Recently, a division bench of the Delhi High Court refused to intervene with an interlocutory order restraining Canva, from using its “Present and Record” feature. Priyam discusses that the order side-steps the appellant-defendant’s submission on section 3(k), relying on statutory presumption of validity. Priyam is a third-year student at NLSIU, Bengaluru and is deeply interested in IP and Data Protection laws. His previous posts can be accessed here.
Canva v RxPrism; Analysing How the 3(k) Challenge was ‘Canva’ssed with a Statutory Presumption of Validity
By Priyam Mitra
Recently, a division bench of the Delhi High Court refused to intervene with an interlocutory order restraining Canva, the renowned graphic design platform, from using its “Present and Record” feature. The focus of the judgement seems mostly to be on claim construction by the Single Judge bench and the doctrine of equivalents; however, the Court seemingly failed to address the Section 3(k) submission by Canva. As a quick background, The single judge interlocutory order was passed in 2023 against an application by an Indian startup- RxPrism. RxPrism had alleged that Canva’s “Present and Record” feature (launched in August 2020) mirrors its patented layered architecture, where a user records a video overlay (Picture-in-Picture) on background slides and integrates “Call-to-Action” (CTA) buttons. The Single Judge granted an interim injunction on July 18, 2023, restraining Canva from using the feature in India and ordering a Rs. 50 lakh security deposit. The division bench, following the ratio of Wander Ltd. v. Antox India (1990), laid out the limited grounds of interference with the Court of first instance- when the discretion is shown to be “arbitrary, capricious, perverse, or contrary to settled legal principles, and not merely because another view is possible on the same material.” The court thus upholds the single judge’s finding of a strong prima facie case of infringement leading to the balance of convenience being in the favor of the plaintiff Rxprism and the relief of an interim injunction being granted.
The post will not go into details of how claim mapping was done and how the doctrine of equivalents was applied. This is because the analysis of the Court, following the dicta of F. Hoffman La Roche v. Cipla (2016), correctly mapped the claims of the plaintiff’s patent with the defendant’s product. The post has no qualms with this part of the judgment but rather looks at two arguments of the appellant-defendant that were ignored by the division bench and the result of such erroneous analysis, namely, the sidestepping of submission based on section 3(k) and the Court’s reliance on a statutory presumption of validity.
3(k) challenge and Presumption of validity
Canva, during the course of pleadings, had raised two issues with respect to validity of Rxprism’s patent. The first based on prior art namely Microsoft PowerPoint, Auto-Auditorium and Loom (para 42). Canva had filed a post-grant opposition under section 25(2) of the Patents Act and the same arguments were raised in the suit. This argument was dismissed by the single judge and consequently reaffirmed by the division bench (para 177). Canva argued that the single judge incorrectly compared the prior art with the product of the plaintiff rather than the claims of the patent. They specifically relied on this phrasing, “This slide-by- slide content plus audio recording cannot be equated with the Plaintiff’s product”. However, the division bench considered the analysis of the single judge holistically and held that the judge did in fact correctly map the prior art with the patent claims. In fact, the single judge stated “A perusal of the presentation submitted by the Defendant would show that the manner in which the audio overlay has been made on each of the slides, is completely different from the Plaintiff’s suit patent.” Ironically, this phrasing can be seen in the same paragraph as the sentence that Canva relied on. This is a good example for Courts to be mindful of the phrasing in their judgment as rogue framing such as this opens up objections that can be pre-empted and avoided.
The second argument was tethered to Section 3(k) of the Patents Act, 1970 and the analysis here is much more interesting. Canva argued that if the plaintiff’s patent is software related then it would be hit by S.3(k) as computer programme per se has been excluded from the aegis of patent protection, and if only the hardware part of the plaintiff’s product is considered, then Canva’s product would be non-infringing as it is “merely a software programme”.As discussed before, the Court undertakes an exercise of mapping the claims and comparing the prior art with the product of the plaintiff. It reaches the conclusion that the plaintiff’s patent discloses new inventive steps capable of differentiating itself from the prior art. It is interesting to note that the single judge doesn’t talk about invalidity with respect to the second argument of s.3(k) and only addresses the first argument of prior art. Even more surprising is the way the division bench handles this argument. The court states (¶43), “The learned Single Judge reiterated that for invalidity to defeat interim relief, it must be clear, immediate, and compelling. […] Hence, the validity challenge was found to be arguable but not “so strong as to defeat interim protection” or the statutory presumption of validity.”
There are two contentions with this phrasing of the court. The phrase “so strong as to defeat interim protection” (cited in double quotes by the division bench) notably does not appear in the single judge’s judgment and more importantly, the court’s reference of a statutory presumption of validity is simply put, incorrect. It must be noted that the single judge did not provide even this reason of a statutory presumption of validity in their judgment and merely ignored the 3(k) argument.
There has been a long history of cases consistently holding that there is no presumption of validity in patents by virtue of Section 13(4) of the Act as opposed to Section 31 of the TM Act (Supreme Court in Biswanath Prasad v. Hindustan Metals (1978)). A previous post has discussed whether this distinction is based on rationality and deserves to continue, however, that is beyond the scope of this post as cases as recent as Natco Pharma Limited vs Novartis Ag(2024)(¶40) have held that there is no presumption of validity for patents. The appellant did argue that such a presumption is non-existent for patents (¶23), but the Court nevertheless continued to make such a statement as obiter (¶43).It should also be noted that there is no certainty that the Court would have favored Canva even if it addressed the challenge of 3(k). As Yogesh has written before (here), the jurisprudence on 3(k) is nebulous with different decisions considering a computer program with technical effect, technical feature, or technical character as patentable with different thresholds for each. For instance, it is very much possible that the Court considers the entirety of the plaintiff’s invention as patentable and does not divide it into hardware and software (as the plaintiff admitted in their first examination report,¶24(j)). If this is the case, then the analysis on claim mapping would persist, and the court would have reached the same conclusion. However, it is necessary for the Court to address this strand of argument instead of brushing it aside without due consideration. This becomes an important factor in even determining whether an interim injunction must be given.
II. Interim Injunction and Conclusion
The division bench upheld the interim injunction restraining Canva from making the “Present and Record” feature available in India and directed them to deposit Rs. 50 lakhs as security and payment of Rs.5 lakh as costs. The single bench reasoned that costs should be imposed in this case because of the language used by Canva in their written statement. Canva used phrases such as “sham paper trail to tick the boxes”, “arms twisted”, “first scapegoat”, while describing Rxprism’s efforts of licensing and mediation as coercive and malafide. Canva basically wanted the Court to take notice of the way the Plaintiffs were forcing them to accept exorbitant terms of licence under the garb of lawful injunctions and how this could be the start of the plaintiff “hunting” other potential licensees. The Court noted how Order VIII, Rules 3, 4 and 5 of the CPC prescribe precise language to be used in the plaint and the use of such language smearing the plaintiff’s character was deemed to stem from an “intention to create prejudice”. Coming to the direction on security deposit, while 50 lakhs might seem like a high amount, this is following recent judgments in cases where the supposed infringer is an entity outside India with no or limited attachable assets in India (See this post for a better explanation of this judicial trend).
The impugned judgment mentioned the reason for there being a strong prima facie case of infringement as no credible challenge as being a reason for the decision. The possibility of granting no injunction and instead relying on costs was rejected by the judge on grounds of the damage being irreparable in certain market conditions (¶88). The victory for the patentee therefore should not be “pyrrhic but real” and thus the Court granted an interim injunction.
The principles that should be followed for granting interim injunctions in patent cases was summarized in Ten XC Wireless Inc v Mobi Antenna Technologies (Shenzhen) Co. Ltd (2011) and one of the important factors was that there is no presumption of validity and consequentially the plaintiff is not entitled to an injunction if the defendant raises a credible challenge to the patent. Here, the credible challenge means a “serious question to be tried”. The defendant need not make out a case of actual invalidity. The court goes on to say, “vulnerability is the issue at the preliminary injunction stage, whereas the validity is the issue at trial”.
The judgment also notes that the recency of grant of the patent is also a relevant fact. There had been a “six-year rule” prominent in the jurisprudence since the 1965 decision of the Madras High Court in Manicka Thevar v Star Ploughs. The rule basically states that any patent registered within the last six years is considered a recent patent and interim injunctions were not granted easily in such cases. There was a higher weight of validity attached to patents older than six years. With the Supreme Court in Biswanath Prasad holding that no patent is presumed to be valid, the six year rule has been significantly diluted. For instance, the Delhi High Court in 3M Innovative Properties Company v M/S Venus Safety & Health Pvt Ltd (2014) held that this rule cannot be uniformly applied in every case, and its applicability depends heavily on the facts of the case, its merits, and the nature of defense raised. To conclude, the issue then with both the division bench and single judge judgements is their lack of engagement with the 3(k) challenge. Brushing the challenge aside as “not so strong as to defeat interim protection” is contrary to the brief enquiry that is anticipated by the jurisprudence to make out a case of credible challenge with respect to vulnerability and not validity. As discussed in the post already, a 3(k) enquiry would have perhaps not helped the appellants in this case. Still, as held in the seminal case of Kranti Asso. Pvt. Ltd. & Anr vs Masood Ahmed Khan & Ors (2010), the judgment needs to be reasoned and addressing a relevant submission ensures transparency in the decision making process and opens up discussion for broader scrutiny. It can only be hoped that courts realise this responsibility of addressing relevant submissions and do not fall into the trap that the Patent office often finds itself entangled in (see here and here).
