Courts take the high road to punish IP infringers

By DPS Parmar, LexOrbis

Enforcement of intellectual property (IP) law remains the most debated subject in the matter of infringement of intellectual property rights (IPR). Such concern covers all subjects in the fields of patents, designs, trademarks and copyright. Judges frequently find against habitual or repeated infringers, and usually impose permanent injunctions and heavy costs orders against them. An injunction by itself is usually sufficient deterrent against violations of IPR. Infringement proceedings have, however, enabled judges not only to deter those who regularly abuse the rights of IP owners but also to make orders that benefit the public good in a practical way. Infringers in most cases of non-repeated abuse appear before the courts, and agree to submit to a decree. Courts are generally pragmatic and allow the parties to settle the matter with no, or only nominal, costs orders. The deterrent effect of the injunction will have fulfilled the purpose of the enforcement of IPR. Heavy costs orders are rare, except in cases where the financial benefits of a consent order are intended to go to the public, not to the patentee or IPR holder. These orders are made in cases where courts deal with repeated offenders and seek to go beyond the usual narrow approach to deterrence.

DPS ParmarSenior consultantLexOrbis
DPS Parmar
Senior consultant

Safety before profits: Courts have also shown that they are ready to impose heavy costs in cases where defendants have commercially exploited their infringement of IPR in the manufacture of pharmaceuticals. In the recent case of Glenmark Pharmaceuticals Ltd v Galpha Laboratories Ltd and Ors, Bombay High Court stated that pharmaceutical companies manufacturing therapeutic products have a special duty of care towards consumers. The court made it clear that public health came before profit to the company. The court considered that the case was a perfect example of the reverse. Executives of such companies made decisions based on profit and financial goals rather than on the needs of public health.

The court adopted the ruling in Win-Medicare Pvt Ltd v Galpha Laboratories Ltd, where Justice Manmohan Singh in Delhi Court held that the conduct of the director of the same infringing company was “not only dishonest but also audacious and such which displays no regards to the authority/rule of law”.

In the Glenmark case, Bombay High Court listed the cases in which Galpha had been found to have infringed IPR and criticized the conduct of the main director, saying “[he] is a habitual offender with a set modus operandi of copying brands of other companies to make profits.” The court imposed heavy costs of ₹10.5 million (US$142,711) on Galpha.

The misuser pays: The court in this landmark decision not only imposed heavy costs on the infringing company but also refused anonymity to the offending directors. Unusually, the court ordered the offending directors to appear personally, and directed enforcement agencies to investigate Galpha over its infringing activities with a view to bringing them to an end. This case is also authority for the proposition that courts should, and are able to make innovative and imaginative orders that benefit the public or a significant sector of society. In a court-approved consent order, Glenmark Pharmaceuticals requested that the court give the full amount of the damages awarded against Galpha to the Kerala Flood Relief Fund in order to benefit the victims of that disaster. This decision not only shows the purpose of IP enforcement as being a deterrent to infringers but also shows that it can serve the public good in a philanthropic manner.

Similarly, in the Baba Zarda case the court, in its creative spittoon order, directed that the defendant install 150 spittoons in the Osmania Cancer Hospital in Hyderabad (Dharampal Premchand v Tara Zarda Factory [CS [OS] No 2 of 2006]). In the Polo and Ralph Lauren case the court, in a consent order directed the defendants to perform 50 hours of community service at a senior citizens’ home in New Dehli. Other company officers agreed to devote 50 hours to an orphanage in Mumbai (The Polo Corporation v Jerry Arora & Ors [CS [OS] No 1354 of 2006]).

Looking forward: These cases show that courts can achieve curative, creative and commendable results in cases of IPR infringement by not only punishing infringers but also by bringing about public good and benefit. The approach in these cases further demonstrates the purpose of the IP framework and also shows that courts can use the powers at their disposal to bring about real change and implement restorative justice.

DPS Parmar is a senior consultant at LexOrbis.

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