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India's Apex Court to address Bajaj-TVS interim injunction

Issue: July/August 2009

Keywords (click to search): outbound investment India intellectual property IP

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Manisha Singh Nair
Lex Orbis
manisha@lexorbis.com

Patent litigation in India seems to be at an upswing with establishments and corporations increasingly approaching Courts to enforce their rights. As litigation in patents undergoes a steep rise every year, it reflects the seriousness of patent holders to enforce their rights and hence make all possible attempts to reap benefits from their intellectual property.

Appeals to interim injunction orders have a prominent role to play since the reversal of an order granting or denying an injunction can have grave commercial implications in favour of either of the parties. The interim injunction is determined by considering the establishment of a prima facie case, balance of convenience tilting in favour of the applicant in respect of the injunction order and irreparable loss and injury being caused to him.

The battle between two-wheeler manufacturers, TVS Motor Company and Bajaj Auto, for patent rights on engine technology has witnessed action in the last month: appeals to the injunction granted restraining from infringing the patented technology.

As holders of a patent in respect of "an improved internal combustion engine working on a four stroke principle", Bajaj had moved against TVS on the exclusive right to prevent third parties from making, using, offering for sale, selling or importing the invention, as granted under Section 48 of the Patents Act, 1970.

The High Court of Madras granted an interim injunction in favour of Bajaj while preventing TVS from engaging in the patented technology. TVS in that pursuance moved an appeal, and the Division Bench of the Madras High Court addressing the issue pronounced a verdict in favour of TVS (O.S.A.Nos.91 & 92 of 2008 in C.S. No. 979 of 2007).

Looking into the specifics of the patented technology, the Court took into consideration the aspect of the perception of the technology among participants in the industry in question. Stating its opinion only to be prima facie in the event of this being an interim injunction, the provisions governing Revocation (Section 64), burden of proof in suits concerning infringement (Section 104A) and defences to infringement (Section 107) were stated to have independent application at the appropriate stage of the proceedings.

Among other things, the Court also laid down that in situations where an application for revocation of a patent by the respondent is pending before the Appellate Tribunal, and is preferred on the grounds of existence of a prior art, obviousness and other formidable grounds as provided under Section 64 of the Patent Act, the Court should not grant injunction in such cases. An application for revocation being pending, the Court opined the interim injunction to be unsustainable.

The doctrine of pith and marrow vis-à-vis the novelty of the invention was also taken into consideration in determining the merits of the case. In denying the injunction, the Court disregarded the existence of irreparable loss and of a question of balance of convenience.

In the event of such an order, Bajaj promptly approached the Supreme Court (see SLP No. 13933/2009) in appeal to the order of the Division Bench of the Madras High Court which allowed the launch of TVS' Flame in the market. While the appeal has been admitted, and parties instructed to complete relevant documentation, it is for the Apex Court now to determine the fate of the interim injunction in appeal.

In the course of averments, TVS made a statement that they would not allow any finished product to leave the warehouse, to which effect the Court demanded an undertaking. However, in the event of a decision from the Apex Court being pending, the order expressly restrained the parties from using the order for all other purposes, including publicity.

Now being the determining body for interim injunctions, the Apex Court will have to take careful consideration of the contentions placed before it - given the previous decisions of the Madras High Court to first grant and then deny an interim injunction, which were contrary to each other.

While the matter still needs to be taken up by the Supreme Court for arguments, the Apex Court seems to have towed a fine line in allowing production of the two-wheelers and disallowing it to be launched in the market by TVS. Further, the direction by the Court not to use its pronouncement for purposes such as publicity is a reflection of the wisdom of Indian Courts in considering and rendering justice in the interests of all litigating parties.