Bajaj Auto Ltd v TVS Motor Company Ltd (2008)

Summary

"C.S. No. 1111 of 2007 is a suit filed under Section 108 of the Patents Act, 1970 for the relief of permanent injunction in respect of the plaintiff's patent No. 195904", and "Pending the said suit, the plaintiff therein, namely Bajaj Auto Limited has filed O.A. 1357 of 2007 praying for an order of temporary injunction" (para 2). "M/s. TVS Motor Company Limited has filed the suit on the basis of groundless threat of infringement under Section 106 of the Patents Act" and "has filed O.A. 1272 of 2007 for an order of interim injunction" (para 3). According to Bajaj, "The said invention relates to the use of twin spark plugs for efficient combustion of lean air fuel mixture in small bore ranging from 45 mm to 70 mm internal combustion engine working on 4 stroke principle", and "The respondent, M/s. TVS Motor Company Limited has launched motor bikes of 125-CC on 13/14.12.2007 under the trade mark 'FLAME' powered with a lean burn internal combustion engine of bore size 54.5 mm with a twin spark plug configuration, which according to the applicant, infringes its patent No. 195904" (para 10). TVS answered that "the use of two spark plugs in an IC engine with three valves was a prior art" (para 11) and that it had "filed an application for revocation of the applicant's patent before the IPAB" ("Indian Patents Appellate Board") "even on 24.08.2007" (paras 10(e), 11(a)). "The Hon'ble Supreme Court, by order dated 18.01.2008, while setting aside the above said order of the Division Bench, has requested the single Judge to hear and dispose of the application as an interim application after parties have exchanged their respective affidavits" (para 6).

The Court held that "in cases of interlocutory injunction, including any patent action, the principle is the same" (para 18), and that "while deciding about the prima facie case, even though no presumption of the validity of the patent can be drawn, certainly the patent obtained after the amendment is having more significance" (para 25). It found that "it cannot be said at least at the prima facie stage that there is any deviation in the specification made by the applicant in these three stages" (para 43), that TVS's conduct "certainly cannot be taken as a bona fide conduct" (para 46), that "it cannot be said that by mere filing of such application, presumption should be drawn against the validity of patent" (para 49), and that "it cannot be said that the applicant's use of the patented product is of recent in nature" (para 59). On infringement, "except the use of three valves, the product which is attempted to be marketed by the respondent is prima facie similar to the applicant's patented product" (para 51), and "the applicant has made out a prima facie case for injunction against the respondent" (para 55). Holding that "the concepts of prima facie case, balance of convenience and inadequacy of damages lean largely towards the applicant/plaintiff" (para 71), the Court ordered: "interim injunction as prayed for in O.A. No. 1357 of 2007 in C.S. No. 1111 of 2007, is granted. ... Consequently, O.A. No. 1272 of 2007 in C.S. No. 979 of 2007, stands dismissed. There will be no order as to costs." (para 73)

What the court decided

1. The triple test. "Normally, in cases of interlocutory injunction, including any patent action, the principle is the same, viz," that "the plaintiff must prove/show prima facie case that the patent is valid and infringed", that the "balance of convenience is in favour of plaintiff", and the "irreparable loss that may be caused to the plaintiff by not granting an order of injunction" (para 18). "Therefore, we have to proceed on the basis of the materials available to decide the triple test of an interim injunction, viz., prima facie case; balance of convenience; and inadequacy of compensation." (para 26) "The three imminent factors which are necessary for consideration while dealing with the issue of interim injunction during pendency of legal proceedings are stated by the Division Bench of this Court in Wockhardt Ltd. v. Hetero Drugs Ltd. and Ors. 2006 (32) PTC 65 (Madras)". (paras 18, 26, 48)
2. The onus on the plaintiff. "The general tendency regarding interlocutory injunctions in patent cases has been that the onus in showing a prima facie case in justifying the grant of injunction is heavy on the plaintiff and it is comparatively easy for the defendant to establish a defence." (para 24) "While it is true that after the amendment, there is a significant change, nevertheless, as I have stated above, it is the duty of the plaintiff to prove the prima facie case, balance of convenience and irreparable injury in the event of not granting interlocutory injunction." (paras 24, 48)
3. Amended section 48 and section 13(4). Recording that "the effect of Section 13(4) has been clearly held by the Hon'ble Supreme Court in" Bishwanath Prasad Radhey Shyam v Hindustan Metal Industries (1978) (para 24), the Court held: "by virtue of the amended provision of Section 48 as stated above, one can only come to a conclusion that while deciding about the prima facie case, even though no presumption of the validity of the patent can be drawn, certainly the patent obtained after the amendment is having more significance. Therefore, the patent obtained by the patentee can be given more weight for deciding the prima facie case, however, the onus of proving prima facie case about the validity of the patent and its infringement is still on the plaintiff and the amendment to Section 48 by Act 32 of 2002 has not made any significant change on the celebrated principle of prima facie case to be proved by the plaintiff before granting an order of injunction pending disposal of the suit." (paras 24–25)
4. The certificate of grant. The Court recorded that "it was held in K. Ramu v. Adyar Ananda Bhavan Muthulakshmi Bhavan 2007 (34) PTC 689 by S. Rajeswaran, J. that when issuance of a patent right is an admitted fact and the same is valid for a period of 20 years, the plaintiff is deemed to have discharged its initial responsibility of proving that they are protected by the certificate issued by the competent authorities under the Patents Act and therefore, it should be presumed to be a prima facie case on the strength of the certificate." (para 47)
5. Triable issues against the patent. "I am of the considered view that the contention that triable issues against the patent must be found out by the Court before granting an order of injunction is not sustainable, in the light of the amended provision of Section 48" (para 64). The Statement of Objects and Reasons "states that one of the salient features of the said Bill was to," "to align rights of patentee as per Article 28 of the TRIPS Agreement", and "Section 48 has been amended to give better rights to the patentees and the entire aspect has to be looked into in that angle also." "In such factual situation, the question of raising a triable issue against the patent granted to the applicant at this stage does not arise." (paras 64–65)
6. Inventive step and obviousness. An "inventive step" "must be relating to an invention involving technical advance or having economic significance or both" (para 30). "Even though the term 'obvious' has not been denied under the Patents Act, it can be safely stated to be a circumstance where a person of skill in the field, on going through the specification would complete the product." "Therefore, it is clear that a patent must have the characters of novelty, non-obviousness and enablement, out of which, enablement being the concept of putting the novelty into action and all the above said ingredients must consecutively be present to have a valid patent." (paras 30–31)
7. Obiter. Challenge after grant. "Therefore, it is clear that even after the grant of patent under Section 43 of the Patents Act, 1970, ... it is open to a party, who is opposing the patent to prove that there are no inventive step in the invention of a patentee and therefore, the patent granted need not be taken into consideration atleast at the stage of granting an order of interim injunction." (para 32)
8. Provisional, complete and amended specifications. "Even though in the provisional specification the applicant has not specifically explained the diameter of the cylinder, it was its specific case that the invention, particularly relates to engine prime mover for operation of 2 and 3 wheeled vehicles." (para 42) "Therefore, even as per the Honda specification, which is stated to have been followed by the respondent it is admitted that more than 70 mm is deemed to be big bore and on the basis of the record, it cannot be said at least at the prima facie stage that there is any deviation in the specification made by the applicant in these three stages." (para 43) "In this regard it is relevant to note that a final claim cannot be invalidated merely, because it gives more construction than what was available earlier during the time of provisional specification", and "either in a complete specification or amended specification, if an explanation is made to a provisional explanation, it cannot be said as if the patentee has abandoned a part of his claim." (paras 42–44)
9. Market success and economic significance. "In such circumstances, there is no difficulty to come to the conclusion that prima facie the product of the applicant for which the patent was granted as invention has found a special place in the market." (para 45) "That apart, prima facie it can be held safely that it has achieved economic significance as one of the ingredients of the term 'inventive step' under Section 2(ja) of the Patents Act, 1970, especially when the factum of sale of such large number of products is not under dispute." (paras 45, 60)
10. The defendant's conduct. Of TVS's filing of the revocation petition "for the first time on 24.08.2007" and introducing its products "immediately within six days from the date of filing of the revocation petition", the Court held: "This certainly cannot be taken as a bona fide conduct of the respondent, by looking into the over all factual situation in this case." (para 46) "Applying the said principles to the facts I have stated above, adding to the conduct of the respondent, there is no difficulty to come to the conclusion that the applicant has proved the prima facie case in its favour in respect of the patent granted to its product." (paras 46, 48)
11. A pending revocation petition. "As far as the revocation application filed by the respondent under Section 64 of the Patents Act, 1970, it cannot be said that by mere filing of such application, presumption should be drawn against the validity of patent, while it is true that the grant of patent itself will not certify the validity of the same." "Certainly, under Section 64 of the Patents Act, when a revocation petition is filed under anyone of the grounds stated therein, the same can be operative only after a final decision is rendered by the authority competent to decide the same and in the meantime, it cannot be said that the patent validly granted should be presumed to be suspicious." (para 49)
12. Length of use of the patent. "The fact that the patent creates a statutory monopoly, of course, protects the patentee against any unlicensed user of the patented devise enabling the patentee to get an order of injunction, and considering that a patent has been in existence for more than 5 years, the patentee must be treated as actual user and there is a presumption of its validity", referring to "the judgment of a Division Bench of Delhi High Court in Telemecanique & Controls (I) Ltd. v. Schneider Electric Industries SA 2002 (24) PTC 632 (Del)" (para 50). "It is true that in cases where the use of the applicant's patent is recent in origin or the patentee has not even used or commenced to release its product, then such patentee is not entitled for the grant of injunction." (para 56) In "Bilcare Limited v. Supreme Industries Ltd. 2007 (34) PTC 444 (Del)", the Delhi High Court "has held that use of a patent for two years cannot be said to be sufficiently old" (para 58); "However, as I have stated above, in the present case, the applicant's patent has been in use from 2003, nearly five years" and "therefore, it cannot be said that the applicant's use of the patented product is of recent in nature." (paras 50, 56, 58–59)
13. The third valve. "Now coming to the question of infringement, it is not in much dispute that except the use of three valves, the product which is attempted to be marketed by the respondent is prima facie similar to the applicant's patented product." (para 51) "Therefore, it is clear that the defence of variant must be real and essential to the features and purpose of plaintiff's product." (paras 51–52)
14. Purposive construction and pith and marrow. "While deciding the test for variant raised as a defence by the defendant, the three questions have been raised and answered by the English Court in Improver Corporation and Ors. v. Remington Consumer Products Ltd. and Ors. 1990 FSR 181" (para 53). "It is also clear as per the decisions, for the purpose of deciding the novel features to constitute 'pith and marrow' a purposive construction has to be given in order to make it essential requirement of the invention that any variant would follow outside the monopoly even if it could not have material effect upon the working of invention." (paras 53–54)
15. Equivalents and unessential variations. From the Division Bench's judgment in Raj Parkash v Mangat Ram Chowdhry (1977), reproduced by the Court: "A person is guilty of infringement if he makes what is in substance the equivalent of the patented article. Some trifling or unessential variation has to be ignored." The Court concluded: "Therefore, it is clear that the applicant has made out a prima facie case for injunction against the respondent." (para 55)
16. Balance of convenience. "Therefore, prima facie when it is made clear that the applicant/plaintiff is in the market and its patent is for a limited period and it is in a crucial stage of development, the respondent/defendant cannot be permitted to interfere, especially when the defendant is a strong competitor to the plaintiff." (para 61) "On the other hand, the respondent claiming itself to be a licensor of AVL products has not even marketed its product. On the face of the validity of the patent, prima facie proved by the applicant, certainly, the applicant is entitled to prevent any competition and that is the test of balance of convenience as laid down by the English Court as stated above." (para 62) Hence "the balance of convenience is also in favour of the applicant for granting an order of injunction." (paras 61–62, 66)
17. Adequacy of damages. "More over, on the factual position in this case, the applicant has come up in the world market by sale of its product as stated above and its period is only for 20 years and there is every possibility for a new invention in the field by bringing the new product even before the time of expiry of patent granted to the applicant and such invention may be brought by the applicant itself and hence, the quantum of damages which the applicant may suffer in not granting injunction cannot be ascertained in monetary sense." (para 62) "As I have stated earlier, the test is as to whether the plaintiff should be made to face the adverse effect of competition." Of the argument that damages could be calculated on a royalty basis, "A similar contention was rejected by the Court of Appeal in Netlon v. Bridport-Gundry Ltd." (paras 62, 68)
18. The onus on a challenger. "At this stage, it is relevant to point out one other judgment of the Bombay High Court in" Farbwerke Hoechst v Unichem Laboratories (1968), "wherein it is held that when a person challenges the validity of patent, the onus is on him to prove against its validity." (para 63)
19. Obviousness at the interlocutory stage. "The further plea of the respondent that the patent given to the applicant is 'obvious', since the components explained by the applicant are known to the entire world and there is no specialty in the invention of, the applicant, is also not acceptable, especially at this interlocutory stage." Of the Supreme Court in Bishwanath Prasad Radhey Shyam, the Court recorded that it "held that a patented invention may be a combination of different matters already known, but it must be something more than a mere workshop improvement", and that "The object of patent law has been very aptly explained by the Hon'ble Supreme Court". (para 69)
20. Novelty and enablement shown by marketing. "Suffice it to say now at this stage, prima facie there is novelty which means an invention and the same has been registered under the Patents Act with priority date and the enablement of novelty has been on the face of it proved by the applicant by marketing the product in such large extent and also without objection fairly for long 5 years and it is not proved that so far the product of the applicant is 'obvious'." (para 71) "I have taken into consideration while arriving at such conclusion the novelty stated to have been achieved by the applicant by way of patent, coupled with its enablement, as proved by putting the product in the market and that has earned usage in large extent and both novelty and enablement have been established by the applicant for the purpose of granting the order of injunction in favour of the applicant/plaintiff." (paras 71–72)
21. Disposition. "In view of the same, interim injunction as prayed for in O.A. No. 1357 of 2007 in C.S. No. 1111 of 2007, is granted. Accordingly, O.A. No. 1357 of 2007 in CS. No. 1111 of 2007 stands allowed. Consequently, O.A. No. 1272 of 2007 in C.S. No. 979 of 2007, stands dismissed. There will be no order as to costs." (para 73)

What the court did not decide

Of validity, the Court held that "these are all matters involving complexity of trial and at this stage it is only the prima facie view which can be taken into consideration" (para 49); of the third valve, that "it is a matter of evidence, which can be decided only after full-fledged trial" (para 51); and that "the test of 'obviousness' which forms part of the term 'inventive step' under Section 2(ja) of the Patents Act, 1970 will have to be decided only in an appropriate manner in a full-fledged trial" (para 71).

Subsequent treatment

• Appealed — On 18 May 2009 a Division Bench of the Madras High Court (S.J. Mukhopadhaya and F.M. Ibrahim Kalifulla JJ), in O.S.A. Nos. 91 and 92 of 2008, TVS Motor Company Ltd v Bajaj Auto Ltd, allowed TVS's appeals against this order and set aside the interim injunction. Bajaj's appeal from the Division Bench, Civil Appeal No. 6309 of 2009, Bajaj Auto Ltd v TVS Motor Company Ltd, was decided by the Supreme Court on 16 September 2009.
• Followed — In Chemtura Corporation v Union of India, 2009 (41) PTC 260 (Del), the Delhi High Court held that "The amended Section 48, however, does not in any manner change the position as regards the validity of the patent itself. It would still be vulnerable to challenge in terms of Section 13 (4) read with Sections 64 and 107 of the Act. A similar conclusion has been arrived at in Bajaj Auto Ltd. v. TVS Motor Company Ltd." (para 48), a passage reproduced in AstraZeneca v Intas Pharmaceuticals (2020).
• Followed — In Merck Sharp and Dohme v Glenmark Pharmaceuticals (2015) the Delhi High Court Division Bench cited this case among those in which "the fact that the patentee was already dealing in the market on the basis of the patent weighed in as a factor in granting the interim injunction" (para 87); and in Novartis v Cipla (2015) the Delhi High Court cited it for the rule that "once it is held by the Court that it is a valid patent and it has been infringed by the defendant, normally an injunction order can be passed" (para 76).
• Explained — In F Hoffmann-La Roche v Cipla (2012) the Delhi High Court held that "the approach laid down in Catnic is not alien to the Indian context", citing this case as one "where Catnic case has been relied upon by the Madras High Court and same has been confirmed by the Division Bench while deciding the appeal on 18.5.2009" (para 239).