Shogun Organics Ltd. v. Gaur Hari Guchhait & Ors.

2. That this affidavit is being filed in compliance with the solemn order passed by this Hon‘ble Court on 21st July, 2015, wherein the Hon‘ble Judge has been pleased to direct, ―Let the affidavit (s) be filed by the defendants in terms of the order dated 23rd February, 2015 within two weeks from today. In the said affidavit (s) they will also disclose the process of their products in addition to the earlier information.‘

3. That it is humbly submitted that the deponent herein has already submitted an affidavit before this Hon‘ble Court on 30th April 2015 disclosing the particulars of the batch numbers of the products used by Defendant No. 4 (Manaksia Ltd.). In the said affidavit it was also stated that Defendant No. 5 (Endura Spa) is not engaged in manufacturing D-trans allethrin.

4. The particulars disclosed in the earlier affidavit is reproduced here in below: Name of Defendants Manuf acturin g Dtrans allethri n Using Dtrans allethrin for final product Batch no. Year of manufact ure CIB no. Manaksia (Defendant no. 4) No Yes Latest produced batch No. 12 hrs coil MHP364 month code – April 2015 Latest batch No. produced with d-trans allethrin provided by Solex (by using batch AL20150304 of March 2015): 12 hrs coil MHP364 month code – April 2015 CIB registration no. for 12 hrs coil (d trans Allethrin): CIR 46, 634/2003/d trans Allethrin (Mosquito Coil) (239) - Endura Spa (Defendant no. 5)

5. That the defendant nos. 4 & 5 have provided the above details as directed by this Hon‘ble Court. No other details are available or have been suppressed by the defendants.

6. In respect of the direction of the Hon‘ble Court to disclose the process of the products of the defendants, the deponent respectfully submits that the plaintiff‘s patent number no. 236630 is under challenge in a post grant opposition proceeding before the Learned Controller of Patents. That on 26th June, 2013 the Learned Controller of Patents had allowed the post grant opposition and revoked the patent. Subsequently, the plaintiff preferred an appeal before the IPAB. By an order dated 18th August, 2014 the post grant opposition has been remanded back to the Patent office for a de novo hearing. The matter is part heard.‖

8. Thus, all the Defendants failed to disclose the process of manufacture which was being used by them. On 12th March, 2018 the Court framed the following issues: “From the pleadings of parties following issues are made out:-

1. Whether the Plaintiff‘s patent IN 233660 is prepublished and lacks novelty in view of the CIB Regitration No. CIR-25,228/97/D-trans Allethrin (TECH) granted to the plaintiff? OPD

2. Whether the defendants have not infringed the plaintiff‘s registered patent IN 233660? OPD

3. Whether the plaintiff is entitle to the decree of permanent injunction as prayed for? OPP

4. Whether the plaintiff is entitle to the decree of damages, as prayed for? OPP

5. Whether the plaintiff is entitle for rendition of accounts, as prayed for? OPP

6. Relief”

9. On 3rd August, 2018, since the injunction application had remained pending since inception and there was no interim injunction, the application was disposed of. The Plaintiff examined one witness - PW 1. The Defendants did not lead any evidence, as recorded in order dated 3rd November, 2018. Thereafter, the matter was heard finally. Submissions of counsels

10. The submission of ld. counsel for the Plaintiff, Ms. Rajeshwari is that the Plaintiff was granted registration under Section 9(3) of the Insecticides Act on 17th March, 1997. The Defendant‟s registration is a follow-on registration under Section 9(4). Repeated orders were passed directing the Defendants to disclose their process, which they did not comply with. Even the affidavit that was filed by the Defendants on 4th August, 2015 does not actually disclose the process, but merely mentions the pendency of the postgrant opposition before the IPAB. An expert affidavit of Mr. Ramesh Lad has been filed by the Plaintiff to establish infringement and no counteraffidavit has been filed by the Defendants to rebut the said expert affidavit. Ld. counsel also relies upon a letter dated 9th February, 2011 issued by the Central Insecticides Board & Registration Committee, which clearly mentions that a registration under Section 9(4) of the Act is given only to such a party whose insecticide has the same process of manufacture as the original Section 9(3) registrant. On the strength of these three documents namely the Defendant‟s Section 9(4) registration, the letter issued by the CIBRC and the expert affidavit of Mr. Ramesh Lad, ld. counsel argued that infringement stands established. She also relies upon the finding in the order deciding the pre-grant opposition, which clearly distinguishes the various prior arts, and thus, establishes the novelty and inventive character of the Plaintiff‟s innovation.

11. Ld. counsel further submits that Manaksia Ltd., Defendant No.4 having opposed both at the pre-grant and the post-grant step and having led no evidence in support of its case of lack of novelty and inventive step, the grant of the patent and the unsuccessful nature of the Defendants‟ challenge shifts the onus on the Defendants. Further, the fact that Defendant had filed a pre-grant opposition goes to show that it ought to have waited till the same was decided, rather than launching the product.

12. Mr. Manav Kumar appearing for the Defendants submits that the main plank of his argument is that the process for manufacture of d-trans Allethrin was disclosed in the application filed by the Defendants with the CIBRC on 20th February, 2006. The registration was granted to the Defendant on 13th November, 2009 and the Plaintiff‟s patent is dated 10th May, 2007, thus, the invention is itself in the public domain. Since enormous reliance has been placed by the Plaintiff on the grant of registration under the Insecticides Act, if the process applied for by the Defendants is identical to the patented process and was disclosed in the said application, the Plaintiff‟s patent is, per se, invalid. He, further submits that PW-1 had admitted that the Defendants‟ process of manufacturing is the same as that of the Plaintiff, and that its application under the Insecticides Act was prior to the Plaintiff‟s filing, since the Defendants‟ process was being investigated by the licensing officer and not the Plaintiff‟s process, the immunity granted under Section 30 of the Patents Act is also not available.

13. He further relies upon a printout of the Plaintiff‟s website, which claims that d-trans Allethrin is being sold since 2002 as per its own website screenshot, which was admitted by PW-1. Since the Plaintiff has not made out a case that the earlier process had any shortcomings which required it to apply for a new process, the patent is not liable to be recognized. Moreover, Mr. Ramesh Lad was also not produced before the Court. Since the Plaintiff has not discharged the onus of proving infringement, the Defendant did not require to lead any evidence. In fact, based on the existing record, the Defendant submits that the Plaintiff‟s patent is invalid. Under Section 60 of the Indian Evidence Act, 1872, evidence of infringement has to be direct evidence and not reliance upon an opinion, and, thus, non-production of Mr. Ramesh Lad as a witness goes against the Plaintiff.

14. Mr. Manav Kumar further submits the word “public” qua the Plaintiff would include the Defendants i.e. the fact that the Defendants and the persons employed under them knew the patented process and had applied for the same under the Insecticides Act prior to the patent being filed itself proves public use and public knowledge of the invention. Insofar as the Plaintiff is concerned, the Defendants are members of the public.

15. Ms. Rajeshwari, ld. Counsel, on the other hand rebuts the submissions of ld. Counsel for the Defendant and submits that in order for the patent to be revoked under Section 64 of the Patents Act, the invention has to be publicly known and publicly used. Since the Plaintiff‟s website does not disclose the process of manufacture, no member of the public can ascertain the process of manufacture of d-trans Allethrin and thus, the invention is good in law.

16. She relies on the judgment of the Bombay High Court in Lallubhai Chakubhai Jarivala v. Shamalda Sankalchand Shah AIR 1934 Bom 407 to argue that if the members of the public cannot ascertain the patented process from the publication, then prior public use is not established.

17. She relies on the testimony of PW-1 who states that prior to the patent being issued, a different process was in use for manufacture of d-trans Allethrin. She submits that prior use has to be established strictly and not merely by surmises. Reliance is placed on Section 26 of the Patents and Designs Act, 1911 to argue that the novelty of the process is not destroyed unless there is public use. The same principle is also contained in Section 64 of the Patents Act which requires public use and not secret use. Reliance is placed on Section 64(1)(e) and (f) read with Section 64(2) of the Patents Act. Further, the use of „any person‟ in Section 30 shows that even the Defendant‟s application under the Insecticides Act is covered by the exception contained therein. She submits that a perusal of a news report in the Telegraph dated 11th February, 2014 shows that the Defendants were planning commercial launch only in February, 2014 and not before, while the patent dates back to 2007. This press news also establishes the relationship between the various Defendants. It also makes it clear that the approval under the Insecticides Act has been given to Manaksia. Thus, as of 2014, there were only plans to commence manufacture. Further, there is no evidence on record on behalf of the Defendants to show that there was any prior public use of all the 6 steps contained in the patented process.

18. The documents on record clearly establish that the Defendants are supplying the active ingredients to various coil manufacturers, including Jyoti Laboratories which manufactures mosquito repellent coils under the brand name „MAXO‟.

19. It is further submitted by Ms. Rajeshwari, ld. Counsel that though the expert Mr. Ramesh Lad himself did not appear, the evidence of PW-1 shows that the expert report was prepared under his supervision. The Defendants were repeatedly asked to produce the process adopted by them, which they failed to do. Analysis & Findings

20. This Court has heard the submissions of the parties. A perusal of the pleadings shows that the Plaintiff – Shogun Organics Ltd. has been granted a patent for the process of manufacturing of d-trans Allethrin. The said process has gone through several levels of scrutiny, including a pre-grant opposition by Defendant No.4, a post-grant opposition wherein the patent was revoked and an order by IPAB setting aside the said revocation and reinstating the patent. The patent is thus a valid patent, and subsists as on date. The claims of the suit patent read as under: ― We Claim:

1. Process of manufacturing d-trans Allethrin comprising of following steps: a) charging d-trans Ethyl chrysanthmate into a reactor at a temperature of 5 to 10 degrees C alongwith 75 gms of Sodium Hydroxide, 154 gms of water and 96 gms of Methyl Alcohol, b) subjecting reactants for saponification and distilled off methyl alcohol at atmospheric pressure of 4 kg. c) cooling of contents at 20 degrees C and further acidification with sulphuric acid wherein sodium chrysanthmate is converted into d-trans crysathemic acid. d) adding 1.70 kgs quantity of petroleum ether which forms two layers, petroleum layer containing d-trans crysathemic acid and water layer with dissolved sodium sulphate. e) Allowing two layers to settle for 1 hour, water layer is drained to effluent tank and d-trans crysathemic acid remains in the reactor, f) Carrying distillation of d-trans crysathemic acid at 20 degrees g) Treating d-trans crysathemic with 150 grams thiunyl chloride, thus forming d-trans crysathemic acid chloride which is further dissolved in N-H-heptane solvent. h) adding 540 grams d-allethrolne (72: 21) 230 grams pyridine and 600 grams toluene with d-trans chrysanthanic acid chloride in a reactor gradually resulting to desired d-trans allethrin.

2. The process of manufacturing d-trans allethrin as claimed in claim 1 wherein hydrogen chloride gas is scrubbed using caustic scrubber directly.

3. The process of manufacturing d-trans allethrin as claimed in claim 1 & 2 wherein the organic layer containing d-trans allethrin is distilled off to yield desired end product.”

21. The Defendants, in their written statements have alleged that the invention is prior published, prior used and hence lacks novelty. According to the Defendants, the process disclosed in IN „630 was known, because the approval for manufacture of the insecticide was granted to the Plaintiff on 17th March, 1997. Thus, according to the Defendants, the filing of the patent ten years after the approval was granted shows that the same is prior published and prior used. Apart from the averments relating to the pre and post grant opposition proceedings, the Defendants further rely upon the order of the Controller dated 26th June, 2013 which has since been set aside. Apart from these averments, the entire written statement is merely a denial of the plaint. The Defendants have failed to lead any evidence in the matter. As stated earlier hereinabove, the Defendants also failed to disclose their process.

22. A perusal of the evidence filed by PW-1 shows that the witness clearly states that d-trans Allethrin was being prepared by various processes, which suffered from shortcomings and disadvantages. In order to overcome these shortcomings, the Plaintiff invented a six-step synthesis process which is cost effective. Para 5 of the affidavit reads as under: ―5. I say that, the present suit relates to a process of manufacturing "D-trans Allethrin", a compound which is used as active ingredient in mosquito repellants and mosquito control products such as Coils, sprays and other insect repellant products. D-trans Allethrin, also known in the trade as "Esbiothrin", "EBT" and by various other names is an important insecticidal active ingredient (a.i.). D-trans Allethrin is responsible for the insecticidal activity of these products and their effect against target insects. Prior to the Plaintiffs invention, D-trans Allethrin was being prepared through other processes that suffered from various shortcomings and disadvantages. The Plaintiffs product is superior and efficient because the Plaintiff has devised a simple six step synthesis process which is cost effective. The process covered by the suit patent can be replicated in small laboratory scale experiments as well as large commercial scale production giving a minimum of 93% pure content. The product obtained using the process of the suit patent shows high efficacy, gives maximum repellant and knockdown effect against mosquitoes and low human toxicity.‖

23. The witness also gives details of the various steps in the process of manufacture of DTA and he states that there are various marker compounds which could be found in the Defendants‟ product establishing the infringement of the process. He filed a supplementary affidavit stating that his duties entailed supervising operations of the company “including manufacturing and quality control lab.” He further relies upon a judgment of the District Judge, Thalassery dated 23rd February, 2016 wherein a permanent injunction was granted protecting the Plaintiff‟s rights in the suit patent against a third party. PW-1 also filed a certificate under Section 65B of the Evidence Act to rely upon various printouts from the website.

24. In his cross-examination, the witness states that he used to supervise the production, Research and Development, quality control and administration of the Plaintiff and that he is the head of the R&D department from 1996 till date.

25. He admits that prior to the process patented by the Plaintiff, there were processes for manufacture of d-trans Allethrin and that d-trans Allethrin was available in the market prior to 2007, however, the same contained some deficiencies and shortcomings. He denied the suggestion that d-trans Allethrin was being manufactured by the Plaintiff since 2002. In the cross-examination, the witness admits that the terms selection of solvents, specific molar ratio in which ingredients are charged, high yield and purity are not mentioned. He admits that the usage of D-allathrone and Toluene solvent are mentioned in the specification, as also the analysis reports. He further states that the technical analysis of Ex.PW-1/23 was conducted under his supervision. He admits that he himself did not conduct the analysis of the „MAXO‟ coil, which contains the Defendants‟ D-trans Allethrin. The said analysis was conducted by the In Charge & Chemist in the R&D department of the Plaintiff. The witness admitted that the Defendants‟ registration under Section 9(4) of the Insecticides Act was prior to the Plaintiff‟s application for its patent. Issues that arise for consideration

26. There are two parallel issues that have arisen in the present case. The first is the submission based on the provisions of the Insecticides Act and the approvals granted thereunder. The second is the infringement of patent under the Patents Act. Both parties have made their submissions on these two areas of consideration in a completely conflated manner. The approvals under the Insecticide Act, in the facts of this case, have to be treated independently of the patent. This is because D-trans Allethrin as a product was known much prior to the Plaintiff‟s suit patent. The existence of D-trans Allethrin prior to the Plaintiff‟s application for the suit patent is not in dispute, however, details of the pre-existing processes have not been placed before the Court. The Plaintiff obtained its registration for D-trans Allethrin under Section 9(3) of the Insecticides Act in 1997, and the Defendant obtained its registration under Section 9(4) in 2007. The application by the Defendant was made in 2006. There is no doubt that the Defendants‟ approval is subsequent to that of the Plaintiff and is under Section 9(4). What is however, not established on record is as to which was the process that was being followed by the Plaintiff and the Defendants, which was disclosed to the authorities under the Insecticides Act. In the absence of any details as to the process which was disclosed by both parties to the Insecticides Authority, it cannot be held that the mere fact that the Defendants‟ registration is a follow-on registration under Section 9(4) would lead to the inference that there is an infringement of patent.

27. The patent being of 2007 vintage, is not in any manner connected with the Plaintiff‟s registration or the Defendants‟ registration under the Insecticides Act. Thus, the issue that arises in the present case has to be decided independently of the said registrations. The Plaintiff places enormous reliance on a letter issued by the Central Insecticide Board which reads as under: ―…. Point-II M/s. Shogun Organics Ltd. Mumbai, is the only registrant registered u/s 9(3) of Insecticides Act for indigenous manufacture of D-trans-allethrin technical in India. Point-III The applicant of 9(4) registrant should have the same process of manufacture as the original 9(3) registrant to make the same product with the same chemical composition as per the existing R.C. Guidelines. Therefore, it is quite clear that the term ―Same Condition referred to in reply dated 15.10.2010 interalia implies ―Same process of Manufacture also‖ This observation of the CIBRC cannot automatically mean that there is an infringement of the patent.

28. A perusal of the issues framed in the suit shows that with respect of the two main issues i.e. lack of novelty and non-infringement, the onus has been placed on Defendants. Issue No. 1 - Whether the Plaintiff‟s patent IN „630 is pre-published and lacks novelty in view of the CIB Registration No. CIR-25,228/97/D-trans Allethrin (TECH) granted to the plaintiff? OPD

29. Insofar as the question of novelty of IN „630 is concerned, the stand of the Defendants is that the same is pre-published in view of the registration granted under the Insecticides Act to the Plaintiff in 1997 and the Defendant in 2007. The Defendants have not filed a counter claim in the present suit as they were pursuing a post-grant opposition. The pre-grant opposition filed by Defendant No.4 was decided in favour of the Plaintiff. The findings in the said pre-grant opposition order dated 30th June, 2009 are that there were four prior art documents marked as D-1 to D-4 which were relied upon by the Opponent (Defendant No.4). The Deputy Controller of Patents holds that the Plaintiff‟s patent has a clear advantage that it does not leave any unreacted d-trans ethyl chrysanthmate (DTEC). It is also held that the prior art documents do not specifically teach the Plaintiff‟s process for manufacture of D-trans Allethrin. It was further held that the patent involves inventive steps and a technical advancement. It is also held that the opponent failed to establish prior public use and prior public knowledge of the process. Further, the order also comes to the conclusion that “the process employs new reactants such as thionyl urea and n-heptane (step g) which are not disclosed in the cited art, and hence it cannot be considered as mere use of a known process, and the opponent‘s arguments in this regard cannot be considered as valid under Section 3(d) of the Patents Act, 1970”. Under these circumstances, the opposition was rejected and the patent was allowed to proceed for grant. The review against the said order was also dismissed.

30. However, in the post-grant opposition, the Patent Office undertook a detailed analysis in its order dated 26th June, 2013 and revoked the patent. This order was set aside by the IPAB vide order dated 18th August, 2014 on the ground that there was no definite finding in the order. Further, the IPAB also held that the expert evidence given by the Plaintiff‟s expert was ignored by the Board. Since the IPAB found that there was total non-application of mind, the post-grant opposition order was set aside and the patent was reinstated. It is submitted by both counsels for the parties that the post-grant opposition continues to remain pending.

31. As held above, the Defendants, who took the onus upon themselves to show that the patent lacks novelty and that it is prior published, have failed to lead any evidence on record. Under the Patents Act, under Section 107 the grounds that can be relied upon for revocation of a patent, can also be defences to an allegation of infringement. The said provision reads as under: