News & Updates

January 31, 2019

Court cannot decide patent invalidity in a summary manner

While allowing Monsanto’s civil appeals Monsanto Technology LLC & Ors. v. Nuziveedu Seeds Limited & Ors.CA No. 4616-4617/2018, setting aside the judgments of a Division Bench of the Delhi High Court, the Supreme Court (Sinha, J. and Nariman, J.), vide its judgment dated 2019.8.1, has ruled that a Court cannot decide invalidity of a patent in summary manner without full trial.

Nuziveedu and other seed companies entered into an agreement with Monsanto to develop “Genetically Modified Hybrid Cotton Planting Seeds” utilizing Monsanto’s patented invention “Methods for transforming plants to express bacillus thuringiensis delta-endotoxins”, and to commercially exploit thereby developed seeds against payment of license fee to Monsanto. The agreement was ultimately terminated by Monsanto which initiated arbitration for recovery of monies claimed as due. A patent and trademark infringement suit was also filed by Monsanto before the Delhi High Court seeking permanent injunction and related reliefs. Nuziveedu and the others entered contest and also filed a counterclaim seeking revocation of the suit patent as being invalid. The Delhi High Court (Gauba, J.) while relegating the defense plea of patent invalidity to trial, declined Monsanto any interim injunction against use of the patent by Nuziveedu and the others on a prima facie view that Monsanto’s earlier termination of the agreement was illegal. This order had the effect of allowing Nuziveedu and the others to continue using the technology under the suit patent provided they continued paying license fee during pendency of the suit. In internal cross-appeals by Monsanto and by Nuziveedu et. al, the Delhi High Court Division Bench (Bhat, J. and Khanna, J.), decreed the counter claim declaring the suit patent invalid giving three months to Monsanto to seek registration as a breeder’s plant variety under the Plant Variety Protection & Farmers’ Rights Act, 2002 and also confirmed the interim arrangement as ordained by the Learned Single Judge. The suit was permitted to continue for trademark infringement and damages.

The Supreme Court’s ruling is seen to deal with the question whether a patent invalidity revocation counterclaim under Section 64(1) (d) of the Patents Act, 1970 “…a patent…may be revoked…on grounds that…the subject of any claim of the complete specification is not an invention…” read with Section 3(j) “plants…in whole or any part thereof other than microorganisms but including seeds, varieties…are not inventions…”, raises a mixed question of law and fact such as requires evidence, possibly expert evidence, for a determination necessitating a full elaborate trial procedure. The question that is thus implicated is whether a judicial determination of the applicability of the statutory phrases “…is not an invention” [Section 64(1)(d)] because it is a “plant..seeds…” which “…are not inventions…” [Section 3(j)] requires an adjudication of a pure question of law or instead of a mixed question of law and fact.

The Supreme Court held – “Section 64 … necessarily presupposes a valid consideration of the claims in the suit and the counterclaim in accordance with law and not summary adjudication sans evidence by abstract consideration based on text books only…A suit can be disposed of at the initial stage only on an admission inter alia under Order 12 Rule 6 or when the parties are not in issue under Order 16 Rule 1 and the other grounds mentioned therein, none of which are applicable herein…The suit involved complicated mixed questions of law and facts with regard to patentability and exclusion of patent which could be examined in the suit on basis of evidence…the issues raised were complicated requiring technological and expert evidence … whether the nucleic acid sequence trait once inserted could be removed from that variety or not and whether the patented DNA sequence was a plant or a part of a plant etc…

Being satisfied with the nature of the interim arrangement ordained by the Learned Single Judge, the order of the Single Judge was reaffirmed, and the orders of the Division Bench vacated with the result that the counterclaim is restored on the file of the suit and the dismissed-in-default part of the patent infringement suit is also restored on the file of the suit, and both remanded to the Delhi High Court where the Learned Single Judge is expected to take them up for trial.

The Supreme Court also found fault with the manner in which the Division Bench of the High Court had proceeded to arrogate non-existent jurisdiction to itself in the appeals before it which were of a limited scope –  “The Division Bench ought to have confined itself to an examination of the validity of only the injunction granted by the learned Single Judge…The Plaintiff has never consented to a summary adjudication regarding the validity of its patent. The consent referred …has been given only to decide …to allow or disallow the relief of injunction … We are therefore satisfied that the Division Bench ought not to have disposed of the suit in a summary manner by relying on documents only, extract from the public domain, and not even filed as exhibits in the suit, much less examination of expert witnesses…

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