Full Text
HIGH COURT OF DELHI
Date of Decision: 4th August, 2023
ENCONCORE N.V. ..... Plaintiff
Through: Mr. Hemant Singh, Ms. Mamta Rani Jha, Mr. Siddhant Sharma, Mr. Abhay Tandon, Mr. Rishabh Paliwal, Advocates.
Through: Ms. Vibha Makhija, Sr. Adv. with Mr. Pankaj Pandey, Mr. Anshuman Gupta, Mr. Karan Mamgain, Advocates along with Mr. R. K.
Gupta, MD & Mr. Raghav Gupta (M- 9560031419)
JUDGMENT
1. This hearing has been done by hybrid mode.
2. The Plaintiff-Enconcore N.V., a Belgium-based company, has filed the present suit seeking a permanent injunction restraining the Defendants- Anjani Technoplast Ltd. and Mr. R.K Gupta from infringing its registered Indian Patent No. ‘260709’ (hereinafter, ‘Plaintiff’s patent’ or ‘suit patent’). as also infringement of copyright, damages and other reliefs.
3. The case of the Plaintiff is that it is the global leader in the manufacture of honeycomb sandwich panels and parts, which are used across various industries segments and products. The Plaintiff claims that it has patented the technology in the production of thermoplastic honeycomb core materials and sandwich panels, which it supplies to various companies around the world. The Plaintiff also claims to have issued licenses for its patented technology to various companies that manufacture such panels. The Plaintiff has an annual turnover of over 6 million Euros. Additionally, Plaintiff also avers to have licensed the technology to Tata Group in the U.K., where Tata Steel is manufactured using the Plaintiff’s patented polymer honeycomb production process.
4. The suit patent is titled “FOLDED HONEYCOMB AND PROCESS FOR PRODUCING THE SAME”. It is submitted by the Plaintiff that the suit patent invention relates to folded honeycomb formed by a plastic deformation without using any cuts. The case of the Plaintiff is that the process of deformation of the thermoplastic firm by way of thermo-forming serves the purpose of formation of three-dimensional shapes i.e. cells of honeycomb in the folded end product. These cells in honeycomb structure are thus the structural and load bearing elements of the folded honeycomb structure. The said panel is identified by various features, including a central honeycomb core that is sandwiched on the sides with laminates. According to the Plaintiff, the said honeycomb panel is used in insulation, sound proofing and various other applications. Various steps have also been shown by the Plaintiff in the patent to show the manner in which it is manufactured. The advantages claimed by the Plaintiff in its honeycomb panel are set out in the patent and are pleaded in the Plaint, as under:
5. The Plaintiff filed the suit patent as Patent Application NO. 3054/DELNP/2007 as national phase entry of Patent Cooperation Treaty (PCT) International Application No. PCT/BE2005/000168 dated 21st November, 2005 claiming priority from European Application NO. 04447255.[3] dated 19th November, 2004. Indian filling date of the said application is 24th April, 2007. The term of the suit patent is valid till 20th November, 2025 owing to the international filing date 21st November, 2005. The suit patent was, thereafter, granted on 19th May, 2014. The bibliographic details of the suit patent are as follows: Particulars of IN 260709 Date Indian Patent application no. 3054/DELNP/2007 Indian Filing date 24th April 2007 International Filing date 21st November 2005 International PCT application no. PCT/BE2005/000168 Priority Date 19th November 2004 Date of grant 19th May 2014 Term of validity of patent 21st November 2025
6. The corresponding patents to the suit patent have also been granted in Europe, the US, Russia, Japan and China. It is, thus, submitted that the Plaintiff’s patent deserves to the protected and enforced. The details are as follows: Country Patent Number (Date of Grant) Europe EP1824667 (24/06/2010)
7. The Defendant No.1 - M/s Anjani Technoplast Ltd. is a company based out of Delhi engaged in the manufacturing and marketing of plastic products, special-purpose machines, moulds, safety and security equipment for defense, bulletproof jackets, helmets, anti-riot control equipment, shields, etc. Defendant No.2 - Mr. R. K. Gupta is the managing director of the Defendant No.1 company.
8. The Plaintiff's case is that during an International Conference and Exhibition on Reinforced Plastics (ICERP) held in Mumbai in April 2013, the Plaintiff's representative came across the Honeycomb Panel, i.e., the infringing product exhibited by Defendant No.1. Again, in February 2018, the Plaintiff came across the infringing product of Defendant No.1 sold under the brand name HONCORZ.
9. It is submitted by Mr. Hemant Singh, the ld. Counsel for the Plaintiff that since the Plaintiff was of the opinion that the Defendant’s panel that was exhibited, violated the Plaintiff’s patent rights, a legal notice was sent by the Plaintiff to the Defendants in February, 2018. The same was followed up with another letter dated 15th March, 2018; however, according to the Plaintiff, no reply was received from the Defendants. In view thereof, the Plaintiff conducted an investigation through its private investigator. The investigation report dated 14th October 2018 revealed that the Defendant’s products were marketed and sold through the website www.anjani.com and were also advertised on www.indiamart.com, Exportersindia.com, www.justdial.com, www.tradeindia.com as also on social media platforms. The investigation report further revealed that the Defendants are manufacturing a wide range of honeycomb panels with the main brand being ‘HONCORZ’. Additionally, at the investigator's behest, Defendants’ employee furnished a honeycomb panel sample and a brochure showcasing the products of Defendant No. 1.
10. After receiving the investigation report, the Plaintiff's Belgian Attorney, Mr. William Bird, forwarded a sample of the product to an independent testing institute specialising in polymers and polymer processing. The test report dated 24th April 2019 confirmed through their expert, that the Defendants’ product infringes on the Plaintiff's patented product.
11. After analysing the said infringing products of the Defendants, the Plaintiff filed the present suit seeking an injunction restraining the Defendants from manufacturing, using and selling the said infringing products.
12. Vide order dated 29th July, 2019 the Court granted an ex-parte adinterim injunction in the following terms:
13. Thereafter, a contempt application I.A.-4851/2023 was filed by the Plaintiff alleging that Defendants had not complied with the aforesaid order. On 29th July, 2019 this Court appointed Local Commissioners in the following terms: “IA No. 10143/2019
1. This application is filed under Order 26 Rule 9 CPC seeking appointment of Local Commissioners. It is stated that the' plaintiff apprehends that on being served with the ad interim injunction order, the defendants will dispose of the existing stock of infringing goods and flood the market with infringing goods without proper documents executed to show such sale.
2. There is merit in the contention of the plaintiff.
3. Accordingly, Mr.Vinod Wadhwa, Advocate (Mobile No.:9811175799) is appointed to visit the following premises of the Defendants Anjani Technoplast Ltd. Flat No. B-63, Sixth Floor, Nav Kunj Apartments Plot No. 87, I.P. Extension, Patparganj, Delhi East, Delhi -110092.
4. Mr. Farman Ali, Advocate (Mobile No.:9469448888) is appointed to visit the following premises of the defendant:- "Anjani Technoplast Ltd, 6A, Sector 40/41, Ecotech-I, Greater Noida, U.P-201310.
5. The Local Commissioners will obtain samples of honeycomb panels of the defendants which will be filed in court. They will also make an inventory of the stock of such infringing honeycomb panels lying in the premises and hand over the same to the defendants on superdari.
6. The local commissioners need not give any advance notices to the defendants. The representative of the plaintiffs and their counsel will assist the local commissioners in carrying out the necessary work. The local commissioners shall also sign books of accounts etc. and take a copy of the same lying at the site. The Local Commissioners are also permitted to hire a photographer who will take photographs of the infringing products at the site. The Local Commissioners will also be entitled to break open the locks of any almirah or storage area in the premises, if the defendants do not cooperate and open the locks.
7. The fees of the Local Commissioners are fixed at Rs. 1,00,000/- each plus out of pocket expenses.
8. The SHO of the concerned Police Station where the above premises are located will ensure that appropriate police protection is granted to the local commissioners to enable them to execute the necessary work.
9. Application stands disposed of.”
14. The Local Commissioners have submitted their reports dated 7th August 2019 and 1st November 2019. Some samples from the Defendants’ premises were procured from the Defendants’ premises. They also prepared an inventory, and have filed the same along with their respective reports. In the said reports it is stated that the Ministry of Defence is one of the main customers of the Defendants.
15. In the meantime, the Defendants have also filed their written statement on 9th October 2019. The Defendants’ aver that the suit patent is invalid and should be revoked under Section 64 of the Patents Act, 1970 and, in any case, the Defendants are not infringing the same, as their product falls completely outside the scope of the claims of the suit patent.
16. Further, a confidentiality club was also constituted under IA. 15072/2019, wherein vide order dated 31st July 2023, the enlarged chart containing details of the Defendant's product and process, was allowed to be exchanged between the parties.
17. According to the Defendant, it is the sole manufacturer and supplier of pressurized containers for missiles, ammunition and sensitive equipment for the Ministry of Defence, Government of India. The Defendant claims that it is the only non-Government supplier for Akash missiles, and has entered into exclusive agreements with Ministry of Defence companies DRDO, Bharat Dynamics Ltd. etc. It is also averred that the Defendant No.1 possesses an in-house R&D unit led by the Defendant No. 2, focusing on research, development, and commercialization of products and technology. The technology and equipment used to manufacture honeycomb panels are all developed in-house through years of hard work and research by Defendant No. 2. In relation to the present suit, the Defendants also argue that from 2013 to 2018 no action was taken by the Plaintiff, hence the present suit is belated.
18. The Court has also been shown some photographs depicting the containers manufactured by the Defendants for Akash missiles. On behalf of the Defendant, it is argued that the process for manufacture of the honeycomb panels used by the Plaintiff and the Defendants is entirely different.
19. The Defendants also rely upon various prior arts such as Patent no. DE19716637A[1] [titled: ‘Method of producing folding honeycomb structure’] and DE19606195A[1] [titled: ‘Folded honeycomb structure esp. used as sandwich core layer’], to argue that honeycomb panels are known in the field. The written statement also claims that there are other prior arts which show similar honeycomb panels which are manufactured. The written statement has been accompanied with the counterclaim seeking revocation of the patent.
20. As of 2017-2018, the turnover of the Defendants is claimed to be Rs.16.54 crores for containers which incorporate inter alia honeycomb panels/ equipment.
21. The Court has heard ld. Counsels for the parties over the last two to three hearings, the submissions which have been made are recorded below: Plaintiff’s submissions
(i) The Plaintiff submits that it has licensed its honeycomb technology to various persons and companies globally. The usual terms on which the licensing is done are based on the sale value of the sandwich panel, i.e. 4% of the invoice value is charged. In cases where parties do not wish to disclose the invoice value for confidentiality reasons, an alternate license fee of 1 Euro per square meter of the honeycomb panel is charged.
(ii) Mr. Hemant Singh then takes the Court through the claims in the suit patent and the specification to highlight the existing state of art and the advantages of the Plaintiff’s product for better insulation than the existing prior art. He submits that the existing state of art, as explained in the technical background of the specification, contemplates the honeycomb as disclosed in ‘WO 97/03816’, wherein the honeycomb is produced continuously from a single layer, and the hexagonal cells are constructed by introducing cuts into the layer. In the Plaintiff’s patented product, however, folded honeycombs are produced without using cuts and this enables formation of vacuum with greater efficiency and lesser usage of material.
(iii) Mr. Singh thereafter takes the Court through the plaint in order to highlight the manner in which the honeycomb is structured and prepared. Pages 27 to 41 of the plaint are relied upon to show the prior art which existed, and the manner in which the end product is arrived at.
(iv) Plaintiff’s counsel also brings to the attention of the Court to the photographs from the Defendants’ website to show that the Defendants’ product is almost identical. The purchase documents from the Investigator - Greves Group are relied upon to establish that the product was purchased and was examined by Mr. William Bird to give his affidavit and expert opinion. Defendants’ submissions
(i) Ld. Sr. Counsel, Ms. Vibha Makhija, highlighted the following differences between the Plaintiff’s patent product and the Defendants’ product: a) In the Plaintiff’s case, the starting point is a plastically deformable sheet, whereas in the Defendants’ case, no sheet is used as an input, and the starting point is chopped granules. b) In the Plaintiff’s case, there is a single line continuous process in which half folded honeycomb self-structures are produced. In the case of the Defendants, the process is not continuous, and consists of two separate and distinct processes. Defendants' process involves cutting as without introducing cuts, they cannot produce the honeycomb foldable 3D half cells. c) In the Plaintiff’s case, the manner in which the sheet is subjected to rollers would show that the brakes are created once the sheet passes through the roller. However, in the case of the Defendants, there is no use of brakes at all, and the processes are distinct and shown in diagrams in the chart produced, especially at 1(b), 1(c) and 3(c). The initial granules are extruded, and the sheet passes through specially designed puller rollers, which work in an angular manner to introduce the joints in the molten draping stock. Ld. Counsel for the Defendants further states that the cutting system is also completely different, and after the cutting takes place, it is wrapped around the roller and thereafter reversed for the next stage of the process. d) In the Plaintiff’s case, there is single sandwiching which takes place, whereas, in the Defendants’ case, there are stages of sandwiching and finally the laminate sheet is stuck on the product. (e) In the Plaintiff’s case, the honeycomb panel are symmetrical and there is no space between the individual cells, whereas in the Defendants’ product, the cells are not symmetrical and there is a gap between the cells in the Defendants’ product. The cells in the Defendants’ product do not close one hundred percent. (f) It is further stated that due to the operation of the injunction order, the Defendants' sales have been diminishing over the last 4 years, and hence, the injunction order should be vacated to enable them to continue their business. Further, the Defendants’ are the sole manufacturer of honeycomb panels in India. Analysis
22. Heard. Today, the Court has also perused the samples of both the products, which have been filed along with the Local Commissioner’s reports.
23. One of the significant factors in the present case, which would have a bearing at this stage, is the fact that the Plaintiff licenses its technology, and as per the submission made by the ld. Counsel, the terms of the license are, on the basis of invoice value i.e. 4% of the invoice value. In case, the invoice value cannot be disclosed in order to maintain confidentiality, €1 (one Euro) per square meter of the honeycomb is charged. Admittedly, the Plaintiff is not manufacturing its honeycomb panels in India, nor it is selling the same, in India. In fact, the sales figures of the Plaintiff’s product in India are miniscule.
24. On the other hand, the Defendant is clearly selling to the Ministry of Defence, and its various companies since 2012. The containers/equipment, manufactured by the Defendants, use the honeycomb panel for various purposes. Clearly the containers of the Defendant cannot be sold without the panel, considering the purpose for which the containers are stated to be needed, that too by the Ministry of Defence. Considering that the Plaintiff is willing to license its suit patent and the Defendants are a company supplying to the Ministry of Defence, this Court is of the opinion that at this stage, instead of an injunction, which would result in complete stoppage of the production of containers/equipment only because the Defendants’ honeycomb panel has been incorporated, an interim arrangement can be put into place to balance the interest of both the parties.
25. Such a course of action would also be appropriate considering the ratio of the decision rendered in Franz Xaver Huemer v. New Yash Engineers (AIR 1997 Delhi 79) where the ld. Division Bench held:
12. The Indian precedents in this behalf are clear and say that non-user of the patent by the patentee is a ground for refusing injunction. A learned single Judge of the Delhi High Court in N.R.D. Corporation of India v. D.C. and G. Mills Co., AIR 1980 Delhi 132 refused injunction on the ground of non-user by the plaintiff-patentee. To a like effect is the decision of the Calcutta High Court in Boots Pure Drug and Co. (India) v. May & Baker Ltd., (1948) 52 Cal WN 253 which was followed by the Madras High Court in Manicka Thevar v. Star Plough Works. We are in agreement with these decisions for the more elaborate reasons we propose to give below. [….]
19. For our purpose the minority view pronounced by Douglas, J. in the Special Equipment Co. case is important. He declared that the absolute right theory had come into the law a decade after the first patent Act was passed and that it "was time to be rid of that rule". It was inconsistent with the Constitution (Article I Cl. 8) and the Act. He said that a patent is not a form of private property but a "privilege" "conditioned by a public purpose," to promote the progress of science and useful arts. (Mercoid Corp. v. Mid-Continent Invest Co., (1943) 320 US 661: 88 Law Ed 376). The exclusive right of the inventor is but the means to that end. This principle was recognised in several cases earlier in US. But the Continental Paper Bag case had deviated radically from that theory and equated the "exclusive" right with an "absolute" right, thereby subordinating the public purpose of the grant to the self-interest of the patentee. The results were far reaching, observed Douglas, J.: "The result is that suppression of patents has become common place. Patents are multiplied to protect an Economic barony or empire, not to put new discoveries to use for the common good." …. We are in entire agreement with the strong views expressed by Douglas, J. in his dissenting judgment. The philosophy behind his view appears to us also to be the basis of the views of the Calcutta, Madras and Delhi High Courts earlier referred to. Apart from that even the majority decision in the US cases has clearly left the question open so far as equity is concerned.
21. In our opinion, what was said about unused foreign patents and their adverse effect in US, equally applies to foreign patents registered in India but not used.
22. For the above reasons, the plaintiff who has registered patents in India in 1984 but has not used them in India cannot, in equity, seek temporary injunction against the respondent. Points 1 and 2 are decided accordingly.”
26. Ld. Sr. Counsel for the Defendants, on instructions from Defendant No. 2-Mr. Gupta, submits that for every container and shelter home manufactured by the Defendants, only 10 square meter and 25 square meter of the honeycomb panel is used, respectively. Further, the said honeycomb panels were in the past used for portable toilets under Swachh Bharat India campaign as well.
27. At the moment, the Defendants intend to supply honeycomb panels only to the Government. In this background, at this stage, with the consent of the parties, the following interim arrangement is put in place. (1) For the purpose of incorporating the honeycomb panel in containers or shelter homes supplied to the Ministry of Defence / Ministry of Home Affairs or any other governmental body, the Defendants are permitted to manufacture and use honeycomb panels in such containers, equipment or products that may be manufactured for shelter homes. (2) A complete account of sale shall be filed on a six-monthly basis of all the equipment/containers, products that are sold, and contain the honeycomb panel. The value and the quantity of the said honeycomb panels shall also be mentioned. Invoices need not be filed, in order to maintain confidentiality. However, the quantum shall be mentioned in square meters. (3) To safeguard the Plaintiff’s interest, the Defendants shall deposit a sum of Rs.25 lakhs with the Registrar General of this Court within four weeks. The same shall be kept in an interest-bearing FD on auto renewal mode. (4) In order to confirm the fact that in such missile containers, not more than 10% to 15% honeycomb panel is used, it is directed that CMD, Bharat Dynamics Ltd. shall nominate a Senior Scientist who shall inspect the Defendants’ containers, mention the quantity of honeycomb panel incorporated/used, and file a report before this Court within 6 weeks, in a sealed cover. The Senior Scientist shall be nominated within 10 days of this order. (5) The nominated Senior Scientist shall inspect the containers and other equipment/products which use the honeycomb panel of the Defendants on 21st August, 2023.
28. The injunction order dated 27th July 2019 is modified only to the above extent for supply to the Ministry of Defence, Ministry of Home Affairs or any other governmental body.
29. On the next date of hearing, the Defendants’ concern regarding the Plaintiff not having any assets in India and the security to be furnished in this regard, as also the accounts in respect of the Defendants’ production as demanded by the Plaintiff shall also be considered.
30. On the next date of hearing, both the parties shall produce their respective multiple samples of the honeycomb panels before the Court so that they can be exchanged between the parties.
31. Sealed cover produced in the Court has been opened. Registry is directed to re-seal the same. The Local Commissioner’s report along with the samples thereof is open for inspection by both the counsels.
32. The contentions relating to infringement, invalidity etc., have not been considered at this stage, in view of the interim arrangement agreed as recorded above. All the contentions of parties are thus left open.
33. I.A. 15072/2019 is disposed of.
34. List on 6th October, 2023.
PRATHIBA M. SINGH JUDGE AUGUST 4, 2023/dk/dj/kt/dn