Franz Xaver Huemer v New Yash Engineers (1996)

Summary

“The point arising in the case is of considerable importance in regard to patents registered in India by foreigners and not kept in use in our country and thereby seriously affecting our market and economy.” (para 1) “The appellant, Franz Xayer Huemer, is an Austrian citizen. He filed the Suit No. 468 of 1994 on 26-2-1994 seeking a permanent Injunction restraining the respondent from making, using, exercising, selling or distributing any items which infringe the 5 patents belonging to the plaintiff” ... “Pending the suit the plaintiff filed I.A. No. 2233/94 for temporary injunction on the same lines. The Court initially granted temporary injunction on 1-3-1994 but vacated the same on 27-11-1993 under the impugned order. The plaintiff has preferred this appeal against the said order.” (para 2) “The patented items are certain mechanical devices used in textile industry.” (para 3) The trial Judge had reasoned that “under Section 107 of the Patents Act, in a suit for injunction, every ground on which the plaintiffs patent could be revoked, could be a ground of defense. On this reasoning the injunction granted earlier was vacated.” (para 5)

The Court held that “Non-user of the patent by the patentee is a ground only under Section 84 for grant of compulsory licence to another person but the grounds in Section 84 have not been made grounds of defense under Section 107 in a suit by the patentee” (para 10), but that “The Indian precedents in this behalf are clear and say that non-user of the patent by the patentee is a ground for refusing injunction.” (para 12) It held that “what was said about unused foreign patents and their adverse effect in US, equally applies to foreign patents registered in India but not used” (para 21) and that “the plaintiff who has registered patents in India in 1984 but has not used them in India cannot, in equity, seek temporary injunction against the respondent.” (para 22) “In view of our findings on Points 1 to 4, we agree with the learned Judge that the appellant-plaintiff has neither made out a prima facie case nor is the balance of convenience in his favour” ... “We accordingly dismiss the appeal.” (para 34)

What the court decided

1. Non-user and section 107. “In our opinion, this contention raised for the appellant is well founded. Non-user of the patent by the patentee is a ground only under Section 84 for grant of compulsory licence to another person but the grounds in Section 84 have not been made grounds of defense under Section 107 in a suit by the patentee. Hence, Section 107 cannot by itself come to the aid of the respondent.” (para 10)
2. Discretion under Order 39 Rule 1. The Court framed the question “whether, while exercising discretion under Order 39, Rule 1, CPC for granting temporary injunction, it is not open to the Court to rely on the conduct of the plaintiff in not using his patent or virtually ‘suppressing’ his patent for all practical purposes in India?” (para 11) and answered: “The Indian precedents in this behalf are clear and say that non-user of the patent by the patentee is a ground for refusing injunction.” Of “N.R.D. Corporation of India v. D.C. and G. Mills Co., AIR 1980 Delhi 132”, “Boots Pure Drug and Co. (India) v. May & Baker Ltd., (1948) 52 Cal WN 253” and “Manicka Thevar v. Star Plough Works”, it held: “We are in agreement with these decisions for the more elaborate reasons we propose to give below.” (paras 11–12)
3. The right not to use. To the appellant’s contention that under Section 53(b) “It is his exclusive privilege to use or not to use” (para 13), the Court answered: “In our view, the contention of the appellant’s counsel, if accepted, would seriously affect the market and economic conditions-in our country in as much as it would enable a mechanical device, invented abroad (or in India) to be registered in India and kept unused thereby excluding public of its benefit and, at the same time precluding a similar device being produced or used in our market of industry.” (paras 13–14)
4. A privilege conditioned by public purpose. Of the dissent of “Douglas, J. in the Special Equipment Co. case”, the Court recorded that “He said that a patent is not a form of private property but a ‘privilege’ ‘conditioned by a public purpose,’ to promote the progress of science and useful arts” and that “The exclusive right of the inventor is but the means to that end.” It held: “We are in entire agreement with the strong views expressed by Douglas, J. in his dissenting judgment. The philosophy behind his view appears to us also to be.the basis of the views of the Calcutta, Madras and Delhi High Courts earlier referred to. Apart from that even the majority decision in the US cases has clearly left the question open so far as equity is concerned.” (para 19)
5. Unused foreign patents. “In our opinion, what was said about unused foreign patents and their adverse effect in US, equally applies to foreign patents registered in India but not used.” (para 21)
6. Applied to the plaintiff. “There is no evidence of user of the patents by the plaintiff except in six bills. That means that there is practically no evidence of user since 4984-85.” (para 8) “For the above reasons, the plaintiff who has registered patents in India in 1984 but has not used them in India cannot, in equity, seek temporary injunction against the respondent. Points 1 and 2 are decided accordingly.” (paras 8, 22)
7. Procedure. A new plea in appeal. “Neither in the plaint nor in the IA, has the appellant pleaded that he held 40% equity in Lohia Starling Ltd. It is therefore not possible to permit the plaintiff to raise a new issue of fact for the first time in appeal. Alternatively, if the plaintiff cannot get temporary injunction himself, he cannot be” “in a better position by employing a power-of-attorney.” (para 23) “The fact that R. K. Lohia is manufacturing and using these mechanical devices in India cannot help the plaintiff inasmuch as Mr. Lohia does not have a registered patent in his name.” (paras 23–24)
8. Triable issue or prima facie case. “In a recent intellectual, property case concerning trade mark, the Supreme Court after referring to Cyanamid, still observed that plaintiff has to prove prima facie case, balance of convenience and irreparable injury if injunction is to b’e granted. Gujarat Bottle Mfg. Co. Ltd. v. Coca Cola Co., . That would mean that the rule of ’triable issue’ stands mellowed down in favour of prima facie case, in intellectual property matters.” (para 30)
9. Registration and the defences. “It is said that in the law of patents, it is not sufficient merely to have registration of a patent. The Court must look at the whole case, the strength of the case of the patentee and the strength of the defense such as those falling under Section 107 ,read with Section 64.” (para 31)
10. Prima facie validity. “The need to establish prima facie has been emphasized in recent cases in England and in India.” “Prima facie proof of validity is different from prima facie proof of infringement as stated by Suitan Singh, J. in NRDC Co. v. DCM Ltd., AIR 1980 Delhi 132.” The passage there quoted from Terrel reads: “The plaintiff must first establish such facts as will satisfy the Court that there are strong prima facie reasons for acting on the supposition that the patent is valid.” “In Surendra Lal Mahendra Jain v. Glazers, 1981 PTC 112 (117) it was held that a prima facie case about the existence of the monopoly, right and its infringement must be established.” (para 32)
11. Balance of convenience. “Balance of convenience has also an important role to play. Stultification of defendants investment, loss of employment, public interest in the product (such a life saving drug), product quality coupled with price, or the defendant being smaller in size, may go against the plaintiff. Cases of a ‘Bridgehead (only a short period to go before expiry of plaintiff’s patent), parties being of equal size, -- may go in favour of plaintiff. Case of snowball (more future infringements) may not till the balance in favour of plaintiff.” “Again, even delay of a few months in some cases has led to refusal of injunction.” (para 33)
12. Procedure. Disposition. “In view of our findings on Points 1 to 4, we agree with the learned Judge that the appellant-plaintiff has neither made out a prima facie case nor is the balance of convenience in his favour. We have given additional reasons as to why the order of the learned Judge is to be affirmed. We accordingly dismiss the appeal.” (para 34)

What the court did not decide

Of the defendant’s pleas of prior public knowledge and use, the Court held that “Having regard to the several Annexures (A to P) filed along with the counter-affidavit, there is considerable force in this defense taken out by the defendant. But in view of our findings on Points 1, 2 it is not necessary for us to go in depth into this question.” (para 26)

Subsequent treatment

• Followed — In F Hoffmann-La Roche v Cipla (2009) the Division Bench of the Delhi High Court, citing this judgment, set out its balance-of-convenience factors and concurred in refusing an interim injunction (para 77).
• Explained — In Merck Sharp and Dohme v Glenmark (2015) the Division Bench of the Delhi High Court said of the principle in Bishwanath Prasad Radhey Shyam v Hindustan Metal Industries (1978) that “the principle applies equally to interim hearings. This was implicit in the decision of this Court in” this case (paras 36–37).