1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE Dated this the 9th day of December 201 1 BEFORE THE HON’BLE MR. JUSTICE N KUMAR O.S.No.1 of 2004 BETWEEN: Natural Remedies Private Limited A Company incorporated under the Companies Act, 1956 Having its Registered Office at Ashwathalakshmi Mansion’ No.364 211(1 Floor, 16th Main Road, 4th T Block Jayanagar Bangalore - 560 041 Represented by its Chairman and Managing Director Mr. Ravindra Kumar Agarwal Sb Shri Ram Lal Agarwal .. .Plaintiff (By Sri K.G. Raghavan, Senior Counsel for Sri G. L. Vishwanath, Sri Shayam Sunder - MIs. Fox Mandal & Associates, Advocates) AND: 1. Indian Herbs Research & Supply Co. Ltd., A Company incorporated under the Companies Act, 1956 Having its Registered Office at P.B. No.5 2 Sharadanagar Saharanpur — 247 001 U.P., India Represented by its Managing Director Mr. Susheel Kumar Agarwal 2. Mr. Susheel Kumar Agarwal S/o late Shri Ram Lal Agarwal Managing Director Indian Herbs Research & Supply Co. Ltd.. No.5 Sharadanagar Saharanpur - 247 001 U.P., India 3. Mr. Sudhakar Agarwal Sb Late Shri Ram Lal Agarwal Director Indian Herbs Research & Supply Co. Ltd., No.5, Sharadanagar Saharanpur -247 001 U.P., India . ..Defendants (By Sri Sajan Poovaiah, Smt. Sheila Rao and Sri Manu Kulkarni for M/s. Poovaiah & Co., Advocates for defendants Sri N. S. Sangolli appointed as Court Commissioner) This 0.S. filed under Order VII Rule 1 of CPC before the City Civil & Sessions Court, Bangalore District, Bangalore. registered as Original Suit No.7801/2003 and transferred to the High Court of Karnataka, praying to the pass a judgment and decree against the defendants as under: a) for permanent injunction restraining the defendants and/or their licensee, nominees, agents, suppliers, dealers, consignees or any one acting directing or indirectly on their behalf from manufacturing and/or producing and/or selling of the 3 products ‘LIVOLIV-250’ by infringing the plaintiffs protected patent rights under patent No.186857 of 20t11 April 1998 granted for ‘A method of preparing a Herbal Hepatoprotective and Antihepatotoxic Composition” in the market throughout India and etc., This O.S. coming on for orders this day, the Court delivered the following: JUDGMENT The plaintiff has filed this suit for a decree of permanent injunction restraining the defendants from manufacturing, producing or selling of the product Livoliv-250 by infringing the plaintiffs protected Patent rights under Patent No.186857 of 20th April 1998 in the market and for other consequential reliefs. PLEADINGS 2. The plaintiff is a Private Limited Company incorporated under the Companies Act, 1956. The case of the plaintiff is that it is a pioneer in the business of Ayurvedic Veterinary products credited with integrating a Scientific approach to the search of medicines and health supplements 4 ensuring purity, safety and affordability. The plaintiff was formerly known as M/s. Indian Herbs Private Limited. It was founded in 1951, by late Sri. Ramlal Agarwal. an entrepreneur with profound knowledge of herbs and their medicinal benefits. 3. The defendant is a Public Limited Company incorporated under the Companies Act, 1956. The plaintiff and defendants had been operating the defendant company together upto 1996 under the name of M/s. Indian Herbs Research and Supply Company Limited. In 1996, the Company was divided into two separate entities or two separate divisions within the same company, namely M/s Indian Herbs Research and Supply Company, Saharanpur and M/s Indian Herbs Research and Supply Company. Bangalore. Over the years the plaintiff has diversified with its solutions that blend the understanding of the benefits of medicinal herbs with modern science to develop and provide herbal veterinary medicines, human health supplements and standardized herbal extracts. The plaintiff has also been awarded a number of patents and 5 has also filed Patent Co-operation Treaty (PCT) applications for this purpose. A list of Patents obtained and applied by the plaintiff is produced along with the plaint. Copies of patents awarded to the plaintiff company by the Patent Office, Government of India are also produced. 4. The Chairman and Managing Director of the plaintiff is one Ravindra Kumar Agarwal. The Managing Directors of the first defendant is the second defendant, Mr. Susheel Kumar Agarwal, and the third defendant is Sudhakar Agarwal. Ravi Kumar Agarwal, Susheel Kumar and Sudharkar Agarwal are all sons of late Sri. Ram Lal Agarwal. 5. The specific case pleaded by the plaintiff was that it had developed a product named Zigbir, a natural performance enhancer for broilers in the year 1998. It was invented by Mr. Amit Agarwal, who had assigned all his interest and rights in favour of the plaintiff Company. The plaintiff applied for a Patent titled “A method of preparing a 6 herbal hepatoprotective and antihepatotoxic composition” as an Assignee with the Patent Office, Chennai for the process of manufacturing said product Zigbir. The application was filed on 20th April 1998 and it was allotted an Application No.079/MAS/98. The plaintiff had launched their production in the market in the year 1998 under the Trade Mark “Zigbir”. The application of the plaintiff for the grant of Patent was duly examined in accordance with the provisions of the Patents Act, 1970, for short, hereinafter referred to as the ‘Act’ and after being fully satisfied that the invention satisfied all the requirements for the grant of a patent, the plaintiff was granted a Patent (bearing Patent No.186857) for the invention titled, “A method of preparing a herbal hepatoprotective and antihepatotoxic composition” dated 5th July 2002 by the Controller of Patents, India for a term of seven years from 20th April 1998 which was initially valid upto 20th April 2005. However, with the enactment of the Patents (Amendment) Act, 2002 and the framing of the Patent Rules, 2003, the plaintiffs patent bearing No.186857 has been subsequently extended for 7 a period of twenty years from 20t1 April 1998 which expires on 20th April 2018. The certificate bearing No.186857 evidencing the granting of Patent in favour of the plaintiff issued by the Controller of Patents, Government of India dated 5th July 2002 is produced. The plaintiff has paid the renewal fees and the patent is in force. 6. The main embodiment of the plaintiffs invention resides in the process of preparation of the herbal composition being synergistically effective in curing the ailments of the liver. The plaintiffs invention is novel and significantly effective in optimizing the liver functions. The plaintiffs invention is a process directed to specifically producing a liver stimulating agent and has been derived from certain selected plants which syriergise one another’s activity. The plaintiff has been using the above patented method to manufacture and sell herbal poultry feed supplement under the trade mark Zigbir which is being sold all over India and also exported to other countries including but not limited to Malaysia, Korea, Bangladesh, ‘WY 8 Japan and Italy. Copies of certain invoices showing the export of the product to Japan, Malaysia and Italy are produced. The plaintiff has enjoyed remarkable success as the manufacturer and seller of the said product and within a venj short span of time the said product of the plaintiff has become freely available In the market all over India. The business of the plaintiff had been increasing eveiy year since the plaintiff launched its product In the market In the year 1998 in India until the first defendant’s company launched its product Livoliv-250 in the year 2002 by copying the patented process of the plaintiff. Copies of invoices and sales turnover of the said product Zlgbir for the year since 1998 to March 2003 which bear testimony to this fact, are also produced. 7. The plaintiff states that in or around 2002 the defendants have launched a product under the name Livoilv 250 with similar dose, indictions, feed inclusion rates etc., which are similar to that of the plaintiffs product Even the physical paramteres like colour, smell, taste are slmllqr. The 9 defendants do not appear to have done any research and development work in developing their product but have misappropriated and mis-utilised the patented process of the plaintiff. The products of the plaintiff and the defendant are similar, have similar chemical compositions and have the same commercial use. The defendants have intentionally lowered the price of their product Livoliv-250 as compared to Zigbir and started marketing and selling their product at a much lower price all over India. This has resulted in huge loss to the plaintiff. Further, it has come to the knowledge of the plaintiff- company that the defendants marketing team has been approaching most of the major customers of the plaintiff and selling their product to them at a much cheaper rate as compared to that of the plaintiffs product by representing to them that the defendant’s product is same as that of the plaintiffs. The marketing personnel of the defendants have been claiming that the said invention was jointly developed by the plaintiff and the 1t defendant prior to 1996 and thus their product Livoliv-250 is the same as Zigbir in terms of efficacy, L 10 but is priced much lower than Zigbir. By such illegal and dishonest practices, the defendant is attempting to capture the plaintiffs market and deprive it of its legitimate rights under the Patent granted to it, thereby causing far-reaching economic loss to the plaintiffs product in addition to infringing the plaintiffs rights as a Patent holder. The plaintiff has set out the details of the total sales of its product Zigbir annually from the date of its launch as under: Sl.No. Year Sales volume of Annual ZIGBIR growth (in kgs) (%) 1 1998-99 90,600 - (year of launch) 2 1999-2000 1,35,000 28 3 2000-2001 1,68,000 26 4 2001-2002 1.87,000 10 (2,11,680)* 5 2002-2003 1,20,000 -36 (2,66,710)* (negative growth) *These figures are calculated @26% Annual growth. Based on the above sales figures, it is amply clear that the annual sales growth of the plaintiff has declined considerably after the launch of Livoliv-250 in the market. This fact, by 11 itself, proves the detriment and damage caused to the plaintiff by the infringement of its Patent rights by the defendants. 8. The plaintiff further states that on receiving the information that the defendants are selling a product under the name of Livoliv-250 which is similar to the plaintiffs product Zigbir, the plaintiff conducted various physical and chemical analysis tests by using different modern analytical methods which are accepted in national and international pharmacopoeias to compare herbal products. An in-house study was carried out by the R & D Centre of the plaintiff to compare Zigbir and Livoliv-250 using different analytical methods. These analytical methods prove beyond doubt that Livoliv-250 is manufactured by misappropriating and unlawfully using the patented process of the plaintiff. Chromatography is universally accepted as a process for quality control of herbs/medicinal plants and the products derived from them. Three major types of chromatography which are almost routinely used for plant analysis are: 14- 12 (1) Thin layer chromatography (TLC) (2) High performance thin layer chromatography (HPTLC) (3) High performance liquid chromatography (HPLC) 9. The chromatographic profiles obtained by adopting the three separate methods have all confirmed the fact that Zigbir and Livoliv-250 are similar. Copy of the analytical report and a detailed explanation of the methodology adopted are produced along with the plaint. These findings are further corroborated by tests carried out by the Foundation for Revitalisation of Local Health Traditions (FRLHT), a scientific research organisation which is nationally and internationally recognised. The report submitted by FRLHT clearly reflects that the Co-ordinator who issued the report is an expert in the field. Further the said report certifies that from the analytical studies conducted at the FRLHT laboratory using HPLC and HPLTC, it appears that the three samples Zigbir. Livoliv-250 and the standard sample prepared by FRLHT are similar in 13 their major chemical profiles. It can he concluded that in all probability the chemical composition of Zigbir and Livoliv-250 is similar to the chemical composition of the standard sample prepared by FRLHT in accordance with Claim 1 of Patent No.79/MAS/98 dated 12th January 1998. This finding clearly and categorically establishes the fact that the defendant’s product Livoliv-250 has been manufactured by using the plaintiffs patented process. Therefore, the same amounts to infringement of the plaintiffs Patent (bearing Patent No.186857). Therefore, the plaintiff was constrained to issue a legal notice dated 9th September 2003 to the defendants calling upon them to cease and desist manufacturing and selling of Livoliv-250 with immediate effect. However the defendants have failed and neglected to comply with the demands. They sent a reply dated 19t1 September 2003 raising various untenable and frivolous grounds. 10. The plaintiff further submits that the commercial uses of the respective products of the plaintiff and the 14 defendants are also the same. They are poultry feed supplements. These facts are evident on a bare perusal of the product brochures of the plaintiff and defendants produced along with the plaint. Both the products are used to optimise liver functions, improve Feed Conversion Ratio (FCR), weight gain and egg yield: production and performance and to attain sexual maturity of birds. Since the market for both the products is same, infringement of the plaintiffs Patent by the defendants resulted in depriving the plaintiff of its market share and has thereby caused substantial injury and prejudice to it. 11. The cumulative effect of the facts narrated above makes it amply clear that the defendants have infringed the plaintiffs statutorily conferred rights as a patent holder. The plaintiff has not given any permission or licence, express or implied, to the defendants, to use its Patent. The plaintiff has exclusive right to use the patented method: any unauthoirsed use of the same in manufacturing a similar or identical 15 product, without obtaining the permission of the plaintiff company, amounts to an infringement of plaintiffs Patent rights under the Act. In this case the defendants, without taking any authorization from the plaintiff, have been using the manufacturing process which has been patented in the plaintiffs name and as a result have violated the stipulation given under the Act. Therefore, the plaintiff has filed this suit for injunction restraining the defendants from manufacturing, producing or selling the product Livoliv-250 and for a direction to the defendants to destroy all Livoliv-250 products and other related materials and also for a mandatory injunction to render accounts to the plaintiff of the revenue, gains and profits earned by the defendant by the manufacture and sale of Livoliv-250 and to pay damages. They have also sought for other consequential reliefs. 12. After service of summons, the defendants entered appearance and filed detailed written statement denying the claim of the plaintiff. 16 13. The defendants contend that prior to the incorporation of the plaintiff company, the family of the parties to the suit possessed wide and extensive experience and expertise in the science of ayurvedic and herbal medicines. This was inherited from the Karta of the family, i.e., Late Mr. Ram Lal Agarwal and the knowledge base is the common heritage of both the plaintiff and the defendants. The plaintiff company is a newly incorporated company which cannot claim inherent knowledge in ayurvedic medicine as its proprietary asset. The legacy of Mr. Ram Lal Agarwal was inherited by the parties and other family members. The claim of developing a natural performance enhancer for broilers is denied. They also deny that Mr. Arnit Agarwal invented the said natural performance enhancer for broilers. As a fact, the so called method of preparing the herbal hepato-protective and anti hepato-toxic composition is not a patentable invention within the meaning of the Act. The patent was obtained on false suggestion/representations and misleading specification statement. The specification/statement itself shows that the so 17 called invention was developed based on human liver functions and no assertions whatsoever are made as regards its use for poultry. The allegation of assignment is false. No assignment document has been filed with the plaint and such action is in violation of the mandates under Order VII Rule 14 of the Code of Civil Procedure 1908. The failure to produce the assignment document as per Section 68 of the Act is fatal to the plaint and consequently, the plaint ought to be rejected under Order VII Rule 11 of CPC. Though the patent has been claimed to be for a method of preparing a herbal hepato-protective and anti hepato-toxic composition, the invention resides in the herbal composition synergically aimed at curing the ailments of the liver. Consequently, it is submitted that the patent ought not to have been granted. The alleged invention is based on common indigenous ayurvedic herbs which have curative and/or prophylactic properties. The thrust of the claim leads towards a medicine or a drug and consequently the patent as sealed is contrary to law. 18 14. The assignment claimed by the plaintiff of the patent is ineffective being not in conformity with Section 68 of the Act and therefore the suit is not maintainable. Patent No.186857 for the so called invention was obtained by false suggestions, misrepresentation and by misleading statements in specification. The alleged method of preparing a herbal hepato-protective and anti-hepato-toxic composition, is not patentable under the Act, as it is not an invention by any stretch of legal logic. The extension was also obtained by false suggestion/misrepresentation. The patent relied on in the plaint is not an invention as the process claimed by the plaintiff does not involve an inventive step. The claim does not qualify as non-obvious to a person skilled in the art. The invention as claimed in the plaint does not qualify as an invention in law and does not involve any novelty. As such, it is not patentable under the Act. The claim as major features of the so called process puts the product within the meaning of drugs/medicines and consequently the plaintiff would not be entitled to exclusive marketing rights. 19 15. Livoliv-250 of the defendants is a result of their own intellectual pursuits in their R & D Centre. The defendants have standardized the ayurvedic (indigenous) herbs, standardizing the formulation and traditional use by developing and upgrading it in modem scientific norms. The assertion that the composition of the defendants’ Livoliv-250 and plaintiffs Zigbir is same, is not correct and refuted. Even assuming that the uses of the defendants Livoliv-250 may in some manner be similar to many other products in the market including that of the plaintiff, Zigbir. the plaintiff cannot claim exclusive rights of their product legally and factually. The defendants have not infringed the alleged patent of the plaintiff. It is wrong to allege that Mr. Amit Agarwal has invented the process of preparation of the product Zigbir. As a fact, it is not an invention known to law. The so-called assignment by him in favour of the plaintiff is not filed and appears to be legally ineffective and bad in law. Basis of the suit is assignment by Mr. Amit Agarwal in favour of the plaintiffs company. No assignment deed is filed along with the plaint. 20 16. The alleged invention is a herbal composition being synergistically effective in curing and preventing the ailments of liver. Another embodiment of the plaintiffs invention resides in the process for preparation of the herbal composition. This and other related assertions of the plaintiffs indicate that the product Zigbir is a Drug/Medicine within the definition as contained in Section 2(1) of the Patent Act read with Section 3(a) of the Drugs & Cosmetics Act, 1940. This basic feature of the claim of the plaintiffs attracts Chapter IV-A of the Drugs & Cosmetics Act. As prima facie, the plaintiff had not complied with the requirements of Chapter TV-A (Section 33-B to Section-33-O) of Drugs & Cosmetics Act, 1940 and related rules for manufacture/sale of Ayurvedic Drugs/Medicines, Zigbir being a medicine/drug, before granting Patent No.186857, the claim of so called invention should have been dealt with in accordance with Chapter TV-A vide Section 5(2) of the Act. Consequently, the grant of Patent is void. ab initio and as such Zigbir is being illegally manufactured and sold without proper Drug Licence and under the said patent. which is void 21 ab irütio, therefore the suit itself is not maintainable and the plaint is liable to be rejected on this score also. 17. In the specifications the claim about invention as Hepatoprotective and Anti-Hepato-toxic composition is not supported by empirical clinical experimentation and data related to it. The whole specification consists of assumptions and presumptions. This is clear misrepresentation, false statements and fraud on the Authority. The plaintiff avers that the composition and uses of the plaintiffs product Zigbir and defendant’s product Livoliv-250 is same. It is submitted that in this respect the composition and ingredients of the two products contain the following: Plaintiffs’ Zigbir Defendants LivoLiv-250 Phyllanthus amarus 10% (Phyllanthus niruri - also (Bhuiamla) 20-30% called (Bhuiamla) Solanum nigrum 10% (Makoh) 20-30% Andrographis paniculata 10% (Kalmegh) 25-35% Boerrhavia diffusa Nil (Punarnava) 15-25% Other herbs Nil 70% 22 18. The defendants are using only the first three herbs namely Phyllanthus nuriri, Solanum nigrum and Androgpahis paniculata. The defendants are not using Boerrhavia diffusa. This herb is claimed by the plaintiff as synergistic. As defendants are not using this Boerrhavia diffusa, there can be no infringement of the alleged patent. The plaintiff itself in the specifications submitted to the Controller of Patents have written Boerrhavia diffusa is commonly grown and commonly used through India and it is known to act synergistically with the other herbs like phyllanthus. So the plaintiff cannot claim any exclusive use of this herb. Defendants are only using Bhuiamla, Makoh and Hara Chiraita along with 70% other herbs which they are not bound to disclose as such composition is protected by law as a proprietary and trade secret. The four herbal ingredients used by the plaintiff are household herbs, generally used in Indian villages, farmhouses and are simple household remedies used by even illiterate villagers, cattle keepers and poultry raisers. It is a common feature in India that the Indian villagers domesticate poultry 23 and cattle and they commonly use these herbs in various ways and in different situations for mitigating the health problems of their poultry/cattle. These herbs are in traditional use in rural India for improving digestion, metabolism and production performance, etc. in poultry and cattle. In various parts of India, these herbs are used in different compositions/ratios according to the domestic and climatic conditions of their regions. Plaintiff cannot claim monopoly of any type about the use of these ingredients in any way. The plaintiff cannot also claim marketing monopoly of their product Zigbir in law or in equity. 19. The proportion/ratio of the herbal ingredients used in the composition of Zigbir and Livoliv-250 are not identical, as stated above. Moreover the quantities of these herbs used in Livoliv-250 are beyond the range of these herbs claimed in the so-called process patent of Zigbir by the plaintiff. The plaintiffs own admission is that these herbs are commonly found and grown throughout India. As such these herbs are 24 used in various proportions/ratios according to their conventional/traditional use based on folk experience and ancient wisdom. Ayurveda/ Unani/Siddha indigenous system is based on mass experience and ancient wisdom used traditionally from generation to generation. The above mentioned herbs are known all over Indian households, in farms and are used in the cattle and poultry farming community in different formulations in different regions of the country. Variations in ratios of these herbs are practised by rural men and women traditionally. Zigbir, the product of plaintiff, is only the conversion of these herbs in powder form, i.e., mere admixture of known substances resulting only in the aggregation of properties of the components thereof, presented for sale in contemporary packaging without inscribing the names and quantities of herbal ingredients. Further in relation to the process claimed by the plaintiff as an invention, it is not an invention in any way, i.e., it is not at all a new process involving an inventive step. Converting these herbs into 25 powder form, in any way, by any method