Expired Patents, Injunctions and Commercialization

The following post discusses two recent patent cases where the relief of permanent injunction became infructuous due to the expiration of the impugned patents. A related issue of commercialization of patents is also briefly discussed.

U. Varadaraya Nayak v S.K. Anand, Del HC:

In this case, the patentee a retired school teacher obtained a patent for an invention titled ‘twin blade razor’. The inventive feature of the blade was the “novel manner in which the holes are positioned in relation to the upper blade and lower blade”. The patent was valid till March 2014 (20 years from March 1994, the date of filing).

In 2003, as the patentee claims, in order to exploit his patent, he began to negotiate a license through letters and telephonic conversations with Defendant No. 1 (S.K. Anand; who he believed was the CEO of Harbans Lal Malhotra & Sons Pvt. Ltd.). These talks did not materialize. However, in 2011 the patentee found out that the defendants were selling razors using his technology and therefore instituted a suit praying for permanent injunction and Rs. 20 lakhs as damages. Pending trial, the patentee prayed for an interim injunction.

Denying the interim injunction, the court held that the patentee had not made out a prima facie case and that the balance of convenience was not in his favour.

Assessing balance of convenience: the patentee argued that since his patent expires in March 2014, he would suffer irreparable injury if the interim injunction was not granted. However, the court quoted the Supreme Court in Zenit Metaplast Pvt. Ltd. v. State of Maharashtra: The object of the interlocutory injunction is, to protect the Plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. In the present case, if an interim injunction was ordered it would adversely affect the business of the defendants and their loss could not be adequately compensated by the patentee if he lost at trial. However, the defendants were in a financial position to compensate the plaintiff for his loss, if he were to win at trial. The court cited American Cyanamid: “If damages in the measure recoverable at common law would be adequate remedy and the Defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the Plaintiff’s claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the Plaintiff in the event of his succeeding at the trial, the Court should then consider whether, on the contrary hypothesis that the Defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the Plaintiffs undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the Plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction.”

Assessing prima facie case: The court observed that while the patentee’s invention related to ‘twin blades’ the defendant had launched triple-blade and quadra-blade razors. Moreover, the size of the blades and positioning of holes were different from the claimed patent. Also, the court held that the defendants had raised a credible challenge to the validity of the patent due to conflicting expert opinions regarding the existence of prior art i.e. US Patent No. ‘070. Moreover, the complete specification lacked clarity on basic information such as size of the holes, number of holes etc. such that the blade and its technology could not be replicated.  The patent had been granted without a working model and the Controller of Patents would have to verify such a grant. The court also observed that the patentee had not convincingly explained the delay in bringing this case as he should have known about the commercial sale of the defendant’s product even before 2011. Lastly, there was no clear link established between all the defendants and even the communication with the first defendant remained to be proved. Considering all this, the court held that there was no prima facie case and these matters could only be decided in trial.

This order was given in December 2013 and by the time the case goes to trial, the patent would have expired.

Venkatraman Das v. V.N.S. Innovations, Madras HC:

The patentee in this case held a patent for a product ‘Disposable Armpit Perspiration Pad’. The patent expired in 2013. The patentee had not manufactured or sold the patented product but found out that the defendants were commercially exploiting a similar product. The patentee claimed a permanent injunction but by the time the case was decided his patent had expired.

In this case, however, the court held that the invention was not new and that it has been in use for more than 100 years (patented in the US in 1870).

Non-use of patents

In both cases, the patentees waited till the fag end of their time-limited monopoly to obtain injunctions. They had not commercially utilized their patents nor could they practically start commercializing them with such little time to the expiration of their patent. So, monetary compensation, if infringement was proved was certainly enough. Maybe the judicial process should have been fast tracked since their patents were on the verge of expiration. However, since they were not practicing their patents, no real harm accrued to them as they could be compensated if infringement was proved. An argument on the issue of revocation of a patent based on non-use was made but deferred to a later stage in the Varadaraya Nayak case.

This in turn leads to a related issue of commercialization of patents, aspects of which have been discussed by Prashant here and here.

As is known, a patent is given to an ‘inventor’ who may not be a ‘commercializer’. But as a policy should an inventor be allowed to lock up his patent for 20 years on the pretext of inability to commercialize as well as be allowed to prevent others who may be able to commercialize the invention? Should we then allow individuals to engage in economic rent-seeking? I had the good fortune of reading an insightful paper on commercialization of patents as part of Shamnad sir’s course. The author, Ted Sichelman, provides an alternative to this problem.  He creates a new IP right- a ‘commercialization patent’ – an exclusive right granted for a commitment to commercialize a product which is not in the market. This new model provides the patentee three years to commercially exploit his patent. Failing which, a commercializer can obtain a ‘commercialization patent’ to commercially exploit the invention with absolute immunity from the patentee and by paying reasonable royalty to the patentee. The paper discusses the nuances of the model. This model shares features with that of the compulsory licensing provision in the Indian Patent Act. However, this provision is more difficult to fulfill and non-use of any and every invention will not fall within this provision.