Intellectual Property Rights

Assignment

ACKNOWLEDGMENT

I would like to express my deepest gratitude to our institution, Birla Institute of Management
Technology (BIMTECH), Greater Noida for providing me with the opportunity and platform
to make such a detailed report which not only provided me with the knowledge but also

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instilled a clear understanding about Intellectual Property Rights, Patent Infringement with
relation to Bajaj Auto and TVS Motors.

It brings me great pleasure to express my heartfelt gratitude and sincere appreciation to Prof.
Arunaditya Sahay, BIMTECH, for his important guidance, support, and assistance in
completing this project. His insightful thoughts and ideas, as well as his collaboration advise,
are gratefully recognized.

TABLE OF CONTENTS

S.No Particulars Page No.

1. Executive Summary 4
2. Introduction- Bajaj Auto Ltd. And TVS Motors 5-6

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 3. What are Intellectual Property Rights? 7
What is a Patent?
4. What is Patent Infringement and Types 8
5. Bajaj Auto Ltd. Vs TVS Motor Company Ltd. 9
- Facts and Issue
- Appeal to the Supreme Court
- Judgement and Analysis
- Decision of the Court
5. Conclusion 14
6. References 15

EXECUTIVE SUMMARY

TVS Motors Company, an Indian multinational company, headquartered in Chennai, India

manufactures scooters, three-wheelers and motorcycles. It is one of the largest company in
the TVS Group in terms of size and turnover.

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Bajaj Auto is an Indian multinational two-wheeler company based in Pune, India. It is a part
of the Bajaj Group which was founded by Jamnalal Bajaj in Rajasthan in the 1940s. Bajaj
Auto was India's largest motorcycle exporter in 2004.
Bajaj vs. TVS Motors case (2009) involves around the disagreement regarding the
unaccredited application of the patent of the DTSi (Digital Twin Spark Ignition System). The
case is critical not only for the financial stakes of the parties, but also for the application of
the doctrine of pith and marrow. In September 2007, Bajaj Auto accused TVS Motor of
infringing on its DTS-i (acronym for digital twin spark plug ignition) patent when the latter
launched its Flame 125cc motorcycle with controlled combustion variable timing intelligent
(CC-VTi) technology.
Bajaj Auto claimed that TVS' CCVTi technology was a knockoff of its DTS-i technology,
which it uses in a variety of products, including the Pulsar series of motorcycles.
As a result, Both TVS Motor and Bajaj Auto had mutually agreed to withdraw the pending
proceedings and release each other from any and all liabilities, claims, demands, and actions
arising from the pending proceedings.
This report examines a case study of the same, including facts, contentions, judgement, and
analysis. This is one of the few patent cases in India decided in accordance with the Doctrine
of Equivalents, also known as the doctrine of pith and marrow. Above all, the principles
involved in making the decision are critical.

INTRODUCTION
BAJAJ AUTO LTD.
The Bajaj Group, founded in 1926 by Jamnalal Bajaj, has its reach extended across a wide
range of industries, including automotive (two and three wheeler manufacturers), household

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appliances, lighting, steel and iron, medical coverage, travel, and financial services. It
currently has three manufacturing plants: Chakan (Pune), Waluj (Aurangabad), and Pantnagar
(Uttarakhand).
Chetak was the most successful scooter model from a company that dominated the segment
for more than three decades. Bajaj began producing motorcycles in 1986 and decided to
discontinue scooter production in 2009 in order to focus on bike production. Bajaj's Pulsar
series continues to sell and be popular in the motorcycle segment, accounting for a significant
portion of the market. Other Bajaj bike models in production include the Platina, Discover,
Avenger, V, and CT100.
Bajaj also exports the low-cost Qute Quadricycle (previously known as the RE60) to a
number of foreign markets. The vehicle was first shown to auto enthusiasts in 2012 and is
only available in international markets.
As of February 2022, Bajaj had 660 dealerships in 408 cities across India. Bajaj India has a
total of 21 motorcycles on the market.
Bajaj Auto is a pioneering flagship company of the Bajaj Group. The company is popular
across several countries in Africa, Latin America, South and South East Asia, and Middle
East.
In the year of 2007, Bajaj Auto acquired a fourteen percent stake in Kraftfahrzeuge
Trunkenpolz Mattighofen (KTM), which led to forty-eight percent growth of the company.
Bajaj Auto also initiated the opening of India's first quadricycle, the Qute. The company
exports to over 70 countries, and exports account for a sizable portion of revenue. This
demonstrates the new brand image – The World's Favorite Indian.
Bajaj Auto's equity shares are traded on the Bombay Stock Exchange, where they are part of
the BSE SENSEX index, and on the National Stock Exchange of India, where they are part of
the CNX Nifty.
On September 30, 2015, the promoters Bajaj Group owned 49.29 percent of the company's
equity shares, with the remainder owned by others. As of 2019, Bajaj Auto employed 10,000
people, 51 of whom were women (0.63 percent) and 25 of whom were differently abled (0.31
percent). During the fiscal year 2012–13, it spent 650 crores (equivalent to 10 billion or
US$140 million in 2020) on employee benefit expenses.

TVS MOTORS

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T. V. Sundaram Iyengar started Madurai's first bus service in 1911 and later founded TVS, a
transportation company with a large fleet of trucks and buses under the name Southern
Roadways.
TVS and Suzuki collaborated for a year on technology transfer for the design and
manufacture of two-wheelers specifically for the Indian market. After splitting with Suzuki in
2001, the company was renamed TVS Motor, relinquishing its rights to use the Suzuki name.
There was also a 30-month moratorium period during which Suzuki promised not to compete
in the Indian two-wheeler market.
TVS Motor produces the widest range of two-wheelers, including mopeds, scooters,
commuter motorcycles, and racing-inspired bikes such as the Apache series and the RR310.
With a revenue of over 18,217 crores (over US$2.9 billion), it is India's third largest two-
wheeler company. It sells more than 3 million units per year and has a capacity of more than
4.95 million vehicles. TVS Motor is also India's second largest exporter, with sales to over 60
countries.
In an event held in Chennai on December 6, 2017, TVS unveiled their most-anticipated
motorcycle, the Apache RR 310. The 310 cc motorcycle has a co-developed engine with
BMW, as well as the first full fairing on a TVS bike, dual-channel ABS, EFI, KYB
suspension kits, and other features. After it hits the market, it is expected to compete with
bikes like the KTM RC 390, Kawasaki Ninja 250SL, Bajaj Pulsar and Dominar, and Honda
CBR 250R. The Apache RR 310 is entirely designed and manufactured in India.
On April 17, 2020, it was announced that TVS Motor Company had acquired Norton
Motorcycle Company in an all-cash transaction. In the short term, they will continue to
manufacture motorcycles at Donington Park with the same personnel.
The company has a global presence, with operations in the Middle East, Africa, Southeast
Asia, the Indian subcontinent, and Latin and Central America.

What are Intellectual Property Rights?

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Intellectual Property Rights (IPRs) are legitimate rights that protect creations and/or
inventions resulting from intellectual activity in the fields of industry, scientific knowledge,
literary works, and the arts. Patents, copyrights, trademarks, and trade secrets are the most
common IPRs.
According to the World Trade Organization, the purpose of intellectual property rights (IPR)
in industrial property is "to provide protection for the results of investment in the
development of new technology, thereby providing the incentive and means to finance
research and development activities." WTO (2017)
Intellectual Property Rights add value to societal augmentation by promoting:
(1) the biggest possible availability of novel and improved goods, services, and technical
information resulting from innovativeness, and
(2) the largest achievable level of economic activity associated with the manufacture,
circulation, and further growth of such goods, services, and information.
These goals are expected to be met because owners may seek to capitalise on their legal
rights by transforming them to commercial advantage. It is believed that the possibility of
gaining such an advantage encourages innovation.

What is Patent?

A patent is a monopoly granted by the government to design, sell, and use your invention
(and prevent others from doing so). If you are granted a patent, it’s usually good for 20 years;
however, there are some patents that are only good for 14 years. The patent will expire after
20 years, and anyone will be able to copy, build, and sell your invention. In exchange for the
"monopoly," you must make public the details of your invention so that someone "practiced
in the arts" can recreate it.
There are three kinds of patents that you can pertain for:
1. Utility patents may be conferred to anyone who innovates or uncovers any new and
useful process, machine, article of manufacture, composition of matter, or any new
and useful improvement thereof (good for 20 years).
2. Design patent may be granted to anyone who creates a new, unique, and ornamental
design (good for 14 years).
3. Plant patents may be granted to anyone who manages to create or invent and
asexually reproduces any distinguishable and new variety of plant (good for 20 years).

WHAT IS PATENT INFRINGEMENT? WHAT ARE THE TYPES?

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Patent infringement occurs when a patentee's right to an invention is violated. When a third
party violates the patent holder's rights or the claims in the patent without the patent holder's
consent or license, such third party is said to have infringed the patent holder's patent rights.
It is necessary to understand the types of patent infringements when performing a patent
infringement risk analysis to ensure that the invention is unlikely to infringe any existing
patent rights.

Types of Patent Infringement:

1. Direct Infringement: The most obvious and common type of infringement is direct
infringement. The marketing, sale, or commercial use of a similar patented item or
invention that performs substantially identical functions is considered an
infringement. There are two types of direct infringement: literal and nonliteral.
Literal infringement occurs when every component listed in the patent specification is
used in the allegedly infringing product/device/process.
Non-literal infringement occurs when the infringing device or process is similar or
equivalent to the claimed invention (performs substantially the same function, in
substantially the same manner, and to substantially the same result).

When the accused product/process falls within the scope of patent claims, the
infringement is referred to as literal infringement. One such case is Polaroid Corp v.
Eastman Kodak Co., in which Eastman Kodak's patent infringement of Polaroid's
"Instant camera technology" was considered a case of literal infringement.

Equivalence doctrine: Nonliteral infringement is another term for it. When a

component or device performs the same function to achieve similar or identical
results, the infringement is known as doctrine of equivalence. This infringement gives
a patentee additional and equitable protection for their patents.

2. Indirect infringement: Indirect Infringement occurs when an infringement occurs but

is made possible by someone else. There are two kinds of indirect infringements:

Induced infringement occurs when one actively encourages, assists, aids, or induces
another person to infringe a patent by encouraging, assisting, aiding, or inducing
him/her to do so. In most cases, patent infringement by inducement means that the
inducer willingly and knowingly assisted in the infringement but may or may not have
specifically intended to violate a patent.

Contributory infringement occurs when one party intentionally participates/assists in

an act of infringement to the other party, making them vicariously liable for the
infringer's actions. It is a type of indirect infringement in which a person or
corporation is held liable even if they did not actively participate in infringing
activities. As a result, it occurs when a party sells a product that they are aware is used

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 in the infringing product. In most cases, the use of this product in the infringing
product will have no commercial value.

Contributory infringement occurs when a seller provides a part or component that,

while not infringing any patent, has a specific use as part of another machine or
composition covered by a patent.

BAJAJ AUTO LTD. VS TVS MOTORS

Introduction to the Case

In the year of 2007, the case of Bajaj Auto Ltd. And TVS Motors was filed. It revolved
around the defendant’s patent infringement and the resulting damages. Moreover, it also
touches on the controversy the justification of the threats issued by the defendant in the same
case.
The plaintiffs (Bajaj Auto Ltd.) and the state of Maharashtra accused the defendants (T.V.S.
Motor Company Ltd.) of infringing on the plaintiffs' patents, that involve the innovation of
enhanced combustion engine technology under Section 108 of the Act. While the suit for
permanent injunction was pending in the HC, the Plaintiff also lodged for a preliminary
injunction.
Simultaneously, Defendant filed a second suit under Section 106, claiming that the Plaintiff's
infringement claim was invalid since they had created upgrades to the patented article.

Brief facts and Issue

The facts in this case headway through the following phases:
1. Bajaj Auto’s patent:

The appellant, Bajaj Auto Limited, asserted to have been accorded a patent titled "An
Improved Internal Combustion Engine Working on a Four Stroke Principle" with a relevant
date of July 16, 2002. On July 7, 2005, the patent was granted. The following are the
invention's highlights:
a. Small displacement engine, as indicated by a cylinder bore diameter ranging from
45 to 70 mm.
b. Slender air fuel mixture combustion;
c. Using just a pair of spark plugs to activate the air fuel mixture at a predefined
moment.

2. What was the patent about?

The patent's subject matter, the invention by the applicants known as DTS-i Technology, was
pertaining to use of a dual spark plugs for better combustion of lean fuel / air mixture in small

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bore internal combustion engines with bore size varying from 45 mm to 70 mm and operating
on a four-stroke principle.
3. The Tests of Patentability:

The applicants claimed that their innovation was patentable because it met the tests of
uniqueness, non-obviousness, and industrial applicability. The applicants endorsed the
claims on the basis of:
● The use of two spark plugs in large bore engines, as well as in high performance or
racing motorcycles, was really well known in the automobile industry. However, the
appellant's invention was unidentified in the industry.
● "DTS-I Technology" accounted for 54.25 percent of Bajaj two wheelers in the first
eight months of that fiscal year. Applicants asserted that they spent a considerable
amount of funds on advertising and marketing which helped them receive worldwide
recognition as recipients of various world awards, and that the product is
economically beneficial to the country.

4. FLAME, the Bone of Contention, is launched by TVS:

On December 14, 2007, The Respondents (M/s. TVS Motor Company Limited) announced
the launch of 125-CC motorbikes under the trade mark 'FLAME’. The motorcycle was
powered by a lean burn internal combustion engine with a twin spark plug configuration,
which Bajaj Auto Ltd. claims infringes on its patent. As a result, prior to the release of
motorbikes, the applicants filed a lawsuit in order to protect their patent.
5. TVS prosecutes under Sections 105 and 106 of the Patents Act of 1970:

TVS prosecutes under Sections 105 and 106 of the Patents Act of 1970. The respondent filed
the suit in Madras High Court 4 in October 2007, asserting that the applicant's statement
signified a baseless threat. They discovered that the respondent had also filed a defamation
suit against the applicant in the Bombay High Court.
6. Revocation of the applicant's patent application:

The applicant also learned that the respondent filed an application for revocation of the
applicant's patent before the Indian Patents Appellate Board ("IPAB") only 7 days before the
proposed 125-CC motorcycle's launch.
7. Publication of the disputed motorcycle:

Later in the month of December of 2007, the respondents launched the bikes with no
changes.

Issue
The issue was whether the Defendant actually infringed the patent despite making
modifications to the patented article.

Appeal to the Supreme Court

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 1. The Supreme Court did not take into account the case's merits.
2. The main issue for the Supreme Court was that the legal battle had lasted nearly two
years over a temporary injunction.
3. Without considering the merits of the case, the Supreme Court dismissed the appeal,
stating that all matters involving IPR infringements must be decided expeditiously by
trial courts, particularly when it comes to granting or refusing injunctions.
4. The Supreme Court also ordered the Madras High Court to hear the case on a daily
basis and rule on it by November 30, 2009.

JUDGEMENT AND ANALYSIS

After considering both parties' submissions and various aspects of the case, the learned single
judge reached a decision. In allowing an interlocutory injunction in any patent acts, the court
relied on the principles.
The principles are as follows:
• The plaintiff must establish a prima facie case that the patent is valid and infringed;
• The balance of convenience is in favour of the plaintiff; and
• The plaintiff may suffer irreparable harm if an injunction is not granted.
1. The First-Past-the-Post Case (Prima Facie Case): Following the amendment in
Section 48 of the Patents Act, 1970, the court considered the applicants' argument that
once a patentee files a suit for infringement based on the patent granted to him, it
should be treated as prima facie presumed to be valid until it is revoked or set aside in
the manner known to law, either by revocation under any one of the grounds under
Section 64 of the Patents Act, 1970 or in any other manner.

- Section 13 Analysis: The court considered the respondent's argument that section
13(4) of the Patents Act, 1970 states that the validity of a patent is not merited in
reference to the examiner's examination of a patent application and quest for
anticipation regarding past publication and previous claim.
- Analysis of Section 48: The court noted that, while no presumption of patent validity
can be attracted as a consequence of the amended Section 48 provision, the patent
acquired after the amendment is undoubtedly more considerable. However, because
the amendment did not change the burden of proving a prima facie case about the
patent's validity and infringement, the plaintiff still bears the burden of proving a
prima facie case.
- Pith and Marrow Test: Several decisions have established that a purposeful
construction must be provided in order to determine the novel features of an invention
that constitute its "pith and marrow."

2. Balance of Convenience: The last and final test for granting an interim injunction is
whether the payment of damages can compensate the parties while granting or

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 refusing an interlocutory order of injunction. The court considered the applicant's and
respondent's use of the patent when deciding the balance of convenience.

In instances where the applicant's patent is being used for the first time, or where the
patentee has not yet used or begun to release its product, the patentee is not entitled to
an injunction. A patent that has been in use for two years cannot be said to be
sufficiently old. However, in this case, the applicant's patent has been in use since
2003 (nearly five years), and it cannot be said that the applicant's use of the patented
product is recent. When a person challenges the validity of a patent, he bears the
burden of proof. The triable issue against the patent on behalf of the respondent that
the specifications differ at various stages and thus the applicant is unaware of its
invention was found to be incorrect by the court. Thus, the balance of convenience
was ruled in favor of the applicant for granting an order of injunction in the second
aspect of the grant of interim injunction.

3. Payment of Damages: The final and most important test for granting an interim
injunction was whether the payment of damages could reimburse the parties while
granting or refusing an interlocutory order of injunction.

The issue is whether the plaintiff should be subjected to the negative effects of
competition. The learned Counsel for the respondent contended that the applicant is
capable of being determined with reasonable certainty with an amount of calculated
damages. If the applicant wins the suit, the amount of the applicant's sales will be
known, and the sales in the previous year can be taken into account for the purpose of
calculating damages on a royalty basis. This argument was rejected by the court.

The respondent's additional argument is that the patent granted to the applicant was
"obvious," because the components explained by the applicant are known to the entire
world and there is no specialty in the applicant's invention. The same did not go down
well.

In this regard, the court considered the case Bishwanath Prasad Radhey Shyam v.
Hindustan Metal Industries. The court determined that novelty existed in the patent,
which was registered under the Patents Act with a priority date, and that the applicant
demonstrated novelty by promoting the product to such a great extent and without
objection fairly for a period of 5 years. Furthermore, the applicant's product was not
deemed "obvious."

What was the Decision of the Court?

Following a review of the pleadings and various aspects of the case, the learned single judge
concluded that the concepts of prima facie case, balance of convenience, and inadequacy of
damages favoured the applicant. The injunction was granted in favour of the applicant. As a
result, the applicant was granted an interim injunction.

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What was the Appeal and Judgement?
The interim order was questioned before the Madras High Court's Division Bench, which
granted the appeal. The appeal was finally heard by the Supreme Court (Markandey Katju
and Ashok Kumar Ganguly, JJ.) through a Special Leave Petition. In the case at hand, the
Supreme Court criticised the pending status of intellectual property cases, even at the
interlocutory stage. The court was also hearing a case for a permanent injunction.
The Court overturned the order granting the applicants an interim injunction, holding the
Respondents entitled to sell their product in the market while keeping an accurate record of
all India and export sales. For the same, the Court appointed a receiver.
The Court also directed that the learned single judge decides the permanent injunction suit
and that the Respondents file a written statement in the suit.

Analysis of the Case

The case is critical in the Indian Patent regime. Several tests, developed in previous cases,
were included in this case. These tests were deemed significant in determining the liabilities
of the parties, one seeking to establish patent infringement and the other seeking to challenge
the validity of the patent in question. To resolve the matter, the learned single judge of the
Madras High Court applied the various tests in previous cases. The court made the correct
decision in order to protect the applicants' intellectual property. The applicant's market
goodwill would have been jeopardised if the interim injunction had been denied.
However, in my opinion, the Supreme Court's decision to vacate the interim injunction
granted to the applicants is unsatisfactory. The applicants who strained their nerves to get
their invention patented deserve to have their patent protected so that others cannot use it in
an unauthorised manner. Furthermore, it has been established in the Madras High Court that
the applicants own the patent as well as all of the necessary ingredients for a valid invention
to be patented. Allowing respondents to sell their product during the pendency of the suit will
significantly reduce the applicants' market share.

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CONCLUSION

A patent is the exclusive right to an invention granted to the holder, allowing him to enjoy a
monopoly as well as profits from the use of that invention. The Patent Act of 1970 contains
provisions relating to the enforcement of patent rights and protects the holder's interests.
The Madras High Court ultimately determined that Plaintiff possesses a patent on DTSi
technology and has been using it for five years.
The HC applied the Doctrine of Equivalence and stated, "It is also clear from the decisions
that for the purpose of deciding the novel features to constitute "pith and marrow," a
purposeful construction must be given in order to make it an essential requirement of the
invention that any variant would follow outside the monopoly even if it could not have
material effect on the working of the invention.
In this case, the legal battle lasted nearly two years and was fought between interlocutory
orders, which rendered the legal battle ineffective for either party. In this case, the Supreme
Court issued a landmark decision requiring that all IPR cases be completed within 4 months
of the date of filing the suit, and that cases be heard on a day-to-day basis in order to comply
with the SC's direction.

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References
https://www.sciencedirect.com/topics/agricultural-and-biological-sciences/intellectual-property-
rights

https://legal.thomsonreuters.com/en/insights/articles/four-types-of-intellectual-property

https://www.bajajauto.com/about-us/the-company

https://www.readcube.com/articles/10.2139/ssrn.2184655

https://www.mondaq.com/india/patent/949758/patent-infringements-and-their-
types#:~:text=Direct%20infringement%3A%20Direct%20infringement%20is

https://www.thehindu.com/business/bajaj-auto-tvs-motor-settle-patent-dispute/
article29846041.ece

https://economictimes.indiatimes.com/industry/auto/auto-news/bajaj-tvs-motor-settle-all-cases-
related-to-patent-infringement/articleshow/71838520.cms?from=mdr

https://indiankanoon.org/doc/1058259/

https://www.bloombergquint.com/business/bajaj-tvs-motor-settle-all-cases-related-to-patent-
infringement

https://www.google.co.in/search?q=bajaj+and+tvs+motors+case&sxsrf

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