Continuing in our series of posts highlighting the inequity of interim injunctions in patent cases, here’s a guest post from Saahil Dama. Saahil is a student at National Law University, Jodhpur. He is currently in the fourth year and is pursuing Intellectual Property Law Honours at the University.
Interrogating Interim Injunctions: The Difficulty in Getting Vacations
By Saahil Dama
In furtherance of our I-3 series, I’ll be writing a short post on the case of Microsoft Corporation v. Dhiren Gopal and Ors., [2010 (42) PTC 1 (Del)]. We’ve discussed this post before in the context of forum shopping.
Though the ex parte order passed in this case was subsequently stayed and the injunction was modified by the Division Bench, the judgement is still pertinent in describing the difficulties that defendants face in getting injunctions vacated.
For the brief facts, Microsoft Corporation filed four suits against four different defendants, alleging that the defendants had infringed Microsoft’s software copyright by using pirated/illegally-copied software at their offices and workplaces. Microsoft argued that issuing notices would defeat the very purpose of filing the suits since it would give the defendants sufficient opportunity to delete the pirated software from their computer systems and that would make the suits infructuous. Hence notices were not issued and an ex parte injunction restraining the defendants from using the software was passed by the single judge of the Delhi High Court.
However, while passing the ex parte injunction, several problems in vacating such injunctions were observed. This judgement highlighted the hardship such injunctions cause for defendants. The judge stated – ‘There is no gain saying that once an ex-parte injunction is granted by the Court, getting an ex-parte injunction vacated or a decision on the application on merits by the court becomes a Herculean task for the other party. Granting of ex-parte injunction along with appointment of Local Commissioner has become a routine process and deciding of applications under Order 39 Rules 1 and 2 CPC on merits after hearing the parties in such cases is a rare phenomenon. All kinds of excuses are used to seek adjournments once a party gets ex parte injunction.’
Order 39 Rules 1 provides for cases in which temporary injunctions may be granted whereas Rule 2 allows for injunctions to be granted in order to prevent continuance of injury to the plaintiff.
The court also took cognizance of the lobby of right-holders who oppose the transfer of original jurisdiction from the High Court to the District Court since it is easier to get ex-parte injunctions in the High Court. ‘Once you get ex-parte injunction,’ the court noted, ‘the application on merits is invariably not allowed to be decided in time and the party having ex-parte injunction starts evading arguments on merits on one or the other ground. This results in those cases (of alleged copyright infringement) where computes are sealed, adopting a blackmailing tactics by the plaintiff and the defendants, in order to restart their business and lessen their losses, start succumbing to the pressure.’
When seen holistically, ex parte injunctions present an extremely dismal picture for defendants. Firstly, the defendant is not heard by the court when the injunction is granted and is still made to bear the brunt of the order. Further, the hearing of the case on merits is delayed as the party in whose favour the injunction is granted seeks excuses for delaying hearing. Even getting the order vacated proves to be a painstaking and time-consuming process. This puts the defendant in a rather compromising position, since while all this is happening, his business is likely to be severely affected if not shut altogether. As a result, he would be compelled to settle on unfair terms, which only exacerbates the situation for him.
This judgement highlighted a pressing concern for defendants when an injunction is passed at their detriment. While laws exist on paper to prevent the defendant from unjustly suffering under the injunction, their practical implementation has been a problem. Cases such as Vifor are classic examples of this, where the injunction hasn’t been vacated even after almost four years! Such misuse of law must be prevented to protect the defendants from bleeding dry without even being heard.
The court also acknowledged the fact that when suits are filed in a city where the defendants are not situated, the fact that they have to travel all the way to the other city becomes a source of harassment for the defendants. As a result, in several cases where ex-parte injunctions are granted (specifically in copyright infringement cases), the suits are never contested.
I am very surprised to learn that SpicyIP now has to rely on overruled decisions to further their propaganda. You have not even supplied a link to the DB order while the Single Judge’s OVERRULED order has been hyperlinked.
If you suggest that ex – parte injunctions are not warranted in piracy/ counterfeiting cases, you clearly have not practiced the law, have not had the experience of raiding a pirate’s premises and have not even bothered to research the subject. The logic of granting an ex-parte injunction in such cases is well documented – you will find it if you try reading up on the background of these “Anton Piller orders”. There are a number of cases which recognize the real danger of the goods being temporarily hidden by the Defendants or evidence being destroyed on receiving notice of Court-ordered raids/ injunctions. Having practiced the law for several years, I have seen a number of cases in which the Defendants have ran away with infringing right before the Court-appointed commissioner arrives. These goods then resurface later leaving the right holder without any effective remedy.
Please enlighten all of us about the overriding public interest in promoting piracy and counterfeiting….
Try to practice “investigative journalism” rather than “sensational journalism” …
Dear Anon.,
Your feedback is much appreciated.
Firstly, I must emphasize that the order by the single judge was stayed and not overruled, as you have claimed. Since the focus of the post was on the comments made by the single judge, I thought it appropriate to hyperlink the same. Also, at the time of writing, I referred to the copy of the DB judgement on Manupatra, which could not be hyperlinked anyway. I fail to see how the absence of the link, in any way, amounts to anyone furthering any propaganda, when readers have clearly been made aware that the judgement was stayed.
I certainly do recognize the concerns that arise out of counterfeiting/piracy of goods and have immense respect for the practice that you might have in the area. There are two submissions that I’d like to make with regards to this –
A. The primary purpose of the post is to highlight the hardship that defendants are likely to face when an ex parte injunction is granted against them. No fair reading and interpretation of this would amount to me suggesting that ex parte injunctions are not warranted in cases of piracy or counterfeiting. That is a discussion by itself, one outside the purview of this post.
B. However, even if your argument about Anton Pillar orders was to be considered, it must be noted that even the passing of an Anton Pillar order requires the harm that would be caused to the defendant to be considered. Lord Denning established similar criteria for the passing of Anton Pillar orders (prima facie case against the defendant, potential or actual damage to the plaintiff, harm to the defendant) as exist for granting ex parte injunctions in our country (prima facie case, irreparable injury, balance of convenience). Our concern, however, is that these, and other requirements, are rarely followed while granting injunctions – a claim that we have illustrated through posts in the past.
This post, in no way, lends support to the proposition that piracy and counterfeiting should be promoted. But that does not goes to say that ex parte injunctions do not do any harm either. Of course there lies a debate in this, with strong arguments from both sides (loss to plaintiffs v. loss to defendants, etc). I certainly won’t take this space to defend the losses that defendants incur; that’s something our posts are already trying to do.
Thank you for the feedback. Fostering discussion and debate is one of the motivations behind this endeavour of ours. 🙂
Thanks for your reply, Saahil. My comments are as under:
Stay of operation of observations versus overruling: In your last comment, you suggest that even if the operation of the order has been stayed, it is still relevant for an academic discussion. Please clarify if the entire I-3 series is only for an academic purpose or if you intend to influence practice/ policy. From what I understood based on your earlier posts is that you guys want to have a say on the practice in the Courts and file a writ petition to ‘correct’ it. If that is the case, it is no longer merely an academic discussion (at least in my view) and you will have to play by the rules of the game, which are that an order whose observations have been stayed (and thus have no precedential or judicial value) cannot be relied upon.
Non-availability of the order on Manupatra: A copy of the DB order is available on http://www.delhihighcourt.nic.in which is openly accessible. The link to the relevant DB order is http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=230108&yr=2009.
Non-availability of the link by itself does not further the propaganda but it certainly denies your readers the opportunity to form an informed opinion which would be incomplete and biased without the DB order.
What is the focus/ purpose of the I-3 series?: Shamnad’s post which supposedly sets the tone for your I-3 series suggests that your aim is to propagate the following “In particular our advocacy campaign will focus on ex parte injunctions and ask that they be prohibited (Say No to Ex-Partes!)”. Since you are one of the authors who is part of the I-3 series who seems to be advocating this cause, I think it is fair to read your post to suggest that you are advocating against ex-partes even in counterfeiting/ piracy cases. What otherwise is the point of talking about the hardships that Defendants face? What about the hardships that Plaintiffs face? Why do you not mention those and conduct an analysis and see if the Court’s orders in this regards are unsustainable? In view of this, I cannot accept your comment that “no fair reading and interpretation of this would amount to me suggesting that ex parte injunctions are not warranted in cases of piracy or counterfeiting. That is a discussion by itself, one outside the purview of this post”.
Conducting a balance of convenience analysis in such cases: Courts have been dealing with such counterfeiting/ piracy cases for at least 20 – 25 years. The earlier cases had analysed these aspects in much more detail and over the years the Courts have realised that in such cases invariably the balance of convenience lies in favour of the Plaintiff. The jurisprudence has now reached a very advanced stage.
In any event, while it may not be recorded in the order, the courts do look at these aspects even at the ex-parte stage. Further, the Defendant always has the option of filing an appropriate application before the Court to deseal their systems. These applications are considered immediately (you can confirm this from any practitioner) but of course the Court does not allow the Defendant to continue using the infringing software for obvious reasons (which I can explain in detail if you want).
Thanks for your reply, Saahil. My comments are as under:
Stay of operation of observations versus overruling: In your last comment, you suggest that even if the operation of the order has been stayed, it is still relevant for an academic discussion. Please clarify if the entire I-3 series is only for an academic purpose or if you intend to influence practice/ policy. From what I understood based on your earlier posts is that you guys want to have a say on the practice in the Courts and file a writ petition to ‘correct’ it. If that is the case, it is no longer merely an academic discussion (at least in my view) and you will have to play by the rules of the game, which are that an order whose observations have been stayed (and thus have no precedential or judicial value) cannot be relied upon.
Non-availability of the order on Manupatra: A copy of the DB order is available on http://www.delhihighcourt.nic.in which is openly accessible. The link to the relevant DB order is http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=230108&yr=2009.
Non-availability of the link by itself does not further the propaganda but it certainly denies your readers the opportunity to form an informed opinion which would be incomplete and biased without the DB order.
What is the focus/ purpose of the I-3 series?: Shamnad’s post which supposedly sets the tone for your I-3 series suggests that your aim is to propagate the following “In particular our advocacy campaign will focus on ex parte injunctions and ask that they be prohibited (Say No to Ex-Partes!)”. Since you are one of the authors who is part of the I-3 series who seems to be advocating this cause, I think it is fair to read your post to suggest that you are advocating against ex-partes even in counterfeiting/ piracy cases. What, otherwise, is the point of talking about the hardships that Defendants face? What about the hardships that Plaintiffs face? Why do you not mention those and conduct an analysis and see if the Court’s orders in this regards are unsustainable. In view of the above, I cannot accept your comment that “no fair reading and interpretation of this would amount to me suggesting that ex parte injunctions are not warranted in cases of piracy or counterfeiting. That is a discussion by itself, one outside the purview of this post”.
Conducting a balance of convenience analysis in such cases: Courts have been dealing with such counterfeiting/ piracy cases for at least 20 – 25 years. The earlier cases had analysed these aspects in much more detail and over the years the Courts have realised that in such cases invariably the balance of convenience lies in favour of the Plaintiff. In any event, while it may not be recorded in the order, the courts do look at these aspects even at the ex-parte stage. In any event, the Defendant always has the option of filing an appropriate application before the Court to deseal their systems. These applications are considered immediately (you can confirm this from any practitioner) but of course the Court does not allow the Defendant to continue using the infringing software for obvious reasons.
Dear Anon.,
I fail to see why the purpose of the series (academic v. influence policy) needs to be mutually exclusive. The primary purpose of the series is, as SB noted, to ‘highlight the potential inequity of patent injunctions that take forever to vacate–particularly the ex-parte ones.’ Data from this research would then be used to file a petition. Of course, that does not mean that all the data would be used (such as stayed/overruled judgments). But this judgment did serve a great academic purpose, a point that is being proven as we have this conversation.
I thank you for the link. However, I do maintain that I did not see any reason to hyperlink the same; and it certainly does not amount to ‘spreading propaganda,’ as readers were clearly made aware of the fact that the order was stayed, thus giving them the opportunity to form a complete opinion if they considered the same to be necessary. Also, with regards to the stay itself, I’ve already commented that the DB does not mention which comments it had a problem. However, if we were to interpret it in the back-drop of in what terms the judgment was modified, it becomes clear that the impugned comments are different from what the DB seems to have an issue with.
While you have rightly highlighted the issues that plaintiffs face in the absence of ex parte injunctions, through our posts, we’re analyzing the various issues that defendants are confronted with. Our problem is that the loss caused to the plaintiff can be mitigated through compensation by the defendant in case the parent application is decided against the defendant. Bilcare’s case directed defendants to keep accounts of the manufacture and sales during the pendency of the suit which could be made available to the court whenever directed. This is done to ensure that the the plaintiff is compensated for if the main application regarding the patent is decided in his favour. The same cannot be done for the defendant.
To support your argument that “the hearing of the case on merits is delayed as the party in whose favour the injunction is granted seeks excuses for delaying hearing”, you have linked to the post on the Issar case whose author had acknowledged that it was the Defendant in that case which had delayed the process of hearing on the vacation of the injunction.
The inherent bias and lack of depth in posts are becoming clearer as we read the posts closely…
Dear Anon.,
For my claim – ‘the hearing of the case on merits is delayed as the party in whose favour the injunction is granted seeks excuses for delaying hearing,’ I have linked the post on the Issar case, which also contains a preliminary discussion from the Sharon case on the causes of delays. One of the cited reasons is – ‘denying the defendant’s request to have an advance hearing on his application to vacate the interim order.’ This links to the Sharon judgement wherein the defendants’ request for advancing hearing was disallowed because the plaintiff required time to submit the written statement against the counter claim.
Hence my citation.
For the benefit of your readers, I am extracting the relevant portion of the DB order which stays the observations that you are relying upon:
“After hearing learned counsel for the Appellants and going through the
record, we are of the prima facie view that the operation of the impugned order
deserves to be stayed particularly in view of some observations made by the
learned Single Judge.”
I do not understand how “the judgement is still pertinent in describing the difficulties that defendants face in getting injunctions vacated” if a higher Court has come to the conclusion that the observations ought to be stayed. Going back to the basics, a stay of the observations means that the observations do not have judicial value and a higher bench thinks that they are prima facie incorrect…
Dear Anon.,
Like you correctly quoted the judgement, the operation of the order was stayed by the DB. However, the observations of His Lordship are still relevant in having an academic discussion on the issue. It is true that the operation of the order was stayed (and not overruled) for ‘certain observations in the impugned order which are wholly unwarranted.’ The DB does not mention what these observations are.
However, these observations can be interpreted in how judgement was modified in certain ways –
1) The need to deposit Rs. 2 lakh was done away with. This pertains to the observations made by the single judge about the possibility of the suit being speculative. To quote the single judge –
‘If the investigative suits are filed by a party on mere suspicion that there may be an infringement of copyright being committed by the defendant and seeks appointment of a Local Commissioner and notice to the defendant, having his office at a far of place so as to deter him from approaching the court at Delhi when the suit could have been filed at the place of defendant itself, the plaintiff should be asked to deposit costs for the defendant in the court so that in case, after notice it is found that the plaintiff instituted a false suit, he can be burdened with cost and the defendant can be compensated accordingly. The costs must commensurate with the expenses which the defendant will have to incur for coming to Delhi, staying here and engaging a counsel in Delhi and paying fee to the counsel. Fees of competent advocates in High Court of Delhi are quite high. I, therefore, consider that the plaintiff should be asked to deposit a sum of Rs.2 lac per case as costs security in the court for the defendant as a pre-condition for entertaining a suit which is investigative in nature and Delhi is deliberately chosen as a forum despite having office at defendant’s place where the basis of suit is a suspicion based on a hired investigator‟s report, who is bound to give affidavit favourable to the plaintiff being a salaried investigator.’
2) As per the DB, mirror images were required to be made by the defendant and not the plaintiff for the future use. The judgement of the single judge required the plaintiff to make mirror images with the help of a technical expert.
The impugned comments, hence, would be limited to these observations that have been altered in decision of the DB. It should not preclude a discussion on the entire judgement since the decision of the DB itself is unclear about the observations of the single judge that are unwarranted.