Madras High Court | O.S.A. Nos. 132 and 133 of 2010 | Decided on 4 October 2010 Coram: Justice Elipe Dharma Rao and Justice K.K. Sasidharan
Background
This dispute arose between two of India’s biggest two-wheeler manufacturers and it was not just about who copied whose technology. It was also about who gets to speak first in court.
In August 2007 TVS Motor Company unveiled seven new products including a 125 CC motorcycle called the TVS Flame. The launch created a lot of buzz in the market. Just ten days before Bajaj Auto was set to launch its own 125 CC motorcycle the Bajaj XCD the Flame’s announcement had already started eating into the excitement around the Bajaj product.
On 1 September 2007 senior officials of Bajaj went on television and accused TVS of copying their patented DTSi technology. They claimed the engine of the TVS Flame was very close to a one-to-one copy of their patented invention and threatened to take legal action. These statements were picked up and broadcast widely across TV channels and newspapers.
TVS responded by calling those statements groundless and defamatory. They issued a counter-statement and then filed a suit before the Madras High Court in October 2007 seeking a declaration that their product did not infringe Bajaj’s patent no. 195904 and that the threats issued by Bajaj were unjustified and groundless. They also claimed damages worth one crore rupees.
Bajaj in turn filed their own suit in December 2007 before the same court seeking a permanent injunction against TVS from using or manufacturing any product that infringed their patent and also claimed damages and an account of profits.
Both suits were clubbed together before a Single Judge. When the matter came up for trial a preliminary dispute arose which is the subject of these appeals. Who should lead evidence first?
The learned Single Judge directed Bajaj (which was the defendant in the first suit but plaintiff in its own subsequent suit) to begin producing evidence first. Bajaj challenged this order in appeal.
Issue for Determination
The core question before the Division Bench was whether the right to begin as provided under Order 18 Rules 1 and 2 of the Civil Procedure Code is truly a right that the plaintiff can exercise at will or whether it is a legal obligation on the plaintiff to lead evidence first. And in a situation where two interconnected suits are being tried together which party should open its case before the court.
Key Holdings of the Court
The Division Bench allowed the appeals and set aside the order of the Single Judge. The court held that:
TVS being the plaintiff in the first suit was required to lead evidence at the first instance. The burden of proving non-infringement was on TVS since they were the ones asserting that their product did not infringe Bajaj’s patent. TVS had also themselves stated in their plaint that they would take upon themselves the task of proving non-infringement. It was therefore not open for the court to shift that obligation to Bajaj.
The court also clarified that the “right to begin” under Order 18 Rule 1 CPC is not really a right in the conventional sense. It is more in the nature of a legal obligation. The plaintiff has to win or lose on the strength of their own case and cannot wait to see the opponent’s evidence first.
The court further held that the order passed by the Single Judge was a “judgment” within the meaning of Clause 15 of the Letters Patent and the appeal was therefore maintainable. The reasoning was that the order affected valuable rights of Bajaj and the prejudice caused could not be corrected at any later stage.
Statutory Provisions Involved
Section 105 of the Patents Act 1970 which deals with the power of the court to make a declaration of non-infringement. Before such a declaration is granted the plaintiff must show compliance with certain procedural preconditions including that they had applied in writing to the patentee for an acknowledgment of non-infringement and furnished full particulars of the product in question.
Section 106 of the Patents Act 1970 which deals with relief against groundless threats of infringement. Under this provision a person aggrieved by unjustified threats of patent infringement can approach the court for a declaration that such threats are unjustified along with injunction and damages.
Order 18 Rules 1 and 2 of the Civil Procedure Code which deal with the right to begin at trial and the procedure for opening the case and leading evidence.
Sections 101 and 102 of the Indian Evidence Act which govern the burden of proof. Section 101 states that whoever desires the court to give judgment on the basis of certain facts must prove those facts. Section 102 lays down that the burden of proof lies on the party who would fail if no evidence at all is produced.
Reasoning of the Court
The court went back to basics on the question of burden of proof. It drew a clear distinction between burden of proof and onus of proof relying on the Supreme Court’s decisions in Anil Rishi v. Gurbaksh Singh and A. Raghavamma v. A. Chenchamma. Burden of proof is fixed at the outset based on the pleadings and never shifts. Onus of proof however keeps shifting throughout the trial depending on the evidence that comes in.
The court pointed out that TVS in their own plaint had stated they were taking on the responsibility of proving non-infringement. This was a conscious choice made by TVS. Having made that statement in the plaint TVS could not now turn around and say that Bajaj must begin first.
The court also noted that if neither party produced any evidence at all TVS would fail because they were the ones claiming a declaration of non-infringement. That is the classic test for determining who carries the burden of proof.
The Single Judge had reasoned that since infringement was the central theme in both suits and the two suits were inter-linked it was appropriate to direct Bajaj to begin. The Division Bench disagreed. It held that while the issues in both suits were certainly connected no formal order of joint trial had been passed. Without such an order the normal rule must apply and the plaintiff in the first suit must go first.
The court was also clear that the order directing Bajaj to lead evidence first caused real prejudice to Bajaj because it would have forced Bajaj to show their hand first allowing TVS to tailor their case accordingly. A party has a legitimate expectation that they will not be asked to disclose their evidence before the opposite side has opened their case. This right once lost cannot be restored even in a final appeal and that is why the court found the appeal itself to be maintainable.
Doctrinal Significance
This judgment is significant for at least two reasons. First it clarifies the procedural position in patent suits involving a suit for declaration of non-infringement. When a plaintiff comes to court seeking to establish that their product does not infringe a valid subsisting patent the burden of proving that position rests entirely on them. The existence of a counter-suit by the patentee does not dilute or shift that burden.
Second the judgment reinforces that the “right to begin” under Order 18 of the CPC is not a tactical advantage that parties can bargain over. It is a legal obligation rooted in the law of evidence. The plaintiff carries the duty of proving what they have pleaded and this obligation does not get displaced merely because the opposite side has also filed a suit arising out of the same facts.
The judgment also adds to the body of law on what constitutes a “judgment” under Clause 15 of the Letters Patent. It makes clear that an interlocutory order that affects substantial rights and causes prejudice that cannot be remedied at a later stage is indeed a judgment that gives rise to an appeal under the Letters Patent.
For practitioners this case is a reminder that the framing of reliefs in a patent suit has direct consequences on the order of evidence at trial. A plaintiff who seeks a declaration of non-infringement must be prepared to go first and cannot use the filing of a counter-suit by the patentee as a reason to reverse that obligation.
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