that the defendant had participated in the tender, has got two tenders allotted and has promised to supply to the Railways the product which imitates the patented product, and in the result, has infringed rights of the plaintiff under section 48. According to plaintiff, once the right is so established, prevention of breach can be conveniently done. Balance of convenience, therefore, favours the plaintiff. According to the plaintiff, the Government would not suffer any loss, for the reason that the defendant No. 1 can still perform the contract either by purchasing the patented product from the plaintiff, or negotiating and getting license from the plaintiff of the products which the defendant No. 1 wants to sell to the Railways.
22. On the basis of points already agitated and noted in earlier paras, the defendant No. 1 has urged that the plaintiff is urging and demonstrating the provisions in an extremely one-sided manner. According to defendant No. 1, to claim absolute right under section 48 is very easy, however, the said section 48 cannot be read in isolation. The absoluteness of rights is always subject to exceptions towards defences carved out and recognized by law. Moreover, the fact that the defendant No. 1 is working for the Government cannot be ignored and the question of authorization will have to be inferred, in as much that the law, as relied upon by the appellant, which are judgments of foreign Courts, do not in toto govern the situation in India. The format of agreement entered into, copies whereof are placed on record by the plaintiff, indicates that the agreement is signed by the Railways for and on behalf of the President of India, and though there is a mention about licenses and royalty, failure to comply is well mitigated by Sub-section (3) of section 100 of the Patents Act relied upon by the appellant itself. According to the respondent-defendant No. 1, therefore, the aspect of a prima facie case does not, in any manner, favour the plaintiff.
23. Moreover, according to learned Advocate for defendant No. 1, the provisions can never be looked into in isolation and in a close quarter. The facts of the case, namely that:—
(1) there is an agreement signed for and on behalf of the President of India;
(2) the plaintiff was one of the competitors; and,
(3) defendant No. 1 has denied the plaintiff's story of innovatiness and research, all will have to be considered together.
24. The result, which, according to learned Advocate for defendant No. 1, is that the plaintiff's submissions, claims and contentions are not as strong as pleaded and hence the plaintiff does not have a prima facie good case. The fact that the plaintiff has alternate remedy by way of damages etc. under section 100(3), for which a prayer has very well been included in the plaint, is a complete answer to aspect of irreparable loss.
25. According to defendant No. 1, therefore, in the event, plaintiff succeeds, the plaintiff's alternate prayers are well toned to meet the situation.
26. It is obvious that on showing by the plaintiff, the breach came to the plaintiff's knowledge in December, 2005. Plaintiff did not take action in the intervening period. Plaintiff has seen the defendant No. 1 participating in the contract, and after a lapse of three months of signing the agreement, the plaintiff has filed a suit. It is, therefore, a clear case that there is a delay on the part of the plaintiff in taking steps in preventing the breach of obligation on the part of defendant No. 1 in response to plaintiff's right.
27. The provisions in the tender document fastening a duty on the defendants to secure license and to pay the royalty would, at the most, make the defendant liable monetarily, when breach - infringement is proved.
28. Plaintiff has not even pleaded that product, subject-matter, is a product of plaintiff's own research and development and that the technique underlying it was never in use or knowledge of the concerned any time in past.
29. Moreover, the defendant No. 1's plea that the product for which the plaintiff claims to be innovative and hence patent does not look to a layman to be a work of art and innovation appears to be prima facie reasonable.
30. Considering the case from all angles, this Court finds that on what is shown in the plaint, the plaintiff has anticipated damages.
31. In the result, this Court has reached a conclusion that the plaintiff does not have a prima facie strong case entitling the plaintiff to get injunction against the respondents, holding prima facie that the defendant No. 1 is infringing plaintiff's right and that the infringement to be such a nature that it cannot be compensated in terms of monetary compensation.
32. The findings of the trial Court are not shown to be contrary to law. The view taken by the trial Court is possible and permissible in the facts on record. With these findings, this Court holds that the Appeal has no merit.
33. The Appeal is, therefore, dismissed. In the circumstances, parties shall bear their own costs.
Appeal dismissed.