India: Review Of Indian Patent Law In 2008

Last Updated: 10 June 2009
Article by Swathi Sukumar and Tusha Malhotra

Published in Asialaw April 2009

2008 saw several important decisions in the area of patent law, the most hotly-debated branch of intellectual property law in India. Each passing year brings on further nuanced decisions in the area of patent law.

The landscape of decisions prior to 2008 was not particularly encouraging in respect of the grant of injunctions in patent cases. It was generally accepted that any sort of challenge to the validity of a patent would lead to the Court declining an interim injunction. The cases of Bilcare v. Amartara (2007, Delhi High Court), Bilcare v. Associated Capsule (2007, Delhi High Court), Standipack Pvt. Ltd. v. M/s Oswal Trading Co. Ltd.(2000, Delhi High Court) and Garware v. Mr. Kanoi (2006, Gujarat High Court) were among the important cases where interim injunctions were declined to patentees.

Against this backdrop, the Madras High Court decision in Bajaj Auto Ltd. v. TVS Motor Company Ltd. [2008 (36) PTC 417 (Mad)] was a refreshing change. The decision granted an interim injunction to the Plaintiff, after examining the parameters for grant of an injunction in patent infringement cases.

Bajaj Auto Limited filed a suit against TVS Motor Company Ltd for permanent injunction in respect of it registered patent titled "An improved Internal combustion engine working on a four stroke principle" under patent number 195904.

The said invention relates to combustion of lean air fuel mixture in small bore ranging from 45mm to 70 mm internal combustion engine working on 4 stroke principle. TVS Motor Company filed a counterclaim of revocation citing prior art to render Bajaj's patent invalid.

Further TVS contended that the subject matter of the patent is now in public domain as it was first registered in favour of a third party 20 years ago, and had now run its course.

The Hon'ble Madras High Court reiterated the basic principles of granting interim injunction as follows:

  1. the plaintiff must prove/show prima facie case that the patent is valid and infringed
  2. balance of convenience is in favour of plaintiff, and
  3. Irreparable loss that may be caused to the plaintiff by not granting an order of injunction.

The counsel for TVS argued that section 13(4) of the Patents Act, which provides that the grant of patent does not certify for its validity, precludes a determination that a prima facie case is made out merely because a patent has been registered. The counsel for Bajaj based his arguments on a harmonious construction of section 13 (4) and section 48 of the Patents Act, which provides for the exclusionary rights of a Patentee against third parties in respect f the patented product or process.

The Court granted Bajaj an interim injunction, holding that the classic tests for grant of an injunction were satisfied.

The Court reaffirmed the antiquated yardstick to ascertain the validity of a patent that is the 6 year rule. The rule states that if a patent is more than 6 years old and there has been actual use of the patented product or process, presumption of validity of patent must be drawn.

The court applying the test of adverse effect, held that the question of whether a patent was "obvious" will have to be decided in an appropriate manner in a full fledged trial. The Court held that at the interim stage, it is sufficient to show that the patent has prima facie novelty. In the present case the Hon'ble Court was of the view that the tests of injunction were met and therefore, an interim injunction was granted.

The Madras High Court in Mariappan v. A. R. Safiullah [2008 (38) PTC 341 (Mad.)], considered the issue of whether a patent could be considered prima facie valid, by virtue of registration under the Patents Act.

The provision in question was Section 13(4) of the Patents Act. In the facts of the case, the Plaintiff was the registered owner of the patent for "food-grade laminated paper, method and apparatus for manufacture the laminated paper".

The Plaintiff also held a design registration for the same product. The Plaintiff filed a suit for permanent injunction restraining infringement of Plaintiff's patent rights and design rights by the Defendants. The Defendants filed a counterclaim attacking the validity of the patent on the ground of lack of inventive step.

The Hon'ble Court in the present case went into the lack of inventive step and laid down principles pertaining to the patentability of new substances produced by known methods from known materials as follows:

  1. An invention consisting of the production of new substance from known materials by known methods cannot be held to be patentable subject-matter merely on the ground that the substances produced are new. This could lead to a situation where the substance produced may serve no useful purpose, in which case the inventor will have contributed nothing to the common stock of useful knowledge or of useful materials.
  2. Such an invention may, however be held to be patentable provided that the substances produced are not only new but also useful, though this is subject to the qualification that the substances produced must be truly new, as opposed to being merely additional members of a known series and that their useful qualities must be the inventor's own discovery as opposed to mere verification by him of previous predictions.
  3. Even where an invention consists of the production of further products belonging to a known series of products whose useful attributes have already been described or predicted, it may be patentable provided that the conditions for the grant of a selection patent are satisfied.

Then the Hon'ble division Bench went into the question of prima facie validity of a patent as provided under Section 13(4) of the Patents Act, 1970.

Section 13 (4) of the Patents Act, 1970 reads as follows:

"13. Search for Anticipation by previous publication and by prior claim

(1) – (3) ...

(4) The examination and investigations required under section 12 (examination of patent applications) and this section shall not be deemed in any way to warrant the validity of any patent, and no liability shall be incurred by the Central Government or any officer thereof by reason of, or in connection with, any such examination or investigation or any report or other proceedings consequent thereon."(Underlines supplied)

The rejected the principle laid down in the English case of Smith v. Gregg, where it was held that a right is not established sufficiently by the mere fact that a patent has been granted unless there is a substantial case established before the Court that there is in fact a valid patent.

The Hon'ble Court held that the fact of grant of patent is indeed a factor that ought to be given weightage while considering the Plaintiff's right to an interlocutory injunction.

The Court finally held that even though the banana leaf is a natural product, the invention on the part of the Plaintiff in using artificial laminated food-grade paper in the form of a banana leaf, with its colour and with artificial scented smell, is prima facie innovative. The Court held that in view of the patent having been granted in favour of the Plaintiff for the said product, he is entitled to protection by way of an interim injunction.

The Hon'ble Delhi High Court had the opportunity to consider the issue of territorial jurisdiction in cases of groundless threats of legal proceedings under section 106 of the Patents Act in Bata India limited v. Vitaflex Mauch GmbH (unreported).

Bata filed a suit against a German company, Vitaflex Mauch for sending a legal notice allegedly without any basis in an actionable right, under section 106 of the Patents Act, 1970.

In a decision rejecting Vitafelx's application for rejection of the Plaint, the Court held that in the case of a threats action, the forum to be considered is the place where the Plaintiff carries on business.

The Court held that the facts pleaded by Bata in the plaint to the effect that Bata carries on business which is likely to be adversely affected in the territorial jurisdiction of this Court, by the allegedly groundless threats of Vitaflex, are sufficient to invoke the territorial jurisdiction of the Delhi High Court.

The Court held that the Plaintiff is dominus litis in a suit to restrain groundless threats and has a right to file a suit where part of the cause of action arises. The Bata suit is still pending before the High Court.

However, the most talked about decision in Indian patent law in the last few years was the decision of the Delhi High Court in F. Hoffmann-la Roche Ltd., and Anr. v. Cipla Limited [2008 (37) PTC 71 (Del.)].

The suit was filed by Roche, a multinational pharmaceutical giant agsinst Cipla, an Indian company, seeking a permanent injunction restraining infringement of its patent right in a cancer-treatment drug.

The case was important in several respects. It is the first Indian case to consider the aspect of "pricing" of the drug in assessing whether an interim injunction ought to be granted in patent infringement law suits involving life-saving drugs.

The case was also important for its dilution of the "Six-year" rule. The rule states that interim injunctions ought not to be granted in cases of patent infringement where the patent in question is less than six years old.

The Roche decision held that the rule was to be seen as a rule of caution and prudence rather than a rigid, ritualistic formula of mathematical application.

The Court declined Roche an interim injunction and laid down several important principles in relation to grant of interim injunctions in infringement cases involving life-saving drugs.

A summary of the principles laid down by the decision are as follows:

(i) In patent infringement actions, the courts should follow approach indicated in American Cyanamide.

The governing principle is that the court should first consider whether, if the plaintiff were to succeed at trial, he could be adequately compensated by an award of damages for the loss sustained during the pendency of the hearing.

If damages would be adequate and the defendant is in a financial position to pay them, then no interlocutory injunction ought to be granted.

If on the contrary, it is found that the defendant could be compensated by way of damages at the final stages of the suit, and an undertaking for paying such damages would be an adequate remedy, then there would be no ground to refuse an interlocutory injunction.

If there is doubt as to adequacy of respective remedies, then the question of balance of convenience arises.

(ii) The Courts should follow a rule of caution, and not always presume that patents are valid, especially if the defendant challenges the validity of the patent.

(iii) The standard applicable to judge a defendant's challenge of a patent is whether the challenge is a genuine one, as opposed to a vexatious defense.

An interim injunction will be declined only if the challenge appears to be a genuine one.

If the balance is approximately equal, the Court may consider the relative strength of each party's case.

The Court also opined that unlike cases involving infringement in relation to products, the Courts have to tread with care in the case of pharmaceutical products and more specifically when life-saving drugs are involved. The Court declined Roche an injunction on the ground that several unidentified members of the public may suffer as a result of the injunction, as Roche's drug was priced much higher than Cipla's drug. The Court considered the fact that patients who were already being treated with Cipla's drug would be adversely affected if the injunction were to be granted.

The Court therefore held that the test of balance of convenience would have to take into account factors such as the likelihood of injury to unknown parties and the fact that there may be a risk of denial of remedies. The decision was subject to appeal proceedings, which are pending before a Hon'ble Division Bench of the Delhi High Court.

In summary, 2008 was an eventful year for patent law. The trend of declining interim injunctions to patentees continued in Roche, however the reasons for the refusal have now been better enunciated. The Roche decision also seems to have had a far-reaching impact on the pricing policy of pharmaceutical companies in developing countries. The decision has been celebrated by public-health activists. However, it has caused some concern on whether the Court can look into the issues of pricing which would effectively amount to treading into the area of compulsory licensing, a function which the Controller of Patents fulfills.

The Bajaj decision a well-reasoned exception to the line of cases declining injunctions, and offered patent-holders some respite.

The coming year will be critical as the patent decisions of this year are subject to appeal proceedings and decided. Several new issues are also being agitated before court this year such as the drug-patent linkage and border control for cases of patent infringement.

SWATHI SUKUMAR-Biography

Swathi Sukumar is a Senior Associate in the Litigation Department in Anand and Anand. She graduated in 2005 with a Bachelor of Arts and Bachelor of Law (Honours) degree, from NALSAR University of Law, Hyderabad, India. She has been counsel in several important decisions of the Delhi High Court, including the first Indian decision on statutory dilution under trademark law and the first Indian decision protecting a film title as a trademark.

Swathi has authored several articles on IP law in international periodicals. Swathi has recently co-authored the India Chapter, in the Patent Litigation Reference Series, published by European Lawyer Ltd. She has also co-authored the India Chapter in the Global Patent Litigation series, published by Wolters Kluwer Law & Business in 2008.

Swathi has also assisted the Ministry of Science and Technology, Government of India in drafting the Public Funded R&D (Protection, Utilization and Regulation of Intellectual Property) Bill which is currently pending before the Indian Parliament.

TUSHA MALHOTRA

Tusha Malhotra is an associate in Anand and Anand's litigation department. She graduated in 2008 with a bachelor's of science and a bachelor's of law degree from University of Delhi, Hyderabad, India. Her area of practice is general intellectual property litigation with a focus on patent and trade secret litigation.

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