Importance of Interim Relief in Intellectual Property Litigation and Impact of the Commercial Courts Act

Introduction

The concept of “interim measures of protection” is one of the general principles of law common to all legal systems. However, there is no definition of this expre-ssion under the Civil Procedure¹ (CPC). Even under substantive law, there is no universally accepted definition of this concept or its scope. Interim measures of protection are forms of temporary relief intended to safeguard the rights of the parties until the court passes a final judgment. Interim measures of protection arise in a variety of circumstances and are a procedural necessity in both public and private dispute resolution modes. Interim relief can have final and significant con-sequences without which the adversarial party may easily render the award meaningless.

The enforcement of intellectual property rights (IPR), involving determination of rights in the intellectual property concerned, being a civil cause of action, is also governed by CPC. In any action of civil nature, the rights are decided after trial which requires evidence to be led by both the plaintiff and the defendant. Since the trial usually takes time, the law also provides for grant of interim relief in particular cases provided the conditions for grant of interim relief are met.

Given the importance of IPR in commercial litigation, the decision to grant or refuse interim relief is of considerable consequence to the rights of the parties. An interim relief once granted or refused generally continues to hold the field, unless varied in appeal, till the trial takes place and therefore allows the plaintiff or the defendant to enjoy and cement their position till the trial is over.

Meaning, scope, and conditions for grant of interim injunction

Once cause of action arises in a civil case, the plaintiff has a right to file a suit, which consists of a plaint with documents. Along with the suit, if there is any requirement of an interim order, pending the trial of the suit, an application for interim injunction is also filed. The application for interim injunction is governed by Order 39 Rules 1 and 2 CPC.²

The underlying principle in respect of interim measures is that the assets or rights which are the subject-matter of the dispute, are not frittered away, or removed from the jurisdiction of the court. In a move to include every possible measure on a request for interim protection, the term “temporary” or ”protective” or “interlocutory” is used along with the term ”interim” or ”provisional”. The expressions “interim mea-sures”, “interlocutory” and “temporary’” or ”provisional mea-sures” are loosely used to mean the same thing. Presumably, all the terms are borrowed from various legal systems referring to those measures.³

Source of power

The source of a court’s power to grant interim relief is traceable to Section 37(1) of the Specific Relief Act⁴ and Section 94(c)⁵ and Order 39 Rules 1 and 2 CPC. Further, Section 94(e) CPC clothes a court with the power to pass interlocutory orders to meet the ends of justice. The court also has the power to grant temporary injunction for those cases which are not covered under Order 39 Rules 1 and 2 CPC in exceptional circumstances under its inherent power recognised in Section 151 CPC⁶.⁷ An interim injunction is governed by three basic principles⁸ which have been reiterated time and again:

(a) Prima facie case in favour of the plaintiff.

(b) Balance of convenience lies in favour of grant of relief than against it.

(c) Irreparable loss. If the injunction is not granted, the loss suffered is irreparable and likely to be not compensable in terms of money.

Even though the grant of interim injunction or relief is not based on any straitjacket formula, certain standards have come to govern the exercise of judicial discretion to certain standard.⁹ The standards are well accepted, but the application of the same is not easy and different courts have taken different views while applying the same to facts of the cases before them.

Interim relief in practice and impact on IP litigation in India: An analysis

In an intellectual property case relating to a patent, trademark or copyright, the nature of the suit has a huge impact on the rights to be exercised on the intellectual property concerned. For example, if company A being in the consumer goods segment starts a shoe with the brand TINA and another company B starts using a mark with the brand TINE. If a suit is filed by A against B, the grant or refusal of interim relief will decide whether company B continues to use TINE or not. In case an interim injunction is granted, it is unlikely that the company will shut the business of shoes altogether. It is likely that they will alter the brand TINE to something else. Once the name is altered, it may be so that company B loses interest in TINE altogether once it builds a reputation in the altered mark. Even if B succeeds in the trial, it is unlikely that it will start using TINE again in place of the later altered mark. Given the impact of the interim relief on business, many cases in trademark lose track after the interim application stage and do not go to trial. This is not feasible because an interim injunction is granted only based on a prima facie view and not after perusing the evidence of the parties. A prima facie view may turn out to be wrong. However, if the trial does not conclude quickly, an interim order continues to hold the field and thus help the succeeding party.

The problem with interim injunction has been that despite being categorised as an equitable and discretionary remedy, the same has been granted more often than refused. A survey on the cases in patent law filed between 2000-2016 shows that the High Courts have granted injunctions in more than 36 out of 59 cases.¹⁰ From 2005 to 2015, relief was given in 5 out of 19.¹¹ Once these interim reliefs are granted, data also shows trial concluded only in 5 cases between 2005 to 2015 out of 143 and the rest remained depending.¹² The delay in the system is ubiquitous and the said delay influences the IP litigation too. The order of the Supreme Court in Bajaj Auto Ltd. v. TVS Motor Co. Ltd.¹³ to conclude trial in all IP litigation within four months is followed more in the breach. There are many studies which have reflected on the delay in the intellectual property trial, and it does not appear that the same will go away soon.

There are also occasions of the big companies exploiting the delay in judicial workings to obtain interim injunctions in a clandestine manner by impleading the first defendant as an individual so as to avoid getting noticed in the cause list by the real defendants. This further shows the real contestant to be an unimportant party and not a business rival to reduce the stature of the defendant before the court.¹⁴ This also shows the importance of being attached to the grant of interim injunction as a business and legal tactic.

Further, the grant of ex parte injunctions has also created substantial issues as the same means that the order is passed without hearing the defendant. Even though the Supreme Court has expressly laid down guidelines in Ramrameshwari Devi v. Nirmala Devi¹⁵ and warned against the grant of ex parte injunction, the practice continues. Even Order 39 Rule 3-A CPC¹⁶ specifically states that the Court “shall ‘make an endeavour’ to dispose of the ex parte application within 30 days from the date on which it is granted”, the same is usually not possible.

Thus, there is a huge incentive to obtain interim orders often ex parte because those orders continue to define the rights of the parties and their obligations, often for a longer period than contemplated in law. An interim order extending for a long period of time is jurisprudentially frowned upon, because of lack of any determination on merits. An interim order against a party which ultimately succeeds causes grave damage as time is of the essence to the brand in intellectual property cases.

(Potential) impact of Commercial Courts Act regime on interim relief in IP cases

A notable reform pertained to improving judicial efficiency through reduction of time and cost involved in resolving of commercial disputes through courts in India. In line with the recommendations of the Law Commission of India as outlined in its 188th¹⁷ and 253rd Reports¹⁸, and with an intention of reforming the civil justice system in India, creation of dedicated commercial courts was proposed as a necessary and critical reform.

The result was the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015¹⁹ (“the Commercial Courts Act” after substitution), which aimed at creation of specialised courts for adjudication of commercial disputes. They were meant to transform the civil litigation landscape in India by adopting a robust and proactive approach towards enforcement of contracts, awards of just compensation, and facilitation of easy recovery in complex commercial and business disputes.

The changes made making the filing of pleadings and recording of evidence in a time-bound manner is a good step.²⁰

The Commercial Courts Act restricts the application of Order 15²¹of the Code of Civil Procedure providing for disposal of the suit at the first hearing, to commercial disputes of a specific value. It makes special provision specially providing for adoption of case management by commercial courts and doing so through an early hearing in adjudication of matters before them.

All cases relating to intellectual property are covered under the definition of commercial disputes under the Commercial Courts Act.²² Those cases which are valued at a pecuniary value of more than Rs 3,00,000²³ go to the Commercial Division of the District Court. In States, where the High Court has original jurisdiction, there is a commercial division in the High Court also above a certain pecuniary value. For example, in the Delhi High Court, a commercial suit can be filed only if the value of the relief is above Rs 3 crores. Since all matters of significance are likely to be valued at more than Rs. 3,00,000, they are covered by the Commercial Disputes Act.

Further, under Section 12-A of the Commercial Courts Act²⁴, an application for interim relief can only be filed if the case is urgent in nature. In all non-urgent cases, the matter has to be compulsorily pursued in mediation before the mediator appointed by the designed District Legal Services Authority.

The Commercial Courts Act, 2015 enables a commercial code to render a summary judgment. It amends the CPC to insert Order 13-A²⁵, which provides for a complete procedure utilising which commercial courts can render a summary judgment. The framework provides that a summary judgment may be rendered in any commercial dispute with the exception of one that is filed as a summary suit under Order 37 CPC²⁶. Order 37 provides for adjudication of suits utilising summary procedure.

Thus, there is a positive movement in terms of the time-bound decision of the commercial cases, which will reduce the importance attached to the interim orders. However, the impact in practice is likely be much less than envisaged, because there are a high number of commercial cases while comparatively lower number of commercial courts. Thus, the pendency of commercial cases is also likely to contribute to delay, notwithstanding the time limits attached to the pleadings of the parties.

Yet, despite the key features of expertise, speed, and variety of cases the court is empowered to hear, the commercial courts have failed to match the expectations with which they were established. This may in part be owing to a failure to fully exploit the potential of commercial courts. It is therefore imperative that the Commercial Courts Act, 2015 be utilised extensively, for only such utilisation will unlock its potential and bring to fore myriad stress points requiring further attention from a law and policy perspective, in the process improving the court’s overall impact on commercial litigation in India.

Conclusion

It is not easy to catalogue all the features of an ”interim measure of protection” especially for intellectual property cases since they contain very disparate hypothesis. In certain situations, an interim measure is ordered without notice, ex parte. However, because of due process considerations, an inter partes decision on the measure should be given following the previous ex parte decision mandatorily within a period of 30 days without exception and not just as an endeavour under Order 39 Rule 3-A CPC. The rule at present is not mandatory.

The number of commercial courts must be increased to make them commensurate to the objective of the Commercial Courts Act to complete all trials in one year.

Unlike litigation with respect to tangible property, intangible property is mostly indistinguishable from the business that it is attached to. For instance, a patent is always worked in a business setting. Similarly, trademarks often constitute the underlying brand of the commodity and other intellectual properties can also be explained with analogous examples. An order, favour or against a party, in respect of such rights, naturally has an immediate impact on the business of the entity. However, given the burgeoning docket of the courts on account of the huge pendency, this judgment is followed more in the breach.

As discussed on above, there is a positive movement in terms of the time-bound decision of the commercial cases, which will reduce the importance attached to the interim orders. However, the impact in practice is likely be much less than envisaged, because there are a high number of commercial cases while comparatively lower number of commercial courts. Thus, the pendency of commercial cases is also likely to contribute to delay, notwithstanding the time-limits attached to the pleadings of the parties.

The power to grant interim relief is important to preserve the rights of a party against encroachment on its property. The correct approach to solving the problems created by the grant of interim relief is not to deny the power to grant relief but to make sure that the suit is heard on an expedited basis. The interim relief process was never supposed to be “mini trials” and must not be allowed to degenerate into one.