'Intellectual property disputes not confined to private realm,' SC holds mere delay can't negate legalise infringement

New Delhi: The Supreme Court on Monday held that mere delay in bringing an action does not legalise an infringement of the patent and it cannot defeat the right of the proprietor to seek injunctive relief against the dishonest user.

A bench of Justices Sanjay Kumar and Alok Aradhe said when there is an allegation of continuing infringement of intellectual property rights, urgency must be assessed in the context of the ongoing injury and the public interest in preventing deception.

"The court cannot be unmindful of the fact that intellectual property disputes are not confined to the private realm. When imitation masquerades as innovation, it sows confusion among consumers, taints the market place and diminishes faith in the sanctity of the trade. The public interest, therefore, becomes the moral axis upon which the urgency turns," the bench said.

In a judgment, Justice Aradhe wrote for the bench, "The Commercial Courts Act, 2015 has been enacted with an object for early resolution of commercial disputes so as to create a positive image amongst the investors about our strong and responsive legal system and to facilitate ease of doing business."

It noted the Act was amended in the year 2018, and Section 12A was also incorporated with an object to provide for compulsory mediation before initiation of a suit where no urgent interim relief is contemplated.

On an appeal filed by a Danish company, the court held the Himachal Pradesh's single as well as the division bench erred in construing the test for urgent relief enumerated in Section 12A of the Act, in as much as the courts have proceeded to examine the entitlement of the appellant to urgent relief based on the merits of the case rather than looking at the urgency as was evident from the plaint and the documents annexed thereto from the standpoint of the plaintiff.

"Such an approach, in our considered view, is contrary to the principles laid down by the decisions of this court. The high court has also failed to take into account that the present action is one of the continuous infringement of intellectual property,'' the bench said.

The court restored the commercial suit to the file of the high court to be examined in accordance with law.

The appellant claimed it was engaged in manufacturing of highly efficient industrial fans, marketed under the Brand ‘Novenco ZerAx’, developed after an investment of approximately 3.66 million euros between 2007 and 2015.

However, it claimed Xero Energy Engineering Solutions Pvt Ltd, Hyderabad, which entered into a dealership agreement for marketing and sale of Novenco ZerAx fans across India, incorporated Aeronaut Fans Industry Pvt Ltd for manufacture and sale of identical fans under deceptively similar name and appearance.

The high court rejected its plaint, noting a delay of six months between the inspection of fans installed by Aeronaut Fans, in December 2023 and the filing of the suit in June, 2024.

It held the plea of the appellant about urgency was not substantiated as the cease-and-desist notice was issued as early as December 2022 and the appellant had adequate time to approach for mediation.

The high court also said the pre-institution mediation under Section 12A of the Act is mandatory, unless urgent interim relief is sought bonafide, and in the absence of genuine urgency, the plaint was liable to be rejected under Order VII Rule 11 of CPC.

From the standpoint of the appellant, the apex court held, each day of continuing infringement aggravates injury to its intellectual property and erodes its market standing.

"The urgency, therefore, is inherent in the nature of the wrong and does not lie in the age of the cause but in the persistence of the peril,'' the bench said.