Bajaj-TVS Feud- The Judgment

This would first of all require a certain level of understanding of technology, both reasoned and intuitive. Though patent law is certainly not always about technology, none can deny that an internalised comprehension of the technology or an ability to relate to technology in general, is a condition precedent if one is to do justice to the inventor or the patentee.

This I subscribe to with greater vigour after going through the Madras High Court judgment on the Bajaj-TVS feud. In an earlier post, I had attempted to bring out the points on technology relevant to the case. At the expense of sounding immodest, I admit I cannot help feeling sunny that my research on the case was spot on, for a couple of documents which I had cited in the post have been used in the case (however, the judgment certainly comes as a dampener). As I usually do, I disclaim any kind of vested interest in the outcome of the judgment, which has not affected my rational faculties or my sense of objectivity in the least.

I was going through the judgment from Manupatra and honestly, I was appalled at the number of typographical errors which made reading a miserable task. Anyway, the whole case revolves around the following issue:

“Did Bajaj have a prima facie case of infringement against TVS so as justify the grant of an order of injunction against the latter?”

This issue would lead to several other sub-issues. To establish the above:

Firstly, Bajaj had to prove that it had a valid patent. The validity of the patent would again bring in the question of presumptive validity on account of grant and several other factors such as the history, if any, of challenge to the patent, pre-grant or post-grant; prosecution history with regard to provisional, complete and amended specifications of the Bajaj patent and finally the scope of protection sought by and granted to the patent.

Secondly, if the patent was valid, did the TVS model infringe the same? Did Bajaj have sufficient information about the TVS model to allege infringement? Or did it constitute a groundless threat under s.106 of the Patents Act? Was the nature of conduct of TVS subsequent to grant of patent to Bajaj and prior to the launch of Flame consistent with its belief that the Bajaj patent was invalid?

Finally, Bajaj had to establish balance of convenience in its favour and irreparable harm to it in case of non-grant of injunction.

Validity and Infringement

I shall deal with the first two issues together. To give due credit to the Court, it did make an attempt to understand the fundamentals of the working of a four stroke Internal Combustion engine before moving to the specific aspects of the Bajaj patent 195904. The Court then listed the essential embodiments protected by the patent, which according to the company were infringed by TVS. The essential features according to the Court and Bajaj are:

The Court acknowledged the use of twin spark plugs in large bore engines prior to the Bajaj patent and opined that this had not been implemented in small bore engines earlier, since a single spark plug catered well to the needs of smaller engines. More importantly, according to the Court, dual ignition was earlier used in smaller engines, but not for lean mixtures. 

TVS countered this allegation by citing prior art. But before it could venture to do so, it was forced to explain to the Court that a spark plug did not cause a lean mixture, when in fact it burnt the lean mixture!!! One of the occupational hazards which come with being a patent attorney is that one is faced with the thankless and unenvious task of explaining technology to an audience which is technologically handicapped. TVS then proceeded to cite the following documents to buttress its case:

In contrast the affidavit filed by Bajaj in the Court reverted to a plug centric stand. According to TVS, this change in specification indicated an inconsistency in the subject-matter sought to be protected by Bajaj. This could also be taken to mean that Bajaj recognised the function of the third valve as given in the Honda patent and accordingly restricted its claim to a cylinder with two valves, which is inconsistent with its belief that the third valve was ornamental.

With particular regard to the inconsistency of the specification, the Court was of the opinion that Bajaj had merely given more construction to its claim and it was in accordance with the provisions of the Act. I believe this is where knowledge of technology comes into play to help one distinguish claim restriction from change of subject-matter; in this case, the Court was not adequately equipped to understand this fine distinction.

Bajaj in its support averred that the Honda patent did not have any limitation on the bore diameter of the engine and since its (Bajaj’s) patent was more specific in claiming dual ignition in cylinders with bore diameter between 45-70mm, the Honda patent did not in any manner affect the validity of its patent. Now the question to be answered here is, if a patent may be granted on a specific application in a smaller range or at a smaller scale when an earlier patent has no limits on specification? This question is very subjective.

C. US 6250146– This patent, titled “Internal Combustion Engine Comprising atleast Two Valves per Cylinder” was granted to AVL List on the 3 valve technology which was subsequently licenced to TVS by AVL. This patent proves that the third valve was not merely an ornamental addition aimed at circumventing the Bajaj patent. In my earlier post, I had cited its European version EP0444018 and explained in detail its function which differs largely from Bajaj’s DTSi technology.

Bajaj responded by insisting that the third valve had no effect on the working of the TVS model and sought explanation for the absence of dual-ignition based small bore lean engines in earlier motorcycle models. Purportedly, Honda seems to have made a statement on 20-07-2005 to the effect that dual ignition in smaller engines would be successful in the future, indicating that Honda’s US patent was directed towards small bore engines. This may be true, but the limits of a patent cannot be etched on the basis of public statements made by patentees. 

The discussion then veered to presumptive validity to a patent on account of grant and the effect of a challenge to the patent on such validity. Bajaj argued that s.48, after the 2002 Amendment Act, laid increased emphasis on the rights of the patentee for it allowed him to prevent third parties from using the patent. According to Bajaj, this enhanced protection translated into a presumption in favour of the patent which had been granted until it is revoked in a manner prescribed by law.

To this, TVS countered that the revocation bid negated any presumptive validity of the Bajaj patent. TVS relied on s.13(4) of the Patents Act which states that examination and investigation or any proceeding consequent to it carried out pursuant to s.12 of the Act did not in itself warrant any kind of validity to the patent. “Any proceeding consequent” includes grant as well. It was also submitted on behalf of TVS that had the question of validity of the Bajaj patent not arisen, injunction would follow, but since the very basis of the grant had been questioned, it was incumbent on Bajaj to prove the prima facie validity of its patent without relying on any kind of presumption arising out of grant, to justify its prayer for an injunction. The Court then drew support from the decision of the Supreme Court in Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries where it was held that:

“It is noteworthy that the grant and sealing of the patent, or the decision rendered by the Controller in the case of opposition, does not guarantee the validity of the patent, which can be challenged before the High Court on various grounds in revocation or infringement proceedings. It is pertinent to note that this position, viz., the validity of a patent is not guaranteed by the grant, is now expressly provided in Section 13(4) of the Patents Act, 1970. In the light of this principle, Mr. Mehta’s argument that there is a presumption in favour of the validity of the patent cannot be accepted.”

On infringement, the Court again reiterated that the third valve was not of much use though the issue had to be decided at the trial stage. It was of the opinion that even if the third valve was considered a material addition to the TVS model, since the essential features of the Bajaj patent had been used in Flame, it amounted to infringement because the consent of the patentee was absent. The Court relied on a purposive construction of the claims to arrive at this decision and compared the present case to the Beecham group case involving hetacillin and ampicillin. 

Here I would like to point out that the Court did not wish to comment on triable issues for only a prima facie view was required. Interestingly, of the 45 pages in the judgment, 31 pages are dedicated to the “prima facie” analysis of validity and infringement with 29 on the former and 2 on the latter- all this for a prima facie case. Some feel that this goes against the “spirit” of a prima facie analysis. May be, but could it have been avoided in the instant case without being unfair to either party? I don’t think so. This is because the case involves technology, something which the Court is not familiar with and it involves the second and third largest two-wheeler manufacturers in the country with the stakes naturally being high. 

Balance of Convenience and Damages

The Court relied upon several decisions to rule in favour of Bajaj. Again this aspect of the issue turned on the time elapsed from the date of grant of the patent and the market share carved by the DTSi technology. Citing the Bilcare decision of the Delhi High Court, the Court felt that use of a patent for two years could not be termed sufficiently old and that in this case since nearly 5 years had passed since Bajaj’s patent had been put to use, it was a fit case for interim injunction. The Court noted that Bajaj had sold approximately 3.05 million motorcycles upto November 2007 running on the patented technology.

The Court also felt that the scope of rights of the patentees had increased after the 2002 Amendment of s.48 as required by Article 28 of TRIPS. In the light of this amendment, to raise triable issues at the interlocutory stage would amount to abridgment of such rights sought to be protected by TRIPS and s.48. It was also of the view that the opinions expressed at the interlocutory stage cannot and should not affect the examination of evidence at the trial stage. Also, the fact that TVS was yet to release its model and Bajaj had a market for 4 years tilted the balance in favour of Bajaj.

In my opinion, the issue of balance of convenience in this case is not a straightforward one. On one hand, Bajaj has a steadily rising market and on the other TVS was all set to launch a whole product line on which it must have made a considerable investment. An interlocutory injunction stalling the launch would not only affect the sales of the impugned model, but would affect the reputation of the company and its subsequent products as well. If TVS were to be vindicated at the trial stage, how would the Court calculate the opportunity loss incurred by TVS on account of a delayed release not to mention the loss in share prices? However, I must admit I do not see how the Court could have ruled otherwise for Bajaj too has a market, an established one at that. As regards the calculation of damages, the Court did not agree with TVS’s view that damages could be calculated with reasonable certainty at the trial stage for the company maintained an exact account of number of motorcycles sold and profits made.

In conclusion, one feels that though the ingenuity of Bajaj’s patent is in doubt, the fact that the DTSi technology has a significant market presence coupled with TVS’s inaction tipped the scales in Bajaj’s favour. More importantly, the judgment points to the challenge which patent attorneys may face in the future in explaining much more complicated technologies to the judiciary.