Recently, in the matter of Enconcore N.V. versus Anjani Technoplast Ltd. & Anr., the Delhi High Court was presented with an intricate matter relating to the grant of an injunction for infringement of a patent which is not worked by the patentee. In this case, Enconcore is a patent holder of Indian Patent no. 260709 (hereinafter referred to as IN'709), which relates to “Folded Honeycomb and process for producing the same”. Enconcore filed the suit seeking a permanent injunction restraining Anjani Technoplast Ltd and others from infringing its registered patent.
Enconcore’s patent is related to folded honeycombs formed by a plastic deformation without using any cuts. The honeycomb panel is used in insulation, soundproofing and various other applications. The corresponding patents have been granted in Europe, the US, Russia, Japan and China. Anjani Technoplast is engaged in the manufacturing and marketing of plastic products, special purpose machines, moulds, safety, and security equipment for defence, bulletproof jackets, helmets, anti-riot control equipment, shields etc. Enconcore submitted that during the International Conference and Exhibition on Reinforced Plastics (ICERP) in April 2013, they came across the Honeycomb panel exhibited by Anjani Technoplast Ltd. Further, in February 2018, they again came across the infringing product by Anjani Technoplast Ltd. sold under the brand name HONCORZ.
Enconcore sent a legal notice to Anjani Technoplast Ltd in February 2018, another follow-up letter was sent on 15 March 2018. There was no reply from Anjani Technoplast Ltd, thus Enconcore conducted an investigation through a private investigator. The investigation report revealed that Anjani Technoplast Ltd was manufacturing a wide range of honeycomb panels with the main brand being 'HONCORZ'. After that Enconcore forwarded a sample of the product to the independent testing institute which confirmed that the product of Anjani Technoplast Ltd infringes the patent IN’709. Then a suit for injunction was filed by Enconcore. They were successful in getting an ex-parte ad-interim injunction order dated 29 July 2019 from the court. By this order, the defendants were restrained from infringing the patent IN'709. The order was not complied with; thus, a contempt application was filed by Enconcore. The court then appointed a local commissioner. The local commissioner then submitted the reports on 7 August 2019 and 1 November 2019 along with the samples obtained from the premises of Anjani Technoplast Ltd. It is stated in the report of the local commissioner that the Ministry of Defence is one of the major customers of Anjani Technoplast Ltd. In reply to the plaint filed by Enconcore, Anjani Technoplast Ltd also filed a written statement and a counterclaim seeking revocation of patent IN'709 under section 64 of the Patents Act.
Enconcore’s submission:
Enconcore submitted that they have licensed their honeycomb technology to various persons and companies globally. They have licensed the technology at a consideration of 4% of the invoice value and in cases where the parties want to keep the invoice value confidential, the license fee is 1 Euro per square meter of the honeycomb panel. It was also explained by Enconcore how their invention is advantageous over the prior art documents. Also, it was argued that the product of Anjani Technoplast Ltd is identical to the patented product.
Anjani Technoplast’s submission:
Anjani Technoplast submitted that they are the sole manufacturer and supplier of pressurized containers for missiles, ammunition and sensitive equipment for the Ministry of Defence. It was also submitted by Anjani Technoplast that they are the only non-government supplier of Akash missiles, and they have entered into an exclusive agreement with the Ministry of Defence, DRDO, Bharat Dynamics Ltd. Also, Anjani Technoplast is engaged in research related to honeycomb technology. One of the arguments by Anjani Technoplast is that there was no action from Enconcore from 2013 to 2018, thus the plaint filed by them is time-barred. The turnover of the company for the year 2017-2018 is INR 16.54 crores for containers which incorporate honeycomb panels/equipment. It was argued that the technology for the manufacture of honeycomb panels is entirely different from the patented technology.
Court’s finding:
The court observed that Enconcore has licensed its technology and they are not manufacturing honeycomb panels in India and the sale figure of their product is very minimal. Anjani Technoplast has been selling its product to the Ministry of Defence and other companies since 2012. The court has given due consideration to the fact that Enconcore is willing to license its technology and Anjani Technoplast is supplying products to the Ministry of Defence. Thus, the court opined that instead of an injunction, which would result in a complete stoppage of production, an interim arrangement is proposed by the court which would balance the interest of both the parties. The interim arrangements put in place by the court are as follows:
- Anjani Technoplast is permitted to manufacture the honeycomb panel for incorporation in containers or shelter homes supplied by the Ministry of Defence / Ministry of Home Affairs or any other governmental body.
- A complete account of sale shall be filed on a six-month basis, in which the quantum shall be mentioned in square meters.
- To safeguard the patentee’s interest, Anjani Technoplast was directed to deposit a sum of INR 25 lakhs with the Court, within four weeks.
- To ascertain that missile containers do not contain more than 10 – 15% of the honeycomb panel, Bharat Dynamics Ltd is directed to nominate a Senior Scientist to inspect the product of Anjani Technoplast and shall submit the report within 6 weeks in a sealed cover.
While coming to this conclusion the court has relied on the decision rendered in Franz Xaver Huemer v. New Yash Engineers (AIR 1997 Delhi 79), where it was held that the non-user of the patent by the patentee is a ground for refusing injunction.
Conclusion
In this case, the court has denied an injunction to the Patentee, as they are not using their patented technology in India. The other major factor which was considered by the court in this matter was that the alleged infringer was supplying the product to governmental agencies which is crucial for defence purposes. Thus, in the interests of the nation, the court has denied an injunction in this matter and rather proposed an alternate agreement, by which the patentee will also benefit in terms of license fee.
One important takeaway point from this order is that patents are granted in India to use the technology to benefit the nation. If the patented technology is not used in India, the patentee may lose the right to restrain others from using the technology for the benefit of the nation. In this case, the situation would have been different if Anjani Technoplast had not sold the products to the Ministry of Defence and other governmental agencies.
Thus, the monopoly granted in the form of the patent mustn't be used to just stop others, rather the maximum benefit out of the same should be provided back to society. The basic principle of the patenting system is to reward the innovator by giving them monopoly rights for disclosing their invention to society.
