SC-Brihan Karan Sugar Syndicate Private Limited Vs. Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana

When a Winner Loses: How Acquiescence and Unproved Goodwill Stayed a Copyright and Passing-Off Decree

Copyright Infringement, Goodwill and Passing Off Action:Brihan Karan Sugar Syndicate Private Limited Vs. Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana Judgement by Supreme Court

Introduction

In the world of intellectual property disputes, winning a full trial is often considered the hardest part. Yet, as this Supreme Court case demonstrates, even a decree passed after a complete trial is not immune from being stayed by a higher court. This case presents a fascinating intersection of copyright law, passing-off actions, and the doctrine of acquiescence, all arising from a dispute over labels on country liquor bottles. Beyond the intellectual property issues, the Supreme Court also took the opportunity to comment on the professional conduct of advocates during trial proceedings, making this judgment instructive on multiple levels. The case serves as an important reminder that winning on the merits at trial does not automatically translate into enforcement of the decree if the appellate court finds a good reason to pause its operation.

Factual and Procedural Background

Brihan Karan Sugar Syndicate Private Limited, the appellant, was in the business of selling country liquor under the label "Tango Punch." The respondent, Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana, also sold country liquor but used the label "Two Punch Premium." The appellant claimed to own a registered copyright in the artistic label displayed on its bottles and contended that the respondent's label was deceptively similar to its own.

The appellant filed a suit before the District Judge-1, Osmanabad, seeking two main reliefs. The first was a permanent injunction restraining the respondent from infringing the copyright in the appellant's artistic label by reproducing it or any substantial part of it. The second was an injunction restraining the respondent from passing off its country liquor as that of the appellant by using a deceptively similar trademark label.

During the pendency of this suit, the appellant applied for a temporary injunction, which was denied by the Trial Court on 12th April 2019. This refusal was confirmed by the High Court on 7th January 2020. This meant that throughout the trial, there was no court order stopping the respondent from using its labels.

Despite this, after a complete trial on merits, the District Judge passed a decree on 24th May 2021 decisively in favour of the appellant. The decree included a permanent injunction against copyright infringement, a permanent injunction against passing off, damages of Rs. 1,00,000 to the appellant, and an order directing the respondent to hand over all infringing labels, wrappers, dies, and printing material for destruction within one month.

The respondent, aggrieved by this decree, filed an appeal before the High Court of Judicature at Bombay, Aurangabad Bench. By an order dated 23rd June 2021, a learned Single Judge of the High Court stayed the execution and operation of the entire decree pending the final disposal of the appeal. It is this stay order that was challenged by the appellant before the Supreme Court in Civil Appeal No. 2768 of 2023.

The Dispute Before the Supreme Court

The core question before the Supreme Court was whether the High Court was justified in staying a decree that had been passed after a complete and full-fledged trial. The appellant argued strongly that once a trial court has examined all evidence and passed a reasoned decree, it should not be suspended by the appellate court merely because an appeal has been filed. The respondent, on the other hand, defended the stay by pointing to specific weaknesses in the appellant's case, particularly regarding the failure to prove goodwill and reputation, and the admitted act of withdrawing objections which, the respondent argued, amounted to acquiescence.

A key factual element was that in March 2016, the respondent had applied to the Commissioner of State Excise for approval to use the "Two Punch Premium" labels. The appellant had raised formal written objections to this application. However, in April 2016, the appellant withdrew those objections by submitting letters of withdrawal. Although one of the appellant's witnesses claimed during cross-examination that the withdrawal was conditional, he was unable to point to anything in the letters themselves that said so. The suit was ultimately filed by the appellant only on 4th October 2017, nearly one and a half years after withdrawing the objections.

Reasoning and Analysis of the Court

The Supreme Court approached the matter with careful nuance. The Court began by acknowledging that it was dealing with an interim order passed during a pending appeal, not a final decision on the merits. It clarified that the High Court was not required to conduct a deep or exhaustive analysis of the merits of the appeal while deciding whether to stay a decree. Only a prima facie examination was needed.

On the Question of Passing-Off

The Court turned to the law on passing-off actions and referred extensively to the Supreme Court's own decision in Satyam Infoway Ltd. v. Sifynet Solutions (P) Ltd., reported as (2004) 6 SCC 145. This judgment had laid down that a passing-off action requires three elements to be established by the plaintiff: first, that the plaintiff had acquired a reputation or goodwill connected with its goods; second, that the defendant made a misrepresentation to the public; and third, that the plaintiff suffered or was likely to suffer loss. Importantly, the Satyam Infoway case had clarified that it is not essential for the plaintiff to prove long use, and that the question of reputation depends on the volume of sales and extent of advertisement.

The Court also referred to Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd. and Others, reported as (2018) 2 SCC 1. This decision approved the view in S. Syed Mohideen v. P. Sulochana Bai, reported as (2016) 2 SCC 683, that a passing-off action premised on the rights of the prior user generating goodwill shall remain unaffected by any registration. The Toyota case had endorsed the triple test laid down by the House of Lords in Reckitt and Colman Products Ltd. v. Borden Inc. and Others, reported as (1990) 1 WLR 491, one element of which was that the plaintiff must prove acquisition of reputation or goodwill in connection with the goods. The Toyota decision further held, in paragraph 40, that if goodwill or reputation in a particular jurisdiction is not established, no other issue needs examination to determine the extent of the plaintiff's right in a passing-off action.

Applying these principles to the facts, the Court found that the appellant had examined only two witnesses. The first was Mr. K.K. Kalani and the second was Mr. Sudhir Pokhale, who was examined only on the issue of label approval. Exhibits 73 and 73.1 to 73.4 were statements of sales and advertisement expenses certified by a Chartered Accountant named Mr. Natesh. However, the Chartered Accountant was never examined as a witness to prove these statements. The witness Kalani had only quoted figures of sales and marketing expenses in his examination-in-chief without the underlying documents being proved in the manner known to law. The Court noted an important distinction between the standard applicable at a temporary injunction stage and at the final hearing. At the stage of a temporary injunction, certified accounts might suffice to make out a prima facie case. But at the final hearing of the suit, figures of sales and advertisement expenses must be proved through proper legal evidence. Since this was not done, the Court found that the appellant had prima facie failed to establish the goodwill and reputation necessary for the passing-off action. This finding, the Court held, justified the High Court's decision to stay that part of the decree relating to passing-off.

On the Question of Copyright Infringement and Acquiescence

The Court then turned to copyright infringement. It acknowledged that acquiescence is a well-recognised defence in copyright infringement actions. It referred to  Power Control Appliances and Others v. Sumeet Machines Pvt. Ltd., reported as 1994 (2) SCC 448, which had discussed the concept of acquiescence at length. That case had held that if acquiescence in infringement amounts to consent, it will be a complete defence. Acquiescence is a course of conduct inconsistent with the claim for exclusive rights, and it applies to positive acts, not merely silence or inaction as in cases of latches. Mere negligence is not sufficient for acquiescence.

Applying this to the facts, the Court found a very significant positive act on the part of the appellant. When the respondent had applied for permission to use the impugned labels, the appellant had raised written objections. It then took the affirmative step of withdrawing those objections in writing. The letters of withdrawal did not contain any condition or reservation, even though the witness Kalani claimed orally that the withdrawal was conditional. When confronted with the actual letters, he admitted there was nothing written to suggest the withdrawal was conditional. Moreover, the suit was filed nearly one and a half years after this withdrawal. The Court held that this withdrawal amounted to a prima facie case of acquiescence, supporting the stay of the copyright infringement part of the decree as well.

The Court also noted that the fact that temporary injunction had been refused during the pendency of the suit was a relevant consideration. Since no prohibitory order had operated during the entire period of the trial, the situation of the respondent's business had developed without any court-imposed restriction.

On Lawyers' Conduct During Trial

The Court also took note of a deeply concerning aspect of the trial proceedings. The Trial Judge had recorded observations that the advocate appearing for the appellant had persistently raised objections to almost every question asked during cross-examination. The Trial Court noted that the frequency of objections had become so excessive that it was required to record a substantial part of the cross-examination in question-and-answer form, consuming considerable court time. The Supreme Court, in paragraphs 19 and beyond, noted this with concern in the context of the massive judicial pendency reflected in the National Judicial Data Grid for Maharashtra. It observed that advocates, as officers of the court, are expected to act fairly and reasonably during trials. It stated that fairness is a hallmark of great advocacy, and that persistent objections to every question in cross-examination not only delay individual trials but contribute to the systemic problem of arrears.

Final Decision of the Court

The Supreme Court dismissed the civil appeal filed by the appellant. It upheld the High Court's order staying the execution and operation of the decree passed by the District Judge-1, Osmanabad, pending the final disposal of the respondent's appeal before the High Court. The stay was to continue until the High Court disposed of the substantive appeal on merits.

Points of Law Settled in the Case

This judgment contributes meaningfully to several areas of law. On passing-off, it reaffirms that while long user is not essential to establish reputation, evidence of sales volume and advertisement expenditure must be properly proved through legal evidence at the final hearing stage. Certified accounts alone, without the certifying Chartered Accountant being examined as a witness, are insufficient to prove goodwill and reputation at trial.

On acquiescence in copyright matters, the judgment reaffirms that acquiescence requires a positive act, not mere silence or inaction. However, a written withdrawal of formal objections, especially without any recorded condition or reservation, constitutes such a positive act and can make out a prima facie case of acquiescence, even if the party later claims the withdrawal was conditional.

On the power to stay decrees, the judgment clarifies that an appellate court is not required to conduct a detailed examination of the merits while deciding whether to stay a trial court decree. A prima facie examination suffices. The fact that temporary injunction was refused during the pendency of the trial is a legitimate and relevant consideration when deciding whether to stay the eventual decree.

On professional responsibility, the Court's observations remind the Bar that excessive and unwarranted objections during cross-examination are inconsistent with an advocate's role as an officer of the court and contribute to the delay in the administration of justice.

Case Title: Brihan Karan Sugar Syndicate Private Limited Vs. Yashwantrao Mohite Krushna Sahakari Sakhar Karkhana

Date of Order: September 14, 2023

Case Number: Civil Appeal No. 2768 of 2023

Neutral Citation: 2023 INSC 831

Name of Court: Supreme Court of India, Civil Appellate Jurisdiction

Name of Hon'ble Judge: Justice Abhay S. Oka (with Justice Rajesh Bindal)

Disclaimer: Readers are advised not to treat this as a substitute for legal advice as it may contain errors in perception, interpretation, and presentation.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi

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2. Acquiescence as Defence in Copyright Law: How Withdrawal of Objections Cost a Decree Holder in Supreme Court
3. Proving Goodwill in Passing-Off Actions: Supreme Court's Landmark Guidance on Evidence Standards
4. When a Trial Court Victory Gets Stayed: Supreme Court on Acquiescence, Goodwill, and Appellate Powers
5. Tango Punch vs Two Punch: Supreme Court Explains Copyright Acquiescence and Passing-Off Proof Standards

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Headnote

The appellant-plaintiff obtained a decree from the District Judge, Osmanabad, granting permanent injunction, damages, and other reliefs for copyright infringement and passing off. The respondent appealed, and the Bombay High Court (Aurangabad Bench) stayed the execution and operation of the decree pending disposal of the appeal. The plaintiff challenged the stay order before the Supreme Court.The Supreme Court upheld the High Court’s interim stay and dismissed the appeal. The Court held that a prima facie case existed regarding lack of proof of goodwill in the passing-off claim and acquiescence in the copyright claim, justifying continuation of the stay pending disposal of the first appeal. The High Court was directed to decide the appeal on its own merits, uninfluenced by observations in either judgment.

Kanpur Flowercycling Private Limited Vs Sarathi International Inc.

Kanpur Flowercycling Private Limited Vs Sarathi International Inc. 04.06.2026 : Writ Petition No.30565 of 2025 (IPR) : 2026:KHC:26391 : Karnataka HC : Tara Vitasta Ganju

The court considered a dispute concerning the pecuniary jurisdiction of a Commercial Court in a trademark infringement suit relating to the mark "TULASI". The case arose from allegations that the respondent/plaintiff, after initially asserting that the specified value of the suit exceeded Rs.3,00,000/- (resulting in the matter being transferred to the Commercial Court), later filed an application contending the value was below Rs.3,00,000/- and sought return of the plaint to the Civil Court, relying on an order in a separate suit involving a different defendant. The principal question before the Court was whether the Commercial Court's order returning the plaint, passed without independently determining the "specified value" under Section 12(1)(d) of the Commercial Courts Act, 2015, warranted interference under Article 227 of the Constitution.

After examining the material on record and the submissions of the parties, including the petitioner/defendant, respondent/plaintiff, and the Amicus Curiae, Justice Ganju observed that a writ petition under Article 227 is maintainable against orders of Commercial Courts despite the bar under Section 8 of the CC Act, but such jurisdiction must be exercised sparingly and only in cases of patent jurisdictional error or manifest injustice. The Court held that the Commercial Court had failed to undertake any independent examination of the "specified value" as required under Section 12(1)(d), and had erroneously relied on an order in another suit (involving a different defendant) which itself was based on the wrong provision (Section 12(1)(c) instead of 12(1)(d)), emphasizing that while a plaintiff is dominus litis, a bona fide and reasoned valuation must still be demonstrated, especially where mala fides are alleged.

Accordingly, the Court allowed the petition, set aside the impugned order dated 02.08.2025, and directed the Commercial Court to examine the "specified value" claimed by the respondent/plaintiff afresh and pass orders in accordance with law, keeping the rights and contentions of both parties open.

[Disclaimer: Readers are advised not treat this as a substitute for legal advise as it is based on limited information and is intended solely for general informational purposes.]

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Karnataka High Court Examines Scope of Article 227 Jurisdiction Over Commercial Court Orders: A Case Study on Valuation Disputes in Trademark Litigation

Determination of Specified Value in Commercial IPR Dispute is Essential

Introduction

When a business approaches a court seeking protection of its trademark, one of the first hurdles it must cross is establishing that the court has the authority to hear the case. This authority, known as jurisdiction, often depends on something as seemingly mundane as the monetary value assigned to the dispute. Yet, as this judgment from the Karnataka High Court demonstrates, valuation disputes can become surprisingly complex, especially when a litigant changes its position midway through proceedings.

This case is significant for multiple reasons. First, it addresses a long-debated question about whether the High Court can intervene under its supervisory powers when a Commercial Court passes an interlocutory order, particularly given the restrictions imposed by the Commercial Courts Act, 2015. Second, it deals with the practical problem of how courts should value "intangible rights" such as trademarks for the purpose of deciding whether a case belongs before a Commercial Court or an ordinary Civil Court. Third, and perhaps most importantly for litigants and practitioners, it cautions against parties taking inconsistent positions on valuation to suit their convenience, a practice sometimes described as forum shopping.

For businesses engaged in intellectual property disputes, lawyers handling commercial litigation, and even courts grappling with similar valuation questions, this judgment offers valuable clarity on how such issues ought to be approached.

Factual and Procedural Background

The dispute traces back to a suit filed by the respondent, a partnership firm, against the petitioner company, alleging infringement of its registered trademark "TULASI". The respondent had approached the Civil Court seeking a permanent injunction and managed to obtain an ex parte temporary injunction in its favour shortly after filing the suit.

Once the petitioner appeared before the Civil Court and raised objections regarding maintainability, the Civil Court directed the respondent to disclose the specified value of the suit as required under Section 12 of the Commercial Courts Act, 2015. In response, the respondent filed a memo stating that the specified value of the suit exceeded Rs.3,00,000. Based on this declaration, the Civil Court returned the plaint for presentation before the Commercial Court, since disputes involving registered trademarks valued above this threshold fall within the domain of Commercial Courts under the Act.

The plaint was accordingly re-registered before the Commercial Court. The respondent then went a step further and sought an amendment to its plaint, adding a fresh paragraph specifically asserting that the market value of the "TULASI" trademark, as estimated by the plaintiff, exceeded Rs.3,00,000, thereby justifying the Commercial Court's jurisdiction.

However, the story took an unexpected turn. The respondent subsequently filed an application under Order VII Rule 10 of the Code of Civil Procedure, this time contending that the specified value of the suit was actually below Rs.3,00,000, and therefore the matter should be sent back to the ordinary Civil Court. This reversal was based on an order passed in a separate suit filed by the same respondent against a different defendant, where another Commercial Court had observed that the value of the respondent's rights in the same trademark was below the threshold.

The petitioner opposed this application, arguing that the respondent could not be allowed to take such a contradictory stand after having earlier invoked the Commercial Court's jurisdiction on its own assertion. Despite this objection, the Commercial Court allowed the respondent's application and directed that the plaint be returned to the Civil Court. This order, passed on a date corresponding to August 2025, became the subject matter of challenge before the High Court.

Following the impugned order, the respondent refiled the suit before the Civil Court, where it was registered as a fresh proceeding. The High Court, while examining this petition, also stayed further proceedings in both the Commercial Court suit and the subsequently filed Civil Court suit.

Interestingly, this petition was heard alongside a batch of other petitions raising a common question: whether interim or interlocutory orders passed by Commercial Courts are amenable to challenge under Article 227 of the Constitution, given the restrictions contained in Section 8 of the Commercial Courts Act. An Amicus Curiae was appointed to assist the Court on this larger question, and arguments on both the maintainability issue and the merits of the present case were heard together.

Dispute Before the Court

At its core, this case presented two intertwined questions, one procedural and one substantive.

The procedural question was whether a petition filed under Article 227 of the Constitution challenging an order of a Commercial Court is maintainable at all, given that Section 8 of the Commercial Courts Act bars civil revision applications or petitions against interlocutory orders of such courts. If maintainable, the Court also had to determine the extent to which it should interfere with such orders, particularly keeping in mind the legislative intent behind the Commercial Courts Act to ensure speedy resolution of commercial disputes.

The substantive question revolved around the conduct of the respondent in changing its stance on the valuation of the suit. The petitioner argued that having once asserted, through a formal memo and an amendment application, that the value of its trademark rights exceeded Rs.3,00,000 (and having obtained the benefit of this assertion by getting the matter transferred to the Commercial Court), the respondent could not be permitted to reverse this position simply because it suited a different litigation strategy. According to the petitioner, this amounted to forum shopping and an abuse of the legal process, forcing the petitioner to chase the case across different courts.

The respondent, on the other hand, contended that as the "dominus litis" (master of the suit), it had the right to value its own claim, and that this valuation could be revised based on subsequent developments, particularly the observations made by another Commercial Court in a separate suit involving the same trademark. The respondent also pointed to earlier proceedings involving the same mark where courts had accepted a lower valuation.

The Amicus Curiae, appointed specifically to address the broader question of Article 227's applicability to Commercial Court orders, argued that while this supervisory power is a constitutional safeguard that cannot be taken away by any statute, it must be exercised with extreme caution, particularly in commercial matters where speed of disposal is a legislative priority.

Reasoning and Analysis of the Court

The Court's analysis proceeded in a structured manner, first addressing the question of maintainability and the scope of Article 227, before turning to the specific facts of the valuation dispute.

On the question of maintainability, the Court extensively relied on the foundational principle laid down by the Supreme Court in L. Chandra Kumar v. Union of India, (1997) 3 SCC 261, which held that the power of judicial review and superintendence vested in High Courts under Articles 226 and 227 forms part of the basic structure of the Constitution and cannot be excluded by any legislative enactment. This meant that no matter what restrictions the Commercial Courts Act imposes through Section 8, the constitutional power under Article 227 remains intact.

The Court then turned to Surya Dev Rai v. Ram Chander Rai, (2003) 6 SCC 675, where the Supreme Court clarified that even interlocutory orders, against which statutory revision has been barred, remain open to challenge under the High Court's supervisory jurisdiction. However, this jurisdiction is to be exercised only where the subordinate court has acted without jurisdiction, in excess of jurisdiction, or in a manner causing grave injustice, and not merely to correct errors of fact or law where two views are reasonably possible.

The Court further discussed Shalini Shyam Shetty v. Rajendra Shankar Patil, (2010) 8 SCC 329, which reiterated that the power under Article 227 is meant to keep subordinate courts within the bounds of their authority and is not to be exercised as an appellate remedy. The Supreme Court in that case had cautioned that this power, though unfettered, is subject to a high degree of judicial discipline and should be used sparingly.

On the specific question of how Article 227 interacts with the Commercial Courts Act, the Court examined the Delhi High Court's Division Bench ruling in M/s. C.P. Rama Rao Sole Proprietor v. National Highways Authority of India, 2024 SCC OnLine Del 7342, and the earlier decision in Black Diamond Trackparts Pvt. Ltd. v. Black Diamond Motors Pvt. Ltd., 2021 SCC OnLine Del 3946 (a decision whose correctness was later affirmed by the Supreme Court when a challenge to it was dismissed). These cases held that the word "petition" in Section 8 of the Commercial Courts Act refers only to revision petitions and not to petitions under Article 227, and therefore the statutory bar does not extend to constitutional remedies. Similar reasoning was found in the Gujarat High Court's decision in State of Gujarat v. Union of India, 2018 SCC OnLine Guj 1515, and the Bombay High Court's ruling in Pravinchandra v. Hemant Kumar, 2023:BHC-NAG:16159.

At the same time, the Court drew guidance from how the Supreme Court has approached similar tensions in the context of the Arbitration and Conciliation Act, 1996. In Deep Industries Ltd. v. ONGC, (2020) 15 SCC 706, and Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1 SCC 75, the Supreme Court held that while Article 227 remains available even against orders passed under self-contained statutory codes, High Courts should be extremely circumspect in interfering, restricting intervention to situations where a party is left remediless or where bad faith is clearly demonstrated. The Karnataka High Court found this reasoning equally applicable to the Commercial Courts Act, which similarly aims at speedy and efficient disposal of commercial disputes through Sections 8 and 13.

Turning to the substantive valuation issue, the Court examined Section 12 of the Commercial Courts Act in detail. While Section 12(1)(a) to (c) deal with valuation for money claims, movable property, and immovable property respectively, Section 12(1)(d) specifically governs "any other intangible right" and states that the market value as estimated by the plaintiff shall be taken into account. The Court also noted Section 2(1)(c)(xvii), which classifies disputes relating to registered and unregistered trademarks as commercial disputes, and Section 2(1)(i), which defines "specified value" as the value determined under Section 12, which cannot be less than Rs.3,00,000.

The Court examined the petitioner's reliance on Kirloskar AAF Limited v. M/s. American Air Filters, RFA 1/2015, where a Coordinate Bench had observed that the value of a trademark infringement dispute involving a company could "safely" be taken as exceeding Rs.3,00,000, even without specific evidence. However, the Court distinguished this case on facts, noting that the present matter was at a different procedural stage where the respondent had already made specific assertions about valuation, which were later contradicted.

The Court also discussed the Bangalore Blues Entertainment India Pvt. Ltd. v. One Ikigai Edutech Pvt. Ltd, 2023 SCC OnLine Kar 177, and Gangadharappa Munindra Kumar v. M/s Eaglesight Media Pvt. Ltd., 2022 SCC OnLine Kar 1859, observing that these dealt with situations where the specified value had not been mentioned in the plaint at all, a stage already crossed in the present case. The Court noted that the reasoning in Bangalore Blues had relied on a Delhi High Court single-judge decision in Vishal Pipes Limited v. Bhavya Pipe Industry, which had since been substantially overruled by a Division Bench in Pankaj Ravjibhai Patel trading as Rakesh Pharmaceuticals v. SSS Pharmachem Pvt. Ltd., 2023 SCC Online Del 7013.

The discussion of the Pankaj Ravjibhai Patel case proved particularly significant. The Delhi High Court Division Bench had clarified that it would be incorrect to assume that intellectual property disputes are necessarily valued above Rs.3,00,000, just as it would be incorrect to assume that valuations below this threshold are automatically the result of bad faith. Instead, where a dispute arises about whether a valuation has been deliberately understated, the competent court hearing the matter itself can examine this issue and, if satisfied that the valuation was incorrect or actuated by ulterior motives, direct amendment of the plaint and payment of additional court fees. Importantly, this examination need not be transferred to a separate Commercial Court merely for this purpose.

Applying this framework to the facts, the Court observed that the respondent had indeed asserted contradictory valuations for the same intangible right, the trademark "TULASI", at different points in the litigation. However, no material had actually been placed before the Commercial Court to support either valuation, and crucially, the Commercial Court itself had not undertaken any independent examination of the specified value. Instead, it had simply relied on an order passed in a different suit involving a different defendant, where the earlier Commercial Court had itself relied on Section 12(1)(c), the provision dealing with immovable property, rather than the correct provision, Section 12(1)(d), applicable to intangible rights like trademarks.

The Court found this approach problematic. Given that the petitioner had specifically raised an allegation of mala fide conduct and forum shopping against the respondent, the Commercial Court was obligated to examine this allegation and independently determine the specified value in accordance with Section 12(1)(d), rather than mechanically adopting a determination made in an unrelated proceeding based on an incorrect statutory provision.

On the question of whether an alternative remedy of appeal was available, the Court examined Order XLIII Rule 1(a) of the Code of Civil Procedure, which provides for an appeal against orders returning a plaint under Order VII Rule 10, except where the procedure under Order VII Rule 10A has been followed. Since the Commercial Court had followed the Order VII Rule 10A procedure (fixing a date for appearance before the transferee court), and since Order VII Rule 10A(5) expressly bars an appeal where the plaintiff's own application for return of plaint has been allowed, the Court found that no appellate remedy was available to the petitioner. This made the case an appropriate one for invoking Article 227.

Final Decision of the Court

The High Court allowed the writ petition and set aside the order of the Commercial Court that had directed the return of the plaint to the Civil Court. The matter was remanded back to the Commercial Court with a specific direction to conduct a proper examination of the "specified value" as claimed by the respondent, taking into account the allegations of inconsistent positions and mala fides raised by the petitioner, and to pass a fresh order in accordance with law. The rights and contentions of both parties on this aspect were left open for consideration by the Commercial Court.

Given that the matter had already been pending for a considerable period, the Court requested the Commercial Court to conduct this examination at the earliest opportunity. The Court also directed that the matter be placed before the Chief Justice for appropriate administrative directions, particularly regarding the suggestion that a separate roster or procedural mechanism be considered for handling Article 227 petitions arising from commercial disputes, so as to further the speedy disposal objectives of the Commercial Courts Act.

Point of Law Settled

This judgment makes several important contributions to the law surrounding commercial litigation and supervisory jurisdiction.

First, it reaffirms that a petition under Article 227 of the Constitution remains maintainable against orders, including interlocutory orders, passed by Commercial Courts, notwithstanding the bar contained in Section 8 of the Commercial Courts Act, 2015. This is because the word "petition" in that section refers only to revision petitions under the Code of Civil Procedure and not to constitutional remedies, which cannot be curtailed by ordinary legislation.

Second, and equally important, the judgment emphasizes that this constitutional remedy must be exercised with considerable restraint in commercial matters. Drawing parallels with how courts approach the Arbitration and Conciliation Act, the judgment suggests that interference should be limited to situations involving patent jurisdictional errors, manifest injustice, or where a party would otherwise be left without any remedy, so that the legislative goal of speedy disposal of commercial disputes is not defeated by routine recourse to writ jurisdiction.

Third, on the substantive question of valuation, the judgment clarifies that for disputes involving intangible rights such as trademarks, Section 12(1)(d) of the Commercial Courts Act is the governing provision, requiring the court to consider the market value as estimated by the plaintiff. However, this does not mean such estimation is beyond scrutiny. Where a party raises a specific allegation that the valuation has been manipulated for forum shopping or is otherwise actuated by mala fides, particularly where the same litigant has taken inconsistent positions on the value of the same intellectual property right in different proceedings, the court hearing the matter must independently examine this question rather than mechanically relying on determinations made in unrelated proceedings, especially where those determinations were themselves based on an incorrect statutory provision.

Finally, the judgment also serves as a reminder that courts cannot simply transplant findings on valuation from one suit to another involving different parties without independent verification, particularly when the correctness of the underlying reasoning itself is in question.

Case Title: Kanpur Flowercycling Private Limited Vs. Sarathi International Inc.

Date of Judgment/Order: 04.06.2026

Case Number: Writ Petition No.30565 of 2025 (IPR)

Neutral Citation: 2026:KHC:26391

Name of Court: High Court of Karnataka at Bengaluru

Name of Hon'ble Judge: Justice Tara Vitasta Ganju

Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi

Disclaimer: Images used herein do not reflect actual images used in Judgement and that the same are for illustrative purpose only. Readers are advised not to treat this as substitute for legal advice as it may contain errors in perception, interpretation, and presentation.

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2. Can a Plaintiff Change Trademark Valuation Mid-Suit? Karnataka High Court Examines TULASI Trademark Dispute
3. Karnataka High Court on Section 12(1)(d) of Commercial Courts Act: How Should Intangible Rights Be Valued?
4. Forum Shopping in Commercial Disputes: Karnataka High Court's Take on Inconsistent Valuation Claims
5. Supervisory Jurisdiction Under Article 227 and Commercial Courts: Lessons from the TULASI Trademark Case
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7. Trademark Valuation Disputes: Karnataka High Court Remands TULASI Case for Fresh Determination
8. Dominus Litis and Its Limits: Karnataka High Court on Plaintiff's Right to Value Intellectual Property Suits
9. Pecuniary Jurisdiction in IP Suits: Karnataka High Court Analyses Commercial Courts Act Provisions
10. Article 227 Petitions in Commercial Litigation: Karnataka High Court's Guidance for Faster Disposal

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Article 227, Commercial Courts Act 2015, trademark infringement, specified value, intangible rights valuation, Section 12 Commercial Courts Act, supervisory jurisdiction, High Court Karnataka, Order VII Rule 10 CPC, pecuniary jurisdiction, forum shopping, TULASI trademark, Commercial Court orders, writ petition maintainability, Section 8 Commercial Courts Act, dominus litis, intellectual property litigation India, trademark suit valuation, Article 226 and 227, judicial review High Court, civil procedure code amendments, IP suit jurisdiction, return of plaint, commercial dispute resolution India, trademark law India, AdvocateAjayAmitabhSuman, IPAdjutor

Headnote of the Judgment:

In Kanpur Flowercycling Private Limited Vs Sarathi International Inc. (2026:KHC:26391), the Karnataka High Court, in WP No.30565/2025 (IPR), examined a writ petition under Articles 226 and 227 challenging an order of the Commercial Court returning a trademark infringement plaint to the Civil Court for alleged lack of pecuniary jurisdiction. The Court held that Article 227 petitions remain maintainable against Commercial Court orders despite Section 8 of the Commercial Courts Act, though to be exercised sparingly. Finding that the Commercial Court had not independently examined the "specified value" under Section 12(1)(d) despite allegations of inconsistent valuation by the plaintiff, the Court allowed the petition, set aside the impugned order, and remanded the matter for fresh determination.

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SC-Bishwanath Prasad Radhey Shyam Vs. Hindustan Metal Industries

When Old Methods Don't Make New Patents: The Supreme Court's Landmark Ruling on Inventive Step in Bishwanath Prasad Radhey Shyam Vs. Hindustan Metal Industries

The Test of Inventive Step and Novelty for Invention: Bishwanath Prasad Radhey Shyam Vs. Hindustan Metal Industries Judgement by Supreme Court

Introduction

Patent law exists to reward genuine creativity. It gives an inventor a temporary monopoly over his creation in exchange for sharing that creation with the world. But this bargain only works if the law is strict about what qualifies as an invention. If courts allow patents over things that were already known, already used, or merely obvious to any skilled worker, the system turns from a reward for innovation into a tool for monopolizing common knowledge. This is precisely the concern at the heart of the Supreme Court's landmark 1978 judgment in Bishwanath Prasad Radhey Shyam Vs. Hindustan Metal Industries. Decided on December 13, 1978, this case remains one of the most important Indian judicial pronouncements on what it truly means for something to be "new" and "inventive" under patent law. The judgment not only settled a specific commercial dispute between two utensil manufacturers in Mirzapur but laid down enduring principles about novelty, inventive step, and the standard by which courts should evaluate the validity of a patent.

Factual and Procedural Background

The story begins in the utensil manufacturing industry of Mirzapur, Uttar Pradesh, a town with a long tradition of producing brass and German silver utensils. The old method of manufacturing shallow dishes and plates involved turning and polishing them on a machine called a headstock, without a tailstock. The utensils were either fixed to the headstock using a thermoplastic adhesive like lac or shellac, or held in the jaws of a chuck attached to the headstock. The problem with this method was a serious safety hazard: the utensils would frequently fly off the headstock during the turning process, causing injuries to workers. This risk apparently became serious enough that the work of manufacturing plates and dishes was suspended at Mirzapur for several years before 1951.

In 1951, Purshottam Dass, one of the partners of Hindustan Metal Industries (the plaintiff-respondent), claimed to have invented a new device and method to address this problem. His solution involved mounting metallic utensils on a lathe using an adapter on the headstock and applying independent pressure through a pressure spindle or tailstock to hold the utensil firmly in place during the turning operation. This, he claimed, eliminated the danger of utensils flying off and made the manufacturing process safer, faster, and more efficient. On the strength of this claimed invention, the plaintiff firm filed the necessary specifications and claims at the Patent Office and obtained Patent No. 46368-51 on May 6, 1953, with effect from December 13, 1951, under the Indian Patent and Designs Act, 1911.

In September 1952, the plaintiff discovered that Biswanath Prasad Radhey Shyam (the defendant-appellant), another concern in the utensil manufacturing business in Mirzapur, was using substantially the same device and method. The plaintiff served a notice on September 9, 1952, demanding that the defendant stop using the patented method, but the defendant did not comply. On August 8, 1953, the plaintiff filed a suit for permanent injunction and damages of Rs. 3,000 in the Court of the District Judge, Allahabad.

The defendant contested the suit vigorously. He argued that his firm had been in the metal ware manufacturing business for a long time, and that the method described in the patent, namely using a lathe with a headstock, an adapter, and a tailstock, had been publicly known and in common commercial use all over the country for several decades before the plaintiff's patent. He further argued that the alleged invention was not, at the date of the patent, a manner of new manufacture or improvement, nor did it involve any inventive step. The defendant also filed a counter-claim for revocation of the patent, and on October 13, 1953, he along with three other business concerns filed a formal petition under Section 26 of the Indian Patent and Designs Act, 1911, for revocation of the patent on the same grounds.

The plaintiff's suit and the revocation petition were transferred to the High Court of Allahabad under Section 29 of the Act, consolidated, and tried together . The defendant examined 9 witnesses to establish that the method had been publicly known and in use long before 1951, while the plaintiff examined 4 witnesses to prove that the patented machine was a genuine improvement over the crude machines previously in use.

The learned Single Judge, after careful examination of all the evidence and the machines produced before him (marked Exhibit CC, which was the plaintiff's patented machine, and Exhibit XVI, alleged to be an imitation), ruled against the plaintiff on all the key issues. He found that the patent did not involve any inventive step having regard to what was known or used prior to its date, that the alleged invention was not a manner of new manufacture or improvement, that the defendant had publicly manufactured goods before the patent date substantially according to the same method, and that the patent was liable to be revoked. He accordingly dismissed the plaintiff's infringement suit and allowed the petition for revocation, revoking Patent No. 46368-51.

The plaintiff challenged this decision before a Division Bench of the Allahabad High Court in two Special Appeals. The Division Bench took a different view. It found that formerly, plates and dishes were attached to the headstock using adhesive like lac or shellac and used to fly off causing injuries, leading to the suspension of manufacturing at Mirzapur for about 5 or 6 years. It found that the plaintiff had invented the method of mounting in 1951, after which the work restarted successfully. The Division Bench accepted that lathes with headstock and tailstock were well known, and that known uses of a tailstock included centering the article, holding long work by pivoting with a pointed tailstock, and holding articles in metal spinning by pressure of a pad. However, it went on to find that "the method of holding an article by the pressure of a point of a pointed tailstock was neither used nor known." On this basis, the Division Bench concluded that the method of mounting patented by the plaintiff did involve an inventive step and was a manner of new manufacture and improvement. It allowed the appeals, set aside the trial court judgment, and decreed the plaintiff's suit with costs. Aggrieved, the defendant brought the matter before the Supreme Court of India.

The Dispute

At the Supreme Court, the central controversy narrowed into two essential questions. First, whether the patented method was, at the date of the patent on December 13, 1951, a manner of new manufacture or improvement under Section 26(1)(d) of the Indian Patent and Designs Act, 1911. Second, whether the invention involved any inventive step having regard to what was known or used prior to the date of the patent under Section 26(1)(e) of the same Act. If either answer was no, the patent was liable to be revoked.

The defendant-appellant argued that the method and means claimed in the patent involved no inventive step or novelty whatsoever. He specifically pointed out that the Division Bench had committed a serious error by locating the novelty of the invention in the use of a pointed tailstock, when the complete specification itself expressly stated that the pressure spindle could be "pointed or blunt." The claims in the patent, he argued, made no assertion of novelty for a pointed tailstock. Therefore, the Division Bench had gone beyond the scope of what the patentee himself had claimed and had essentially invented a case for the plaintiff that had never been pleaded. He also highlighted the damaging fact that Purshottam Dass, stated to be the actual inventor, had not appeared in the witness box to explain in what way the invention was novel or what research or experiments had led to it. This failure, the appellant argued, should give rise to an adverse inference.

The plaintiff-respondent countered that the question of whether a process involves a manner of new manufacture or improvement is purely one of fact, and factual findings, especially concurrent ones, should not be disturbed by the Supreme Court. He further argued that a patent is granted by the Controller only after due inquiry and publication, and should therefore be presumed valid unless the contrary is proved. He also urged that since both the trial court and the Division Bench had concurrently found that the invention had utility, the patent should be sustained on that ground alone.

Reasoning and Analysis of the Court

The Supreme Court, in a judgment authored by  began by setting out the foundational principles of patent law before applying them to the facts. This approach gave the judgment its lasting significance, as the principles articulated go well beyond the specific dispute between two utensil manufacturers in Mirzapur.

The Court explained that the object of patent law is to encourage scientific research, new technology and industrial progress by granting an exclusive privilege to own, use or sell a patented method or product for a limited period. The price of this monopoly is the disclosure of the invention, which after the expiry of the monopoly period passes into the public domain. The Court then stated the fundamental principle with great clarity: a patent is granted only for an invention that must be new and useful. It must have novelty and utility. It must be the inventor's own discovery, as opposed to mere verification of what was already known before the date of the patent.

The Court noted that under Section 2(8) of the Indian Patent and Designs Act, 1911, "invention" means any manner of new manufacture and includes an improvement and an allied invention. "Manufacture" under Section 2(11) includes any art, process or manner of providing, preparing or making an article, as well as any article prepared or produced. Unlike the Patents Act, 1970, the 1911 Act does not expressly require an invention to be "useful" in its definition, but courts have always required utility, reading it from Section 26(1)(f) which lists lack of utility as a ground for revocation.

On the crucial question of what qualifies as patentable, the Court drew an important distinction. It emphasized that in order to be patentable, an improvement on something already known, or a combination of different matters already known, must be something more than a mere workshop improvement. It must independently satisfy the test of invention, meaning it must involve an inventive step. The improvement or combination must produce a new result, a new article, or a better or cheaper article than before. The Court noted that a mere collocation of more than one known integers or things, without any exercise of inventive faculty, does not qualify for a patent.

To illustrate this principle, the Court quoted Lord Davey from Rickmann v. Thierry (1896) 14 Pat. Ca. 105, to the effect that it is not enough that the purpose is new or that there is novelty in the application; there must be novelty in the mode of application itself, meaning that in adapting an old contrivance to a new purpose, there must be difficulties to be overcome that require what is called invention, or there must be some ingenuity in the mode of making the adaptation. Cotton L.J.'s formulation from Blackey v. Latham (1888) 6 Pat. Ca. 184 was also cited: that to be new in the patent sense, the novelty must show invention.

The Court then set out the tests for determining whether a claimed invention involves novelty and an inventive step. It observed that this is a mixed question of law and fact, depending largely on the circumstances of the case. One important criterion is whether the manner of manufacture patented was publicly known, used and practised in the country before or at the date of the patent. Prior public knowledge, whether by word of mouth or through published books and other media, would negate novelty. The Court quoted from Hindmarch on Patents, as approved in Humpherson v. Syer 4 R.P.C. 407, that once the public becomes possessed of an invention by any means whatsoever, no subsequent patent for it can be granted, because the public cannot be deprived of the right to use what it already possesses.

The Court then discussed the concept of "obviousness," noting that the expression "does not involve any inventive step" in Section 26(1)(a) of the Act and its equivalent word "obvious" have acquired special significance in patent law terminology, and that obviousness must be strictly and objectively judged. The Court quoted the test formulated by Salmond L.J. in Rado v. John Tye & Son Ltd. (1967) R.P.C. 297: whether the alleged discovery lies so much out of the track of what was known before as not naturally to suggest itself to a person thinking on the subject. The discovery must not be the obvious or natural suggestion of what was previously known.

Another test articulated by the Court, drawn from the Encyclopaedia Britannica, asked: if the prior art document had been placed in the hands of a competent craftsman endowed with common general knowledge at the priority date, who was faced with the problem the patentee sought to solve, would he have said "this gives me what I want"? A further formulation from Halsbury's Laws of England, 3rd Edition, Volume 29, referred to by Vimadalal J. of the Bombay High Court in Farbwerke Hoechst & B. Corporation v. Untchan Laboratories AIR 1969 Bom 255, asked: was it practically obvious to a skilled worker in the field, in the state of knowledge existing at the date of the patent as found in the literature then available, that he would or should make the invention the subject of the claim concerned?

The Court also firmly rejected the respondent's argument that there is a presumption in favour of the validity of a patent once granted. It pointed out that the grant and sealing of a patent, or a decision in favour of grant by the Controller in opposition proceedings, does not guarantee the validity of the patent, which can always be challenged before the High Court in revocation or infringement proceedings. This position is now expressly stated in Section 13(4) of the Patents Act, 1970. The argument for a presumption of validity was therefore untenable.

Turning to the facts, the Supreme Court conducted its own examination of the evidence and the machines placed before it. It found that the trial court had established the following on the basis of evidence: the manufacture of utensils is an old industry at Mirzapur and across India; the lathe is a well-known mechanism used for spinning and various other processes; adapters of various sizes and shapes were in use for holding plates and dishes before 1951; the tailstock was probably also used in this industry before 1951; no bracket or angle exactly like the one used in the plaintiff's machine (Ex. CC) appeared to have been used before 1951; and that work on plates and dishes was suspended at Mirzapur for a few years before 1951. The trial court had found that the mere addition of a bracket did not amount to a novelty, and that the suspension of work was a neutral circumstance that could just as well have been caused by labour trouble rather than any defect in the then-existing contrivance.

The Supreme Court agreed completely with the trial court's analysis. It found that the patented machine was merely an application of an old invention, known for decades before 1951, to the traditional purpose of scraping and turning utensils, with only a slight change in the mode of application. This was no more than a "workshop improvement," a normal development of an existing manner of manufacture, not involving anything novel that would be outside the probable capacity of a skilled craftsman. The alleged discovery did not lie outside the track of what was known before.

The Court was particularly scathing about the Division Bench's reasoning. The Division Bench had located the novelty of the invention in "the method of holding an article by the pressure of a point of a pointed tailstock" which it said was neither used nor known. The Supreme Court pointed out that this finding was directly contradicted by the Division Bench's own earlier findings, in which it had acknowledged that lathes with headstock and tailstock were well known, and that uses of the tailstock included holding articles by the pressure of a pad. More importantly, the finding about the pointed tailstock directly contradicted the patent specification itself. The complete specification expressly stated that "the pressure spindle may be pointed or blunt," and Claim No. 4 in the patent similarly stated that the pressing end of the pressure spindle could be "pointed or blunt." There was thus no assertion of novelty for the pointed tailstock in the patent itself. The Division Bench had gone beyond the scope of the specifications and claims made by the patentee and had essentially made out a new case for the plaintiff that had never been alleged in the patent or in the pleadings.

The Court also found that the Division Bench's finding was contradicted by admissions made by Sotam Singh (D.W. 3), the representative of the patentee firm, in cross-examination. Sotam Singh had admitted that he did not know whether Purshottam Dass had made any research or experiments before obtaining the patent, and another witness Lakshmi Dass (D.W. 1) had admitted that machines like Ex. XVI were in use even before 1951-52. The Court quoted the rule from Arnold v. Bradbury (1871) 6 Ch. A. 706 that the proper way to construe a patent specification is to first read the full description of the invention before reading the claims, because the patentee cannot claim more than he desires to patent. The specification and claims must be read together, as stated by Lord Esher M.R. in Parkinson v. Simon (1894) 11 R.P.C. 483.

The Court also referred to the House of Lords decision in Harwood v. Great Northern Railway Co. (1864) 11 H.L.C. 654, a factually analogous case where a person had patented a groove in a fish-plate used to connect railway rails. The House of Lords held the patent invalid because it involved merely applying an old contrivance in the old way to an analogous subject, without any novelty or invention in the mode of application. Blackburn L.J. had stated that in order to bring the subject matter of a patent within patentable territory, there must be invention so applied as to produce a practical result, and a mere application of an old contrivance in the old way to an analogous subject, without novelty or invention in the mode of applying it, is not a valid subject matter of a patent. The Supreme Court found this principle squarely applicable to the facts before it.

On the respondent's final argument that utility alone should sustain the patent, the Court firmly held that utility is not the crucial test. Even if an invention has utility, it must separately satisfy the tests of novelty and inventive step. The crucial test is whether the invention involves novelty and an inventive step, and that test went against the patentee in this case.

Final Decision of the Court

The Supreme Court allowed both appeals. It set aside the judgment of the Division Bench of the Allahabad High Court dated January 18, 1966, and restored the judgment of the learned Single Judge. The patent (No. 46368-51) stood revoked on the grounds mentioned in Clauses (d) and (e) of Section 26(1) of the Indian Patent and Designs Act, 1911, namely that the invention was not, at the date of the patent, a manner of new manufacture or improvement, and that the invention did not involve any inventive step having regard to what was known or used prior to the date of the patent. 

Point of Law Settled in the Case

This judgment settled several foundational points of Indian patent law that continue to be cited by courts and practitioners.

The most important principle is the standard for patentability: a patent is valid only if the claimed invention is new and involves a genuine inventive step. Novelty alone is not sufficient if the claimed novelty does not rise above the level of what any skilled craftsman would have done. Utility alone is also not sufficient to sustain a patent, even if concurrently found by multiple courts.

The Court clarified that an improvement on existing technology, or a combination of existing elements, is patentable only if it produces a new result or a better result and goes beyond what could be called a "workshop improvement." The combination of old known integers, without any novelty in their interaction or result, does not qualify for a patent. Mere collocation of existing elements without any inventive faculty is not patentable.

The Court firmly established that there is no presumption of validity in favour of a patent merely because the Controller granted it after due examination. The grant of a patent does not guarantee its validity.

The Court also laid down the correct approach to construing patent specifications and claims: the description of the invention must be read first, followed by the claims, and both must be read together. The patentee cannot claim more than what is described in the specification. Courts cannot go beyond the scope of the specifications and claims to find novelty that the patentee himself never asserted.

The tests for "obviousness" were clearly articulated: whether the discovery lies so much outside the track of existing knowledge that it would not naturally suggest itself to a person thinking on the subject, and whether a competent craftsman endowed with general knowledge at the priority date, faced with the same problem, would have arrived at the same solution from the prior art.

Case Title: Bishwanath Prasad Radhey Shyam Vs. Hindustan Metal Industries

Date of Order: December 13, 1978

Case Number: Civil Appeal Nos. 1630-1631 of 1969

Citation: AIR 1982 SC 1444; (1979) 2 SCC 511; [1979] 2 SCR 757

Name of Court: Supreme Court of India

Hon'ble Judges: A.N. Sen, J.; R.S. Sarkaria, J.; V.D. Tulzapurkar, J.

Disclaimer: Readers are advised not to treat this as a substitute for legal advice as it may contain errors in perception, interpretation, and presentation.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi

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1. Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries: Supreme Court on Novelty and Inventive Step in Indian Patent Law
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3. Inventive Step and Novelty Under the Indian Patent Act: Analysis of the Bishwanath Prasad Case
4. When Old Technology Cannot Be Patented: Supreme Court's Ruling in Hindustan Metal Industries Case
5. Patent Revocation on Grounds of Lack of Inventive Step: Lessons from a Landmark Supreme Court Case
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Headnote

Bishwanath Prasad Radhey Shyam Vs. Hindustan Metal Industries ,  The dispute concerned the validity of a patent relating to a method of mounting metallic utensils on a lathe. The patent holder sued for infringement, while the defendant sought revocation on grounds of lack of novelty and inventive step. The Supreme Court held that the claimed invention was merely a workshop improvement based on existing knowledge and did not constitute a “manner of new manufacture.” Accordingly, the patent was revoked and the appeal was allowed. This Judgement is one of the foundational Judgement in Patent Law in India explaining The Test of Inventive Step and Novelty for Invention.

SC-Diyora and Bhanderi Corporation and Others Vs. Sarine Technologies Limited

Diyora and Bhanderi Corporation Vs. Sarine Technologies Ltd.: Software Copyright, Expert Comparison, and the Boundaries of Judicial Scope in IP Disputes

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Expert can compare the software and issue of Infringement is to be decided by the Court on Expert Comparison: Diyora and Bhanderi Corporation Vs. Sarine Technologies Ltd. by Supreme Court

Introduction

When a company accuses another of stealing its computer software, one of the most critical and technically challenging questions that arises in court is: how does one actually prove that software has been copied? Unlike a physical product where similarities can be seen with the naked eye, software operates through invisible lines of coded instructions. The only meaningful way to compare two software programs and determine whether one has been copied from the other is to examine their underlying source code and object code , the internal programming that makes the software work.

The case of Diyora and Bhanderi Corporation and Others versus Sarine Technologies Limited, decided by the Supreme Court of India on 30 July 2018, arose in the context of exactly this challenge. The dispute involved a cutting-edge software used in the diamond and precious stone industry and raised important questions about how courts should manage the process of expert comparison of software in intellectual property litigation. The Supreme Court was called upon to decide two focused but practically significant questions: first, whether the appointment of a expert to compare the competing software programs was proper; and second, whether the scope of comparison should be limited to only the registered version of the software or could extend to all previous and unregistered versions as well. Though procedural in nature, the Court's resolution of these questions carries important lessons about the integrity of judicial processes in technology-related intellectual property disputes.

Factual and Procedural Background

Sarine Technologies Limited, the plaintiff and respondent before the Supreme Court, is a company that had developed and owned a software product called Advisor™. This software uses a three-dimensional representation to help analyze how a raw precious stone can best be cut and polished so as to yield the best quality diamonds and gemstones. In essence, it is a sophisticated tool designed for the diamond processing industry to maximize the quality and value extracted from rough stones.

The plaintiff claimed that it had a validly subsisting copyright in the Advisor™ software both in Israel and in the United States of America. Specifically, it had obtained copyright registration in the USA for version 6.0 (also referred to as the 6th version) of the Advisor™ software, bearing the registration number TX8-252-522. The plaintiff also asserted that by virtue of the International Copyright Order, 1999, and India being a member country of the Berne Copyright Union, this copyright protection extended to India in the same manner as if the software had originally been published in India.

The defendants  Diyora and Bhanderi Corporation and others, who are the appellants before the Supreme Court  were also engaged in the business of the diamond industry. The plaintiff alleged that these defendants had infringed the copyright in the Advisor™ software.

On this basis, the plaintiff filed Commercial Trade Mark Suit No. 8 of 2017 before the Court of District Judge at Surat. Along with the main suit, the plaintiff also filed an application for interim injunction (marked as Exhibit 5 in court) seeking an interim order restraining the defendants from using, distributing, or selling any services that infringed its Advisor™ software copyright, covering both the registered version 6.0 as well as any future machines or devices incorporating the copyrighted software.

The trial court, by its order dated 22 September 2017, dismissed the plaintiff's application for interim injunction. The plaintiff challenged this dismissal before the Gujarat High Court. The High Court, by its order dated 21 December 2017, set aside the trial court's order and remitted the matter back to the trial court for fresh consideration. The High Court's key observation was that the central question  whether the source code or object code of the defendants' software was the same as or copied from the plaintiff's software  had not been properly examined. The High Court directed that both parties should submit their respective source codes and object codes to the court so that these could be sent to an impartial and independent expert for comparison. This remand order of the Gujarat High Court was itself challenged by the defendants before the Supreme Court, but the Supreme Court did not find any ground to interfere, and the Special Leave Petition was dismissed on 16 March 2018.

With the matter thus sent back for a fresh hearing at the trial court level, a series of procedural orders followed. On 12 February 2018, the trial court appointed a Local Commissioner and directed both parties to submit their respective source codes and object codes in sealed covers by 21 February 2018. The parties were also asked to suggest names of experts who could carry out the technical comparison. On 28 February 2018, the trial court directed the plaintiff to confirm on affidavit that it had submitted the source code and object code of the software exactly as registered.

On 16 March 2018, the trial court appointed Mr. Robert "Bob" Zeidman, whose name was proposed by the plaintiff, as the technical expert to compare the software of both parties and to report to the court as to whether the defendants' source code and object code had infringed the copyright of the plaintiff. The defendants had proposed the names of three well-regarded Indian institutions  the Centre for Development of Advanced Computing (C-DAC), the Department of Computer Science and Engineering at IIT Bombay, and the Department of Computer Science and Engineering at IIT Madras. These suggestions were, however, objected to by the plaintiff on the ground that one of the defendants' advocates had been associated with these institutions, raising a concern about impartiality. The trial court rejected this objection, rightly observing that an advocate having studied at an institution does not mean the institution could be influenced. However, the trial court found that the profiles of the professors attached to the application did not demonstrate that they could conduct the specific task of comparing source and object codes, and therefore appointed Mr. Zeidman as the most competent person for the task.

The defendants challenged the appointment of Mr. Zeidman before the Gujarat High Court in Special Civil Application No. 4468 of 2018. One of their main objections was that sharing proprietary software with a expert could cause them serious prejudice, as the court's processes would not be able to hold a foreign expert accountable if the confidential data were later misused. The Gujarat High Court dismissed this application on 1 May 2018, finding the appointment proper.

After this, the trial court issued another order on 4 May 2018, clarifying that the comparison would be confined only to the source code and object code of the registered version of the plaintiff's software — i.e., version 6.0 with copyright registration No. TX8-252-522. Any additional material furnished by the plaintiff beyond this registered version was specifically excluded.

However, the controversy was not over. On 1 June 2018, the trial court passed another order while considering logistical arrangements for the expert's work, this time directing that the expert could compare the defendants' source and object code with the plaintiff's Advisor™ software across all previous and existing versions, whether registered or not. This significantly expanded the scope of comparison beyond what had been settled in the 4 May 2018 order.

The defendants again went to the Gujarat High Court in Special Civil Application No. 9010 of 2018, challenging this expanded scope. The defendants also raised a challenge to the constitutional validity of Section 8 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. The High Court dismissed this challenge on 4 July 2018, holding that while exercising its supervisory power under Article 227 of the Constitution of India, it could not act as a court of appeal and interfere with the trial court's order. Since no arguments were advanced on the constitutional validity of Section 8, the High Court did not go into that question.

Both the High Court orders of 1 May 2018 and 4 July 2018 were then challenged by the defendants before the Supreme Court by filing Special Leave Petitions No. 17685-17686 of 2018 on 10 July 2018. When the matter came up before the Supreme Court on 16 July 2018, counsel for the plaintiff on caveat submitted that Mr. Zeidman had already arrived in India to conduct the comparison and that suspending his work would cause the plaintiff great prejudice. The Supreme Court accordingly directed the parties to maintain status quo and also directed that the travel expenses of Mr. Zeidman would initially be borne by the plaintiff, but would be reimbursed by the defendants if their challenge ultimately failed. Leave was thereafter granted and the matter was heard on 30 July 2018.

The Dispute

The case presented the Supreme Court with two focused and specific issues. The first was whether the appointment of Mr. Robert "Bob" Zeidman, a expert, to compare the software of the two parties was proper and should be allowed to stand, particularly given the defendants' objections about the security of their confidential source code and the fact that Indian institutions of adequate standing had been available. The second issue was more significant in terms of principle: once the trial court had already settled by its order dated 4 May 2018 that the comparison would be restricted to only the registered version 6.0 of the plaintiff's software, could the trial court then expand that scope by a subsequent order dated 1 June 2018 to include all previous and existing versions of the Advisor™ software, whether registered under copyright or not?

Reasoning and Analysis of the Court

On the first question regarding the appointment of Mr. Zeidman as the expert, the Supreme Court was candid that it did not approve of the manner in which the plaintiff had objected to the three reputed Indian institutions suggested by the defendants. The Court noted that C-DAC, IIT Bombay, and IIT Madras are institutions of great repute and standing. The mere fact that one of the defendants' advocates had studied at those institutions was, as the Court observed, no ground to have any apprehension about the impartiality and integrity of those institutions. The professors suggested from these institutions were acknowledged to be experts in their field, particularly in computer software and software decoding. The Court found no reason why they could be said to lack the requisite experience for comparing the two software programs. The Court made clear that this observation was not a comment on Mr. Zeidman's competence, which was not disputed  the point was that the Indian professors were equally qualified and ought not to have been dismissed by the plaintiff on such a flimsy ground.

However, having noted this, the Court took into account an important practical reality: by the time the matter came before the Supreme Court, the defendants had already accepted Mr. Zeidman's appointment through their own conduct. Various emails and correspondence placed on record demonstrated that after the appointment was made, the defendants were themselves actively in touch with Mr. Zeidman  asking him about his willingness to visit India, discussing logistics, and enquiring about his fees. This conduct showed, as the Court found, that the defendants had not merely accepted but had clearly acquiesced in the arrangement. The plaintiff correctly submitted that at this stage, having practically cooperated with and acquiesced in Mr. Zeidman's appointment, there was no justification for the defendants to turn around and contest it. The Supreme Court, therefore, rejected the defendants' challenge to the appointment of Mr. Zeidman and affirmed it.

On the security concern raised by the defendants that sharing their proprietary source code with a foreign expert posed a risk of data compromise  the Court found this concern addressed by the practical arrangements described by the plaintiff's counsel. The comparison exercise was to be carried out using a separate laptop with no internet connection, which would always remain in the custody of the Local Commissioner. After each day's work, all the material on the laptop would be erased. The Court found these precautionary steps adequate to ensure the safety and security of the data shared by both parties. The objection on grounds of data security was therefore rejected.

The Court also made an important clarificatory observation at this juncture: the task entrusted to the expert, Mr. Zeidman, was only to compare the respective software programs and prepare a report. The question of whether the defendants' software actually infringed the plaintiff's copyright was not for the expert to decide  that would remain entirely for the court to determine after examining the expert's report along with all other evidence. This clarification was important to ensure that the expert's role was understood correctly as that of a technical assistant to the court, and not as an adjudicator.

On the second and more legally significant question  the scope of comparison  the Court's reasoning was direct and principled. The plaintiff had brought its claim based on two foundations: first, its registered copyright in version 6.0 of the Advisor™ software (registration No. TX8-252-522 in the USA); and second, rights under common law in respect of all earlier and unregistered versions of the software. When the interim injunction application was considered at the earlier stage, the court had proceeded primarily on the basis of the registered copyright. The plaintiff had never sought, at the interim stage, to rely on its common law rights in earlier unregistered versions to establish a prima facie case.

Given this background, the trial court had passed the order dated 4 May 2018 specifically confining the comparison exercise to the source code and object code of the registered version only. That order had never been challenged by the plaintiff  the plaintiff accepted it without any objection. Once a party accepts an order without challenge, it cannot later seek to go behind that order and expand what it had already agreed to. The trial court's subsequent order dated 1 June 2018, which expanded the scope to all previous and existing versions of the software  whether registered or not  was, in the Supreme Court's view, an error. The trial court had no occasion or reason to expand the scope once the parties had accepted the restriction, and particularly when the plaintiff had not challenged the 4 May 2018 order. The Supreme Court therefore accepted the defendants' argument on this point, set aside the expanded scope directed by the order of 1 June 2018, and directed that the comparison shall be restricted to the source code and object code in respect of the registered version 6.0 of the plaintiff's software.

On the question of costs, the Court recalled its earlier direction of 16 July 2018 that all travel expenses of Mr. Zeidman would be reimbursed by the defendants if their challenge failed. Since the defendants' challenge succeeded on one of the two issues  namely, the scope of comparison  the Court took a balanced approach and directed that only one half of the travel expenses borne by the plaintiff should be reimbursed by the defendants, rather than the entire amount.

Final Decision of the Court

The Supreme Court disposed of Civil Appeal Nos. 7304-7305 of 2018 with the following directions. On the first issue, the appointment of Mr. Robert "Bob" Zeidman as the technical expert was affirmed. His engagement was upheld as proper given the defendants' acquiescence, and the safety arrangements for protecting the confidential source codes were found to be adequate. On the second issue, the Court accepted the defendants' submission and directed that the scope of the comparison exercise shall be confined only to the source code and object code of the registered version 6.0 of the plaintiff's Advisor™ software, setting aside the expanded direction given by the trial court on 1 June 2018. On costs, the defendants were directed to pay one half of the plaintiff's expenditure on Mr. Zeidman's travel, within 7 days of the plaintiff disclosing the amount spent, which was to be disclosed within 3 days of the judgment. No other costs were awarded. The Court expressly clarified that it had not gone into the factual merits of the dispute, and the trial court was to proceed to determine the matter afresh on its own merits, uninfluenced by any observations in the Supreme Court's judgment.

Point of Law Settled

This judgment settles two practically important procedural principles in the context of software copyright litigation. First, when a party has accepted a court order and has demonstrated acquiescence in an arrangement through its own subsequent conduct  such as corresponding with an appointed expert and facilitating the engagement  it cannot at a later stage challenge or seek to reverse that arrangement. The principle of acquiescence operates as a significant bar. Second, and more importantly, the scope of an expert comparison exercise ordered by a court in an intellectual property dispute must be kept within the boundaries actually litigated at the relevant stage. At the interim injunction stage, where the court has proceeded on the basis of registered copyright rights, the scope of the expert comparison directed to assist that inquiry cannot be unilaterally expanded by the court to include unregistered or common law rights unless those rights were actually placed in issue and contested at that stage.the Expert's role was understood correctly as that of a technical assistant to the court, and not as an adjudicator. An order settling the scope of such comparison, once accepted by all parties without challenge, acquires a binding character that the same court cannot unilaterally revise without proper cause.

Case Title: Diyora and Bhanderi Corporation and Others Vs. Sarine Technologies Limited

Date of Order: 30 July 2018

Case Number: Civil Appeal Nos. 7304-7305 of 2018 

Citations: (2018) 8 SCC 804; 2018 (9) SCALE 423

Court: Supreme Court of India

Hon'ble Judges: Justice Abhay Manohar Sapre and Justice U.U. Lalit

Written By:Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi

Disclaimer: Images used herein do not reflect actual images used in Judgement and that the same are for illustrative purpose only. Readers are advised not to treat this as substitute for legal advice as it may contain errors in perception, interpretation, and presentation.  

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Headnote

Diyora and Bhanderi Corporation & Ors. v. Sarine Technologies Ltd., Civil Appeal Nos. 7304–7305 of 2018, decided on 30 July 2018 by the Supreme Court of India. The appeal arose from orders of the Gujarat High Court affirming the appointment of a software expert to compare the parties’ source and object codes in a copyright infringement suit concerning the plaintiff’s Advisor™ software. The appellants challenged both the appointment of a foreign expert and the expansion of the scope of comparison beyond the registered version of the software. The Supreme Court upheld the appointment of the expert, holding that the appellants had acquiesced to the arrangement and adequate safeguards existed for data confidentiality. However, it partly allowed the appeal by setting aside the trial court’s order expanding the scope of comparison and directed that the comparison be confined to the plaintiff’s registered Version 6.0 software.

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