‘I have found in my experience that there is one panacea which heals every sore in litigation and that is cost’.
- Justice Bowen L[1]
The one approaching the Court, must do so with ‘clean hands’; the Delhi High Court held in a recent decision[2] dated 14 December 2023 while adjudicating upon an application for interim injunction filed by Freebit AS (‘Plaintiff’) against Exotic Mile Private Limited (‘Defendant’) in a patent infringement suit. The Single Judge of the Delhi High Court dismissed the application and imposed costs of INR 5 lakh on the Plaintiff for having suppressed material facts by way of failing to report that corresponding foreign patents of the suit patent have been invalidated/refused in several jurisdictions, including China, Japan, New Zealand, USA, Europe and Brazil.
Facts
The instant patent infringement suit pertains to the Plaintiff’s granted patent bearing no. IN 276748 (suit patent) titled ‘Improved Earpiece’. The Plaintiff placed before the Court Form-27 (statement of working of patent), as also the Form-3 (disclosure of foreign prosecution) dated 24th March 2016, wherein the statuses of the corresponding foreign applications were mentioned. The Plaintiff disclosed in the plaint, that the corresponding patent bearing publication number ‘EP2177045A1’ has been revoked by the European Patent Office by order dated 27 April 2018. The Plaintiff asserted that it has several licensees, including Boat, JBL, Skullcandy, Harman etc. who are paying royalties to the Plaintiff for its patent portfolio. The Plaintiff, on the first date of listing of the matter for hearing, pressed the application for interim injunction.
The Defendant, who was present on advance notice, contended that the information on the corresponding patents given by the Plaintiff is completely inaccurate, misleading, and false. It was contended that the corresponding foreign patents of the suit patent have been invalidated/refused in several jurisdictions, including China, Japan, New Zealand, USA, Europe and Brazil. The Defendant relied upon the decision of the European Patent Office (‘EPO’), and the judgment delivered by the High Court of Justice, Patent, Court, UK.
The Defendant also brought to the notice of the Court the decision[3] of the Patent Trial and Appeal Board (PTAB) that has been further upheld by the decision[4] of the US Court of Appeals for the Federal Circuit (CAFC), wherein the suit patent was declared invalid, owing to lack of novelty.
Decision and analysis
The Court referring to Rule 3 of the High Court of Delhi Rules Governing Patent Suits, 2022 held that it is mandatory for a plaint to include details of corresponding foreign patent applications, as well as information pertaining to any orders passed by a Court or Tribunal concerning the same or substantially similar invention. The Court further observed that Order XI Rule 1 of the Civil Procedure Code (CPC), as amended by the Commercial Courts Act, 2015 obligates the Plaintiff to file all documents having a bearing on the suit. It is in order to aid in a comprehensive and fair adjudication, that this rule had put an obligation on the Plaintiff to file documents, irrespective of whether the same are in support of or adverse to the case of the Plaintiff.
The Court observed that contrary to the actual status of the corresponding patent applications in countries wherein the patents had either been ‘revoked’, ‘refused’, ‘abandoned’, ‘lapsed’; the Plaintiff has shown the status of said corresponding applications in the plaint as either ‘pending’ or ‘granted’. The Court noted that contrary to the Plaintiff’s submissions, the corresponding patent to that of the suit patent had been refused in China, invalidated in Japan, lapsed in New Zealand, and revoked in Europe. Additionally, the corresponding patent in USA had been stated to have been ‘abandoned’ in the plaint, however the same was ‘invalidated’ by virtue of the decisions of the PTAB and CAFC.
The Court further ascertained that the corresponding patent application filed in Japan (JP2012170136A) was refused in Trial and Appeal by order dated 26th May 2015. This was in complete contradiction to what had been submitted by the Plaintiff in Form-3 on 24th May 2016 (showing the status as ‘Pending’) i.e., a year after. The Court observed that this discrepancy puts a serious question on the accuracy of the information provided by the Plaintiff in the Form-3.
The Court relied on the decision in Satish Khosla[5] of the Hon’ble Delhi High Court wherein the Division Bench had categorically held that it is incumbent upon a Plaintiff to approach the Court with ‘clean hands’, and reasoned that the duty of disclosure is not restricted to the current litigation, but also encompasses any previous litigation concerning the suit patent. The Court further relied on the decision in Arunima Baruah[6] of the Apex Court wherein it was held that suppression of material facts by a party can impact their right to equitable relief. The Court applying the same principle to the instant suit, held that on account of the Plaintiff’s failure to disclose revocations or invalidations of corresponding foreign patents of the suit patent, amounts to material suppression and misrepresentation of facts, thus adversely affecting the Court’s willingness to grant an equitable relief.
The Court further analyzed the three facets for grant of an interim injunction order namely prima facie case, balance of convenience and irreparable injury. The Court held that in light of the suit patent being susceptible to revocation, on account of invalidation, the absence of prima facie case would act as a fundamental barrier to the grant of an interim injunction.
On the issue of balance of convenience, the Court held that on account of there being serious assertions regarding the revocation of the suit patent, and in case the suit patent is found invalid or revocable later, it would prejudice the Defendant as there would be no point in having restrained them from their course of business. With respect to irreparable injury, the Court held that the grant of interim injunction, especially when the patent is susceptible to revocation and being declared invalid, would lead to significant losses to the Defendant, which in the opinion of the Court would be incapable of being adequately compensated, at that stage. However, in case of the patent being valid post-trial, the Defendant can be subject to damages in the form of monetary amounts.
The Court then relied upon the decision in Gujarat Bottling[7], wherein the Apex Court had held that since the grant of an injunction is wholly equitable in nature, the conduct of the parties have a significant bearing on the grant or non-grant of an interim injunction. The Court, considering the factual matrix of this case, and the settled judicial precedents, held that the Plaintiff is not entitled to any interim injunction, let alone, an ex-parte or ad interim injunction. In addition, the Court also held that the conduct of the Plaintiff in the instant case cannot be ignored, especially in a case where the Plaintiff ought to come clean and there are specific provisions in this regard set out in the various statutory Rules.
The Court, nevertheless, also directed that the Plaintiff’s counsel may be allowed to verify the decisions cited by the Defendant and if any of the above information or facts asserted by the Defendant and considered by the Court, is stated to be incorrect on behalf of the Plaintiff; the Plaintiff may seek revival of the injunction application.
[The authors are Partner and Associate, respectively, in IPR practice of Lakshmikumaran & Sridharan Attorneys]
[1] Cropper v. Smith, (1884) 26 Ch D 700
[2] CS(COMM) 884/2023 [Neutral Citation no. 2023:DHC:9219]
[3] Bose Corporation v. Freebit AS, IPR2017-00129
[4] Freebit AS v. Bose Corporation (18-2365)
[5] Satish Khosla v. M/s. Eli Lilly Ranbaxy Ltd. [71 (1998) DLT 1 (DB)]
[6] Arunima Baruah v. Union of India (UOI) [MANU/SC/7366/2007]
[7] Gujarat Bottling Co. Ltd. v. Coca Cola Co. [(1995) 5 SCC 545]
