On November 7, 2014, the Division
Bench of the Delhi High Court pronounced its 23-page verdict in Sukesh
Behl & Anr vs. Koninklijke Phillips Electronics. The issue before the
Division bench in this case may be broken down as follows:
a. In
assessing compliance or alleged violation of Section 8 of the Patents Act, 1970 by a patentee in the
context of a revocation proceeding under Section 64(1)(m), does the Court have
the power to exercise its discretion to delve into the materiality of the violation
and the bona fides of the patentee?
b. Does
the presence of “may” in Section 64(1) vest the Court with the power to not
revoke a patent despite arriving at the conclusion that the patentee has not
complied with the requirements of Section 8? In other words, is the “may” a “may”
or a “shall”?
c. Can
an admission of violation of Section 8 lead to a judgment on admission under
Order 12 Rule 6 of the CPC?
This context is important since
the Court was not seized of the effect of prima
facie non-compliance of Section 8 by a patentee on his entitlement to an
interim injunction under Order 39 Rules 1 and 2 of the CPC. Simply stated, the standards
applied and the considerations that go into are significantly different when
analyzing the issue of Section 8 compliance in the context of judgment on
admission and an application for interim injunction, and this is a view that I
agree with.
To this extent, there is no
inconsistency between the earlier decision of the Delhi High Court on Section 8
in Chemtura
Corporation vs. Union of India (2009), wherein Justice Muralidhar had
held that a prima facie violation of
Section 8 poses a credible challenge to the validity of the patent and hence
disentitles a patentee to the grant of an interim injunction. This view has
been endorsed by the Division Bench in paragraph 39 of the Phillips decision,
which is reproduced below
“39. In Chemtura Corporation Case (supra), this Court was dealing with grant
of injunction under Order XXXIX Rule 1 and 2 of CPC. Having recorded a prima
facie satisfaction that there had been a failure by the plaintiff to comply
with the mandatory requirement of Section 8(1), this Court held that the
interim injunction in favour of the plaintiff cannot be continued. The question
whether the power conferred under Section 64(1) of the Patents Act for
revocation of the patent is discretionary or mandatory neither fell for
consideration nor adjudicated by the Court in the said decision. Therefore, the
learned Single Judge had rightly distinguished Chemutra Corporation Case
(supra) relied upon by the learned counsel for the appellants/defendants.”
Now let’s proceed to the Division
Bench’s discussion on the issues enumerated above.
In the facts of this case, the
Defendant/ Appellant, Maj. (Retd) Sukesh Behl, alleged in his written statement
that Plaintiff’s patent IN218255 was liable to be revoked under Section
64(1)(m) for failure to disclose to the Controller of Patents, information relating
to its corresponding foreign patent applications required under Section 8.
In response to this allegation,
the Patent agent of the Plaintiff in his letter dated 14.09.2012 (subsequent
to the institution of the suit on 24.07.2012) informed the Controller of
Patents that certain details regarding the corresponding foreign patents
applications had not been disclosed during the prosecution of the Indian patent
and requested that the said information be taken on record. Along with the said
letter, an affidavit was filed stating that the agent had received documents
relating to the status of the said foreign applications way back in 2004. However,
he had inadvertently failed to take note of information which was printed at
the back of the first page of the documents received by him. In other words, according
to the Plaintiff, the omission was not deliberate and certainly not at the
behest of the Plaintiff.
As a consequence of the admission of omission made by
the Plaintiff’s patent agent, the Defendant/Appellant moved for a judgment
on admission under Order 12 Rule 6, seeking a decree of revocation in the
Counter-claim filed by him under Section 64. The submission of the Defendant
was that in light of the unequivocal admission by the Plaintiff, contravention
of Section 8 was manifest which must lead to revocation of the patent in the
Counter-claim without the need for further examination at trial. Further, since
there is no room for exercise of discretion under Section 64(1)(m) where the
situation relates to failure to disclose information (as opposed to a situation
where false information has been furnished), there is no discretion available
to the Court to not revoke a patent if failure to disclose information is
established. Since the Plaintiff itself had admitted to this failure in an
affidavit, the patent deserved to be revoked all the more without any need for
enquiry on the aspects of willful suppression and the materiality of the
information suppressed.
The Patentee/Plaintiff on the
other hand contended that that the revocation of a patent is not warranted
unless the Court finds that the omission was deliberate and the information not
submitted was material to grant of patent. Since such adjudication requires a
detailed examination, at trial, the Plaintiff contended that the Single Judge
was right in dismissing the application under Order 12 Rule 6.
In this context, readers may
recall my earlier
post on Section 8 in the context of the Roche vs. Cipla decision of Justice
Manmohan Singh, wherein I had said the following:
“1. Is there any room for
exercise of discretion under Section 64(1)(m) once violation of Section 8 is
established to the satisfaction of the Court or the IPAB?
2.
Assuming there exists room for exercise of discretion, did the Learned Single
Judge take a reasoned approach in exercising his discretion to not revoke the
patent? In other words, has the Single Judge sufficiently reasoned as to why he
was of the opinion that the patent on Erlotinib did not deserve to be revoked “solely on the ground of non-compliance”
of Section 8?”
I had further gone on to say the
following:
“Section 64(1)(m), when read with the preamble, reads as follows:
64. Revocation of
Patents: (1) Subject to the provisions contained in this Act, a
patent, whether granted before or after the commencement of this Act, may,
[be revoked on a petition of any person interested or ofthe Central
Government by the Appellate Board or
on a counterclaim in a suit for
infringement of the patent by the High Court] on any of the following grounds,
that is to say—
(m) that
the applicant for the patent has failed to disclose to the Controller the
information required by section 8 or has furnished information
which in any material particular was false to his knowledge;
The
Learned Single Judge placed reliance on the “may” in the preamble to
sub-section (1) to conclude that the “may” provided for exercise of discretion
by the Court or the IPAB. The question is, is the “may” to be interpreted as
“shall”, or as “may”?
It
needs to be pointed out that the preamble, and consequently the “may” in
Section 64(1) is applicable equally to all 14 grounds of revocation which are
enumerated under Section 64(1). Therefore, it would be difficult and probably
even untenable to argue that certain grounds are more serious (or more equal)
than the rest.
In
other words, it may not be possible to argue that violation of Section 8 is a
minor ground compared to other so-called “substantive” grounds such as novelty
or obviousness. Specifically, it may not be possible to argue that the “may” is
a “shall” for certain grounds, but remains a “may” for certain other grounds.
Further,
there are two sub-grounds within Section 64(1)(m) itself, namely:
A. that
the applicant for the patent has failed to disclose to the Controller the
information required by section 8; or
B. that
the applicant has furnished information which in any material particular was
false to his knowledge
These
two grounds refer to two different circumstances. In the first circumstance,
there is a failure on the part of the applicant to disclose information sought
under Section 8. Specifically, the failure must relate to details of foreign
application sought in Form 3. Such failure need not be deliberate or
calculated. There just needs to be failure to disclose. Therefore, it could be
said that the scope of analysis is restricted to establishing whether or not
there was a failure to disclose by the applicant.
Before
we jump to any conclusion, it needs to be pointed out that what amounts to
“failure to disclose” is a subjective enquiry based on what constitutes
sufficient disclosure under Section 8. It could also be argued that
subjectivity allows for exercise of discretion. However, the exercise of
discretion is limited to evaluating the adequacy of disclosure, and no more. If
the applicant has disclosed the details sufficiently as sought in Form 3, there
is no question of violation of Section 8.
However,
if the disclosure is less than adequate, it must be concluded that the
applicant/patentee has indeed violated Section 8. Once this conclusion is
reached, there appears to be no more room for exercise of discretion. In other
words, once failure to disclose is established, the “may” in the preamble to
sub-section (1) of Section 64 cannot be used to further exercise discretion.
Revocation appears to be the only legal and logical course of action.
As
regards the second circumstance which refers to willfully furnishing false
information, it is clear that there must be a positive act on the part of the
applicant to supply information which he knows to be false in a “material” way.
Simply put, the false information must necessarily have a bearing on the decision
of the Controller to grant or refuse a patent. Obviously, in this circumstance,
the Controller has the power to exercise his discretion to understand whether
the false information was “material” in any way to the outcome of the
examination process.
To summarize,
on a strict reading of relevant portions of Section 64(1)(m), it could be
argued that there does not exist a room for exercise of discretion once failure
to disclose information under Section 8 is established. Therefore, since the
Learned Single Judge had arrived at a finding of contravention of Section 8 by
the patentee, I don't think the Court had the option of not revoking the
Erlotinib patent.”
Applying this logic to the Phillips
case, it could be said that the Plaintiff’s patent is liable to be revoked for
failure to disclose information in light if its own admission. However, it must
also be noted that such revocation was being sought summarily under Order 12
Rule 6. Therefore, given the grave implications for the patentee, a Court would
not be wrong in coming to the conclusion that the issue deserved deeper
analysis at trial.
Now let us see what the Division Bench
had to say. In paragraph 25, the Court notes, based on the affidavit of the
Plaintiff's patent agent, that certain information was inadvertently omitted/not disclosed by
the Plaintiff’s patent agent to the Indian Patent Office, despite having
received the information from the Plaintiff. In such a situation, the Court
ought to have held that only at trial it may be understood as to whether the
failure of a patent agent to disclose information amounts to failure of the
patentee to furnish information under Section 8. This would have been a better
issue to frame and decide. Instead, in paragraph 27 of the decision, the Court
goes on to observe that the issues that need to be looked into at trial are the
alleged suppression and the materiality of the suppressed information. In my
humble opinion, although the Court was perhaps correct in taking the view that
the issue deserved a trial, it has erred in its appreciation of Section
64(1)(m) and the latter's application to the facts of the case. Simply put, the
conclusion may be correct but the reasoning is flawed.
The Division Bench then dwelt
on the interpretation of the word ”may” in Section 64(1). Based on a host of
precedents, the Court took the view that the “may” was indeed a may which has
the consequence of conferring discretion upon the Court while exercising the
power of revocation. On this too, I humbly disagree with the Court as stated in
my earlier post, the “may” in Section
64(1) is applicable equally to all 14 grounds of revocation which are
enumerated under Section 64(1). Therefore, it would be difficult and probably
even untenable to argue that certain grounds are more serious (or more equal)
than the rest. In other words, it may not be possible to
argue that violation of Section 8 is a minor ground compared to other so-called
“substantive” grounds such as novelty or obviousness. Specifically, it may not
be possible to argue that the “may” is a “shall” for certain grounds, but
remains a “may” for certain other grounds.
Although testy, I’d like to
volunteer with another argument. The Indian Patents Act, 1970 perhaps is
inspired by its British counterpart and the use of “may” in certain instances in
British English is synonymous with “shall”. In other words, the use of the word
“may” is meant to be assertive or in the form of a directive, with no room for
exercise of discretion. This must be considered in interpreting the language of
the Indian statute. Therefore, given that the “may” used in Section 64(1)
applies to both substantive and procedural grounds, it may not be possible to
selectively construe the “may” as “shall” for substantive grounds and “may” for
procedural grounds.
From the above, it is clear that
although in the facts of the case perhaps a trial was necessary, the DB’s interpretation
of Sections 8, 64(1) and 64(1)(m) do not do justice to the express language of
the provisions and intent of the Legislature. Critically, this is bound to affect the adjudication of the appeal in the Roche-Cipla case where Section 8 has been agitated vigorously by the defendant Cipla. In that case, although the Learned Single Judge concluded that the patentee had violated Section 8, his Lordship ruled that the "may" in Section 64(1) allowed him to not revoke the patent despite the violation. Therefore, the DB's decision could deprive Cipla of an otherwise legitimate ground of appeal. I, for one, will wait to see how the DB's decision is applied in pending matters by Courts and the IPAB.
