Marks Rare
Counter Strategies – Malicious Prosecution, Groundless Threats, Cancellation And Revocation Of Plaintiffs Marks And Patents
With the advent of India as an important emerging market for global players, protection of trademarks, patents and designs for their goods and services has become a very vital issue. Increasingly, IPR stake holders are finding it necessary to enforce their rights in the Indian Courts through litigation. For years India was a neglected market, some of these IPRs, particularly trade marks, were being used by local entities even legitimately, in the absence of the foreign IPR holder in the Indian market. In other cases, there has been an actual deliberate copying of the global trade mark taking advantage of what is termed as ‘trans border reputation’. In still others there was prolific counterfeiting of the trade mark or design. In all these cases, if the global IPR holder now wants to establish its IPR in India it must deal with these violations to protect its market in India. Defendants who have been accustomed to an unregulated market and almost no attack from the IPR holder on their activities, are suddenly feeling the pressure of these enforcement actions. The defendants are using conventional time tested defence techniques to protect their respective businesses. At the same time they and the legal fraternity, involved in defending these litigations, are continuously evolving newer and innovative counter strategies for defeating and/or delaying and thereby frustrating these enforcement litigations. In this dissertation, I propose to identify these conventional and non conventional counter strategies deployed by defendants and their legal advisors, suggest mechanisms to anticipate these strategies and frame alternative mechanisms to effectively deal with them. Global holders of IPRs do not take into account two fundamental differences in litigation principles in India. Firstly, litigation is very inexpensive for Indian defendants and secondly, the Indian Courts are choked with cases, therefore it takes an inordinately long time for Courts to decide matters and therefore the Judges are quite liberal in granting adjournments. If the daily Board of any Judge in any court is studied, it would be humanly not possible for a Judge to even cursorily take up all the matters during the day and it is therefore preordained that many of the matters will be adjourned. Defendants take advantage of these procedural delays as a matter of strategy to defeat enforcement actions. Another typical tactic adopted by defendants in India is to take the most aggressive stand possible from the start of the proceedings. Therefore, unlike other countries where defendants generally reply to notices requiring them to cease and desist infringement of an IPR and even make counter offers of settlement, the normal practice in India is to attack the IPR stake holder and/or its IPR. This attack can take various forms: The commonest of them all is to challenge the validity of the IPR . In respect of trade marks and patents, the validity of the rights are challenged at the Intellectual Property Appellate Tribunal, based in Chennai. In the case of a patent, if the Patent has been recently granted, a post grant opposition may also be filed within one year of the publication of the date of grant at the Patent Office itself in accordance with section 25(2) of the Patents Act. In the case of a registered Design, revocation proceedings are commenced at the Controller of Designs at Kolkata. In 2008, the Designs Rules were modified to make revocation of a design simpler. Another common remedy when served with a notice is to file an action for groundless threat of legal proceedings [under section 142 of the Trade Marks Act 1999 for instance] and sue for damages. A further type of action is a declaratory suit seeking to declare that the action of the defendant does not amount to infringement. [under section 105 of the Patents Act, for instance] A not so common strategy is that the defendant itself files a suit for passing off against the stake holder asserting, that in fact it is the defendant who is the rightful owner and the IPR holder who has sent the cease and desist notice in the first place, has violated the rights of the defendant. All these defences are fairly robust and therefore, currently I do not advocate the issuance of a cease and desist notice to a potential infringer in the Indian context. If the IPR holder has in fact decided to go after an infringer, an action for infringement must be filed as soon as possible after the investigation stage is over. This will effectively thwart the actions for groundless threats which is not available once a litigation is actually filed [see for instance section 142(2) of the trade marks Act]. When it comes to litigation in the Indian environment, the conventional legal advise has been to file an action and seek an interim or even an ex parte injunction against the defendant. To a certain extent this makes sense because of the inordinate delays customary in the Indian Courts. However, the prospective defendants have come to understand this anxiety of the IPR stake holders and their legal advisers. Therefore their initial strategy is to delay and thwart the taking up of the matter for interim injunction in the first place. This strategy takes the form of filing a sheaf of interlocutory applications challenging every possible aspect of the suit. It starts with challenging the jurisdiction of the Court to entertain the Suit. It is often seen that many of the legal retainers of Global IPR holders are located in the metro cities of Delhi, Mumbai, Kolkata and Chennai. Often the infringer may not have any activity in these cities, but the action for infringement is filed in one of these cities for the convenience of the stakeholders’ lawyers. Such a suit is therefore ideal for the infringer to challenge the jurisdiction of the Court. To prevent this type of counter strategy, it is advisable to file the suit within the jurisdiction of the Court where the defendant resides or carries on business. In my experience Judges outside the Metro Cities in India are quite keen to deal with IPR issues and some times pronounce very erudite and favourable judgements, when they are explained the legal provisions clearly. Another expedient measure adopted by Plaintiffs is the use of a local authorised signatory to execute the documents, particularly the Plaint. It is not uncommon that a junior lawyer from the local litigating lawyer’s office is given the authority to make all statements on behalf of the Global IPR holder. Except for local technical or legal matters which may require that a local or legal person may be so authorized, where facts and evidence is to be laid before the Court, the practice of using an external authorized signatory to the main pleadings, must be avoided, because this gives the defendant a chance to challenge the signatory. If the suit were to ever go on to trial it may pose all sorts of problems for the plaintiff, particularly if the plaintiff decides to change its litigation lawyer. This counter strategy can be prevented if the constituted attorney of the Plaintiff or a senior officer of the Plaintiff executes the pleading papers in the first place. I must at this stage stress on an important maxim that is not appreciated. The grant of an interim injunction is a purely discretionary relief whereas the grant of the permanent injunction is to be decided purely on the merits of the case. Because of the very nature of the interim relief, for countering the interim injunction, the defendant adopts two parallel strategies : In the first place the defendant challenges the validity of the IPR. Under the Indian Trade Marks once the validity has been challenged under the provisions of section 142 of the Act, the trial judge must stay the proceedings. Secondly the defendant pleads balance of convenience in its favour. The balance of convenience counter strategy at the interim stage has often worked in favour of the defendant. These pleas include attempting to show the apparent mala fide actions of the Plaintiff including that of excessively overcharging for the products protected by the IPR , delay in filing the Suit, acquiescence and latches, lamenting how the defendant and its business is likely to suffer irreparable loss, how the Indian customers are likely to be deprived of the low cost defendants goods and the same customers will be oppressed by the plaintiff, how the employees of the defendants and its associates will be deprived of employment. The list goes on and on. At the interim stage the Courts in India have been successfully persuaded by these pleas. {see for example the recent case of Roche vs Cipla in the Delhi High Court, where Roche was portrayed as a villain and even fined a significant amount for ‘daring’ to take on the ‘altruistic’ defendant } There are two effective ways to tackle these counter strategies. By proper investigation of the defendant’s activities, the suit should include all that is wrong with the defendant’s products. Instances where the defendant’s products, even products that are not the subject matter of the suit, have been required to be recalled may be led in evidence. Actually test can be performed to establish that the defendants products under the infringing IPR are subs standard and are definitely not up to the standards of quality of the Plaintiff’s products. Any evidence to show that the defendant is unreliable and capable of placing unsatisfactory, substandard product in the market, or are themselves violating will help tipping the scales in favour of the Plaintiff in matters of discretion. Alternatively, in my opinion, the Plaintiff should trade off the interim injunction application with an order for expediting the invalidity proceedings and even the trial for permanent injunction. On rare occasions, Judges themselves have favoured a fast track completion of the trial, as happened in the Scotch Whiskey Association’s case at the Mumbai High Court. Recently, a Judge of the Delhi High Court commented on the paucity of final judgements in IPR matters while dealing with a patent interim injunction case. Once the validity challenge has been shaken off, the infringement action boils down to whether the act of the defendant amounts to infringement or not. The action is now free from any distractive and disruptive proceedings. In the rare occasion where the proceedings have proceeded to trial, the defendant commences its dilatory activities in trying to needle the plaintiff. Particularly if a witness is required to travel from abroad, it is not uncommon for the defendant going to any length to seek an adjournment. I must here also stress the importance of continuous investigation on the activities of the defendant. Rarely will the defendant file an action for malicious prosecution in case the plaintiff is able to obtain a decree against the defendant. Well before even a decree is obtained or damages awarded against it, the defendant is quite likely to have changed its address, location, constitution and even name thus thwarting the plaintiff’s efforts. Most decrees in India go unexecuted. The primary cause for this is the lack of ongoing investigation efforts by the local team. With continuous monitoring all these activities can be taken into account during the proceedings. In dealing with the defendants’ counter strategies, IPR stake holders should bear in mind never to underestimate their opponents’ tenacity to pursue their cause, particularly when the dice is sometimes heavily loaded against the stake holders in the first place .
Unfortunately, stake holders in IPRs in India, particularly the global players, have not yet accepted this fundamental maxim. IPRs, being by their very nature a form of a negative monopoly,- giving the IPR holder a right to prevent others from making, selling or importing products which infringe the IPR, -are often looked upon in India as instruments of oppression. In fact in a recent judgement delivered by the Intellectual Property Appellate Tribunal, [the Glivec case] the Tribunal even whet on to state, whilst refusing the grant of a patent, that the grant of a patent would be against the interest of the common public and therefore contrary to ‘public order’, thus questioning the existence of the very IPR system in the first place.
About the Author
This article was written by Dr. Mohan Dewan and Dr. Niti Dewan from R. K. Dewan and Co. which is leading IPR firm from India with vast experience in the field of
Patent Infringement
and
Trademark Infringement litigation.
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