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Revocation of registration of potato variety FL 2027 held by Pepsico India and its impact
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Background
Lays potato chips, a product of Pepsico, uses FL-2027 variety of potatoes which was introduced in 2009 in India. It came into limelight in April 2019, when Pepsico filed infringement cases against farmers in Gujarat and alleged that nine farmers who are growing and selling this variety in Gujarat are not part of its “collaborative farming programme”. Additionally, filed a lawsuit of Rs.4.2 Cr against four small farmers under the Act. However, widespread protest and boycott threats by political parties and farmers groups, forced Gujarat government to step in and this forced Pepsico to withdraw all cases in May 2019. Following which Ms. Kuruganti filed an application to revoke Pepsico’s registration in June 2019 on the grounds of being against the public interest.
Summary of the final judgement by PPV&FV
On Dec 03, 2021, PPV&FV revoked the registration of potato variety FL 2027 registered in favor of Pepsico India Holdings Private Limited. The revocation application submitted was mainly based on the grounds of providing incorrect information by the applicant, certificate of registration is not valid and that the grant of certificate of registration is not in the public interest. Based on the arguments submitted by the defendant and the facts, on December 03, 2021, the registration of FL 2027 was revoked under Sections 34 (a), (b), (c), and (h) of PPV&FR Act, 2001. Additionally, the registrar was asked to develop a standardized sheet for evaluation of application for registration of plant varieties in accordance with Act, Rules and Regulations.
Opinion
Revocation of the registration certainly made the farmers of India happier, as it allowed them to buy or sell FL 2027, a variety of potato without being the member of the “collaborative farming programme”. This decision as such, if misunderstood, could deter many of the large entities from entering India who might want to bring in new varieties of plants. In this case, the PPV&FR revoked the registration only after it was proven that the defendant may not have submitted all the documents as per the requirements, even after being requested. As alleged in the Revocation Application, it was found that Dr. Robert W Hoopes, who is the breeder of FL 2027, has not validly assigned it to the Assignee (Recot Inc subsequently name changed to Frito-Lay North America (FLNA)). Additionally, it was pointed out that several farmers were put to hardship including the looming possibility of having to pay huge penalty on the purported infringement they were supposed to have been committing which did not eventually happen as on date.
Considering the facts of the case and the evidence, it is evident that the registration of potato variety FL 2027 registered in favor of Pepsico India Holdings Private Limited was revoked as a result of negligence or intentionally trying to mislead the authorities in India. We are of the opinion that after the creation of the standardized sheet by the registrar, instances such as this could be reduced to a large extant. Additionally, this will help the future applicants with easier and streamlined process for registration of their plant variety and will avoid any complications that may arise in future as happened in case of the registration of potato variety FL 2027.
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Philips moves Delhi High Court against Xiaomi and Vivo over patent infringement
Philips has moved the Delhi High Court over patent infringement against two Tech giants, Xiaomi and Vivo. Philips in its suits claims that the two mobile manufactures have violated its "Standard Essential Patents". The patents relate to “UMTS enhancement (HSPA, HSPA+) and LTE technologies” in the telecommunication technologies.
In one of its suits against Xiaomi, the Plaintiff have sought the following:
- Restraint against manufacturing/assembling, importing, selling and advertising of certain smartphones that infringe the Plaintiff’s patents.
- Injunction has been sought to direct the Central Board of Excise and Customs to issue appropriate instructions to custom authorities to restrict the import of mobile handsets that infringe the Plaintiff’s patents.
- Quantum of mobile phones and any other devices sold till date that are UMTS, HSPA, HSPA+ or LTE compliant.
- Revenue earned from the sale of such devices for every quarter.
- Safeguarding the Plaintiff's rights and interest and secure recovery of amounts for past infringing activities of the Defendant.
A single bench of Justice V. Kameswar Rao directed the defendant to maintain an amount of Rs 1000 crores in their bank account operated in India and submit details of the bank accounts operated in India.
The advocate representing the defendants accepted the notice for the defendants and has taken on record that, till the next date of hearing the Defendants shall maintain an amount of Rs 1000 crores in their bank account operated in India. The defendants have also agreed to file the details of the bank accounts operated in India where the said amount is being maintained before December 02, 2020.
Summons are issued to the defendants, and the same are received by the advocate for the defendants. The summons states that a written statement be filed within 30 days from the date of summons.
The hearing of suit against Xiaomi will be on March 01, 2021.
In its suit against Vivo, the Plaintiff has pleas that a direction be issued to not create any encumbrance or third-party rights in its manufacturing plant.
While dealing with the suit against Vivo, a Single Judge Bench of Justice Rajiv Shakdher directed the defendant to not create any encumbrance in its manufacturing plant during the adjudication of the case.
The hearing of suit against Vivo will be on February 10, 2021.
High court order against Vivo: https://images.assettype.com/barandbench/2020-12/7c132206-219b-43ae-a047-82e43136ff40/Philips_v__Vivo___383___Order_dt__17_11_2020.pdf
High court order against Xiaomi:
http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=220558&yr=2020
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Comments on the Draft “The High Court of Delhi Rules Governing Patent Suits, 2020”
Being cognizant of the Notice issued by the Registrar General of the High Court of Delhi on October 9, 2020 calling for comments on “The High Court of Delhi Rules Governing Patent Suits, 2020”, we propose the following amendments:
Point-wise comments on the Draft Rules –
- With respect to Draft Rule 2 (9)
“(9) Technical primer:
A document either in text form or a powerpoint presentation which gives an introduction to the basic undisputed technology covering the patent(s) preferably in non-technical language.”
We wish to state that at times, due to the nature of the invention or the manner of its operation, it may in fact be not only difficult to explain, but also tougher to process the details of an invention and how it works.
Therefore, we feel that the definition for Technical Primer so stipulated in the Draft Rules should also provide for the submission of videos detailing the working of the invention, which would be suitably more illustrative for the attention of the judges, and would greatly assist them in understanding the minute details of the case.
- With respect to Draft Rule 4
“Documents to be filed:
- Documents to be filed along with the Plaint:
The documents to be filed with the plaint shall include, inter alia…”
We wish to point out that due to voluminous nature of such proceedings, it becomes harder for parties and for advocates to scour through the numerous pages contained in either the plaint/written submission, or the supporting documents. At times, parties may even intend to bury specific facts that may have an adverse impression on their case within these voluminous pages.
In order to not only cure such inconvenience but to also pre-empt such nefarious practices, we propose that the High Court of Delhi maintain a digital repository whereby parties would upload their submissions as well as their supporting documents in a digital copy format, which could then be indexed and easily referred to prior to, during or after the proceedings.
A suitable repository fee would also be charged as part of court fees from the Plaintiff, and recoverable from the Defendant as per the usual determination by the Court regarding costs.
It would also be fortuitous for this system that parties ensure that all possible documents are uploaded in an Optical Character Recognition (OCR) format, which would make it easier for parties to search through these documents in preparing submissions and arguments.
If at all any document is composed solely of images, or is of such nature that it cannot be converted into an OCR format, notwithstanding the costs incurred, then the parties may be allowed to upload such documents in a scanned format.
- With respect to Draft Rule 9
“9. Second case management hearing:
iii. Hot-tubbing: Expert testimony may be directed by Court on its own motion or on the application by a party to be recorded by Hot-Tubbing technique, with appropriate safeguards and guidelines.”
We wish to state that the process of hot-tubbing witnesses, especially when it comes to expert witnesses, is significantly more fruitful than the traditional manner of examining witnesses, for not only does it reduce inconsistencies regarding technical aspects, but it also reduces the time involved in prosecuting the case.
Given the poor light that the judiciary has fallen into regarding excessive delays when it comes to determining cases, we assert that hot-tubbing should be the primary means of recording evidence before the Court, and the traditional manner of recording evidence should only be allowed when expert witnesses are submitting their testimony via video conferencing means.
- With respect to Draft Rule 11
“11. Confidentiality Club:
At any stage in the suit, the Court may constitute a confidentiality club, for preservation of confidential information exchanged between the parties, including documents.”
While it is concerning that the details of such infringement cases are sought to be hidden behind a veil of confidentiality, we submit that such power should be exercised sparingly, and only in dire circumstances, such as protection of information that would impinge on a future patent, or information that constitutes a trade secret, but not regular proprietary information.
In addition to this, given the nature and the requirement for transparency and public discourse, it would be suitable to include a proviso within the Draft Rule to ensure that submissions and conditions pertaining to FRAND terms, as well as actual rates submitted as FRAND terms are to be excluded from the sanctuary of Confidentiality Clubs.
We propose that ensuring such information is in the public domain only leads to a more competitive application of patent laws, and would avoid the need for adjudication before the Competition Commission of India and its appellate bodies with respect to Standard Essential Patents, and this would circumvent the existing roadblock in the application of Competition Law to Patent matters.
- With respect to Draft Rule 12
“12. Compulsory mediation:
At any stage in the suit, if the Court is of the opinion that the parties ought to explore mediation, the Court may appoint a qualified mediator or panel of mediators including, technical experts to explore amicable resolution of the dispute. Consent of the parties is not required, once the court is of the opinion that an amicable resolution needs to be explored. Further the mediator appointed by the court could be a scientific expert, economic expert or a legal expert, assisted by technical experts.”
It is noticed that in a number of foreign jurisdictions, courts mandate as a pre-requisite that parties are required to attend mediation before enacting judicial determination measures, as a means to cut down on the number of cases that are filed before trial courts.
We therefore propose that it would be appropriate and constructive for the High Court to impose a duty to attempt mediation of the dispute with all possible efforts to resolve the matter amicably. Parties should be required to submit a certificate by a certified mediator stating that the parties have attempted to resolve their differences through the process of mediation, and that due to irreconcilable differences, the mediation process fell through. Such a certificate must become a pre-requisite to the institution of a patent infringement case.
General Comments
Instituting Timelines
While the Rules have been silent on such aspects, we believe that it is imperative that a timeline as well as permissible period for adjudication be established to ensure speedy disposal of cases. While we submit that the deadlines for the written submissions of the parties must be governed by the Civil Procedure Code, the specific stages of the suit must also be governed by a rigid timeline, and any delays caused by the parties must be viewed prejudicially against their interests.
We submit that the entire suit must conclude within 1 year / 12 months from the date of the First Case Management Hearing, and thereafter we propose that each individual stage of the suit must have its own duration.
We propose that the following stages have the following timelines –
- First Case Management Hearing: Must conclude within 2 months from the first date of the hearing, after the plaint, written statement and counterstatement with the replication has been filed.
- Second Case Management Hearing: Beginning from the conclusion of the First Case Management Hearing, the Second Case Management Hearing must conclude within 3 months.
- Third Case Management Hearing: Beginning from the conclusion of the Second Case Management Hearing, the Third Case Management Hearing must conclude within 2 months.
- Final Case Management Hearing: Beginning from the conclusion of the Third Case Management Hearing, the Final Case Management Hearing must conclude within 2 months.
- Judgment: The Final Judgment rendered by the Honourable Judges must be passed within 3 months from the conclusion of the Final Case Management Hearing.
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PepsiCo Withdraws Cases Against Potato Farmers – A Missed Opportunity
PepsiCo India Holdings Pvt. Ltd. (“PepsiCo”) had filed cases against several farmers and business entities alleging infringement of its IP in potato plant variety FL 2027. PepsiCo has now withdrawn cases filed against farmers, in view of what appears to be under political pressure. Although withdrawal of cases may have provided short-term relief to the farmers, a long-term solution in favour of farmers may have been achieved had the cases been pursued.
To provide a bit of background, PepsiCo has protected its potato plant variety FL 2027 under the Protection of Plant Varieties and Farmers Rights Authority (PPV&FR) Act, 2001. PepsiCo sought permanent injunction restraining the farmers from using FL 2027. The PPV&FR Act defines what constitutes infringement U/S 64 (reproduced below, with emphasis added). A breeder of a variety registered may allege infringement if any entity carries out acts that fall within the scope of Section 64.
64. Infringement.—Subject to the provisions of this Act, a right established under this Act is infringed by a person—
(a) who, not being the breeder of a variety registered under this Act or a registered agent or a registered licensee of that variety, sells, exports, imports or produces such variety without the permission of its breeder or within the scope of a registered licence or registered agency without permission of the registered licensee or registered agent, as the case may be;
(b) who uses, sells, exports, imports or produces any other variety giving such variety, the denomination identical with or deceptively similar to the denomination of a variety registered under this Act in such manner as to cause confusion in the mind of general people in identifying such variety so registered.
While Section 64 defines infringement, Section 39 protects various interests of farmers. Particularly, Section 39(1)(IV) (reproduced below, with emphasis added) entitles farmers to save, use, sow, resow, exchange, share or sell his farm produce including seed of a variety protected under the Act in the same manner as he was entitled before the coming into force of the Act. Exception being, farmers are not entitled to sell branded seed of a variety protected under the Act.
39. Farmers’ right.—
(1) Notwithstanding anything contained in this Act,—
(iv) a farmer shall be deemed to be entitled to save, use, sow, resow, exchange, share or sell his farm produce including seed of a variety protected under this Act in the same manner as he was entitled before the coming into force of this Act: Provided that the farmer shall not be entitled to sell branded seed of a variety protected under this Act. Explanation.—For the purposes of clause (iv), “branded seed” means any seed put in a package or any other container and labelled in a manner indicating that such seed is of a variety protected under this Act.
Notably, provisions of Sections 64 are “subject to the provisions of this Act”, whereas rights under Section 39 are “notwithstanding anything contained in this Act”. Therefore, the entitlement of farmers under Section 39 can be argued to triumph over the provisions of Sections 64. Consequently, it appears that an IP owner of a registered variety cannot stop farmers from saving, using, sowing, resowing, exchanging, sharing or selling (not as branded seed of a variety protected) his farm produce including seed of the protected variety. Given the forgoing observations, as mentioned earlier, a long-term solution in favour of farmers may have been achieved had PepsiCo continued to pursue cases against the farmers.
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Nuances of Copyright infringement by manufacture of products based on Engineering drawings
A recent judgement of the Delhi High Court in Holland L.P. and another. vs S.P. Industries calls for a debate on copyright infringement, and overlap and exclusivity between copyright and industrial design protection laws in the country.
We start by providing an overview of events that led to the dispute between the parties. Holland L.P. had designed and developed an Automatic Twist Lock (“ATL”) system, and has supplied the same to the Indian Railways over the years, with an Indian partner. Indian Railways had floated a tender in the year 2012 for replacement and repair of a list of parts of the ATL devices supplied by Holland L.P. and its partner. The Indian partner of Holland L.P. and S.P. Industries participated, with the latter emerging as the successful bidder.
In this backdrop, Holland L.P. (“Plaintiff 1”) and its partner (“Plaintiff 2”) had sought permanent injunction restraining S.P. Industries (“Defendant”) from manufacturing, selling, offering for sale, advertising, directly or indirectly ATL and parts thereto, alleging that such acts of the Defendant amounts to infringement of copyright of the Plaintiff. The Court however, ruled in favour of the Defendant.
Now referring to the particulars, engineering drawings (2D drawings) of the ATL prepared by Plaintiff 1 was made available as part of the tender by Indian Railways with permission from Plaintiff 2. The Plaintiffs contended that they are the owners of the copyright over the engineering drawings and they have the exclusive right over three-dimensional representation of the engineering drawings. In other words, the Plaintiffs contended that they have the right to prevent others from manufacturing, selling, offering for sale or advertising a product based on the engineering drawings. The Plaintiffs further contended that engineering drawings are not “Design” as per The Designs Act, 2000, since such drawings are “functional” and do not “appeal to the eye alone”. The instant contention is particularly relevant because, in case the subject matter over which the Plaintiffs are claiming copyright protection, is protectable under The Designs Act, then copyright would cease after the Plaintiffs reproduce the ATL 50 times by an industrial process, as per Section 15 of the Indian Copyright Act. The Plaintiffs had in fact reproduced the ATL systems 50 times by an industrial process.
On the other hand, the Defendant contended that the subject matter over which the Plaintiffs are claiming copyright, is protectable under The Designs Act, and since the Plaintiffs have reproduced ATL systems at least 50 times, the copyright of the Plaintiffs has ceased.
While there were various other contentions, we are particularly interested in understanding whether engineering drawings is subject matter of copyright protection alone, or are they protectable as industrial design under The Designs Act.
The Court is of the opinion that engineering drawings made for the purposes of production of ATL systems is subject matter, which is protectable as industrial design under The Designs Act. The Court is of the opinion that, any design (such as engineering/machine drawings) which is used for the purpose of industrial production of an article, is protectable as industrial design. The Court draws the instant opinion by conjoint reading of Section 2(d) of Designs Act, 2000, Section 14(c) and 15(2) of the Copyright Act, 1957.
We agree with the Court’s interpretation only in part for reasons that follows. One would agree that a set of engineering drawings would include drawings that define the way a product looks. In other words, such subset of drawings defines how the finished article/product appeal to and are judged solely by the eye. Hence, such drawings may be subject matter of industrial design protection. However, engineering drawings may also include a subset of drawings that define how certain parts, which are housed inside the product, are configured. Hence such drawings correspond to parts that are purely functional and are incapable of appealing to and being judged solely by the eye. Hence, it may be inappropriate to come to a conclusion, as the Court has, that any design which is used for the purpose of industrial production of an article, is protectable as industrial design. Our sense is that, design of product will include subject matter, such as engineering drawings of “housed/functional” parts (purely functional and not expressly contributing to aesthetics), over which only copyright protection applies, and will also include subject matter, which substantially defines how the product is perceived by the eye, which is protectable as industrial design.
Having made the above observation, it is now worthwhile to explore whether the owner of copyright over technical drawings corresponding to such functional parts (not the product as a whole, which is subject matter of industrial design protection) stop others from manufacturing such functional parts. Section 52(1) of the Copyright Act precisely deals with this matter.
Section 52(1): The following acts shall not constitute an infringement of copyright, namely:-
(w) the making of a three-dimensional object from a two-dimensional artistic work, such as a technical drawing, for the purposes of industrial application of any purely functional part of a useful device.
The above section makes it clear that, even though one may hold copyright over engineering drawings over purely functional parts, they will not be able to stop third party from producing such parts. In other words, provisions of the Copyright Act cannot be used to stop third party from producing (including other acts of commerce) such functional parts, irrespective of whether they are visible or hidden from being gauged by the eye.
In conclusion, drawings that define the way an article/product appeals to and is judged solely by the eye, is protectable as industrial design, and copyright in the same ceases to exist once the article/product is reproduced 50 time by an industrial process by the owner. Drawings of purely functional parts of an article/product are not protectable as industrial design, and only copyright protection exists. However, such copyright is not infringed by third party who produces such functional parts.
I hope you found our article informative. The judgment can be downloaded below.
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The end of Roche vs. Cipla infringement lawsuit
The tussle between Roche and Cipla that started in the year 2008 has come to an end with a compromise announced on 30th May 2017 between the parties.
Roche has an Indian patent over a drug, “Erlotinib hydrochloride”, for treating lung cancer. In the year 2006, Roche launched the drug in India under the name “Tarceva”. It was reported in January 2008 that Cipla is planning to launch a generic version of “Erlotinib” under the name “Erlocip”. Roche followed by initiating infringement proceedings against Cipla in January 2008.
Roche’s plea for interim relief by way of injunction was rejected by single judge with an opinion that injunction against Cipla’s manufacture was against public interest. Notably, Tarceva costed around INR 140,000 (~USD 2300) for a month’s dosage, whereas Elrocip costed only INR 48,000 (~USD 800). Subsequent appeal by Roche was mostly unsuccessful.
The turnaround in the case happened in 2015, when the case was moved to the Divisional Bench of the Delhi High Court where the judgement was in favour of Roche. The Divisional Bench held that Cipla was infringing Roche’s patent.
Followed by the judgement, Cipla filed a Special Leave Petition (SLP) requesting for appointing a technical expert, which was accepted by the Apex Court in 2016 after which the matter was adjourned. After almost decade long legal proceedings, on 30th May 2017 both the pharmaceutical companies finally came to an agreement and reached a settlement. In June 2017, Cipla moved the apex court seeking to withdraw the Special Leave Petition (SLP) filed against the DHC divisional bench’s decision given in 2015.
The case which is considered to be significant in the Indian pharmaceutical industry has come to an end after shedding light on various aspects of laws pertaining to patent protection of pharmaceutical products.
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Delhi High Court makes a decision in Hybrid Cotton Seeds case
The Delhi High Court ruled in favour of Nuziveedu Seeds Limited in Monsanto Technology’s case against Nuziveedu on 28th March 2017.
India is the world’s largest producer of cotton, accounting for about 26% of the world’s total cotton production. Naturally, a case concerning the sale of cotton seeds involved in patent and trademark issues becomes important. This decision is related to a particular type of hybrid cotton seeds manufactured by Monsanto Technology called Bt cotton seeds, which are resistant to an insect called Bollworm that has the ability to destroy cotton crops and cause huge losses to farmers.
The Plaintiffs in this case are Monsanto Technology, Monsanto Holdings Private Limited and Mahyco Monsanto Biotech, all part of a multi-national agrochemical and agricultural biotechnology corporation and a leading producer of genetically engineered seeds. The Plaintiffs filed a case against Nuziveedu Seeds Limited, Prabhat Agri Biotech Limited and Pravardhan Seeds Private Ltd. (Defendants), which are Indian agribusiness companies that market seeds and supply hybrid seeds to Indian farmers.
The Plaintiffs alleged that the Defendants continued to market and sell Genetically Modified Hybrid Cotton Planting Seeds despite the termination of sub-license agreements between the Plaintiffs and the Defendants. The Plaintiffs also alleged violation of intellectual property rights of their registered patent (IA 214436) and their trademark sub-licenses for ‘Bollgard’ and ‘Bollgard II’. The Plaintiffs alleged trademark infringement and ‘passing off’ by the Defendants when they sold their products with labels of ‘Bollgard’. The Plaintiffs wanted to initiate a permanent injunction against the Defendants, along with disclosures, recalls of infringing products and award of damages.
RECAP OF PRIOR EVENTS
Monsanto developed and commercialised Bt cotton technology named BG I and BG II, and sub-licensed these technologies to Indian seed manufacturers including the Defendants in 2004, and renewed the license in 2015. A lifetime fee of Rs. 50 lakh was charged along with a recurring ‘trait value’ as compensation. Trait values are generally high, and contribute to a significant cost for the cotton seed producers. However, due to disputes related to the high trait value of the Bt cotton seeds, several states like Andhra Pradesh, Maharashtra, Gujarat and Telangana enacted price-control measures between 2007 and 2009, thus fixing the cotton seed prices and the trait values chargeable by the seed developer. The fixed trait values were significantly lower than the ones charged by Monsanto, making them more affordable for cotton-growing farmers.
In July 2015, Nuziveedu approached Monsanto to discuss charging the cotton seed packets at the trait value rates determined by the local government, and reconciling accounts for the excess trait value that was paid after comparison with the trait value set by the legislation. Monsanto however, refused and sent a notice to Nuziveedu in November 2015 regarding the termination of their sub-license with Nuziveedu for non-payment of duties. Consequently, Nuziveedu and some other seed producers approached the Competition Commission of India (CCI), alleging “abuse of dominant position” and “anti-competition agreements” by Monsanto. Subsequently, the Commission found that Monsanto violated Sections 3 and 4 of the Competition Act, 2002, which involve the allegations mentioned previously.
Meanwhile, during these proceedings, the central government fixed the minimum support price (MSP) and trait value of Bt cotton seed packets for the financial year 2016-2017 for the whole of India under the Cotton Seeds Price (Control) Order, 2015. The MSP for BG I was fixed at Rs. 635 per packet with zero payable trait value and Rs. 800 per packet for BG II, inclusive of seed value, trait value and taxes.
Further, the Government of India published the "Licensing and Formats for GM Technology Agreement Guidelines, 2016" through the Ministry of Agriculture and Farmers Welfare. The Guidelines obliges the licensor and licensees to ensure that all agreements executed by them "fulfil the criteria" provided therein, primarily ensuring non-discriminative licensing to encourage competition and availability of GM cotton seeds to cotton farmers at fair and reasonable prices. In particular, the fourth para of these Guidelines direct the Licensor and the Licensee to conform the sale of cotton seeds with the trait value, seed value and MSP values fixed by the Central Government, for the benefit of cotton farmers.
Subsequently, the Plaintiffs initiated the present lawsuit in February 2016 before the Delhi High Court. The High Court allowed the Defendants to sell seeds that were manufactured and packed before 30th November 2015 and include the Plaintiff’s trademark on the packaging. The High Court ordered the Defendants not to sell seeds manufactured after that date until further orders of the Court. These directions were subsequently modified by various subsequent orders from the High Court. The next issue of contention involved subsequent seeds that may be reaped from the planted Bt cotton seeds.
DECISION OF THE HIGH COURT
When the Plaintiffs alleged infringement by the Defendants, the Defendants responded by filing a counter-claim seeking revocation of the suit patent. However, the Court decided not to look into the issue of patent validity at the interim stage as it would have required evidence to be led through a trial.
The Defendants also tried to make use of Section 26 of the Plant Variety Protection Act, which may be used when a new plant variety is registered under the same Act. According to this Act, a party that developed a new plant variety, of which genetic material has been used in an invention, may seek to share potential benefits arising from the invention. The Court rejected the Defendant’s claims related to Section 26.
The Plaintiff on the other hand, argued that their contract allowed the termination of the contract if royalty payments were not received within a fixed period. The Defendant countered that the Plaintiff was required to renegotiate the rates following the revision of cotton seed rates by various State Governments.
The High Court was of the opinion that the termination of the contract by the Plaintiffs was incorrect. The Judge states: “the Plaintiffs were duty bound to consider the request of the defendants as made by the communications beginning July 2015, for modification of the terms as to the rate of trait fee payable under the 2015 sub-license agreements for which the mechanism had earlier been agreed upon in the form of Article 11.03. Since the plaintiffs did not adhere to their obligation under the contract, the demand of payment under the contract terms being not lawful, it apparently being higher than the trait fee permitted by the law in force, the defendants could not have been found to be in default or to have breached their obligations within the meaning of Article 9.02” (Emphasis added)
The High Court emphasized on two points: Article 11.03 of the sub-license agreement between the Plaintiffs and the Defendants, which obliges the parties to keep the contract in accordance with the local laws at all times; and Section 23 of the Indian Contract Act, 1872 which forbids unlawful consideration. Further, the High Court pointed out the illegality of Monsanto’s sudden termination of the contract and hence, upheld the contract between the Plaintiffs and Defendants. Additionally, the Court allowed the Defendants to continue using the technology by paying trait fees in accordance with the prevalent State laws.
This matter related to Bt cotton seeds saw multiple parties playing important roles, from the Plaintiffs and Defendants to the State and Central Governments, including a few other government bodies. However, what comes as a relief is that in the end, the order was favourable towards the real beneficiaries of this situation, namely, the numerous Indian farmers who wish to continue growing cotton crops at reasonable and affordable costs.
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Enforcement of Standard Essential Patents in India
Ericsson has been going all out to enforce its Standard Essentials Patents (SEP) against several mobile phone companies, such as Micromax, Intex and Lava, among others, who are primarily selling mobile phones in India. The outcome of these law suits will no doubt play a significant role in defining the future of licensing and enforcement of SEP in India.
The latest in these law suits is an interim judgement by The High Court of Delhi in the matter between TELEFONKTIEBOLAGET LM ERICSSON (Ericsson) and LAVA INTERNATIONAL LTD (Lava). The interim judgement is in favour of Ericsson. More importantly, the judgement deals with various aspects of licensing and enforcement of SEP.
The judgement held that, as is the well-established practice, demonstrating or establishing compliance of a device or a process with concerned standard is sufficient to confirm that the device/process is infringing an SEP.
As a step-wise approach, to allege infringement of an SEP, the following may be done:
- Set out the relevant standards;
- Map the standards with the claims;
- Wherever implementation is optional, testing shall be done;
- Wherever implementation is compulsory, an expert affidavit shall be furnished.
The judgement favours passing injunction order once an SEP patent prima facie is held to be infringed and no credible defence is established. In case any party is reluctant or unwilling and deliberately and intentionally avoids entering into license agreement on flimsy grounds, the injunction order is to be passed.
The judgement also appears to suggest that once the owner of SEP has entered into several FRAND agreements, the balance of convenience lies in favour of the owner, necessitating an interim order to be passed. The reasoning provided is that, in case the interim order is not passed or the defendant is not ready to enter into FRAND agreement, other licensees would also take the same stand which is being taken by the defendant. Hence, under such circumstances, the owner of the SEP would suffer irrecoverable loss and also injury.
The operative parts of the interim order (w.e.f. June 21, 2016) include the following:
- Lava shall not import mobiles under the patents and technology, which are subject of the suit patents, and not to sell the same in the market, directly or indirectly through agent, shopkeepers, dealers, distributors or any other person on its behalf.
- Lava shall also not export the impugned goods.
- All Custom Authorities in India are directed not to release the impugned mobile phones if received from overseas countries under technology of suit patents of Ericsson to the Lava or any person on its behalf.
The operation of the interim order shall remain stayed till the final disposal, if the following conditions are met by Lava.
- Deposit a sum of INR 50 crores (approx. USD 7.7 million) with the Registrar General of the Court by way of FDR as security amount on or before 20th June, 2016;
- File statement of accounts for the period of 2011 to 31st May, 2016 before the Court by 10th July, 2016; and
- Continue to file statement of accounts every quarterly till the final judgment is delivered in the main suit.
The judgement is clearly in favour of Ericsson at this juncture. We will continue to monitor and analyse the suits involving Ericsson concerning their SEP in India, since the judgements will have far reaching implications on the subject of licencing in general, and licensing of SEP in particular.
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Infringement between Publication of Patent Application and Grant of Patent
We start by discussing what constitutes patent infringement, and subsequently discuss in detail provisions corresponding to patent infringement carried out between patent application publication and patent grant.
A patent owner has the right to exclude other from making, using, selling, offering for sale, and importing the patented product/process. A patent owner who has good reason to believe that an entity (e.g., company or individual, among others) is violating his/her rights, may seek relief by filing a case, typically referred to as “patent infringement suit”, against the entity. In case the entity is found guilty of violating the rights of the patent owner, the entity will be liable for “Patent infringement”.
The rights of the patent owner start from the date of publication (generally 18 months after filing the patent application) of the patent application. However, a patent owner can file a patent infringement suit only after the patent is granted. In real world scenario, once a patent application is filed, granting a patent may take 3 to 5 years or even more in some cases. Hence, it is evident that there is a significant time lag between publication of a patent application and the eventual grant of patent.
A patent application, and in particular claims, which define the scope of protection sought, of the patent application may undergo several changes before a patent is granted. In majority of the cases, the claims in the published patent application are not the same as the claims in the granted patent. An alleged infringer who may be infringing on the claims of a granted patent may not necessarily infringe on the claims of the published patent application.
There can be a stark contrast between statutes of different jurisdictions corresponding to such matters. Statutes of U.S. and India may be considered to exemplify the contrast between the statutes governing infringement carried out between publication of patent application and grant of patent.
U.S. Patent Law:
35 U.S.C. § 154(d) provides “provisional rights” to a patent owner to claim reasonable royalty from an infringer for an infringement carried out after the publication of the patent application and before the patent is granted.
35 U.S.C. § 154(d) is recited below:
“a patent shall include the right to obtain a reasonable royalty from any person who, during the period beginning on the date of publication of the application … and ending on the date the patent is issued
(i) makes, uses, offers for sale, or sells in the United States the invention as claimed in the published patent application or imports such an invention into the United States; or
(ii) if the invention as claimed in the published patent application is a process, uses, offers for sale, or sells in the United States or imports into the United States products made by that process as claimed in the published patent application; and
(B) had actual notice of the published patent application and, …
(2)Right based on substantially identical inventions.
The right under paragraph (1) to obtain a reasonable royalty shall not be available under this subsection unless the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application.”(emphasis added)
In light of the above recitation of the code, it is evident that, to obtain reasonable royalties, an alleged infringer has to have an “actual notice” of the published patent application, and the invention as claimed in the patent has to be “substantially identical” to the invention as claimed in the published patent application. The above recitation does not clearly define what constitutes “actual notice” and “substantially identical” under the code. However, several courts have interpreted “actual notice” and “substantially identical” during patent infringement suits.
Actual notice
One of the district courts stated that, it is not required by a patent owner to take an affirmative action to provide such a notice to the alleged infringer. However, in such a scenario, the patent owner has to prove that the alleged infringer came to have actual notice through “other means”.
In view of the above, one may contemplate that the published patent application, which is in public domain and can be readily accessible by anybody, can be considered as “other means”. However, the district court further added that, the mere fact that the published application is included in a database where it might be found is insufficient to prove that the alleged infringer came to have “actual notice”.
Further, another district court stated that in case of direct notification by the patent owner, a notice of the published patent application by calling attention to the same in a letter is sufficient to satisfy the “actual notice” requirement under 35 U.S.C § 154(d).
Thus in summary, if one can prove that the alleged infringer is aware of the published patent application or by sending a direct notice to the alleged infringer stating that a patent application is published would satisfy the “actual notice” requirement concerning provisional right. However, one should reconsider sending such a direct notice since it’s highly possible that the alleged infringer may assist the examiner in laying a rough road for patent application prosecution. In general, it is a common practise followed by many companies to regularly monitor their competitor’s patents portfolio. Thus, one should also think of using such evidences to prove that the alleged infringer is aware of the published patent application through other means to satisfy the actual notice requirement.
Substantially identical
A district court in Pandora Jewelry, LLC v. Chamilia, LLC patent infringement case stated that, the claims in the published patent application and the claims in the granted patent application are not substantially identical since Pandora Jewelry had made a narrowing amended to substantially amend the scope to overcome the rejections in the Office Action. Thus, in view of the above ruling, the courts have to rely on the scope of the claims instead of going after the literal words.
Further, a district court in K-TEC, Inc. v. Vita-Mix Corp patent infringement case stated that, in light of the prosecution history, the published set of claims and the granted set of claims are substantially similar. The court added that although amendment have been made to the claims of the published patent to obtain the patent from the USPTO, which can preclude a finding that the claims are not substantially similar, there is no per se rule that an amendment to a claim in order to overcome a Office Action rejection based on prior art precludes finding provisional rights.
Thus, although the rulings were different in the above mentioned cases, the take home message is that not all amendments to the claims result in a finding that the claims of the published application and issued patent are not substantially identical. Further, amendments made for clarification may not change claims substantially, and each claim amendment must be carefully evaluated for its impact on the scope of the claim. Furthermore, claims can still be substantially identical as long the amendments do not narrow down the scope of the claim, in response to rejections in Office Action.
So, now the question arises, what is considered as a narrowing amendment? Is rewriting a dependent claim in independent form a narrowing amendment?, and the answer is yes in view of the ruling of Honeywell Int’l Inc. v. Hamilton Sundstrand Corp. case.
The Honeywell court ruling states that “[a] presumption of surrender therefore arises if rewriting the dependent claims into independent form, along with cancelling the original independent claims, constitutes a narrowing amendment”. Thus rewriting the dependent claim into independent form and also cancelling an original independent claim is considered as a narrowing amendment. Therefore in view of the above cited rulings, one should not assume that claims in the issued patent are substantially similar to those in the published application simply because they are the dependent claims with the exact same language rewritten in independent form.
In conclusion, one can obtain damages for an infringement during the period between publication of patent application and the patent grant under provisional right if proved that an infringer had actual notice, and the claims of the published patent application and the granted patent are substantially identical.
India
Section 11A(7) of the Indian Patent Act , 1970 enables a patent owner to claim damages for infringement that was carried out between publication of the application and patent grant. Section 11A(7) of the Indian Patent Act , 1970 is recited below.
“(7) On and from the date of publication of the application for patent and until the date of grant of a patent in respect of such application, the applicant shall have the like privileges and rights as if a patent for the invention had been granted on the date of publication of the application:
Provided that the applicant shall not be entitled to institute any proceedings for infringement until the patent has been granted:…”
It is interesting to note that as per the Act, a patent owner need not prove that an alleged infringer has “actual notice” of the published patent application. Further, the Act does not mention that the invention as claimed in the published patent application has to be substantially identical to the invention as claimed in the granted patent, to claim damages for infringement carried out between publication and grant.
Hence, compared to US, claiming damages in India for infringement carried out between publication and grant is far less burdensome on the patent owner since actual notice requirement is absent. Further, one may argue that the section with substantially similar requirement being absent gives rise to great amount of uncertainty to third party, and favours the patent owner.
The above section does not appear to have been scrutinized by a court in India so far. The literal interpretation of the section certainly does not require the claims to be substantially identical. However, literal interpretation may appear to be absurd, and in such cases a purposive interpretation may be called for. It would be interesting to see the interpretation of the above statute by a court as and when the statute is used in an infringement suit.
In conclusion, patent right starts from the date of publication of patent application but it is enforceable only after a patent is granted. However, the prerequisites to seek relief for infringement carried out between publication and grant may vary from one jurisdiction to the other. Such prerequisites may have to be taken into consideration while drafting a patent application and prosecuting the same.
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Infringement of patent claims – Indian Context
Claims of a patent define the scope of protection conferred by the patent. Hence, patent claims are worded carefully with an objective to make it harder for those attempting to work around the claims. While patent holders dread a situation where competitors make minor changes to a patent protected product/process to evade patent infringement, competitors on the other hand dread a situation where changes made to a patented product/process are not sufficient to evade patent infringement. Insight into how patent infringement is determined can go a long way in addressing concerns of patent holders and those attempting to work around existing patents.
Patent infringement analysis is usually conducted in two stages, namely, literal infringement analysis and non literal infringement analysis (infringement under the doctrine of equivalents). In the first stage of analysis, a claim and the alleged infringing product or process are analyzed to determine whether all the elements of the claim are present in the alleged product/process when the scope of the claim is construed by the literal language of the claim. If the alleged product/process includes all the elements of the claim when the scope of the claim is construed by the literal language of the claim, the claim is said to be literally infringed by the alleged product/process.
Patent infringement analysis proceeds to the second stage if literal infringement is not established. In the second stage, the scope of protection conferred by the claim is extended beyond the literal language of the claim. Several countries including US, UK and India apply various principles which extend the scope of protection conferred by a patent claim beyond the literal language of the claim while analyzing non literal infringement. Courts in the US have dealt extensively with situations relating to non literal infringement. The courts in India on the other hand have had relatively fewer occasions to deal with situations relating to non literal infringement.
On occasions the Indian courts have had to deal with situations relating to non literal infringement, the courts have favored purposive construction of claims, thereby extending the scope of claims beyond the literal language of the claims. The Delhi High Court in Raj Parkash Vs. Mangat Ram Chowdhry held:
“It is the pith and marrow of the invention claimed that has to be looked into and not get bogged down or involved in the detailed specifications and claims made by the parties who claim to be patentee or alleged violators.”
Purposive construction of claims was also suggested by the Madras High Court in TVS Motor Company Limited Vs. Bajaj Auto Limited. The court in the instant case held:
“In construing an allegation of infringement, what is to be seen is whether the alleged infringement has taken the substance of the invention ignoring the fact as to omission of certain parts or addition of certain parts.”
The above cited judgments suggest that the “pith and marrow” or the “substance” of the invention has to be looked into in defining the scope of a claimed invention. The Madras High Court also refers to House of Lords decision in Catnic Components Limited Vs. Hill and Smith Limited, which favors purposive construction of claims.
In light of the foregoing discussion, it is evident that the Indian courts do not limit the scope of protection conferred by a claim to the literal language of the claim. The instant position of the courts is in favor of patent holders who can be optimistic about enforcing their patent rights against those attempting to work around their patents by making modifications, which may be within the “substance” of the claim. Nonetheless, claims should be carefully crafted to capture the “substance” or “crux” of the invention, and should avoid including non-essential elements in the claim. On the other hand, those attempting to work around a patent claim should not rely on minor modification to a claimed product/process, which may be inferred to be not going beyond the “substance” of the target claim.
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