Patent Infringement

PATENT INFRINGEMENT Azeem Rasic Nabi B.A.L., LL.B. Bangalore University

Introduction A patent is an exclusive right granted by a country to the owner of an invention to make, use, manufacture and market the invention, provided the invention satisfies certain condition stipulated in the law. Exclusivity of right implies that no one else can make, use, manufacture or market the invention without the consent of the patent holder. This right is available only for a limited period of time. However, the use or exploitation of a patent may be affected by other laws of the country which has awarded the patent. These laws may relate to health, safety, food, security etc. Further, existing patents in similar area may also come in the way. A patent in the law is a property right and hence can be gifted, inherited, assigned, sold or licensed. As the right is conferred by the State, it can be revoked by the State under very special circumstances even if the patent has been sold or licensed or manufactured or marketed in the meantime. The patent right is territorial in nature and inventors and their assignees will have to file separate patent applications in countries of their interest, along with necessary fees for obtaining patents in those countries. Section 2(1)(m) of the Patents Act, 1970 defines “patent” means a patent for any invention granted under this Act A patent is an official document given to an inventor by the government allowing him to exclude anyone else from commercially exploiting his invention for a limited period which is 20 years at present. The object of the patent is to encourage scientific research, new technology and industrial progress.

Infringement Infringement refers to the violation of a law or a right Intellectual Property Infringement refers to the infringement or violation of an intellectual property right. Patent Infringement refers to the commission of a prohibited act with respect to a patented invention without permission from the patent holder. It is the unauthorized making, using, offering for sale or selling any patented invention within India or importing into India of any patented invention during the term of the patent. In other words, patent infringement means the violation of the exclusive rights of the patent holder. The patent rights are the exclusive rights granted by the Government to an inventor over his invention for a limited period of time. If any person exercises the exclusive rights of the patent holder without the patent owner’s authorization then that person is liable for patent infringement. Sections 104 to 114 of the Patents Act, 1970 provide guidelines relating to patent infringement. Unlike other intellectual property laws, the patents law does not specify as to what constitutes infringement of a patented product or process. However, the following acts when committed without the consent of the patentee shall amount to infringement. i.

making, using, offering for sale, selling, importing the patented product;

ii.

using the patented process, or using, offering for sale, selling or importing the product directly obtained by that process.

There are two types of patent infringement i.e. Direct and Indirect Patent Infringement.

1. Direct Patent Infringement The most common form of infringement is the direct infringement. Where the claims of the patent literally describe the infringing invention or the invention performs substantially the same function. In other words, when a product that is substantially close to a patented product or invention is marketed, sold, or used commercially without a permission form the owner of the patented product or invention.

2. Indirect Patent Infringement The indirect infringement is further divided into two types: i.

Infringement by Inducement Infringement by inducement is any activity by a third party that causes another person to directly infringe the patent. This can include selling parts that can only be realistically used for a patented invention, selling an invention with instructions on using in a certain method that infringes on a method patent or licensing an invention that is covered by another’s patent. The inducer must knowingly aid the infringement, but intent to infringe on the patent is not required.

ii.

Contributory Infringement Contributory infringement is the selling of material components that have been made for use in a patented invention and have no other commercial use. There is a significant overlap with inducement, but contributory infringement requires a higher level of guilt. To be contributory infringement, the seller must intend for the direct infringement to occur. In order for there to be liability for indirect infringement, there must also be direct infringement resulting from the indirect act.

Exclusion from Infringement The law however enumerates certain exception to the infringement. a. Experimental and Research: Any patented article or process can be used for the following purposes:  Experiment  Research  Education It is also permitted to make, construct, use, sell or import a patented invention solely for the users reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product. All such acts, if within the bounds as created above, cannot be challenged as infringing the rights of the patentee. b. Parallel Importation under certain conditions: Patented article or article made by using the patented process can be imported by government for its own use. Also

a patented process can be used by the government solely for its own use. Moreover the government can import any patented medicine or drug for the purpose of its own use or for the distribution in any dispensary, hospital or other medical institution maintained by the government or any other dispensary, hospital or medical institution notified by the government.

Jurisdiction The legal provisions with regard to jurisdiction are provided in Section 104 of the Patents Act, 1970. Before dealing with jurisdiction, it may be pointed out that the courts in India receive (a) Patent Administrative Cases (b) Patent Infringement Cases. In patent administrative cases, the Indian Patent Office is the defendant. These types of cases include dispute on grant of a patent, patent invalidation and upholding and compulsory licensing. In patent infringement cases, patentee or patent assignee pursue damages against willful infringement conduct by the alleged infringer. These include infringement of patent, disputes relating to ownership of patent, disputes regarding patent rights or right for application, patent contractual disputes, and contractual disputes of assignment right, patent licensing and dispute relating to revocation of patents. Section 104 of the Patents Act, 1970 says that the infringement suit shall not be instituted in a court lower than the District Court in India. Further, if the defendant files a counter-claim against revocation of the patent, then the suit along with the counter-claim shall be transferred to the High Court for decision. Like any other civil suit the jurisdiction shall be determined in accordance with rules of the Code of Civil Procedure. The appropriate forum would be: a. Principal place where the plaintiff carries on his business; or b. Principal place where the defendant carries on his business; or c. Place where the infringing articles are manufactured or sold or infringing process is being applied or where the articles manufactured by the infringing process are sold.

Period of Limitation The period of limitation for instituting a suit for patent infringement is three years from the date of infringement.

Burden of Proof The traditional rule of burden of proof is adhered to with respect to patented product and accordingly in case of alleged infringement of a patented product the onus of proof rests on the plaintiff. However, TRIPS prompted amendment inserted by way of Section 104(A) has reversed burden of proof in case of infringement of patented process. Under the current law, the Court can at its discretion shift the burden of proof on the defendant, in respect of process patent if either of the following two conditions is met: a. The subject matter of the patent is a process for obtaining a new product; or b. There is substantial likelihood that an identical product is made by the process and the plaintiff/patentee has made reasonable efforts to determine the process actually used but has failed In considering whether a party has discharged the burden imposed upon him under Section 104(A), the Court shall not require him to disclose any manufacturing or commercial secrets, if it appears to the Court that it would be unreasonable to do so.

Doctrine of Equivalents and Doctrine of Colorable Variation Patent infringement generally falls into two categories: literal infringement and infringement under the doctrine of equivalent. The term “literal infringement” means that each and every element recited in claim has identical correspondence in the allegedly infringing device or process. However, even if there is no literal infringement, a claim may be infringed under the doctrine of equivalents if some other element of the accused device or process performs substantially the same function, in substantially the same way, to achieve substantially the same result. The doctrine of equivalents is a legal rule in most of the world’s patent systems that allows a Court to hold a party liable for patent infringement even though the infringing device or process does not fall within the literal scope of patent claim, but nevertheless is equivalent to the claimed invention. The expansion of the claim coverage permitted by the doctrine of equivalents, however, is not unbounded. Instead, the scope of coverage which is afforded to the patent owner is limited by (i) the doctrine of ‘prosecution history estoppel’ and (ii) the prior art. An infringement analysis determines whether a claim in a patent literally ‘reads on’ an accused infringer’s device or process, or covers the allegedly infringing device under the doctrine of equivalents. The steps in the analysis are:   

Construe the scope of ‘literal’ language of the claims. Compare the claims, as properly construed with the accused device or process to determine whether there is literal infringement. If there is no literal infringement, construe the scope of the claims under the doctrine of equivalents.

The doctrine of equivalents is an equitable doctrine which effectively expands the scope of the claims beyond their literal language to the true scope of the inventor’s contribution to the art. However, there are limits on the scope of the equivalents to which the patent owner is entitled. Doctrine of Colorable Variation/Alteration: A colorable variation or immaterial variation amounting to infringement is where an infringer makes slight modification in the process or product but in fact takes in substance the essential features of the patentee’s invention. It refers to the small modification or a change made to an invention and such alteration is made only to distinguish an invention or work form an existing patent. In Lekhophone Corporation v. Rola Company, 282 U.S. 168 (1930), a patent holder’s patent were of sound-reproducing instruments for phonographs. According to the patent application, size an dimensions of the invention were the essence of the patent. That patent holder claimed that a radio loud speaker manufactured by the defendant manufacturer infringed the patents. The manufacturer’s device also had a central paper cone, but the cone was smaller than that of the patented device and that constituted colorable alteration. The court held that because colorable alterations of the manufacturer’s device, it would not accomplish the object specified in the patent claims and hence did not infringe upon the patent holder’s claims.

Declaration as to Non-Infringement Under Section 105 of the Act, any person after the grant of publication of patent may institute a suit for a declaration as to non-infringement. For this the plaintiff must show that (a) he applied in writing to the patentee or his exclusive licensee for a written acknowledgement to the effect

that the process used or the article produced by him does not infringe the patent and (b) patentee or the licensee refused or neglected to give such an acknowledgment. It is not necessary that the plaintiff must anticipate the infringement suit.

Power of the Court to grant relief on groundless threats of Infringement Proceedings Under Section 106 of the Act, if any person whether or not entitled or interested in a patent or application for patent threatens any other person by circulars or advertisements or by communications oral or in writing addressed to that or any other person with proceedings for infringement of a patent, any person aggrieved thereby may bring a suit against him praying for the following reliefs as mentioned below unless the defendant proves that the acts in respect of which the proceedings were initiated constitute or if done would constitute an infringement of a patent. a. A declaration to the effect that such threats are unjustifiable b. An injunction against the continuance of the threats c. Damages if any sustained thereby

Defences etc. in Suits for Infringement Under Section 107 of the Act, in any suit for infringement of a patent every ground on which it may be revoked under Section 64 shall be available as a ground for defence. Further in any suit for infringement of a patent by the making, using or importation of any machine, apparatus of other article or by the using of any process or by the importation, use or distribution or any medicine or drug, it shall be a ground for defence that such making, using, importation or distribution is in accordance with any one or more of the conditions specified in Section 47.

Acts which do not amount to Infringement There are certain acts mentioned under Section 107A of the Patents Act, 1970 which are not to be considered infringement and these include: a. Any act of making, constructing, using, selling or importing a patented invention solely for uses reasonably related to the development and submission of information required under any law in India or in any other country that regulates the making, constructing, using, selling or importing any product. b. Importation of patented products by any person from a person who is duly authorized under the law to produce and sell or distribute the product. It is possible to import the patented products from the licensee of the patentee in any country without the permission of the patentee. The purpose of parallel import is to check the abuse of the patent rights and to control the price of patented product.

Reliefs in Suits for Infringement The patentee has been provided protection under the Patents Act, 1970 and in the event of any violations of his rights; the patentee can file a suit in the appropriate court. No infringement action may be started until a patent has granted. As per Section 108 of the Act, the reliefs which may be awarded in such a suit include: 1. An injunction, 2. Damages or accounts of profits.

The Court may also order that the goods which are found to be infringing and materials and implements, the predominant use of which is in the creation of infringing goods shall be seized, forfeited or destroyed. The reliefs granted under Section 108 of the Act are inclusive and not exhaustive. In the case of patent infringement, the plaintiff can obtain interlocutory order in the form of temporary injunction from the court by providing the existence of the following facts: a. A prima facie case of infringement. b. Balance of convenience is tilting in his favor. c. Irreparable loss if injunction is not granted In Hindustan Lever Limited v. Godrej Soaps Limited AIR 1996 Cal 367, the court held that the plaintiff in the patent case must show a prima facie case of infringement and further the balance of convenience and inconvenience is in his favor. On the other hand in Novartis AG and Anr v. Mehar Pharma and Anr, 2005(30) PTC (Bom), the court refused to grant temporary injunction on the ground that the validity of a recent patent was challenged. The power to grant temporary injunction is at the discretion of the court and must be exercised reasonably, judiciously and on sound legal principles. In a number of landmark patent litigation cases the courts have displayed a varied approach in deciding on interim injunction. The high profile case of Bajaj Auto Ltd. v. TVS Motor Company Ltd., 2008 (36) PTC 417 (Mad) was most significant as the Supreme Court concurred with the observations made in Shree Vardhman Rice & Gen Mills v.Amar Singh Chawalwala that matters relating to trademarks, copyrights and patents should be finally decided very expeditiously by the trail court instead of merely granting or refusing to grant injunction. Once the suit is decided in favor of the plaintiff, the court can either award damages or direct the defendant to render an account of profits. The two remedies are alternative and not concurrent in nature. Some express limitations have been imposed on the grant of this relief. The court shall not grant damages or account of profits in the following cases: a. Where the defendant proves that at the date of the infringement he was not aware and had no reasonable grounds for believing that the patent existed. b. Where infringement is committed after a failure to pay any renewal fee with the prescribed period and before any extension of that period. c. Where any amendment of a specification has been allowed after the publication of the specification, and the infringement action is in respect of the specification before the date of publication unless the court is satisfied that original specification was made in good faith and with reasonable skill and knowledge. The right to obtain provisional damages requires a patent holder to show the following: i. ii. iii.

The infringing activities occurred after the patent application was published; The patented claims are substantially identical to features of the process or the product infringing the patent; and The infringer had actual notice of the published patent application.

The Supreme Court of India has laid down the following guidelines to determine infringement of a patent based on Biswanath Prasad Radhey v. Hindustan Metal Industries. AIR SC 1978.

i. ii. iii. iv. v. vi.

Read the description and then the claims; Find out what is the prior art; What is the improvement over the prior art; List the broad features of the improvement; Compare the said broad features with the defendant’s process or apparatus; and If the defendant’s process or apparatus is either identical or comes within the scope of the plaintiff’s process or apparatus, there is an infringement.

In India only the High Courts have the power to deal with both infringement and invalidity of patents simultaneously. After the establishment of Intellectual Property Appellate Board (IPAB) and with the extension of its jurisdiction to patent law is therefore now authorized to hear and adjudicate upon appeals from most of the decisions, orders or directions made by the Controller of Patents and Central Government. Every appeal from the decision of the Controller to the IPAB must be made within three months from the date of the decision, order or direction as the case may be or within such further time as the IPAB may permit, along with the prescribed fees (117A). Exceptions: The IPAB procedure rules exempt orders passed by the Central Government of India with respect to inventions pertaining to defence purposes, including directors of secrecy in respect of such inventions, revocation if the patent is contrary or prejudicial to public interest or pertains to atomic energy, from the purview of appeal to the IPAB. An order of the Controller granting an extension of time under any provision of the Patent Act, 1970 is also not appealable. In case of counter-claim in a suit for infringement, the Indian High Courts continue to be the competent authority to adjudicate on the matter