Declaration Of Non-Infringement: Preemptive Or Preventive Measure? - Patent

Getting caught in the infringement imbroglio at times is not only taxing but also a painful experience. The patentee armours like ex-party injunction, cease and desist notice, search and seizer by commissioner, sealing and lockout of the business altogether and loss of reputation makes the accused infringer run for the legal advice at the first instance of legal notice from the patentee. The infringement proceedings are protracted battles in the courts which often take longer time than anticipated. In the battle of nerves accused infringer is invariably at the receiving end as loses he is likely to suffer at times are heavier than contemplated. Remedies available to the accused infringer in this legal situation are envisaged in every patent law and it flows from the law of equity. The patentee can possibly intimidate the potential infringer by sending notice even during the processing of his pending patent application by the asserting his right on a possible patent. He can also issue legal warnings to the infringer for initiating litigation action in the future once the patent is granted. Once such notice or warning is received by the potential infringer he is duty bound under the law to take note of the existence of such patent and exercise due care to check whether he is trespassing the boundaries of the patent technology in question. In some jurisdictions these patent assertion notices are taken as of higher significance as courts can award damages based on and calculated from the date when the infringer first became aware of the existence of the patent or patent application. In fact the accused infringer loses the umbrella of being treated as innocent infringer from that date when he get such notice. An accused infringer do gets an opportunity to defend and counter attack. In non-bifurcated adjudication procedure infringement and validity are decided jointly in the same proceedings at a single court. The accused infringers in India are more likely to challenge validity of the patent. However, as a preemptive action seeking a declaration as to non-infringement under section 105 appears to be more beneficial and cost effective. More so this declaration can be sought from the court even before any cease and desist notice from the patentee is received.

Preemptive Defence

Every patent law suit rises or falls on one of two defences, invalidity or non-infringement. As a preemptive action any person working within the crowded field of the patentee's inventions can initiate a legal action against a patentee, seeking a declaration from the court that the he is not infringing the patent in question even when no law suit is filed against him by the patentee. He may also do so even before issue of a cease and desist notice by the patentee. Section 105 of The Patents Act, 1970 gives sufficient protection to any person who is sure that he is not within the infringing limits of the patentee claims. Any person may institute a suit for a declaration in a court that the use by him of any process, or the making, use or sale of any article by him does not, or would not, constitute an infringement of a claim of a patent, against the patentee or the holder of an exclusive licence under the patent.

Power of court to make declaration as to non-infringement

The declaratory judgment, in legal terms is a judicial pronouncement intended to fix or elucidate litigants' rights that were previously uncertain or doubtful. The power of the court in declaratory judgment is limited to determination of facts. The person seeking 105 declarations is not entitled to question the validity of a claim of the specification of a patent in a suit for a declaration. Accordingly the making or refusal of such a declaration by the court in the case of a patent will not be deemed to imply that the patent is valid or invalid. The declaratory judgment is an important judicial remedy in patent law in India. The courts in India are not only reluctant but also cautious in granting a declaratory relief as to non-infringement under section 105 of the Patent Act, 1970. The courts invariably insist upon the plaintiff to comply with the procedures contemplated under the Act. The first and the foremost requirement the courts would insist upon is that the third party must demonstrate a real interest to the court in order to justify such a negative declaration relief. Such a suit can be initiated at any time after the publication of grant of a patent. Section 105 mandates the plaintiff to apply in writing to the defendant for a written acknowledgment to the effect of the declaration claimed in respect of the patent in question. The plaintiff is also required to furnish to the defendant the full particulars in writing of its products in question. The Plaintiff can seek for declaratory relief as to non-infringement under section 105 only when the defendant patentee had refused or neglected to give such an acknowledgment. For reference section 105 is reproduced below:-

105. Power of court to make declaration as to non-infringement.— (1) Notwithstanding anything contained in section 34 of the Specific Relief Act, 1963 (47 of 1963), any person may institute a suit for a declaration that the use by him of any process, or the making, use or sale of any article by him does not, or would not, constitute an infringement of a claim of a patent against the patentee or the holder of an exclusive licence under the patent, notwithstanding that no assertion to the contrary has been made by the patentee or the licensee, if it is shown—

(a) that the plaintiff has applied in writing to the patentee or exclusive licensee for a' written acknowledgements to the effect of the declaration claimed and has furnished him with full particulars in writing of the process or article in question; and

(b) that the patentee or licensee has refused or neglected to give such an acknowledgement.

(2) The costs of all parties in a suit for a declaration brought by virtue of this section shall, unless for special reasons the court thinks fit to order otherwise, be paid by the plaintiff.

(3) The validity of a claim of the specification of a patent shall not be called in question in a suit for a declaration brought by virtue of this section, and accordingly the making or refusal of such a declaration in the case of a patent shall not be deemed to imply that the patent is valid or invalid.

(4) A suit for a declaration may be brought by virtue of this section at any time after the publication of grant of a patent, and references in this section to the patentee shall be construed accordingly.

However, in view of the rule in equity the Courts had no jurisdiction to pronounce a declaration as to non-infringement unless the defendant had denied the right of the plaintiff and asserted any adverse right in him. In Indian context such remedy is notwithstanding anything contained in section 34 of the Specific Relief Act, 1963 (47 of 1963).This implies that the patentee

Burdon of proof in declaratory relief under section 105

When the plaintiff seeks a declaration of non-infringement, the question of burden of proof comes into play. Normally in civil suits the plaintiff who has sought the relief of non-infringement, is naturally required to lead their evidence first. The moot question before the court in such cases is who would fail in case no evidence is let in. The Patents Act is silent on who should lead the evidence. However, primarily, it is the responsibility of the plaintiff to produce evidence in support of his case. In Bajaj Auto Ltd vs TVS Motor Company Ltd [ 4 October, 2010] the Appeal court while disposing the appeal for deciding the limited issue as to who should begin first observed that:-

"34. There is nothing in the Patents Act to indicate that in case a suit for declaration of non-infringement was filed, the burden is on the defendant to lead evidence to show that there was infringement. Therefore, primarily, it is the responsibility of the plaintiff to produce evidence in support of his case."

Preventive attempt under section 106?

But in case when a suit for such declaration of non-infringement is filed after the patentee has issued threats to any person by circulars or advertisements or by communications, oral or in writing addressed to that person and with a warning to institute proceedings for infringement of a patent, such suit for declaration of non-infringement by the aggrieved person would fail as court would insist on following the procedure as laid down under section 105. In Bajaj Auto Ltd vs TVS Motor Company Ltd [ 4 October, 2010] the Appeal court while disposing the appeal held that "The declaratory relief sought for by the plaintiff does not come under the purview of Section 106 of the Patents Act." Thus the delayed preventive attempt to seek declaratory relief as to non-infringement under section 106 may suffer the glitch of statutory non-compliance of procedure as stipulated under section 105.

Essentials for Declaration of non-infringement

Section 105 clearly lay down certain essential requirements that should be complied by the plaintiff before the court would give such exculpatory opinion on the patent in question. In Bajaj Auto Ltd vs TVS Motor Company Ltd case the court held that there was total non-compliance with the statutory requirements and hence no declaration could be granted in favour of the plaintiff. The court in clear terms laid the preconditions for granting a declaratory relief as to non-infringement such as :-

"To grant a declaratory relief as to non-infringement, the plaintiff ought to have complied with the procedures contemplated under the Act viz., [Section 105 ]

plaintiff should have applied in writing to the defendant for a written acknowledgment to the effect of the declaration claimed and
furnished to the defendant with full particulars in writing of its products in question and
the defendant had refused or neglected to give such an acknowledgment.

Since there was total non compliance with the statutory requirements, no declaration could be granted in favour of the plaintiff. [Emphasis Added]"

Therefore, it is advisable to seek section 105 relief before the patentee issue cease and desist notice. Any belated attempt to club grant of a declaratory relief as to non-infringement with section 106 suits may fail as it happened in TVS case. The third party working in the crowded technology fields must be vigilant to seek declaration as to non-infringement to preempt filing of any infringement suit by the patentee. There is one hitch in filling such suits as the patentee would come to know who is likely to infringe his patent and as counter measure seek injunction or even Quia timet injunction. The burden in infringement suit is on the plaintiff to lead evidence to show that there was infringement and defendant is left with only two defences, either seek invalidity of the patent or prove non-infringement. In many cases alleged infringer is able to probe non-infringement. For example in Cipla case [Drug sold as Erlocip] where Roche accuses Cipla of infringing its patent IN 196774 on cancer drug Tarceva [Erlotinib]. Delhi High Court had ruled in favour Cipla so far as non- infringement of patent was concerned. It is all together a different matter that Division bench overruled this findings and held that Cipla has infringed the questioned patent. For the purpose of the issue of declaration of non-infringement what matters here is that Single Judge's conclusion right or wrong, clearly reflects the judicial approach in deciding the issue of infringement as summed up in Paras below:-

"All the afore mentioned attending circumstances, coupled with the other reasoning discussed above and the lack of evidence clearly enables this Court to arrive at the finding that the plaintiffs have failed to discharge the onus of the proof as to establishing the infringement of the suit patent IN'774 in the present case."

286. To sum up the findings arrived under this head relating non establishment of the infringement of suit patent IN'774 is based on the following attending circumstances:

The establishment of the fact on record that the plaintiffs' product Tarceva does not corresponds exactly with the suit patent IN'774 but is a Polymorphic version B of the suit compound.
On the purposive construction of the claim of the suit patent IN'774 as per Catnic approach, it has been found that the plaintiffs never intended to cover the Polymorphic version B of the said compound under IN'774 as it is apparent from the facts correlating the product with that of the claim in the suit patent which are that the plaintiffs have separately filed patent for Polymorph B in US and India separately.
The plaintiffs' inability to show the role of the reactants or variants as major or minor at the time of establishing infringement which could have enabled this Court to persuade that the said Polymorphic version B was intended to covered within the ambit of the suit patent IN'774.
The plaintiffs' failure to examine the product of the defendant's clinically, file depositions thereto by establishing that the product of the defendant is actually covered within the suit patent IN'774.
The plaintiffs' non-denial of the fact that the Tarceva is based on the Polymorphic B version and non traversal to the defendant's position that the defendant product is not actually Polymorphic B version but is the one corresponding the suit patent.
The plaintiffs maintaining the position that the Polymorphic version B was intended to be covered within the purview of the claim of the suit patent without establishing and defining the role of the reactants as major and minor.
The plaintiffs' inability to justify as to whether the Polymorphic version of the said compound affects the working of the invention materially or not.
The existence of the attending circumstances like specification of US'221 which clearly provides that there are reactions done to the suit patent compound subsequently which makes the product under the Polymorphic version B more stable which lead to the conclusion that not merely the role of such reactants are major but innovative enough to call it as a patent in itself. The said US'221 also reveals that the working of the product like dosages and form like tablet one also changes than the earlier one.
The factum of the rejection of the separate patent IN'507 filed in India which was the attempt of the plaintiff's to seek the separate protection to the Polymorphic version B. this is again indicative of the fact that the plaintiffs as a patentee never intended to include the said Polymorphic version B in the suit patent but always intended to treat the same as a separate invention. The plaintiffs' rejection of the patent in IN'507 is due to the reason of failure of the plaintiffs to satisfy the controller as to efficacy part under the explanation appended to Section 3(d) and the said order has attained finality. " The plaintiffs' inability to show the positive evidence to establish as to how the statements made in US'221 are not relevant especially when the role of the reactants and workings are clearly defined therein. The plaintiffs could have done so by their own defining the role of the reactants and their effect on the working by leading contrary evidence.
The plaintiffs not following the direct approach of establishing the infringement by clinically examining the product and taking the indirect route of showing the admissions and orders, product packaging in order to call upon this Court to infer such an infringement.
The plaintiffs'inability to discharge its onus which is independent to that of the stand of the defendants on their own by establishing the infringement.
The plaintiffs being themselves being aware of the fact that the suit patent does not corresponds with the Tarceva drug and thereby seeking the prayers in the suit relating to legal rights of Tarceva drug and not seeking the prayers as to infringement of the Patent." [Emphasis added]

Impact of such declaration of non-infringement

Had Cipla taken the preemptive cost effective step before the patentee subjected him to the hassles of infringement proceedings he could have ended up with the same results as happened in Cipla case decision by single Judge. In the legal terminology once cease and desist notice is received by the potential infringer he is duty bound to defend himself. His options here are either to prove that he is not infringing the patent in question or seek invalidity of the patent claims. Court may hold that the patent is valid but non-infringed. An exculpatory opinion of the court setting forth reasons that the patent is not infringed at this stage operate as a decree. But if such a declaration as to non-infringement is sought under section 105 such a declaratory judgment is binding but is distinguished from other judgments or court opinions in that it lacks an executory process. This case may perhaps open up a channel by filing a seldom used section 105 suit to seek a court declaration as to non-infringement in order to preempt the patentee to seek injunction/ institute infringement suit. How far such attempt would succeed depends on the facts and circumstances of each case.

Conclusion

When assessing the declaration as to non-infringement of a patent right, a court is almost inevitably forced to engage in a comparative analysis of the patented products/process with the plaintiff's product/process and rarely it is merely a matter of looking at how much defendant's infringing activity fall within the scope of the alleged a patent. Such a finding by the court simply declares or defines rights to be observed or wrongs to be eschewed by a plaintiff. In legal terms such findings merely expresses the court's determination of a contested question of patent claims without ordering that anything be done. In other words declaratory judgment is binding but it lacks an executory process as distinguished from other judgments or court opinions. However, such declaratory judgment must deal with a real as opposed to a hypothetical dispute. It is not necessary for the court to look into an actual wrong to have been done or even threatened or contemplated. It provides parties with a convenient means for the efficient and effective resolution of a patent dispute, without the need for further remedies if the plaintiff succeeds. A declaration of non-infringement is an effective measure through which a third party involved in or anticipating a possible or actual infringement dispute may seek courts intervention to rule on its freedom to perform acts which might otherwise be at risk of being considered suitable for initiating patent infringement litigation.

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India: Declaration Of Non-Infringement: Preemptive Or Preventive Measure?