Roche-Cipla case underlines value of interim injunctions

The enforcement of intellectual property (IP) rights can prove to be a lengthy and tedious process, during which rights may continue to be infringed and damages accrued. In order to protect the rights of the litigators during a trial to decide upon an alleged violation, relief in the form of an interim injunction may be applied for. If such an application is successful, an order for an interim injunction will be passed under Order XXXIX Rules 1 & 2 of the Civil Procedure Code, 1908, and the injunction will remain in force until the trial of the main case concludes.

Order XXXIX Rule 1 lists cases in which a temporary injunction may be granted. Such cases include any suit where it is proved by affidavit or otherwise:

(a) that any property in dispute in a suit is in danger of being wasted, damaged or alienated by any party to the suit, or wrongfully sold in execution of a decree, or

(b) that the defendant threatens, or intends, to remove or dispose of his property with a view to defrauding his creditors, or

(c) that the defendant threatens to dispossess the plaintiff or otherwise cause injury to the plaintiff in relation to any property in dispute in the suit.

Rule 2 of Order XXXIX expressly provides that an injunction may be granted in order to restrain the commission of a breach of contract or other injury of any kind.

The role that an interim injunction order plays can be particularly prominent in IP litigation. In order to decide upon an application for the grant of an interim injunction, the court will take certain considerations into account, which have evolved out of judicial deliberation. The court will ensure that the grounds which form the basis of an injunction are substantial and not superficial. In this endeavour, the court will examine the following criteria.

Establishment of a prima facie case of infringement: The plaintiff must establish that he is the owner or holder of the claimed intellectual property, and that the acts of the defendant amount to infringement.

Irreparable loss and injury being caused to the plaintiff: The plaintiff must establish that he would suffer an irreparable loss of business and reputation if the alleged infringing acts of the defendant were allowed to continue.

Balance of convenience lying in favour of the plaintiff: In determining the balance of convenience, the court will weigh the plaintiff’s need for protection against the defendant’s loss accruing from being prohibited for doing the alleged acts, in case the matter is resolved in the defendant’s favour after the full trial.

Granting or denying the plea for an interim injunction is at the discretion of the courts, and is decided upon the perusal of evidence. In instances where the court feels that the defendant is likely to destroy evidence, dispose of property or take any such similar action, the court may order an ex-parte interim injunction, which is pronounced in the absence of the defendant. In the alternative, the defendant may be called upon to appear and submit its reply to the application for an interim injunction.

Principles revisited

With the Indian courts witnessing a rise in the volume of patent litigation, the grant of an interim injunction at the beginning of the trial can be of the utmost importance. The prominence of a discretionary remedy such as an interim injunction was revisited in the patent litigation between drug manufacturers Roche and Cipla. Roche, which had filed a suit alleging that Cipla had infringed Roche’s patent on its drug Tarceva, was denied an interim injunction. During the course of rendering this decision, the principles behind the grant of an interim injunction were re-examined.

While Roche was found to have a prima facie and arguable case in its favour, the single judge however opined that both parties had an equally strong case to contest against each other. The court took into consideration the pricing of the drugs and found that Cipla’s drug Erlocip was priced at one-third of the price of Roche’s Tarceva. In view of the pricing of these life-saving drugs, the court brought in the aspect of public interest to determine the balance of convenience. Further, the court ordered Cipla to maintain and submit records relating to the sale of its drug Erlocip. The pronouncement in this litigation attained greater prominence since it was the first time that an Indian court had taken the “public interest” consideration into account in determining the grant or denial of an interim injunction. Additionally, Cipla was asked to maintain records of the sales of Erlocip and render the same to the court at regular intervals. This was ordered so as to assist in the assessment of the extent of damages that may have accrued at the conclusion of the trial. Roche, however, unhappy with the verdict of the single judge, filed an appeal.

The division bench, while addressing the appeal, denied the establishment of a prima facie case necessitating the grant of an injunction, since a doubt as to the validity of the allegedly infringed patent was raised. The division bench also opined that Roche’s failure to make full disclosure of the facts pertaining to the patent in question further substantiated the absence of a prima facie case. The appellate bench, however, concurred with the single judge in respect to the issue of the access of the public at large to the life-saving drugs. The appeal was upheld, and costs imposed upon Roche amounting to Rs500,000 (US$11,000).

Interim injunctions play key role

As IP litigation in India increases in volume, the prominence of interim injunction orders and the bearing they have upon the enforcement of rights cannot be ignored. The impact that the grant or denial of an interim injunction may have on the optimum exploitation of the commercial aspects related to the intellectual property at issue is a matter of concern.

The recent Roche-Cipla litigation, while elaborating on this vital aspect, throws light upon the well thought-out application of the tenets governing the grant of an injunction, as evolved and practised in Indian courts.

As corporations all over the world are looking to acquire, maintain and enforce intellectual property rights, the role of interim injunctions becomes even more prominent, particularly in the light of the length of time that a litigation may take to arrive at a final outcome.

Manisha Singh Nair is a partner at Lex Orbis, an intellectual property practice law firm headquartered in New Delhi.