The Hindu Business Line : Patent infringement and the law

The interim injunction by the Madras High Court restraining the activities of TVS in the Bajaj-TVS patent infringement case highlights the need to rethink the courts’ approach to interim proceedings in such litigation, says FEROZ ALI K.

The Indian Patent Office has had a prolific year. It reportedly grants, on an average, 50 patents a day. Patent litigation — the art of stopping others from doing things — is a direct beneficiary of the benevolence shown by the patent office in granting more patents in less time. In many ways, the Bajaj-TVS patent infringement case is a sign of our litigious times.

The grant of interim injunction by the Madras High Court restraining the activities of TVS could not have come at a more appropriate time. The lengthy order rendered by the Court reflects the detail in which the case was argued at the interim stage for a week. Things have not been different in another patent infringement action before the Delhi High Court between Roche and Cipla over Tarceva (Erlotinib), where again, the interim application was argued for many days in a row, crippling the daily routine of the court.

The courts tend to give a patient hearing to these ‘heavy’ intellectual property matters since the technological aspects involved in these cases demand a fair amount of judicial time even at the interim stage.

Coupled with this, the monetary value of these inventions (be it an four-stroke internal combustion engine with twin spark plugs or a drug than can treat lung cancer) guarantees exclusive attention of the court gained usually at the expense of other pending cases.

As a country with a large number of pending cases, it is time to rethink the courts’ approach to interim proceedings in patent infringement cases.

Interim injunction

An interim injunction is a temporary measure granted at the interlocutory stage of a suit. It endures only until the suit is disposed of or until further orders are passed by the court. It is a preventive relief granted to a litigant who fears a possible future injury.

Though temporary by definition, interim injunctions can have an enduring effect, especially when the life period of the patent is for a limited time, i.e. 20 years. In most cases, when the matter reaches the court in the form of an infringement suit, the patent would have lived one-fourth of its life.

The three principles

In matters pertaining to interlocutory relief, the courts in India have meticulously followed what is now popularly known as the triple tests.

For the grant of an interim injunction in its favour, the plaintiff will have to prove:

(1) A prima facie case of infringement

(2) Balance of convenience in its favour, and

(3) Irreparable hardship or loss that may follow if injunction is not granted.

The courts in this country have assiduously applied these three principles as a ‘rule of law’. In fact, it is hard to find a case where the courts have not applied these three principles where interim injunction is sought for. But both Order 39 of the Code of Civil Procedure 1908 and section 37 of the Specific Relief Act, 1963, which deal with interim injunctions, do not mention these three requirements.

As with some of the principles of law, the above three principles were also adopted from the practice of the courts in United Kingdom.

The English Law

The English Law till 1975 required the plaintiff to prove a strong prima facie case for the grant of injunction. A prima facie case implies the probability of the plaintiff obtaining a relief on the materials placed before the court. This inevitably resulted in prolonged hearings at the interim stage with parties adducing a good deal of arguments on the merit of the case.

The need to prove a strong prima facie case was a higher test which the House of Lords reiterated, in the speech of Lord Diplock, in F. Hofmann-La Roche A.G. v Secretary of State for Trade and Industry [1975] A.C. 295, HL. But four months later, Lord Diplock delivering the judgment in American Cyanamid Co. v. Ethicon Ltd [1975] A.C. 396, HL, would reject the higher test of ‘strong prima facie’ case for a lower standard.

Cyanamid Approach

The Cyanamid approach, introduced by Lord Diplock for the first time in 1975, required the court to consider an initial series of questions before exercising its discretion in deciding an application for an interim injunction.

The questions were:

(1) Is there a serious question to be tried? If the answer is ‘yes’, then

(2) Would damages be an adequate remedy for a party injured by the court’s grant of, or its failure to grant, an injunction? If not,

(3) Where does the ‘balance of convenience’ lie?

By rephrasing the threshold question, the Cyanamid approach dispensed with the need to offer elaborate, time-consuming arguments for the higher test of proving ‘prima facie’ case and replaced it with the test of whether there is ‘a serious question to be tried’.

Normally, in deciding the prima facie case, the courts would require the plaintiff to satisfy the court on the balance of probabilities that the act of the other party, if done, would infringe the plaintiff’s rights. The Cyanamid approach relaxed this requirement.

The House of Lords observed that the court could directly look into the aspect of damages and balance of convenience circumventing the threshold question of ‘prima facie’ case.

Case management

The Cyanamid approach to interim applications has been hailed as a brilliant exercise in case management. First, this approach is consistent with the objective that the court should not, while hearing an interim application, express any opinion on the merits of the case until trial, thereby avoiding a ‘mini trial’.

Second, the lower test of determining whether there was ‘a serious question to be tried’ could be answered easily and quickly thereby eliminating constraints on the most valuable of judicial resources — time.

Third, and more importantly, this approach discourages appeals as the defendant will find it difficult to overturn on appeal the judge’s finding that there is a serious question to be tried rather than finding on the prima facie case which would involve detailed discussion.

The courts in India have differed in applying the American Cyanamid approach. In the recent decision involving Bajaj and TVS, the Cyanamid approach was neither mentioned nor considered. This is surprising because the order discussed tens of English decisions and left out the most celebrated English decision on interim proceedings rendered by the House of Lords. The omission is all the more baffling since the Cyanamid approach after 1975 continues to be applied, considered or following in hundreds of cases in the UK.

The number of patents granted every year by the Indian Patent Office has been steadily on the rise. Between April and December 2007, the Indian Patent Office granted a record number of more than 10,000 patents, of which only a small percentage have been opposed.

Thus, the most preferred form of challenge to a patent is likely to come in infringement proceedings where the competitor will be entitled to counter-claim invalidity of the granted patent as a defence.

Unless the judiciary rethinks its approach on interim proceedings, the courts in India can expect a tough task at hand if interim applications are argued for weeks, resulting in lengthy orders passed on the merits of the case.

(The author is a Chennai-based advocate and the author of the recent book “The Law of Patents – With a Special Focus on Pharmaceuticals in India”, published by LexisNexis Butterworths India, 2007.)

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