How Will the Commercial Courts Ordinance Affect Patent and Design Suits?

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance, 2015 came into force on October 23, 2015 and the Delhi High Court (Amendment) Act, 2015 came into force on October 26, 2015. Vide notification dated November 24, 2015, the following directions were issued by the Delhi High Court:

1.       All suits or other proceedings pending in the Delhi High Court on the Original Side up to the value of rupees one crore, excepting those cases in which final judgments have been reserved, shall be transferred to the jurisdictional subordinate courts.

2.       All suits or other proceedings the value of which exceeds rupees one crore but does not exceed rupees two crores, other than those relating to commercial disputes the specified value of which is not less than rupees one crore (as defined in The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance, 2015), pending in the Delhi High Court on the Original Side, excepting those cases in which final judgments have been reserved, shall be transferred to the jurisdictional subordinate courts.

While the effect of this notification on pending suits relating to Intellectual Property depends on the interpretation of the First Proviso to Section 7 of the Ordinance (which is pending in a writ petition filed before the High Court of Delhi), the position with respect to certain patent and design suits appears to be relatively clear thanks to the Second Proviso. Section 7 reads as under:

All suits and applications relating to commercial disputes of a Specified value filed in a High Court having ordinary original civil jurisdiction shall be heard and disposed of by the Commercial Division of that High Court.

Provided that all suits and applications relating to commercial disputes, stipulated by an Act to lie in a court not inferior to a District Court, and filed on the original side of the High Court, shall be heard and disposed of by the Commercial Division of the High Court.

Provided further that all suits and applications transferred to the High Court by virtue of sub-section (4) of Section 22 of the Designs Act, 2000 or section 104 of the Patents Act, 1970 shall be heard and disposed of by the Commercial Division of the High Court in all the areas over which the High Court exercises ordinary original civil jurisdiction.

The reference in the Second Proviso is to suits and applications which have been “transferred” to the High Court by virtue of Section 104 of the Patents Act and Section 22(4) of the Designs Act, both of which relate to situations where the validity of the patent and design have been challenged respectively. Simply put, suits which have been transferred to a High Court by virtue of the said provisions will be transferred to the Commercial Division of the High Court regardless of the valuation of the Suit and counter-claim.

This position was recently taken by a Single Judge of the Delhi High Court in Novartis v. Cipla wherein it was held as under:

“22. It is an undisputed fact that the present High Court exercises Ordinary Original Civil Jurisdiction. Before passing of the Ordinance, the suit for infringement of patent and designs which were being filed before the District Judge(s) of District Courts have been transferred to this Court, once the patent is challenged in the written statement by the defendants as a defence or by filing of the counter-claim under the Patents Act, 1970 and under Section 22(4) of the Designs Act, 2000. Various matters had been transferred by the District Courts from time to time to the High Court, who had received the same after pleading the defence in the written statement or a separate counter-claim filed by the defendants. Under these circumstances, it is quite clear that under any circumstances, such matters have to be heard and disposed of by the Commercial Division of the High Court which has the Ordinary Original Civil Jurisdiction irrespective of their pecuniary value.”

Although the law appears to have been correctly applied in the facts of the decision, the question that remains is this- the reference in the Second Proviso is to High Courts which exercise ordinary original civil jurisdiction. Does this mean that the Second Proviso does not apply to Courts which do not exercise such a jurisdiction? What would be the consequence of such a reading? Would it mean that in High Courts which do not exercise such jurisdiction, there will not be a transfer of such suits to the commercial divisions of the High Courts? Then what happens to such suits? Would they remain unaffected by the Commercial Courts Ordinance and continue to be prosecuted the way they currently are?

It is important to address this issue because according to Section 21 of the Ordinance, the Ordinance shall prevail over any other law in force. Comments and corrections are welcome!