Patent

The Bilcare decisions by the Delhi High Court: Preliminary injunctions and the presumption of validity of a ‘new’ patent




Two recent decisions of the Delhi High Court discuss the issue of grant of interim/preliminary injunctions in patent infringement disputes. The cases, M/S Bilcare v. M/S Amartara and M/S Bilcare v. M/s Supreme Industries were both decided on March 20, 2007. The key issues discussed in the decisions are:

(1) Whether there is any presumption in favor of the validity of the patent for grant of preliminary/temporary injunction in favor of the patentee?
(2) What are the grounds for grant of a preliminary injunction in a patent infringement action.
(3) Whether no interim injunction could be granted if the validity of the patent was challenged.
(a) The weight to be attached to the age of the patent when determining whether or not an interlocutory injunction ought to be granted


The Delhi High Court recently decided two appeals against interim orders in patent infringement suits filed by Bilcare Limited. The two suits, Bilcare Vs. Amritdhara, pending before the High Court of Delhi and Bilcare Vs. Associated Capsules & Supreme Industries, pending before the Delhi District Court (Tis Hazari), were both filed by the same plaintiff (Bilcare) and have substantially the same facts. Because it was almost impossible to understand the reason why Bilcare filed suits in two different courts, I spoke with Mr. Manu TR, a lawyer who has been closely associated with this matter, to get the details. (For other summaries of the case, click here and here)

The summary of the explanation by Mr. Manu TR is as follows: Bilcare filed the matters in different courts for strategic reasons. The suit seeking ex parte injunction against Amritdhara was filed in the High Court and Amritdhara opposed the same. In order to obtain a quick ex parte injunction without having to face a possible caveat filed by defendants, Bilcare filed the next two suits, against Associated Capsules (a competitor) and Supreme Industries, in the District Court– Tis Hazari. Usually, if the Defendant in an infringement action counter claims for revocation of a patent, the entire suit is transferred to the High Court. In the case against Associated Capsules and Supreme Industries however, the case did not get transferred to the High Court because Associated Capsules had already filed an opposition proceeding (against Bilcare’s patent) before the Controller of Patents.

Summary and Discussion of the case:

The invention: A multilayer thermoformable, translucent pharmaceutical and food packaging film which has a core PVC layer, a metallized layer and a third polymeric layer ranging from 0-250 microns, and which prevents moisture from entering the material packaged using the same. Plaintiff (Bilcare) claimed that PVC films made prior to its invention were incapable of preventing moisture from passing through and were therefore unsuitable for packaging medicines and vitamin tablets. The PVC invented by Plaintiff had the additional quality that was highly desirable – it was translucent, thereby allowing patients to identify them easily.

The dispute: The dispute arose when the defendants were found to be manufacturing and marketing similar PVC films, which Bilcare alleges is an infringement of their exclusive rights under the patent. Pending the final decision of the cases, Bilcare obtained ex parte injunctions against the defendants, which were later set aside on motion by the defendants. Bilcare thereafter, filed appeals in the High Court against the orders setting aside the ex parte injunctions. The two cases are decided by Justice JM Malik and Justice Sanjay Kishen Kaul respectively. The judges reach the same conclusion, albeit on different reasoning, that in the facts of the case, a temporary injunction need not be granted.

A number of arguments were made for and against the grant of an interlocutory injunction. The key arguments and holdings are discussed hereunder. While I am discussing the arguments presented as well as the decisions in the two cases together, I have, for the purpose of convenience, identified the argument/holding as being from the decision by Justice JM Malik (JMM) or by Justice Sanjay Kishen Kaul (SKK).

Key Arguments and issues:

One of the main issued addressed in both cases is “whether there is an any presumption in favor of the validity of the patent for grant of temporary injunction in favor of the patentee?” (JMM) In both decisions, the judges hold that there is no presumption of validity of a patent. In support, they quote § 13(4) of the Indian Patent Act, 1970, which states that:

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

A related issue was whether no interim injunction could be granted if the validity of the patent was challenged. This issue was discussed in relation to the age of the patent.

The courts looked at a number of decided cases. The JMM court quoted from National Reseach Development Corporation v. Delhi Cloth and General mills AIR 1980 Delhi 132: “It is also a rule of practice that if a patent is a new one, a mere challenge at the bar would be quite sufficient for a refusal of a temporary injunction but if the patent is sufficiently old and has been worked the court would for the purpose of temporary injunction, presume the patent to be valid one. If the patent is more than 6 years old and there has been actual user it would be safe for the court to proceed upon this presumption.”

The (SKK) court cited a number of cases as well as Kerr on Injunction (2nd ed pg 320), which state that when the validity of a patent is challenged and a revocation application is filed, no injunction should be granted. However, it has also been held that once a violation is established in a case of a registered patent, subject of course to the patent being used, it would not be possible to contend that the patentee is not entitled to an injunction. [Telemecanique and Controls v. Schneider Electric 2002 (24) PTC 632 (Del)] (It is interesting that this is the current law in India because the Bilcare court does not over rule this holding in Telemecanique. This is contrary to the holding in the Ebay decision last year where the US Supreme Court put an end to the general rule that a permanent injunction should follow a finding of infringement of a valid patent. [See Comment here)

Other cases were also cited which state that the mere fact that a patent is young (i.e. the grant was made recently) is on its own not a sufficient ground to refuse an injunction. For example, the (JMM) court cited the case Metro Plastic Industries v. Galaxy Footwear, New Delhi (AIR 2000 Delhi 117), which held that merely because a registration is recent, it is not by itself a ground for refusing an injunction (although it could be one of the many factors considered). After considering these cases, the court held that “it is not sufficient for the grant of an injunction that a patent is registered and the strength of the defense including the revocation application have to be looked into.” (SKK)

Determining whether or not to grant an interlocutory injunction in patent infringement actions:

The court (JMM) enumerated the following factors to be considered while determining whether or not to grant an interlocutory injunction in an alleged patent infringement action:

“Whether the Act [sic.] in question is really an invention. It is to be proved that the device in question is new, non-obvious and inventive.” From reading the case, it appears that this question may be paraphrased as “whether the invention was a meritorious one that truly deserved patent protection. In answering this question, the court considered the prior art on record and came to the conclusion that the plaintiff’s alleged invention cannot qualify as an invention under the Patents Act because it was already known in the trade.

“Whether it is not of recent origin.” Quoting from M/S National Research Development Corporation v. M/s Delhi Cloth and General Mills, AIR 1980 Del 132, the court stated: “it is also a rule of practice that if a patent is a new one, a mere challenge at the bar would be quite sufficient for a refusal of a temporary injunction, but if the patent is sufficiently old and has been worked, the court would for the purpose of temporary injunction, presume the patent to be valid one. If the patent is more than 6 years old and there has been an actual user, it would be safe for the court to proceed upon this presumption.” The court also stated that “it is settled law that in an action for infringement of a patent, an injunction would not be granted where the validity of the patent itself has been questioned and a revocation petition has been filed.” [citing Niki Tasha India v. M/S Faridabad Gas Gadgets AIR 1985 Delhi 136 at 140].

“Whether it pertains to a three layered product or a two layered product.” This step seems to require a comparison of the patented invention and the allegedly infringing product.
“Whether damages would provide adequate remedy should the claim succeed.”
“Whether it would be proper for the appellate court to upset the trial court order which has made its perspicacious judgment.” For this issue, the court held that the “it would not be proper to upset the well reasoned judgment of the trial court. The trial court has meticulously checked the record for precision and clarity”

Other defenses
Issue of Mosaicing (SKK). In response to the allegation that the patent was invalid as being obvious, the plaintiff submitted that the argument of the defendant was based on “mosaicing” various prior art documents, which is not a permissible means challenging the validity of a patent. According to Terrel, “the mosaicing of individual documents or prior uses is not permissible unless it can be shown that the skilled person, confronted with a particular citation, would turn to some other citation to supplement the information from the first. Whether he would do so is a question of fact.” (Terrel on Law of Patent (16th ed) as quoted in Technograph v. Mills and Rockley [1972] RPC 346 at 355. The court further observed that when dealing with non-obviousness, mosaicing is permissible but it must be a mosaic that can be put together by an unimaginative man with no inventive capacity.

The court did not accept the argument of mosaicing on the ground that in the facts of the case, not only were the individual components known, but so was a combination of the components. The court therefore held that the invention was neither novel nor non-obvious.

Prosecution history and scope of specification: Another interesting issue raised by the defense was that the plaintiff had expressly disclaimed a two layered film during the US patent application process by stating before the USPTO that its invention applies to film containing at least three layers as a two layered film had been patented as long back as 1975 (JMM – Para 5). The court did not discuss the issue of prosecution history in the United States but did look at the specification in the Indian patent which stated in relevant part that “a multi layered film essentially comprising at least three layers is developed…” Since the defendant’s product only had two layers, it could not be an infringement. (SKK paragraph 80)

Non disclosure of material facts (SKK): The defendant claimed that the invention is not novel because the plaintiff failed to disclose that it was not manufacturing the product itself but was sourcing the same from a Taiwanese corporation. The defendant also contended that the plaintiff had started selling the product before filing a patent application (thereby killing its novelty). In response, the plaintiff claimed that the know how for manufacturing the product was given by the plaintiff to the Taiwanese corporation and that the product it was selling before applying for the patent was different from the patented product. The court did not accept either of these arguments and held that the original injunction was obtained without disclosing the complete facts.

Considering the above arguments as well as the fact that the patent was granted recently and there was a post grant opposition pending against the grant of the patent, the court came to the conclusion that the balance of convenience was in favor of vacating the injunction. The court further stated that the interests of the plaintiff can be protected by direction the defendant to keep accounts of the same of the product in question during the pendency of the suit and filing the same on a quarterly basis.

I was discussing this issue with Shamnad and he raised an interesting question in the context of the Ebay decision: in the light of the Ebay decision, what is the likely standard for permanent injunction in India? Ebay, as many of you will recall, stated that injunctions (even after the patent is found to be valid and infringed) are not a matter of right. The Ebay court relied on the “traditional” “four-factor test” for determining whether to issue a permanent injunction, namely, that a plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. (See Comment on the Ebay case) The court found that these familiar principles apply with equal force to disputes arising under the Patent Act. The key 4th factor, namely, “public interest” is one that the Bilcare courts did not discuss. The traditional grounds for grant or refusal of a preliminary injunction in India, are, (1) that the plaintiff demonstrate that it has a prima facie case; (2) they must produce prima facie evidence that there has been an infringement of their patent by the defendant; and (3) that the balance of convenience is in favour of the plaintiff. This is the standard applied in most intellectual property cases as well. While it may be argued that these considerations if met, will indirectly lead to a result that is not contrary to public interest, none of the cases discussed by the Courts in Bilcare expressly mention “public interest” as a factor in determining whether or not to grant a preliminary injunction. I am also not personally aware of any Indian case that discusses public interest as a determining factor for the grant or refusal of preliminary injunction. Any additional information on this is welcome.

7 comments.

  1. AvatarMrinalini Kochupillai

    I got an email from Anoop, asking a very interesting question. I am posting his questions as well as the responses by Shamnad and me here:

    Anoop said (May 14, 2007):

    The article that you had posted in Spicy IP about injunctions in India was indeed very interesting.
    however,(because of my non-law background) I had this doubt-

    To my understanding in either of the judgments the plaintiff has not succeeded in proving infringement. The court has observed that the patent relates to 3 layered structure, where as the defendants product is only 2 layered. In this background, why was the validity of patent important? because even if the patent was valid ,there was no infringement. Is it mandatory that the 3 step test should be followed necessarily in that same order?

    Mrinalini said (May 14, 2007):
    The Bilcare cases decided by the High Court were in the stage of preliminary injunction. The final decision as to whether or not there is infringement has not been taken by the court. Preliminary injunctions are usually requested by the Plaintiff (patent holder) pending the resolution of the dispute. This is done to try and prevent the defendant (alleged infringer) from manufacturing and selling the allegedly infringing products till such time as a final decision is taken on whether or not there is an infringement. At the stage of
    preliminary injunction, therefore, the court will take a not so in depth look at the record to see if there appears to be a strong case in favour of the plaintiff. Thus, there usually are observations on
    whether or not there “appears” to be a good case made out by the plaintiff. The court will not, at this stage, rule determinatively on whether or not there is an infringement.

    In the actual case for example, the court might take a deeper look into the 2 versus 3 layer argument. There is a doctrine called the doctrine of equivalents – i.e., even if the infringing product is not exactly the same, it may in some cases be deemed “equivalent” and therefore infringing.

    The issue of presumption of validity of the patent becomes important during the preliminary injunction stage because if there is a presumption of validity of patent, the plaintiff’s case for grant of preliminary injunction would become stronger.

    Regarding your query about the order in which the 3 step test is to be applied: I presume that the three steps you are mentioning are “(1) that the plaintiff demonstrate that it has a prima facie case; (2) they must produce prima facie evidence that there has been an infringement of their patent by the defendant; and (3) that the balance of convenience is in favour of the plaintiff.” The order is not imprtant. All three must be proved and on the basis of all three, the court will decide whether or not a preliminary injunction ought to be granted.

    Shamnad said (May 15, 2007):

    Thanks very much for your incisive queries. Mrinalini is absolutely right here. The only enquiry at the stage of a prelim injunction is whether the
    plaintiff has made out a prima facie case (a case that is good on the face of it…). And I think you’re right that in this case, it appears that no prima facie case was made out (so the first condition for the grant of a prelim injunction itself is not present). Is this factually correct, [Mrinalini]? I.e. That the judge found there was no prima facie case for infringement?

    If it is, then all this stuff about patent validity etc is obiter–for as Anoop rightly says, if there is no prima facie case on infringement, then patent validity really doesn’t matter in an issue involving the grant of a temporary injunction.

    Reply
  2. AvatarMrinalini Kochupillai

    Continuing the above discussion…
    Mrinalini said (May 16, 2007):
    Shamnad, thanks for the inputs. The court focussed more on prima facie case for the validity of the patent – looking into the prior art etc. There was just a brief discussion on infringement. The judgements are themselves really haphazard and the court has identified the main issue as whether or not there is a presumption of validity of a [granted] patent in a preliminary injunction case and whether when there is a challenge to the validity of a patent, a PI should be granted.

    Indeed, the court could well have just said that there is no prima facie case made out for infringement and avoided the issue of validity of the patent but chose not to do so. The interesting question might be why the court so chose.

    Reply
  3. AvatarMrinalini Kochupillai

    Shamnad said (May 16, 2007):

    I am copying our litigation expert Shwe[tashree] on this.

    For the benefit of Anoop, let me lay down the 3 factor test that courts normally use for deciding whether to grant a temporary injunction:

    1. Prima facie case
    2. balance of convenience in plaintiff’s favour, and
    3. plaintiff would suffer irreparable injury if injunction is not granted.

    Shwe, it seems like the court had two options here:

    1. no prima facie case, since infringement not likely (2 layer vs 3 layer)
    2. no prima facie case, since patent does not appear to be valid (of course, this issue might also impact the second and third factors above).

    If they could have disposed this off under point 1 above, why did they have to go into 2?

    Reply
  4. Avatarmanu

    Here the case relates to revocation of the injunction already granted and therefore the Court will have to analyse more elaborately into the three principles laid down for grant of temporary injunction based on the validity of the patent in question for continuance of the injunction; rather than going into details whether the Defendants infringed the patent or not. Both the High Court and District Court has observed that the patent is not valid and therefore the injunction cannot be continued. I am unable to comment more on the validity of the patent since I am also involved in this case on behalf of the Defendants. In any case, Bilcare has filed an SLP before the Supreme Court of India but surprisingly only against one of the Defendants.

    Reply
  5. AvatarShamnad Basheer

    Thanks Manu,

    But, isn’t it easier to make an “infringement” determination, as opposed to an “invalidity” determination?

    In other words, at the level of a temporary injunction and proving a prima facie case, it seems to me that it would be easier to do an “infringement” analysis than an “invalidity” analysis (not always–but certainly in a case like Bilcare).

    Shamnad

    Reply
  6. AvatarAnonymous

    well shamnad, as they say attack is the best form of defence.the defendents here have questioned yhe validity of the patent itself rather than justifying the legality of their own product.when the said patent is itself invalid there can be no question of its infringement in the first place.so the plantiff is not entitled to point a finger at the defendants.

    Reply

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