Whether patent infringement fades away once the validity of the patent expires? Can a patent nearing its expiry, still be granted protection in a suit for infringement? Can all parallel imports get a blanket protection under Section 107A (b) of the Patents Act? Is it necessary for a suit for infringement to succeed, that all elements of the claim must be reflected in the infringing product or do we look at the pith and marrow of the suit patent to determine the infringement?
These are some of the questions that were elaborated upon and discussed in detail by Hon'ble Mr. Justice Sanjeev Narula of the Delhi High Court, in a Commercial Suit titled as Sotefin SA vs. Indraprastha Cancer Society and Research Center & Ors.1 , while adjudicating upon an application for ad-interim injunction under Order 39 Rules 1 & 2.
Brief background of the plaintiff and the suit patent
The Plaintiff, Sotefin SA, a Swiss company that designs, manufactures, and sells automated parking systems, on the basis of an exclusive license from the patentee Sotefin Patents SA , for right of use and exploitation in its favour, filed a suit seeking permanent injunction for restraining infringement of Indian Patent No. 214088 titled as 'Carriage for the horizontal transfer of motor vehicles in automatic mechanical car parks' (hereinafter 'suit patent') against the Defendants in the Hon'ble Delhi High Court in July 2021. The invention is described as a 'self-propelled carriage on wheels, for horizontal transfer of motor vehicles by lifting two or more wheels, in a single or multi automatic mechanical car parks', and is commonly known as a 'Dolly' or a 'Silomat Dolly'. The suit patent was filed on March 13, 2002 with 20 years of validity) and since then has been in continuous use in India.
The case of the Plaintiff is that it had entered into two separate supply contracts with the Defendant No. 3 i.e. Simplex Projects Limited, on December 10, 2011 for the supply of 14 of the patented 'Silomat Dollies', as well as for supply of drawings of the automatic parking system, respectively, which was transferred online as well as sent physically sometime in 2012. The Defendant no. 3 was bound by the confidentiality clauses to keep all this know-how that was supplied to it, secret.
In 2017, Defendant no. 2 i.e. Rajiv Gandhi Cancer Institute and Research Centre (RGCIRC) floated a tender for an automatic car parking system for its site at Rohini, Delhi, when the technical background of the Plaintiff's invention was shared with Defendant No. 2, and they were also made aware of the existing suit patent. Later, in November 2020, Plaintiff found that the Defendant no. 4 i.e. Simpark Infrastructure Private Limited (in which the Defendant No. 3 is the largest shareholder) is handling the parking project at Defendant No. 2's site.
As per the Plaintiff, the Defendant No. 1 (a non-profit society, managing and operating the RGCIRC) was using "Smart Dollies" for the project at RGCIRC parking system imported from Naijing, China, which resemble the "Silomat Dollies" of the suit patent, hence causes infringement.
The Plaintiff further argued that the Defendant No. 3 illegally transferred the technology and/or drawings of machineries related to the suit patent to Defendant No. 4 and the act of importation of Smart Dollies in the name of Defendant No. 1 trust, is a wilful breach of contractual confidential obligations, in connivance amongst all parties.
In support of its argument, Plaintiff placed reliance upon the report of the scientific advisors2 appointed by the Hon'ble Court vide an interim order.
MAIN DEFENCES OF DEFENDANTS (INDEPENDENT AS WELL AS OVERLAPPING)
- It was argued that in order to conclude that the "smart dollies" being installed at the premises of Defendant no. 2 infringes the suit patent, there has to be a finding of the Court that all the essential elements of the suit patent's claims are present in the Smart Dollies. Relying on the report of the scientific advisors, it was argued that out of the 19 elements in Claim 1 of the suit patent, 2 essential elements are missing in the Smart Dollies i.e. 'hinging and immobilization of rear wheels. In addition to these two elements, there are some other missing elements in the Smart Dollies, which are the essential features of suit patent's claims.
- The Smart Dollies installed at Defendant No. 2's site, are purchased from Nanijing, China, which is protected by one invention patent and two additional utility patents in China along with suit patent corresponding to IN 214088, which implies that the Nanjing patents are inventive, non-obvious and non-infringing of suit patent. Plaintiff has not taken any action against the Chinese party, therefore, it cannot now take action against the Defendants.
- Even if the Smart Dollies infringe the suit patent, the import of Smart Dollies from Naijing would not be considered as in infringement, as Naijing is the person duly authorized under law of China to produce, sell and distribute the patented products and the parallel import of Smart Dollies in India is protected under Section 107A of the Act;
- The suit patent was already on its leg, expiring on March 13, 2022 and even if it amounts to infringement the Plaintiff can be compensated after the trail of the suit, which is an adequate alternative relief of injunction.
REBUTTAL ARGUMENTS OF PLAINTIFF IN SERITIAM
- Absence of two essential elements in the Smart Dollies: with regard to the issue of 1st differencing sub-element i.e. hinging, it was argued that the patented self-propelled carriage is "jointed by means of hinges" and the Smart Dolly is not. However, this is not an essential element and the Smart Dollies function exactly the same as the suit patent. The configuration in the Smart Dollies has an additional function incorporating the claimed function, and it cannot be argued that the Smart Dolly has a different function. Neither the expert Report, nor the Defendant, has given any explanation for additional functionality and utility of a shoulder joint style movement found in the Smart Dolly. With regard to the 2nd sub-element i.e. the difference of immobilization features/function in the two dollies, it was argued that this, in the suit patent is at both sides of carriage, whereas the Smart Dolly has only on one side. There is no difference in the carriages, as both of them perform the same function in substantially the same way. Hence, even for this element, the infringement is proved by equivalence.
- Chinese patent- it was argued that the patent(s) relied upon by the Defendants is for a machine which is not related to the Dolly technology, and instead, relates to a lifting mechanism with hydraulic motors, which is not part of any of the claims of suit patent. No evidence has been produced by the Defendants mapping the Smart Dollies to the Chinese patent.
- Safeguard of parallel import- It was argued that Section 107A of the Patent Act is not a safeguard for counterfeit products. Any patented product manufactured without authority of the patentee, would be a pirated product, and not a parallel import. Parallel imports are not pirate copies but items lawfully made and put into circulation in a foreign country with the permission of the intellectual property right holder.
- Expiry of the patent- It was argued that the Plaintiff would be entitled to an injunction to restrain the use of Smart Dollies which were made and imported at a time when the patent was valid, notwithstanding the approaching expiry. Further, the rigors of Sections 48 and 108 of the Patents Act apply throughout the length of the patent, without exception. Under Section 53(4), a patent shall be entitled to "any protection" during the "term of patent". Hence, any import made during the term of the patent, infringing suit patent, is in violation of a patentee's exclusive rights, except for the Bolar Exemption provided for in Section 107A(a).
ISSUES CONSIDERED BY THE HON'BLE COURT AND ITS CONSEQUENT FINDINGS
The Hon'ble Court limited the scope of inquiry, considering that there is no challenge to the validity of the suit patent by the Defendants or in the pre-grant or post grant opposition stages and summarized the dispute in four (4) legal issues to decide the interim relief application:
- Doctrine of purposive construction;
- The infringement of a patent during its validity;
- Whether the Doctrine of International Exhaustion be applicable under Section 107A (b)?
- Whether the award of damages would be an adequate remedy to deny interim injunction?
The Hon'ble Court noted that the suit patent has been protected in various Countries across the world, including U.S.A., Europe, Canada, Australia and also China. Further, infringement suit had to be adjudged objectively. The Defendants' intention would not necessarily be a material concern in determining the prima facie nature of the case, however, the intent to infringe could be a relevant and significant factor to determine the relief of injunction to restrain such infringement.
Taking note of the facts in the present suit, specifically the involvement of the Defendant No. 3 in breaching the obligations of the contract, prima facie merit was found in the contention of the Plaintiff that the Defendant No. 3 had transferred the technology relating to the suit patents to Defendant No. 4, and therefore the importation of the machines by Defendant No. 1 was an act to avoid any action from the Plaintiff.
Doctrine of Purposive Construction and Doctrine of Equivalence
The Hon'ble Court relying upon the findings of the independent Scientific Advisors, agreed that 17 of the 19 elements of Claim No. 1 of the suit patent were found in the Smart Dollies being imported by the Defendants, and Claim No. 2 of the suit patent was found to be infringed in each of the elements.
Relying on the case of Rodi & Wienenberger A.G. v. Henry Showell Ltd., 1966 RPC (441), the Hon'ble Court observed that in order to determine an infringement, it is imperative to reach a finding that all the essential elements of the suit patents are present in the Smart Dollies. Therefore, it was essential to determine whether the two missing elements in the Smart Dollies are so essential or substantial that their absence would disentitle the Plaintiff to an injunction?
The Hon'ble Court relied on the pith and marrow doctrine also known as the doctrine of purposive construction along with the doctrine of equivalence to examine if the substituted element in the infringed product does the same task, in substantially the same way, to accomplish substantially the same result. For this, the Hon'ble Court relied on Raj Prakash v. Mangat Ram3 , wherein it was held that a minor variation cannot be treated as a shield from piracy. The Court also relied upon the judgment of the Supreme Court of Canada in Free World Trust v. Electro Sante Inc.4 , wherein it was held that non-essential elements may be omitted or substituted but that too would not shield infringement.
Relying upon the abovementioned precedents and the principles laid therein, the Hon'ble Court analysed the two sub-elements missing in the infringing products, namely the presence of the Hinges and the Immobilization of wheels. It noted that the former does not provide a substantial difference in the functionality and achieves substantially the same result in a substantially similar way, whereas, the Immobilization of wheels does not have material effect upon the working of the invention.
Keeping in mind the aforementioned analysis of the infringed products and applying the Doctrine of Purposive Construction, the Hon'ble Court held that the Plaintiff had successfully established a strong prima facie case against the Defendants' Smart Dollies.
Whether the Protection of the patent is any less forceful towards the end of its term?
The Hon'ble Court observed that the Suit Patent was expiring on 13th March, 2022 (now expired). In context of the Defendants' reliance on the proximity of the expiry date of patent rights, as a factor to deny the relief of injunction, the Hon'ble Court noted that the monopoly granted to exploit the invention without competition, during the term of the patent, would apply in equal vigour, notwithstanding the fact that the patent is on its last legs. Section 48 and 108 of the Act would apply throughout the life of the patent without any exception, as well as Section 53(4) makes no distinction between a new or a concluding patent, therefore it could not be said that a patent shall lose on its protection if it is nearing the end of its term.
The Hon'ble Court opined that "if infringement has occurred during the lifetime of the patent, the infringing goods would not become kosher on expiry of the patent." Hence the use of Smart Dollies, imported during the term of a subsisting patent, in violation of the patentee's exclusive rights, have to be restrained.
Whether the Doctrine of International Exhaustion be applicable under Section 107A (b)?
The Hon'ble Court after the analysis of the provision noted that the 2005 amendment in Section 107A does not mean that as long the imported product is patented in any jurisdiction – it would fall within the ambit of Section 107A(b) of the Act.
Further, on a cumulative reading of Section 2(1)(o), 2(1)(m), 2(1)(j), it means that the term 'patented article' found in Section 107A(b) would include only those products which are patented under the Indian Patents regime.
Nanjing does not have any authorization to sell the Silomat Dollies in China or anywhere in the world, including India, and therefore, the products sold by Nanjing will not fall under the definition of "patented products" or "patented articles" as defined under the Act as well as that Section 107A(b) shall not provide a blanket protection to parallel import.
The Hon'ble Court further highlighted that the essence of 107A (b) is not to give a blanket protection for parallel imports, since such a protection would render the Indian patent nugatory and futile, therefore it could not be the intention of the law. Furthermore, the Hon'ble Court while examining the intent of Section 107A, contrasted it with Section 30 of the Trade Marks Act, 1999, noted that the expression of "lawfully acquired" is starkly different from what is given under Section 107A (b), and that the doctrine of International Exhaustion as provided for under the Trade Marks Act, shall not be incorporated under the Patents Act. Therefore, the Chinese patent as relied upon by the Defendants would give them no protection under Section 107A (b).
Whether the award of damages would be an adequate remedy for Patent infringement?
The Hon'ble Court noted that the contention that the award of damages is an adequate remedy and an injunction is not the correct approach, since the remedy of an injunction in a suit of infringement is provided under Section 108 and accepting such a proposition would defeat the monopoly and statutory rights of the patentee. The statutory rights of the patentee cannot be defeated, just because the Plaintiff may be entitled to damages at the end of trial.
In light of the above, The Hon'ble Court allowed the ad-interim injunction application of the Plaintiff and restrained the Defendants from making, selling, importing, exporting, from offering for sale, or in any manner directly or indirectly dealing with the Silomat Dollies / Automatic Parking System that infringe the suit patent IN – 214088 of the Plaintiff.
The Defendant No. 4 has challenged the aforesaid judgement before the Hon'ble Division Bench of the Delhi High Court, wherein a notice has also been issued to the Respondent/original Plaintiff on April 25, 2022.
Author's view- The judgement passed by Hon'ble Mr. Justice Narula of the Delhi High Court washes away many misconceptions about the defences available in a patent infringement suit such as import of products under a foreign patent. Let see if the judgement is uphold or upset by the Division Bench.
1 CS(COMM) 327/2021 in the Delhi High Court
2 CS(COMM) 327/2021 in the Delhi High Court
3 ILR (1977) 2 Del 412.
4 2000 SCC OnLine Can SC 66
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