Caught in Limbo: The Karnataka HC’s Compromise on Staying Patent Infringement Suits
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Caught in Limbo: The Karnataka HC’s Compromise on Staying Patent Infringement Suits
By Anushka Kanabar
The Karnataka High Court’s order in M/s Lavos Performance v. M/S Yashram Lifestyle Brands dealt with a fraught question of patent law procedure: what are the options available to a trial court hearing an infringement suit for a patent that is the subject of revocation proceedings? Unlike the Supreme Court case of Aloys Wobben v. Yogesh Sharma, which held that defendants in infringement suits cannot simultaneously file a counterclaim based on the invalidity of the patent and initiate revocation proceedings, here, the defendant had clearly preferred one remedy (revocation). The dilemma, rather, was this: should the trial court move ahead with the infringement suit, risking wasting judicial time and effort in the scenario that the patent is ultimately revoked? Or should it stay the infringement suit, potentially handing patent infringers a delay weapon?
In Lavos Performance, the trial court took the former route, holding that the petitioner’s stay application was not maintainable and that the infringement suit must go on. Citing the Delhi High Court’s judgement in Unilin Beheer B.V. v. Balaji Action Buildwell, which refused to grant a stay in a similar factual scenario, the trial court noted that the Patents Act does not prescribe a stay on infringement proceedings simply because revocation proceedings are ongoing.
Instead of clearly setting aside or upholding the trial court’s logic, the Karnataka High Court devised a creative outcome: the infringement suit could proceed, but only to the extent of recording evidence on infringement; the final arguments on the merits could only be heard after the revocation proceedings were disposed of. In doing so, the Court seems to have acceded to the Petitioner’s arguments that deciding on infringement would necessarily involve adjudicating the validity of the patent itself, which was the subject of another proceeding.
This creativity, while well-suited to the facts at hand, is not backed up by extensive reasoning in the seven-page order passed by the Court. Interestingly, although the authority of the Court to pass such stay orders was under question, with the respondents specifically having raised the point that no provision under the Patents Act, 1970 enables it to do so, the Court does not mention any statutory backing for the same. The Court simply accepts the petitioner’s application made under the broad ambit of Section 94(e) CPC which confers discretionary powers upon it to issue interlocutory orders.
The Unspoken Trademark Analogy
The Court’s lack of engagement with the relevant statutes is important because unlike Section 124 of the Trade Marks Act, which explicitly allows stays on infringement proceedings on the ground of a pending revocation application, the Patents Act contains no such provision. In fact, the latter has an entire chapter on suits for infringement (Chapter XVIII), which only addresses revocation to the extent of allowing defendants in infringement suits to take the same grounds they would in a revocation application (see the proviso to Section 107).
It could be argued that the non-insertion of a similar provision in the Patents Act by way of amendment demonstrates the legislative intent to not permit such stays. This could be countered by arguing that the Trade Marks Act, being enacted later, simply filled some procedural lacunae in earlier laws like the Patents Act. On this view, the absence of an explicit stay power in the Patents Act is not deliberate or reflective of legislative intent in any way, so courts are free to exercise their discretion under the CPC.
Whatever position wins out, the bottom line here is that the silence in the Patents Act cannot be ignored in the face of the legislature’s explicit coverage of this issue in the Trade Marks Act. The Court’s treatment of this interplay between the two statutes, and its ultimate utilization of its discretion, could be made more explicit so as to not enable this confusion in patent infringement cases, where the rights at stake have a stronger potential to shut down innovation than in trademark cases.
A Missed Opportunity to Evolve Tests
The real challenge in such cases, as I indicated in the beginning of this post, is balancing two competing risks: on one hand, that posed by unscrupulous patent infringers filing frivolous revocation petitions just to delay the infringement suits they are embroiled in. On the other, courts could end up wasting a significant amount of time litigating infringement suits on patents that are revoked in a parallel set of proceedings.
The resolution of this question should be guided by existing jurisprudence in patent infringement suits. Here, I particularly refer to cases like F. Hoffmann-La Roche v. Cipla and Chemtura Corporation v. Union of India, holding that an interim injunction enforcing patent rights (in a patent infringement suit) might be refused if the defendants raise a “substantial question of invalidity.” While these cases are evidently in an altogether different context, they deal with a similar base problem: if a patent’s validity is vulnerable, should a court enforce it? This logic – of letting the court in the infringement suit decide on the prima facie strength of an invalidity claim – is also reflected in cases dealing with parallel trademark infringement and rectification proceedings, previously discussed on the blog here, here, and here.
The selling point of this approach is that it is grounded in the substance of the case at hand: it requires the court to actually examine whether the revocation challenge has merit. The Karnataka High Court in Lavos Performance ducks that assessment by accepting the petitioner’s context-blind, procedural argument that an infringement suit is dependent on the revocation proceeding. As a result, its directions to the trial court to proceed with recording evidence on infringement but pause before final arguments are more along the lines of a compromise than a principled decision. Moreover, in its refusal to engage with the statutory scheme, the Court may have missed an opportunity to bring greater clarity to a hitherto unexplored question.
This seemingly procedural question has consequences beyond this case: patent suits being prolonged, complex disputes, a lack of judicial clarity on when infringement suits ought to be stayed risks straining the system even further, locking patentees into a limbo where validity disputes remain unresolved. Therefore, while the Karnataka High Court’s compromise solution is pragmatic in the circumstances, the Court’s silence on whether the Patents Act demands it has left behind some unresolved questions. Courts dealing with similar cases in the future would do well to explicitly grapple with the statutory silence and the conflicting interests at work in such disputes.