IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Special Appeal No. 67 of 2008 M/s Lambda Eastern Telecommunication & others. .……… Appellants Versus M/s Acme Tele-power Private Ltd. & another.……… Respondents Mr. V.K. Kohli, Senior Advocate with Mr. Jitendra Chaudhary, Advocate and Mr. H.M. Bhatia, Advocate for the appellants. Mr. R. Parasarthy with Mr. Lalit Sharma, Advocates for respondent No. 1. Coram: Hon’ble J.S. Khehar, C.J. Hon’ble Sudhanshu Dhulia, J. Dated: 25th March, 2010 J.S. KHEHAR, C. J. Respondent No. 1 M/s Acme Tele-power Private Ltd. was granted Patent No. 197086 for “Power Interface Unit” on 11.08.2006, and Patent No. 197108 for “Cubical Shaped Green Shelter” on 08.09.2006. 2. Based on the rights vested in respondent No. 1, consequent upon the grant of the aforesaid Patents, it filed a suit under Section 104 of the Patents Act, 1970 in the court of the District Judge, Udham Singh Nagar. Along with the aforesaid suit, respondent No. 1 moved an application under Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure. By an order dated 10.08.2007, the District Judge, Udham Singh Nagar, granted an ex parte ad interim injunction, in terms of the prayer made by respondent No. 1 in the aforesaid suit. The order dated 10.08.2007 was impugned by the appellants herein by filing Appeal from Order No. 412 of 2007 (AO No. 412 of 2007). The aforesaid AO No. 412 of 2007 was dismissed on 01.10.2007. The appellants then approached the Supreme Court by filing a Petition for Special Leave to Appeal (Civil) bearing No. 2095 of 2007. The Supreme Court, however, dismissed the aforesaid petition vide an order dated 26.11.2007. Inspite of dismissing the Petition for Special Leave to Appeal, the Supreme Court vide its order dated 26.11.2007, directed the District Judge, Udham Singh Nagar, to finally dispose of the application filed by respondent No. 1 under Order XXXIX, Rules 1 and 2 of the Code of Civil 2 Procedure, by hearing the said application on a daily basis. In compliance with the directions issued by the Supreme Court, the District Judge, Udham Singh Nagar, after hearing the rival parties, finally disposed of the injunction application filed by respondent No. 1 under Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure, on 18.12.2007. The District Judge, Udham Singh Nagar, vide his aforesaid order dated 18.12.2007, confirmed his earlier order dated 10.08.2007, vide which respondent No. 1 had been granted an ex parte ad interim injunction. 3. Dissatisfied with the order passed by the District Judge, Udham Singh Nagar, dated 18.12.2007, the appellants again approached this Court, by filing Appeal from Order No. 49 of 2008 (AO No. 49 of 2008). The aforesaid AO No. 49 of 2008 was disposed of by this Court vide an order dated 19.03.2008. While disposing of AO No. 49 of 2008, this Court set aside the impugned order dated 18.12.2007. In addition to the aforesaid, this Court further directed, that the earlier order passed by the District Judge, Udham Singh Nagar, dated 10.08.2007, by which respondent No. 1 was granted an ex parte ad interim injunction, would remain in force. A perusal of the order passed by this Court, disposing of AO No. 49 of 2008, reveals, that the impugned order dated 18.12.2007 was set aside on the ground, that the appellants herein had filed a counter claim before the District Judge, Udham Singh Nagar, whereupon the District Judge, Udham Singh Nagar, had ceased to have jurisdiction in the matter. In sum and substance, the order dated 18.12.2007 was stated to have been passed by the District Judge, Udham Singh Nagar, after he had ceased to have jurisdiction in the matter. 4. After the disposal of AO No. 49 of 2008, the injunction application, filed by respondent No. 1 under Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure, came to be placed before a learned Single Judge of this Court for adjudication. A learned Single Judge of this Court, by his order dated 11.04.2008, affirmed the ex parte ad interim injunction, granted to respondent No. 1 by the District Judge, Udham Singh Nagar vide his order dated 10.08.2007. 3 5. Through the present Special Appeal, the appellants have assailed the order of the learned Single Judge dated 11.04.2008, confirming the ex parte ad interim injunction granted to respondent No. 1 by the District Judge, Udham Singh Nagar (vide his order dated 10.08.2007). Before this Court, respondent No. 1, in the first instance, raised an objection about the maintainability of the instant Special Appeal. By a separate order passed by this Court on 17.09.2008, while rejecting the objection raised on behalf of respondent No. 1, it has been held, that the instant Special Appeal is maintainable (as against the impugned order dated 11.04.2008). Having dealt with the hurdle raised by way of the preliminary objection, we have heard learned counsel for the rival parties, on the challenge raised by the appellants, against the impugned order dated 11.04.2008. 6. In order to assail the impugned order dated 11.04.2008, learned counsel for the appellants have invited our attention to a series of facts, which are being noticed hereunder: Firstly, it is pointed out, that the court of the District Judge, Udham Singh Nagar, before whom respondent No. 1 had filed the suit under Section 104 of the Patents Act, 1970 (out of which the instant impugned order has arisen), had no jurisdiction to entertain the same. In this behalf, it is submitted that the registered office of the appellants is located in Delhi. Its manufacturing units are in Kundli, district Sonipat, in the State of Haryana. It is also acknowledged, that recently the appellants have set up a manufacturing unit at Dehradun in the State of Uttarakhand. It is, however, pointed out, that neither any office of the appellants, nor any manufacturing unit of the appellants, is located in Udham Singh Nagar of the State of Uttarakhand. In addition to this, it is pointed out, that the alleged infringement, asserted to be committed by the appellants (in the suit filed by respondent No. 1), was allegedly committed at Kapurthala in the State of Punjab. Since the appellants herein have been arrayed as the defendants in the suit filed by respondent No. 1, based on the factual position noticed herein above, it is asserted that the District Judge, Udham Singh Nagar, had no territorial jurisdiction to entertain the Suit filed by respondent No. 1 under Section 104 of the Patents Act, 1970. Secondly, it is submitted that after the grant of the two patents to respondent No. 1, on the same grounds as have been raised in the suit filed 4 by respondent No. 1 under section 104 of the Patents Act, 1970, respondent No. 1 had initiated similar proceedings against three other manufacturing industries, namely, M/s Selvon Instruments Pvt. Ltd., M/s Maxfaith and M/s Sintex Industries Ltd. It is pointed out, that although as against the first two manufacturing industries (referred to above), a similar application under Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure had been filed by respondent No. 1, but no interim order was passed in its favour. Whereas, as against the third manufacturing industry, though an ad interim injunction was granted to respondent No. 1 in the first instance, the same was subsequently vacated. Accordingly, it is submitted that on the same grounds, as have been raised in the instance case, a similar prayer made on behalf of respondent No. 1 has been declined in three different cases. Thirdly, it is submitted that all the components of the “Compact Power Interface Unit”, which include Micro-Controller, Surge Protectors, Fire/Smoke Detectors, Auto Phase Selectors, Battery Chargers, AMF Panel, and MCBs in PIU, are neither manufactured by the appellants nor by respondent No. 1. In fact, the aforesaid components are purchased by the appellants, as also by respondent No. 1, from the open market and assembled together in the form of “Compact Power Interface Unit”. Additionally, it is pointed out that the “Cubical Shaped Green Shelter” is merely a box used for maintaining the temperature of the “Compact Power Interface Unit”. It is submitted that neither the components nor the assembly thereof involves any specialization or expertise, and as such, the same cannot be described as an “invention” within the meaning of the Patents Act, 1970. Since, according to the appellants, neither the “Compact Power Interface Unit” nor the “Cubical Shaped Green Shelter” can be described as “inventions” under the provisions of the Patents Act, 1970, the appellants cannot be restrained from manufacturing the same by assembling them after purchasing the components thereof from the open market. 7. Although the learned counsel for respondent No. 1 has not very seriously contested the three submissions advanced at the hands of the learned counsel for the appellants (as have been noticed in the foregoing paragraph), yet, two assertions were emphatically pressed. The assertions 5 made at the hands of the learned counsel for respondent No. 1 M/s Acme Tele-power Pvt. Ltd. are being summarized hereunder: Firstly, it is the contention of the learned counsel for respondent No. 1, that the proforma respondent, namely, Sachidanand Patnaik, who was earlier an employee of respondent No. 1 - M/s Acme Tele-power Pvt. Ltd. as Deputy Manager, had access to the drawings of respondent No. 1, which were indicative of the process of manufacturing the products under reference. It is asserted, that in April, 2006, the aforesaid Sachidanand Patnaik had copied the drawings of respondent No. 1, and had transferred them electronically to his own e-mail. It is submitted, that the aforesaid Sachidanand Patnaik is now an employee of the appellants, and had surreptitiously transferred the know-how of the manufacturing process of the products under reference, to the appellants. It is submitted that only thereafter the appellants had started to manufacture the same. Secondly, it is asserted on behalf of respondent No. 1 - M/s Acme Tele- power Pvt. Ltd., that the products manufactured by respondent No. 1 had resulted in saving of thousands of units of electricity, which is more than the aggregation of the results of the existing products available in the market. It is therefore submitted, that even though all the components of the products under reference are purchased by the parties from the open market, yet their assembly, in a manner which has resulted in saving thousands of units of electricity, must be described as an “invention”, as against, a mere assembly of components. 8. Before we advert to the nicety of the submissions advanced by the learned counsel for the rival parties, it is imperative for us to make a reference to the judgment rendered by the Apex Court in Bajaj Auto Limited Vs. TVS Motor Company Limited, (2009) 9 SCC 797, wherein the Apex Court, on the issue of grant of injunctions on matters inter alia pertaining to trade-marks, copyrights and patents, has laid down the following guidelines: “4. Recently, we have held in Shree Vardhman Rice & General Mills v. Amar Singh Chawalwala as follows: “…Without going into the merits of the controversy, we are of the opinion that the matters relating to trade marks, copyrights and patents should be finally decided very expeditiously by the trial court instead of merely granting or refusing to grant injunction. Experience shows that in the 6 matters of trade marks, copyrights and patents, litigation is mainly fought between the parties about the temporary injunction and that goes on for years and years and the result is that the suit is hardly decided finally. This is not proper. Proviso (a) to Order 17 Rule 1(2) CPC states that when the hearing of the suit has commenced, it shall be continued from day-to-day until all the witnesses in attendance have been examined, unless the court finds that, for exceptions reasons to be recorded by it the adjournment of the hearing beyond the following day is necessary. The court should also observe clauses (b) to (e) of the said proviso. In our opinion, in matters relating to trade marks, copyright and patents the proviso to Order 17 Rule 1(2) CPC should be strictly complied with by all the courts, and the hearing of the suit in such matters should proceed on day-to- day basis and the final judgment should be given normally within four months from the date of the filing of the suit.” As has been observed by us in the aforesaid case, experience has shown that in our country, suits relating to the matters of patents, trade marks and copyrights are pending for years and years and litigation is mainly fought between the parties about the temporary injunction. This is a very unsatisfactory state of affairs, and hence we had passed the abovequoted order in the abovementioned case to serve the ends of justice. We direct that the directions in the aforesaid order be carried out by all courts and tribunals in this country punctually and faithfully.” Based on the aforesaid observations recorded by the Supreme Court, it is the submission of the learned counsel for the appellants, that in the facts and circumstances of the present case, the injunction sought by respondent No. 1 in the application filed by it under Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure, should not be granted. 9. In response to the judgment rendered in Bajaj Auto Limited’s case (supra), relied upon by the learned counsel for the appellants, it is the vehement contention of the learned counsel for respondent No. 1, that the Supreme Court did not, through its aforesaid judgment, record the conclusion, that an injunction cannot be granted in any matter whatsoever. Infact, referring to the judgment rendered in Shree Vardhman Rice & General Mills Vs. Amar Singh Chawalwala, (2009) 10 SCC 257, it is submitted by the learned counsel for respondent No. 1, that the same Bench, which had passed the order in Bajaj Auto Limited’s case (supra), had granted an injunction (as has been sought by the respondent in the instant controversy). 7 10. We have given our thoughtful consideration to the rival submissions advanced by the learned counsel for the parties. Insofar as the plea of territorial jurisdiction raised by the appellants is concerned, the same could not have been considered in the correct perspective by the learned Single Judge on account of the fact that no issue had been framed by the learned Single Judge on the subject of territorial jurisdiction. While allowing Special Appeal No. 192 of 2009, by a separate order passed by us on 22.03.2010, we have permitted the framing of two additional issues, besides the nine issues earlier framed by the learned Single Judge. These two issues relate to the territorial jurisdiction of the District Judge, Udham Singh Nagar in having entertained the suit filed by respondent No. 1 under Section 104 of the Patents Act, 1970, as also, to the consequential jurisdiction of this Court. It is, therefore, apparent that even the territorial jurisdiction, depicting the veracity of the Suit filed by respondent No. 1, is as of now unclear, and will be finally ascertained only when the two additional issues, framed as preliminary issues, will be determined by the learned Single Judge. Insofar as the assertion at the hands of the appellants, that a similar claim for an injunction was made at the hands of respondent No. 1 against three different manufacturing industries, is concerned, there was no repudiation thereof at the hands of the learned counsel for respondent No. 1. Insofar as the instant aspect of the matter is concerned, learned counsel for respondent No. 1 did attempt to distinguish this case from the one filed against M/s Sintex Industries Ltd. But then, against the other two industries, learned counsel for respondent No. 1 did not even attempt to draw a distinction. Insofar as the third submission (made on behalf of the appellants) is concerned, it has yet to be concluded, whether the products manufactured by respondent No. 1 can be described as “inventions” within the meaning of the Patents Act, 1970, inasmuch as diagonally opposite views have been expressed in expert opinions produced on behalf of the rival parties. As such, as of now, it is difficult to conclude whether the products manufactured by respondent No. 1 can indeed be described as “inventions” within the meaning of the provisions of the Patents Act, 1970. Taking into consideration the factual position noticed hereinabove, and the authoritative pronouncement rendered by the Supreme Court in Bajaj Auto Limited’s case (supra), we are of the view, that respondent No. 1 has not been able to establish the three essential 8 ingredients, which are liable to be taken into consideration before the grant of an injunction, namely, prima facie case, balance of convenience and irreparable loss. The two submissions advanced by the learned counsel for respondent No. 1, which have been noticed in paragraph 7 above, cannot tilt the balance in favour of respondent No. 1 at the present juncture. Being disputed by the appellants, any finding on the basis thereof will have to await a finding on the aforesaid issues after the rival parties have lead evidence thereon. 11. For the reasons recorded herein above, we are satisfied that respondent No. 1 has not been able to establish any of the three ingredients which need to be fulfilled before a temporary injunction is granted. Additionally, in view of a clear declaration of the law on the issue of grant of injunction in matters pertaining to trade marks, copyrights and patents, rendered in Bajaj Auto Limited’s case (supra), we are satisfied that the impugned order dated 11.04.2008 is liable to be set aside. The same is accordingly hereby set aside. 12. Despite the conclusion recorded by us herein above, it is also necessary to extract herein certain further observations recorded by the Apex Court in Bajaj Auto Limited’s case (supra), which are relevant to the present controversy. The same are accordingly being reproduced hereunder: “6. The interim orders of this Court dated 8.6.2009 and 31.8.2009 are vacated and substituted by the following directions. The respondent shall be entitled to sell its products but it shall maintain accurate records / accounts of its all-India and export sales. We are appointing a Receiver to whom the records of such sale shall be furnished every fortnight by the respondent and the same shall be signed and authenticated by a responsible officer of the respondent. A copy of the same shall be given to the appellant also. 7. We are requesting the Hon’ble the Chief Justice of the Madras High Court to forthwith nominate a Receiver in the matter to whom the sale records / accounts will be submitted by the respondent fortnightly, and the Receiver will verify the said sale records / accounts and thereafter submit his report to the learned Bench of the Madras High Court where the suit is pending. A copy of the same will be sent to the parties also. This direction will continue till the pendency of the suit. The remuneration of the Receiver will be fixed by the Hon’ble the Chief Justice.” 9 Having declined to grant respondent No. 1 the injunction sought by it, we are satisfied that the rights of respondent No. 1 deserved to be protected in terms of the observations recorded by the Apex Court (extracted herein above). On the analogy of the order passed in Bajaj Auto Limited’s case (supra), the learned Single Judge shall appoint a Receiver. The appellants shall furnish all records, pertaining to sales made by them, to the Receiver on a fortnightly basis. The aforesaid sale records shall be authenticated by a responsible officer of the appellants. The Receiver appointed shall regularly submit a report to this Court. The said reports shall be compiled in the form of a separate file, and shall be attached with the record of the suit filed by respondent No. 1. In case, respondent No. 1 succeeds in its suit, he shall also be entitled to the profits earned by the appellants through the sale of the aforesaid products, in such manner as may be determined by this Court, while disposing of the civil Suit. The learned Single Judge, while nominating the Receiver, shall also determine the fee payable to him. The aforesaid fee shall be paid, in the first instance, by the appellants herein. If the suit filed by respondent No. 1 fails, respondent No. 1 shall be liable to reimburse to the appellants, the entire fee paid by the appellants to the Receiver. 13. The instant Special Appeal stands disposed of in the aforesaid terms. (Sudhanshu Dhulia, J.) (J.S. Khehar, C. J.) G