Lg Electronics India Pvt. Ltd. vs Bharat Bhogilal Patel & Others
2011 Latest Caselaw 5824 Del

*         HIGH COURT OF DELHI: NEW DELHI

                                        Order decided on: 30.11.2011

+                     CS (OS) No.2982/2011

       LG ELECTRONICS INDIA PVT LTD                 ..... Plaintiff
                    Through   Mr Hemant Singh, Mr Sachin Gupta
                              and Mr S.P. Ojha, Advs.

                      versus


       BHARAT BHOGILAL PATEL & OTHERS        ..... Defendants
                   Through  Mr Kamal Nijhawan, Adv. with
                            Mr Jitender Kumar, Adv. for D-3.

CORAM:
HON'BLE MR. JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J. (ORAL)

1. I.A. No.19080/2011 (u/O 13 R 1 CPC)

The original documents be filed within eight weeks. The application

is disposed of.

2. I.A. No.19081/2011 (u/S 80(2) r/w Section 151 CPC)

Issue notice to the defendants, on filing of process fee and registered AD cover within two days, returnable on 16.12.2011.

3. CS(OS) 2982/2011

Let the plaint be registered as a suit.

Issue summons to the defendants. Mr Kamal Nijhawan accepts

summons on behalf of the defendant No.3. Let the written statement be filed within two weeks.

The summons be issued to the defendants 1 and 2, on filing of process fee and registered AD cover within two days, returnable on 16.12.2011.

4. I.A. No.19079/2011 (u/O 39 R 1 & 2 CPC) Issue notice. Mr Kamal Nijhawan accepts notice on behalf of the defendant No.3. Let the reply be filed within two weeks.

Notice be issued to the defendants 1 and 2.

5. The case of the plaintiff The plaintiff, namely, LG Electronics India Private Limited, is a company incorporated under the Companies Act, 1956, having its registered office at A-27, Mohan Cooperative Industrial Area, Mathura Road, New Delhi.

6. The defendant No.1 is an individual, who claims to have obtained a patent for process titled as "A Process of manufacturing engraved design articles on metals or non-metals" under patent No.189027 dated 21.09.1998.

7. The defendants No.2 and 3 are Commissioners of Customs (Import), Officers of Customs under Section 3 of Customs Act, 1962 located at Mumbai and Delhi, responsible for, inter alia, levy of an exemption from customs duty, clearance of imported goods, detection of illegally imported goods and prevention of the disposal thereof etc.

8. The goods of the plaintiff's parent company, namely LG Electronics Inc. have been available in India since 1995 through imports from Korea.

9. On 10.03.1997, the LG Electronics Inc. entered into a foreign collaboration agreement.

10. The plaintiff is an importer at various Indian ports one of them being Mumbai Air Cargo Complex, holding status of an "Accredited Client" under Accredited Client program (ACP) of the Ministry of Finance, Government of India enjoying privileges and using Green Channel for clearance of all its goods imported without examination at Indian Ports on the basis of self-assessment (declaration).

11. On 29.09.2010, the defendant No.1 filed a complaint with the defendant No.2 against the plaintiff and various other importers namely Sony India, Motorola India Private limited, Nokia India, Samsung India Electronics Pvt. Ltd. Videocon Mobile Phone Division, Spice Mobiles Ltd, Bharti Airtel Limited etc. alleging that such importers were importing products inter alia GSM handsets (Phones), using laser marking and engraving process which infringe his patent rights under patent No.189027. The defendant No.1 also sought issuance of circular to inform the CHA (Custom House Agents) and importers/exporters about the infringement of his Patent rights.

12. The plaintiff received a show cause notice SIIB/GEN-42/2010-11 ACC(I) dated 15.2.2011, from the defendant No.2 appointing a hearing on the complaint filed by the defendant No.1 for 07.03.2011.

13. In between the hearing dates between March 2011 to September 2011, the plaintiff, vide its letter dated 23.04.2011, requested defendant No.2 to forward the documents pertaining to the impugned patent, which was provided by the defendant No.2 under the cover of letter dated 08.08.2011. After studying the letter, the plaintiff found that the claims of

the impugned patent lacked novelty as well as any inventive step being obvious to person skilled in the art of applying of laser engraving.

14. The plaintiff filed a revocation petition challenging the validity of the impugned patent as on 21.09.2011 before the appropriate forum, namely, Intellectual Property Appellate Board, Chennai under the Case No.302/2011/PT/MUM under Section 64 of the Patent Act, 1970.

15. It is alleged by the plaintiff that the office of defendant No.2 is restricting clearance of plaintiff's consignments despite the plaintiff holding status of an "Accredited Client" under the Accredited Client Programme (ACP) of Government of India.

16. It is stated by the plaintiff that the impugned order is in breach of Clause 4 of Circular No.41/2007-CUSTOMS(N.T.) which pertains to instructions for implementation of IPR Enforcement Rules.

17. Clause 4 of Notification No.305/96/2004-FTT vide Circular No.41/2007-Customs dated 29.10.2007 is reproduced as under :

"4. It is pertinent to mention that while the mandatory obligations under Articles 51 to 60 of the TRIPS dealing with border measures are restricted to Copyright and Trade Marks infringement only, the said Rules deal with Patents, Designs and Geographical Indications violations as well, in conformity with the practice prevailing in some other countries, notably EU countries. While it is not difficult for Customs officers to determine Copyright and Trade Marks infringements at the border based on available data/inputs, it may not be so in the case of the other three violations, unless the offences have already been established by a judicial pronouncement in India and the Customs is called upon or required to merely implement such order. In other words, extreme caution needs to be exercised at the time of determination of infringement of these three intellectual property rights."

18. In view of the above said facts stated in the plaint, there is no dispute that the jurisdiction for a suit for infringement of patent lies in the civil court under Section 104 of the Patent Act, 1970.

19. The learned counsel for the plaintiff states that no such suit was filed by the defendant No.1. He further states that instead of filing the suit for infringement of patent, the defendant No.1 has filed a complaint dated 29.09.2010 before defendant No.2. Section 106 of the Patent Act, 1970 provides the power to the Court to grant the relief in cases of groundless threat of infringement of proceedings.

20. The plaintiff has admittedly informed the defendant No.2 about the filing of the revocation petition against the patent granted in favour of the defendant No.1.

21. In case clause 4 of the notification dated 29.10.2007 is read in a meaningful manner, it becomes clear that as far as the case of other three violations, i.e., Patents, Design and Geographical Indications, are concerned, unless the offences have already been established by a judicial pronouncement in India, the custom department cannot take action contrary to clause 4 of the notification.

22. Mere reading of clause 4 makes it clear that as far as three violations, i.e., Patents, Design and Geographical Indications, are concerned, the defendants 2 and 3 are merely implementing agencies to enforce the orders, if passed by the Court in favour of the party pertaining to above mentioned three subjects and the custom department would be entitled to enforce the same.

23. However, as far as the present case is concerned, prima facie it appears that the defendants 2 and 3 cannot restrict clearance of the

plaintiff's consignments on the basis of alleged patent obtained or on the complaint made by defendant No.1.

24. No doubt, unless the Court passes the order in favour of the patentee, thereby restraining the plaintiff from infringing the impugned patents, then under these circumstances, in order to implement the order of the court, the defendant No.2 can take action as provided under Clause 4 of notification dated 29.10.2007.

25. In the absence of that, even the complaint, if any, filed by the patentee is to be treated contrary to the Clause 4 of the notification issued by Government of India and any order passed contrary to that would be without any jurisdiction.

26. Learned counsel for the defendant No.3 states that this Court has no territorial jurisdiction to entertain and try the suit against the defendant No.3 as the defendant No.3 has no role to play in the transaction. He says that since the plaintiff has failed to issue notice within the prescribed time, therefore, the suit is not maintainable.

27. So far no written statement has been filed by the defendants. However, prima facie in view of the statement made in the plaint, the objection raised is not sustainable as in the case of Girdhari Lal Gupta v. M/s K. Gian Chand Jain & Co., Delhi-6; AIR 1978 Delhi 146, it was observed as under:

"14. Just as there are two kinds of legal injury that may be caused by the static and dynamic effects of registration, former confined to the place of registration and the latter extending beyond it, similarly, a person interested may fall into either of two categories. Firstly,

a person interested may be aggrieved by a legal injury to his own interest in property, business, reputation, etc. He is thus a person aggrieved and as such has locus standi to make the application. The place where the injury occurs is the place where his interest has been adversely affected. The cause of action, therefore, arises at the place where the legal injury to his existing private interest has occurred. As already stated above, if a person merely intends in future to use such a design then no present interest of such a person is injured and, therefore, the only injury of which he can complain is that his future activity is prevented by the existence of the registration. That cause of action will relate to the place of the registration. The expression "person interested" is quite common in legislative drafting. For instance, it is used in S. 18(1) of the Land Acquisition Act, 1894. Its purpose is to confine the competence to make an application to a person who has his own interest to be served by such application, It intends to exclude a mere busy body from making such an application though none of his interests has been affected. In other words, a person interested is a person aggrieved by the existing situation or by the cause of action.

16. In Association of Data Processing Service Orgn. v. William B. Camp, (1970) 397 U. S. 150, and Clemon Barlow v. B. L. Collins, (1970) 397 US 159, the question sharply arose as to what precisely should constitute the standing of a plaintiff as distinct from the reviewability of the dispute by the court and the merits of the dispute. Justice William Dauglas speaking for the majority expressed the view that not only the competence of the plaintiff to file the suit on the allegation that the has suffered a legal injury in fact, but also the question whether the interest sought to be protected by him by way of the suit is within the range of legally protected interests together formed the locus

standi of the plaintiff. Justice Brennan, with whom Justice White joined, expressed the minority view that the allegation of legal injury by the plaintiff was sufficient to confer standing on him and to make him a person interested in filing the suit. The question whether the interest sought for by him was legally protected interest was a part of the merits of the ease or may be a part of the reviewability of the question raised by the plaintiff, but was no part of the plaintiff's capacity to sue. Fortunately in the present case, we are not concerned with the question whether standing includes merely capacity to sue or whether it includes a legal right or a part of the legal right to sue. Under S. 51-A if the petitioner is a mere pro bono publico, he would have to make the application in that High Court within the local limits of which the registration enures and continues attacking it on one of the grounds specified in S. 51-A. But, if the petitioner is a person whose private commercial interests are injured, then the place where the commercial interests are injured is included in the requirement of S. 51-A that the application can be made only by the person interested. A part of the cause of action or the subject-matter is, therefore, situated in Delhi. The application under S. 51-A can, therefore, be made at Delhi or at Calcutta, but in no other High Court.

17. The registration of the design and its continuance in the Register of Designs is only a part of the subject- matter. What the respondents complain is not merely of the registration. They rather complain of the impact or the effect of the registration which extends far beyond the place where the Register of Designs is kept. The effect of the registration of the design under the Act is to confer a copy right in the design on the appellant. This copyright prevents the respondents from using the same design so long as the registration subsists in favor of the appellant. The copyright effect of the registration is felt in Delhi and would be felt at any place where it prevents

competitors of the appellant from using the registered design for their own purpose. Viewed in this way a part of the subject-matter of the application under S. 51-A would be seen to be at Delhi where the alleged legal injury and the damage in fact is said to have been suffered by the respondents though the rest of it may be at Calcutta where the entry in the Register of Designs rests. It is not only the static entry in the Register of Designs, but also the dynamic effect of the copyright all over the country, which causes injury to the competitors of the appellant. These injured persons would have the right to make the application to the High Court having jurisdiction over the place in which this injury has occurred. In Workmen of Shri Rangavilas Motors (P) Ltd. v. Shri Rangavilas Motors (P) Ltd., AIR 1967 SC 1040 (supra), the order was passed at the Head Office of the company at Krishnagiri. It was that order which was the injury done to the workmen. It was, therefore, argued that the nexus of the subject-matter to the appropriate Government was between Krishnagiri which was in the State of Tamil Nadu and the Govt. of Tamil Nadu at Madras which had the jurisdiction over Krishnagiri, But, the Supreme Court repelled this argument with the statement that "but the order was to operate on a workman working in Bangalore." By that observation the Supreme Court held the subject-matter to be at Bangalore and not at Krishnagiri. The nexus, therefore, was with the appropriate Government, viz., the Government of Mysore."

28. Similar question arose in Dashmesh Mechanical Works v. Hari Singh & Anr.; 2010 (42) PTC 288 (Del.) and the Court dismissed the application under Order 7 Rule 10 CPC filed by the defendant on the question of territorial jurisdiction.

29. No doubt, in the present case the question of jurisdiction has to be

decided on merit after filing of the written statement by the defendants. At this stage, I am of the view that the said objection is without any force.

30. For the aforesaid reasons, it appears to me that prima facie it appears that the complaint made before the defendant No.2 is not tenable on the face of it. It is contrary to clause 4 of the notification dated 29.10.2007 issued by the Government of India.

31. Considering the overall circumstances of the case, I am of the view that the plaintiff has been able to make out a strong prima facie case for grant of an ex-parte ad-interim injunction.

32. Hence, till the next date of hearing, operation of the complaint filed by the defendant No.1 dated 29.09.2010 is stayed as far as the plaintiff is concerned.

Dasti.

MANMOHAN SINGH, J.

NOVEMBER 30, 2011 jk