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26 九月 2017

Groundless infringement threats

An introduction to Section 106 – Patents Act, 1970

Intellectual Property (IP) rights ensure that innovation is rewarded and encouraged. In recent times, there has been a proliferation of the IP rights, and a single product may be protected by a multitude of ways, such as patents, trademarks, and design rights. IP law provide means by which the IP rights may be effectively enforced against infringement; however, this can be misused by many to suppress competition. For instance, a mere threat of infringement proceedings may cause damage to a business, since many parties may not go to the length and expense of litigating an infringement suit. As a result, a party receiving a threat may change the course of the act which had caused the threat. To curb such situations, the IP law has provisions to prevent any person, especially IP right-owners, from making indiscriminate threats of infringement proceedings against others.

A threat becomes groundless when one party threatens another party with legal proceedings without having a basis for the threats. For example, if a threat to sue for infringement is made where there has been no infringement, or the IP right is invalid, the threat is said to be groundless. In case of LG Electronics India Pvt. Ltd. v. Bharat Bhogilal Patel & Others [see End Note 1], Delhi High Court clarified that “if any proprietor or the right holder issues a notice to the custom officials and the custom officials act upon the same by restricting the imports of consignments of any party without the determination (prima facie or otherwise) of the factum of infringement of patent by the appropriate designated authority, then such notice by the right holder to the customs and the actions thereof by the customs either in the form of notice to that party or otherwise calling upon the party to explain its stand are all unnecessary illegal threats to that party.”

A threat may be made verbally or in writing and is viewed in the context of a correspondence or series of communications or circulars or advertisements. For example, one letter may not in itself be threatening; however, when viewed as part of an entire correspondence it may constitute a threat. Mere notification of existence of an IP right does not amount to a threat of infringement proceedings.

Section 106 of the Patents Act, 1970 strikes a balance between a patent right (which in some circumstances may be exercised indiscriminately) and interests of individuals or companies whose businesses may have the possibility of infringing valid patent rights. Section 106 prescribes a mechanism to safe guard such interests against an indiscriminate use of patent rights to suppress competition. More specifically, section 106 prescribes relief to a person who is being threatened by any person with proceedings for infringement and whose commercial interests suffer because of the threat. Such a person, being aggrieved, may bring an action for seeking remedy against the threat.

Section 106 provides to the aggrieved person a remedy to bring a suit seeking a declaration from the Court indicating that the acts of the Plaintiff are lawful and the allegations are unjustifiable, restraining order against repetition of the threats, or compensation to the Plaintiff for any losses that may have occurred to the Plaintiff due to the threats. The Court may grant all or any of the reliefs prayed for by the Plaintiff.

On a plain reading of subsection (2) of Section 106, in a suit filed against groundless threats, burden of proof initially lies on the Plaintiff to prove that the Patent is invalid. In case, the Plaintiff is unable to prove invalidity of the Patent, the burden of proof shifts to the Defendant to establish that the Plaintiff performed an act of infringement. Failure to prove infringement of the Patent by the Defendant entitles the Plaintiff to the remedy.

While Section 106 intends to provide relief to the aggrieved person (alleged infringer), the alleged infringer may use this provision for their own benefit. For example, the alleged infringer may receive a communication from the IP right holder notifying the alleged infringer about the IP rights. In response to the communication, the alleged infringer may bring a suit for groundless threats against the IP right holder to continue the act of infringement till the time the suit is heard by a court.

 

Bata India Limited Vs Vitaflex Mauch GmbH (Delhi High Court)

In the case of Bata India Limited Vs Vitaflex Mauch GmbH [see End Note 2], the Plaintiff (Bata) instituted a suit against the Defendant (Vitaflex) for restraining the Defendant from issuing threats of legal proceedings to the Plaintiff. Further, in the suit, the Plaintiff sought for a declaration that the threats extended by the Defendant to the Plaintiff are unjustified and the Plaintiff is not infringing the legal rights of the Defendant as alleged by the Defendant. Moreover, the Plaintiff also claimed damages from the Defendant for issuing groundless threats to the Plaintiff.

 

Facts of the case

Bata received a legal notice from Vitaflex on April 3, 2006 wherein Vitaflex claimed that,

i) Vitaflex is a distributor of shoes marketed under brand “by doc Mauch” or “nach Dr. Mauch”.

ii) That the insole of the shoes was characterized by a five pressure point design and they had a pending trademark application in India for the five pressure points.

iii) That Vitaflex has a pending patent application under application number 1521/CHENP/2003, in India and that one of the noticeable difference between the two products is that Bata’s product has six pressure point configuration instead of five pressure point configuration.

iv) That Bata is infringing the defendant’s trademark rights and patent.

Bata contended that Vitaflex has only applied for a patent and does not have any registered patent for the insole. Bata further stated that the PCT application only claims novelty in the material and the thickness of the insole and not in the configuration or number of pressure points. With regard to the trademark application, Bata contended that the five-pressure points configuration is not entitled to trademark protection as it constitutes a functional aspect of the shoes.

The major issue before the Court was whether the legal notice amounted to groundless threats of legal proceedings and whether Bata was entitled to an injunction and damages for the same.

 

Decision

The Court stated that according to Section 142 of the Trade Marks Act, 1999 and Section 106 of the Patents Act, 1970, the Plaintiff is entitled to seek injunction against groundless threats, unless the Defendant shows that the Defendant had a valid IP right in the pressure points.

The Court also relied on Section 48, Section 52(3), and Section 70 of the Patents Act, 1970 and pointed out that for infringing a patent, “there must be a granted patent to the person who has issued the threat to the Plaintiff”.

In the present case, the Defendant was unable to submit any evidence in support of their claims for the infringement of IP rights and therefore the Court held that the legal notice/threats made to the Plaintiff are groundless, unjustifiable, and wrong. The Court passed the order to restrain the Defendant from issuing any groundless threats to the Plaintiff with respect to five pressure point configuration.

 

Similar provisions in other acts

The Copyright Act, 1957, the Trade Marks Act, 1999, the Design Act, 2000, and the Geographical Indications of Goods Act, 1999 also have similar provisions whereby a person aggrieved who receives groundless threats of infringement proceedings from an IP right holder or any other person may seek a declaration from the court.

It is interesting to note that the Copyright Act, 1957 specifically confers protection to a person receiving groundless threats of legal proceedings only when such a threat comes from the owner of that work.

 

Conclusion

Before issuing any communication to a person for legal proceedings against infringement of IP rights, it is imperative to ensure that the IP rights are being infringed and are valid.

[The author is a Senior Associate, IPR Practice, Lakshmikumaran & Sridharan, New Delhi]
End Notes:
1.https://indiankanoon.org/doc/48055807/
2. https://indiankanoon.org/doc/67493713/

 

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