Three Birds, One Stone: Inphase Power Technologies v. ABB India

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Inika Charles

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Oct 30, 2016, 7:20:46 AM10/30/16

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In a fascinating case before the Karnataka High Court: Inphase Power Technologies v. ABB India (read the order here), Justice P.S. Dinesh Kumar passed an order confirming the misappropriation of confidential information, patent infringement, and hold your breath – trademark infringement as well! Not to be left out, there were arguments advanced of alleged copyright infringement too, which were ultimately not taken up by the Court. This case is significant due to the parties involved, as there is an ongoing CCI investigation on ABB as well, following an abuse of dominance complaint filed by none other than Inphase.

The facts are quite simple; the present case is an appeal against a Trial Court order which restrained Inphase from infringing ABB’s patent, and from misappropriating their confidential information. ABB is a company inter alia involved in the business of manufacture and supply of electrical equipment of various types, and markets their products under the brand ‘PQC STATCON’. The defendants were offering a product called ‘STATCOM’, a reactive power compensator. ABB alleged that Inphase, a company formed by their former employees had used and misappropriated confidential information that they had been entrusted with while in the service of ABB. It was also alleged that Inphase, through their marketing of ‘STATCOM’ (trademarked as ‘150-SCOM’), a reactive power compensator – infringed not only ABB’s patent, but also their trademark. I shall deal with these issues separately:

Misappropriation of Confidential Information

The Court accepted ABB’s arguments insomuch as the misappropriation of confidential information was concerned. ABB had contended that the directors of Inphase had formed the company while still employed at ABB. This was evidenced by their use of ‘@inphase’ domain name e-mail ID’s before they resigned. The Court found Inphase’s defence on this matter to be quite frivolous, as they had merely attempted to prove that the emails were not genuine.

Referring to Sirmour Remedies Private Limited v. Kepler Healthcare Private Limited, a 2014 Calcutta High Court decision, the Court stated that an ex-servant could not make improper use of information communicated to him in confidence and under contract, and could be restrained from doing so. The Court emphasised that such information obtained in confidence could not be used as a springboard for activities detrimental to the person who made this confidential communication. Further, it was held that an ex-employee could be injuncted from using such information.

Trademark Infringement

This issue was not dealt with in detail. Inphase, though marketing their products under ‘STATCOM’ and ‘150-SCOM’, applied to trademark ‘PQC STATCON’ on the 5th of August 2015 (Application No. 3025385). They attempted to rationalise this behaviour by claiming that ‘STATCON’ was a generic term. The Court dismissed their arguments on the matter as their conduct of applying for said trademark went against the stance they attempted to take.

Patent Infringement

ABB was granted Patent No. 206766 for a ‘Dynamic Reactive Power Compensator’ – STATCON. They argued that the product manufactured by Inphase infringed their patent, as it was in substance the same invention. Inphase attempted to differentiate between the two products on minute differences in the technical specifications, which the Court dismissed. Justice Kumar was of the opinion that a prima facie case was all that was needed to be shown at this stage; and the evidence put forth by ABB had fulfilled this standard.

The Court then referred to previous precedent to rule on this matter: The 1977 Delhi High Court case of Raj Prakash v. Mangat Ram Chowdhry had held that a person would be guilty of infringement if he makes what is in substance the equivalent of the patented article, and trifling or unessential variation was to be ignored in this determination. Ravi Kamal Bali v. Kala Tech, a 2008 Bombay High Court Judgement held it to be obvious that only the patentee of the main invention was entitled to improve, or modify the invention, or permit anyone to benefit from the main invention. Relying on these cases, the Court found Inphase to have infringed ABB’s patent, and therefore held the existing injunction to be valid.

Role of Appellate Courts

Before concluding, the Court highlighted the role that a Court of Appeal should confine itself to, and that they should be slow in interfering with discretionary orders passed by Trial Courts. As was held by the Supreme Court in their 1990 case of Wander Ltd. v. Antox India Pvt. Ltd., Appellate Courts would normally not be justified in interfering with the exercise of discretion of Lower Courts on appeal, solely on the basis of the existence of a contrary conclusion. Only where the Court’s discretion can be shown to have been exercised arbitrarily, or where they ignored settled principles of law, should Appellate Courts interfere. Based on this principle, the High Court did not see fit to disturb the Trial Court’s ruling in any manner, and hence dismissed the appeals filed.