Damages are entirely insufficient as panacea for the holder of a valid patent: High Court of Delhi

6 & 7IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 17th May 2021 Decided on: 19th May 2021 I.A. 5801 2021 in CS(COMM) 69 2021 FMC CORPORATION BEST CROP SCIENCE LLP & ANR. Plaintiff Through: Mr. Sethi Advocate with Mr. Sanjay Kumar Ms.Arpita Sawhney Mr. Arun Kumar Jana Mr. Harshit Dixit and Ms. Priyansh Sharma Advs. ..... Defendants Through: Mr. Gopal Subramanium Senior Advocate with Dr. Shilpa Arora Mr.Sidharth Chopra Ms. Sneha Jain Dr.Amitavo Mitra Dr. Victor Vaibhav Tadon Ms. Shruti Jain Ms. Hima Lawrence and Mr. Jayavardhan Singh Advs. I.A.5816 2021 in CS(COMM) 611 2019 FMC CORPORATION & ANR. Plaintiffs Through: Mr. Sandeep Sethi Sr.Adv. with Mr. Sanjay Kumar Ms. Arpita Sawhney Mr. Arun Kumar Jana Mr.Harshit Dixit and Mr. Priyansh Sharma Advs. I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 NATCO PHARMA LIMITED ..... Defendant Through: Mr. J. Sai Deepak with Mr.G Nataraj Mr.Avinash K Sharma and Mr.R. Abhishek Advs. HON BLE MR. JUSTICE C. HARI SHANKAR JUDGMENT This order disposes of IA 5801 2021 in CS 69 2021 and IA 5816 2021 in CS611 2019. Both these suits instituted by M s FMC Corporation allege infringement by the defendants of Indian patents IN 201307 and IN 213332held by the plaintiff. Of these IN 307 is a product patent and IN 332 is a process patent. The plaints allege that the defendants are intending to launch Chlorantraniliprole “CTPR”) which is specifically covered and disclosed in IN 307 and IN 332 held by the plaintiff. The proposed action of commercially manufacturing and launching CTPR would therefore according to the plaint infringe IN 307 and IN 332. The plaint therefore prays for a permanent injunction against the defendants from dealing in any product which could infringe IN 307 or using any of the processes claimed under IN 332. The defendants’ case in opposition to the case set up by the plaintiff is that CTPR stands covered by IN 204978 which is a genus Markush patent held by the plaintiff. The plaintiff I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 has in response contended that even if CTPR is covered by IN 978 it is not disclosed therein. As against this the defendants contend relying on the judgment of the Supreme Court in Novartis AG v. that coverage in the genus patent is sufficient and that the Supreme Court has specifically disapproved dichotomizing coverage and disclosure. Detailed arguments have already been advanced before me over the course of several hearings by both parties on this nuanced issue regarding the distinction between coverage and disclosure in the genus Markush patent and whether coverage sans disclosure would be sufficient to invalidate the subsequent specie patent(s) i.e. in the present case the suit patents IN 307 and IN 332. The defendants question the very validity of the suit patents IN 307 and IN 332 contending that once CTPR stood covered by IN 978 no separate patents could be issued specifically claiming CTPR. They contend that a person ordinarily skilled in the art could easily derive CTPR from the moeities disclosed in IN 978 without having to resort to any inventive step in that regard. In view thereof the very validity of IN 307 and IN 332 according to the defendants is highly questionable and by seeking to base their claim on the said patents the plaintiff is attempting to “evergreen” the Markush patent IN 978 even beyond its IN 978 expired on 20th March 2021 and the suit patents IN 307 and IN 332 are due to expire in August 2022. 16 SCC 1 I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 The basic premise on which these applications are based is that as IN 307 and IN 332 are ab initio invalid patents and as IN 978 has expired the defendants are now entitled to launch their CTPR product in the market. At the time of issuance of notice in CS(Comm) 611 2019 on November 2019 the statement of Mr. Sai Deepak learned counsel for the defendant was thus recorded: “2. Mr. J. Sai. Deepak learned counsel for the defendant states upon instructions that the defendant has applied for regulatory approval for manufacturing and marketing the product which the plaintiff alleges infringes the suit patent in September 2019. He states that approval usually takes 6 to 18 months to be processed. Consequently it is further stated that there is no likelihood of commercial launch of the product prior to March 2020. Recording the aforesaid statement it is unnecessary to pass an ad interim order at this stage. Mr. J. Sai Deepak also states for the record that the defendant has applied to the Intellectual Property Board for revocation of the suit patent IN 201307.” Effectively therefore the defendant seeks to resile from its statement as recorded on 14th November 2019 citing changed circumstances as the justification thereof. Similar relief is sought in IA 5816 2021 in CS611 2019. I have heard at length learned senior counsel Mr. Gopal Subramanium for the applicant in I.A. 5801 2021 and Mr. J. Sai Deepak learned counsel for the applicant in I.A.5816 2021. I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 10. Mr. Subramanium initially invited my attention to paras 25 and 26 of CS69 2021 which read thus: “25. In fact during the prosecution of the application corresponding to the suit patent IN 201307 in the US a Declaration was filed at the United States Patent and Trademarks Office disclosed in the suit patent with the closest specifically disclosed compounds in IN’978. A copy of the said declaration is annexed with the list of documents filed with the present plaint. 26. The said Declaration mentions tests conducted with the compounds of the selection inventionand a comparison with the closest compounds disclosed in IN’978. In the tests all the new compounds of the suit patent IN’307) showed unexpected and unpredictable superior insecticidal activity compared with the closest compounds disclosed in IN 978. CTPR is not specifically disclosed in IN’978. A person skilled in the art would not arrive at CTPR from Formula 1 of IN’978 without human intervention and ingenuity on account of extensive thorough and undue experimentation or hindsight knowledge. Nonetheless CTPR is in the class of anthranilamides within the scope of the numerous compounds included in the Markush Formula disclosed and claimed in the IN’978 patent.” 11. Mr. Subramanium emphasises the concluding sentence in para 26 of the plaint in CS69 2021 which admits that CTPR “is in the class of anthranilamides within the scope of the numerous compounds included in the Markush formula disclosed and claimed in the IN’978 patent”. Once this has been admitted by the plaintiff and IN 978 has expired Mr. Subramanium would seek to contend that there can be no justification to further restrain his client from manufacturing and selling its CTPR product. Over the course of past year and a half Mr. Subramanium submits that his client has acquired I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 all statutory clearances for the manufacture and launch of its CTPR product. 12. CTPR points out Mr. Subramanium is an agricultural insecticide which is specifically used during the kharif season which is due to come to an end in July 2021. If therefore the defendant is not permitted to manufacture or sell its CTPR product it would lose its entire business for this year and would be denied the right to exploit the IN 978 patent even after it has expired. 13. Mr. Subramanium also emphasises the aspect of public interest by stating that the product of his client is priced 25% lower than the product of the plaintiff. In these circumstances submits Mr. Subramanium the interests of justice would justify permitting the defendant to manufacture and sell its CTPR product against which the defendant is prepared to maintain the accounts and is also willing to secure the damages of ₹ 2 crores mentioned in the plaint by way of an adequate security such as a bank guarantee. He submits that the principles of balance of convenience and irreparable loss viewed in the backdrop of the fact that farmers would have access to the CTPR product at much lower rates would in Mr. Subramanium’s submission additionally justify the prayers in this application. 15. Appearing on behalf of the applicant in I.A.5816 2021 in CS Comm) 611 2019 Mr. J. Sai Deepak initially drew attention to para 6 of the plaint in CS 611 2019 in which the plaintiff has I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 admitted that “the suit patents have been licensed and or sub licensed by the Plaintiffs to Syngenta Ltd. Syngenta Crop Protection AG E.I. Du Pont de Nemours and Company and the Scotts Company LLC”. As such submits Mr. Sai Deepak the plaintiff has already licensed the suit patents for exploitation by others. What essentially the plaintiff is interested in therefore according to Mr. Sai Deepak is money in the form of the license fee which the plaintiff would earn. In such circumstances submits Mr. Sai Deepak the considerations of public interest and balance of convenience would justify allowing the defendants to release their product in the market for which purpose Mr. Sai Deepak places reliance on paras 35.5 35.6 36 and 36.2 of a recent judgment dated 2nd November 2020 of this Court in Astra Zeneca AB v. Intas Pharmaceuticals Ltd.2 which are reproduced “35.5 What persuades me to decline injunction in addition to what I have stated above is also the fact that in this case damages if proved at trial appear to be compensable. The defendants have averred that the plaintiffs have possibly licensed their rights under the suit patents to two entities i.e. Sun and Abbott. The packaging of the products of the drug sold through these entities is indicative of this aspect. The plaintiffs however for reasons best known to them have not placed on record the agreements arrived at with these entities in support of their plea. Therefore it has to be inferred that the said entities are licensees. 35.6 Besides this the plaintiffs also aver that they are importing their drug into the country. Therefore the plaintiffs seek to monetize their invention. Thus at the end of the trial if they were to succeed they could be granted damages if proved under the law. Thus as long as a mechanism can be 2 2020PTC 326 I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 put in place for securing the recovery of damages by the plaintiffs it would at this stage balance the interest of the parties. 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 genus patent IN 978 and releasing their CTPR products in the market. 17. Arguing for the plaintiff non applicant Mr. Sandeep Sethi learned Senior Counsel submits that were the present applications to be allowed IA 2084 2021 in CS69 2021 and IA 15352 2019 in CS 611 2019 preferred by the plaintiff under Order XXXIX Rules 1 and 2 of the CPC would be rendered infructuous. Apropos the equities of the case Mr. Sethi submits that the defendants never filed any pre or post grant opposition to the suit patents or sought to challenge the suit patents by any other means known to law except a belated revocation petition before the IPAB. He submits that damages can never constitute adequate recompense for infringement or violation of validly held patents especially pharmaceutical patents and relies for this purpose on the following passages from Merck Sharp and Dohme Corpn. v. Glenmark Pharmaceuticals3 “82. Addressing these principles in the circumstances of the present case the Court notes six equitable principles that come into play in this case and must be considered. First and this principle is now well established in Indian jurisprudence the Court must look at the public interest in granting an injunction as access to drugs especially one for a condition as prevalent as diabetes is an important facet of the patent regime. Here the price difference between the commercial products sold by Glenmark and MSD is not so startling as to compel the court to infer that allowing Glenmark to sell the drug at depressed prices would result in increased access. Permitting Glenmark to operate would not necessarily result in lowering of market prices. Importantly whilst lower prices may result from competition amongst two competitors no allegation has been made that MSD today sells its drugs at a relatively high price that hinders access to the drug. MSD has reduced its price by 1 5 from the United States which shows 3 63 PTC 257 I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 some receptivity to the Indian market Glenmark has not disputed this submission. 85. This leads us to the second principle which is whether the Court can overlook the public interest in maintaining the integrity of the patent system itself so that a legitimate monopoly is not distorted. As this Court noted in Bayer Corporation v. Cipla Union of India 162 DLT 371 “[i]f after a patentee rewarded for his toil in the form of protection against infringement were to be informed that someone not holding a patent would be reaping the fruits of his efforts and investment such a result would be destructive of the objectives underlying the Patents Act.”. The Court must be mindful especially in a case where a strong case of infringement is established as here there is an interest in enforcing the Act. It may be argued that despite this no injunction should be granted since all damages from loss of sales can be compensated monetarily ultimately if the patentee prevails. This argument though appealing is to be rejected because a closer look at the market forces reveal that the damage can in some cases be irreparable. This in turn leads to the third principle which is where an infringer is allowed to operate in the interim during the trial it may result in a reduction in price by that infringer since it has no research and development expenses to recoup most revenue becomes profit. The patentee however can only do so at its peril. Importantly prices may not recover after the patentee ultimately prevails even if it is able to survive the financial setback during the interim which may take some time. The victory for the patentee therefore should not be pyrrhic but real. This irreparable market effect in cases of a sole supplier of a product has also triggered the decisions in Smith Kline Beecham v. Generics 25(1) IPD 25005 and Smithkline Beecham PlcGlaxosmithkline UK Ltd. v. Apotex EWCA Civ L37 where in granting an interim injunction it was held that damages would not be an adequate remedy for the plaintiff since it was the sole supplier of the product. New entrants to the market would be likely to cause its prices to go into a downward spiral and Smith Kline s I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 prices may not recover even if it wins eventually. Equally granting the injunction would not prejudice Glenmark to an equal extent since if the suit is dismissed it may return to a market that is largely variable.” As such submits Mr. Sethi these applications merit outright In a short rejoinder Mr. Sai Deepak points out that Merck Sharp & Dohme Corpn.3 was noticed by the Coordinate Bench of this Court in AstraZeneca2. He further draws my attention to paras 35.1 and 35.3 of the decision in AstraZeneca2 19. Having heard learned Senior Counsel Mr. Subramanium and learned Counsel Mr. Sai Deepak at length I am unable to convince myself that any case for grant of the prayers in these applications 20. To my mind the entire issue is something of a no brainer. The extensive reliance by learned Counsel on the fact that IN 978 has expired on 20th March 2021 is neither here nor there. The plaintiff does not allege infringement by the defendants of IN 978. The plaintiff alleges infringement of IN 307 and IN 332. It is not in dispute that IN 307 and IN 332 are still alive and would expire only in August 2022. 21. Equally reliance by Mr. Subramanium on acknowledgement in para 26 of the plaint in CS(COMM) 69 2021 that CTPR is in the class of anthranilamides within the scope of the I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 numerous compounds included in the Markush Formula disclosed and claimed in IN 978 cannot advance the case of the defendants in these applications. This acknowledgement does not in any manner discountenance the case of the plaintiff. Even as per Mr. Sai Deepak the plaintiff has specifically pleaded that CTPR is not disclosed in IN 978. According to the plaintiff even if CTPR were to be regarded as covered by IN 978 in the absence of disclosure mere coverage would not invalidate the specific suit patents issued for CTPR i.e. IN 307 and IN 332. Whether mere coverage of CTPR in IN 978 assuming such coverage exists would in the absence of disclosure of CTPR in IN 978 be sufficient to invalidate the suit patents IN 307 and IN 332 is a matter for consideration and decision in the applications filed by the plaintiff under Order XXXIX of the CPC which are presently at the stage of rejoinder. This Court cannot obviously in these applications prejudge that issue and indeed Mr. Subramanium very fairly stated that the defendants were not requiring the Court to do so. It is not and indeed it cannot be disputed that were these applications to be allowed nothing substantial would survive for consideration in IA 2084 2021 and IA 15352 2019 filed in these suits under Order XXXIX of the CPC. Once allegedly infringing products are in the market there can obviously be no stay against the infringement and even if any stay were to be granted the exercise would be fundamentally chimerical in nature. It is also a well settled position in law that damages are entirely insufficient as panacea for the holder of a valid patent which is infringed by another. Intellectual property has its own sanctity. The prejudice caused even by a single I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 day’s infringement of intellectual property is in principle incalculable. It is fundamentally incongruous therefore to suggest that even while the applications for injunction preferred by the plaintiff in the suits under Order XXXIX of the CPC are being heard by this Court and are in fact at the stage of rejoinder the defendants should be allowed to launch the allegedly infringing CTPR products. 23. The decision in AstraZeneca2 can hardly help the defendants. Paras 35.5 35.6 36 and 36.2 of the said decision are only in the nature of residual findings after a detailed examination of the merits of the case in the preceding paragraphs. This Court has not in the said decision permitted release of allegedly infringing pharmaceutical products in the market even while the prima facie merits of the application under Order XXXIX of the CPC was under consideration before it as is the prayer in the present case. I also find substance in the reliance by Mr. Sethi on paras 82 and 85 of the judgment of the Division Bench of Corporation3 this Court in Merck Sharp & Dohme which emphasized the fact that in cases of alleged infringement of pharmaceutical patents damages are poor solace. I posed a specific query to Mr. Sai Deepak as to how if this Court were to find that there was prima facie infringement of the plaintiff’s suit patent by the defendants and that therefore a prima facie case for grant of the relief in IA 2084 2021 and IA 15352 2019 filed by the plaintiff under Order XXXIX of the CPC existed any meaningful order could be passed if the defendants were to be allowed to release the allegedly infringing CTPR products in the I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 market in the interregnum. Despite attempting to answer the query with the considerable legal acumen at his command I am constrained to observe that no satisfactory response was forthcoming. Rather Mr. Sai Deepak with characteristic candour acknowledged that it was not his case that damages were adequate recompense for a plaintiff who had suffered infringement of its intellectual property. Once this position is admitted there can be no reasonable justification for permitting the defendants even while the arguments in the plaintiff’s applications under Order XXXIX of the CPC are at the stage of rejoinder to allow the defendants to release the allegedly infringing CTPR products in the market thereby effectively rendering the applications under Order XXXIX of the CPC infructuous. In view thereof I am of the opinion that no case for grant of the prayer for permitting the defendants to release their allegedly infringing CTPR products in the market can be said to exist at this 26. Learned Senior Counsel Mr. Subramanium and learned counsel Mr. Sai Deepak pray towards the conclusion of the proceedings that even if this Court were not inclined to allow the prayers in these applications the IA 2084 2021 and IA 15352 2019 be set down for conclusion of arguments in rejoinder on a date convenient to the Court and as expeditiously as possible. The record reveals that arguments in rejoinder have been advanced by the plaintiff in these applications on 21st January 2021 3rd February 2021 15th February 2021 and 22nd February 2021. The issue involved in the case is serious far reaching I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 and justifies an expeditious disposal especially as it involves pharmaceutical patents. Accordingly list on 25th May 2021 from 2:15 to 4:30 pm and on 28th May 2021 from 2:15 to 3:15 pm for conclusion of the rejoinder submissions of the plaintiff. Submissions in surrejoinder if any and subject to the discretion of the Court would be entertained from 3:15 pm to 4:30 pm on 28th May 2021. It is made clear that these times would be adhered to by the clock with no further time to either side whatsoever. Once submissions are concluded both parties would be at liberty to file their respective written submissions after exchanging copies with each other within the time that would at that stage be stipulated in that regard. 27. With the aforesaid observations these applications stand disposed of. C. HARI SHANKAR J MAY 19 2021 I.A.5801 2021 in CS(COMM) 69 2021 I.A.5816 2021 in CS(COMM) 611 2019 

Summary: It is also a well-settled position in law that damages are entirely insufficient as a panacea for the holder of a valid patent, which is infringed by another. Intellectual property has its own sanctity. The prejudice caused even by a single day’s infringement of intellectual property is, in principle, incalculable. It is fundamentally incongruous, therefore, to suggest that, even while the applications for injunction, preferred by the plaintiff in the suits under Order XXXIX of the CPC, are being heard by this Court and are, in fact, at the stage of rejoinder, the defendants should be allowed to launch the allegedly infringing CTPR products.’. This was held in FMC CORPORATION V. BEST CROP SCIENCE LLP &amp; ANR.[I.A.5801/2021 in CS(COMM) 69/2021] in the High Court of Delhi by a single bench consisting of JUSTICE C. HARI SHANKAR. Facts are the plaintiff alleges infringement by the defendants of Indian patents held by the plaintiff. Of these one is a product patent and one is a process patent. The plaints allege that the defendants are intending to launch CTPR, which is specifically covered and disclosed, and held by the plaintiff. The action of the defendant will infringe the plaintiff’s rights and they thus have prayed for a permanent injunction against the defendants. The counsel for the defendants contended plaintiffs patents IN 307 and IN 332 are ab initio invalid patents and as IN 978 has expired, thus the defendants are now entitled to launch their CTPR product in the market. The court made reference to the judgment of the court in the case of Astra Zeneca AB v. Intas Pharmaceuticals Ltd., wherein it was held that “What persuades me to decline injunction, in addition to what I have stated above, is also the fact that in this case damages if proved at trial, appear to be compensable. The defendants have averred that the plaintiffs have, possibly, licensed their rights under the suit patents to two entities i.e. Sun and Abbott. The packaging of the products of the drug sold through these entities is indicative of this aspect. The plaintiffs, however, for reasons best known to them have not placed on record the agreements arrived at with these entities in support of their plea. Therefore, it has to be inferred that the said entities are licensees.”. The court also made reference to the judgment of Delhi high court in  Merck Sharp and Dohme Corpn. v. Glenmark Pharmaceuticals, wherein it was observed that “The Court must be mindful – especially in a case where a strong case of infringement is established, as here – there is an interest in enforcing the Act. It may be argued that despite this no injunction should be granted since all damages from loss of sales can be compensated monetarily ultimately if the patentee prevails. This argument though appealing is to be rejected because a closer look at the market forces reveal that the damage can in some cases be irreparable. This in turn leads to the third principle, which is where an infringer is allowed to operate in the interim during the trial, it may result in a reduction in price by that infringer since it has no research and development expenses to recoup – most revenue becomes profit.”