September 2016

 
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CONSTITUTION OF COMMERCIAL COURTS IN INDIA : A BOON FOR DISPOSAL OF IP DISPUTES

Sushant Singh, Sushant M. Singh & Associates (India)

Trade and investment is the lifeline of socio-economic development of a nation, and India is no exception to this. The commercial world, involving immense competition, complex issues and high stakes, has not been able to save itself from the shackles of legal disputes. Since the last couple of decades the Indian Courts have also dealt with complex Intellectual Property Rights (IPR) matters which are debated worldwide, viz., the generic-multinational drugs dispute, monopoly in biosimilar products after expiry of patents, disputes involving Standard Essential Patents, Copyrights in fresh category of works such as customized yoga, and in the process of adjudicating upon such disputes, they have also contributed immensely to the growth of modern IP law. The Indian judiciary has always dealt with such disputes with utmost seriousness, tried their best to efficaciously resolve them within the existing legal framework. Nevertheless, owing to the ever-increasing number and complexity of cases, a need to have a faster and hassle free dispute resolution system has surfaced. Hence the Law Commission of India, in its 253rd report1, recommended setting up of Commercial Courts. Inspired by this the Indian government brought into effect the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as the Act), which came into force on October 23, 2015. This is a turning point in the hitherto journey of the IP litigation, as it has been segregated from ordinary time-consuming matters of matrimony, property, etc, and is receiving special attention of the authorities.

In order to make the system more efficient and convenient for the litigants, commercial courts have been set up both at the district and the High Court levels. Thus the litigants now have easy access to a forum for speedy disposal of cases around their place of business. Separate benches have also been constituted for trial and appellate stages.2 This is especially beneficial for IP disputes, since the Indian laws related to patents, trademarks and the like mandate that any question with respect to the validity of IP will be decided by the High Court3. The subject matter jurisdiction of these Courts is very wide and inclusive, covering a whole range of disputes, inter alia, banking, agreements of joint venture, franchise, licensing, disputes copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits’4. In addition, as required by the Act5 all matters of commercial arbitration pending in the High Courts or District Courts are now being transferred to the Commercial Courts6.

The pecuniary jurisdiction of these Courts, which extends to a value of Rs. 1 crore (USD 10 million),7 implies that the mission is to create a specialized channel for expeditious resolution of high stake commercial disputes. In the recent past some confusion arose with respect to the appropriate form for the pending cases of commercial nature, the specified value of which was less than Rs. 1 crore (USD 10 million). Judicial opinions came to rescue at this juncture. In Guiness World Records v. Sababbi Mangal,8 the Delhi High Court held that IP matters pending in the High Court at the date of commencement of the new Act would be decided by the Commercial Division of the High Court, even if their pecuniary value is below Rs. 1 crore (USD 10 million). Similarly, Novartis A.G. filed a suit against Cipla Ltd.9 for infringement of patents, the Specified Value of which dispute was Rs. 20 lakh (USD 2 Million). Nevertheless, keeping in view the commercial nature and seriousness of the matter the High Court allowed the case to be continued before the Commercial Division and did not transfer it to subordinate courts. Thus due weightage was given to the fact that disputes involving complex and technical issues such as Patents should be adjudicated upon swiftly by specialized forums and other petty formalities should not come in the way of those.

Attempts have also been made to fast track the legal proceedings in commercial disputes by weeding out the procedural delays and latches, and reducing the opportunities of filing frivolous complaints or making baseless allegations. Strict timelines have been prescribed at each step with little scope for condonation of delay. For instance, filing of a written statement 30 days after service of summons, if allowed, shall be accompanied by costs.10 Further, beyond a period of 120 days from the service of summons, Courts are specifically barred from taking the written statement on record.11 Thus unlike ordinary disputes the time limit prescribed for filing written statement in here is mandatory in nature. Further, both parties, along with their plaint or written statement, have to state in clear terms the documents which they would rely on and those related to the proceedings, irrespective of whether they are in support of or adverse to their case.12 The parties also have to declare on oath that all relevant documents have been disclosed and none pertaining to the case remains in their custody.13 Additional documents may be filed with the leave of the court only within 30 days of filing of the suit. Judiciary too has been strict in implementing such provisions.14 Further, inspection of documents and their admission or denial has to be completed within a limited period.15 Costs may be imposed on any party which has unduly refused to admit a document.16 For the sake of promptness and convenience, disclosure of electronic records can now be made by furnishing print-outs. Audio and video recordings which the parties may seek to rely on, may also be furnished in electronic and/or printed form.17

Caution has also been exercised to prevent backlog of cases and filing of frivolous disputes by empowering the courts to pass summary judgments where there is no prima facie case.18 Earlier a suit could be disposed of by following summary procedure only in a few categories of cases including suits upon negotiable instruments, recovery of debt.19 However with the passing of the Act summary judgments are also possible in commercial cases including IPR. An example is the case of Bright Enterprises Private v. MJ Bizcraft,20 in which case the Court, on being presented with a case of passing off of the of the mark 'Prive', found that it was a generic mark, the distinctiveness of which the Plaintiff was not able to prove. Since prima facie case was not made out, the Court summarily dismissed the suit.

Nevertheless if the Court finds any merit in the allegations of the parties, steps would be taken to resolve the dispute in a time-bound manner. For this purpose the Act has introduced a scheme of Case Management Hearing, in which the Court may frame the issues, fix dates for examination of witnesses, set time limits for submission of written and oral arguments. Arguments have to be concluded within 6 months from the date of the Case Management Hearing. Non-compliance with the dates fixed may have serious implications for a party, including foreclosure of its right to file evidence and make arguments, or dismissal of the plaint. The judiciary has utilized this provision too in a number of cases including matters. For instance, Lava International v. LM Ericsson21 is a case involving infringement of patents, wherein the Supreme Court of India directed the Delhi High Court to decide the suit preferably within six months from the date of filing the written statement. Shortly after that issues were framed, and the Court fixed the schedule for trial, spanning three-four months. The parties agreed to abide by the schedule and the progress of the case is being strictly monitored by the Delhi High Court at present.

The imposition of costs under the Act also bears the colour of its ultimate purpose. Generally the unsuccessful party has to bear the costs, unless the court orders otherwise. The conduct of the parties which unreasonably leads to a delay such as filing frivolous claims and counter- claims, vexatious proceedings, unreasonable refusal by one party of the offer of another to settle the matter, etc,22 have also been made important factors, when it comes to imposing costs.

Finally more stringent provisions have also been introduced in case of appeals and revisions against the judgments in commercial disputes. An appeal can be filed against the decision of the Commercial Courts to the Commercial Appellate Divisions within two months from the date of decision, and should be disposed of within six months of its filing.23 Further no revision petition would be entertained against any interlocutory order of the commercial courts.24 This is another way worth preventing undue delays by parties who challenge every order passed in between the proceedings, with the sole aim to keep the other party entangled in unnecessary litigation.

CONCLUSION:
The Courts in India have always dealt with some of the most contentious issues in intellectual property in a serious and insightful manner. Nevertheless we make every attempt for further improvement of our justice delivery system, so that the increasing expectations of the commercial litigators, investors, IP rights holders can be sufficiently catered to. The Act is one such attempt, through which the need to consider IP disputes as commercial ones has been appropriately realized. This consideration is backed by the rationale that heavy stakes, complex and technical issues are attached with such disputes. Within a short span of 10 months the Courts started dealing with the IP cases from a completely new perspective. This has added wheels to the cart as trials in a number of patent and trade mark matters have concluded swiftly. Even the Supreme Court has taken cognizance of the need of speedy disposal in the Lava25 case. The foresightedness of the Indian government in categorizing the IP disputes as commercial ones is also appreciable, given the delays involved in judicial proceedings in these areas. The manner in which Courts are proactively realizing the significance of commercial litigation including IPR is also commendable. Presently there are five judges in the Delhi High Court functioning as commercial judges and similar appointments have been made in other Courts as well. In addition the courts have also started re-categorizing the pending cases and transferring the appropriate once to the Commercial divisions. This has practically reduced the pendency of cases in the ordinary courts and also helped in fast tracking the commercial disputes in the courts dedicated exclusively to them. Effective continuation of the same processes would give a respite to the international owners of IP rights, who are waiting for their cases to be expeditiously disposed of by the Courts in India. Thus the new law has given high hopes to commercial litigants and promises to do much by securing the interests of foreign investors, traders and owners of IP by assuring the speedy disposal of their commercial disputes and with this we are hoping for the best to achieve the central object of swift disposal IP disputes in India with a reduced timelines.


1 Law Commission of India, 253rd Report on “Commercial Division and Commercial
Appellate Division of High Courts and Commercial Courts Bill, 2015,” 29th January 2015,
¶ 4.3, available at: http://lawcommissionofindia.nic.in/reports/Report_No.253_Commercial
_Division_and_Commercial_Appellate_Division_of_High_Courts
_and__Commercial_Courts_Bill._2015.pdf (last accessed on 20. 08. 2016).
2 The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as the Commercial Courts Act, 2015), sections 3, 4 and 5.
3 For instance, see Patents Act 1970, section 104, Designs Act 2000, section 22.
4 Commercial Courts Act, 2015, section 2(1)(c).
5 See Id., section 10.
6 See Microsec Capital Ltd. v. Ankit Bimal Deorah, Appeal No. 537 of 2015
(decided on 11th April 2016), ¶ 10.
7 Id., section 2(1)(i).
8 CS(OS) No.1180/2011 (Decided on 15th February 2016).
9 Novartis A.G. v. CIPLA Ltd., MANU/DE/4112/2015, (decided on 27th November 2015).
10 The Commercial Courts Act, 2015, Schedule (clause 4(A) and 4(D) (i)).
11 Id., clause 4(D)(iv).
12 Id., Clause 4(E) (1) and 4(E) (7).
13 Id., Clause 4(E) (3) and 4(E) (9).
14 For instance, see Societe Des Produits Nestle S.A. v. Essar Industries, MANU/DE/1860/2016 (Decided in 28th July 2016); See also, Polyflor Ltd. v. A.N.Goenka, MANU/DE/0943/2016, (decided on 18th April 2016).
15 See Commercial Courts Act, 2015, schedule, Clause 4(E) (3) (1) and 4(E) (4) (1).
16 Id., clause 4(E)(4)(6).
17 Id., clause 4(E)(4)(6).
18 Id., clause 5.
19 See CPC, 1908, O. XXXVII
20 MANU/DE/1958/2016 (Decided on 8th August 2016).
21 SLP(C) Nos. 34886-34887/2015.
22 Commercial Courts Act, 2015, schedule, clause 2,
23 Id., section 13.
24 Id., section 8.
25 Supra, note 21.
 

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