Reserved Judgment IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Special Appeal no.131 of 2008 M/s Acme Tele Power Limited …...Appellant. Versus Sintex Industries Limited and another .…Defendants/respondents. Mr. R. Parthsarthy, Advocate with Mr. Lalit Sharma, Advocate for the appellant. Mr. V.K. Kohli, Senior Advocate with Mr. H.M. Bhatia, Advocate for the respondents. Dated: January 09, 2009 Coram: Hon’ble V.K. Gupta, C.J. Hon’ble V.K. Bist, J. V.K. Bist,J. (Oral) Present Special Appeal has been filed by the appellant challenging the order dated 30.06.2008 passed by Hon’ble Single Judge in Original Suit No.02 of 2008 by which application of the plaintiff/appellant for temporary injunction under Order 39 Rule 1 and 2 read with Section 151 of Code of Civil Procedure 1908 was rejected. Brief facts of the case are that the plaintiff/appellant instituted Civil Suit No.02 of 2008 for 2 permanent injunction in the Court of District Judge, Rudrapur under section 104 of Patents Act, 1970 for restraining the defendants/respondents from infringing the property right of the appellant into patents. According to the case of the plaintiff the plaintiff/appellant manufacturers products known as “Green Shelter” and “Compact Power Interface Unit” at its factory within the territory of State of Uttarakhand. These two products are purchased by and used in Telecom industry for efficient management of the temperature for telecom equipment at telecom towers. Defendant/respondent no.1 is a company running business of manufacturing and supplying Sintex BTS Shelters (using therein Integrated Power Unit) and defendant/respondent no.2 is a partnership firm manufacturing and selling integrated power unit, allegedly by infringing the plaintiff/appellant’s intellectual property rights. The plaintiff/appellant is committed to constant innovation and has spent huge capital and labour in inventing its products. The two products of the plaintiff/appellant namely Green Shelters and Compact Power Interface Units were the result of extensive research and developments, as such, the application was moved by the plaintiff/appellant for getting registered the patent. Consequently, the authority concerned granted registration of patent No.197086 on 11.08.2006, for Power Interface Unit and No.197108 on 08.09.2006, for Cuboidal shaped green shelter. By virtue of ownership of above patents, the plaintiff/appellant has right to prevent all other persons from making, using, selling offering to sell or 3 importing two products. It is alleged that the defendants/respondents were infringing the valuable intellectual property rights of the plaintiff/appellant by manufacturing, using copy right works of plaintiff/appellant, and selling the same in the market. The plaintiff/appellant also moved an application for interim injunction. The defendants/respondents filed their separate written statements and counter claims. In the written statement of defendant/respondent no.1, territorial jurisdiction of the court in Uttarakhand is challenged with the allegation that no part of cause of action has arisen within the territory of Udham Singh Nagar (Uttarakhand). It is also stated in the written statement of defendant/respondent no.2 that suit is bad for misjoinder of causes of action. It is further pleaded that, the suit has been filed after the plaintiff/appellant failed to get relief in suit no.598 of 2005 instituted before Delhi High Court and withdrew it. It is further stated by defendant/respondent no.1 that he is manufacturing Base Trans. Station Shelter (for short BTS Shelter) on the basis of the requirements of the specification demanded by the customers. It is specifically denied that patent products namely ‘Cuboidal Shaped Green Shelter’ (in short Green Shelter) and ‘Compact Power Interface Unit’ (in short PIU) are inventions of plaintiff/appellant. It is further stated that products with different names are used in 4 telecommunication Industry for a long time. Nine distinguishing features between the products by plaintiff/appellant and the one by defendant/respondent no.1 are enumerated in para 9 of the written statement. Defendant/Respondent no.1 pleaded that the plaintiff/appellant’s patented products “Green Shelter” is nothing more than workshop modification and the patent is liable to be revoked. Objections filed under Section 2 of Patent Act, 1970, by defendant/respondent no.1 against patent No.197108 and 197086, are pending for decision of the authorities concerned. Denying the plaintiff/appellant’s right is infringed it is also pleaded by defendant/respondent no.1 that defendant/respondent no.1 would suffer irreparable loss if the injunction is granted in favour of the plaintiff/appellant while the plaintiff/appellant can be compensated in terms of money. Defendant/respondent no.2 also filed his written statement and also raised objection as to territorial jurisdiction of the court. It is pleaded that no cause of action has arisen to the plaintiff/appellant against him. It is further pleaded that the plaintiff/appellant has not come to the court with clean hand and is not entitled to the relief claimed. It is also stated in the written statement that there is material concealment of fact that Sintex has challenged the patents of plaintiff before the authorities concerned and the said matter is pending for disposal. Defendant/respondent no.2 further pleaded that products, which were got patented by 5 the plaintiff/appellant are not inventions. Phase Change Material (PCM) Power Interface Unit (PIU), and Green Shelter, are not inventions. PCM are products, known to the world for several years and are being used for maintenance of temperature with or without use of air conditioners and can be considered environment friendly. In fact appellant was earlier purchasing PCM products from Australian manufacturer TEAP Energy Ltd. Similarly, PIU is a product where various electronic and electrical products like, Servo Stablizer, Isolation Transformer, Alarm Panel etc. are to be in a Panel Board. Such devices are also available in the market. Some assembles of PIU are known as Integrated Power Unit (PIU), Power Management System (PMS) etc. As such, the defendants/respondents are not barred from manufacturing and selling the same. Denying the copy rights of the designs claimed by the plaintiff/appellant, it is pleaded that plaintiff/appellant design is nothing but workshop modification of the existing products. Denying that defendant/respondent no.2 has any access to website or has downloaded any information at Pantnagar, it is stated that this Court has no jurisdiction to try the suit. Challenging the experts report, relied by the plaintiff/appellant, it is pleaded that no intellectual property right of the plaintiff/appellant is being violated by the defendants/respondents. It was further stated that if the plaintiff/appellant is granted injunction it would cause enormous loss to the defendants/respondents, while plaintiff/appellant can be compensated in terms of money. 6 It is further pleaded that since patent in question are challenged before the authority and the counter claim is pending in the suit as such no injunction can be granted and the suit is liable to be dismissed. On 22.01.2008 the learned District Judge, Udham Singh Nagar granted an ex-parte injunction against the defendants/respondents under order 39 Rule 1 and 2 of the Code of Civil Procedure, 1908. This injunction was extended till 01.04.2008. On 01.04.2008 the suit alongwith injunction application was transferred to this Court under Proviso of Section 104 of the Patents Act, 1970. While doing so the learned District Judge also extended the ex- parte injunction. Therefore, on 25.04.2008 Hon’ble Single Judge of this Court extended the ex-parte injunction till 19.05.2009 but same was not extended on 19.05.2008. Miscellaneous application for extension of stay order filed by the plaintiff/appellant remained pending and was not disposed off but on 30.06.2008 the Hon’ble Single Judge passed an order declining to grant temporary injunction to the plaintiff/appellant against which present Special Appeal is preferred. The Hon’ble Single Judge refused to grant interim injunction on two grounds:- (i) Prima facie it appears that the respondents were already producing their products before the appellant got his production patented. (ii) The appellant had suppressed the following material facts:- (a) The respondents were already in the business of manufacturing similar products. 7 (b) The institution of Original Suit No.598 of 2005 against respondent no.1 in the High Court of Delhi and its withdrawal on 15.11.2007. Heard Shri R. Parthsarthy, Advocate with Shri Lalit Sharma, Advocate for the appellant and Mr. V.K Kohli, senior advocate with Mr. H.M. Bhatia, Advocate for the respondents. Shri R. Parthsarthy, learned counsel for the appellant argued that the finding of the Hon’ble Single Judge that the respondents were already in business of manufacturing the products in question even before the appellant got improved version of items, manufactured by him, patented is perverse. According to him the issue in question is not whether the respondents were already in business of manufacturing similar products or not. The issue is whether the respondents are making and selling a product which infringes the patents granted to the plaintiff/appellant and if the respondents have copied the invention according to the plaintiff/appellant’s patent then Section 48 of the Patent Act, 1970 read with Section 104 and 108 entitles the appellant to an injunction. This exclusive monopoly of the plaintiff/appellant is only for the product covered by the patent and not for any other patent. If the defendants/respondents were manufacturing a different product before the patent was granted they are not 8 prevented from manufacturing and selling that prior product or any other product which is not covered by the patent. According to Shri R. Parthsarthy the finding of Hon’ble Single Judge that defendants/respondents were already in the business of manufacturing similar products cannot be or should not be a reason for declining interim injunction in favour of plaintiff/appellant. Shri V.K. Kohli, learned Senior Advocate argued that BTS Shelter manufactured by the defendant/respondent no.1 were used to be purchased by plaintiff/appellant even before two products were patented. He referred paper nos. C 94/2, C 94/5, C 94/6 and C 94/8 in support of his argument. He also tried to demonstrate that BTS shelter is not substantially identical to Green Shelter. It is not disputed that the appellant got the two products namely “Green Shelter” and “Compact Power Interface Units” patented. It is also not disputed that no opposition was filed by anyone before the grant of patent. Therefore, unless an application filed under Section 25 (2) of the Patent Act, 1970 is allowed by the concerned authority, it cannot be said that the products which the plaintiff/appellant got patented are not new products and were already in business in the market. Moreover, the question whether the plaintiff/appellant’s invention is a patentable improvement or not over those existing shelter has yet to be adjudicated finally by the Court in the suit. 9 On the question of suppression of material facts the Hon’ble Single Judge observed in the order that:- “there appears to be suppression of material fact on the part of plaintiff/appellant to the extent that it concealed from the court at the time of instituting the suit, before the trial court that the BTS shelters manufactured by defendant/respondent no.1 used to be purchased by the plaintiff/appellant before getting Green Shelter patented. Not only this, there is yet another fact on the record, which shows that plaintiff/appellant has not come with the clean hands before the Court, as after hearing the parties, it is found that the plaintiff/appellant has not only concealed the above fact, but also concealed another fact that it instituted Original Suit No.598 of 2005, before High Court of Delhi against respondent no.1, and after it failed to obtained the injunction, the suit was withdrawn from there on 15.11.2007, whereafter this suit was filed in District Udham Singh Nagar of Uttarakhand.” On the aforesaid question of suppression of material facts, the learned counsel for the plaintiff/appellant argued that since the suit instituted in Delhi High Court was on a totally different aspect and not on patent infringement, the filing of suit or its withdrawal in 2007 is not at all a material for the purpose of grant of injunction in the present suit. For meeting this argument the prayer made in Delhi 10 suit as well as of the present suit were referred by same are quoted below:- Prayer of Delhi suit: It is therefore respectfully prayed that this Hon’ble Court be pleased to (1) Pass decree for recovery of amount of Rs.2,42,79,908/- (Rupees Two Crores Forty Two Lacs, Seventy Nine Thousands, Nine Hundred and Eight Only in favour of plaintiff no.1 and against defendants no.1 and 2. (2) To pass an order for pendete lite interest @ 18% per Annum from the date of filing of Suit till recovery of decretal amount. (3) To pass a decree of permanent Injunction against all defendants thereby restraining them to transfer, sell, alienate THE TEAP Brand or technology based on TEAP PCM and under brand name of Teap PCM to any other third party. (4) To award cost of the Suit. (5) To pass any other or further orders which this Hon’ble Court may deem fit and proper under the facts and circumstances of the case. Prayer of Suit no.02 of 2008 pending before Uttarakhand High Court: The plaintiff therefore prays that this Hon’ble Court may grant the following relief: (i) An order for permanent injunction restraining the Defendants by themselves, and or through their directors, principal officers, servants and agents from reproducing the copyrighted works of the Plaintiff in any material form in any material form including depiction in three dimensions of a two dimensional work or in two dimensions of a three dimensional work; (ii) An order for permanent injunction restraining the Defendants by themselves, and or 11 through their directors, principal officers, servants and agents from communicating the copyrighted works of the Plaintiff and products based on the works to the public; (iii) An order for permanent injunction restraining the Defendants by themselves, and or through their directors, principal officer, servants and agents from issuing copies of the copyrighted works of the Plaintiff and products based on the works to the public; (iv) An order for permanent injunction restraining the Defendants by themselves, and or through their directors, principal officers, servants and agents from permitting any place to be used for communication of products that infringe the copyright of the Plaintiff to the public; (v) An order for permanent injunction restraining the Defendants by themselves, and or through their directors, principal officers, servants and agents from making, selling, letting for hire, offering for sale, distributing, exhibiting products that infringe the copyright of the Plaintiff; (vi) An order for permanent injunction restraining the Defendants by themselves, and or through their directors, principal officers, servants and agents from making, using, selling or offering to sell products that infringe the patent rights of the Plaintiff; (vii) An order for permanent injunction restraining the Defendants by themselves, and or through their directors, principal officers, servants and agents from permitting any place to be used for making, using, selling or offering to sell products that infringe the patent rights of the Plaintiff; (viii) An order granting damages for the loss caused to the Plaintiff by the infringing acts of the Defendants; (ix) An order for rendition of true and faithful accounts of profits made by the Defendants by manufacture and sale of the infringing products any pay to the Plaintiff the proceeds that may be found due on taking of such accounts; (x) An order directing Defendants to disclose on affidavit complete details of locations where 12 infringing products are presently installed or available; (xi) An order to seize and destroy all infringing products and to seize and destroy all machinery used in the manufacture of infringing products, wherever they are found; (xii) An order for costs of the proceedings. (xiii) Any other orders as this Hon’ble Court may deem fit and proper in the facts and circumstances of the present case. From bare reading of prayers it is clear that Delhi Suit was for recovery of Rs.2.43 crores from defendant/respondent no.1. The suit was also for permanent injunction against all defendants in that suit from transferring, selling, alienating the TEAP Brand or technology based on TEAP PCM to any third party. Delhi Suit was not against defendant/respondent no.1 for infringement of the patents of the appellant whereas suit in this Court has been filed for permanent injunction against the defendants/respondents for restraining them from infringing property rights of the plaintiff/appellant in two patents. Moreover, the Delhi suit was filed in May 2005, much before the grant of patent to the plaintiff/appellant. Therefore, according to us, prima facie, the filing of Delhi suit will have no bearing on the merit of present suit and non-disclosure of Delhi suit in the present suit cannot be said as concealment of material fact. However, it is open for the Hon’ble Single Judge to take into consideration the objection of defendants/respondent's in this regard at the time of final hearing of suit. As far as 13 defendants/respondent’s already being in business of manufacturing of similar products are concerned, this fact can also be looked into at the time of final hearing of the suit. Shri V.K. Kohli, learned Senior Advocate also raised a very serious objection about the lack of territorial jurisdiction of the court of District Judge, Udham Singh Nagar or this Court to entertain and try the Suit. The learned Single Judge, in the impugned order, has not agreed with the objection regarding territorial jurisdiction because, according to his prima facie opinion, by application of Section 20(c) C.P.C., the court at Udham Singh Nagar has the jurisdiction to entertain the Suit and accordingly, in the prima facie opinion of the learned Single Judge, the Suit does not suffer from the vice of lack of territorial jurisdiction. Section 20(c) C.P.C. perhaps has been wrongly applied by the learned Single Judge in this case. Undoubtedly, clauses (a) & (b) of Section 20 are not applicable or attracted in this case and the only clause, which can be held applicable or attracted in this case, is clause (c), which relates to the accrual of the cause of action. In this case, the location of the factory in Udham Singh Nagar or the production of the products at Udham Singh Nagar, perhaps strictly speaking, may not by itself give rise to the cause of action or a part of it because, prima 14 facie, the accrual of cause of action to file the Suit might have a bearing to the place, where the infringement of the patented right is alleged to have occurred. Rule 1(f) of Order VII C.P.C. clearly stipulates as well as enjoins upon a plaintiff to ensure that the plaint contains the facts showing that the court has jurisdiction in the matter. We have carefully perused the plaint and find that, in this case, the plaint filed by the plaintiff / petitioner did not contain any fact showing that the court of District Judge at Udham Singh Nagar has the territorial jurisdiction except a bald statement in para 23 of the Plaint to the following effect: “This Hon’ble Court has got the necessary territorial jurisdiction to entertain and try the present Suit.” How has the court got necessary territorial jurisdiction and in what manner and with reference to what facts, has not been mentioned either in para 23 or elsewhere in the Plaint. There thus being a serious dispute about the territorial jurisdiction, the grant of temporary injunction perhaps would not be in the interest of justice. The aforesaid apart, we are also not inclined to interfere with the order passed by the learned Single Judge because we find that the patent was granted to the appellant in the month of September, 2006 and, during the last 28 15 months, interim injunction stood granted in favour of the appellant / plaintiff for just four months. On a totality of circumstances, we find that the balance of convenience is not in favour of the plaintiff / appellant. We accordingly uphold the order dated 30th June, 2008 passed by the learned Single Judge, impugned in this appeal, on the ground that if the injunction is granted in favour of the plaintiff / appellant, the loss suffered by the defendants / respondents would be much higher, but if, on the other hand, the injunction is not granted in favour of the appellant and the Suit succeeds, the appellant / plaintiff can be compensated monetarily. To ensure this, we direct that the respondents / defendants shall maintain true and complete account, until the disposal of the Suit, of the sales made by them. Looking to the issues involved for adjudication in the Suit, we direct that the Suit shall be decided and disposed of very, very expeditiously. The Registry is directed to list the Suit before the appropriate Single Bench immediately after winter vacations. The Special Appeal is dismissed. No order as to costs. (V.K. Bist, J.) (V.K. Gupta, C.J.) 09.01.2009 Arti 16 17