Teva Pharmaceutical Industries ... vs Natco Pharma Limited
2014 Latest Caselaw 2817 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                      Date of decision: 30th May, 2014

+                              FAO(OS) 144/2014
       TEVA PHARMACEUTICAL INDUSTRIES
       LTD & ORS                              ..... Appellants
                  Through Mr.Parag P.Tripathi and Mr.Sudhir
                          Chandra,     Sr.Advocates        with
                          Mr.Pravin Anand, Mr.Nischal Anand,
                          Ms.Savitha Suresh and Mr.Aman
                          Taneja, Advocates.

                                  versus

    NATCO PHARMA LIMITED                      ..... Respondent
                  Through  Mr.Chetan Sharma, Sr.Advocate with
                           Ms.Rajeshwari     H.,       Mr.Tahir
                           Abduljabbar     and        Ms.Sudipa
                           Dasgupta, Advocates.
CORAM :-
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

1. This appeal under Order 43 Rule 1(a) of the Code of Civil Procedure

1908 impugns the order dated 28th February, 2014 of the learned Single Judge

(exercising ordinary original civil jurisdiction) of allowing IA No.10390/2012

of the respondent / defendant under Order 7 Rule 10 of the CPC and returning

the plaint in CS(OS) No.3193/2012 filed by the three appellants / plaintiffs for

presentation in the appropriate Court.

2. Notice of the appeal was issued and owing to the urgency expressed by

the appellants on the ground that the protection afforded by the US Supreme

Court to the appellants qua the patent to which the suit pertains is till 24th May,

2014 only, hearing was expedited. We have heard the counsels for the parties.

3. The suit from which this appeal arises was filed by the appellants /

plaintiffs for the relief of permanent injunction restraining the respondent /

defendant from manufacturing, selling, offering for sale, exporting or

registering the product that has been held by the United States District Court to

infringe the appellants / plaintiffs Indian Patent No.190759 and for ancillary

reliefs of rendition of accounts and damages, pleading:-

(i) that the appellant / plaintiff no.2 Yeda Research and Development

Co. Ltd. Israel is the holder of Patent No.190759 dated 23 rd May,

1995 in respect of "a method for manufacturing Co-polymer I

fraction";

(ii) that the appellants / plaintiffs using the patented method are

manufacturing drug under the trademark COPAXONE for

treatment of relapsing, remitting multiple sclerosis;

(iii) that the appellants / plaintiffs earlier filed CS(OS) No.1708/2007

in this Court against the respondent / defendant for restraining

infringement of the said Patent No.190759;

(iv) that the respondent / defendant in the previous suit aforesaid made

a statement that the process employed by the respondent /

defendant for manufacturing the drug Glatiramer Acetate is

different from the process which had been patented by the

appellants / plaintiffs;

(v) that in view of the aforesaid statement of the respondent /

defendant, the appellants / plaintiffs did not press their application

for interim relief in the previous suit;

(vi) however it was reported in the news article published on 17 th

January, 2012 that the respondent / defendant will work with

Mylan Pharmaceuticals Inc. (MPI) to launch Glatiramer Acetate

for the treatment of multiple sclerosis;

(vii) that the appellants / plaintiffs on making enquiries learnt that MPI

had signed an agreement with the respondent / defendant relating

to development and marketing of Glatiramer Acetate in the United

States and in pursuance thereof MPI submitted to the US FDA an

Abbreviated New Drug Application seeking approval to

manufacture and sell MPI's proposed Glatiramer Acetate;

(viii) that the appellants / plaintiffs instituted a suit in the US District

Court against MPI and the respondent / defendant for

infringement of the US Patents of the appellants / plaintiffs;

(ix) after trial, the US Court found that the Glatiramer Acetate product

that MPI and the respondent / defendant were seeking to sell in the

United States infringes the claims of US Patent 430 and 898

(corresponding to Indian Patent 190759) of the appellants /

plaintiffs;

(x) that the US Court's decision leads to an incontrovertible

conclusion of infringement of rights of the appellants / plaintiffs in

Indian Patent 190759 based on the manufacture of Glatiramer

Acetate by the respondent / defendant for export and sale in the

United States; and,

(xi) "that the acts of the defendant in manufacturing the Glatiramer

Acetate product for sale in the United States and elsewhere amount

to a clear infringement of the registered Patent No.190759".

4. Needless to state respondent / defendant contested the suit by filing a

written statement. Application aforesaid under Order 7 Rule 10 of the CPC

was also filed, pleading:-

(a) that this Court does not have territorial jurisdiction to entertain the

suit;

(b) no part of the alleged cause of action has accrued within the

territorial jurisdiction of this Court;

(c) that the alleged cause of action as set-out in the plaint is qua the

manufacture and export of Copolymer-I by the respondent /

defendant;

(d) the only basis for filing the suit at Delhi is the alleged presence of

an office of the respondent / defendant at Delhi;

(e) that the respondent / defendant does not have any manufacturing

facility at Delhi that could possibly practice or export the product

of the suit patent;

(f) though the respondent / defendant manufactures Copolymer-I

under the mark Glatiramer Acetate but not at Delhi;

(g) the respondent / defendant does not carry on any business within

the territorial jurisdiction of this Court; and,

(h) that the suit is only concerned with the process patent and the

appellants / plaintiffs do not claim any patent in the product

manufactured by the said process; though the appellants / plaintiffs

had applied for a product patent also but the same was denied.

5. The learned Single Judge has vide impugned order allowed the aforesaid

application of the respondent / defendant and held this Court to be not having

any territorial jurisdiction to entertain the suit and has resultantly ordered the

plaint to be returned, finding / observing / holding:-

A. that it is the case of the appellants / plaintiffs themselves that the

suit is a quia timet action in as much as the same is based on a

apprehension of the likelihood of the respondent / defendant

exporting the infringing goods to US and other countries;

B. that the patent, for restraining infringement of which the suit is

filed, is a process patent and not a product patent; though the

appellants / plaintiffs had applied for a product patent also but the

said application was rejected;

C. that the argument of the appellants / plaintiffs was that though the

respondent / defendant for producing the product Glatiramer

Acetate for marketing in India was using a different process as

stated by the respondent / defendant in the first suit but the

respondent / defendant for exporting Glatiramer Acetate to MPI

for sale in US was intending to use the process in which the

appellants / plaintiffs held a patent;

D. that there is no averment in the plaint of the violation of the

process patent of the appellants / plaintiffs within the territorial

jurisdiction of this Court; there is no averment that the process

patent was being practiced / infringed by the respondent /

defendant within the jurisdiction of the Court in as much as neither

had the appellants/ plaintiffs pleaded nor controverted that the

respondent / defendant had no manufacturing activity in Delhi and

that the manufacturing facilities of the respondent / defendant were

in Hyderabad only;

E. that since the suit concerned a process patent, the pleadings as

regard the product being sold in Delhi or the possibility of the

product being launched in Delhi or elsewhere cannot justify the

territorial jurisdiction of this Court;

F. rather the case of the appellants / plaintiffs was that the respondent

/ defendant was intending to practice the process patent of the

appellants / plaintiffs for manufacturing of goods for export to US

and elsewhere;

G. that there is no averment in the plaint of the product manufactured

from practicing the process patent of the appellants / plaintiffs

being marketed in Delhi;

H. Thus the argument raised by the appellants / plaintiffs on the basis

of Section 48(b) of the Patents Act, 1970 is misconceived;

I. the fact that the respondent / defendant may have an office in

Delhi or a distributor in Delhi is not relevant to the subject matter

of the suit;

J. that the argument, of the respondent / defendant having obtained

approval to sell Glatiramer Acetate in India or of the respondent /

defendant selling Glatiramer Acetate manufactured by different

process in Delhi, in the face of the cause of action in the instant

suit of apprehension of infringement of process patent for the

purpose of export to US and elsewhere, were irrelevant; and,

K. the judgment in Bristol Myers Squibb Vs. V C Bhutada 2013 (56)

PTC 268 (Del). relied upon by the appellants / plaintiffs which was

concerned with a product patent and in which the defendant had

already obtained approval from the Drug Controller for marketing

the product without any restriction as to territory, was not

applicable.

6. The senior counsel for the appellants / plaintiffs has argued:-

I. that the learned Single Judge has misconstrued the rights attaching

to a process patent; the said rights are not only in the process but

also extend to preventing others from offering for sale or selling

products obtained from that process; reference in this regard is

made to Section 48(b) supra; and,

II. that the learned Single Judge has also erred in holding that the

relief claimed in the suit was limited to preventing export of the

product manufactured by using / practicing the patented process of

the appellants / plaintiffs to US and other countries when the

averments in the plaint were not so confined or limited.

7. Per contra the senior counsel for the respondent / defendant has argued:-

(i) that the suit is indeed confined to prohibiting export to US by the

respondent / defendant of the product manufactured from the

patented process; the appellants / plaintiffs have otherwise filed

the first suit for prohibiting the respondent / defendant from

marketing the products manufactured from the patented process in

India; if the scope of the second suit were to extend to marketing

the goods in India, then the same would in any case be not

maintainable for the reason of the pendency of the first suit;

(ii) that the fact that the present suit is confined to prohibiting export

by the respondent / defendant of products manufactured by the

patented process to US becomes clear from the replication filed by

the appellants / plaintiffs to the written statement of the respondent

/ defendant where the appellants / plaintiffs have repeatedly stated

that the second suit is confined to apprehensions of export to US

only;

(iii) thus as far as the second suit is concerned, as per the averments of

the appellants / plaintiffs also, no cause of action has accrued at

Delhi in as much as neither was the patented process going to be

practiced / used in Delhi nor was the product manufactured

therefrom to be marketed in Delhi; and,

(iv) in the judgment in Bristol Myers Squibb, quia timet action was

held maintainable since the defendant had already obtained the

sanction of the Drug Controller while that is not the plea of the

appellants / plaintiffs in the second suit.

8. In view of the aforesaid arguments, we, during the course of hearing

enquired from the senior counsel for the respondent / defendant whether the

respondent / defendant was willing to make a statement that the products

manufactured from the process in which the appellants / plaintiffs claim patent

will be only for export and not for the Indian market. Though the senior counsel

for the respondent / defendant responded by first contending that the respondent

/ defendant was not required to make such statement as the question of

territorial jurisdiction was to be adjudicated on the basis of the averments in the

plaint itself but subsequently on instructions stated that the respondent /

defendant has no intention to market the products to be manufactured in its

plant at Hyderabad for export to US, in India or in Delhi.

9. We further enquired from the senior counsel for the respondent /

defendant whether any permission was required for such export and whether

such permission had been obtained.

10. The senior counsel replied in the affirmative but stated that as of now the

respondent / defendant does not have the permission for export to US.

11. We further enquired from the senior counsel for the respondent /

defendant whether the permission from the Drug Controller was required qua a

product only or also qua the process of manufacture of the product and whether

the respondent / defendant has such permissions.

12. The senior counsel on instructions informed that permission from the

Drug Controller is required for process also and the respondent / defendant as

of today has no such permission either.

13. Though in view of the aforesaid we enquired as to what survives in the

suit, in as much as the respondent / defendant as per its own statement, as of

today does not appear to be in a position to indulge in the acts, from doing of

which it is sought to be prohibited, but the senior counsel for the appellants /

plaintiffs contended that the respondent / defendant have not taken the said

stand neither in the pleadings nor in the arguments and the suit thus has to

proceed.

14. The senior counsel for the appellants / plaintiffs in rejoinder contended:-

(a) that for the purposes of Order 7 Rule 10, only the averments in the

plaint are to be seen and the replication which is in response to the

written statement cannot be seen in as much as for comprehending

the replication the written statement will necessarily have to be

seen and which is not to be seen;

(b) that the appellants / plaintiffs, on the basis of the replication cannot

be said to have given up any part of the case as made out in the

plaint and it was not so pleaded by the respondent / defendant in

the application under Order 7 Rule 10 of the CPC also though filed

after the filing of the replication; and,

(c) that the focus in the replication was on the interim relief and not to

the prayer in the plaint.

15. We have considered the rival contentions;

16. The same learned Single Judge who has passed the impugned order is the

author of Bristol Myers Squibb also where quia timet action has been held to

be maintainable on apprehension of marketing of the patented product in Delhi.

What has however prevailed with the learned Single Judge in the impugned

order to hold this Court to be not having territorial jurisdiction is the factum of

the subject suit being confined to prohibiting export to US of the products

manufactured from the patented process. It is for this reason only that the

learned Single Judge has held that the question of the sale / marketing of

products manufactured from the patented process within the territorial

jurisdiction of this Court does not arise. The learned Single Judge thus cannot

be said to have misconstrued Section 48(b) of the Act, as has been argued by

the appellants / plaintiffs.

17. So the only question to be considered is, whether the suit of the

appellants / plaintiffs as per averments therein is limited to prohibiting export to

US.

18. The pleadings in the plaint, to say the least, are not very lucid and clear.

However the senior counsel for the respondent / defendant also has not argued

on the basis of the pleadings in the plaint. He has in this regard rather relied on

the replication which indeed shows that the focus of the appellants / plaintiffs

was / is on prohibiting / preventing export. We have perused the replication

carefully. We tend to agree with the senior counsel for the appellants / plaintiffs

that what has been filed as a replication is indeed a cut and paste job perhaps

from the rejoinder which may have been prepared or filed to the reply to the

application for interim relief. However what arises for consideration is, whether

the appellants / plaintiffs are to be penalized for the weak, not precise and

ambiguous pleadings of their Advocates. We are in this context reminded of

what the Courts have held about Moffusil pleadings. It has been held that they

are to be construed liberally and that only because the parties did not use the

terminology which they should have, ipso facto, would not mean that the

ingredients for satisfying the requirements of statute are absent. The Supreme

Court in Kedar Lal Seal Vs. Hari Lal Seal AIR 1952 SC 47 held that the

Courts would be slow to throw out a claim on a mere technicality of pleading

when the substance of the thing is there and no prejudice is caused to the other

side, however, clumsily or inartistically the plaint may be worded. The same

sentiment was echoed in Ganesh Trading Co. Vs. Moji Ram (1978) 2 SCC 91.

Though the genesis of the said view was, the Moffusil lawyers being not skilled

in language and pleadings but we find the principle to have travelled till Des

Raj Vs. Bhagat Ram (2007) 9 SCC 641 and Narain Prasad Aggarwal Vs.

State of M.P. (2007) 11 SCC 736, though the Supreme Court in Devasahayam

Vs. P. Savithramma (2005) 7 SCC 653 also observed that different

considerations on construction of pleadings may arise between pleadings in the

Moffusil Court and pleadings on the Original Side of the High Court. Alas, we

find that the said difference appears to have ceased to exist -- pleadings on the

Original Side of this Court are being drafted, as in the Moffusil Court.

19. However we are still of the opinion that the principle, of not allowing a

litigant to suffer for such defects in pleadings should still be upheld. From a

reading of the plaint, it can undoubtedly be not said that the suit is confined to

prohibiting exports. The suit is for using the patented process of the appellants /

plaintiffs for manufacturing the product for sale in US and "elsewhere" and

from the averments of the respondent / defendant of sale network of the

respondent / defendant in Delhi, it has to be held that the averments pertain to

Delhi also. We are also of the view that no prejudice is caused to the

respondent / defendant from so giving benefit of doubt to the appellants/

plaintiffs inspite of defect in their pleadings, as the respondent / defendant is

already contesting the first suit in this Court. We are further of the view that the

second suit for the same relief i.e. of restraining the respondent / defendant

from marketing the goods produced from infringing process in Delhi would be

maintainable as the same is based on a subsequent cause of action i.e. threat by

the respondent / defendant to commence marketing goods produced from

infringing process, in Delhi, as pleaded, i.e. after having made a statement in

the first suit of not using the infringing process.

20. We have also wondered whether owing to the statement aforesaid of the

respondent / defendant, of not intending to market the product in India, the

territorial jurisdiction of this Court, otherwise invoked in accordance with law,

can be ousted. We are unable to find any basis for holding that though on the

basis of averments in the plaint, this Court will have territorial jurisdiction, the

same can be ousted on the statement of the respondent / defendant of not doing

/ intending to do act, to prevent which suit is filed, within the territorial

jurisdiction of this Court. We are of the opinion that once the appellants /

plaintiffs have pleaded apprehension of sale / marketing in Delhi, the Courts in

Delhi would have jurisdiction to entertain the suit and such jurisdiction cannot

be ousted by the defendant by making a statement not to do any such act in

Delhi, though the defendant would be entitled to prove that there is no basis for

such apprehension. If such a course of action were to be permitted, it would

enable a defendant to avoid action in a particular Court by making such a

statement and indulge in forum shopping. We also find that the same was not

permitted by this Court in Rana Steels Vs. Ran India Steels Pvt. Ltd. (2008) 37

PTC 24 (Del); there, though the counsel for the defendant stated that the

defendant had no intention to sell its products in Delhi, it was held that the

plaint could not be ordered to be returned on the basis of the said statement.

Though the matter was taken in appeal by way of FAO(OS) 212/2008 but was

compromised.

21. Thus, we hold that the learned Single Judge erred in holding that the suit,

as per averments in the plaint was confined to preventing only the export to US

of products manufactured at Hyderabad using the process patented by the

appellants / defendants. The averments in the plaint extend to apprehension of

marketing by the respondent / defendant of the products manufactured by the

process patented by the appellants / defendants, in Delhi. Thus, as per dicta in

Bristol Myers Squibb (supra), Courts at Delhi would have territorial

jurisdiction to entertain the suit.

22. Accordingly, the appeal is allowed. The order of the learned Single Judge

allowing the application of the respondent / defendant under Order 7 Rule 10 of

the CPC is set aside. Resultantly the suit is restored to the Board of the learned

Single Judge. The parties to appear before the learned Single Judge on 2nd July,

2014.

No costs.

RAJIV SAHAI ENDLAW, J

CHIEF JUSTICE MAY 30, 2014 pp..