Innovation and Intellectual Property: Remedies and Damages Available in India

Divya Singh

Topics Covered in this article

Introduction

The Indian Constitution assures various fundamental rights such as the right to life[1] (expansively interpreted so as to include dignity, privacy, livelihood, right to shelter, access to emergency healthcare and clean environment), the right to equality[2]and non-discrimination[3] (on specific grounds such as gender, descent, race, caste, religion, etc.), right to primary education,[4] freedom of speech,[5]association,[6] movement and the right to business, trade, commerce.[7]Property rights (subject to expropriation through eminent domain, based on the determination of fair compensation) were deleted from the Chapter on Fundamental Rights of the Constitution in 1978; they are now relegated to another place. Nevertheless, the Supreme Court in the K.T. Plantation (2011) ruling[8] holds that intellectual property enjoys a high degree of protection (“The expression ‘Property’ in Art.300A confined not to land alone, it includes intangibles like copyrights and other intellectual property and embraces every possible interest recognized by law”).

It would be also necessary to note that Indian Courts take into consideration Part IV of the Constitution, which enacts the Directive Principles of State Policy, wherever issues of legislative interpretation that impinge upon the rights of a cross-section of people arise. Articles 39 (e) and (f) enact concerns relating to health which Indian legislatures have to recognize, in their laws. The courts have not un-often recognized that while it is imperative to give full effect to the rights of IPR owners, equally the law plays an important role in balancing the public interest between the property rights of the IPR owner and the public interest in permitting creativity and innovation:

“From the jurisprudential point of view, intellectual property rights work as a two way sword. On the one hand, there is a growing awareness that such protection is a sine-qua-non of the motivational factor underlying the creation of intellectual work; however, on the other hand, granting absolute protection to the intellectual work can be detrimental to the further progress of humanity. In order to balance the rights of the author on the one hand and the society, on the other hand, certain limitations have been made a part and parcel of the IPR statutes around the globe. In the realm of copyright laws, one of the more important limitations is the doctrine of ‘fair use’. This doctrine of Fair dealing/Fair use is a limitation and exception to the exclusive right granted by copyright law to the author of creative work and it allows limited use of copyrighted material without acquiring permission from the rights holders.”

Unlike in other countries, the Indian Constitution compels national legislation, to embody the terms of a treaty, for it to be enforceable in courts in India.[9] Treaties are per se unenforceable in courts but are to be incorporated through national legislation. The Supreme Court of India, in the area of human rights – especially in respect to personal liberty, often iterated that to the extent provision of any treaty is in consonance with the Constitution (such as Article 21), it would be read along with such provision or right.[10]Courts, therefore, are bound to interpret and follow the law on the specific subject, in India. If it is clear and unambiguous, no question of resorting to external sources arises. The qualification is that if the terms of such treaties are similar to the law applicable in India, courts may consider foreign judicial precedents in that regard; however, those are of persuasive value. This the Supreme Court recognized, in its Entertainment Network ruling in 2008 in a dispute relating to copyright.[11]At the same time, when there is national law embodying international conventions and treaties, the courts do take into consideration their provisions, rulings of foreign courts in the area, and so on.[12]

In an unusual case, the Madras High Court had to decide whether the enactment of a provision in the Patents Act infringed provisions of the Trade-Related Aspects of Intellectual Property Rights (“TRIPS”).[13] The holding was argued, if the enacted provisions did violate TRIPS, the court ruled that it lacked the capacity to determine and grant the relief, as it could not direct the Indian Parliament to enact a law. Given the dualist nature of the Indian legal system and its relation to international obligations undertaken by the government, courts in India do not have the competence to pronounce on possible treaty violations, in the face of domestic legislations covering the issue. Hence, even if some provisions of the Patents Act violated India’s commitments under the TRIPS, the only remedy available would be the amendment or re-enactment of the law by the Parliament. This would mean that the responsibility of ensuring that the laws in India are compatible with the international obligations under TRIPS would be on the Parliament. While the courts may adopt an interpretative approach that could read the statute in harmony with the TRIPS, however where such harmonious construction would not be possible, the obligation would fall on the Parliament to suitably modify the law to make it TRIPS compliant.

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Remedies

Injunctions and damages are the most commonly claimed remedies for infringement or violation of intellectual property rights. Besides, trademark or copyright infringement is also subject to penal sanction.

Since trials in IPR enforcement actions can be time consuming, more often than not ad-interim relief is hotly contested. India follows the common law standards for grant of ad-interim relief such as examination of the prima facie case, the existence of irreparable hardship and balance of convenience. The Supreme Court underscored the importance of granting such interim relief in the Midas Hygene case;[14] the Court said that “in cases of infringement either of Trade Mark or of Copyright normally an injunction must follow. Mere delay in bringing an action is not sufficient to defeat the grant of injunction in such cases. The grant of injunction also becomes necessary if it prima facie appears that the adoption of the Mark was itself dishonest.”

In patent cases, as in others, courts have followed the three-step analysis of the existence of the prima facie case, irreparable hardship and balance of convenience. In F. Hoffman La Roche Ltd. v. Cipla,[15] the element of “public interest” was recognized as a part of the balance of convenience exercise which the court undertakes while considering the grant of a temporary injunction. The plaintiff, the patentee of the anti-cancer drug Tarceva, sought an injunction against an Indian generic manufacturer, for allegedly infringing the patent of its drug. The generic manufacturer had counter claimed for patent cancellation. The court held that the plaintiff had a prima facie case in its support; equally, the court reasoned from the materials on record that the defendant’s challenge was a credible one. In these circumstances, the court held that public interest constituted a significant element while considering balance of convenience, since the price differential between the patented drug (which was then selling at US $ 100 per tablet) and the generic product (then selling at US $ 30 per tablet) was so significant that those using the latter—given that the product was a life-saving one—would be threatened with loss of lives and un-compensable harm. The court also, at the same time, imposed conditions on the generic manufacturer to disclose its sales (of the questioned drug), file periodic accounts and furnish continuing guarantees to pay damages in the event of the plaintiff succeeding. In the final judgment, the plaintiff could not establish patent infringement and failed, though the defendant’s argument about patent invalidity was not accepted.

A recent decision saw a Division Bench of the Delhi High Court clarifying that “public interest” cannot always be decisive criteria. The patent owner sued for infringement of a patent for an anti-diabetes drug. The court found that prima facie infringement had been made out; it echoed a previous ruling in Bayer Corporation[16] that “if, after a patentee, rewarded for his toil—in the form of protection against infringement—were to be informed that someone, not holding a patent, would be reaping the fruits of his efforts and investment, such a result would be destructive of the objectives underlying the Patents Act.”. Indian Courts are empowered to, by procedural laws and frequently resort to Anton Piller type orders for assistance by a court appointed commissioner to collect material for fuller adjudication. This procedure has been recognized since 1989.[17]

Quia Timet actions, based on apprehensions that the defendant would infringe the plaintiff’s rights are maintainable; Indian courts recognize this form of action and have granted reliefs. For instance, the Delhi High Court in Yahoo Inc.[18] granted a quia timet relief to Yahoo, which apprehended that the defendants would release a cinematographic film titled “YAHOO” – a well-known trademark. Similarly, the High Court in Fastrack Communications[19] ruled that where the plaintiff apprehends that the defendant may pass off its goods as that of the plaintiff, the latter has the right to “nip the evil in the bud” and institute a quia timet action.

John Doe Orders

John Doe orders permit the plaintiff to enforce an injunction order against unidentified/unnamed defendants, “John Doe” being a generic name for such defendants. This concept came into force due to the peculiar nature of copyright piracy. The Delhi High Court in Taj Television[20] recognized Indian Courts’ power to pass John Doe orders, although it refused to pass such an order on facts. Recently, the Bombay High Court in passed a John Doe order at the interim stage in a quia timet action, granting protection to the plaintiff against the infringement of its copyright in the film “Happy New Year”.

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However, it must be noted that these orders are passed against unidentified defendants only at the interim stage, and the final relief would be passed only against those defendants, which are identified and impeded in the proceedings before the court.

A troublesome application of this concept has also been witnessed in India, wherein courts have directed Internet Service Providers (ISPs), which are identified defendants, to block access to websites that upload pirated content, in violation of the plaintiff’s copyright.[21]

Damages

Courts in India follow the UK model of assessing and awarding damages. In a departure, for the first time, the Delhi High Court awarded punitive damages though harm could not be established by any objective standard through which damages are awarded. This was in an ex-parte judgment in Times Incorporated (2005).[22] The court reasoned that while dealing actions for infringement of trademarks, copyrights, patents, etc. courts “should not only grant compensatory damages but award punitive damages also with a view to discourage and dishearten law breakers who indulge in violations with impunity.. so that they realize that in case they are caught, they would be liable not only to reimburse the aggrieved party but would be liable to pay punitive damages also, which may spell financial disaster for them.” This reasoning was disapproved by a Division Bench in a trademark/product disparagement case, in Hindustan Unilever Ltd.[23] The Court relied on the UK authorities Rookes v. Barnard,[24] and Cassel & Co v. Broome,[25] especially the latter, that “Damages remain a civil, not a criminal, remedy, even where an exemplary award is appropriate, and juries should not be encouraged to lose sight of the fact that in making such an award they are putting money into a plaintiff’s pocket..” and perhaps most crucially the punitive element of the damages should follow the damages assessed otherwise (or general) damages; exemplary damages can be awarded only if the Court is “satisfied that the punitive or exemplary element is not sufficiently met within the figure which they have arrived at for the plaintiff’s solatium”.

Efforts by courts to ensure efficiency and speed by administrative authorities and resolution of disputes:

In a 2010 decision, the Delhi High Court resolved a vexed question of what is the date when the patent is said to be granted, given that several pre-grant opposition applications are filed opposing patent claims. The Court ruled that “the date of grant of patent is the date on which the Controller passes an order to that effect on the file. It is also directed that the Controller should consider all pre-grant oppositions and decide them together and ensure that the digitally signed copy is published on the website the same day.”[26]

A patent can be annulled in three ways: one by an opposition (pre- or post-grant), through a revocation proceeding before the IPAB or by a counter-claim in an infringement suit. Section 25(2) provides a post-grant opposition mechanism whereby “any person interested” can oppose a granted patent within one year of the date of publication of the grant. If the opposition fails or no notice of opposition is provided within one year, the patent crystallizes. After this, if the patent has to be annulled, Section 64 provides two options—a revocation petition before the IPAB or a counter-claim in an infringement suit before a HC. The Supreme Court in its Enercon judgment in 2014 decided that remedies available through revocation petition before the IPAB or a counter-claim in an infringement suit before the HC, were not conjunctive and a choice would have to be made between the two.[27]

“the liberty granted to any person interested to file a ‘revocation petition’, to challenge the grant of a patent to an individual, cannot be adopted simultaneously by the same person, i.e., firstly, by filing a ‘revocation petition’, and at the same time, by filing a ‘counter-claim’ in a suit for infringement […] According to learned counsel, the concerned person must choose one of the above remedies. […]. We do not have the slightest hesitation in accepting the above contention (fifth in the series of contentions), that even though more than one remedies are available to the respondents in Section 64 of the Patents Act, the word ‘or’ used therein separating the different remedies provided therein, would disentitle them, to avail of both the remedies, for the same purpose, simultaneously. On principle also, this would be the correct legal position….If any proceedings have been initiated by ‘any person interested’, under Section 25(2) of the Patents Act, the same will eclipse the right of the same person to file a ‘revocation petition’ under Section 64(1) of the Patents Act. And also, to invoke the right granted under Section 64(1) of the Patents Act, to file a ‘counter-claim’ (in response to an ‘infringement suit’, to seek the revocation of a patent)”.

In an earlier effort, the Delhi High Court had indicated a speedy procedure whereby in patent litigation, the case could be fast tracked by completing pleadings and discovery in a pre-determined timeline, after which issues (or points of controversy) could be settled. The parties would then proceed to trial and minimize oral evidence, confining it to one expert (or if the case warranted) only, the minimum number of experts needed. The court would then appoint a Special Assessor (it can do so under Section 115 of the Act) who would furnish it with an independent report; parties would be provided the report after which hearings would be held and concluded. This procedure led to the final decision in a patent litigation within two years after the Supreme Court rejected the interlocutory appeal and within about three and a half years of the case filing in the court.

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Conclusion

The intellectual property law regime has seen rapid change in the last decade or so, in India. Today, there is greater awareness amongst the legal community and courts—in the wake of the country’s accession to TRIPS that IPR is a significant driver of economic development. This awareness can be seen both in the bar and the bench. In terms of legal capacity building, more and more, younger generation lawyers are showing better and more nuanced understanding of the various issues in intellectual property law as well as the significance of India’s commitments to IPR protection at the global level. This can also be seen by the growth in the number of law firms that have an exclusive and dedicated focus on IPR practice.

On the side of the bench, the evolving jurisprudence reveals that the courts are cautious of adopting a doctrinaire approach in embracing all concepts—especially remedies in law. The courts have so far attempted to balance the rights of innovator and stepped in to protect them from appropriation by those who have no right to do so; equally, where the protection claimed by IPR owners is too broad as to stifle innovation and progress, the courts have refused to do so. The question of remedies to be granted for infringement of IP rights is a particularly significant example of courts attempting to strike an appropriate balance between the protection of IPR rights of the holder and the larger interests of the public. The refusal to grant the remedy of injunctions on life saving drugs, for instance, evidence that the courts in India do not treat the protection of IP rights as absolute and such rights can be made subservient to the larger public interest. However, at the same time, there is a growing trend in the Indian judiciary of recognizing that the evolution of technology also means that IP rights are increasingly susceptible to various kinds of infringement, beyond those traditionally recognized. Hence, to deal with these kinds of infringement, Indian courts have granted a number of remedies that were hitherto unknown in the realm of civil law; the grant of ex-parte injunctions against unknown defendants, awarding interim royalties, etc. are some examples of a changing judicial trend that seeks to align itself with global practice in cases of IPR infringement. In some sense, the legal regime governing IPR in India is still at a nascent stage, and the role and the potential of the Indian courts in shaping and chiselling the path of IPR law, cannot be overemphasized.


[1] INDIAN CONST. art 21.

[2] INDIAN CONST. art 14.

[3] INDIAN CONST. art 15.

[4] INDIAN CONST. art 21 A.

[5] INDIAN CONST. art 19 (1)(a).

[6] INDIAN CONST. art 19(1)(c).

[7] INDIAN CONST. art 19 (1)(g)

[8] K.T. Plantations v. State of Karnataka 2011 (9) SCC 01.

[9] INDIAN CONST. art 253

[10] Jolly George Varghese and Anr. v The Bank of Cochin, AIR 1980 SC 470.

[11] Entertainment Network v. Super Cassette Industries Ltd. (2008) 13 SCC 30.

[12] Novartis AG v Union of India & Others 2013 (6) SCC 1.

[13] Novartis A.G. v Union of India (2007) 4 MLJ 1153.

[14] Midas Hygene Ltd. v. Sudhir Bhatia 2008 (28) PTC 121.

[15] Hoffmann-La Roche Ltd. v. Cipla (2009) 40 PTC 125 (DB).

[16] Bayer Corporation &Ors. v. Cipla, Union of India & Ors.,162 (2009) DLT 371.

[17] PayaniAchuthan v.Chamballikundu Harijan Fisheries Development Cooperative Society &Ors AIR 1996 Kerala 276.

[18] Yahoo Inc. v FirozNadiawala (2014) 58 PTC 352.

[19] Fastrack Communications Pvt. Ltd. v. Manish Singhal (2012) 50 PTC 98.

[20] Taj Television v. Rajan Mandal [2003] FSR 22.

[21] R.K. Productions v. BSNL (2012) 5 LW 626.

[22] Times Incorporated v. Lokesh Srivastava 116 (2005) DLT 569.

[23] Hindustan Unilever Ltd.v. Reckitt Benckiser India Limited, 2014(57) PTC 495 (Del).

[24] Rookes v. Barnard (1964) 1 All ER 367.

[25] Cassel & Co v. Broome(1972) AC 1027.

[26] Snehlata Gupte v. Union of India, WP 3516/2007.

[27] Alloys Woben v. Yogesh Mehra AIR 2014 SC 2210..