Guest Post: Gillette Defence in India

Here's a Guest Post on the application of Gillette Defence in India by Avinash Kumar Sharma, a litigator from the High Court of Delhi:

The concept of a Gillette Defence was put forth by Lord Moulton in the case of Gillette safety razor company v. Anglo American Trading Company Limited in the year 1913. The concept kicks in whenever a defendant in a suit for patent infringement takes the plea that the product or process implemented by it is covered by prior art. It is based on the premise that there can be no infringement of a patent whose invention is covered by a lapsed patent or an invalid patent. In fact, enforcement of such a patent would amount to encroaching on the realm of commons and granting monopoly over it.

Terrell on the Law of Patents has summed up Gillette Defence as follows:

"Infringement not novel" (Gillette defense) Since no relief could be obtained in respect of an invalid patent, if the defendant could prove that the act complained of was merely what was disclosed in a publication which could be relied on against the validity of the patent, without any substantial of patentable variation having been made, he had a good defense. This is the so-called Gillette defense arising out of the world of Lord Moulton in Gillette Safety Razor Co. VS. Anglo American Trading Co. where he said: "I am of the opinion that in this case the defendant's right to succeed can be established without an examination of the terms of the specification of the plaintiff's letters patent. I am aware that such a mode of deciding a patent case is unusual, but from the point of view of the public it is important that this method of viewing their fights should not be overlooked. In practical life it is often the only safeguard to the manufacturer. It is impossible for an ordinary member of the public to keep watch on all the numerous patents which are taken out and to ascertain the validity and scope of their claims. But he is entitled to feel secure if he knows that that which he is doing differs from that which has been done of old only in non- patentable variations such as the substitution of mechanical equivalents or changes of material, shape or size. The defense that 'the alleged infringement was not novel at the date of the plaintiff's letters patent,' is a good defense in law, and it would sometimes obviate the great length and expense of patent cases if the defendant could and would put forth his case in this form, and thus spare himself the trouble of demonstration on which horn of the well-known dilemma the plaintiff had impaled himself, invalidity or non-infringement."

It appears that this defence was invoked and endorsed for the first time in India in the case of Ravi Raj Gupta v. Acme Glass Mosaic Industries. In the said case, the principal defence invoked by the defendant was that it was using a well-known process for manufacturing tiles, which was covered by a lapsed patent. Holding that the patent sought to be enforced was prima facie not an invention within the meaning of Section 2(j) of the Patent Act 1970 in view of the defence, the Court refused to grant the Plaintiff interim injunction.

This defence has also been accepted by the High Court of Calcutta in the case of Hindusthan Lever Limited v. Godrej Soaps Limited and by the Delhi High Court in  J Mitra v Kesar Medicaments in 2008. In the latter judgement, the Delhi High Court held thus:

“A perusal of the decision in the cases of Ravi Raj Gupta and Gillette Safety Razor Co. cases (supra) shows that where it is shown that the act complained of is what was disclosed in a prior publication, which can be relied on against the validity of the patent, and no patentable or substantial alteration has been made in respect thereof, there is a good defense.”

In the facts of the case though, the defendant was unable to show that the patented invention was covered by the prior art cited by it. The practical consequence of invoking the Gillette Defence is that the scope of the trial can be limited to the said defence since it is assumed that but for the defence, the defendant does not refute the allegation of infringement. This would effectively require the defendant to lead evidence.

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!

Standard Essential Patents: Reviewing the IEEE’s IPR Policy- Part II

In the last post, I reviewed portions of the IEEE’s updated IPR policy for Standard Essential Patents. I continue with the review in this post.

What is common between the IPR policies of IEEE and ETSI is that both disclaim any verification or certification of validity or essentiality or infringement of any patent claim declared as Essential by a patentee. The IEEE policy further disclaims any enquiry into the FRAND-compliance of a patentee’s licensing terms. Importantly, it states that “Nothing in this policy shall be interpreted as giving rise to a duty to conduct a patent search”. This could be interpreted to mean that the policy does not cast a burden on any third party to undertake a search for patents which it infringes or may potentially infringe, which is consistent with the extant practice of casting the obligation of establishing infringement on the right holder. Simply stated, a declaration of essentiality by a patentee remains a unilateral declaration by the patentee, with no formal imprimatur by the IEEE.

This is further corroborated by an express window in the Policy which permits a prospective licensee (“Applicant”) and the patentee (“Submitter”) to litigate over patent validity, enforceability, essentiality, or infringement; Reasonable Rates or other reasonable licensing terms and conditions; compensation for unpaid past royalties or a future royalty rate; any defenses or counterclaims; or any other related issues. This is a thumping endorsement of the position that a prospective licensee’s bonafide challenge to the assertions of the patentee cannot result in an adverse inference of unwillingness. As recognized last year by the England and Wales High Court in Vringo v. ZTE, a prospective licensee is well within its rights to challenge the validity and essentiality of the patents asserted without being branded an “unwilling licensee”. It must however be noted that if litigation is merely employed to delay an inevitable payment, which must be demonstrated by the patentee from the conduct of the prospective licensee and the lack of apparent merits in its challenge, the prospective licensee may not be entitled to be treated as a “willing licensee”.

As regards a patentee’s access to exclusionary remedies such as injunctions, the Policy firstly defines “Prohibitive Order” to mean an interim or permanent injunction, exclusion order, or similar adjudicative directive that limits or prevents making, having made, using, selling, offering to sell, or importing a Compliant Implementation. Further, except for circumstances envisaged by and in the Policy, a patentee who claims to own an Essential Patent Claim may not seek Prohibitive Orders against prospective licensees. 

That exceptional window is available when the implementer of an IEEE Standard fails to participate in, or to comply with the outcome of, an “adjudication”. Adjudication includes adjudication in a first appeal by any party from the decision of the forum of first instance on any issue. Importantly, the scope of the adjudication could relate to a host of issues such as license terms, patent validity, essentiality and the like. Therefore, an injunctive remedy is available to a patentee only when an implementer fails to abide by a Court’s finding, which includes the finding of an arbitral tribunal. Until then, no such remedy may be sought against the implementer of a standard.

As for what constitutes a “Reasonable Rate” of royalty, here’s the definition from the Policy which is best reproduced:

“Reasonable Rate” shall mean appropriate compensation to the patent holder for the practice of an Essential Patent Claim excluding the value, if any, resulting from the inclusion of that Essential Patent Claim’s technology in the IEEE Standard. In addition, determination of such Reasonable Rates should include, but need not be limited to, the consideration of:

• The value that the functionality of the claimed invention or inventive feature within the Essential Patent Claim contributes to the value of the relevant functionality of the smallest saleable Compliant Implementation that practices the Essential Patent Claim.

• The value that the Essential Patent Claim contributes to the smallest saleable Compliant Implementation that practices that claim, in light of the value contributed by all Essential Patent Claims for the same IEEE Standard practiced in that Compliant Implementation.

• Existing licenses covering use of the Essential Patent Claim, where such licenses were not obtained under the explicit or implicit threat of a Prohibitive Order, and where the circumstances and resulting licenses are otherwise sufficiently comparable to the circumstances of the contemplated license.

So not only is the patentee precluded from claiming royalty based on the ex post value of the patent i.e. post its inclusion in an IEEE standard, the royalty must also be based on parameters attributable to the overall contribution of the patent to the IEEE standard and must be a measure of the smallest saleable component which implements the standard. These factors appear to have been distilled from the Microsoft v. Motorola and Innovatio decisions.

Broadly speaking, although there could be room for further refinement (as is always the case), the Policy must be credited for clarifying quite a few issues which have festered to the detriment of all stakeholders, particularly prospective licensees. Importantly, the Policy is a reasonably good template for other SSOs to draw from and build on. Let’s hope the ETSI IPR Policy too is amended on similar lines given the room for exploitative abuse by patentees under the current ETSI Policy.

Standard Essential Patents: Reviewing the IEEE’s IPR Policy- Part I

Earlier this year in March, the Institute of Electrical and Electronics Engineers (IEEE) published the latest version of its bylaws which shall apply to the licensing practices of its members in so far as they relate to the technology standards prescribed by the IEEE. Given that a lot has already been written about the policy, I am not sure if I can add a new perspective to it. Therefore, these series of posts I intend to pen may be treated as my on-going attempts to make sense of the policy given its relevance to my current body of work.

Articles 6 and 7 of the policy deal with the patent and copyright policies respectively. In this post, I review certain aspects of the Patent policy, which I believe are significant developments in SEP jurisprudence. Article 6.1 which contains the definitions defines “Compliant Implementation” thus:

“Compliant Implementation” shall mean any product (e.g., component, sub-assembly, or end-product) or service that conforms to any mandatory or optional portion of a normative clause of an IEEE Standard.

At a time when there is little or no judicial guidance, much less clarity, on whether the policy of the European Telecommunications Standards Institute (ETSI) envisages an obligation on SEP owners to grant FRAND-encumbered licenses to component manufacturers such as chipset makers, the IEEE’s definition of “compliant implementation” must be welcomed for its expansive scope and clarity. The definition expressly treats a component or sub-assembly, and not just the end-product, as product for the purposes of standard compliant implementation.

Although Intel has advanced a similar position in its amicus brief before the United States Court of Appeals for the Federal Circuit in Apple v. Motorola, the brief does not undertake a systematic interpretation of terms such as “Manufacture”, “Equipment” and “Methods” which have been defined in the ETSI IPR policy. This is not to say that Intel’s argument is without basis, but the reasoning in the brief could have been more comprehensive so as to deal with and negate the position that only end-product manufacturers are entitled to a FRAND license under the ETSI IPR policy. Fortunately, the IEEE policy leaves very little to imagination in this regard giving the impression that the framers of this policy have drawn important lessons from the ongoing debate with respect to the ETSI policy.

The other important definition, perhaps a more critical one, is that of an “Essential Patent Claim” which is defined as follows:

““Essential Patent Claim” shall mean any Patent Claim the practice of which was necessary to implement either a mandatory or optional portion of a normative clause of the IEEE Standard when, at the time of the IEEE Standard’s approval, there was no commercially and technically feasible non-infringing alternative implementation method for such mandatory or optional portion of the normative clause. An Essential Patent Claim does not include any Patent Claim that was essential only for Enabling Technology or any claim other than that set forth above even if contained in the same patent as the Essential Patent Claim”

It is pertinent to note that the definition includes both mandatory and optional portions of an IEEE standard. In other words, even if a patent claim covers an optional portion of an IEEE standard, it shall be deemed to be an Essential Patent Claim. It would be interesting to see a Court interpret this definition in the future in light of Fujitsu v. Netgear, where the subject-matter of the dispute related to IEEE standards. In this decision, the United States Court of Appeals for the Federal Circuit held that where a portion of a standard is optional:

…standards compliance alone would not establish that the accused infringer chooses to implement the optional section. In these instances, it is not sufficient for the patent owner to establish infringement by arguing that the product admittedly practices the standard, therefore it infringes. In these cases, the patent owner must com-pare the claims to the accused products or, if appropriate, prove that the accused products implement any relevant optional sections of the standard. This should alleviate any concern about the use of standard compliance in assessing patent infringement. Only in the situation where a patent covers every possible implementation of a standard will it be enough to prove infringement by showing standard compliance.”

In view of this test, can the updated definition of an Essential Patent Claim prevail over the Federal Circuit Court’s ruling? Given that ruling of the Court, and not IEEE’s bylaws, has the force of law as to what constitutes "essential" and how essentiality may be established, the definition may not be of much use to patentees who claim ownership of IEEE standards in circumventing the test laid down by the Court.

The other interesting aspect of the definition of an Essential Patent Claim is its express exclusion of any enabling technology. “Enabling Technology” has been defined thus:

““Enabling Technology” shall mean any technology that may be necessary to make or use any product or portion thereof that complies with the IEEE Standard but is neither explicitly required by nor expressly set forth in the IEEE Standard (e.g., semiconductor manufacturing technology, compiler technology, object oriented technology, basic operating system technology, and the like)”

According to this definition, it appears that owners of essential patent claims cannot extend their claim of essentiality over or treat as essential those patent claims which are directed towards technologies/products that enable the implementation of an IEEE standard. In other words, since an IEEE standard could be silent on the actual manner of its enablement, a patentee which allegedly owns a Standard Essential Patent cannot claim that a specific enabling technology is essential for the implementation of the standard since there could be multiple ways of implementing the standard.

This does not mean that infringement cannot be alleged by the patentee. It only means that as opposed to using the claim of essentiality to establish infringement, the patentee would need to demonstrate a claim-based infringement using the conventional claim-to-product comparison. Therefore, only if the patent contains a claim which covers a particular manner of enablement of the standard or a product which facilitates enablement, it would be available for the patentee to allege infringement based on the claim since the essentiality of the patent cannot aid him in this regard. In this sense, the definitions of Essential Patent Claim and Enabling Technology strike a distinction between technology/product which enables the implementation of the Essential Patent Claim and technology/product which actually implements/uses the Essential Patent Claim. This is yet another interesting aspect of the definitions whose interpretation and application by Courts is bound to generate divergent views. 

In the next post, I shall continue with my review of the IEEE patent policy. 

Division Bench of the Delhi High Court Vacates Interim Injunction against Glenmark in Linezolid Patent Dispute

On February 5, 2015, a Division Bench of the Delhi High Court vacated the interim injunction granted on January 19, 2015 by a Single Judge of the Court against Glenmark Pharma in respect of Symed Labs’ process patents on Linezolid IN213062 and IN213063.

The reason for the ad interim vacation of the interim injunction of the Single Judge, according to the Division Bench, was the failure on the part of the Single Judge to take into account Glenmark’s contention that Symed Labs had failed to establish that the products of the parties were identical, which is a mandatory requirement under Section 104A of the Patents Act, 1970. Extracted below are the relevant portions of the DB’s order:

“According to Mr Chidambaram, a specific plea is taken in the written statement and he has drawn our attention to certain paragraphs thereof to show that the Linezolid API manufactured by the appellants/defendants is different from that of the plaintiff/respondent. Therefore, before the learned Single Judge could grant an injunction in favour of the respondent/plaintiff, it was incumbent upon the learned Single Judge to, prima facie, come to a conclusion that the Linezolid API manufactured by the plaintiff using its patented processes was identical to the Linezolid API manufactured by the defendants/appellants. This does not appear to have been done. It is in these circumstances that we are vacating the interim order for the time being and direct that the defendants/appellants shall maintain accounts and shall file the same in this Court as also supply a copy to the respondent/plaintiff”

Section 104A envisages reversal of burden of proof on the defendant in limited circumstances where the patentee is unable to establish that the defendant’s process is identical to that of the former’s patented process, but has established the limited fact that products of both parties are identical. In the facts of Linezolid case, unless the patentee sought to place reliance on Section 104A to seek reversal of burden of proof, I am not sure it is incumbent on it to establish the identicality of the products. Since I haven’t had the chance to read the Single Judge’s order of injunction, I shall reserve my comments on the issue.  

That being said, the vacation of the interim injunction by the DB is only ad interim since it is yet to dispose the appeal. The next date in the appeal April 6, 2015. 

Delhi Patent Office Revokes Abbott’s Patent on the blockbuster drug Adalimumab (Humira)

On December 31, 2014, in a 30-page decision the Delhi branch of the Indian Patent Office set aside its order of grant of patent IN234555 to Abbott on its blockbuster arthritis drug Adalimumab (trade name “Humira”). The patent was revoked on grounds of lack of inventive step and insufficient disclosure.

The facts of the case make for interesting reading. The Patent Office granted the patent to Abbott on June 8, 2009, oblivious to the pendency of a pre-grant opposition filed by Glenmark in September 2008. When Glenmark brought this to the Controller’s attention, the letter intimating Abbott of the grant of the patent was cancelled, this time without hearing Abbott. Naturally, this peremptory decision was challenged by Abbott in a writ petition before the High Court of Delhi, wherein the Court directed the Controller to review the decision of grant by treating Glenmark’s challenge as a review petition under Section 77(f) of the Act. It is in this review petition that the decision of grant of the patent was set aside on December 31, 2014. That’s quite a way to start the New Year for both the parties concerned.

The Controller’s observations and findings start in Para 9 on Page 15 of the Order. Before dealing with the grounds of review, the Controller undertook a discussion on the subject-matter of the claims of the patent taking into account the amendment of claims undertaken by Abbott during the prosecution of the patent. Subsequently, the Controller rejected the contentions of Glenmark with respect to lack of novelty including the ground of prior claiming and ineligibility of subject-matter under Section 3(e) of the Act. However, the contentions relating to lack of inventive step and insufficient disclosure were accepted.

I will discuss the specifics of these findings in detail in a later post, but what is to be noted is that this decision again proves the need for and efficacy of the pre-grant opposition mechanism which is effectively the reason for the outcome in this case. Importantly, this also highlights the need to improve the procedure of examination of patent applications since examination, and not pre-grant opposition, is the first line of scrutiny. Therefore, it would help if details of examination of a patent including the search and analysis carried out by the Patent Office are captured clearly during its prosecution and are also available to the public, instead of the confidential treatment it receives now. After all, what is so confidential about the steps taken the examiner of a patent application to evaluate the patentability of the subject-matter?

Let’s hope these issues receive the attention that are due to them. Until then, we will have to repose faith in the opposition and revocation mechanisms.

I thank a good friend of mine for sharing a copy of the decision with me! The link to the Controller's decisions on the official website of the Indian Patent Office is as usual playing truant (even at the time of publication of this post).

Delhi High Court Enforces Novartis’s INDACATEROL against CIPLA

In a 143-page judgment pronounced on January 9, 2015, Justice Manmohan Singh of the Delhi High Court granted an injunction in favour of Novartis enforcing its patent 222346 on the bronchodilator drug Indacaterol against Cipla. Extracted below are the observations of the Court on the options available to it and operative portions from the decision (In the next post, I will present my analysis of the decision):

“121. Let me therefore ascertain as to what tools are available on record in order to enable to perform this duty of striking the balance between the parties. The said tools can be discerned from the pleas raised by the parties and position which they have taken the same can be summarized in the following manner:

a) Before starting of hearing in the injunction application in the present case, the statement was made on behalf of the plaintiffs that they are agreeable to license its patented product to the defendant subject to the defendant’s agreeing that the plaintiff would allow the defendant’s to import its product and work on profit sharing basis. In response thereto, the defendant refuses to consider the said offer as it is interested in conducting the manufacturing activities in India as according to the defendant that the merely importation would still lead to monopoly situation which is the ground of the tribunal to interdict for a compulsory license under Section 83 and 84 of Patent Act and upon which I cannot prematurely decide the same and perform the role of compulsory licensing tribunal at this stage without fact finding and evaluation of evidence and correctness of the stand of the parties.

b) The defendant on the other hand suggested that the court can mould the relief in its written submissions and also pleads that the court may fix up the royalty which can be ordered to be deposited before the court subject to the trial of the present suit. I find this approach again to be inequitable. This is due to the reason that in the present case, the court is not proceeding to hold that there exists a credible defence raising the grounds of the invalidity of the patent (though the defendant has raised the said grounds but the same are neither explained properly nor the same are relevant in view of the contra material on record and are distinguished by the plaintiffs for which the defendant has not provided any further answer) but is proceeding to observe on prima facie basis that there exists a valid patent and the defendant could be provided a permission to manufacture subject to payment of the royalty as an alternative to injunction so that the inventor is rewarded. Thus, the alternative to injunction approach for carrying out the activities which would otherwise be an infringement but for the public interest cannot be misunderstood on presumptive basis that the amounts are secured in the court subject to trial which means that the defendant would continue to use the invention with the plaintiff getting nothing until the trial of the suit gets concluded (without approaching the appropriate forum which is compulsory licensing court) when prima facie case has been made out for infringement and all other circumstances warrants the injunction. That is the reason why, I cannot agree with the proposal of the defendant that this court should permit the defendant to manufacture the patented product by observing that the public interests warrants so without recompensing the plaintiff realistically at this stage and merely seeking a deposit in the court which would lead to all other generic companies would be taking the same route without actually rewarding the inventor in practice. This approach was never contemplated by the US courts nor was such jurisprudence ever intended to be laid down by this court even.

c) The third tool which exists at this stage in my hand is to fix up the royalty as an interim measure as to what sort of the royalty would be reasonable and practicable so as to suitably recompense the plaintiff as an inventor. In order to perform this task, I have gone through the records of the case. There exists sale figures of the plaintiffs and the defendant also states that it has sold 12148 unit of drug in the month of October, 2014. I find that the said material again is not adequate in order to understand the profit margin of the either side and further perform calculation on the basis of the proximate loss or detriment to be caused to the plaintiff in terms of financial loss or otherwise in order arrive at the figure of reasonable royalty. Furthermore, the said fixation of the royalty by this court on the monthly basis would be against the scheme of the Act when there exists a mechanism under the Act to seek compulsory license and the domain of the tribunal is prescribed under the Act. Thus, it would be neither wise nor it is justifiable for me to comment on the sum of the royalty on per monthly basis or per annum basis without analyzing the relevant material on record to be presented before the court. I would say that in case the defendant was really interested in paying the royalty on practicable rates without hiding anything from the court, then the defendant ought to have proposed the concrete proposals to the court and discussions could have been made by it in detail in the written submissions as to what reasonable sum can be arrived at between the parties as an interim royalty in lieu of the injunction."

Operative Portion 

"130. The question to be asked at this stage is whether there exists any such circumstance showing the extreme demand of the patented product in question as per the material available on record showing imminent need or dire straits reflecting the plaintiffs inability to provide the medicine in question to the consumers except the concerns emerging from articles which are noteworthy yet general in nature. I find that there is no material on record suggesting the demand of the said patented product outstripping the supplies on the basis of the public interest. Rather, there exists a contra material on record wherein the plaintiff is stated to have a surplus medicines available and agrees to further accelerate the supplies if need be.

131. The main question in the present case before Court is whether the Court will allow a party to infringe the registered patent which is prima facie held to be valid, the infringement is established and there is no credible defence raised by the other side. The answer of this question is "NO". Under these circumstances, the Court would never encourage the infringement in view of the exclusive and statutory rights granted under section 48 of the Act. The effect of registered patent is defined in the statute and the same is not capable of being misunderstood. The statutory and monopoly rights cannot be reduced to a nullity as by virtue of section 48 of the Act till the term of validity of the suit patents, the plaintiff is entitled to prevent any third party who does not have its permission from the act of making, using, offering for sale, selling or importing for those purposes an infringing product in India. In the present case, the compulsory licence has not been granted by the authority to the defendant. Even its application for the same is not pending. Merely the grounds and conditions stipulated under section 83 and 84 of the Act do not absolve the defendant to infringe the registered patent.

132. Accordingly, in the facts and circumstances of the present case, the following directions are passed in order to balance the interest of the parties in the interim:

a) The defendant is restrained by itself or through its directors, group company, associates, divisions, assigns in business, licensees, franchisees, agents, distributors and dealers from using, manufacturing, importing, selling, offering for sale, exporting, directly or indirectly dealing in Active Pharmaceutical Ingredient (API), pharmaceutical products, compound or formulation containing INDACATEROL, specifically its Maleate salt, namely INDACATEROL Maleate alone or in combination with any other compound or API or in any other form as may amount to infringement of Indian Patent No.222346 of the Plaintiff No.1 until the determination of the pleas raised by the defendant for seeking the compulsory licensing if so filed shall be determined on merit and after hearing of parties in favour of defendant, otherwise, it would continue during the pendency of the suit.

b) If such an application is filed by the defendant, under those circumstances, the directions are issued to the controller or to the relevant authority to decide the application for seeking compulsory licensing within the period of six months from the date of filing the application within two weeks from the pronouncement of the order.

c) The defendant is at the liberty to move an application seeking modification/ vacation of the interim injunction in case the application seeking compulsory licensing is decided by the competent authority in its favour or the parties otherwise arrive at some consensus on the licensing terms.

With these observations, the application, being I.A. No.24863/2014, is disposed of. It is clarified that all the findings arrived by this Court are tentative which shall have no bearing at the final stage of the suit as well as at the time of deciding the application for compulsory licence, if filed by the defendant.”

Beginning the New Year with a Few Thoughts for “Specialist” Litigators

Four years ago, on New Year’s Eve, I wrote a post on “generalizing” Intellectual Property Law. In the intervening period, particularly in the last two years, I have been blessed with ample opportunities to apply that sentiment to my work which has improved (I think) my understanding of IP Law and its practice. I have had multiple occasions to understand IP through the prism of Constitutional law, Criminal law and Competition law, and also go through the entire process of trials. The latter has strengthened my firm belief that a lawyer who banks solely on his knowledge of substantive law to deliver the goods is not even half a litigator because procedure will prove to be his Achilles’ heel.

Also, increasingly, I am of the opinion that although it might help to have a dedicated forum to deal with technology litigation, technology litigators must themselves not limit the scope of their practice and learning to their specialized areas. Regardless of what one chooses as her or his area of core competence, a litigator shouldn’t lose touch with fundamentals such as jurisprudence, Constitutional Law and Contracts. In fact, I’d go a step further to say that it is counter-productive, at least in Indian Courts, to project oneself as a specialist technology/IP litigator. Of course, the approach depends on what one wants to be seen as. If the objective is to have a larger appeal and be sought after as a counsel for multiple areas of the law, it helps to be a generalist with core competence in select areas, which is vastly different from exclusively practising niche subjects.

As I have said before, this is important because an internalized understanding of general areas of the law helps a litigator connect with non-specialist Courts which are seized with specialized subjects like IP. I have personally benefited as a litigator by employing this approach each time I have had to present the peculiarities of an IP statute before a Court, hence the conviction. Which is why it surprises me when I hear students of the law, who are yet to set foot in the profession and who wish to litigate, declare with absolute certainty in the first or second semester of law school that all they wish to study and focus on is IP or some other specialized subject.

It is certainly important to closely follow the evolution of jurisprudence in one’s chosen area, but it is equally important to connect it to the big picture because ultimately a litigator must be in a position to present to the Court the larger implications of specific arguments. And staying constantly in touch with general principles of the law helps present such arguments with greater effectiveness. Therefore, I think students would benefit immensely from paying attention to the fundamentals of general subjects instead of rushing through them. It would also help in the long run to having a basic understanding of economics and accounting.

This applies all the more to students of law who come from an engineering or pure sciences background. Although I don’t think law is meant to be taken up only by students from commerce or humanities streams (since I am engineer-turned-litigator myself), I do believe engineers and science grads in particular must invest more efforts in understanding the spirit of the law by systematically and rigorously examining theories of law and principles of common law. Engineers and science grads can certainly bring to the law skillsets and attitudes which are unique to them, but it is also imperative to “acclimatize” themselves to the dialectics of the law and its parlance.

When they do so, they will not only find greater acceptance in the fraternity, but will also perhaps be rightfully heard first on areas such as patent litigation given their training in technology. This also has a critical and positive consequence for the quality of discourse on patents. In the last few years, although the level of IP awareness has increased in India, the discussion on patents seems limited to broad and generalized propositions which may be attributed to lack of training in science, and negligible or no experience in the practice of the subject on the part of certain commentators. There are notable exceptions to this trend, but by and large the reluctance to deal with specifics probably stems from a clear paucity of training and experience.

I personally believe that the bar on academics from practising the law must also be held significantly responsible for this trend, which may not be peculiar to the patent discourse. As long as this bar remains in force, academics will be deprived of the opportunity of sharpening their perspectives through practice. Until such time this bar is lifted and even after, patent litigators with training or experience with technology must play a greater role in shaping the discourse on patents and in volunteering with realistic policy initiatives. This will hopefully bring about a more nuanced discussion on the subject. I must clarify that none of these suggestions are meant to claim an exclusive space for litigators with scientific training because there are patent practitioners whose lack of formal scientific training has not come in the way of professional brilliance.

With this, I wish everyone a Happy and Prosperous New year! May we learn more and be blessed with opportunities to apply what we learn!

Division Bench of the Delhi High Court on Section 8 of the Patents Act and Judgment on Admission of its Violation

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.

Making Sense of the Supreme Court’s ratio in Dr.Aloys Wobben & Anr. v. Yogesh Mehra & Ors.

Recently, I had the occasion to interpret the judgment of the Supreme Court in Dr.Aloys Wobben & Anr. v. Yogesh Mehra & Ors., wherein it was seized of the following issue- whether under Section 64 of the Patents Act, 1970, a ‘person interested’ has the option of concurrently invoking the jurisdictions of both the High Court in a counterclaim for revocation of a patent, and the IPAB in a revocation petition against the same patent? I had earlier blogged on the dispute here and here.

Although the central findings of the Supreme Court’s decision have been touched upon elsewhere by others, I intend to make sense of lesser-discussed observations of the Apex Court. The discussion of the Court begins at Paragraph 17. In the said paragraph, the Court interprets the contingent clause in the preamble of Section 64 (“Subject to the provisions contained in this Act…”) to mean that the provision is subservient to other provisions of the Act. In other words, it is not the sequence of initiation of proceedings that would dictate the outcome/conclusion, but the existence of a conflict between a proceeding under Section 64 and a proceeding initiated under any other provision of the Act.

For instance, if a person interested institutes a post-grant opposition under Section 25(2) against the grant of a patent, he is barred under law from challenging the vires of the patent again in a subsequent revocation petition or counterclaim under Section 64. This explains the Court’s observation in paragraph 18 that “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).”  

The same conclusion has been reiterated in paragraph 26 wherein the Court has observed as follows:

“Firstly, if “any person interested” has filed proceedings under Section 25(2) of the Patents Act, the same would eclipse all similar rights available to the very same person under Section 64(1) of the Patents Act. This would include the right to file a “revocation petition” in the capacity of “any person interested” (under Section 64(1) of the Patents Act), as also, the right to seek the revocation of a patent in the capacity of a defendant through a “counter-claim” (also under Section 64(1) of the Patents Act).” (Emphasis supplied)

What is to be critically noted is that a post-grant opposition under Section 25(2) eclipses only “similar rights/grounds” which are available under Section 64 and not those grounds which are not provided for in the former but are available in the latter. Although the Court has not dealt with such an eventuality, it could be argued (not necessarily successfully) that a person interested may concurrently institute a post-grant opposition and also file a counterclaim on grounds not available under Section 25(2). 

Yet another matter of concern are the observations of the Court in paragraph 18 since the Court seems to have come to the conclusion that the grant of a patent is merely the finalization of the Controller’s decision to bestow a patent on an applicant, but does not translate to the grant of a right to an applicant. In other words, according to the Court, a patentee, although having been granted a patent, does not have a right worth enforcing until the expiry of the post grant opposition period i.e. a year from the date of publication of grant of the patent. Does this mean that a patentee with a patent in his name in the register of patents cannot institute a suit for infringement of the patent until the expiry of the post grant opposition period? On this point, following is the observation of the Court:

“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.”

Unfortunately, the above conclusion is ambiguous since it does not appear to be based on the law and seems to be driven more by “practical” considerations which may not even hold water in all situations. Further, in arriving at this conclusion, the Hon’ble Apex Court has not discussed those provisions of the Act which deal with institution of suits for infringement, leaving its “practical” finding bereft of concrete statutory support.

It remains to be seen in the times to come if the decision of the Court has raised more questions than it has answered. Comments and corrections are welcome.           

Legality of a Contractual Estoppel against Challenge to Patent Validity

Can a licensee who has reaped the benefits of a patented invention challenge the validity of the patent? Under the Patents Act, 1970, yes. Section 140(1)(d) provides that it shall not be lawful to insert in a patent-related contract or license a clause that prevents the licensee from challenging the validity of the licensed patent. It goes on to say that such a condition shall be void.

The said provision, which flows from Article 40 of the TRIPS, was introduced in the Act as part of the 2002 amendment. Interpreting the provision in Enercon (India) Limited v. Aloys Wobben in January 2013, the IPAB observed as follows:

“Licensee Estoppel

14.       The learned counsel for the respondent submitted that though S.140 of the Patents Act provides for avoidance of certain restrictive conditions, it is always subject to Ss. 115 and 117 of the Indian Evidence Act.  Having pleaded that the applicant is the transferee of the technology transferred, it cannot destroy the validity of the intellectual property that was transferred.  There is lack of good faith.  Learned counsel referred to paragraph-18 of the written statement filed by the applicant herein in the suit before the Delhi High Court. It was submitted that after revocation petition was filed, the applicant stopped paying the royalty.  Learned counsel referred to various paragraphs in the written statement. Learned counsel submitted that an order of revocation is a discretionary remedy and the discretion shall not be exercised in favour of the applicant. Learned counsel referred to the derivative action suit filed before the Bombay High Court.  Learned counsel submitted that the applicant must surrender the rights under the agreement (Intellectual Property Licence Agreement) before it attacks the patent. 

15.       In response, Mr. R. Parthasarathy, learned counsel for the applicant submitted that on 8.12.2008, the licence had been terminated and once it has been terminated, the subsequent  application for revocation  will not be barred by estoppel.  Learned counsel submitted that the respondent cannot plead in the same breath that the license has been terminated and that the applicant as the licensee is estopped from challenging it. According to him, the suit in the Bombay High Court was for a relief regarding the payment of royalty, etc. where the Court will decide the construction of documents and it is still pending before the Bombay High Court.  Learned counsel submitted that the answer to the question whether a licensee can file a revocation is ‘yes’ and referred to S. 140 of the Patents Act.  He submitted that the power under S. 64 is very wide.  He referred to the decision in Lear, Inc v. John S. Adkins [395 U.S.653, 89, S.Ct.1902].   

16.       So we will see whether even if the applicant is a person interested, he is estopped from suing for revocation being a licensee. S. 140 says that it is not lawful to insert in a licence to manufacture or use a patented article or to work any process protected by a patent, any condition of prevention to challenges to the validity of a patent.  This is the law.  This condition will govern all licences which relate to or are in relation to a patented article or a process protected by a patent.   Learned counsel for the applicant relied on AIR 2010 SC 259 in which it was held that there can be no estoppel against a statute. 

17.       In Lear Incorporated v. John S.Adkins [395 U.S.653, 89, S.Ct.1902], it has been held that the contractual rights give way to public interest in a challenge to a patent and therefore, even a licensee can attack an unworthy patent.  In Lear , the inventor was Adkins.  He was hired by Lear Incorporated to develop a gyroscope which was required in the aviation industry.  Adkins developed an invention which Lear incorporated in its production process.  In the litigation where Adkins claimed compensation for Lear’s use of the improvements which the inventor has patented, Lear sought to prove that Adkins inventions were not sufficiently novel.  The inventor argued that as a licensee, Lear must pay.  The California Supreme Court relied on the rule of estoppel to bar Lear from proving that Adkins’ invention was not patentable.  The U.S. Supreme Court granted Certiorari in this case to reconsider the Hazeltine rule which invoked estoppel to deny a licensee the right to prove that the licensor’s idea was really a part of the public domain.  The U.S. Supreme Court said that the present federal policy favoured free competition in ideas which do not merit patent protection, and  that the licensee estoppels had an uncertain status and it is a product of judicial efforts to accommodate the competing demands of the common law of contract in the federal law of patents.  It observed that instead of a creative compromise, there has been a chaos of conflicting case law. It also observed as under:

“Surely the equities of the licensor do not weigh very heavily when they are balanced against the important public interest in permitting full and free competition in the use of ideas which are in reality a part of the public domain.  Licensees may often be the only individuals with enough economic incentive to challenge the patentability of an inventor’s discovery.  If they are muzzled, the public may continually be required to pay tribute to would-be monopolists without need or justification.  We think it plain that the technical requirements of contract doctrine must give way before the demands of the public interest in the typical situation involving the negotiation of a license after a patent has issued.”

The U.S. Supreme Court also held that the overriding federal policies would be significantly frustrated if licensees are required to continue to pay royalty during the time they are challenging the patent’s validity.  The Court observed that enforcing this contractual provision would undermine the strong federal policy favouring full and free use of ideas in the public domain.  So we have the Act which says that the conditions which restrict the right of a licensee from challenging the patent are illegal and we have the opinion of the U.S. Supreme Court explaining why a licensee is entitled to invalidate the patent. This restriction imposed by S.140, is another indicator of the public interest angle in patent law. While the law shall protect the rights of the property owner, it will not restrict the rights of the interested person to challenge the grant, so that unworthy patents are restored to the public domain.

Because of the costs of the litigation and the very special nuances of the technology, it may very well be that the licensee alone is capable of challenging the patent. He has the funds and the knowledge to launch the attack on the subject matter of the invention. This is why the U.S. Supreme Court held that it would be inequitable to restrict him from attacking the patent by any condition in the contract. The Parliament has specifically introduced this provision in our Patents Act which is a special enactment as far as patents are concerned and hence it will prevail over the general rules relating to contract. Therefore no licensee can be estopped from challenging the patent. This objection is rejected.”

I don’t think I could have captured the spirit and objective of Section 140 better. What needs to be understood is that the freedom to challenge the validity of a patent extends to a compulsory licensee and a prospective licensee as well. Considering additionally that a licensee or a prospective licensee is also a “person interested” within the meaning of Section 2(1)(t) of the Act who has the commercial incentive and the technical wherewithal to challenge the validity of the patent, I tend to agree with the policy intent underlying Section 140.