Injunctions in cases of infringement of IPRs

Question Q219 National Group: Title: Contributors: Reporter within Working Committee: India Injunctions in cases of infringement of IPRs Amarjit Singh Amarjit Singh Date: October 15, 2011 Questions The statutory safeguards against infringement of the intellectual property rights in form of injunction and damages are universally recognized. In India apart from the specific provisions which empower the Courts to issue injunction contained in the Intellectual Property laws, there are provisions in the specific Relief Act for grant of preventive relief by injunction, temporary or perpetual, at the discretion of the court (Section 36, 37, 38). A perpetual injunction can only be granted by the decree made at the hearing and upon the merits of the suit and the defendant is thereby perpetually enjoined from the assertion of a right, or from the commission of an act, which would be contrary to the rights of the Plaintiff. (Section 37(2) of the Specific Relief Act). Temporary injunctions can be granted during the pendency of the suit and are regulated by the code of Civil Procedure (O.XXXIX). In the field of intellectual property, injunction is almost always prohibitory in nature. Till the infringement of a right is established at the trial, interlocutory injunction would constitute a temporary redress to be granted at the discretion of the court and has great deal of practical efficacy. The courts, however, have ample discretion to impose terms and conditions while granting interlocutory orders or taking provisional measures to ensure appropriate compensation being paid to the defendant who ultimately is found not to have done any infringement. The courts are empowered to make interlocutory orders under O.XXXIX Rule 7 of the Code for detention, inspection or preservation of any property which is the subject matter of the suit and for this purpose to authorize any person to enter upon or into any premises in possession of any other party and authorize samples to be taken. Exparte orders of this nature can be made under Rule 8(3). Thus it was already within the jurisdiction of the Indian Courts to make orders under the procedural rules contained in the Code like Anton Piller order, John Doe order or the Mareva injunction. Where no specific provisions are made it has inherent jurisdiction under Section 151 of the Code to make orders necessary for the ends of justice. Grant of Anton Piller injunction order, which is an ex-parte order to inspect the defendant s premises without notice, where there is a possibility of the defendant 1

destroying or disposing of the incriminating material, is also very common and the same can be obtained on making out a prima facicase for grant of such an order. As this type of order is very sensitive in nature hence various pre conditions for its grant are imposed which are: The existence of extremely strong prima facie case Damage (potential or actual) which is very serious Clear evidence that defendants have in their possession, incriminating document/ material which they may destroy. Courts also grant Mareva Injunction, freezing defendant s assets, where there exists a probability of the assets being dissipated or cancelled so as to make a judgement against him worthless and un-enforceable. This order prevents the infringer / offender from removing / disposing of assets in which the gains from infringement have been invested. The aim of this order is to prevent unjust enrichment of the defendant and to ensure payment of damages to Plaintiff. The Indian courts have also started the practice of passing a John Doe order which is passed against unnamed persons. Recently this practice was followed during the release of the movie Singham, Bodyguard and Speedy Singhs to reduce the piracy of the movies. In Taj Television v. Rajan Mandal and others 2003 FSR 22 at page 407, principle of John Doe order has been recognized and followed for passing appropriate directions against such unknown and unscrupulous cable operators. In CS (OS) No. 821/2011 titled UTV Software Communications Limited v. Home Cable Network Limited and ors has noted that court has jurisdiction to pass an order in nature of a John Doe injunction order against unknown persons in the circumstances as had been pleaded by the plaintiff in the case. Indian Courts also recognise and have applied and expanded principles of trans-border reputation even if the Plaintiff has no presence in India and the goods of the defendant are entirely dissimilar provided the mark has acquired enough trans border reputation and the same have percolated in India. Hence, legal entities who are not an Indian national are also eligible to obtain an injunction order in India if the intellectual Property right sought to be protected by them is recognised worldwide. Interim order is passed on the basis of prima facie findings, which are tentative. Such order is passed as a temporary arrangement to preserve the status quo till the matter is decided finally, to ensure that the matter does not become either in fructuous or a fait accompli before the final hearing. The object of the interlocutory injunction is, to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. (Zenit Mataplast P. Ltd Versus State of Maharashtra and Ors.) (Vide Anand Prasad Agarwalla v. State of Assam vs. Tarkeshwar Prasad & Ors. AIR 2001 SC 2367; and Barak Upatyaka D.U. Karmachari Sanstha (2009) 5 SCC 694) Grant of an interim relief in regard to the nature and extent thereof depends upon the facts and circumstances of each case as no strait-jacket formula can be laid down. There may be a situation wherein the defendant/respondent may use the suit property in such a manner that the situation becomes irretrievable. In such a fact situation, interim relief should be granted (vide M. Gurudas & Ors. Vs. Rasaranjan & Ors. AIR 2006 SC 3275; and Shridevi & Anr. vs. Muralidhar & Anr. (2007) 14 SCC 721. 2

Grant of temporary injunction is governed by three basic principles, i.e. prima facie case; balance of convenience; and irreparable injury, which are required to be considered in a proper perspective in the facts and circumstances of a particular case. But it may not be appropriate for any court to hold a mini trial at the stage of grant of temporary injunction (Vide S.M. Dyechem Ltd. vs. M/s. Cadbury (India) Ltd., AIR 2000 SC 2114; and Anand Prasad Agarwalla (supra). In Colgate Palmolive (India) Ltd. Vs. Hindustan Lever Ltd., AIR 1999 SC 3105, this court observed that the other considerations which ought to weigh with the Court hearing the application or petition for the grant of injunctions are as below: (i) (ii) (iii) (iv) (v) (vi) (vii) Extent of damages being an adequate remedy; Protect the plaintiff s interest for violation of his rights though however having regard to the injury that may be suffered by the defendants by reason therefore; The court while dealing with the matter ought not to ignore the factum of strength of one party s case being stronger than the others; No fixed rules or notions ought to be had in the matter of grant of injunction but on the facts and circumstances of each case- the relief being kept flexible; The issue is to be looked from the point of view as to whether on refusal of the injunction the plaintiff would suffer irreparable loss and injury keeping in view the strength of the parties case; Balance of convenience or inconvenience ought to be considered as an important requirement even if there is a serious question or prima facie case in support of the grant; Whether the grant or refusal of injunction will adversely affect the interest of general public which can or cannot be compensated otherwise. In Dalpat Kumar & Anr. Vs. Prahlad Singh & Ors., AIR 1993 SC 276, the Supreme Court explained the scope of aforesaid material circumstances, but observed as under:- The phrases prima facie case, balance of convenience and irreparable loss are not rhetoric phrases for incantation, but words of width and elasticity, to meet myriad situations presented by man s ingenuity in given facts and circumstances, but always is hedged with sound exercise of judicial discretion to meet the ends of justice. The facts rest eloquent and speak for themselves. It is well nigh impossible to find from facts prima facie case and balance of convenience. In Wander Ltd. & anr. vs. Antox India P. Ltd. the Supreme Court observed on interlocutory injunctions: Usually, the prayer for grant of an interlocutory injunction is at a stage when the existence of a legal right asserted by the plaintiff & its alleged violation are both contested The object is to protect the Plaintiff against injury by violation of his rights for which he could NOT adequately be compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. On the issue of Balance of Convenience the Supreme Court observed that: The need for such protection must be weighed against the corresponding need for the defendant to be protected against injury resulting from his having 3

been prevented from exercising his own legal rights for which he could not be adequately be compensated. The Court must weigh one need against another and determine where the balance of convenience lies. In Midas Hygiene Industries P. Ltd. V. Sudhir Bhatia & Anr. the Supreme Court observed that: in cases of infringement either of trademark or of copyright normally an injunction must follow. Mere delay in bringing the action is not sufficient to defeat grant of injunction in such cases the grant of injunction also becomes necessary if if it prima facie appears that the adoption of the mark itself was dishonest. In Lakshmikant V. Patel vs. Chetanbhat Shah the Supreme Court observed that: In an action for passing off it is usual, rather essential to seek an injunction, temporary or ad-interim proof of actual damage is not essential likelihood of damage is sufficient an absolute injunction can be issued restraining the defendant from using or carrying on business under the Plaintiff s distinctive trademark. In Deoraj vs. State of Maharashtra & Ors. AIR 2004 SC 1975, this Court considered a case where the courts below had refused the grant of interim relief. While dealing with the appeal, the Court observed that ordinarily in exercise of its jurisdiction under Art.136 of the Constitution, this Court does not interfere with the orders of interim nature passed by the High Court. However, this rule of discretion followed in practice is by way of just self-imposed restriction. An irreparable injury which forcibly tilts the balance in favour of the applicant may persuade the Court even to grant an interim relief though it may amount to granting the final relief itself. The Court held as under:- The Court would grant such an interim relief only if satisfied that withholding of it would prick the conscience of the court and do violence to the sense of justice, resulting in injustice being perpetuated throughout the hearing, and at the end the court would not be able to vindicate the cause of justice. Thus, the law on the issue emerges to the effect that interim injunction should be granted by the Court after considering all the pros and cons of the case in a given set of facts involved therein on the risk and responsibility of the party or, in case he looses the case, he cannot take any advantage of the same. The order can be passed on settled principles taking into account the three basic grounds i.e. prima facie case, balance of convenience and irreparable loss. The delay in approaching the Court is of course a good ground for refusal of interim relief, but in exceptional circumstances, where the case of a party is based on fundamental rights guaranteed under the Constitution and there is an apprehension that suit property may be developed in a manner that it acquires irretrievable situation, the Court may grant relief even at a belated stage provided the court is satisfied that the applicant has not been negligent in pursuing the case. The jurisprudence in relation to damages is very well developed in the United States unlike in India where the jurisprudence is oriented towards the granting of injunctions in intellectual property infringement cases. In the case of EBay Inc. v. MercExchange, 547 U.S 388 (2006) where the US supreme court held that patent cases were no different from other cases when it came to applying the four factor test for determing whether or 4

not an injunction ought to be granted: prima facie case, balance of convenience, irreparable injury and public interest. The insistence on injunction in India over damages is because of the nature of the infringers and the difficulties associated with assessing damages. Defendants are often fly by night companies, who shift or abscond as soon as an infringement suit is filed. Small traders and shop owners who are the infringers in most cases do not maintain account books and file returns, which makes it very difficult to assess account of profits. It is often also pointed out by intellectual property owners that the true battle begins only after the decree with respect to damages is granted. It is often impossible to obtain damages from the defendant even after obtaining an execution decree. Thus, the plaintiff gives up on the damages pleaded for once an injunction is granted. There are often three kinds of disputes in infringement cases. Firstly disputes with respect to infringers dealing in counterfeit or pirated goods, where identical marks are used on identical goods. Ex-parte injunctions are often granted in these cases. Secondly disputes involving small traders attempting to exploit the goodwill of established brands. This for instance would include underwear with the brand name of Mercedez Benz. In this case, there need not be any similarity between the goods. Injunctions are granted in these cases also. Thirdly, there are genuine disputes in relation to infringement involving established manufacturers where the defendant is not a fly by night company. Most cases fall in the first two categories wherein injunction order at the preliminary stage which is referred to as interlocutory injunction in India and permanent and mandatory injunction which is passed after the final determination of the rights of the parties upon the completion of the court proceedings often proves to be an effective remedy. However, in a recent case Cipla v. Roche, the Delhi High Court denied a temporary injunction on a cancer drug (erlotinig) that Cipla was manufacturing despite the existence of a patent owned by OSI (and licensed to Roche). The decision cites the US. ebay decision and applies the 4-factor test, In weighing public interest factor, the court declared that: Undoubtedly, India entered into the TRIPS regime, and amended her laws to fulfill her international obligations, yet the court has to proceed and apply the laws of this country, which oblige it to weigh all relevant factors. In this background the Court cannot be unmindful of the right of the general public to access life saving drugs which are available and for which such access would be denied if the injunction were granted.another way of viewing it is that if the injunction in the case of a life saving drug were to be granted, the Court would in effect be stifling Article 21 [right to life] so far as those would have or could have access to are concerned. 5