Patent

Section 47 Pops Up Again in Patent Litigation Involving a Government Tender for Public Procurement


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Our readers from the Hyderabad High Court have informed us of a recent order passed in a case filed by a patentee against the State Government of Telangana and some other private parties for allegedly infringing its patents no. 196432, 196439 and 211904 that cover the ‘Ball Drive Flow Control Valve’ when it issued a tender for the same. Apart from filing a patent infringement lawsuit before the civil court (O.S.No. 734 & 735 of 2017 before the IIIrd Addl. Chief Judge, City Civil Court, Hyderabad), the patentee for some reason also filed a writ petition before the High Court challenging the government’s tender on the grounds that it was “wholly illegal, arbitrary and contrary to the provisions of Article 14, 19(1)(g) and 21 of Constitution of India and Section 48 of Patents Act, 1970 and a colourable exercise of power to deny the fruits of the patented product to the Petitioners.” (sic) That appears to be a rather strange prayer to me.

It is common knowledge that a writ court does not go into questions of facts and does not have the jurisdiction to decide a patent infringement claim since that power vests only in district judges (and High Court judges only where there exists an original civil jurisdiction) under the Patents Act. Since the civil suit had already commenced, the Hyderabad High Court declined to interfere and dismissed the petition. While dismissing the petition it also observed that the State Government was well within its rights to issue a  for even patented products since Section 47 of the Patents Act prima facie allowed the patented product to be imported or made on behalf of the government for the purpose of its own use and hence the government could not be restrained from issuing a tender for the goods that may have infringed the patents in question. This analysis wasn’t really necessary since the petition itself was not maintainable.

In any event, this reference to Section 47 once again brings the spotlight on a curious provision that has occasionally popped up in the context of patent litigation related to government tenders. The relevant part of Section 47 is as follows:

  1. Grant of patents to be subject to certain conditions.— The grant of a patent under this Act shall be subject to the condition that— (1) any machine, apparatus or other article in respect of which the patent is granted or any article made by using a process in respect of which the patent is granted, may be imported or made by or on behalf of the Government for the purpose merely of its own use;

The provision has been litigated in the past in at least two cases pertaining to railway tenders. We blogged about both these cases around 8 years ago. Both dealt with Section 47 in different ways. In the first judgment of Garware v. AI Chopra Engineers by the Nagpur bench of the Bombay High Court, the court drew a distinction between the government using a patent ‘merely of its own use’ as opposed to the phrase found in Section 99 and 100 – ‘for the purposes of Government’. In the court’s opinion, the Patents Act was drawing a distinction between using a patent for sovereign functions of the government and non-sovereign functions of the government. In the former case, the court held the patent could be used without paying any royalty, while in the latter case, Section 99 and 100 would require payment of royalty to the patentee. Concluding that the railways was a non-sovereign function, the court restrained the defendant from supplying the patented invention to the Indian Railways. The second judgment was the case of Chemtura Corporation v. Union of India where the Delhi High Court was faced with a similar fact situation – the railways had put out a tender seeking bids for a device that was supposedly patented by Chemtura, which then sued the government and other private parties for patent infringements. The Delhi High Court in this case came to the simple conclusion that Section 47(1) clearly covered the Indian Railways and that the Railways could use whatever patents it wanted without the requirement of paying royalties. In other words, the Railways got a carte blanche to exploit patents without paying any royalty. While the doctrine of eminent domain does allow the government to use or acquire private property, there is usually an understanding that the government will have to pay up for such use. To that extent Section 47 does appear to be a rather incongruous provision. Although the judgment was appealed to a Division Bench, I think it was settled by both parties because the DB never ruled on the appeal.

The reality of Section 47 and its seeming conflict with Section 100 is a bit more complicated than what has been discussed in the Garware or Chemtura cases but that’s a story for another day.

Hatip: Advocates Venkat Reddy and S.M Saifullah appearing on behalf of the Respondent No.5 and 6 in WP No. 28498 of 2017 before the Hyderabad High Court

 

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP). He has recently been appointed as an Assistant Professor at NALSAR, Hyderabad, starting September 1, 2017.

One comment.

  1. Dhamotharan

    Dear Mr.Prashant Reddy
    I am Dhamotharan, professional worked in various leading Indian corporates.
    I would like to contact you to take an important advise. Can you please share your email id or phone number. My e mail id is [email protected] . My no is 9953590505

    Reply

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