1. The first appellant claims to be the Inventor of Patent No. 165069/10414, dated 7-7-1987 used as Ultrasonic Metal Hardness Tester (for short UMHT) and the second appellant is given the exclusive licence to exploit the said Patent. The second appellant claims to be manufacturing and selling the said Hardness Tester for several years. The second respondent is stated to be an employee with the second appellant and had access to the confidential information in relation to the said Hardness Tester. After the second respondent ceased to be the employee of the second appellant, the second respondent attempted to utilise the said information or use the same contrary to the terms of the contract of service in developing other Hardness Tester. Inasmuch as the appellant could not file any suit until the patent was sealed, he applied for such sealing on 7-7-1987 and the patent was actually sealed on 23-2-1990 as provided under Section 24 of the Patents Act, 1970 (for short the Act). The respondents having infringed the said patent, the appellants filed a suit in the City Civil Court at Bangalore, wherein an ex parte temporary injunction was granted till the next date of hearing and respondents-1 and 2 filed a counter-claim and therefore the suit came to be transferred to this Court as provided under Section 104 of the Act. Cause of action having arisen in Durg and Coimbatore also in regard to the infringement of the patent in question by reason of the sale of UMHT, the appellants filed two suits one at Durgand another at Coimbatore and in both those suits ex parte temporary injunction had been granted on 13-12-1991 and 5-9-1991 respectively. When these orders of temporary injunction were in operation, the Supreme Court transferred on a petition by the respondents all the original suits to this Court ultimately to be tried by a single Judge.
2. The appellants filed an application before the learned single Judge under Order 39, Rule 2-A, C.P.C for disobedience of the injunction orders in force. An application also had been filed before the learned single Judge to call for an opinion from a Scientific Adviser as contemplated under Section 115 of the Act, as the matter involves complicated questions of technical nature. However, before consideration of those applications, the order under appeals came to be passed vacating the injunction granted earlier. The appellants contended that once the patent is sealed exclusive right vests with a patentee and in view of Section 108 of the Act injunction in favour of the patent holder in addition to damages or on account of profits should be granted. It is claimed by the appellants that they have demonstrated the difference between the patent of the appellant and also established the similarities between the product of the appellants in respect of which patent had been obtained and product of respondents-1 and 2. It is claimed that the appellant's patent is an invention and is in use.
3. On behalf of the appellants it is contended that the learned single Judge failed to consider that the second respondent was an ex-employee of the second appellant and as such was very much aware of the development of the patent in question and an equity lies in their favour for grant of temporary injunction. It is urged that the learned single Judge ought to have considered the application filed under Section 115 of the Act for appointment of the Scientific Advisor and not calling for a report from such Advisor has resulted in miscarriage of justice. The learned single Judge did not apply his mind to the technical aspects of the matter, which is necessary in the case of infringement to appreciate whether there is prima facie case or not. It is contended that there was no basis for the conclusion that the appellants are not manufacturing the product in relation to which the patent had been granted nor has it been sold. The learned single Judge misconstrued the scope of an action for infringement under the Act and did not appreciate the statutory right in favour of the appellants and the presumptions that arise therefrom. It is very pointedly submitted that the learned Judge ought to have given due weight to the fact that the temporary injunction has been in force from middle of 1991 onwards and ought to have allowed that status to continue and decided the case quickly rather than vacating the same.
4. The respondents denied that the appellants are exclusively entitled to the registered patent relating to the improved probe for UMHT and they had obtained the same by suppressing the facts. The respondents aver that proceedings had already been initiated to revoke the alleged patent. The Central Scientific Instruments Organisation, Chandigarh had developed a know how for the manufacture of portable UMHT with probe even prior to August, 1982. Although the second appellant had obtained a licence to use the know how for the manufacture of the said product, they did not exploit the same for a period of five years thereafter. The grant of licence to the second appellant by the Central Scientific Instruments Organisation was only on non-exclusive basis. That prior to 1983, Kawatetsu Instruments Company Limited, Japan and Kraut Kramer of West Germany were already in the field of manufacturing and selling identical instruments throughout the world. Several Companies in India like Mahindra and Mahindra, Siemens, etc., had already purchased UMHT from the said Companies prior to 1987. In support of this contention the respondents had produced a number of documents such as photographs, brochures and pamphlets with technical data issued by them. Therefore, the respondents deny the claim of the appellants that their probe is an invention.
5. The second respondent contended that he was employed by the appellants Company and he ceased to be the employee from 1986 and he denied having acquired any confidential information or technical know how of the nature suggested on behalf of the appellants for being used in the manufacture of the improved UMHT.
6. The first respondent's factory was inaugurated on 7-2-1987 and the Managing Director and Sales Manager of the second appellant attended the function when the probe was demonstrated and they even offered to take up the sole selling agency of the product and negotiations had taken place in that behalf.
7. In the course of these proceedings it is admitted that in the suits that had been transferred to this Court till the order under appeals came to be passed, a temporary injunction was in force restraining the respondents from middle of 1991. The order under appeal came to be passed on 12-12-1994. At any rate, for a period of 2½ years the injunction was in force. Whether in such cases the injunction once granted should be vacated at that distance of time or the suits should have been expedited for trial needs serious consideration.
8. An interlocutory injunction restraining the defendant from a course of action until trial of the issue with the plaintiff, is a rapid and relatively cheap way of procuring temporary relief. In effect a business competition may be cut off for good from attaining commercial success. Even without this, businessmen frequently treat the outcome of the interlocutory proceedings as settling the matter in dispute.
9. Whether such injunction will be granted has always been a matter of discretion. The motion to procure it must be proceeded with due haste and despatch and even short delay might deprive such relief unless there is reasonable explanation. An injunction will normally be granted to a plaintiff only if he gives an undertaking to make good any damages suffered by any defendant from the injunction, should the plaintiff fail at trial.
10. The usual approach until 1975, first to consider whether the plaintiff has made out a prima facie case of infringement, taking account of the apparent merits of any defence that the defendant proposed to establish at trial. Each side normally supported its case with evidence in affidavits. If a prima facie case is established, the Court then considered whether balance of convenience lay in favour of restraining defendant until trial or in leaving the plaintiff to recover damages at the trial for any infringements by the defendant in the intervening period.
11. American Cynamid Company v. Ethicon Limited . ILR 1976 KAR 426., modified the whole approach in grant of temporary injunction in cases relating to infringement of patents indicating that the new principles were in no way special to this field. Test laid down in the said decision is that the Court must first be satisfied that there is a “serious question to be tried”. Thereafter there is no need to assess relative merit by looking for prima facie case in affidavits filed by way of evidence but instead should turn at once the balance of convenience. If it appears that damages awarded at the trial will adequately compensate the plaintiff and the defendant is likely to be able to pay them interlocutory relief should not normally be granted. If damages will not be adequate to compensate the plaintiff, it becomes necessary to consider whether defendant would adequately be compensated by damages upon plaintiffs undertaking, should the plaintiff not make good his claim at trial and if damages would be adequate temporary injunction would be granted. Where there is doubt about the adequacy of the damages to one or both any factor which may affect the balance of convenience is brought into account. To illustrate, whether the defendant has yet started on his allegedly infringing course of action. If the balance remains substantially even some account can be taken ultimately on the relative strength of each party's case as revealed by affidavit evidence. This cannot, however, 2[x x x x x] be adopted where it is evident that there is no credible dispute that the strength of one party's case is disproportionate to that of the other party.
12. Three factors are of significant importance. First is the degree to which plaintiff and defendant are successfully established in business; for loss of market during interim period until trial have wide ramifications in quantifying damages which is not easy. If the defendant has not yet set up in production but plaintiff is already in market the balance may well be in the latter's favour. If both are marketing and plaintiff is struggling to gain a foot hold with a new product, again special danger to him may lead to grant of injunction. But the contrary may well apply if he is already well established and the defendant is unlikely to offer major competition in the interim. In such cases it is generally easier to assess the loss to the plaintiff in actual sales by the defendant than loss to defendant by being enjoined in competing.
13. Secondly, if either party appears to lack financial ability to meet the demand for damages the Court may operate against that party.
14. Thirdly, unnecessary delay on the part of the plaintiff will weigh against him at least if the defendant has materially altered his position in consequence.
15. The concept of the grant of interlocutory injunctions has been considered in American Cynamid Company's case. Therefore, we will only refer to the principles referred thereto which read:
(i) There is no rule that a plaintiff must make out a prima facie case. “The Court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious issue to be tried”…. So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction that the trial, the Court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought.
(ii) It is no part of the Court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed 3[agreement] and mature considerations.
(iii) If damages in the measure recoverable at common law would be an adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however, strong the plaintiffs claim appeared to be at that stage.
(iv) If, on the other hand, damages would not provide an adequate remedy for the plaintiff… the Court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial… he would be adequately compensated under the plaintiff's undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction”.
(v) It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.
(vi) Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo.
(vii) If the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party's case as revealed by this affidavit evidence adduced on the hearing of the application. This however should be done only where it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party's case is disproportionate to that of the other party”.
16. The learned Judge proceeded to hold that no material is produced so far even to establish that the appellants have in fact manufactured and sold the alleged probe, while on the other hand, the respondents had placed material to show that the alleged probe was in existence and the same had been developed and in fact marketed in India by firms from Japan and Germany. The learned Judge proceeded to take the view that no temporary injunction could be granted when the patent is only a recent one and the validity of which is seriously disputed.
17. Appellants have obtained sealing of the patent under Section 43 of the Act. Section 48 of the Act confers on the patentee the exclusive right on himself, his agents, or licensees to make, use, exercise, sell or distribute the invention in India. The grant and sealing of patent or the decision rendered by the. Authorities concerned in case of opposition does not guarantee the validity of the patent, which can be challenged in High Court on various grounds in revocation or infringement proceedings as held in Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries . 1979 2 SCC 511. This position is reiterated in5. No presumption of validity would attract to a patent granted by the Controller under this Act notwithstanding the examination and investigation made under Sections 12 and 13 thereof. Thus, in a suit for permanent injunction restraining the defendants from infringing in any manner certain patent of which the plaintiff claimed to be a proprietor and patentee the plaintiff had to make out a prima facie case about the existence of his monopoly right and its infringement by the defendant independently of the grant of the patent as such. Hence, there is a case to go for trial and on this aspect there is hardly any dispute. The question arises whether the balance of convenience would require the grant of an injunction at an interlocutory stage restraining the other parties from utilising the same when their basic defence is that such goods have already been marketed and the appellants have not manufactured or sold such goods.
18. The learned single Judge proceeded to rely upon the decision in Boots Pure Drug Company (India) Limited v. May and Baker Limited . 52 Cal. W.N 253., wherein certain principles are noticed, which govern the grant of an interlocutory injunction in the case of an infringement of patent. The Calcutta High Court therein required the plaintiff to prove three factors, namely:—
(a) They must show a prima facie case by placing material, which would lead the Court to conclude that the patent is a valid one.
(b) They must prove that prima facie there is an infringement on the part of the defendant.
(c) That the balance of convenience is in their favour.
19. It is also noticed in that decision that as a rule of prudence if the patent is a new one a mere challenge at the bar would be sufficient for refusal of the temporary injunction, but if the patent is sufficiently old and has been worked, the Court would, for the purpose of a temporary injunction, presume the patent to be a valid one and indicated that the period of six years of actual user of the patent would give rise to such presumption.
20. The learned Judge heavily relied upon the latter statement of law without examining the three aspects referred to in the Calcutta Weekly Notes. The learned Judge noticed that no material had been produced to establish that the appellants have in fact manufactured and sold the alleged probe. But, the case put forth by the appellants was that they had several orders on their hand and even as they were about to exploit the patent, the respondent started infringing the same.
21. The learned Judge noticed that no temporary injunction could be granted when the patent is a recent one and its validity is questioned. But, the two questions to be considered in this case were as contended for the appellants that prima facie case as stated by the House of Lords in American Cynamid Company's case should have been taken note of and examined the matter. Although at one time the law as to the concept of prima facie case depended on various factors, now the predominant factor is that the appellants have a case to go for trial. In fact, the learned Judge noticed this position but declined to examine the question by securing a technical opinion in relation to the prima facie validity of the patent and prima facie infringement thereof on the ground that when the main issue to be decided in the case is very question to be decided in the interim application, trial is the best process to be adopted. That means, in the view of the learned Judge there was a case to go for the trial. If there is a case to go for trial, obviously there is a prima facie case in terms of the language adopted by the American Cynamid Company's case and that law has been approved by the Supreme Court in several decisions. Even otherwise, if the principles laid down in Boots Pure Drug Company's case, are to be adopted none of the factors explained thereof has been taken note of by the learned Judge. Above all, in matters of this nature when two rival parties are contending for their respective rights to exploit the market in relation to certain goods by manufacturing the same and when one party is precluded to put forward a new product, in granting or refusal of injunction in such cases various factors have to be balanced by analysing the decision in American Cynamid Company's case. Thus, we are of the view, with great respect to the learned single Judge that he should have taken note of the fact whether prima facie case is established or not either in terms of the principles in the case of Boots Pure Drug Company or in terms of the decision in American Cynamid Company's case and also the factor that if either injunction is granted in favour of the appellants whether they should be put on terms to make good damages by offering appropriate security or depositing money or ultimately if the appellants succeed, the matter may have to go for accounting and to safeguard the interest of the appellants, respondents should be put on terms for refusal of injunction. If such process is not adopted, justice cannot be done to either party.
22. In our view, the learned Judge had not taken note of all the relevant factors necessary for such consideration. Though we do not interfere normally with orders either granting or refusing a temporary injunction, that the order made by the learned Judge glosses over several essential features of the matter, we are constrained to set aside the same and restore the status quo ante, that is the injunction granted by the trial Court originally shall continue to be in force until reconsideration of this application or we leave it to the option of the learned Judge and the parties to proceed for trial expeditiously within a time frame to be fixed by the learned Judge.
23. Temporary injunction had been granted in favour of the plaintiff and was in force till it was vacated. Whether that position should have been continued or not ought to have been considered by the learned Judge, particularly when he felt that the questions at issue could more appropriately be investigated at trial and not at interlocutory stage.
24. However, we wish to place on record that the learned Judge also while vacating the injunction had expressed a desire to dispose of the suit as expeditiously as possible and therefore it would be appropriate for the parties concerned to move the learned Judge for expeditious trial of the matter and we hope, if such an application is made, the learned Judge will certainly give priority to this matter and dispose it of on urgent basis.
25. Subject to what is stated above, these appeals stand allowed by setting aside the order under appeals and restoring status quo ante.
26. S. Rajendra Babu and
Kumar Rajarathnam, JJ.
Dated: 23-8-1995.
ORDER ON BEING SPOKEN TO
27. Certain typographical/clerical errors have crept in the order made by us on 12-7-1995 and the same shall stand corrected as follows:
(1) In para 10 sub-para (ii) in the last sentence ‘argument’ shall be read in place of ‘agreement’.
(2) In para 9.4 in the last sentence the expression ‘should’ shall be omitted.
28. These corrections shall be read as part of original order. Certified copies, if any, issued, may be recalled and corrected as above.