Decoding Commercial Legal Landscapes: A Collection of Recent Judgments Shaping Arbitration, Patent Rights, and Procedural Jurisdiction – August 2023 – Part 1

Decoding Commercial Legal Landscapes: A Collection of Recent Judgments Shaping Arbitration, Patent Rights, and Procedural Jurisdiction – August 2023 – Part 1

By Gunjan Chhabra
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Resolving Patent Disputes: RxPrism Inc. vs. Canva – A Closer Look at Protecting Intellectual Property

In a recent legal battle, RxPrism Inc. went head-to-head with Canva in a patent infringement case titled RxPrism Inc. v. Canva (Delhi High Court, decided on 18.07.2023). The case revolved around the alleged infringement of RxPrism’s patented product, “My show and tell,” by Canva’s new feature called ‘Present and Record.’

The core contention centred on Canva’s Present and Record feature, which RxPrism argued was strikingly similar to its patented product. RxPrism’s product allowed sellers on e-commerce platforms to showcase products through interactive slides and simultaneous video descriptions, enhancing the online shopping experience.

RxPrism had filed a patent application for its innovative product in India back in 2018 and had obtained patents in various other jurisdictions. The heart of the matter was whether Canva’s ‘Present and Record’ feature infringed upon RxPrism’s patent rights.

The Delhi High Court’s observations shed light on crucial aspects of patent law:

1. Interpreting Claims: The court emphasized the importance of interpreting patent claims purposefully. It stated that even minor differences may not be significant if the accused product achieves the same effect as the patented invention.

2. Determining Infringement: The court highlighted that comparing granted claims to the accused product is pivotal in determining patent infringement, rather than a mere comparison of products.

3. Essential Features: Non-essential distinctions between products were deemed irrelevant. What mattered was whether the fundamental elements of both products were alike.

4. Prior Art Defense: Canva’s defense of ‘prior art’ was rejected since the allegedly similar products differed substantially from RxPrism’s patented invention.

5. Balance of Convenience: The court considered the balance of convenience and favored RxPrism, a smaller player whose market prospects would suffer if an interim injunction was not granted.

6. Security for Claims: Due to Canva’s absence of physical business presence in India, the court directed Canva to provide security for RxPrism’s claims.

In light of these considerations, the Delhi High Court restrained Canva from offering the ‘Present and Record’ feature that was found to infringe RxPrism’s patented product. Canva was also instructed to deposit INR 50 lakhs with the Registrar General of the Court as security for past use of the infringing features in India.

The case underscores the significance of safeguarding intellectual property rights and ensuring a level playing field for businesses operating in the digital landscape. RxPrism’s victory reinforces the protection of innovative ideas and serves as a reminder of the pivotal role patent law plays in fostering innovation and fair competition.

Ensuring Accountability: Cost Imposition in RxPrism Inc. vs. Canva – Upholding Fair Play

In the case of RxPrism Inc. v. Canva (Delhi High Court, decided on 18.07.2023), In addition to the significant discussions on patent law, the court’s ruling encompassed various dimensions, including restraining Canva from product use and requiring a security deposit for protecting RxPrism’s interests. Notably, the court also ordered Canva to bear substantial costs.

The court’s rationale for this decision is elaborated below:

  1. Startup Dynamics: RxPrism, a startup established in 2013, applied for its patent in 2018 and received patent grants in foreign jurisdictions as well.
  2. Engagement Attempts: RxPrism proactively communicated with Canva upon discovering the ‘Present & Record’ feature. Canva initially engaged in discussions asking for patent-related documents and claim mapping charts.
  3. Mediation Efforts: The court acknowledged the attempt at mediation during the lawsuit, which unfortunately did not yield a resolution.
  4. Inflammatory Language: Canva’s written statement contained inflammatory language, hurling allegations against RxPrism with terms such as “coerce,” “sham paper trail,” and “unscrupulous.” These expressions were found to violate the permissible language standards of pleadings as per the Code of Civil Procedure.
  5. Libel and Slander: The court interpreted the language used as potentially libelous and slanderous, aimed at hindering not only RxPrism’s case against Canva but also against any potential infringers.
  6. Changing Stance: The sequence of correspondence indicated a shift in Canva’s attitude, initially open to engagement but later resorting to a written statement that sought to smear RxPrism.
  7. Initial Contact: RxPrism’s initial engagement with Canva was viewed as a sincere attempt by a startup to resolve disputes amicably before resorting to litigation.

Taking into account the case’s context and Canva’s choice of language against RxPrism, the court awarded costs amounting to Rs. 5 lakhs in favor of RxPrism. This ruling underscores the importance of maintaining decorum and professionalism in legal proceedings and highlights the court’s commitment to ensuring fair play and accountability.

Challenging the Timeliness of Arbitration Petition Filing: M/s. Noumla Brothers vs. M/s. Ruchi World Wide Ltd.

In the case of M/s. Noumla Brothers vs. M/s. Ruchi World Wide Ltd. (2023) 595 HC, a compelling arbitration appeal unfolded, centering around the dismissal of the Appellant’s Section 34 Petition due to alleged time-bar.

The arbitration proceedings were to be conducted by the Cotton Association of India. However, upon the emergence of disputes, the Appellant refrained from participating, leading to an ex-parte award.

The Appellant’s awareness of the award materialized only upon being served notice of execution. Responding to this, the Appellant filed a Section 34 Petition contesting the award. Nevertheless, this petition was rejected, citing a lack of territorial jurisdiction.

Subsequently, the Appellant lodged a Special Leave Petition (SLP) against this verdict, which saw dismissal on 04.10.2017. Curiously, the Appellant claimed to have become cognizant of the SLP outcome only on 28.11.2017, upon receipt of another notice of execution. Consequently, the Appellant initiated a fresh Section 34 Petition before the appropriate court, coupled with a Section 14 application under the Limitation Act for the exclusion of time.

The Indore District Court dismissed this endeavor, asserting that the filing exceeded the 120-day limit and that the clock started ticking from the date of the SLP dismissal on 04.10.2017, rather than from the date the Appellant gained knowledge.

The High Court’s observations unfolded as follows:

  1. Sufficient Cause Consideration: In line with the proviso of Section 34, the Court holds the authority to entertain an application beyond the initial 3-month period if it is satisfied that the Applicant had a substantial reason for the delay. This extension can be up to an additional 30 days, but not beyond that.
  2. Dual Application Necessity: The Appellant was obligated to file two applications—firstly, a Section 14 application under the Limitation Act, seeking the exclusion of time spent in genuine court proceedings lacking jurisdiction, and secondly, a Section 34(3) application under the Arbitration and Conciliation Act, seeking an additional month’s extension.
  3. Evidentiary Aspect: The correspondence from the Secretary of the Cotton Association of India was pertinent, as it contained a certified copy of the award dispatched via speed post, alongside a letter issued in January 2018. However, the letter did not elucidate whether the award had been dispatched to the Appellant earlier.
  4. Pending Considerations: The issues surrounding the timing of the award’s communication and the related proceedings should be meticulously examined by the District Judge while adjudicating the limitation issue.

Given the aforementioned analysis, the High Court nullified the contested District Judge’s order and referred the matter back for fresh assessment of the limitation issue, to be conducted upon the collection of relevant evidence.

Navigating the High Court’s Revision Jurisdiction: KC Aggarwal vs. National Stock Exchange of India Ltd.

In a significant legal development, the case of KC Aggarwal vs. National Stock Exchange of India Ltd. (2023) 603 HC, brought to the forefront a revision petition filed under Section 115 of the Code of Civil Procedure.

The crux of the matter revolved around a Futures Contract executed by the Petitioner, concerning IOCL shares. A discrepancy arose when a debit was reflected in the Petitioner’s account instead of the anticipated credit.

Upon the Petitioner’s failed attempts to address the issue through complaints and notices, a civil suit was filed. However, the second respondent, ICICI Bank, invoked Section 8 of the Arbitration and Conciliation Act, 1996 seeking arbitration due to the presence of an arbitration clause in the account opening form. This application found success, prompting the current revision petition.

The core contention by the Petitioner was that the disputes extended to involve NSE (National Stock Exchange of India Ltd.) as well. Since NSE was not a party to the arbitration agreement, the Petitioner argued against the reference of disputes to arbitration. The Respondents countered this, asserting that the order was not subject to revision.

The High Court’s analysis unfolded as follows:

  1. Binding Mandate of Section 8: Section 8 of the Arbitration and Conciliation Act operates as a legislative directive to the court. If the prescribed conditions are met, the court must refer the parties to arbitration.
  2. Focus on Reliefs Sought: Scrutiny of the reliefs sought in the Petitioner’s suit revealed that the primary concern centered around Respondent no. 2, ICICI Bank.
  3. Tripartite Dispute Inquiry: The Petitioner’s claim of a tripartite dispute was deemed unsubstantiated. The Petitioner failed to demonstrate how NSE could contribute to resolving their grievances.
  4. Arbitration Clause Significance: The Petitioner’s grievances emanated from the Account Opening Form, which contained the arbitration clause, binding both the Petitioner and Respondent no. 2.
  5. Correctness of Referral: Consequently, the trial court’s decision to refer the matter to arbitration was deemed appropriate.
  6. Limits of Revision Jurisdiction: The High Court clarified that revision jurisdiction could only be invoked if the subordinate court had acted beyond its legal jurisdiction, engaged in illegal exercises of power, or displayed material irregularities. Mere errors in factual or legal interpretation did not qualify.

In light of these considerations, the High Court concluded that the revision did not warrant acceptance, as the Trial Court had acted within the bounds of its lawful jurisdiction.

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