AD-INTERIM RELIEF TO SERGI: ALLOWED TO MANUFACTURE AND DEAL IN TRANSFORMERS

In the patent battle raging between Sergi India and CTR in the Bombay High Court, a Division Bench order provides some respite for the former and allowed Sergi to continue manufacture and deal in transformers.

Sergi had appealed the injunction reinstated against it by a Single Judge bench on the 23rd day of October, 2015. The Division Bench order stayed the order of the single judge in view of the judgement of the Apex court in the Case of Dr. Aloys Wobben & anr. v/s Yogesh Mehra & ors [2014 SCC Online SC 482] which states, “only the culmination of procedure contemplated under Section 25(2) of the Patents Act, bestows the final approval of the patent. Therefore, it is unlikely and quite impossible, that an “infringement suit” would be filed, while the proceedings under Section 25(2) are pending, or within a year of the date of publication of the grant of a patent.” 

Hence, the bench ordered the Controller General of Patents to expeditiously dispose off the post-grant proceedings initiated under Section 25 (2) of the Patents Act , 1970 by Sergi India.

GENERAL PRINCIPLES OF PATENT INFRINGEMENT RE-ESTABLISHED BY BOMBAY HIGH COURT

In a recent order of Bombay high Court in CTR Manufacturing Industries Limited vs Sergi Transformer Explosion Prevention Technologies Pvt. Ltd, Hon’ble Justice G. S. Patel re-established the general principles of a patent infringement as follows:

Claim Construction

 In a combination patent, the invention cannot be a mere arrangement or rearrangement of previously known integers all functioning independently in a known way. These integers, though all themselves previously known, may be combined in a previously unknown way, acting inter-dependently, each of them essential, to produce a new and improved result. Each of the integers must be essential. If indeed any one of the integers can be taken out without affecting the final result, it is not essential.

Additionally, if a patent claim is overbroad by including every single non-essential and essential addition, then the patent may be prima facie invalid for want of novelty. No person can claim such a monopoly as would result in a bar to future improvements. If the patent is, on the other hand, so narrow that it excludes the addition of another essential integer, then there is no infringement.

Further, where a patent has been granted on the patentee disclaiming a particular integer, i.e., by saying it is not essential to his product, then the addition of that nonessential integer does not, per se, defeat the claim for infringement. It must be shown that the additional integer is essential, required and returns a result that is as or more efficient than that produced by the patent. Adding something superfluous to the essential integers does not defeat an infringement claim. It must be shown that what is added is also essential and that it satisfies the previous tests of interdependency, producing as good a result or a new and improved result. The patent must be read in a purposive manner to determine what constitutes its ‘pith and marrow’.

Validity

 At an interim stage, a Court is not required to examine the validity of a patent so much as its vulnerability; and this is to be tested not on a mere say-so, but with the aid of cogent and persuasive technical and scientific material, including reliable expert opinions and other data.

Further, the fact that a patent has been granted is not wholly immaterial at an interim stage. While the grant is not a complete answer to a charge of prima facie invalidity or vulnerability, it is still a factor to be considered and given appropriate weight.

The speed of grant of a patent is wholly irrelevant, particularly if it is made without a substantiated (and substantial) case on illegality and malafide intentions.

Registration of license/assignment deed under the Patent Acts –Not mandatory for Validity

In an interesting twist, a division bench of the Delhi High court in a cross-appeal between Sergi Transformer and CTR Manufacturing Industries Ltd., held that it is not mandated for a license/assignment to be registered for it to be valid. The license/assignment would be valid the moment it is executed and the non-registration thereof does not invalidate the same. At the prima facie stage, the court can always refer to the assignment deed without formal proof thereof.

The Hon’ble court further held that the learned Single Judge on 16 April, 2014 in the case ‘Sergi Transformer Explosion vs. Kumar Pratap Anil & Ors.’ has erred in holding that the exclusive license agreement is not to be considered in evidence by the Court and the benefit of the document for the purpose of seeking relief in a case of infringement would accrue as and when the said document is registered in the office of the Controller.

In order to understand the aforementioned, the scope of Section 68 was analysed by the court. The Hon’ble Court drew a comparison between Section 68 as it stood prior to the year 2005 amendment and as it stands post the 2005 amendment. The comparison showed that an assignment had to be registered for it to be valid prior to 2005 . The amended Section 68 however does not mandate that that an assignment  has to be registered for it to be valid. The amended provision requires that the assignment should be in writing and the agreement between the parties is reduced to a form of a document embodying all the terms and conditions governing their rights and obligations and duly executed.

The Hon’ble court also noted that the Parliament has specifically excluded from the amended provision the words ‘and the application for registration of such document is filed in the prescribed manner with the Controller within six months from the commencement of this Act or the execution of the document, whichever is later or within such further period not exceeding six months in the aggregate as the controller on application made in the prescribed manner allows’.

The fact that the above words have been omitted from Section 68 clearly shows that registration is not mandatory for an assignment to be valid,  and the limitation for applying for registration has also been done away with. This clearly shows that under the amended provision there is no period prescribed for making an application for registration of the agreement. The omission of the proviso to section 68 prior to its amendment i.e. ‘PROVIDED that the document shall, when registered, have effect from the date of its execution’ shows that he registration was a must prior to the amendment for the document to be valid and once registered, the assignment would be valid from the date of its execution. Post deletion, registration is not a pre-condition for the document to be valid and the assignment is valid from the date of its execution. In light of this, in the present case, the licence agreement was stated to have been executed on 01.08.2006 and  the application seeking registration has been filed with the Controller of Patents on 15.03.2010. The suit has been filed on 06.08.2010.

The Hon’ble court further held that for consideration of an application under order VII rule 11 of Civil procedure Code (CPC) what is relevant is that prima facie it is seen whether there is an assignment deed in terms of section 68 of the Act. Further, merely because the document is not registered on the date of the filing of the suit does not ipsofacto imply that the suit would not be maintainable. The fact that a document has been set up by the plaintiff stating the document to be a licence agreement, the plaint cannot be rejected at this stage under Order VII Rule 11 of the CPC.

In addition to that, reading of Section 69(5) shows that the said provision does not completely prohibit the admission of a document by Controller or by any Court as evidence of title under each and every circumstance. The court or the Controller before whom an unregistered licence agreement is produced as an evidence of title is empowered, for reasons to be recorded in writing, to accept the same as an evidence of title. Admissibility of such an agreement is not completely prohibited. The Court or Controller are empowered to admit such an agreement in evidence even though the same may not have been registered with the Controller of Patents. Prima facie it cannot be said that the document i.e. a deed of assignment would not be admissible under each and every circumstance in the absence of registration. At the prima facie stage of consideration of an application under Order 39 Rules 1 and 2 of the CPC for grant of injunction or otherwise, the court would be empowered to take into consideration the same as a document of title.