INFRINGEMENT NEVER KOSHER

In a pathbreaking decision, and a first from an Indian court, several aspects of patent law in India were clarified and discussed. This newsletter discusses these. 

1.    An infringing product not kosher even after expiry of the patent 

    Justice Sanjeev Narula of the Delhi High Court held that “if an infringement has occurred during the lifetime of a patent, the infringing goods would not become kosher on expiry of the patent.”    The questions raised before the court were important ones as to whether a patent loses its sheen as it nears the end of its term.  Should a patentee be less entitled to the full measure of reliefs near the end of the patent?  Justice Narula decided all these issues in favor of the patentee, holding that if a patentee approaches the court for enforcement of its rights during the subsistence of the patent, irrespective of the length of the balance period of the life of the patent, it would be the duty of the court to enforce the same, giving the full benefit of the enforcement provisions of the Patent Act and other provisions of law, “without exception”.   In the facts of the case, the patent was to expire within a month from the date of the decision and the argument raised by the opposite party was that since the patent was expiring soon, no injunction should be granted in favor of the patentee.  

   Since an Indian court had not had an opportunity of answering this important question, the court agreed with the proposition of law in American and English authorities that any product which is infringing, during the term of the patent, would continue to be tainted, after the expiry of the patent as well.  The infringement does not get dissolved after the lapse of the patent.  

    A cat may have many lives, a patent has only one, and that too a short one.   It takes years for a patent to born.  Years of hard work towards its inception followed by years of pregnancy in the form of filing and examination, the life of a patent is always living a charmed life.  At any time, it is open to challenge, from pre-grant to post-grant oppositions in its young life to rectification proceedings on any and every ground.  The judgement now ensures that the limited life of a maximum of 20 years now gets its full measure of protection, till it breathes its last.  

2.    International exhaustion not applicable to patents

    There are other aspects of the case which are equally pathbreaking.   The court held that the Indian patent law protect patents granted in India.  Patent laws are essentially territorial in nature and Indian courts will not permit importation of products even if the patent is registered in the name of other entities in other parts of the world.  The court also held that unlike trademarks, the doctrine of international exhaustion is not applicable to patents under Indian law.  

3.    Damages not a substitute for injunctions

    Another important finding of the court was on the grant of injunctions.  The court held that damages is never an alternative to injunctive relief and even if the infringer is able to eventually compensate a patentee in the form of damages, injunctive relief is not to be denied.   

4.    A patent is infringed even if a single claim is infringed 

   The Court made another significant finding that mapping of one of the independent claims (claim no.1) was sufficient to constitute infringement, even if the dependant claims may differ, without going into the mapping of the remaining, dependent claims.  

5.    Courts must identify the “pith and marrow” of the patent for infringement 

    The court laid down the principles which apply to reading a patent specification.  The court observed that a patent specification has to be read by a notional person who was acquainted with the language of the patent claim.  Infringement can occur in a non-literal sense where each and every element of a patent claim is not found in the infringing product.   It is the pith and marrow which is required to be copied and courts are not to get engaged in a meticulous comparison of the detailed specification.   The court is also to apply the doctrine of equivalence to see if the infringing product does the same work in substantially the same way to accomplish substantially the same result.  Minor variations cannot be treated as a shield from piracy.   

6.    “Hot tubbing” procedure followed 

    This is also one of the first cases in which the court followed the hot tubbing procedure.  The court not only asked for an independent expert analysis from IIT Delhi, but requested the experts to be available in court to answer queries.   This procedure dubbed as “hot tubbing” and incorporated in the Delhi High Court Rules recently was followed for the first time by an Indian court.  

Details of the dispute 

    The matter pertained to patent IN214088 (hereinafter referred to as ‘088) owned by SOTEFIN SA (the Plaintiff) covering a self-propelled carriage on wheels, for horizontal transfer of motor vehicles by lifting two or more wheels, in single or multi automatic mechanical car parks, known as ‘Silomat Dolly’. The Plaintiff asserted its right against four defendants.  Defendant no. 1 (D1, Indraprastha Cancer Society & Research Centre) is a not-for-profit public society and operates/manages Defendant No. 2 (D2, Rajiv Gandhi Cancer Institute and Research Centre). Defendant no. 3 (D3, Simplex Projects Limited) had a supply contract agreement with the Plaintiff for Silomat Dollies. D2 floated a tender in 2017 for which the tender for an automatic car parking system for its site at Rohini, Delhi. Plaintiff approached D2 and also made it aware of the suit patent. In November 2020 the Plaintiff learnt that one Simpark Infrastructure Private Limited (Defendant No. 4) is handling the parking project at Defendant No. 2’s site. Defendant No. 3 is the largest shareholder of Defendant No. 4 and controls its operations and management. On investigation it was found that D1 had placed an order for import of 14 Smart Dollies from a Chinese company, Nanjing Eli Parking Equipment Manufacturing Co. Ltd. The Plaintiff alleged that the Smart Dollies infringed its patent ‘088. The Plaintiff was granted injunction and the order was pronounced by the Hon’ble Delhi High Court pronounced on 17th February, 2022 (CS(COMM) 327/2021).

    This indeed is a landmark judgement that will guide the future course of patent enforcement in India. The issues of doctrine of equivalence, parallel imports, indirect infringement, damages and injunction have been haunting patentees in India for many years. This judgement provides clarity on many issues. The issue of parallel imports has been a cause of major worry and also one of the reasons for portraying India as not-a-patent-friendly jurisdiction. This will likely have ramifications across industries, especially in the pharmaceutical industry. We may have just turned a new leaf.

Creation Of Intellectual Property Division in the Delhi High Court

The Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 was promulgated by the President of India and was notified on 4th April, 2021. The effect of the Ordinance was that various Boards/Appellate Tribunals, which existed under several statutes, have been abolished. In particular, the Intellectual Property Appellate Board (IPAB) stood abolished affecting the IPR ecosystem in the country.

In order to have streamlined and comprehensive review of the manner in which a large quantum of IPR cases ought to be dealt with, Hon’ble the Chief Justice of High Court of Delhi, Justice D.N. Patel constituted a committee comprising of Hon’ble Ms. Justice Prathiba M. Singh and Hon’ble Mr. Justice Sanjeev Narula. The Committee submitted its report to Hon’ble the Chief Justice both in respect of IPR and non-IPR subject statutes.

Based on the recommendations of aforesaid Committee, Hon’ble the Chief Justice has created the Intellectual Property Division (IPD) in the Delhi High Court to deal with all matters related to Intellectual Property Rights. The IPD so created, besides dealing with original proceedings, would also deal with the Writ Petitions (Civil),  CMM, RFA(Regular First Appeal), FAO(First Appeal from Order) relating to Intellectual Property Rights disputes (except those which are required to be dealt with by the Division Bench). This has been done in order to avoid multiplicity of proceedings and to avoid possibility of conflicting decisions with respect to matters relating to the same trademarks, patents, design etc.

As per the press release issued by the Delhi High Court, the creation of Intellectual Property Division (IPD) in the High Court of Delhi is a significant step which is in line with global practices in this regard. Such IP Divisions or IP Courts, which exclusively deal with IPR matters, already exist in the UK, Japan, Malaysia, Thailand, China etc. The creation of IPD with comprehensive rules governing IPR matters, is a momentous step taken towards efficient disposal of such matters. It will provide  much needed respite from the lacuna created by the lack of any appeals forum. 

The Delhi High Court is also in the process of framing comprehensive Rules for the IPD. A Committee has already been constituted for framing of the `Delhi High Court Patent Rules’ which shall govern the procedures for adjudication of patent disputes before the Delhi High Court. The first draft of these Rules have already been notified for stakeholders’ comments, which have been received. We at Lall & Sethi had submitted detailed comments on the draft Patent Rules. We will keep you updated on any further developments with regards to the Intellectual Property Division (IPD) in the High Court of Delhi. 

Design Rules Amendment, 2021

THE DESIGN RULES AMENDMENT, (2021) – A SUMMARY

The Government of India and Ministry of Commerce & Industry notified the Design Rules Amendment of 2021 in the Official Gazette of India on January 25, 2021.

The amendments to the Design Rules can be broadly classified under four headings:

EMPHASIS ON THE START-UPS & SMALL ENTITIES:

• The amended rules now officially recognize and define a “start-up” and “small entities”. The rules have been framed to classify which entities will be recognised and can apply for design registration as a start-up.

• The fee structure has been simplified and there is reduction in the fees for small entities. All categories such as natural person, small entities, start-ups etc. will pay the same fees.

• Indian start-ups must be registered under the MSME ACT, 2006 and foreign entities to qualify as a start-up must submit relevant documents to prove their status.

• In case assignment of rights from start-up to another entity the difference in application fees will have to be paid.

AGENTS / ADDRESS ON RECORD DETAILS:

• Email and Phone numbers are now to be considered part of the address of service details and mandatorily be submitted in the design application.

LOCARNO CLASSIFICATION SYSTEM

• The Locarno classification system has now been officially adopted under the Design Rules. Up until now India had been following their own classification system. (Provided that registration of any design would be subject to the fulfilment of provisions of the Act specifically 2(a) and 2(d)).

CHANGES IN THE COST

• Schedule I, which specifies the fees, has been substituted. The revised Schedule now provides for differences in costs which may be imposed depending on the nature of the entities involved in proceedings. Similarly, the scale of Costs in Fourth Schedule has been substituted to include costs which depend on the nature/category of the applicant.

• In Schedule II, Form 1 has been substituted with amended FORM 1. The amendment is minor and is made to include start-ups as an applicant category. Similarly, Form 24 has also been substituted to incorporate start-ups as a category of applicants.

The main purpose of the amendments seems to be overall positive with aim to make the design registration process simple and streamlined.

Patents Amendment Rules, 2020

The Department for Promotion of Industry and Internal Trade (DPIIT) has notified Patents (Amendment) Rules, 2020 and published its Official Gazette on 19^th October, 2020. The amended rules come into force from the same date as the publication of the notification, i.e. 19^th October 2020.

The major highlight of the said notification is the publication of “fresh” Form 27, the requisite form for filing statements of commercial working/non-working for granted patents. It may be recalled that draft rules, namely the Patents (Amendment) Rules, 2019 were published on 31^st May, 2019. The said draft rules had introduced a new format for Form 27. The said format was widely criticized and several representations were made by stakeholders to both the IPO (Indian Patent Office) and the DPIIT. Both the IPO and DPIIT had held wide consultations with stakeholders in which there was virtual unanimous view that either the requirement for filing Form 27 should be shelved altogether as such a requirement was obsolete and archaic; or it should be substantially simplified. The representations were made not only by the industry representatives and law firms but also by several industry organizations like the CII. The new Form 27 addresses only a few concerns, for instance the time frame within which Form 27 has to be filed (more details can be found below). However major issues like confidentiality of information (revenue accrued); criminality attached to giving (purportedly) false information; and reasons for non-working remain unattended. In fact, there is an additional burden of providing a list of patents that are related to each other, in a single form.

Following are the amendments in rules:

1. Amendments in the format pertaining to Form 27 (working statement) 

1. Due date of filing Form 27:

   Form 27 is required to be furnished once in respect of every financial year (fiscal year in India is from 1^st April to 31^st  March of the next year), starting from the financial year commencing immediately after the financial year in which the patent was granted, and will be required to be furnished within six months, i.e. by 30^th September of the following year, from the expiry of each such financial year.

   Changes: Earlier, the due date for filing Form 27 was calculated on the basis of calendar year (1^st January to 31^st December) and was required to be submitted within three months of end of each calendar year, i.e. by 31^st March of the next year. Accordingly, essentially the deadline to furnish working/non-working statements has been increased by three months.

   Effect: This change simply postpones the filing of statements and has no material effect on the filing per se. The stakeholders had complained that it is difficult to gather the information to be disclosed within three months’ time of the previous calendar year i.e. by 31^st March. The time line has been extended considering this difficulty and has also been changed according to the fiscal year followed in India, which is from 1^st April to 31^st March (of the next year).

2. Format of Form 27

   Following are the changes in the new Form 27:

   1. Para 1: Form 27 may be filed in respect of multiple patents, provided all of them are related patents, wherein the approximate revenue / value accrued from a particular patented invention cannot be derived separately from the approximate revenue/value accrued from related patents, and all such patents are granted to the same patentee(s). 

      Effect: The patentee will now be required to map all the patents to a technology and providing as a list in one form. This goes beyond the mandate of section 146 of the Patents Act or Rule 131. It appears that the use of the word “may” give an optionality, but in reality, it does not. While giving the revenue in para 4 of the form, it will be required to either give revenue patent wise OR if that is not possible, the list of patents will have to be given.

   2. Para 3: This paragraph requires providing a list of patents that have been worked/not worked. If the patentee has given multiple patents in para 1, then which ones have been worked/not-worked are required to be given here.

      Effect: The problem is same as mentioned above in point a. This amounts to product marking which is not mandated by the Patent Act and goes beyond the requirement of Section 146.

   3. Para 4: If Patent is worked, there is requirement for submission of approximate revenue / value accrued in India to the patentee(s)/ licensee through:
      o Manufacturing in India …… (in INR)
      o Importing into India ………. (in INR)

      Brief in respect of above in not more than 500 words.

      Effect: Though the requirement of “quantum” has been removed, but revenue accrued is still required to be given along with how much is manufactured in India and how much is manufactured outside. In effect it does nothing to protect the confidential information of the patentee. However, the opportunity to provide a brief about the working, revenue and manufacturing requirement may allow the patentee to give an explanation.

   4. Para 5: If Patent is not worked, reasons for not working the patented invention(s) and steps being taken for working of the invention(s), have to be given in not more than 500 words.

      Effect: This remains the same as in the earlier form, except that the patentee is expected to provide a long explanation.

   5. The declaration “state whether public requirement has been met partly/adequately/to the fullest extent at reasonable price” has been removed.

   6. Every patentee and every licensee (exclusive or otherwise) is required to file this form; where a patent is granted to two or more persons, all such patentees may file this form jointly; however, each licensee is required file this form individually.

      Effect: This is an added burden on the patentee and the licensee.

Given below is a comparison of the old and the new Form 27:

2. Amendments in Rule 21 concerning the submission of priority document and its verified English translation for national phase applications:

1. Only when the applicant has not complied with requirements of submission/request for the certified copy of priority application before the International Bureau or the Receiving Office under PCT Rule 17.1, there is a requirement for submission of certified copy of priority application within 31 months from priority date.

2. The English translation of priority application duly verified by the applicant or the person duly authorised by him, is required to be submitted within 31 months from the priority date, only:

   1. where the validity of the priority claim is relevant to the determination of whether the invention concerned is patentable; or
   2. where an element or part has been incorporated by reference, for the purposes of determining whether that element or part is completely contained in the priority document concerned.

3. Where there is requirement for submission of certified copy of priority application or its verified English translation and applicant does not submit the same within 31 months from the priority date, the Patent Office shall invite the applicant to file the priority document or the translation thereof, as the case may be, within three months from the date of such invitation, and if the applicant fails to do so, the claim of the applicant for the priority shall be disregarded for the purposes of the Act.

Effect: The applicant or his agent will have to be vigilant with respect to the submission of priority document when invited by the Controller, otherwise there is a danger of losing the priority claim.

Trade secret protection in India

THE INTELLECTUAL PROPERTY APPELLATE BOARD: BACK ON THE TRACK

The Intellectual Property Appellate Board (IPAB) is a tribunal constituted for adjudication of technical issues regarding IP rights. IPAB has jurisdiction to deal with matters pertaining to the Patents Act, 1970; the Trademarks Act, 1999; the Copyright Act, 1957; the Geographical Indications of G o o d s ( R e g i s t r a t i o n a n d Protection) Act, 1999 and the Protection of Plant Variety and Farmers Right Act, 2001. According to rules as defined in various acts, the IPAB Bench must comprise of a Judicial Member and a Technical Member.

The IPAB has been non-functional since several months due to absence of technical members for patent, trademarks and copyright cases; pendency of cases, hence, had become a cause of concern. The post of technical member for patents was lying vacant since 4th May 2016 and that for trademarks was lying vacant since 5t h December 2018. For copyright, no technical member has ever been appointed and only one technical member was appointed for Plant Varieties Protection. As a consequence, no hearing could take place in the matters related to patents, copyright and trademarks.

In Mylan Laboratories Limited vs Union of India and others, the petitioner (Mylan Laboratories Limited) filed an appeal along with a stay application before the IPAB on 17th May 2019 against an order dated 14th March, 2019 passed by the Deputy Controller of Patents and Designs. The impugned order had dismissed a pre-grant opposition filed by the petitioner. The petitioner approached the Court for urgent hearing of the stay application as the IPAB was not functioning. On Courts' direction, the Deputy Registrar, IPAB filed a status report with respect to the vacancy of the position of technical members. This further revealed that there was a huge backlog of cases before the IPAB. As on 23rd May 2019, 3935 cases were found to be pending before the IPAB (Figure 1). This was deemed to be a complete failure of the objectives with which the IPAB was established. In the last five years (January 2014-June 2019), the number of cases disposed of by IPAB is significantly lower when compared to the filings made during the same time period (Figure 2).

Even the number of hearings conducted in relation to patents in past years is very low. From 2014-2016, in all 93 hearings were conducted (2014 – 46; 2015 – 30; 2016 – 17).

The Delhi High Court in its order dated July 8th, 2019, directed that the IPAB Chairman and the technical member (Plant Varieties Protection) are to hear all urgent matters pertaining to patent, trademark and copyright till the vacancies of other technical members are filled up. Further, the Court said that the orders that shall be passed by the Chairman and the technical member, Plant Varieties Act will not be held invalid on the ground of lack of quorum. Also, if the technical member (Plant Varieties Protection) is not available for any reason or is recused, the Chairman of the IPAB can proceed to hear the urgent matters. The Court further held that, in patent matters, the IPAB Chairman can take expert opinion from the members of the panel of scientific advisors under section 115 of the Patent Act, 1970.

This is certainly a welcome direction given by the Delhi High Court. In the coming months it is hoped the Delhi High Court's orders are implemented with appointment of technical members and smooth adjudication in the matters of the IPAB.

Contributed by Ms. Manika Arora & Ms. Rashmi Tandon

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