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Unilin Beheer B.V. v. Balaji Action Buildwell

Delhi High Court

Jan 29, 2018

Judgment

CaseIQ

Smart Summary (Beta)

Factual and Procedural Background

The defendant/applicant sought a stay of proceedings in a patent infringement suit filed by the plaintiff, contending that the patent's term had expired and that the defendant had filed a revocation petition before the Intellectual Property Appellate Board (IPAB) under Section 64 of the Patents Act, 1970 prior to the institution of the suit. The plaintiff opposed the stay, arguing that the IPAB proceedings had become infructuous due to the expiry of the patent term and that the civil court should proceed with the suit for damages. The defendant/applicant also sought permission to withdraw the revocation proceedings before the IPAB and file a counter-claim for revocation in the present suit. The court considered the concurrent jurisdiction of the IPAB and the civil court in matters of patent revocation and infringement, and the procedural propriety of staying the suit pending the IPAB decision.

Legal Issues Presented

Whether proceedings in a patent infringement suit should be stayed pending the outcome of a revocation petition filed before the IPAB under Section 64 of the Patents Act, 1970.
Whether the concurrent jurisdiction of the IPAB and the civil court under the Patents Act affects the precedence of proceedings and the grant of stay.
The effect of expiry of the patent term on the continuation of revocation proceedings before the IPAB and the civil court.
Whether a defence on validity under Section 107(1) of the Patents Act is equivalent to a counter-claim for revocation under Section 64.
The procedural implications and interplay between filing a revocation petition before IPAB and a counter-claim for revocation in the civil court.

Arguments of the Parties

Defendant/Applicant's Arguments

The term of the patent has expired, and the defendant had filed a revocation petition before the IPAB prior to the suit.
Section 113(2) of the Patents Act implies a stay on infringement proceedings pending revocation proceedings.
The defence taken in the suit challenges the validity of all claims of the patent, which would be equivalent to revocation.
The defendant is precluded from filing a counter-claim for revocation in the suit because of the prior revocation petition before the IPAB, relying on Dr. Aloys Wobben vs. Yogesh Mehra.
It would be appropriate to stay the civil suit pending the outcome of the IPAB revocation proceedings since a successful revocation would render the infringement suit unsustainable.
The defendant suggested transferring the IPAB proceedings to be tried along with the civil suit or withdrawing the IPAB proceedings to file a counter-claim in the suit.

Plaintiff's Arguments

The IPAB proceedings have become infructuous due to expiry of the patent term, and the IPAB has been disposing of such petitions on that ground.
The civil court is the appropriate forum to decide the suit for damages as IPAB cannot grant relief for infringement or damages.
The proceedings before IPAB are delayed due to pendency and appeals, making it expedient for the civil court to continue the suit.
The plaintiff has not instituted any other infringement suits on the same patent.
The plaintiff raised no objection to the defendant withdrawing IPAB proceedings and filing a counter-claim in the suit.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Dr. Aloys Wobben vs. Yogesh Mehra, AIR 2014 SC 2210	Bar on filing a revocation petition before IPAB after making a counter-claim for revocation in civil suit and vice versa.	The court relied on this precedent to conclude that the defendant/applicant cannot maintain revocation proceedings before IPAB and a counter-claim simultaneously, permitting withdrawal of IPAB proceedings to file counter-claim in the suit.
Patel Field Marshal Agencies vs. P.M. Diesels Ltd., 2017 SCC OnLine SC 1388	Interpretation of stay of suit for infringement pending rectification proceedings under the Trade Marks Act, including the interplay between civil court and IPAB jurisdiction.	The court analogized the principles from this trademark case to patent proceedings, emphasizing concurrent jurisdiction and precedence of civil court proceedings despite pending revocation petitions before IPAB.

Court's Reasoning and Analysis

The court examined the scope of Section 113(2) of the Patents Act and found that it only provides for costs in subsequent suits after issuance of a certificate of validity, not an automatic stay or damages. There was no case law clarifying whether a "subsequent suit" means one after grant of certificate or after institution of revocation proceedings.

The court noted that the defendant's defence of validity suffices without a counter-claim and that concurrent jurisdiction is vested in both IPAB and the civil court for revocation matters. Unlike the Trade Marks Act, the Patents Act allows concurrent jurisdiction, and thus no ipso facto stay arises under Section 113.

Relying on the Supreme Court's decision in Patel Field Marshal Agencies involving trademark law, the court reasoned that while the Trade Marks Act mandates stay of infringement suits pending rectification proceedings, the Patents Act does not have an equivalent provision and civil proceedings take precedence.

The court observed that the expiry of the patent term complicates the status of IPAB proceedings, which may be disposed of as infructuous but no authoritative ruling exists to that effect. The court found it more expedient to continue the suit rather than stay it pending IPAB decision, as IPAB cannot grant relief for infringement or damages.

The court also noted that decisions of IPAB are often delayed due to appeals and writ petitions, further justifying continuation of civil proceedings.

It was held that taking a defence under Section 107(1) or filing a counter-claim under Section 64 for revocation are legally equivalent, and the presence of the Registrar of Patents in counter-claims does not alter this equivalence.

Finally, the court permitted the defendant to withdraw the revocation proceedings before IPAB and file a counter-claim in the suit, thereby consolidating the issues before the civil court.

Holding and Implications

The court dismissed the defendant's application for stay of proceedings in the patent infringement suit pending the revocation petition before the IPAB.

The court granted liberty to the defendant to withdraw the revocation proceedings before the IPAB and file a counter-claim for revocation in the civil suit within thirty days. If no counter-claim is filed within the stipulated time, the liberty shall cease and no extension will be granted. Subsequent procedural steps and timelines for written statements, replication, and framing of issues were outlined.

The decision implies that civil courts will generally take precedence over IPAB in infringement suits involving revocation defences, particularly where the patent term has expired and relief sought is limited to damages. No new precedent was set, but the ruling clarifies the procedural approach to concurrent jurisdiction and the interplay between IPAB revocation proceedings and civil infringement suits.

Show all summary ...

* IN THE HIGH COURT OF DELHI AT NEW DELHI

%^thDate of decision: 29 January, 2018.

+ CS(COMM) 1683/2016 UNILIN BEHEER B.V. ..... Plaintiff

Through: Mr. Pravin Anand, Mr. Dhruv Anand, Ms. Udita Patro and Mr. Shamim Nooreyezdan, Advs. Versus

BALAJI ACTION BUILDWELL ..... Defendant

Through: Mr. Hari Subramaniam and Mr. Sanuj Das, Advs.

CORAM:

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW IA No.15331/2017 (of defendant u/S 151 CPC)

1. On 20^thDecember, 2017, the following order was made:

"1. The defendant / applicant seeks stay of proceedings in this suit for infringement of patent and for ancillary reliefs, contending that the term of the patent has expired and the defendant / applicant, prior to institution of this suit, had approached the Intellectual Property Appellate Board (IPAB) under Section 64 of the Patents Act, 1970 for revocation of the patent.

2. The counsel for the plaintiff appears on advance notice.

3. I have enquired from the counsel for the defendant / applicant, whether there is any provision in the Patents Act analogous to Section 124 of the Trade Marks Act,

1999.

4. The counsel for the defendant / applicant has drawn attention to Section 113, particularly to sub Section (2) thereof, to contend that there has to be an implied stay of proceedings in the suit.

5. Section 113(2) of the Patents Act only provides that if in revocation proceeding, certificate of validity has been issued, then in any subsequent suit before a Court for infringement / revocation of patent, the patentee, if succeeds, will be entitled also to payment of full costs, charges and expenses of and incidental to any such suit or proceeding. The same does not provide for award of damages for infringement.

6. I have enquired from the counsel for the defendant / applicant, whether there is any judgment interpreting Section 113(2) i.e. whether the „subsequent suit" referred to therein has to be a suit subsequent to the grant of certificate of validity or subsequent to the institution of the proceedings for revocation.

7. Both the counsels state that there is no case law on the subject till now.

8. I have enquired from the counsel for the defendant / applicant that there being no provision in Section 113 for grant of damages and the provision being confined only to costs, why should proceeding in the suit of the plaintiff, which now survives only for damages, be stayed. It has further been enquired, whether the defendant / applicant in the written statement in the present case has taken the defence of validity of the patent.

9. The counsel for the defendant / applicant states that though a defence of validity of a patent has been taken but no counter claim in that respect has been made.

10. In my understanding, no counter claim is required to be made and a defence of validity would suffice and an issue framed and finding thereon will suffice inasmuch as without the same, the provision permitting such a defence would not make any sense.

11. It prima facie appears that once concurrent jurisdiction has been vested in IPAB as well as in this Court, to go into the question of validity, there can be no ipso facto stay under Section 113 of the Patents Act.

12. The counsel for the defendant / applicant seeks adjournment to argue.

13. List on 29^th January, 2018 as already scheduled.

14. Though the counsel for the plaintiff seeks time to file reply but the question being only legal, no need for reply is felt."

2. On request of the counsel for the defendant/applicant, the proceedings were adjourned to today.

3. The counsel for the defendant/applicant has today drawn attention to Section 114(1) of the Patents Act and has contended that the defence taken by the defendant/applicant in this suit would only result in invalidity of either one or all the claims of the plaintiff's subject patent and will not result in revocation of the patent and the patent would remain on the register and entitle the plaintiff to amend the claim/s held to be invalid. Per contra, it is contended that if the defendant/applicant succeeds in the Revocation Petition filed before the IPAB, the patent would be taken off the register and no claim of the plaintiff would survive.

4. On enquiry, whether the application before the IPAB was filed before the institution of this suit or after the institution of the suit, the counsel for the defendant/applicant states that though the defendant/applicant had missed the deadline of one year for applying for revocation before the Registrar but filed the application for revocation of

the patent of the plaintiff subject matter of this suit before the IPAB well before the institution of this suit.

5. On further enquiry, it is stated that the defendant/applicant in its defence in this suit is impugning the validity of all claims made by the plaintiff with respect to the subject patent but it is contended that as long as the patent remains on the register and has not been removed, the plaintiff can still amend the claims.

6. On enquiry, whether the claims can be amended, after the validity of the patent has expired, the answer is in the negative.

7. Section 107(1) of the Patents Act entitles the defendant in a suit for infringement of patent to in its defence take every ground on which it may be revoked under section 64. However that leads me to the inference that if the defendant in its defence has impugned all the claims which constitute a patent and the Civil Court upholds such a defence, the effect thereof would be no different from the order of the IPAB revoking the patent; such a decision would of course be inter parties and not in rem, but may be relied upon by others in infringement suit filed by the patentee.

8. The counsel for the plaintiff, on enquiry, whether the plaintiff has instituted suit for infringement of the subject patent against any other person, replies in the negative.

9. The counsel for the defendant/applicant has also relied upon Dr. Aloys Wobben Vs. Yogesh Mehra AIR 2014 SC 2210 to contend that the defendant/applicant having sought revocation of the patent under Section 64 before the IPAB before the institution of the present suit, was precluded from filing a Counter-Claim in the present suit for revocation of

the subject patent. It is further contended that now that the term of validity of the patent has expired and the only relief which the plaintiff can be entitled to in this suit is of damages, it will be in the fitness of things that the previously instituted proceedings before the IPAB are allowed to be decided and the trial of the present suit stayed till then, inasmuch as in the event of the defendant/applicant succeeding in the Revocation Petition, the suit of the plaintiff will have to be dismissed. It is further contended that even if IPAB holds one of the claims of the plaintiff to be invalid, the plaintiff still would not be entitled to maintain a suit for infringement and for damages.

10. I have enquired from the counsel for the defendant/applicant that if the proceeding before the IPAB and before this Court were to be the same, whether not it will be more convenient to have the proceedings before this Court instead of before the IPAB, inasmuch as during the course of recording of evidence in this suit with respect to the validity of the patent challenged in the defence, evidence on the aspect of infringement and damages, if any also will be led simultaneously.

11. The counsel for the plaintiff has argued that the proceedings before the IPAB have in fact become infructuous on the term of validity of the patent having expired. It is stated that IPAB has been disposing of revocation proceedings recording the said reason. It is further contended that IPAB has become functional, after two and a half years now only and has a huge pendency and the proceedings before IPAB would take much longer than disposal before this Court.

12. I have enquired from the counsels, whether there is any difference in the enquiry into validity of the patent, dependent upon whether the defendant has only taken a defence under Section 107(1) of the Patents Act or has filed a Counter-Claim under Section 64 of the Patents Act for revocation of the patent.

13. The counsel for the plaintiff states that there is no difference and the efficacy of the order on such a defence and of an order on the Counter- Claim would be the same.

14. The counsel for the defendant/applicant states that if a defendant succeeds on the defence of invalidity, only with respect to some of the claims constituting the patent, the patent would not be held to be invalid. He however agrees that it would be so even in case of Counter-Claim.

15. The counsel for the defendant/applicant next contends that if a defendant makes a Counter-Claim for revocation of patent and succeeds therein, it will be a judgment in rem and not a judgment in personam and the Registrar will revoke the patent. It is also stated that in a Counter- Claim for revocation of patent, the Registrar of Patents would also be a necessary party.

16. I have, in the facts aforesaid, considered, whether to stall the proceedings in this suit awaiting the outcome of the IPAB in the application filed by the defendant for revocation of patent of the plaintiff. Though the counsel for the plaintiff has contended that IPAB in the past has been disposing as infructuous such applications, during the pendency of which the term of the patent lapses, but has fairly admitted that there is no order of the IPAB holding/laying down that the application

for revocation of the patent becomes infructuous on lapsing of the term of the patent sought to be revoked. It is thus today not known what will be the fate of the application for revocation. Having given thought to the matter, I have for the reasons appearing hereinafter concluded that the proceedings in this suit are not to be stalled. My reasons are as under:

A. The Patents Act, vide Section 64 thereof has vested the jurisdiction to revoke the patent in the IPAB as well as in a Counter-Claim in a civil suit for infringement of the patent. Unlike the Trade Marks Act, Section 57 whereof vests the jurisdiction to cancel the mark only in the Registrar of Trade Marks or the IPAB, and not in the Civil Court, Section 107 of the Patents Act confers concurrent jurisdiction in the IPAB and the Civil Court to grant the relief of revocation.

B. Supreme Court in Patel Field Marshal Agencies Vs. P.M. Diesels Ltd. 2017 SCC OnLine SC 1388 was concerned with the following questions:

"In a situation where a suit for infringement is pending wherein the issue of validity of the registration of the trade mark in question has been raised either by the plaintiff or the defendant and no issue on the said question of validity has been framed in the suit or if framed has not been pursued by the concerned party in the suit by filing an application to the High Court for rectification under Sections 111 read with Section 107 of the Trade and Merchandise Marks Act, 1958, whether recourse to the remedy of rectification under Sections 46/56 of the 1958 Act would still be available to contest the validity of the registration of the Trade mark."

and held:

(i) that the Trade Marks Act of the year 1958 and 1999 suggest that if a proceeding for rectification of the Register in relation to the trade mark of either the plaintiff or the defendant is pending and a suit for infringement is filed wherein the said plea is raised either by the plaintiff or the defendant, the suit shall remain stayed;

(ii) that if no proceeding for rectification are pending on the date of filing of the suit and the issue of validity of registration of the trade mark of the plaintiff or the defendant is raised and the same is prima facie found to be tenable, an issue to the aforesaid effect shall be framed by the Civil Court and the suit will remain stayed for a period of three months from the date of framing of the issue so as to enable the concerned party to apply for rectification;

(iii) that if no such application for rectification is filed despite such order of the Civil Court, the plea with regard to validity of registration of trade mark shall be deemed to have been abandoned and the suit shall proceed in respect of any other issue that may have been raised therein;

(iv) that in case where the issue of invalidity is raised or arises independent of a suit, the prescribed statutory authority will be the sole authority to deal with the matter; however, in a situation where a suit is pending (whether instituted before or after the filing of a rectification application) the exercise of jurisdiction

by the prescribed statutory authority is contingent on a finding of the Civil Court as regards the prima facie tenability of the plea of invalidity;

(v) that in a situation where the Civil Court does not find a triable issue on the plea of invalidity, the remedy of an aggrieved party would not be to move the IPAB for rectification but to challenge the order of the Civil Court in appeal - this is necessary to avoid multiple proceedings on the same issue and resultant conflict of decisions;

(vi) that the intention of Legislature is clear; all issues relating to and connected with the validity of registration have to be dealt with by the Tribunal and not by the Civil Court;

(vii) that in cases where the parties have not approached the Civil Court, the statute provides an independent statutory right to an aggrieved party to seek rectification of a trade mark;

(viii) that however, in the event the Civil Court is approached, inter alia, raising the issue of invalidity of the trade mark, such plea will be decided not by the Civil Court but by the Tribunal under the 1958 Act;

(ix) that the IPAB (under the 1999 Act) will however come into seisin of the matter only if the Civil Court is satisfied that an issue with regard to invalidity ought to be framed in the suit; once an issue to the said effect is framed, the matter will have to go to the IPAB and the decision of the IPAB will thereafter bind the Civil Court;

(x) that if despite the order of the Civil Court, the parties do not approach the IPAB for rectification, the plea with regard to rectification will no longer survive;

(xi) the jurisdiction of rectification conferred by Sections 47 and 57 of the 1999 Act is the very same jurisdiction that is to be exercised under Section 124 of the 1999 Act when the issue of invalidity is raised in the suit but by observance of two different procedural regimes.

C. Though there is no equivalent in the Patents Act of Section 124 of the Trade Marks Act which was for interpretation in judgment aforesaid, but following the spirit of what has been held inspite of Section 124 in the Trade Marks Act, it has but to be held that the civil proceedings will have precedence, if revocation is not applied for till the institution of the suit;

D. Though the plaintiff in the present case has prior to the institution of this suit availed of the remedy of revocation before the IPAB but still, considering the fact that the jurisdiction of revocation has been conferred concurrently in the IPAB and in the Civil Court in a Counter-Claim in a suit for infringement, the proceedings in the Civil Court will have precedence;

E. The principle of Section 10 of the Code of Civil Procedure, 1908 (CPC) cannot be attracted to a proceeding before the IPAB and the Civil Court;

F. Though a perusal of Dr. Aloys Wobben supra shows that the Supreme Court in that case also considered the applicability of Section

10 of the CPC to the matter aforesaid but ultimately concluded that there is a bar to filing of a Revocation Petition before the IPAB, after making the Counter-Claim for revocation and to filing of the Counter- Claim, after making the Revocation Petition;

G. Even if the analogy of Section 10 of CPC were to apply, it is felt that since the IPAB in not in a position to grant the relief of infringement if any and consequential relief, now that the term of validity of the patent has expired, it is more convenient and expedient that the proceedings in this suit continue, rather than be stayed during the pendency of the revocation proceedings before the IPAB; H. In my view, the effect of taking the defence under Section 107(1) of the Patents Act and/or of making a Counter-Claim under Section 64 of the Patents Act would be the same and the presence of the Registrar of Patents in a Counter-Claim would not make any difference;

I. It is also found that the decisions of IPAB are often subject matter of writ petitions, in this Court first before the Single Judge and then in appeal before the Division Bench and considerable time is thus spent before the said decision of IPAB attains finality. For this reason also, it is felt that the aspect of validity of the patent be also decided before this Court instead of the proceedings in this suit remaining stayed till the decision of the IPAB on the application for revocation of patent and/or till the said decision attains finality.

17. The counsel for the defendant/applicant then suggests that the revocation proceedings before the IPAB be transferred to be tried along with this suit.

18. Though the counsel for the plaintiff has no objection thereto but considering this Court being a Civil Court/Commercial Division, the said power cannot be exercised by me.

19. The counsel for the defendant/applicant has then contended that the defendant/applicant be permitted to withdraw the revocation proceedings and to file a Counter-Claim in this suit.

20. The counsel for the plaintiff has no objection.

21. Though I have hereinabove concluded that there is no difference between taking a defence of invalidity on the same grounds on which revocation can be sought and making Counter-Claim for revocation but it is deemed appropriate to grant liberty to the defendant/applicant therefor. The defendant is thus permitted to withdraw the revocation proceedings pending before IPAB and to file a Counter-Claim in this suit.

22. The application is dismissed with liberty aforesaid.

IA No.1230/2018 (for condonation of 10 days delay in filing reply to IA No.13688/2017)

23. Allowed and disposed of.

IA No.1231/2018 (for condonation of 10 days delay in filing reply to IA No.13689/2017)

24. Allowed and disposed of.

IAs No.13688/2017 & 13689/2017

25. To be taken up for consideration on 2^ndAugust, 2018.

CS(COMM) 1683/2016

26. The defendant, if so desires, may within thirty days hereof file a Counter-Claim to this suit for revocation of the patent, after withdrawing the proceedings under Section 64 of the Patents Act pending before the IPAB. If no such Counter-Claim is made within thirty days hereof, the aforesaid liberty shall cease to exist and the time shall not be extended.

27. If Counter-Claim is filed, written statement thereto be filed within further thirty days.

28. Replication thereto, if any be filed within yet further thirty days thereafter.

29. The parties to, before the next date of hearing, file affidavits of admission/denial of each other's documents, if any filed in the Counter- Claim.

30. List for framing of issues, if any and for consideration of all pending applications on 2^ndAugust, 2018.

RAJIV SAHAI ENDLAW, J.

JANUARY 29, 2018

Bs..