Dolby International Ab & Anr. vs Das Telecom Private Limited & Ors.
2018 Latest Caselaw 1496 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         CS(COMM) No. 1426/2016

%                                                      6th March, 2018

DOLBY INTERNATIONAL AB & ANR.             ..... Plaintiffs
                 Through: Mr. C.M. Lall, Sr. Advocate
                          with Ms. Saya Choudhary
                          Kapur, Mr. Vivek Ranjan, Mr.
                          Rupin Bahl, Mr. Ujjwal Sinha,
                          Mr. Nikhil Chawla, Mr.
                          Saksham Garg, Mr. Devanshu
                          Khanna and Ms. Karnika
                          Kanwar, Advocates.
                          versus

DAS TELECOM PRIVATE LIMITED & ORS.        ..... Defendants
                 Through: Mr. Saikrishna Rajgopal, Ms.
                          Julien George, Mr. Yatinder
                          Garg, Ms. Anu and Ms.
                          Arundhati Gopal, Advocates.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?           YES


VALMIKI J. MEHTA, J (ORAL)

I.A.No. 12309/2017 (U/s 151 CPC)

1.

This application is disposed of as not pressed as plaintiffs

have filed their evidence and the subject documents as per the

plaintiffs have been proved by the plaintiffs.

I.A.No. 1216/2018 (15A(M) & Order XI(7) &(10) r/w 151 CPC)

2. This application is disposed of without prejudice to the

rights and contentions of the plaintiffs to contend that certain evidence

led by the defendants is beyond the pleadings in the suit. Plaintiffs are

always entitled to cross-examine the witnesses of the defendants on

any and every fact which the plaintiffs may however consider to be

relevant. Of course, this Court equally takes on record the contentions

of the defendants that with respect to evidence which is led by the

defendants the same is as per issues which have been framed.

However, these aspects are not being decided today and all these

aspects will be considered at the stage of final arguments in the suit.

I.A stands disposed of.

I.A. No.388/2018 (under Order VI Rule 17 CPC and Order XI Rule 1(10) read with Section 151 CPC, filed by defendant nos. 3 and 4)

3. By this application defendant nos. 3 and 4 seek to amend

their written statement to add a defence with respect to these

defendant nos. 3 and 4 being not guilty of violating the patented

technology of the plaintiffs under the registered patent nos. IN

230121, IN 242206, IN 264129 and IN 224775. The patents of the

plaintiffs are with respect to High Efficiency Advanced Audio Coding

Technology.

4. The defendant nos. 3 and 4 by this application seek to

amend the written statement to plead that these defendants were not

aware till recently on 25.9.2017 that plaintiffs have licensed their

subject technology covered under the suit patents to the company M/s

Google INC, and this was not disclosed by the plaintiffs in the plaint

although plaintiffs should have, and that since the defendant nos. 3

and 4 are using the subject technology under license from M/s Google

INC which entity has been granted a valid license by the plaintiffs in

the suit, therefore the defendants are not guilty of infringement of the

patents of the plaintiffs which are subject matter of the present suit. In

essence, the defendants seek to add a defence and a plea that the

technology with respect to the patents which are subject matter of the

suit, this technology has been licensed by the plaintiffs to M/s Google

INC, and the defendant nos. 3 and 4 are using such technology on

their devices/mobile phones in terms of a license granted by M/s

Google INC, and consequently the defendants being authorised users

of the subject technology should not be held as infringers of the

registered patents of the plaintiffs. I may note that defendant nos. 3

and 4 have in fact besides pleading in the amendment application their

having license from M/s Google INC to use the subject technology

have also in one way pleaded a case that it is in fact M/s Google INC

which is the owner of the technology which is the subject matter of the

registered patents of the plaintiffs in the suit.

5. When this suit came up way back on 14.12.2016, the

applicants/defendant nos. 3 and 4 were represented. In the suit

thereafter various miscellaneous proceedings took place including of

completion of pleadings and admission/denial of documents. This

process consumed time till 22.9.2017 i.e approximately a period of

one year from appearance of the applicants/defendant nos. 3 and 4.

Thereafter issues in the suit were framed on 22.9.2017, and these

issues read as under:-

"(i) Whether the plaintiff No.1 is the registered proprietor of the suit patents IN 230121, IN 242206, IN 264129 and IN 224775? OPP

(ii) Whether the suit patents are Standard Essential Patents? OPP

(iii) Whether the defendants are infringing the suit patents? OPP

(iv) Whether the plaintiffs are entitled for the injunction prayed for?

OPP

(v) Whether the plaintiffs are entitled to damages/payment of royalties from the defendants, if so, for what period and to what extent? OPP

(vi) Whether the plaintiffs are entitled for rendition of accounts, if so, for what period and from whom? OPP

(vii) Whether the plaintiffs have offered to the defendants license on fair, reasonable and non-discriminatory (FRAND) terms and conditions? OPP

(viii) Whether the defendants are unwilling licencee? OPP

(ix) Whether the suit patents are invalid in nature and are liable to be revoked in the light of the grounds raised by the defendants in its counter-claim? OPD

(x) Whether the defendants are entitled to the declaration prayed for in the counter-claim? OPD

(xi) Whether the defendants are entitled to damages and legal costs on point of malicious and baseless prosecution by the plaintiffs? OPD

(xii) Whether the suit is not maintainable against defendant No.1? OPD-

1 [CS(COMM) 1425/2016]

(xiii) Whether the defendants mobile and handset incorporate the portions of the Standard i.e. ISO/IEC 14496:3 to which the suit patents are claimed to be mapping? OPP

(xiv) Relief."

6. Admittedly, the two defences which are now sought to be

taken by the defendant nos. 3 and 4 by amending the written statement

with respect to M/s Google INC being the owner of the technology of

which plaintiffs claim to be the owner in terms of the registered

patents which are subject matter of the suit, as also the fact that M/s

Google INC is a licensee from the plaintiffs of the technology, subject

matter of the registered patents of the plaintiffs, and that the

applicants/defendant nos. 3 and 4 are the licensees from M/s Google

INC, are not defences which are not found in the existing written

statement filed by the applicants/defendant nos. 3 and 4.

7. The subject suit is a commercial suit filed under the

Commercial Courts, Commercial Division and Commercial Appellate

Division of High Courts Act, 2015 (hereinafter referred to as the

„Commercial Courts Act‟). Suits filed under the Commercial Courts

Act are treated differently than ordinary suits which are filed in a civil

court. In terms of various provisions of the Commercial Courts Act

specific time lines are provided with respect to different aspects of

completion of pleadings or admission/denial of documents or for case

management hearing, etc. The object of the provisions of the

Commercial Courts Act read with amended provisions of CPC

applicable to Commercial Courts is to ensure that there is no

unnecessary delay in disposal of the commercial suit. Once specific

time lines are fixed and there is a strict procedure provided in terms of

the Commercial Courts Act, parties are by the statute put to notice that

they have to very carefully contest the suits filed as commercial suits

and that failing to comply with statutory timelines and a strict

procedure, certain adverse consequences may flow on account of lack

of application by a contesting party.

8. The provision with respect to amendment of pleadings is

contained in Order VI Rule 17 CPC and which provision reads as

under:-

"17. Amendment of Pleadings.- the Court may at any stage at the proceedings allow either party to alter or amend his pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties: Provided that no application for amendment shall be allowed after the trial has commenced, unless the court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of trial."

9. The provision of Order VI Rule 17 CPC was amended by

Amending Act of CPC of 2002 whereby entitlement of a party to

amend the pleadings was restricted. This new position was as against

the earlier position of law prior to amendment of Order VI Rule 17

CPC and whereby amendments were liberally granted to the pleadings

of the parties even at a very late stage of the suit. As per the amended

provision of Order VI Rule 17 CPC amendments ordinarily should not

be granted once trial has commenced i.e parties have commenced the

leading of their evidences. Once in normal suits amendment should

not be allowed after commencement of trial, obviously this was with

the object of the legislation that unnecessary delays were happening to

the finalization of the suits on account of liberally allowing of

amendments even at later stages. By curbing the liberal entitlement to

amend the pleadings in certain cases injustice may take place because

even in deserving cases where earlier amendments would have been

allowed, but could not be after the year 2002, the legislature was well

however aware that injustice in some cases should not be a bench

mark for not requiring amendments to be ordinarily allowed only prior

to commencing of trial. This law with respect to ordinary suits of

disallowing amendments after commencement of trial in my opinion

will with greater emphasis apply to commercial suits under the

Commercial Courts Act, inasmuch as, the procedure and the

requirements under the Commercial Courts Act are very strict with

respect to commercial suits with the stated object of the legislature to

ensure early disposal of the commercial suits. Of course it is not that

even after commencement of trial amendment to pleadings should

never be allowed, but that amendments should be allowed only in very

limited cases having such facts that courts should depart from the

normal rule of declining amendments after commencement of trial.

10. Firstly, this Court would like to observe that the

amendments which are prayed for by the applicants/defendant nos.3

and 4 are mutually destructive. Mutually destructive cases cannot be

allowed to be set up in the pleadings. Alternative cases can be set up

in pleadings but mutually destructive pleas cannot be set up. The

mutually destructive plea is that M/s Google INC cannot be at one

point of time the owner of the patented technology which the plaintiffs

claims and that M/s Google INC is not the owner of the patented

technology which the plaintiffs claims and that M/s Google INC is

only the licensee of that technology from the owners/plaintiffs.

Therefore for this very first reason the mutually destructive pleas

which are sought to be got added in the written statement cannot be

allowed. Counsel for the applicants/defendant nos. 3 and 4 argued that

in the amendment application the applicants/defendant nos. 3 and 4

have not stated that M/s Google INC is the owner of the patented

technology, however this Court finds that the language of the

amendment application is capable of two interpretations with one

being that M/s Google INC is the owner. In any case even if this stand

of applicants/defendant nos. 3 and 4 is accepted, yet independently for

reasons given hereinafter the amendment application cannot be

allowed.

11. The amendments as prayed for with respect to M/s

Google INC being the owner of the subject technology or M/s Google

INC being a licensee from the plaintiffs and defendant nos. 3 and

4/applicants being further licensees from M/s Google INC are in law

valid defences to a suit alleging infringement of patents. Such

defences could always have been taken by the applicants/defendant

nos. 3 and 4 at the very first stage of filing of their written statement.

This is because the applicants/defendant nos. 3 and 4 know that in

their devices/mobile phones they are using a technology in terms of a

Google app installed on the mobile phones and therefore the

applicants/defendant nos. 3 and 4 could have used the subject

technology only if M/s Google INC was the owner of the subject

technology or M/s Google INC was a licensee from the owner of the

subject technology. Therefore, when the applicants/defendant nos. 3

and 4 installed the subject technology on their phones through Google

app they were put to notice to find out from M/s Google INC as to

whether M/s Google INC was the owner of the subject technology or

M/s Google INC was an authorised licensee of the subject technology.

This aspect of the aforesaid enquiries to be made has nothing to do

with any concealment of facts by the plaintiffs in not stating that (and

as is the new case of the defendant nos. 3 and 4) that plaintiffs had

licensed its technology to M/s Google INC because surely anyone who

purchases any property or licenses in property, movable or

immovable, will definitely at the time of entering into a contract for

purchase/license will be naturally put to asking a query with respect to

entitlement of the transferor of having a valid title to transfer the

property which is being transferred. It does not lie in the mouth of the

applicants/defendant nos. 3 and 4 to argue that it is only on 25.9.2017

that the plaintiffs filed and revealed their licenses with M/s Google

INC with respect to the technology which is the subject matter of the

registered patents of the plaintiffs in the suit because this the

applicants/defendant nos. 3 and 4 were very much put to enquiry when

the patented technology of plaintiffs was installed in the devices

manufactured by the applicants/defendant nos. 3 and 4. I, therefore,

reject the argument on behalf of the applicants/defendant nos. 3 and 4

that the applicants/defendant nos. 3 and 4 came to know of the

licensing of the plaintiffs technology to M/s Google INC only on

25.9.2017 because the applicants/defendant nos. 3 and 4 right since

the time they installed the subject technology on their mobile devices

ought to have taken necessary information from M/s Google INC as to

on what basis M/s Google INC were giving the technology to the

applicants/defendant nos. 3 and 4. Therefore it is stated that there is

no basis for the applicants/defendant nos. 3 and 4 to claim that it is

only on and after 25.9.2017 that they came to know that plaintiffs have

licensed the subject technology of the registered patents of the suit to

M/s Google INC and that consequently the applicants/defendant nos. 3

and 4 since are licensees from M/s Google INC, hence being

authorised user of the technology from the licensees of the plaintiffs,

hence the applicants/defendant nos. 3 and 4 would not be infringers.

12. I have already stated above that disallowing of

amendments may cause prejudice to a party in a particular case, but

once law requires specific time lines then if parties are not vigilant in

exercising their rights then the consequence of prejudice of such a

party has to suffer consequences which are legally mandated. The

facts of this case are not such that Court should depart from the

general rule of disallowing amendments to pleadings because of trial

having commenced. Parties cannot contend that a valid defence is

sought to be raised which would have great bearing on the merits of

the suit and therefore the amendment be allowed even at later stages

after commencement of trial. In fact, I may note that in this suit

plaintiffs‟ evidence has already been filed when the amendment

application was filed and now evidence of plaintiffs is completed and

evidence now has to be led on behalf of the defendants with respect to

issues which have been framed in the suit.

13. In view of the aforesaid discussion, the present

application under Order VI Rule 17 CPC and Order XI Rule 1(10)

read with Section 151 CPC is completely misconceived and is liable to

be and is accordingly dismissed.

14. Section 35 CPC as amended to commercial courts

requires that courts must adopt pro-active approach in imposition of

costs with respect to every stage of a commercial suit. Courts have

been in fact mandated and have been asked to be vigilant with respect

to requirement of imposition of costs at different stages including

stages of disposal of interim applications. Accordingly, since costs

have to follow the result i.e costs have to follow the dismissal of the

application in favour of the plaintiffs, the plaintiffs will file affidavit

of their authorised officer supported by the necessary documents with

respect to costs incurred by the plaintiffs for defending of this

application, and which affidavit be filed within a period of two weeks

from today. Costs as stated in such affidavits will be paid by the

applicants/defendant nos. 3 and 4 to the plaintiffs within two weeks

thereafter.

CS(COMM) No. 1426/2016

15. List for reporting of evidence being recorded before the

Local Commissioner on 17th August, 2018.

MARCH 06, 2018                            VALMIKI J. MEHTA, J