Salzer Electronics Limited Vs. S.G.Controls and Switchgear Pvt. Ltd. - Court Judgment

THE HIGH COURT OF JUDICATURE AT MADRAS Dated:09.06.2014 Coram THE HONOURABLE Mr.JUSTICE M.JAICHANDREN AND THE HONOURABLE Mr.JUSTICE M.VENUGOPAL O.S.A.Nos.413 and 414 of 2012 and M.P.Nos.1 and 2 of 2012 *** Salzer Electronics Limited, Subhiksha Flats, Old No.15, New No.20, Vellala Street, Kodambakkam Chennai 600 024.

rep.

By its Constituted Attorney, Mr.A.M.R.Gandhi ..Appellant/Applicant/Plaintiff in both OSAs V.

1.S.G.Controls & Switchgear (P) Ltd., No.82, Udyog Vihar, Industrial Area  Phase 4, Gurgaon  121 001.

Haryana.

2.Rajdhani Industrial Spares, Old No.15/16, Govindappan Naicken Street, Chennai  600 001..Respondents/Respondents/Defendants in both OSAs Prayer: Appeals filed under Order XXXVI Rule 1 of the Original Side Rules read with Clause 15 of the Letters Patent as against the Common order dated 21.09.2012 passed by the learned Single Judge in O.A.Nos.327 and 328 of 2011 in C.S.No.240 of 2011.

For Appellant : Mr.P.S.Raman Senior Counsel For M/s.A.A.Mohan For Respondents : Mr.A.Prabhakara Reddy For M/s.APR Associates COMMON JUDGMENT

(Judgment of the Court was delivered by M.VENUGOPAL,J.) The Appellant/Applicant/Plaintiff has preferred the instant Original Side Appeals as against the Common Order, dated 21.09.2012, in O.A.Nos.327 & 328 of 2011 in C.S.No.240 of 2011, passed by the Learned Single Judge, in dismissing the Applications.

2.The Appellant/Applicant/Plaintiff has filed O.A.No.327 of 2011 in C.S.No.240 of 2011, seeking the relief of ad-interim, interim, temporary injunction restraining the Respondents by themselves, their partneRs.heiRs.their legal representatives, successors-in-business, agents, stockists, distributORS.assigns, representatives, or any one claiming under them from in any manner infringing the Applicant's registered patent under No.198122 in respect of INTEGRAL CAM OPERATED ROTARY SWITCH by manufacturing, marketing, selling, offering for sale or exporting Cam Operated Rotary Switches identical or similar to the plaintiff's integral cam operated rotary switches in any manner whatsoever, pending disposal of the suit.

Similarly, the Appellant/Applicant/Plaintiff has filed O.A.No.328 of 2011 in C.S.No.240 of 2011 seeking the relief of ad-interim, interim, temporary injunction, restraining the Respondents by themselves, their partneRs.heiRs.their legal representatives, successors-in-business, agents, stockists, distributORS.assigns, representatives, or any one claiming under them from in any manner passing off cam operated rotary switches manufactured and sold by them as and for Applicant's INTEGRAL CAM OPERATED ROTARY SWITCHES by using identical/or deceptively similar product, same or similar trade dress, colour scheme, getup and layout or in any other manner whatsoever pending disposal of the suit.

3.The Learned Single Judge, while passing the Common Order, in O.A.Nos.327 & 328 of 2011 in C.S.No.240 of 2011, on 21.09.2012, in paragraph 23, has observed the following: 23.As rightly contended by the respondents, the claim for a valid patent can be challenged in a suit under Section 64(2) and they have also filed a cross objection in the written statement and have paid court fee for the same.

Therefore, it is a matter fit for trial.

Even before the trial and a final verdict to be given, it cannot be said that the applicant has made out a prima facie case for the grant of the injunction.

Even the balance of convenience does not stand in their favour for the grant of the injunction.

As rightly contended by the respondents, the patent obtained by him is not out of any new invention and several manufacturers are using the similar design.

After issuing the notice in the year 2010, the applicant also delayed in filing the suit.

Though the delay by itself cannot defeat the right of the patentee, but the fact that he had issued the notice and got the reply as early as in April, 2010, but never chose to question the action of the respondent can be a relevant factor for declining the entire relief. and consequently, dismissed the Applications without costs.

4.The Learned Senior Counsel for the Appellant submits that the impugned common order, in Application Nos.327 & 328 of 2011 in C.S.No.240 of 2011, dated 21.09.2012, had ignored several vital issues that are required for an effective adjudication of the issues.

As such, the said order is bereft of reasoning and the same is liable to be set aside, in the eye of law.

5.According to the Learned Senior Counsel for the Appellant, the findings and conclusions arrived at by the Learned Single Judge, while dismissing O.A.Nos.327 & 328 of 2011 in C.S.No.240 of 2011, are clearly contrary to the pleadings and the uncontroverted statements of the Appellant and to the admissions of the Respondents.

6.The Learned Senior Counsel for the Appellant forcibly submits that the Learned Single Judge had erred in not considering the relief of passing off as prayed for by the Appellant.

7.Proceeding further, the Learned Senior Counsel for the Appellant projects an argument that the Learned Single Judge had failed to appreciate a fact that the Respondents/Defendants had not given any explanation whatsoever as to how and why the Appellant's patent is hit by prior art or on any ground under Section 64 of the Patents Act, 1970.

8.The Learned Senior Counsel for the Appellant contends that the Learned Single Judge had failed to consider the Appellant's case in totality.

Further, it is the submission of the Learned Senior Counsel for the Appellant that the well settled law is that the grant of patent ought to be given some weight and significance while considering the question of prima facie case.

9.Advancing his arguments, the Learned Senior Counsel for the Appellant strenuously submits that the Learned Single Judge erred in not considering the settled principle of law that while exercising the discretionary relief irreparable injury or damage would ensue before the legal right would be established at trial.

10.It is the contention of the Learned Senior Counsel for the Appellant that the Learned Single Judge had ignored an important fact that the Respondents had failed to substantiate that the claims made in the Appellant's patent and the teachings of the Appellant's patent were available in conventional rotary switches.

11.It is the submission of the Learned Senior Counsel for the Appellant that the Learned Single Judge should have considered the statutory rights in the registered patent vested upon the Appellant and ought to have held that the rights of the Appellant would be severely affected and the sales, goodwill and its reputation would be irreparably damaged if the Respondents continue to manufacture and market identical Cam Operated Rotary Switches.

12.While winding up, the Learned Senior Counsel for the Appellant contends that the Learned Single Judge should not have held that since counter claim was filed in the suit, it is a matter fit for trial.

Added further, it is pleaded on behalf of the Appellant that the Learned Single Judge, in para 23 of the impugned order, has categorically observed the following: As rightly contended by the respondents, the claim for a valid patent can be challenged in a suit under Section 64(2) and they have also filed a cross objection in the written statement and have paid court fee for the same.

Therefore, it is a matter fit for trial.

Even before the trial and a final verdict to be given, it cannot be said that the applicant has made out a prima facie case for the grant of the injunction.

Even the balance of convenience does not stand in their favour for the grant of the injunction. Further, the Learned Single Judge went on to proceed and significantly observed as under: As rightly contended by the respondents, the patent obtained by him is not out of any new invention and several manufacturers are using the similar design.

After issuing the notice in the year 2010, the applicant also delayed in filing the suit.

Though the delay by itself cannot defeat the right of the patentee, but the fact that he had issued the notice and got the reply as early as in April, 2010, but never chose to question the action of the respondent can be a relevant factor for declining the entire relief. By pointing out the aforesaid observations made by the Learned Single Judge, while dismissing the Injunction Applications, the Learned Senior Counsel for the Appellant emphatically contends that when once the subject matter in issue between the parties, based on their pleadings, is a matter to be thrashed out during trial of the main Civil Suit, then, it is not open to the Learned Single Judge to simply arrived at a conclusion that the patent obtained by the Appellant is not out of new invention and several manufacturers are using the similar design in the absence of ascribing of valid and justifiable reasons to that effect.

13.Per contra, the Learned Counsel for the Respondents submits that the Learned Single Judge has rightly dismissed the Application Nos.327 & 328 of 2011, by assigning valid and proper reasons.

14.It is not in dispute that the Appellant/Applicant/Plaintiff has filed Civil Suit in C.S.No.240 of 2011 on the file of this Court, against the Respondents/Defendants, praying for a Judgment and Decree to be passed on the following terMs.a.

A permanent injunction restraining the Defendants by themselves, their partneRs.heiRs.their legal representatives, successors-in-business, agents, stockists, distributORS.assigns, representatives, or any one claiming under them from in any manner infringing the Plaintiff's registered patent under No.198122 in respect of INTEGRAL CAM OPERATED ROTARY SWITCH by manufacturing, marketing, selling, offering for sale or exporting Cam Operated Rotary Switches identical or similar to the plaintiff's integral cam operated rotary switches; b.

A permanent injunction restraining the Defendants by themselves, their partneRs.heiRs.their legal representatives, successors-in-business, agents, stockists, distributORS.assigns, representatives, or any one claiming under them from in any manner passing off cam operated rotary switches manufactured and sold by them as and for Plaintiff's INTEGRAL CAM OPERATED ROTARY SWITCHES by using identical/or deceptively similar product, same or similar trade dress, colour scheme, getup and layout or in any other manner whatsoever; c.

The Defendants be ordered to surrender for destruction to the Plaintiff all materials and implements used for creation of the infringing goods to be forfeited or destroyed as the court deems fit in the facts and circumstances of the case; d.

a preliminary decree be passed in favour of the plaintiff directing the defendants to render true and faithful account of profits made by selling cam operated rotary switches which is an infringement of the plaintiff's patent no.198122 and / or deceptively similar to the plaintiff's integral cam operated rotary switches in its essential features including the trade dress etc.from the date of commencement of sale and a final decree be passed in favour of the plaintiff for the exact amount of profits thus found to have been made by the defendants after the latter rendered accounts; e.

The Defendants be directed to pay to the Plaintiff, a sum of Rs.50,00,000/- as damages; f.

For costs of the suit. 15.The 1st Respondent/1st Defendant has filed a detailed written statement together with a counter claim.

16.The plea of the Appellant/Plaintiff is that it is the market leader in manufacturing world-class Cam Operated Rotary Switches and they are exclusively certified prestigious ISO9000 2004, ISO90002008 accreditation by NQA-UK for their Design, Development, Manufacture and Supply etc.Also that, in the couRs.of business, it had invented a novel Integral Cam Operated Rotary Switches in the year 1999 and for protecting its valuable intellectual property rights applied, for the registration of new invention with Controller of Patents on 31.08.1999 under the title 'Integral Cam Operated Rotary Switches'.

17.According to the Appellant/Plaintiff, it came to know that the 1st Respondent/1st Defendant has been manufacturing the identical rotary switches with identical technology, identical design and identical yellow and red colour combination and it purchased the 1st Respondent /1st Defendant's impugned product and dismantled the same to know its dimensions and specifications, by which, it is apparent that the Defendant has imitated all the features of Appellant/Plaintiff's patented product etc.18.In fact, the Appellant/Plaintiff caused a legal notice on 08.04.2010 calling upon the 1st Respondent/1st Defendant to cease and desist from manufacturing the impugned product imitating its patented technology.

However, the 1st Respondent/1st Defendant, through its letter dated 21.04.2010, declined the request made by the Appellant/Plaintiff and it temporarily stopped manufacturing and marketing the impugned rotary switches.

19.The main grievance of the Appellant/Plaintiff is that the 1st Respondent/1st Defendant has copied all the internal spares of its Integral Cam Operated Rotary Switches including poles, shaft, cam wheels, screws, springs etc.in its entirety.

The 2nd Respondent/2nd Defendant is the dealer of the 1st Respondent/1st Defendant's impugned product.

Both of them have common intention to dilute the exclusivity attached with the Appellant/Plaintiff's Integral Cam Operated Rotary Switches.

The situs of the Appellant/Plaintiff's intellectual property viz., the patent is situated within the jurisdiction of this Court.

Indeed, the look alike imitative, spurious, counterfeit rotary switches of the Respondents/Defendants are sold, distributed and offered for sale in the city of Chennai.

Under these circumstances, the Appellant/Plaintiff has filed the suit against the Respondents for the reliefs stated supra.

20.The 1st Respondent/1st Defendant, in its written statement [filed together with counter claim]., had, among other things, averred that the patent, which is the subject matter of the suit, do not disclose any inventive step and it only put the available prior art in a different language.

Admittedly, there is no disclosure in the specification in respect of the novelty which is claimed by the Appellant/Plaintiff and resultantly, it cannot be considered that the patent is granted for the novelty in issue.

Also, there is no novelty even in the assembling, the description of the invention as given in the complete specifications relating to the patent under No.198122, gives only the method of assembling the cam operated rotary switches, which is universally followed by all the manufactureRs.21.Further, it is averred in the written statement that the Appellant/Plaintiff had deliberately not furnished the exact date of its knowledge about the manufacturing and marketing of Cam Operated Rotary Switches by the Defendants.

Also, the 1st Respondent/1st Defendant had issued a suitable reply dated 21.04.2010 to the legal notice dated 08.04.2010 issued by the Appellant/Plaintiff.

All the parts used in the manufacturing of Rotary Switches by every manufacturer in the industry are all having common features, specifications and dimensions.

The Appellant/Plaintiff has no monopoly over the cam operated rotary switches or in the common shape and configuration that is being used by it and every other manufacturer including the 1st Respondent/1st Defendant.

The Respondents/ Defendants are in the industry for more than 23 years and they had established their own goodwill and reputation for their highly standard products particularly in the Cam Operated Rotary Switches.

Therefore, the Appellant/ Plaintiff is not entitled to seek any relief against the Defendants.

22.Apart from the above, the 1st Respondent/1st Defendant, in the Counter Claim [filed by under Order VIII Rule 6(a) of Civil Procedure Code read with 64 of the Patent Act, 1970]., had averred that the invention as claimed in the complete specification is already in the public knowledge and the Cam operated Rotary Switch over which the Appellant/Plaintiff now obtained patent is already available much before the Appellant/Plaintiff filed application for grant of patent and almost all the manufacturers in the industry use the same technology and mechanism.

The patent being of very recent and having regard to the working of the patent for short period no presumption can be drawn as to the prima facie validity of the patent.

No presumption can be drawn as to the prima facie validity of the patent.

No prejudice or hardship would be caused to the Appellant/Plaintiff if the patent granted under No.198122 is revoked as it is unsustainable and contrary to the provisions of the Patent Act, 1970.

Under these circumstances, the 1st Defendant had sought a declaration that the patent granted under No.198122 is liable to be revoked under Section 64 of the Patent Act, 1970 and also prayed for revoking the patent granted as stated above in favour of the Appellant/Plaintiff dated 19.01.2006.

23.At this stage, this Court very relevantly points out that a cursory perusal of the Plaint filed by the Appellant/Plaintiff shows that the Appellant/Plaintiff has sought the reliefs of permanent injunctions (a) and (b) against the Respondents/Defendants, as stated earlier, in the main suit.

In O.A.Nos.327 & 328 of 2011, the Appellant/Plaintiff has sought the relief of ad-interim, interim, temporary injunction against the Respondents/Defendants etc.There is no two opinion of the fact that the reliefs of permanent injunction sought for in the main suit in C.S.No.240 of 2011 and the relief of ad-interim, interim, temporary injunction sought for against the Respondents/Defendants in the injunction applications are one and the same.

In such a situation, if pleadings have been completed in the main suit, then, it is desirable for a Court of Law to frame necessary issues and to proceed with the trial of the main case, in the considered opinion of this Court.

Apart from the relief of permanent injunction, the Appellant/Plaintiff, has, in the main Plaint, sought the relief of issuance of direction by this Court to the Respondents/Defendants to surrender for destruction to the Appellant/Plaintiff all materials and implements used for creation of the infringing goods to be forfeited or destroyed etc.; passing of a preliminary decree directing the Respondents/ Defendants to render true and faithful account of profits made by selling cam operated rotary switches etc.and for claiming a sum of Rs.50 lakhs as damages to be paid by the Respondents/Defendants.

24.In law, a Patent is an exclusive right granted to a person who has invented a new and useful article or an improvement of an existing article or a new process of making an article.

An exclusive right is to manufacture the new article invented or manufacture an article in terms of the invented process for a certain period.

During the patent term, the owner of the patent i.e., the patentee can restrain any other individual from utilising the patentee invention.

It is needless for this Court to point out that after the expiry of the patent period, any one can make use of the invention.

The invention, then, falls within the ambit of public domain.

25.It is to be noted that a patent is a form of 'industrial property', now termed as 'intellectual property'.

The owner can sell the whole or the part of the property, he can also grant licences and also can issue licences to others to utilise or exploit it.

To put it precisely, a patent is a creation of statute and the same is territorial in extent.

26.It cannot be gainsaid that a 'Trade Mark' is infringed if a person other than the registered proprietor or authorised user uses, in relation to goods covered by registration, one or more of the trade mark's essential particulaRs.Conversely, in an action for 'Passing Off', proof of the use of a device or of an essential particular of a device by which Plaintiff's products are characterised does not suffice to prove the cause of action.

A Court of Law ought to be further satisfied that the manner of use is not such as adequately to distinguish the goods of the Defendants from those of Plaintiffs.

Furthermore, in a 'Passing Off Action', the Plaintiff should establish that the mark, name or get up, the use of which the Defendant is the subject of the action, is distinctive of his goods in the eyes of public.

27.It is to be more pertinently pointed out that the functional features of an article are not at inherently distinctive of proprietary origin in the absence of some special designation of such source like trade mark or a non-functional features of get up.

Distinctiveness of functional features can be established only by evidence of acquired distinctiveness, in the considered opinion of this Court.

28.It is to be pointed out that a Court of Law is to pass a speaking/reasoned order in the subject matter in issue by atleast mentioning an outline of process of reasoning.

A speaking order will at his best be reasonable and its wORS.be atleast a plausible one.

A speaking order/reasoned order of a Court of Law in respect of the proceedings before it must satisfy the requirement of 'Consideration of the matter' and the same ought to be a reasoned one ascribing necessary reasons.

In fact, reasons are the link between the materials on which certain conclusions are arrived at and the actual considerations.

When the links are missing, there is scope for interference by the Court of Law.

29.To put it succinctly, an order passed without assigning reasons is certainly not a lawful order, in the eye of law and the same suffers from infirmity/illegality in its nativity.

Moreover, a speaking order/an order passed giving reasons will have an appearance of justice.

An unreasoned order may be just from the point of view of person passing the same but to the affected/aggrieved, the same gives right to him to take up before an Appellate forum for ensuring that the justice be done to him.

30.As far as the present case is concerned, on going through the Common Order passed by Learned Single Judge, in O.A.Nos.327 & 328 of 2011 in C.S.No.240 of 2011, dated 21.09.2012, we are of the considered view that the Learned Single Judge, based on the pleadings set out by the parties, had categorically came to the conclusion that the subject matter of lis between the parties, is a matter fit for trial.

However, the Learned Single Judge, in the impugned order, had not spelt out the divergent stand taken by the parties and had not discussed the merits and demerits of the claim made by them atleast in brevity.

In fact, the Learned Single Judge had went on to observe, in the impugned order, that 'Even before the trial and a final verdict to be given, it cannot be said that the applicant has made out a prima facie case for the grant of the injunction.

Even the balance of convenience does not stand in their favour for the grant of the injunction.

As rightly contended by the respondents, the patent obtained by him is not out of any new invention and several manufacturers are using the similar design etc.', without traversing upon the pleadings and discussing the merits and demerits of the matter in a qualitative, quantitative and threadbare fashion.

Since the impugned Common Order is shorn of necessary details and also taking note of the fact that the links for the reasons are missing for want of adequate reasons, at this stage, this Court, without expressing any opinion on the merits of the matter and also not delving deep into the same, comes to an inescapable and irresistible conclusion that the said impugned Common Order is liable to be interfered with.

Consequently, to prevent an aberration of justice and to subserve the ends of justice, this Court sets aside the said order dated 21.09.2012, in O.A.Nos.327 & 328 of 2011 in C.S.No.240 of 2011 passed by Learned Single Judge.

Resultantly, the Original Side Appeals succeed.

31.In the result, the Original Side Appeals are allowed.

The order passed by the Learned Single Judge, in O.A.Nos.327 & 328 of 2011 in C.S.No.240 of 2011, dated 21.09.2012, is set aside by this Court, for the reasons assigned in these Appeals.

The O.A.Nos.327 & 328 of 2011 are directed to be restored to file in C.S.No.240 of 2011 for fresh disposal in accordance with law.

There shall be no order as to costs.

Consequently, connected Miscellaneous Petitions are closed.

(M.J.J.) (M.V.J.) 09.06.2014 Index :Yes / No Internet :Yes / No Sgl M.JAICHANDREN,J.

AND M.VENUGOPAL,J.

Sgl O.S.A.Nos.413 and 414 of 2012 09.06.2014