Res-Judicata on Intellectual Property Related Judgment


jyotirmoy School of Law ,affiliated by calcutta University

In Intellectual Property related judgments, Res Judicata is applied in cases where parties have filed cases on infringement but did not obtain satisfactory judgments and thus appealed to the higher court. The principle says that no party can reopen the case once it has been decided by a competent court. There is a bar on the higher court from accepting such a case.
We see cases everyday where a particular judgment is delivered by the lower court on a particular matter and the same is taken to the higher court if the parties do not get the desired judgment. The laws in force in our country and many other countries give the parties the right to appeal to the higher court. However, there is a principle in law which prevents this in certain cases known as “Res Judicata”. This is Latin word which says that a case which is decided by a court cannot be appealed in the higher courts and thus, the higher courts were authorised to reject the plea by applying Res Judicata. The principle literally translates to something which has already been adjudged.
The res judicata principle
The Supreme Court, in the present case, summed up the issue of res judicata as follows:

  1. The general Rule is that all issues that arise directly and substantially in a former suit between two parties are res judicata in a subsequent suit between them. These would include issues of fact, mixed questions of fact and law, and issues of law.
  2. The exceptions to this general rule are as follows:
    (i) Where an issue of law decided between two parties in a former suit relates to the court’s jurisdiction, an erroneous decision is not res judicata in a subsequent suit, even where the issue raised is directly and substantially the same.
    The court went on to elaborate that an erroneous decision as to the jurisdiction of a court cannot clothe that court with jurisdiction where it has none. For example, a civil court cannot send a person to jail for an offence committed under the Indian Penal Code. In any event, its judgment would not bind a criminal court in a subsequent proceeding between the same parties, where the Magistrate sentences the same person for the same offence under the Penal Code.
    (ii) An issue of law which arises between the same parties in a subsequent suit or proceeding is not res judicata if, by an erroneous decision given on a statutory prohibition in the former suit, the statutory prohibition is not given effect to. This is despite the fact thateven though the issue may be the same as that directly and substantially in issue in the previous suit. This is because in such cases, the parties’ rights are not the only matter for consideration as the public policy contained in the statutory prohibition cannot be ignored.
    (iii) A third exception is if the issue of law is different from that in the previous suit. This can happen when the issue in the second suit is based on different facts from the issue in the first suit. Equally, where the law is altered since the earlier decision, the issue in the subsequent suit is not the same as in the previous suit, because the law to be interpreted is different.

Perspective under Indian Scenario
In the case of Patent law in India, the dispute may more often lead to multiple proceedings in different jurisdictions. A single patent can be a subject matter before the Controller, Intellectual Property Appellate Board (IPAB), district court or even High Court. In a patent dispute, the parties are usually big companies having abundant financial resources. They are ready to exploit the statutory provisions and launch multiple proceedings on purpose. This would amount to wastage of time for the already overburdened legal system in India.
Summary of leading cases with important issue
In the case of Canara Bank v. NG Subbaraya Shetty, Mr. Shetty had to clear certain dues to Canara Bank. In order toTo repay his dues, he signed an assignment deed with the bank in 2003 assigning his trademark “EENADU”. The bank later cancelled the assignment deed under the pretext that the bank could not be engaged in any other activity other than banking according to the Banking Regulation Act, 1949. The case is dealt in two suits. Shetty filed the first suit in 2004 for recovery of money and challenging the cancellation of assignment deed. A counter suit was filed by the bank. The court gave a common judgment in 2013 dismissing the banks suit and partly allowing Shetty’s suit. A second suit was filed by Shetty in 2008 wherein he sued the bank for the recovery of additional amount paid between 2004 and 2007 against the assignment deed. The court in 2015 held that the 2013 judgment was res judicata between the two parties. The bank further tried to appeal against this 2015 judgmentjudgment, but it was dismissed on the grounds of res judicata in 2017.
The Supreme Court in this case gave an interpretation on the issue of res judicata and also provided exceptions under it. The general rule was that,that all the issues (including the issues of facts, issues of law and mixed question of fact and law) arising directly and substantially in the earlier suit would be res judicata in the subsequent suit.
Res judicata will not apply in the following cases:

  1. If the higher court thinks that the question of law was wrongly decided by a court of competent authority, then the same cause of action is not barred by the principle.
  2. If the issue of law was decided beto be a court outside its jurisdiction.
  3. If the issue of law is different and there are different facts and circumstances of the subsequent suit.
    The Supreme Court in a judgment barred challenging of judgments simultaneously in multiple forums for revocation of patents in India. In the case of Dr. Alloys Wobben and Anr. v. Yogesh Mehra , the court held that the revocation of the patent can be obtained by one of the two ways:
  4. Filing of a revocation petition before the IPAB;
  5. Filing counter claim before the High Court in a patent right infringement suit.
    The opposite party cannot use both the ways.
    The court allowed the bank’s appeal, on grounds that the original judgment in the 2004 suit had effectively validated a transaction which was prohibited under law. Two provisions of law are relevant here: firstly, under Section 45(2) of the Trade Marks Act, unless the assignment deed was registered, it cannot be received in evidence by any Court. Secondly, under Sections 6 and 8 read with Section 46(4) of the Banking Regulation Act, 1949, the bank cannot do any business other than banking business. Further, an assignment deed which allowed the bank to trade in goods and earn royalty from the assignment of a trademark would be void in law, unless such activity was in connection with the realisation of security given to or held by it.

Trademarks as collateral
This case is different from an earlier well-advertised matter involving Vijay Mallya and a trademark bouquet related to the now defunct ‘Kingfisher Airlines’ (consisting of 9 trademarks). In that case, Mallya had offered the trademarks as collateral/security to the lenders (various banks) at the time of taking loans from them. In that case, arguably, the trademarks formed a part of security within the meaning of Section 6 of the Banking Regulation Act, 1949. But in the present case, Shetty had not pledged his trademark, ‘EENADU’ at the time of seeking credit from the bank, and the trademark could not be said to form a security held by the bank.

In every legal principle, there does exist some loophole. The principle of red judicata is also accompanied by some loopholes. Firstly, the restriction of appeal to a higher court in a way hampers justice as it will result in huge losses for a party which faces infringement of Intellectual Property. Secondly, in case of appeals the principle is not applicable. Thirdly, Res Judicata is sometimes applied to judgements which are contrary to law, which is unfair to the justice system and also to parties who have filed cases. Lastly, there are very limited exceptions in this doctrine which is a loophole in itself.
There are many instances where the principle has not been applied. In such a case, if the higher court reverses the judgment of the lower court, then the matter will be transferred to a third court. The third court will apply the principle of res judicata and decide the matter. Each case has its own peculiaritiespeculiarities, and the court will solve it according to the need. The application of the doctrine of Res Judicata is in the interest of justice and for the benefit of the parties.

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