Forbes Marshall Pvt. Ltd. v. Steam Equipments Private Ltd.

S.J. Kathawalla, J.:— This Suit is an action for copyright infringement and breach of confidence. The Plaintif has taken out the above Notice of Motion for interim reliefs.

2. Mr. Kadam, the learned Senior Advocate for the Plaintif, seeks to apply for ad-interim reliefs ex-parte and without notice. He argues that the Suit seeks to preserve and enforce proprietary rights in confidential information (which include confidential and copyright protected drawings) that was entrusted to Defendant Nos. 3 to 7 exclusively for carrying out their duties whilst they were employees of the Plaintif. These ex-employees have in turn colluded with Defendant Nos. 1 and 2 and imparted the confidential information and the copyright protected drawings to the latter for manufacturing a competing and infringing float trap. Mr. Kadam argues that if the Defendants are given notice of the Plaintif's application for ad-interim reliefs, they may make further infringing copies, make further disclosures of the confidential information and also destroy all evidence of their infringing conduct. In these premises, he submits that the Plaintifs may lose its proprietary rights and the confidentiality attached to these materials. He submits that there is a grave and imminent likelihood of the Defendants destroying the drawings to conceal their wrongdoing. In these premises, he argues that the present Application will be rendered infructuous by the delay that would be occasioned pursuant to service. For these reasons, he submits that the Plaintif should be permitted to make its application for ad-interim reliefs ex-parte and without giving notice to the Defendants. These reasons have also been supplied at paragraph 4 of the Affidavit in Support of the Motion and at paragraph 64 of the Plaint.

3. Having considered these grounds, I am prima facie satisfied that the present Application ought to be heard ex-parte and without notice for ad-interim reliefs. At this stage, I am prima facie of the view that notice to the Defendants would entail further delay and would defeat the object of the injunction.

4. According to the Plaintif, it is a pioneer and leader in the business of industrial process efficiency and energy conservation, with several decades of experience in building steam engineering, steam equipment and control instrumentation solutions. It claims that its products and services are provided to industries such as the beverage industry, brewing, cement, chemicals, and others. It further claims to design and manufacture a wide range of advanced technology instrumentation for continuous stack emission monitoring, road tunnel atmosphere sensing, and plant safety equipment, etc. The Plaintif claims that since its founding, it has acquired a vast and impressive portfolio of trade secrets, trademarks, designs and patents.

5. The present Suit has been filed by the Plaintif in respect of its proprietary rights in the confidential information that it claims to own in respect of its SOFT 31 Float Trap and its TOFT float trap. The Plaintif further seeks to enforce copyright in TOFT and SOFT 31 drawings that it claims are artistic works under the Copyright Act, 1957.

6. Mr. Kadam submits that in 1958, the Plaintif's predecessor/associate companies/etc entered into a business relationship with Spirax Sarco of UK (“Spirax”), a manufacturer of valves of various types, including Float Traps. In this relationship according to it, Spirax was not only an equity stakeholder but it also provided technical information In or around March 2015, this relationship was terminated with a mutual agreement interalia that each of the equity stakeholders, including their holding company, affiliates and associates (which included and covered the Plaintif) had and continued to enjoy unrestricted and unfettered ownership rights in the technical information that was developed. On this basis, he submits that the Plaintif is a joint owner of the technical information in relation to Float Traps, and in particular SOFT 31.

7. The Plaintif contends that SOFT 31 is a ‘Float Trap’, an industrial device used in plants to discharge accrued steam condensate. Mr. Kadam states that whilst the buoyancy principle is common and underlies each float trap, manufacturers seek to devise unique internal designs and arrangements of critical components of base, seat, float and float arm assembly, cover, cover gasket and SLR seat etc. to maximize condensate discharge performance.

8. Mr. Kadam argued that the Plaintif has also arrived at its own unique proprietary internal design and arrangement for SOFT 31. In pursuit thereof, it has expended considerable research man-hours, money and resources in carrying out buoyancy calculations, capacity testing, pressure vessel calculations, experiments with various product dimension tolerances, specifications and arrangements of critical components. He asserts that the Plaintif carried out a rigorous process of trial and error/experimentation in devising and testing internal designs and arrangements of critical components in order to conceive an optimal design that would give superior condensate discharge performance within a compact float trap. As a result of eforts, he submits that the Plaintif has developed original and proprietary know-how for manufacturing the SOFT 31 float trap which is not in the public domain. This proprietary know-how according to Mr. Kadam includes industrial drawings, an assembly instruction sheet, technical data, material specification and product dimension tolerances etc. This proprietary know-how has been described as “SOFT 31 confidential information” in the Plaint. As a result of the SOFT 31 confidential information generated by the Plaintif, Mr. Kadam claims that the unique internal design of the SOFT 31 possesses superior condensate discharge capacity. Mr. Kadam states that the SOFT 31 confidential information has been particularized at paragraph 25 of the Plaint.

9. In addition to SOFT-31, Mr. Kadam submits that the Plaintif had also developed confidential and proprietary know-how for developing its TOFT float trap. The confidential know-how in relation to the TOFT float trap for the present Suit relates to a copyright protected TOFT Float Trap drawing No. A3-1208531 pertaining to seat and pin assembly. The Plaint describes this drawing as “TOFT confidential information”. Mr. Kadam contends that the TOFT confidential information is also not in the public domain. He asserts that by utilizing the TOFT confidential information, a party can design their float trap in a unique and original manner that protects the base of the float trap from erosion and which in turn extends the longevity and lifespan of the trap. Mr. Kadam submits that the TOFT confidential information has been particularized at paragraph 26 of the Plaint.

10. Mr. Kadam has tendered a sealed envelope that contains the Plaintif's SOFT 31 and TOFT confidential information.

11. Mr. Kadam submits that this sealed envelope also contains industrial drawings relating to SOFT 31 and TOFT. He invites my attention to a tabulation of drawing numbers pleaded at paragraph 28 of the Plaint. Mr. Kadam states that these drawings relate to the critical components of the float trap such as the base, seat, float and float arm assembly, cover, cover gasket, SLR seat etc. Drawing A3-1208531 details the TOFT Seat and Pin Assembly. He contends that these parts of the float traps and their dimensions, product tolerances etc. are manufactured on the basis of the drawings of the Plaintifs. These drawings were prepared by the employees of the Plaintif during the course of employment with it and are products of skill, labour and novel thought. He asserts that these drawings all contain legends that indicate the Plaintif's ownership of copyright therein. Mr. Kadam argues that these industrial drawings are ‘artistic works’ that are protected by copyright. As the owner of copyright in these drawings, he contends that the Plaintif is exclusively entitled, inter alia, to reproduce the drawings in material form including reproduction in three dimensions of a two-dimensional work or in two dimensions of a three-dimensional work.

12. Mr. Kadam argues that the value of the Plaintif's SOFT 31 and TOFT confidential information can be assessed from the ordinary development timeline annexed at Exhibit N to the Plaint. According to this timeline, independent research and development would take approximately 66 weeks and reverse engineering would in turn take 43 weeks. On the other hand and according to the Plaintif, access to the SOFT 31 and TOFT confidential information would enable a person to copy and manufacture a float trap within a mere 17 weeks.

13. Mr. Kadam submits that Defendant Nos. 3 to 7 were former employees who worked in the Plaintif's manufacturing and customer support divisions. The Plaintif shared these trade secrets and copyrighted works with Defendant Nos. 3 to 7 in the course of their employment and for exclusively enabling them to discharge their duties as the former's employees. By dint of their terms of employment and the Plaintif's HR Policy Manual, these Defendants were put to notice that the SOFT 31 and TOFT confidential information and copyrighted drawings were materials in which the Plaintif enjoyed proprietary rights. They were entrusted with physical access and computer files, strictly for efecting the Plaintif's works. Mr. Kadam contends that Defendant Nos. 3 to 7 by dint of their roles, were also under an implied obligation to utilize this information and copyrighted works exclusively and solely for the Plaintif's benefit and purposes. Since they were imparted with these materials in confidence, Defendant Nos. 3 to 7 were under an ethical duty to maintain confidentiality.

14. Mr. Kadam submits that Defendant Nos. 3 to 6 all resigned in May-June 2017 and were relieved from service in September 2017. Defendant No. 7 appears to have been relieved from service in February 2018. He next invites my attention to relieving letters at Exhibits R-1 to R-5 of the Plaint. These letters, that appear to be countersigned by these former employees, stipulate that they are bound by the confidentiality and intellectual property rights obligations pursuant to the Plaintif's Policy Manual even after the cessation of their employment. My attention in this regard was drawn to an extract of the HR manual at Exhibit Q to the Plaint.

15. Mr. Kadam next draws my attention to emails of 21 and 23 January 2018 annexed at Exhibit S-1 and S-2 to the Plaint. He states that these emails were received at an email address supplied to Defendant No. 4 whilst he was employed by the Plaintif. It was only by way of these emails that the Plaintif learnt that Defendant Nos. 1 to 7 were getting ready to release a new float trap by the name of “SEFT 15”.

16. Mr. Kadam argues that the Plaintif was unable to find this product until October 2018. Before that time, he submits that it was only able to obtain brochures in September 2018 that indicated that Defendant No. 2 had been incorporated in October 2017, a mere month after Defendant Nos. 3 to 6 had been relieved from the Plaintif's service. These brochures further indicated that Defendant Nos. 1 to 7 had changed the name of their float trap to SLFT 15. My attention in this regard was drawn to brochures annexed at Exhibits T-1 and T-2 of the Plaint.

17. Mr. Kadam submits that the Plaintif was finally able to procure the Defendants' SLFT 15 float trap in October 2018 from one of its dealers, one Steam Flow Pvt. Ltd(“Steam Flow”). My attention in this regard was invited to an invoice of 30 October 2018 annexed at Exhibit U to the Plaint.

18. After analysis in November 2018, he submits that the Plaintif was shocked to find that other than cosmetic changes made externally, the competing SLFT 15's internal design and arrangement of critical components was identical and/or similar to the Plaintif's design and arrangement of components underlying its SOFT 31 float trap. He claims that the TOFT confidential information has also been appropriated since the Defendants have managed to have their trap express the exact erosion prevention efect that the Plaintif claims to have uniquely developed.

19. Mr. Kadam further states that Defendant Nos. 1 to 7 has infringed its rights in the industrial drawings (tabulated at paragraph 28). He argues that these Defendants have slavishly imitated and/or copied the Plaintif's works by creating three dimensional parts of the components of seat, float, float arm assembly, cover gasket, SLR seat, base etc. In support of this contention, he relies upon butter paper drawings and comparative photographs annexed at Exhibits W-1 to W-7 and X of the Plaint respectively. He submits that these butter paper renders and the photographs make it apparent that the Defendant's parts are strikingly similar to and appear to be based on the Plaintif's drawings.

20. Mr. Kadam next submits that the Plaintif engaged the services of a former Asst. Controller of Patents to independently assess the two products and the Plaintif's drawings. Mr. Kadam submits that this expert too confirmed that the Defendant's SLFT 15 float trap was based on the Plaintif's drawings and its SOFT-31 Float Traps in respect of its internal arrangement of critical components. He invited my attention to an Affidavit of the expert annexed at Exhibit V to the Plaint. I am informed that a copy of the expert's report has also been produced in the sealed envelope that has been tendered in Court.

21. Mr. Kadam draws my attention to the timing of Defendant Nos. 3 to 6's resignations and Defendant No. 2 ‘s incorporation. He argues that Defendant Nos. 3 to 6 were relieved from service in September 2017. Immediately thereafter, Defendant No. 2 was incorporated in October 2017. By January 2018, he states that the Defendants were confident of bringing their product to market by February 2018. He submits that under the Development timeline annexed to the Plaint, independent research and development activities for devising a float trap ordinarily takes 15 months. In these premises, he argues that it is inconceivable that Defendant Nos. 1 to 7 were able to bring their infringing SLFT 15 product to market within a period of about 3 to 4 months from incorporation and within one third of the time ordinarily spent in independent product development. He argues that such an accomplishment in a short time itself demonstrates that Defendant Nos. 1 to 7 have wrongfully appropriated the Plaintif's SOFT 31 and TOFT confidential information since access to the same would preclude the need to otherwise carry out further independent research. This inference according to him, is further bolstered by the timing of Defendant Nos. 3 to 6's exits from the Plaintif's employment and joining of Defendant No. 2 which in turn further suggests prior collusion to misappropriate the Plaintif's confidential information.

22. Lastly, Mr. Kadam submits that in late December 2018, the Plaintif learnt from Defendant No. 2's website (a screenshot of which is annexed to the Plaint at Exhibit Z) that it had sold goods to Defendant No. 8 in Mumbai. Defendant No. 8 carries on business as a dealer of engineering products. The Plaintif accordingly requested M/s. Steam Flow Pvt. Ltd. to place an order on Defendant No. 8 for supply of the infringing SLFT 15 float trap. Thereafter Steam Flow placed an Order on Defendant No. 8 and it was supplied the product under an invoice of 25 December 2018. In turn, Steam Flow Pvt. Ltd. raised an invoice on the Plaintif on 27 December 2018. My attention was invited to these invoices at Exhibits AA and BB to the Plaint.

23. I have heard Mr. Kadam for the Plaintif and I have perused the documents on record. Having considered Mr. Kadam's submissions, the expert's affidavit, the butter paper drawings and the comparative photographs, I prima facie find that the Defendants float trap appears to be based on the Plaintif's confidential information. Prima facie, I find that the industrial drawings of the Plaintif are ‘artistic works’ entitled to protection under the Copyright Act. Having perused the butter paper drawings and comparative photographs, I am prima facie of the view that there are striking similarities in the Defendant's parts which appear to be three dimensional depictions based on the Plaintif's drawings. Prima facie, Defendant Nos. 3 to 7 appear to be former employees of the Plaintif who agreed to be bound by their confidentiality obligations under their respective relieving letters. At this stage and prima facie, I find it difficult to believe that these employees were in a position to manufacture their own float trap within 4 months of their departure. I further note prima facie, that Defendant nos. 3 to 6 were relieved in September 2017 and thereafter immediately joined Defendant No. 2 (which appears to have been founded in October 2017). Having prima facie found that the SLFT 15 float trap appears to be based on the Plaintif's confidential information, I prima facie find that Defendant No. 2's readiness to launch this float trap in February 2018 was only on account of access to the former's confidential information and drawings. For these reasons, I am satisfied that the Plaintif has made out a prima facie case for ad-interim reliefs.

24. At this stage, I am also satisfied that the balance of convenience is in the Plaintif's favour. The Plaintif is seeking to protect confidential information, the utility and value of which only inheres if it is not released in the public domain. Prima facie, I find that Defendant Nos. 1 to 7 are in possession of its confidential information (which includes its drawings). They are thus in a position to make further disclosure to others and possibly denude the information of its confidential value. I am of the prima facie view that the non-grant of ad-interim reliefs at this stage would irreparably prejudice the Plaintif. For these reasons, I am satisfied that a case for ad-interim reliefs has been made out against the Defendants for breach of confidence and copyright infringement.

25. In view thereof, I pass the following Order:

a. Pending hearing and final disposal of the Suit, the Defendants, their agents, servants, their employees, directors, or any other person claiming through or under from in any manner, are restrained from directly or indirectly infringing the Plaintif's copyright in its drawings (listed at paragraph 28) or from making copies thereof or using the same for their SLFT 15 float trap and/or in any manner whatsoever whether in three dimensional form and/or two dimension form or from storing the same in any medium, making, manufacturing, reproducing the same or issuing copies of the same in any manner to the public so as to infringe the Plaintif's copyright in its drawings (listed at paragraph 28 and produced under sealed envelope as part of Plaintif's SOFT 31 and TOFT confidential information).

b. Pending hearing and final disposal of the Suit, the Defendants, their agents, servants, employees, directors, or any other person claiming through or under them, are restrained from doing the following acts that is to say in any manner, directly or indirectly, imparting, disclosing the same, copying, storing on any medium and/or using it for manufacturing the Defendants SLFT 15 float trap and/or any other product/process, publishing identical performance data relating to the Plaintif's SOFT 31 product and/or otherwise dealing with the confidential information of the Plaintif relating to its SOFT 31 & TOFT confidential information (particularised at paragraphs 25 and 26 and produced under sealed envelope) by way of sale of the SLFT 15 float trap.

c. Pending hearing and final disposal of the Suit, the Court Receiver, Bombay is appointed and directed to forthwith visit the Defendants premises and/or facilities as described at Exhibit “A” to;

i. Search, seize, take possession and control of all physical drawings and information of the Defendants used for the purposes of manufacturing the SLFT 15 float trap and its parts of seat, float, float arm assembly, cover gasket, SLR seat, base found at the premises and to search for, seize, take possession and control of all physical copies of the Plaintif's SOFT 31 and TOFT confidential information (particularised at paragraphs 25 and 26 and produced under sealed envelope) and its copyrighted drawings (listed at paragraph 28 and produced under sealed envelope) as may be found on the premises.

ii. To search, seize and take possession of all the computer machines of the Defendant Nos. 1 to 7 and all persons, agents, employees on site including laptops, servers, cloud servers, passwords of cloud, computers, USBs, hard disks and all other storage devices and/or mediums wherein Defendant Nos. 1 to 7's drawings and information used for the purposes of manufacturing the SLFT 15 float trap and its parts of seat, float, float arm assembly, cover gasket, SLR seat, base may be stored and wherein the Plaintif's SOFT 31 and TOFT confidential information (particularised at paragraphs 25 and 26 and produced under sealed envelope) and its copyrighted drawings (listed at paragraph 28 and produced under sealed envelope) may be stored and to take all steps to retrieve the data/information and/or any correspondence including if deleted and/or to take backups/copies pertaining to the same.

iii. To further search, seize, take control of, inventory and seal the Defendant Nos. 1 to 7's SLFT 15 or SEFT 15 float traps including all parts thereof relating to the same including seat, float, float arm assembly, cover gasket, SLR seat and base.

26. The Court Receiver shall take the assistance of any technical person including the representative of the Plaintifs as he may require for implementing the order. The Court Receiver shall be entitled to use pen drives, hard disks or other such devices/tools required for implementation of this Order. The Court Receiver will depute three teams to execute the commissions at the three sites described at Exhibit A to the Plaint. Representatives (including lawyers) of the Plaintifs may accompany these teams. The Court Receiver is authorized to take the assistance of the local Police Authorities.

27. The local Police Authorities are directed to render all assistance and protection to the representative of the Court Receiver and the teams upon production of an ordinary copy of this order duly authenticated by the Associate/Private Secretary of this Court.

28. The ad-interim Order granted will also continue till the next date of hearing on 15 January, 2019. On that date, the Court Receiver is also directed to submit a report to this Court.

29. This Order is not to be uploaded until the Court Receiver executes his commission.

30. The Plaintif is to comply with the provisions of Order 39 Rule 3 of the Code of Civil Procedure within four working days of the Court Receiver executing his commission.

31. Place the above Notice of Motion under the caption of ad-interim reliefs on 15 January, 2019.