Telemecanique & Controls (I) Ltd v Schneider Electric Industries SA (2001)

Summary

“The souring of relationship between joint venture partner’s has given rise to the present dispute where the respondent is aggrieved by the alleged infringement of its patents by the appellant.” (para 1) “The present appeal arises from the impugned order dated 27.11.2000 of the learned Single Judge allowing interim application of the respondent IA No. 8522/99 under order 39 Rules 1 and 2 read with Section 151 of the Code of Civil Procedure, 1908 and the order dated 27.11.2000 dismissing IA No. 6504/2000 filed by the appellant” (para 1). “The respondent was aggrieved because of the manufacture and marketing of similar products to D2 range of the respondent by the appellant. The rival contention advanced on behalf of the appellant in their written statement was that D2 range of products is nothing but an improvement or modification of the D1 range of products” (para 5).

The Bench held that the minutes of the board could not be read as a licence: “Can such wishing of good luck be construed as a license to copy? In our considered view the answer to this question can only be no.” (para 21) It recorded that “it was admitted before us during the hearing of the appeal by the learned counsel for the appellant that what was being marketed by the appellant was in fact copy of D2 range of the respondent.” (para 22) On working, “in view of their being exploitation of the patent in the country by sale of product by the respondent, the public is getting the product and is not deprived of its benefit.” (para 30) “The learned Single Judge duly considered all the aspects and we see no illegality or arbitrariness in the impugned order” (para 32). “The appeal is consequently dismissed with costs of Rs. 5,000/-.” (para 34) “Interim orders stand vacated.” (para 35)

What the court decided

1. Procedure. The appellate standard. Applying Wander Limited and Anr. v. Antox India P. Ltd., the Bench held that “this court will not interfere with the exercise of the discretion of the court of first instance, which is the order of learned Single Judge, and substitute its own discretion except where the discretion is shown to have been exercised arbitrarily or capricious or perversely or where a court has ignored the settled principles of law regulating grant or refusal of interlocutory injunctions.” (para 2)
2. Locus standi of the respondent. “Though considerable time was spent on rival submissions on this account alone, we are of the considered view that the learned Single Judge had rightly observed that the aspects stated therein would not prima facie disentitle the respondent to maintain the suit at this stage and at best these were matters to be gone into at the stage of trial and thus the suit could be maintained.” (para 11)
3. Functional shapes and designs. The Single Judge “rightly concluded that prima facie a case had not been made out at this stage of the respondents design registration being merely of functional shapes and devices.” “We are prima facie of the view that there are features in respect of the products which are visible to the eye and at this stage it cannot be stated without further scrutiny after evidence that despite the registration, the respondent should be disentitled to the benefits accruing from such registration.” (para 14)
4. Workshop improvement at the interim stage. “The matter being one of a technical nature the two reports have to be weighed and sustenance drawn from the reports to arrive at a prima facie conclusion.” “Thus for the appellant to categories such huge amounts being spent on mere workshop improvements would not be prima facie sustainable.” (para 16) “In our considered view the learned Single Judge has rightly come to the conclusion that the appellant had failed to make out a case of mere workshop improvements specifically taking into consideration the appellant’s own letter dated 31.3.99 addressed to the Superintendent, Central Excise describing the product in question as a new range.” (paras 16, 18)
5. Rights not invoked. “the failure of the appellant to claim its rights under the technical services agreement and initiating proceedings does give rise to a prima facie view that the appellant did not agitate its rights in respect of the D2 range.” “further if a party is not willing or is negligent in invoking its legal rights, the necessary consequences must follow.” (para 17)
6. No licence to copy. “Can such wishing of good luck be construed as a license to copy? In our considered view the answer to this question can only be no.” “However, nothing could prevent the appellant from proceeding to develop its own version of D2 range.” (para 21) “We are afraid that we are unable to read anything in the minutes which can entitle the appellant to copy the D2 range of the respondent. Thus the pleas of estoppel, acquiescence cannot be sustained.” (paras 21–22)
7. Delay and laches. “We see no reason to interfere with this finding of the learned Single Judge arrived at on the bass of the appreciation of the factual position and keeping in mind the fact that the respondent is registered owner of the patents and designs” (para 25)
8. Expenditure on development. “In any case learned Single Judge has rightly observed that if the patents of the respondent are violated, it can be no defense that the appellant has spent large amounts for the same.” (para 26)
9. The duty to work. Of Franz Xaver Huemer v New Yash Engineers (1996), the Bench held: “There can be no doubt about the proposition that since the patents create a monopoly, they must be commercially exploited and the parties are not to only register a patent and sit tight over it.” (para 28)
10. The monopoly and the injunction. “It has to be appreciated that undoubtedly patent creates a statutory monopoly protecting the patentee against any unlicensed user of the patented device. Thus once a violation is established in case of a registered patent, subject of course, to the patent being used, it will not be permissible to contend that the said patentee is not entitled to an injunction.” (para 30)
11. Working by sale in India. “Section 83 by its wording refers to the exercise of powers conferred by the said Chapter and thus in view of their being exploitation of the patent in the country by sale of product by the respondent, the public is getting the product and is not deprived of its benefit.” (para 30) To the submission “that in view of Section 83 read with Section 90(d) of the Patents Act, 1970 the patent has to be worked out in India by manufacture and not by import”, the Bench answered: “We have, however, considered this aspect aforesaid and have come to the conclusion that there is no force in the submission of the appellant.” (paras 30–31)
12. Disposition. “The learned Single Judge had found a prima facie case in favor of the Respondent and that the balance of convenience lay in grant of temporary injunction and that irreparable loss and injury was likely to be suffered by the respondent” “The learned Single Judge duly considered all the aspects and we see no illegality or arbitrariness in the impugned order and thus there is no reason to interfere with the findings of the learned Single Judge.” (para 32) “The appeal is consequently dismissed with costs of Rs. 5,000/-.” “Interim orders stand vacated.” (paras 32, 34–35)

Subsequent treatment

Followed — the Madras High Court in Bajaj Auto v TVS Motor Company (2008) relied on paras 29 and 30, as “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), and the Delhi High Court in Telefonaktiebolaget LM Ericsson v Intex Technologies (India) (2015) reproduced para 30 (para 151).

Explained — the Delhi High Court in Chemtura Corporation v Union of India (2009): “although the injunction was granted on merits, the Court acknowledged that the mere grant of patent will not by itself ensure the grant of an injunction in favour of the patent holder. Significantly, the Division Bench emphasised that the patent holder would have to show that the patent had been worked.” (para 46)

Followed — the Division Bench of the Delhi High Court in Cipla v Novartis (2017) held: “As pointed out in Telemecanique (supra), a patent can be worked in India even through imports. All that is to be seen is that the imports are of a sufficient quantity so as to meet the demands for the product.” (para 25)