IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 04.10.2010 CORAM THE HONOURABLE MR.JUSTICE ELIPE DHARMA RAO AND THE HONOURABLE MR.JUSTICE K.K.SASIDHARAN O.S.A. Nos.132 and 133 of 2010 Bajaj Auto Ltd. Bombay Pune Road, Akurdi Pune 411 035 State of Maharashtra rep. By S.Ravikumar : Appellant Vs. TVS Motor Company Ltd., Jayalakshmi Estates, No.8, Haddows Road, /Chennai 600 006. : Respondents Appeals filed against the Fair and Decretal Order of this Court dated 10th March 2010 in C.S.No.979/2007 and C.S.No.1111/2007 on the file of this Court. For appellant : Mr.T.V.Ramanujam, Senior Counsel Mrs.Nalini Chidambaram, Senior Counsel for M/s.A.A.Mohan For respondents : Mr.A.L.Somayaji, Senior Counsel Mr.P.S.Raman, Senior Counsel for M/s.T.K.Bhaskar COMMON JUDGMENT K.K.SASIDHARAN, J. INTRODUCTORY :- Whether the right to begin as provided under Rule 1 and 2 of Order XVIII of Civil Procedure Code is really a right or is in the nature of a legal obligation of the plaintiff to produce his evidence at the first instance is the substantial question that arises for consideration in these original side appeals. 2.These appeals are directed against the Order dated 10 March 2010 in C.S.No.979 and C.S.No.1111/2007 whereby and whereunder the learned Single Judge directed the appellant being the defendant in C.S.No.979/2007 and the plaintiff in the subsequent suit, to start https://hcservices.ecourts.gov.in/hcservices/ with the letting in of evidence. 3.The parties are referred to as plaintiff and defendant in accordance with their status before the trial Court in the suit in C.S.No.979/2007. The facts :- First suit :- 4.The suit in C.S.No.979/2007 was instituted by the plaintiff against the defendant praying for the following reliefs :- "(a) Declaring that the threats held out by the defendant on September 1 and 3, 2007 that the plaintiff is infringing the defendant's patent no.195904 and the defendant is proposing to take infringement action against plaintiff are unjustified; (b)Declaring that the plaintiff's product TVS Flame which uses two spark plug with screw-fitted sleeve and three valves does not infringe patent no.195904 of the defendant; (c)Granting permanent injunction restraining the defendant by themselves or through their agents, servants, licensees, employees and distributors and anyone claiming through them and/or all those in active concert and participation with them from continuing the issuance of threats that the plaintiff is infringing the defendant's patent no.195904 and/or that the defendant is contemplating infringement action against the plaintiff or threats of like nature and import, directly or indirectly in any manner including by way of circulars, advertisements and communications, oral or in writing to the plaintiff or any other person and also thereby interfering with the launch and sale of the product TVS Flame. (d) directing the defendant to compensate the plaintiff a sum of Rs.1,00,00,000 or such other amount as this Hon'ble Court may determine after the records are produced for the damages sustained on account of the unjustified threats made by the plaintiff; (e) for an order for costs of the suit in favour of the plaintiff; and (f) For such further or other relief as this Hon'ble Court may deem fit and proper based on the facts and circumstances of this case." 5.In the plaint in C.S.No.979/2007, the plaintiff would contend thus :- (a)Plaintiff is a prominent member of the well known TVS Group. Plaintiff has been involved in the manufacture of automobile https://hcservices.ecourts.gov.in/hcservices/ products and they have secured large number of patents for the products developed by them. The plaintiff had introduced a 125 CC motorbike known as "TVS Flame". (b)The plaintiff on 30 August 2007, unveiled seven new products including three wheelers in three variants : an electric scooter, a new 110 cc Star City, new 125 CC Motorcycle by name "TVS Flame". The rolling out of 7 new products and the features of those products and more specifically of "TVS Flame" had excited the media and industry and it was well received. TVS Flame is perceived as a vehicle that would satisfy both the class of riders viz., fuel efficient conscientious consumers and power conscientious consumers. (c)The unveiling of TVS Flame 125 CC bike had the effect of eroding the excitement, hype and interest generated by the defendant's product Bajaj XCD 125 CC planned for launch on 9 September 2007 i.e. after ten days of the unveiling of TVS Flame by the plaintiff. The plaintiff in the meantime made it known to the market that they would soon enter into three wheeler which was hitherto virtually a monopoly of the defendant and the same caused a severe dent in the marketing triumph claimed by the defendant hitherto. The defendant who had planned to launch its 125 Bajaj XCD obviously perceived TVS Flame as a threat to its product. This paved the defendant to indulge in diabolically unethical strategy to tarnish TVS Products, particularly the TVS Flame, even before its launch, with groundless, unjust and unjustified allegation of infringement and threat of action against the alleged infringement so as to gain unfair and illegitimate advantage for its product's proposed to be launched on 9 September 2007. (d)The news of the announcement of launch of TVS Flame and other products were broadcast on TV Channels on 30 August 2007 and it was also published in the newspapers on the next day. Immediately on 1 September 2007, the defendant put its high officials on television channels to accuse, allege and threaten that DTSi technology has been patented by defendant and that the said engine format has been copied by the plaintiff. The officials of the defendant further threatened that the construction of the engine of TVS Flame was very close to one to one copying. The statement made it clear that there is potential for legal course and that is how the defendant is proceeding. The representatives of the defendant also threatened that the defendant would not let the bike go under production with that engine. The statement containing threat was given wide publication throughout India in the electronic and print media. (e)The defendant's accusation of infringement and threat to act against the plaintiff for infringement made through its officials and representatives on 1 September 2007 over popular TV Channels, which were carried in the print on the next day had disturbing and demoralizing effect on the customers of the https://hcservices.ecourts.gov.in/hcservices/ plaintiff, the employees, investors and other stake holders and generally it had adverse and damaging effect on the brand value of the plaintiff's future products under launch, particularly the TVS Flame. Therefore, the plaintiff issued a statement on 2 September 2007 calling upon the defendant to withdraw the threat and the libelous statements made by it or to face action for damages. (f)The defendant on 3 September 2007 issued a statement indicating their use of twin spark technology. The threat of infringement issued by the defendant on 1 September 2007 which was impliedly admitted by the defendant on September 3, 2007 as groundless, falls within the scope of Section 106 of the Patents Act, 1970. Once the fact of threat is established, plaintiff is entitled to move the Court under Section 106 of the Patent Act against the threat of infringement action issued by the defendant. (g)The plaintiff endeavored to establish beyond all doubts that the defendant has threatened them with infringement of its patent. The plaintiff was therefore, justified by submitting relevant materials to show that they have not infringed the patent of the defendant in question. (h)Accordingly, the plaintiff prayed for a decree of declaration of non-infringement, groundless threat and consequential injunction, besides payment of compensation. 6.The suit in O.S.No.979/2007 was resisted by the defendant by filing detailed written statement. The material contentions as found in the written statement reads thus :- (a)The defendant is a reputed business house engaged in the manufacture of automobile products. (b)The declaratory relief sought for by the plaintiff does not come under the purview of Section 106 of the Patents Act. To grant a declaratory relief as to non-infringement, the plaintiff ought to have complied with the procedures contemplated under the Act viz., plaintiff should have applied in writing to the defendant for a written acknowledgment to the effect of the declaration claimed and furnished to the defendant with full particulars in writing of its products in question and the defendant had refused or neglected to give such an acknowledgment. Since there was total non compliance with the statutory requirements, no declaration could be granted in favour of the plaintiff. (c)The statements made were only to assert the exclusive rights vested in the defendant by virtue of patent registration 195904 and the right to take legal action for misuse. It was not a threat within the meaning of Section 106 of the Patents Act. (d)The present suit is barred by Order 2 Rule 2 of CPC. https://hcservices.ecourts.gov.in/hcservices/ Plaintiff has already filed a Suit bearing No.3132/2007 before the Bombay High Court on the basis of the very same alleged press statement and on identical cause of action. Since the plaintiff has omitted to sue for the reliefs claimed herein and no leave under Order 2 Rule 2 CPC has been obtained, they are prevented from filing the present suit for the omitted reliefs. (e)The plaintiff has enclosed several newspaper reports. But the defendant is not aware which particular reference is constituted as threat. Defendant has not admitted the said press releases and the statements attributed to them and put the plaintiff to strict proof thereof. (f)The defendant has conducted preliminary examination of the plaintiff's engine in TVS Flame. The said examination has revealed that insofar as the third valve is concerned, it has no role to play in Indian Driving Cycle conditions. The result of the test conducted by the defendant through an independent testing agency of international repute viz., TUV Rheinland, also corroborated their contention that the plaintiff has infringed their patent 195904. Therefore, assuming that the defendant issued a threat as alleged, it was not a meaningless threat. Defendant has every right to safeguard its statutory rights over the patent 195904 which was granted under the Statute. As per Section 105 of Patents Act, to institute a proceeding, proviso (a) and (b) have to be complied with. Since the plaintiff has not complied with those pre conditions before filing a suit for declaration of non-infringement, they are precluded from questioning the validity of the defendant's patent. Accordingly, the defendant prayed for dismissal of the suit. Second suit :- 7.Defendant in C.S.No.979/2007 filed a suit in C.S.No.1111/2007 against the plaintiff with the following prayer :- "(a) permanent injunction restraining the defendant, its directors, officers, servants, agents, assigns, successors-in-business, legal representatives or anyone claiming through or under it from in any manner infringing the plaintiff's patent no. 195904 and/or from using the technology/invention described in the said patent no.195904 and/or manufacturing, marketing, selling, offering for sale or exporting 2/3 wheelers, including the proposed 125 cc Flame motorcycle containing an internal combustion engine or any internal combustion engine or product which infringes the plaintiff's patent no. 195904. (b)a preliminary decree be passed in favour of the plaintiff directing the defendant to render accounts of profits made by sale or offering for sale/export of 125 cc FLAME motorcycle or any other motorcycle of 100 cc to 125 cc range with twin spark plug https://hcservices.ecourts.gov.in/hcservices/ technology infringing plaintiff's patent no. 195904. (c)the defendant be ordered and decreed to pay the plaintiff sum of Rs.10,50,000/- as damages for infringement of patent no. 195904. (d)That defendant be ordered and decreed to deliver up to the plaintiff, for destruction all the infringing copies and articles including vehicles containing engines that infringe the plaintiff's patent." 8.The contentions taken by the defendant in their written statement in C.S.No.979/2007 were reproduced in the plaint in C.S.No.1111/2007. 9.The averments in the plaint in C.S.No.979/2007 constitutes the defence in C.S.No.1111/2007. 10.Since the pleadings were completed, the learned Single Judge framed issues in both the suits as per order dated 24 November 2009. 11.When the suit was ripe for trial, the learned Single Judge took up the preliminary issue as to who should let in evidence first. Arguments were advanced on both sides as to who should lead evidence at the first instance. After hearing both the parties, the learned Single Judge opined that the infringement being the central theme in both the suits and even though the first suit proceeds on the validity of patent, to arrive at a proper decision, defendant has to start with letting in of the evidence. Feeling aggrieved by this decision, the defendant has filed these two appeals. Submissions :- 12.The learned Senior Counsel for the defendant would submit thus:- (a)The suit in C.S.No.979/2007 being a suit regarding groundless threat, the plaintiff had to lead evidence first, unless the defendant admits the issuance of threat. Since the defendant has categorically denied the issuance of threat, the plaintiff has to lead evidence at the first instance. (b)The plaintiff had also sought for a declaration of non- fringement. In a suit for declaration, evidence has to be adduced on the part of the plaintiff and the question of defendant adducing evidence comes only at a later point of time. Therefore, the learned Single Judge was not justified in directing the defendant to lead evidence first. (c)The direction given by the learned Single Judge was contrary to the scheme of civil jurisprudence. (d)The burden of proving the validity of the patent is always on the persons who allege such invalidity. Therefore, the plaintiff was https://hcservices.ecourts.gov.in/hcservices/ duty bound to prove by adducing evidence at the first instance. (e)The issues framed by the learned Single Judge gives a clear indication that the plaintiff has to set out evidence first. (f)The plaintiff has raised several issues and even contested the very patent obtained by the defendant. Therefore, the burden of proof and the onus is heavily on the plaintiff and in such circumstances, the learned Single Judge was not correct in directing the defendant to lead evidence without asking the plaintiff to lead primary evidence. (g)The plaintiff has made a categorical assertion in the plaint that they would prove the groundless threat and non-infringement of patent by adducing evidence. Therefore, they should have been called upon to produce evidence in support of their contentions. (h)The order passed by the learned Single Judge directing the defendant to lead evidence first was against law and the scheme of Civil Procedure Code and it caused serious prejudice to the defendant and as such, the original side appeal under Clause 15 of the Letters Patent was clearly maintainable. 13.The learned counsel for the plaintiff contended thus :- (a)The order challenged in this appeal was not a judgment within the meaning of Clause 15 of the Letters Patent and as such, the very appeal was not maintainable. (b)It is true that in the plaint in C.S.No.979/2007, plaintiff has undertaken the task of proving the groundless threat as well as non-infringement. However, that does not mean that the burden never shifted to the defendant to prove their case in view of the subsequent suit filed by them in C.S.No.1111/2007. (c)The learned Judge has not directed the defendant in C.S.No.979/2007 to lead evidence first. The direction was to the plaintiff in C.S.No.1111/2007 to open their case. Therefore, it cannot be said that the defendant in the suit was made to produce their evidence without directing the plaintiff to begin. Discussion :- 14.The plaintiff has filed a comprehensive suit in C.S.No.979/2007 in the month of October 2007. The suit was one for declaration and consequential injunction. The plaintiff has also claimed damages. 15.The defendant filed their written statement in the said suit on 16 December 2007. The defendant denied the allegation made by the plaintiff with respect to issuance of groundless threat and their plea that the product TVS Flame 125 CC has nothing to do with the patent No.195904. Subsequently, the defendant filed the suit in C.S.No.1111/2007. Their prayer was to grant a decree of permanent injunction restraining the defendant or anyone from infringing their patent 195904 and for a preliminary decree directing the respondent to render accounts of profits made by sale or offering https://hcservices.ecourts.gov.in/hcservices/ for sale/export of 125 CC Flame, by infringing their patent and to pay damages for such infringement. The said suit was filed on 16 December 2007. 16.The plaintiff filed a detailed written statement in C.S.No.1111/2007 on 18 September 2009. In the said written statement, the plaintiff disputed the contention that they have infringed the patent no.195904 obtained by the defendant. They have also attempted to demonstrate that the threat made by the defendant was groundless in nature. The issues :- 17.The learned Single Judge on the basis of the respective pleadings, framed the following issues in C.S.No.979/2007 and 1111/2007. https://hcservices.ecourts.gov.in/hcservices/ C.S.No.979/2007 "1.Whether this Court has got territorial jurisdiction to try this suit and whether the plaintiff has got any cause of action as prayed for by the plaintiff and more so, whether part cause of action has arisen within the jurisdiction of this Court ? 2.Whether the defendant has issued the press release on 01.09.2007 and 03.09.2007 and whether the same would constitute a threat ? And if so groundless threat ? 3.Whether the present suit is barred by the provisions of order 2 Rule 2 CPC in view of the earlier suit filed in Bombay High Court in Suit No.3132/2007 ? 4.Whether the plaintiff is entitled to seek an injunction restraining the defendant from issuing a threat of infringement as prayed in the prayer even after the defendant has filed the suit for infringement being C.S.No.1111/2007 against the plaintiff herein ? 5.Whether the suit has become infructuous as claimed by the defendant in para 4.1 of the written statement ? 6.Whether the plaintiff proves that the plaintiff's product TVS Flame does not infringe the defendant's patent ? 7.Whether the plaintiff is entitled to a declaration as prayed for in prayer (a) and (b) of the plaint ? 8.Whether the suit has been properly valued on the ground of damages ? If so, whether the Court fee has been properly paid ? 9.Whether the plaintiff is entitled to relief of damages ? 10.Whether the plaintiff is entitled to the reliefs claimed by them ?" C.S.No.1111/2007 "1.Whether the defendant has infringed the plaintiff's patent no.195904 ? 2.Whether the defendant is entitled to question the validity of the plaintiff's patent no.195904 ? 3.If the answer to (2) is in the affirmative, whether the defendant proves that the plaintiff's patent no.195904 is invalid/not patenable in view of US Honda patent no.4534322 read with 678/MUM/2001 and 82/MUM/2001 ? 4.Whether the plaintiff is entitled to permanent injunction as prayed for ? 5.Whether the use of twin spark plugs in an engine delimited by the bore size of 45 mm to 70 mm impart inventive step particularly in the light of Honda Patent 4534322 ? 6.Whether the burning of lean air fuel mixture can be regarded as an element (constructional feature) of the produced claimed in the suit patent? 7.Whether the plaintiff is entitled to damages as prayed for or otherwise ? 8.Whether the plaintiff is entitled to any of the relief prayed for in the above suit ? https://hcservices.ecourts.gov.in/hcservices/ 18.The core issue to be decided in these appeals relate to the question as to who should lead the evidence first. 19.The plaintiff in their suit in C.S.No.979/2007, contended that the burden of proof of the defendant in the suit equals its burden in a properly constituted suit for infringement, yet, they have taken upon themselves the burden of establishing that there is no infringement by them of the defendant's patent in issue. The plaintiff has also stated that the course adopted by them to prove that there is no infringement is legally permitted as the plaintiff has the choice of leaving it to the defendant to prove that they have infringed the rights of the defendant or to prove its case that it has not infringed. Plaintiff has opted to follow the latter course of proving non-infringement. 20.In the plaint, it was further contended that the issue as to whether the plaintiff has infringed the defendant's patent being a fact in issue in the present proceedings, they have endeavoured to marshal all the relevant materials to establish that it has not infringed the patent of the defendant. It was also their case that structure of a suit under Section 106 is that if the defendant pleaded justification for threat and also counter-claims for relief against infringement, the procedure to be followed is that of a normal infringement action. It was in that factual and legal premises, plaintiff has adopted the dubious task of proving that the threat was groundless and that they were entitled for a declaration of non-infrintement. 21.Section 105 of the Patents Act, 1970 empowers the Court to make a declaration as to non-infringement. Before issuing a declaration under the said provision, Court should be satisfied that the plaintiff has complied with the requirements (a) and (b) of section 105. 22.Section 106 of the Patents Act, permits the Court to give relief in case of groundless threat or infringement. The said provision also gives an indication that it is open to the Court to grant a declaration that threats are unjustifiable and a consequential injunction, besides award of damages. 23.The plaintiff has claimed a decree of non-infringement of patent and produced materials which according to them would prove that their product TVS 125 CC Flame was in no way infringing the patent 195904 of the defendant. They have also referred to various statements issued by the defendant to prove that there was in fact a threat and it was a groundless threat. The claim that the product introduced by the plaintiff has nothing to do with the patent obtained by the defendant was specifically contested by the defendant. The defendant also denied the threat, as according to them they were in the process of protecting their product and the so https://hcservices.ecourts.gov.in/hcservices/ called statements were all made in that limited context. The concept of "Right to begin" 24.The issues raised in these appeals revolve around the interpretation of Order 18 Rule 1 and 2 CPC. 25. Order 18 (1) of CPC deals with hearing of the suit and examination of witnesses. The provision reads thus :- "1. Right to begin The plaintiff has the right to begin unless the defendant admits the facts alleged by the plaintiff and contends that either in point of law or on some additional facts alleged by the defendant the plaintiff is not entitled to any part of the relief which he seeks, in which case the defendant has the right to begin. 26.The provisions of Order 18 CPC indicates the normal method of production of evidence and the arguments by either parties. 27.The term "right to begin" is not merely a right. It is rather a duty or legal obligation. It is so because the plaintiff has to win or lose the case on the basis of his own case and not on the weakness of the defendant's case. 28.Order 18 Rule 1 CPC is concerned not only with the production of evidence. It is a composite provision dealing with the right to begin a case in general. This includes the production of evidence as well as addressing the Court by oral arguments. Though Order 18 rule 1 CPC provides in general about the right to begin, Rule 2 of Order 18 deals with opening the case and production of evidence. A combined reading of Rules 1 and 2 of Order 18 CPC would show that the person who got a right to begin must lead evidence first. As per the statutory scheme, the plaintiff is given the right to begin the case. This right would not give the plaintiff a further right to compel the defendant to produce his evidence at the first instance. The question of defendant beginning the case would arise only in cases wherein the defendant admits the facts alleged in the plaint and contends that either on point of law or on some additional facts alleged by him, the plaintiff is not entitled to any part of