Hindustan Lever Limited Vs. Mr. Lalit Wadhwa and anr. - Court Judgment

Vipin Sanghi, J.

1. By this order I propose to deal with I.A. No. 9649/2006 filed under Order 7 Rule 11 CPC and I.A. No. 9648/2006, filed under Order 1 Rule 10 CPC by the defendants.

2. By the aforesaid application under Order 7 Rule 11 CPC, it is contended that the plaint is liable to be rejected since it does not disclose a cause of action; that the suit has not been filed by a duly authorised person, and; that this Court has no territorial jurisdiction to entertain this suit.

3. I.A. No. 9648/2006 has been filed to say that defendant No. 1 is neither a necessary nor a proper party to the present suit and that he has been imp leaded as defendant No. 1 merely to avoid the proceedings being noticed by the defendants in the cause list and with a view to obtain an ex-parte ad interim order of injunction behind the back of the defendant No. 2 and 3.

4. Taking up the application under Order 7 Rule 11 CPC first, I proceed to deal with the objections that the plaint and the documents filed with it, do not disclose a cause of action against the defendant.

5. While dealing with an application under Rule 11 of Order 7, in order to decide whether the plaint discloses any cause of action or not, the Court has to examine only the allegations made in the plaint and the documents filed with it. Where the allegations made in the plaint, prima facie, disclose a cause of action, the plaint cannot be rejected. [See : 60(1995)DLT271 ].

6. The plaintiff states that it is carrying on the business of manufacture of various consumer products. The present suit has been filed by the Plaintiff seeking the relief of permanent injunction, rendition of account and damages on the basis of the alleged infringement of its patent in respect of a gravity fed water purification system, by the defendants.

7. The plaintiff, it is averred, had in the year 2002 developed and invented a gravity fed water purification system assuring a high degree of microbiological purity in the drinking water it delivers. The plaintiff made application No. 539/MUM/2003 for patent registration in India in June 2002. The said application was notified for opposition purposes on 13th May 2005. It is averred that no opposition was raised by any third party within the prescribed period and consequently the plaintiff were granted patent number 198316 on January 9, 2006 which is still valid and subsisting. Corresponding International Application was also made with the European Patent Office on 31st December, 2003.

8. The claim in the patent of the plaintiff's product reads as follows:

1.1) A gravity fed water purification system comprising a filtration unit adapted to filter particulate material, and a Chemical purifying unit containing a Chemical purifying agent, in which the Chemical purifying unit is house in a sealed chamber and is in fluid communication with the filtration unit such that water treated by the filtration unit is then gravity fed into the Chemical purifying unit and retained therein for a predetermined period, after which the water exits the system via a scavenger means which is adapted to recover leached Chemical purifying agent.

2) A water purification system according to claim 1, which comprises a purification unit comprising a top chamber and a bottom chamber, which are separated by a partition, and in which the filtration unit is secured to the partition and housed in the top chamber, and the Chemical purifying unit is housed in the bottom chamber.

3) A water purification system according to claim 1 or claim 2, in which the filtration unit comprises a carbon block.

4) A water purification system according to any one of claims 1 to 3, in which a water exit passage from the Chemical purifying unit is provided in a configuration such that water cannot exit through the water exit passage until it has resided for a defined time in the Chemical purifying unit.

9. It is further averred that the plaintiff had invested over Rs.50 crores over the last two years, immediately preceding the filing of the suit in manufacturing, marketing and other activities related to its launch. It is further averred that the defendant No. 2 company is also involved in making water purification systems. The defendant have launched, around September 2004, their water purification system under the name 'Forbes Aquasure'. It is averred that the defendant's product directly infringes the substance of the plaintiff's patent claim. The plaintiff has also produced a comparative chart of the components of both products in paragraph 13 of the plaint. It is alleged that upon enquiry it transpired that a patent application was filed in the name of defendant No. 3, on or about 29th March, 2004 and notified in the official Journal dated 11th February, 2005. Since the Journal was published late, the plaintiff learnt of this application only sometime in July, 2005. Plaintiff carried out an inspection of patent journals and found that there was no notification of a grant of patent on the said application. Thereupon the plaintiff promptly made a representation of opposition to the Controller of Patents, Chennai under Section 25(1) of the Patents Act which was filed on 18th August, 2005.

10. It is averred that the patent office did not notify the application of the defendant's patent. It proceeded to grant a patent to the defendant, and by a letter dated 30th September, 2005 and informed the plaintiff of the same. The plaintiff pointed out this omission on part of the Controller of Patents by a letter dated the 18th October 2005 followed by reminders dated the 29th December 2005 and 3rd January 2006. It is further averred that the Controller's office not only refused to act on the said representations, but also refused to acknowledge the same. It is further averred that defendant No. 3 failed to file their reply statement to the post grant opposition filed by the plaintiff within the statutory period of two months which expired on 18th January, 2006 upon which the patent of the defendants is deemed to be revoked. However, the plaintiff was informed by a letter dated 21st April, 2006 that the patent office had condoned the delay, and granted a further period of two months to the defendants to file their reply statement and evidence.

11. The phrase 'does not disclose the cause of action' as used in order 7 Rule 11(a) has to be very narrowly construed. This power of rejection of the plaint ought to be used only when the court is absolutely sure that the plaintiff does not have an arguable case at all. [See : AIR2000Bom161 ].

12. In the plaint as filed by the plaintiff, it asserts infringement of its patent by the Defendant which is a matter that requires examination. For the purpose of examination of the present application, the averment that the plaintiff has a valid patent and that the defendant is infringing the patent of the plaintiff have to be assumed to be true. It cannot be said that the plaint on its reading does not disclose a cause of action against the Defendants. This argument of the Defendant is thereforee rejected.

13. The other limb of the defendant's argument to content that the plaint does not disclose a cause of action is that no action for infringement of patent can lie against another patentee. It is argued that a patent for a particular product/process is granted only for an invention which involves an inventive step, and only when there is a new invention. The patent Act itself provides for rigorous mechanism for the examination of all claims of new invention for grant of patent. The rights granted to a patentee under Section 48 of the Patents Act can be enforced against a third party but not against another patentee whose new invention is recognised by the fact that the patentee has been granted a patent. It is argued that the Patent Act is a complete Code in itself which empowers the Controller of Patent to effectively and judiciously determine whether or not to grant a patent in a particular case. It is argued that the remedy available to the plaintiff against another patentee is not by way of a suit for permanent injunction, since the defendant patentee has absolute and unhindered right to market and sell its products. It is argued that the right of the plaintiff, if any, to institute a suit for infringement under Chapter xviii of the Patents Act cannot be superior to the protection afforded to the defendant patentee, who has an equally valuable patent in its favor. It is argued that if the defendant is not in a position to enjoy the privileges arising out of its own patent, then the right of the defendant patentee to enjoy and exploit its patent would become illusory. Since the right to institute a suit for infringement originates from the right of the patentee to exploit its patent, it is argued that a patentee can under no circumstances be an infringer. The Patents Act provides for both pre grant opposition as well as post grant opposition under Section 25. So long as the defendant's patent subsist he cannot be called an infringer and consequently, a suit for infringement by another patentee is not maintainable. Reliance is placed on a couple of decisions of this Court, Tobu Enterprises Pvt. Ltd. V. Megha Enterprises and Anr. (1983) PTC 359 , Indo Asahi Glass Co. Ltd. v. Jai Mata Rolled Glass Ltd. and Anr. : 57(1995)DLT72 and S.S. Products of India v. Star Plast (2001) 21 PTC 835 (Del), wherein courts have refused to grant interim injunction against the defendant on the ground that the defendant also possessed registration of its design. The same position, it is argued, should prevail in respect of the defendant who has a registered patent.

14. On the other hand, it is argued by learned Counsel for the Plaintiff that the grant of a patent to a person does not entitled that patentee to infringe another patent. It is argued that the right of a patentee is an 'exclusionary right' in the sense that it confers upon the patentee an exclusive right to prevent infringement of its patent by another. It does not confer the right to practice or use the invention. The plaintiff relies on the wording of Section 48 of the Patents Act 1970 and contrast the same with Section 28 of the Trademarks Act, 1999. While a patentee has the exclusive right to prevent third parties from infringing the patent, a registrant of a trademark has the exclusive right to use the trademark. The grant of a patent to the defendant gives no immunity or defense in an action for infringement of the plaintiff's patent. Reliance is placed on 'Patents For Chemicals, Pharmaceuticals and Bio Technology' (IV Edition) by Phillip W. Grubb on page 4 of the said commentary, the learned author states that:

Exclusionary Right

It is important to realise that the rights given by the patent do not include the right to practice the invention, but only to exclude others from doing so. The patentee's freedom to use his own invention may be limited by legislation or regulations having nothing to do with patents, or by the existence of other patents.For example, owning a patent for a new drug clearly does not give the right to market the drug without permission from the responsible health authorities, nor does it give the right to infringe an earlier existing patent. In the very common situation where A has a patent for a basic invention and B later obtains a patent for an improvement to this invention, then B is not free to use his invention without the permission of A, and A cannot use the improved version without coming to terms with B. A patent is not a seal of government approval, nor a permit to carry out the invention. We very often hear 'This patent allows Company X' to do something or other. It does not, it only allows them to stop someone else from doing it. The right to prevent others from carrying out the invention claimed in a patent may be enforced in the courts; if the patent is valid and infringed the court can order the infringer to stop his activities, as well as providing other remedies such as damages.

15. The plaintiff argues that the defendant is guilty of infringement of its patent, as the defendant's product is clearly covered by the claims contained in the plaintiff's patent. The plaintiff also argues that the defendants patent is subsequent to that of the plaintiff. The plaintiff, by relying upon Section 45 of the Patents Act contents that the patent dates back to the date of publication of the patent. The plaintiff's application was published in December 2003, though granted in the year 2006, while the defendant's application was published in March 2004, though granted in May 2005. The plaintiff claims priority from 19th June 2002 whereas, according to them, the defendant's patent is of 29th March 2004. Plaintiff also relies on Alert India v. Naveen Plastics and Anr. 1997 (17) PTC 15, which holds that a prior proprietor of copyright in a design has a preferential right over a later proprietor of the copyright in design.

16. I find no merit in the aforesaid submission of the defendant that no action for infringement of patent can lie against another patentee. As submitted by the plaintiff, Section 48 of the Act grants the exclusive right to a patentee to prevent third parties, who do not have his consent, from undertaking the making, using, offering for sale, selling etc. the patented product in India. There is no exclusive right in the patentee to make use of, offer for sale, sell or otherwise exploit the patented product in India. I find myself in agreement with the statement of the law in the treatise of Philip W. Grubb wherein he states that the right of a patentee is an 'Exclusionary Right'.

17. Section 107 of the Act, inter-alia, states that 'In any suit for infringement of a patent every ground on which it may be revoked under Section 64 shall be available as a ground for defense' (emphasis supplied). Section 64 of the Patents Act enlist the various grounds on which the patent may be revoked. The first ground on which the patent may be revoked, in substance, is that the patent of which revocation is sought is in respect of an invention which is the subject matter of an earlier valid patent. This means that even when a subsequent patentee brings an action for infringement against an earlier patent holder, based on Clause (a) of Section 64(1) of the Act, all that the defendant (earlier patent holder) can contend 'as a ground for defense' in the suit, is that the defendant has a valid patent of earlier priority date. That can only be his defense on merits but not a ground to seek rejection of the plaint at the threshold on the basis that no suit is maintainable for infringement of patent against another patentee.

18. Section 107A innumerate the acts, which are not considered as an infringements of a valid patent. The manufacture of a patented product by the patentee is not considered as an act which would not infringe the patent of another patentee. Had the Parliament intended to protect the patent holder against an action for infringement by another patentee, the same would have, in all probability found mention in Section 107A or in some other provision of the Patents Act.

19. Section 108 enumerates the reliefs available to a plaintiff in a suit for infringement and states that the reliefs that a court may grant in a suit for infringement may include an injunction and, at the option of the plaintiff, either damages or on account of the profits.

20. If the argument of the defendant is accepted, it would mean that first the plaintiff should pursue its opposition to the patent of the defendant under Section 25(2), or seek the revocation of the defendant's patent under Section 64, and only after the plaintiff has succeeded in such proceedings finally, would be plaintiff be entitled to seek the relief of injunction and damages or accounts of profits, or any other relief such as seizure, forfeiture or destruction of the infringing goods. Such an interpretation would lead to absurd results. By the time the defendants patent is revoked /cancelled, the plaintiff's suit may itself become barred by limitation, if the plaintiff is first relegated to proceedings under Section 25 or 64 before he is permitted to file a suit for seeking the reliefs under Section 108 of the Patents Act. It also means that in the interregnum, the plaintiff should continue to suffer without any remedy. In my view, the interpretation canvassed by the defendant cannot be accepted for the reasons aforesaid.

21. Reliance is placed by the defendant on the decisions of this Court in Tobu Enterprises v. Megha Enterprises and Ors. 1983 PTC 359, and SS Products of India v. Star Class (2001) 21 PTC 835 (Del), in support of the aforesaid submission. In my view, these decisions do not advance the submission of the defendant, I may first deal with the decision in Tobu Enterprises (Supra). Firstly, it may be noticed that this is a decision under the Designs Act 1911 and not under the Patents Act. Under the Designs Act 1911, the proceedings for cancellation of registration of Design lay before the High Court under Section 51A of that Act, whereas under the Patents Act, a revocation petition lies before the Appellate Board under Section 64. Tobu Enterprises (Supra) was a case, where the plaintiff had not sought any relief for cancellation of the registration of the Design of the defendant, whereas the defendant had already applied to have the registration of the design of the plaintiff cancelled. Morever, the court was considering the plaintiffs application under Order 39 Rule 1 & 2 CPC for grant of interim relief. The court vacated the order of injunction earlier passed and proceeded with the hearing of the suit. This is evident from the last paragraph of the judgment. Had the court considered the issue of maintainability of the suit and decided the same against the plaintiff, the plaint itself would have been rejected. Furthermore, the right of a patentee are governed by the specific provisions of the Patents Act. Unlike the Designs Act, 1911, the Patents Act contains specific provisions such as Sections 107 and 107A discussed above, which are relevant to decide the issue raised by the defendant. Tobu Enterprises (Supra) proceeded on the basis; (a) that the earlier registration of a design does not prevail over a subsequent registration of design, and, (b) that Section 53 of the Designs Act, 1911 does not provide the remedy of injunction etc. to a registrant of an earlier Design over a later registrant of another Design.

22. As noticed hereinabove, the claims under a patent having an earlier priority date have specific protection against any claim for patent having a later priority date. This is a fundamental difference in the present case, when compared to the statement of law contained in Tobu Enterprises (Supra) pertaining to the Designs Act, 1911. Consequently, the decision in Tobu Enterprises (Supra) in any case cannot be relied upon in a case governed by the Patents Act. I may notice that Tobu Enterprises (Supra) has been disagreed to by another single bench decision of this Court in Alert India (Supra). However, I am not getting into the controversy, as to which of the two views is correct, and whether the earlier or the later view is per in curium, since in my view it is unnecessary for me to do so far the purposes of the present case. Moreover, being only a tentative view on a prima-facie evaluation of the merits of the case, interim orders do not constitute binding precedents, not even in the same case in which they may be passed, much less in the facts of another case.

23. Since S.S. Products of India (Supra) is also a decision on an application under Order 39 Rule 1 & 2 CPC, and not on the issue of maintainability of the suit, and it relies on Tobu Enterprises (Supra), I need not separately consider it. thereforee, this decision is also of no assistance to the defendant.

24. So far as objection to the territorial jurisdiction of this Court is concerned, the submission of the defendants/applicant is that a false averment has been made that defendant No. 2 is manufacturing the water purifiers in question. It is asserted that to the knowledge of the plaintiff it is defendant No. 3 which is the inventor of the product, holder of the patent and manufacturer of the impugned product. Defendant No. 3 is situated in Bangalore and is not residing or working for gain within the territorial jurisdiction of this Court. The patent has been granted to the defendant by the Patent Office in Chennai. It is also claimed that defendant No. 2 neither has its registered nor its corporate office within the territorial jurisdiction of this Court. Defendant No. 1 has been roped in only with a view to create jurisdiction in this Court, apart from preventing the defendants from noticing the matter in the cause list in advance. It is also stated that the averment that the defendants are selling their product within the jurisdiction of this Court is of no avail since the plaintiffs are not marketing their products in Delhi. Consequently, the plaintiffs are in no way suffering by the sale of the impugned product in Delhi and no cause of action has arisen within the jurisdiction of this Court.

25. In reply, Counsel for the Plaintiff has argued that, admittedly, the Defendants are selling their impugned product within the jurisdiction of this Court. This raises a cause of action in favor of the plaintiff, and this would give jurisdiction to this Court. Reliance has been placed by the Plaintiffs upon Pfizer Products Inc. v. Rajesh Chopra (2006) 32 PTC 301; L.G. Corporation and Anr. v. Intermarket Electroplasters (P) Ltd. and Anr. (2006) 32 PTC 429; S. Oliver Bernd Freer GmbH & Co. K.G. v. Karni Enterprises and Anr. (2006) 33 PTC 574.

26. It is contended that under Section 20(c) of the CPC a suit can be instituted in a court within the local limits to whom jurisdiction the cause of action, wholly or in part, arises. thereforee, if the sale of its products by the Defendant constitutes an infringement of the Plaintiff's patent, that conduct of the defendants would constitute a part of the cause of action, which has arisen in Delhi, and this Court would have jurisdiction to entertain the present suit.

27. The submission of the Defendants that no cause of action arises within the jurisdiction of this Court because, according to the Defendants, the Plaintiff has no sales in Delhi, is to my mind unacceptable. Under Section 24 of the Patents Act, every patent shall have effect throughout India. Under Section 48 of the Patents Act, the patentee of a product has the exclusive right to prevent other parties, who do not have its consent, from making, using, offering for sale, selling or importing for those purposes, the product in India which is the subject matter of patent. Consequently, the patentee is entitled to prevent other parties from offering for sale or selling the products which infringe the patent in any part of India wherever they may be sold. Admittedly, the Defendants are selling their products in Delhi. The infringement of the Plaintiff's rights under Section 48 of the Patents Act has thereforee, taken place in Delhi, assuming that the plaintiff has a valid patent and that the defendants product infringes the same. It is this infraction of the Plaintiff's rights which would give the Plaintiff the cause of action to sue the Defendants to prevent the infringement of its patent. Consequently, I have no hesitation in holding that a part of cause of action has arisen within the jurisdiction of this Court and that this Court has the territorial jurisdiction by virtue of Section 20(c) CPC to entertain the present suit. The decisions of this Court in LG Corporation (Supra), Pfizer Products Inc. (Supra), S. Oliver Bernd Freer GmbH & Company KG (Supra), are on the same lines.

28. Reliance placed by learned Counsel for the Defendant on a Full Bench decision in Girdhari Lal Gupta v. K. Gian Chand Jain & Co. : AIR1978Delhi146 is misplaced. In Girdhari Lal Gupta (Supra) the court was considering the question of territorial jurisdiction in respect of an application under Section 51A of the Designs Act, 1911 for cancellation of the registration of the designs. Firstly, the present is not an action to seek cancellation of the registration of the defendants patent. In any event, and even if the ratio of that decision is applied, the same does not help the defendants argument. The Full Bench held that an application under Section 51A could be made to a High Court within the local limits of which, a part of the cause of action and/or subject matter of the application may arise. The sale of the impugned products in Delhi by the defendant does form part of the cause of action as already noticed above. Consequently, the Full Bench decision is of no avail. The Division Bench decision of this Court in Ajay Industrial Corporation, Delhi v. Mr.Shiro Kanao of Ibarak City, Osaka, Japan 1983 PTC 245 is also a case relating to cancellation of a patent. It holds that an action would lie within the jurisdiction of the court, inter-alia, where the applicant (i.e., the applicant for revocation of patent) is made liable for infringement of the patent. The court held that even though the applicant was facing action for infringement only in Ahmedbad, since he was selling the goods in Delhi, the Delhi High Court would have jurisdiction to entertain the application for revocation since there was a possibility that the applicant may face a similar action (by the patent holder) in Delhi. The other decisions cited by the defendants on this aspect also do not appear to be of any relevance in the facts of the present case.

29. The last submission of learned Counsel for the Defendant in support of his application under Order 7 Rule 11 CPC is that the suit has not been filed by a duly authorized person. The plaint has been verified by Mrs. Madalsa Srivastava. However, no power of attorney nor a Board Resolution authorising the said signatory to institute the present suit has been filed on record.

30. This submission of the Defendants is also without any merit for purposes of deciding the defendants application. As aforesaid, there is a categorical averment in the plaint itself which states that Mrs. Madalsa Srivastava Product Development Manager, Water, of the Plaintiff has signed the plaint and instituted the present suit being duly authorised and competent to do so on behalf of the Plaintiff. This statement of the plaintiff has to be accepted as correct for the present. This is also an issue which can only be decided one way or the other after a trial and the plaint cannot be rejected at this stage. Consequently I dismiss I.A. No. 9649/2006 with costs of Rs.20,000/-.

I.A. No. 9648/2006

31. The Defendants seek deletion of Shri Lalit Wadhwa from the array of Defendants since it is claimed that he is neither the manufacturer, nor seller of impugned products and he does not hold the patent which is alleged to have been infringed by the defendants. It is asserted that his impleadment as a party Defendant has been resorted to merely with a view to suppress the noticing of the case in the cause list and to obtain an ex-parte ad interim order of injunction behind the back of the Defendants and also to vest territorial jurisdiction in this Court. It is further averred that neither any cause of action has arisen against Shri Lalit Wadhwa, nor any relief is sought against him. Furhter, no relief sought by the Plaintiff can be personally enforced against Shri Lalit Wadhwa.

32. In response learned Counsel for the Plaintiff refers to Section 124 of the Patent Act to contend that Defendant No. 1 is a necessary party since the said section states that where an offence defined under the said Act is committed by a company, the company as well as every person in-charge of the company for the conduct of its business at the time of the commission of the offence shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

33. In my view, reliance placed from Section 124 of the Patent Act by the Plaintiff is fallacious since the said provision deals with penal liability under the said Act. The company is a juristic entity and where the infringement of the patent has been alleged against the company, its officers would not normally become personally liable in a civil action. A reading of the plaint shows that no clear or specific averment has been made against Defendant No. 1 about his role in the alleged infringement of the Plaintiffs patent. In my view, Defendant No. 1 is neither necessary nor a proper party to the suit and consequently he is liable to be deleted from the array of Defendants.

34. I.A. No. 9648/2006 is thereforee allowed.

35. Let amended memo of parties be filed within one week.