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In a bid to balance the rights of parties in a patent infringement suit, the Delhi High Court has stated that if the infringer does not comply with the interim order restraining infringement, the patentee would be entitled to punitive action against the infringer.
This experimentation with interim orders in patent infringement suits is the need of the hour, it added.
The order was passed by a Single Judge Bench of Justice Rajiv Sahai Endlaw in a patent infringement suit by Sterlite Technologies Ltd against ZTT India Pvt Ltd for infringement of its patented technology related to manufacturing optical fibres.
Sterlite argued that the optical fibre being marketed by the defendant had the same technical parameters as that of its own.
After issuing notice to the defendant, the Court opined that at this stage, it was not possible to form even a prima facie opinion. However, being mindful of the consequences of allowing continued infringement of patented technology, the Court observed,
“Considering, that the life of a patent is limited and further considering the time taken in determination, whether there is infringement of patent, non-grant of interim injunction often results in, the defendant, even if ultimately found to have infringed the patent, till the said determination, continuing to reap fruits of infringement.”
It further remarked that the price at which an infringer is able to market is often considerably lower than the price at which innovator is able to market. This because the infringer does not bear the cost of innovation. Consequently, the innovator is driven out of the market till the determination of the suit and is deprived of the fruits of the innovation.
The Court therefore stated that it has considered an “appropriate interim arrangement” to balance the rights of both the parties in a suit.
Justice Endlaw observed that the defendant has two defences in the suit i.e. either deny infringement by proving its product or process is different, or challenge the validity of the patent itself.
“If the defence is of denial of infringement and the defendant proves such defence, the interim order of restraint against infringement will not cause any harm to the defendant.
If the defence is of invalidity of the patent, then also the interim order can be made subject to the condition that on the defendant establishing invalidity, no consequences of violation of the interim order restraining infringement shall follow, again ensuring no harm to the defendant.”
However, if the defendant fails in its defence, the grant of interim relief restraining infringement shall entitle the plaintiff also to consequences of violation of the interim order by the defendant in case of non-compliance, apart from the reliefs claimed in the suit, the Court stated.
This will fully compensate the plaintiff for infringement and will encourage and give impetus to innovation, the Court said.
“I say so because, a patentee, even after succeeding in the suit, in the absence of any interim order, is entitled only to profits earned by the defendant and which do not reflect the profits which the plaintiff would have earned if there had been no infringement.
As aforesaid, the infringer is able to market at a much lower price, resulting in earning far less profits that which the patentee would have earned if there had been no infringement. The patentee would then also be entitled to punitive action against defendant for violation of the interim order.”
The Court further remarked that this arrangement would ensure that suits for infringement are not contested only to take advantage of delays in the Court process, in spite of the defendant knowing the truth.
“Each defendant, in its heart, knows the truth and if in spite of knowing that it is in infringement, violates the interim order, will, besides taking the risk of financial liability, also run the risk of penal consequences. This will also ensure purity of the Court process.”
Thus stating that “this experimentation” with interim orders in patent infringement suits is the need of the hour, the Court passed an interim order in the above terms to restrain the defendant from infringing the plaintiff’s patented technology till the next date of hearing.
The Plaintiff was represented by a team from Anand and Anand comprising Managing Partner Pravin Anand, Senior Partner Archana Shanker, Partner Prachi Agarwal and Ridhie Bajaj.
Read the order: