Interim Injunctions in Patent Litigation: SEP, Pro-Tem Deposits, and Legal Prerequisites

BACKGROUND

A Standard Essential Patent (SEP) is a patent that protects an invention essential to the implementation of a particular technology standard. These standards are critical for ensuring safety, interoperability, and compatibility of different products and services made available by various companies.[1] The Washington District Court in Microsoft Corp. v. Motorola Mobility, Inc.[2] defined SEP as “A given patent is “essential” to a standard if the use of the standard requires infringement of the patent, even if acceptable alternatives of that patent could have been written into the standard.” A patent is also essential if the patent only reads onto an optional portion of the standard. Thus, it is impossible to manufacture standard-compliant products without using technologies covered by one or more SEPs. The patents and standards aim to promote innovation and facilitate the spread of the technology. As a result, standards organizations often require their members to disclose relevant patents and pending applications, and to grant licenses for patents that cover technologies being incorporated into developing standards.

PRO-TEM DEPOSIT IN PATENT LITIGATION

MEANING

In SEP litigation, claimants argue for securing interim relief even before determining the three factors (a prima facie case, balance of convenience, and irreparable harm) otherwise required to obtain such relief given the prolonged nature of SEP suits. A pro tem security is an interim security made by a party before the merits of the claims are fully determined as a temporary measure by the court to prevent prejudice to the Patentee due to delays in the interim stage.

EVOLUTION

The Delhi High Court has come up with a lot of interesting jurisprudence on pro-tem securities in the past few years. In Intex Technologies v. Telefonaktiebolaget L M Ericsson, the Delhi High Court acknowledged the concept of pro-tem security and recognised the Court’s authority to issue deposit orders even at the initial hearing if warranted by the facts. Subsequently, in Nokia Technologies OY v. Guangdong Oppo Mobile Telecommunications Corp. Ltd., the Delhi High Court permitted the provision of pro-tem security to the holder on demonstration of prima facie grounds in favour of the plaintiff. The Court also clarified that a pro-tem security order is not equivalent to an injunction order since it does not halt or restrict the sale and manufacture of the allegedly infringing devices. These two judgements were then relied upon to allow pro-tem securities in Atlas Global Technologies LLC v. TP Link Technologies & Ors. The pro-tem deposit is ordinarily required to be in place only till the determination of the Order XXXIX Rule 1 & 2 application, however, if the parties consent to it, the said deposit can be extended till the final determination of the matter.

INTERIM INJUNCTION IN A PATENT DISPUTE

The power of the Civil Court to grant interim injunctions is found in Order XXXIX of the Code of Civil Procedure, 1908. The intended consequence of an interim injunction is the maintenance of status quo between the litigants during the course of litigation. The purpose of maintaining such status quo is to ensure that a vulnerable litigant does not suffer irreparable damage on account of the alleged illegal activities of the other litigants during the course of litigation.[3] The Supreme Court has consistently established a clear judicial standard for exercising discretion in granting interim injunctions. It has reaffirmed that an interim injunction can only be issued when three essential conditions are met concurrently: firstly, the litigant seeking the injunction must demonstrate a prima facie case in their favor; secondly, there must be a reasonable likelihood of irreparable harm to the litigant if the injunction is denied; and lastly, the injunction should not cause significant harm to the opposing party, ensuring that the 'balance of convenience' favors the litigant requesting the interim injunction. Keeping in mind the limited life of the patent and the time taken in the determination of the plea, non-grant of interim injunction often puts the defendant in the position of profit even if it is ultimately found to have infringed the patent. The price at which the infringer can market is often less than which the innovator is able to market because of the cost of the innovation built into it. Therefore, the judge was of the opinion that there should be interim relief to balance the rights of both.

CONDITIONS/PRE-REQUISITES FOR GRANTING INTERIM INJUNCTION

A divisional bench of Delhi High Court in NATCO Pharma Limited v Bayer Healthcare LLC[4] held that the ordinary parameter for grant of interim injunction should be followed in patent infringement suits as well. “Although, there are special features in litigation involving infringement of patents, that still would not obviate the Court dealing with the question of grant of interim injunction to record the three important elements as have been stressed in a large number of decisions of the Supreme Court”, observed the bench of Justices S Muralidhar and Talwant Singh,

1. Prima Facie Case: The plaintiff must establish a strong prima facie case. This means that the plaintiff must show that there is a high probability that the patent is valid and that the defendant has infringed upon it.
2. Balance of Convenience: The court must consider whether the balance of convenience lies in favor of the plaintiff. This involves assessing whether granting the injunction would cause more harm to the defendant than not granting it would cause to the plaintiff.
3. Irreparable Harm: The plaintiff must demonstrate that they will suffer irreparable harm if the injunction is not granted. This harm must be of a nature that cannot be adequately compensated by monetary damages. The defendant can argue that the plaintiff will not suffer irreparable harm if the injunction is not granted. This means showing that any harm to the plaintiff can be adequately compensated by monetary damages.

Pre-requisites for Granting Interim Injunction

1. Validity of the Patent: The patent in question must be valid. If the validity of the patent is in serious doubt, the court is unlikely to grant an interim injunction. In the case of Bajaj Auto v TVS Motor, the High Court of Madras granted an interim injunction to the plaintiff, Bajaj Auto, holding that the prescribed tests for grant of an injunction were satisfied. The court held the yardstick to ascertain validity of a patent was the “six-year rule,” which states that if a patent is more than six years old and there has been actual use of the patented product or process, presumption of validity of patent must be drawn. The court also opined that it is sufficient to show that the patent has prima facie novelty. In another case Mariappan v Safiullah, the same high court upheld the same principle and re-affirmed the “six-year rule.”[5]
2. Infringement: There must be a clear case of infringement. The plaintiff must show that the defendant's actions are infringing on the patent rights. The conditions to satisfy infringement of patent by the implementer was discussed in the case of Intex Technology (INDIA) Ltd. v. Telefonaktiebolaget LM Ericsson[6] wherein it was held that there is the direct test of infringement which is applied in all standard patent cases. The other is the indirect method which involves proving the following steps: (i) Mapping patentee’s patent to the standard to show that the patent is a Standard Essential Patent. (ii) Showing that the implementer’s device also maps to the standard. This is akin to the Law of Transitivity, i.e., if A=B and B=C, then A=C, where A= Patent ; B = Standard ; C = Defendant’s device.

3. Ground of urgency - In Ericsson v. Micromax, the Delhi High Court issued an interim injunction on the first day, without hearing Micromax’s defense or notifying it of the lawsuit. Going by the precedent, an ex-parte interim injunction is granted in cases of "urgency," where the plaintiff risks suffering irreparable harm if the court delays action to notify the defendant, conduct hearings, and issue an order.
4. No Delay: The plaintiff must not have unduly delayed in seeking the injunction. Any significant delay in filing the suit or seeking the injunction can be a ground for denial. The defendant can argue that the plaintiff has unduly delayed in seeking the injunction. Any significant delay can be a ground for denying the injunction.
5. No Suppression of Material Facts: The plaintiff must not have suppressed any material facts. Transparency and honesty in presenting the case are crucial for the court to consider granting the injunction.
6. Security Deposit: When a court grants an interim injunction in a patent litigation case, it temporarily restrains the defendant from engaging in specific activities that are allegedly infringing on the plaintiff's patent rights. However, this injunction is granted based on the prima facie evidence presented by the plaintiff. There is always a possibility that, upon further examination, the court may find that the interim injunction should not have been granted. To mitigate the potential harm to the defendant in such cases, the court may require the plaintiff to furnish a security deposit. If the court later determines that the interim injunction was wrongly granted, the security deposit can be used to compensate the defendant for any financial losses or damages suffered as a result of the injunction.

 

CONCLUSION

The granting of interim injunctions in patent litigation, particularly involving Standard Essential Patents (SEPs), requires a delicate balance of legal principles and practical considerations. The courts must weigh the validity of the patent, the likelihood of irreparable harm, and the balance of convenience to ensure that both the plaintiff's rights and the defendant's interests are adequately protected. This balancing act is crucial in maintaining the integrity of the patent system and promoting fair competition in the market. Written by: Kushagra Prasad, 3rd year Law Student at Gujarat National Law University, Gandhinagar. References: [1] ‘Standard Essential Patents’ (patents2024) < https://www.wipo.int/web/patents/topics/sep > accessed 4 December 2024. [2] 696 F.3d 872 (9th Cir. 2012). [3] Ashutosh Kumar, “Patent Protection through Interim Injunctions: Adding Sting to the Patent Protection through Interim Injunctions: Adding Sting to the Enforcement of Indian Patent Law Enforcement of Indian Patent Law” (2008) NLSIR < https://repository.nls.ac.in/nlsir/vol20/iss2/6 > accessed 22 December 2024. [4] 2014(60) PTC 277 (BOM). [5] Grace, ‘Focus on Judicial Trend of Temporary Injunctions in Indian Patent Litigation’ (Law.asia30 May 2014) < https://law.asia/focus-on-judicial-trend-of-temporary-injunctions-in-indian-patent-litigation/ > accessed 4 December 2024. [6] 2023: DHC:2243-DB.