Patent

Bajaj-TVS Feud- The Judgment


The danger with judging the worth of a patented invention or a patent application is that after understanding what the invention is all about, one tends to get wiser on account of an afterthought which makes the invention seem easy and or even obvious. It is absolutely imperative on the part of a patent examiner or a judge to control the urge to trivialise the invention so as to appreciate the inventor’s contribution at the time of making the invention or applying for a patent; more so if the invention seeks to give an incremental impetus, and not a quantum thrust, to the state of art.

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:

(i) Small displacement engine as reflected by a cylinder bore diameter of 45-70 mm.

(ii) Combustion of lean air fuel mixtures;

(iii) Using a pair of spark plugs to ignite the air fuel mixture at a predetermined instant.

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. 

According to Bajaj, the TVS model too was small bore lean burn dual ignition engine of size 54.5mm*53.5mm and so it infringed the patent. Further, Bajaj alleged that the presence of 3 valves did not dilute the infringement, for the third valve did not materially contribute to the working of the engine and was a mere ornamental feature designed to circumvent its patent. If this is what Bajaj truly feels about the TVS technology, one would like to hear them repeat the same in a congregation of engineers, either in ASME or SAE conventions; after all, isn’t the opinion of those skilled in the art relevant in judging the merits of an invention? 
More importantly, if the third valve did not add value to the working of the TVS engine which is based on the Honda patent, it would mean that the Bajaj patent is substantially the same as the Honda patent! Somehow, this logic seems to have escaped the Court’s analysis.

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:


A. US 4534322– This was cited by TVS to prove that dual ignition technology was not novel. The Honda patent was granted on 13.08.1985 and expired on 12.08.2005 leaving it open for public use. The patent was on a combination of two spark plugs with three valves in a single cylinder which is exactly what the TVS model was based on. Interestingly, TVS pointed out that, but for the third valve, every aspect of the Bajaj patent is a replica of the Honda patent including the screw-fitted sleeve of the second spark plug. It must also be noted that Bajaj applied for its patent on 16-7-2002 when the Honda patent was still in force. TVS explained that this was one major reason why Bajaj decided to amend the nature of its claim in the complete specification i.e. the provisional specification was valve centric, the complete specification was plug centric and again the amended specification was valve centric. I had pointed this out in my earlier post. Bajaj’s patent application on November 5, 2004, wherein its original claim of:

“An improved internal combustion engine for efficient burning of lean air fuel mixture used in engines working in four stroke principle, characterized in that said IC Engine comprising a pair of spark plugs…. ” was supposedly reduced to


An improved Internal Combustion Engine working on four stroke principle, having two valves per cylinder for efficient burning of lean air fuel mixture used in engines where the diameter of cylinder bore ranges between 45 mm and 70 mm characterised in that said Internal Combustion Engine comprises a pair of spark plugs”.

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.


Under s.11(2) and s.11(3) of the Act, the subject-matter disclosed and claimed in complete specification which is filed in pursuance of a provisional specification must be fairly based on the provisional specification. In this case, the amended specification of Bajaj dealt with use of dual ignition in a cylinder with two valves whereas the earlier specification merely dealt with use of dual ignition in a single cylinder. According to the Court, this change from a plug centric specification to valve centric specification was a refinement in restriction which was in accordance with s.11. 


The Court held that the modification was nothing more than an additional limitation, which is certainly not the case. It failed to differentiate between refinement in claim restriction and a radical shift in the subject-matter claimed; the presence of a third valve would have changed the focus of technology and a restriction to two valves indicates change in emphasis and not just scope of protection.


The Court would have done well to seek the assistance of scientific advisors as provided for in the Patents Act itself. I am surprised that organizations like SAE did not help the Court as Amicus Curiae for it would have largely reduced the confusion with respect to the technology. On this specific count, the American system is worthy of being emulated where organizations like Intellectual Property Owners association (IPO) regularly present their views, particularly in cases where the technology involved is complex and where the opinion of those conversant with technology and law may help the Court see things in proper perspective.


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.


Firstly, one would have to investigate if the earlier patent was sufficiently broad to encompass the entire range of specifications thereby making the Bajaj patent obvious or did the Honda patent explicitly rule out the application of dual ignition to small bore lean burn engines?


Secondly, did the Bajaj patent yield results which were non-obvious and were not disclosed or revealed in the Honda patent or any other prior art?


The answer to the first question is that since the Honda patent does not in anyway restrict the use of dual ignition only to large bore engines, it raises doubts on Bajaj’s qualification to practice its patent. In other words, the Bajaj patent may be accused of lack of novelty as well. However the standard of proof required to prove absence of novelty is higher.


As regards the second question, TVS pointed to the configuration of Kawasaki KZ 1000 SI, which too works on dual ignition in a single cylinder of bore size 69.4 mm, which is within the range claimed by Bajaj.


B. US 5320075– Titled “Internal Combustion Engine with Dual Ignition for Lean Burn”, this was cited by TVS to prove that dual ignition in the case of lean burn ignition too existed prior to the Bajaj patent. This patent was cited in my earlier post. Interestingly, there is no limitation on the bore size of the cylinder in this patent as well.

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. 

At every instance in the judgment, the Court has relied on market response to judge the validity of Bajaj’s patent such as the quantum of exports to other countries, the awards won by Bajaj and the revenue it has fetched Bajaj. Assuming that this indicates the acceptance of technology by competitors, it would still be a gross assumption. This is because Bajaj exported the technology to countries like Sri Lanka, Indonesia and Egypt but not to the US and Japan or places where there were patents on the technology. Had they done so, there claim would have been valid.

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.

It was also submitted that though the Act did not explicitly point to a presumption on account of a patent grant, it may be inferred from s.104A. Bajaj also pointed out that the conduct of TVS subsequent to the grant of patent to Bajaj and prior to the launch of Flame was suspicious. This is because TVS was silent for over 4 years after the patent grant to Bajaj but filed a revocation petition under s.64 of the Patents Act before the IPAB on 24-08-2007, just six days before the launch of its impugned model Flame.

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 the basis of this decision, the Court held that Bajaj had to still establish prima facie case of validity and infringement and that reliance could not be placed on enlargement of rights under s.48 as the 2002 Amendment Act did not in anyway reduce the burden of the plaintiff in cases of injunction. Then moving to the issue of a prima facie case, the Court pointed out that TVS had not questioned the validity of the patent for 4 years and that during this period the DTSi technology had obtained a significant place in the market with the sales increasing steadily over the years. 
The Court also pointed out that none of these facts were contested by TVS at any point in time. On this count, I agree with the Court for TVS still has not been able to give a satisfactory answer to this question. In fact even after the judgment, when the MD and Chairman of TVS, Mr.Venu Srinivasan was quizzed on this, he could not come up with a convincing reply. Accordingly the Court ruled that Bajaj had proved a prima facie case of validity in its favour. The Court also held that mere filing of a revocation petition under s.64 did not give rise to a presumption against the validity of the patent and that a final decision of the validity of the patent involved a plethora of complex issues which the Court was not required to consider for only a prima facie view was required.

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. 

As mentioned earlier, I do not agree with this view of the Court since it has not understood the technology for what it is and the construction is anything but purposive. The sales figures of DTSi technology and its market reputation have played a decisive role in the decision of the Court rather than the merits of the invention. If one were to place the Bajaj patent along side the Honda patent and US 5320075, the answer would be crystal clear.

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. 

Would we be charitable in our views had the Court skimmed through the issues to respect the “spirit” of a prima facie analysis? Again the answer is an emphatic no. Should we have a standard for what constitutes prima facie case to avoid a long drawn battle at the interlocutory stage? I believe the time is not ripe for such a standard. The judiciary is yet to make out what kind of an animal patent law is and until the time we have a good number of decisions on technologies worth discussing, the question of a standard for a prima facie case should be left for the judiciary to evolve on a case by case basis. Moreover, though we have general principles for proving a prima facie case, the application of these principles in different technologies is easier said than done.

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.

Though I agree with the view that quantum of sales and market share are relevant factors which the Court needs to consider in deciding on balance of convenience in favour of either parties, to set a minimum period of 2 years does not appeal to one’s rational faculties. We know that a window of 180 days as provided under the Hatch Waxman Act is sufficient time for a pharmaceutical company to rake in millions, so strictly speaking time should not be of essence in cases of interim injunction. The value of a particular technology, market receptivity, reputation of the company, the amount of investment made in developing the technology and strength of the competitor should take precedence over time. 
More importantly, though the patent is for a term of 20 years from the date of filing, approximately 2.5-3 years are lost in the grant proceedings with the effective period of monopoly being about 17-18 years. In fact, I would go a step further to state that the closer one is to the date of grant, the greater should be the chances of obtaining an interim injunction since it is in the initial stages of commercialisation of a patent that the patentee needs to be protected better from potential infringers. Such being the case, unless there exist very strong grounds which create a presumption against the validity of the patent, the Court should take into account the injury to the plaintiff in granting interim injunction and it need not depend on the time elapsed since grant of the patent. Although in this case, there exist strong grounds for presumption against the validity of the Bajaj patent.

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.

9 comments.

  1. AvatarAnonymous

    “..the presence of a third valve would have changed the technology altogether and a restriction to two valves indicates change in technology and not just scope of protection.”

    – would’nt presence of a third valve in the claim make it fall under scope of prior art? How would you draft Bajaj if you had to avoid Honda?
    – and wat is not claimed is disclaimed? – does that mean the technology when sold cannot have a third valve (if it is in public domain)?
    – for purpose of infringing the Bajaj patent isnt it enough to show TVS has all of Bajaj’s elements? and may be a third valve (which is prior art)

    All these questions offcourse with acknowledgment that I am not anywhere close to being a techie. Apologies for making you explain the technology again..

    Reply
  2. AvatarJ. Sai Deepak

    Hi there,
    No apologies required at all. If the argument is not presented in a proper format, there’s a danger of getting trapped in a tautology. The fundamental premise of my argument is that Bajaj’s patent lacks novelty and is obvious. This i say primarily on the basis of US 5320075, US 4177782 and US 4177783. All these patents speak of Dual ignition in a cylinder with 2 valves(some of them deal with dual ignition with lean burn) and are broad enough to encapsulate the specifications claimed by Bajaj.
    Having said this, I then move on to state that both Honda and Bajaj patents speak of dual ignition, the former with 3 valves and the latter with 2. So as you rightly pointed out, had Bajaj not mentioned 2 valves in its claim, it would have been prior art. But the question is even after mentioning 2 valves, is the technology novel and sufficiently non-obvious to validate a patent grant? The Court has said that use of dual ignition in small bore engines was not tried out before Bajaj. Notwithstanding the factual (in)accuracy in the statement, all that Bajaj has done is to validate dual ignition technology in smaller engines. Even if such use has positive results, the issue is “Is the technology novel and non-obvious?” In other words, does the use of 2 spark plugs in a cylinder with 2 valves teach me as a person skilled in the art something i didnt expect or something i couldnt have arrived at by merely practising the art? If it has not added to the existing store of knowledge, the Bajaj patent must fail the test of patentability. Kindly let me know if i answered your question. I shall be happy to explain myself further.

    Wishes,
    J.Sai Deepak.

    Reply
  3. AvatarJ. Sai Deepak

    Hi ,
    I would like to explain myself better. Bajaj has claimed the use of dual ingition in a cylinder with two valves of size 45-70mm. Hypothetically assuming that the scope of prior patents is restricted to large bore engines i.e above 70 mm, then would Bajaj still be eligible to get a patent for engines below 70 mm , as it has done? Though the use of twin spark plugs in small bore engines is advantageous, does it in itself make Bajaj’s technology patent-worthy? under s.2(ja), the definition of an inventive step = technical advance/economic significance + non-obvious technological contribution. Bajaj’s technology may satisfy the criterion of technical advance or economic significance, but not non-obviousness.So assuming that the Honda patent or any other patent had monopoly over dual ignition in large bore engines, bajaj would be free to apply the technology to small bore engines, but may not patent such application for it would suffer from lack of novelty and obviousness.
    On a different note, there’s always a grey area between obviousness and infringement. So my technology may be obvious in the light of earlier patents, but may still not infringe such patents.
    Hopefully that answers your question.

    Wishes,
    J.Sai Deepak.

    Reply
  4. AvatarAnonymous

    Thank you very much Sai for explaining the technical details. I completely agree with your analysis and may be you are right about Bajaj not being able to cross the obviousness hurdle..except if it can show that no one ever tried to use dual ignition in small bore engines/prior art or references teach away from the result desired/others failed when they attempted to do so.
    Another drawback of explaining technology to a layman is ..you might over-simplify it! 🙂 so after reading your comment it seems like a very obvious thing to try dual ignition in a small bore engine..but I cant be too sure (hindsight)! i am not even a POSA! Neither can the Court decide this at the preliminary stage. Besides, a small step can still be technical advance..like you said..Also..more crowded a field (large number of patents)lesser is the presumtion of oviousness.
    Though in the light of the prior art cited the Court can look at obviousness..if TVS had cited the other two patents mentioned by you..and concluded they were broad enough to include a small bore engine. Then the onus would be on Bajaj to show how it is not obvious..may be then the Court would not have opined the technology was prima facie unobvious/valid.
    On damages though..i sort of agree with the Court. Wouldnt it be difficult to determine lost profits based on speculation..after introducing a competitior?
    Thank you for the post! and if you get your hands on the Roche order pls let me know..would like a copy.

    Reply
  5. AvatarAnonymous

    Sai,

    Can you post the copy of the judgement. I did not go through the Bajaj patent, but I find your arguments emphasising on the preamble of the claim. As far as I know Indian Patent Office treats anything before the clause “characterised in that” as prior art

    Reply
  6. AvatarJ. Sai Deepak

    Would you like me to send it over mail? i am not sure if there’s a way of uploding the judgment on the blog. Also it can be accessed only thru Manupatra. Please let me know if there’s another way.

    Reply

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