Saturday, January 26, 2013

Can a Plaintiff/Patentee Withdraw a Suit for Patent Infringement At Will?

The instinctive response to the question is that a Patentee/Plaintiff must not be permitted to withdraw a suit for patent infringement at will. Our sense of fairness might tell us that by suing the Defendants, the Plaintiff has caused the Defendants to incur costs. Also, if the Defendant has suffered due to grant of an ex parte order or an interim injunction against him, the Defendant has a right to expect compensation/restitution for the loss suffered by him.

What are the relevant provisions of the law which help us address the issue? A combined reading of Order 23, Rule 1 and Section 144 of the Code of Civil procedure, 1908 is called for. Order 23 of the CPC deals with Withdrawal and Adjustment of Suits. Rule 1 of Order 23 states thus:

“At any time after the institution of a suit, the Plaintiff may, as against all or any of the Defendants, abandon his suit or abandon a part of his claim”

Clearly, the Plaintiff has the right to withdraw the suit at will, and there is nothing under the law that prevents him from doing so. That said, does this mean that Defendant is left without any recourse to seek restitution of the costs incurred by him during the course of and as a consequence of the litigation?

Section 144 of the CPC provides for a remedy to such a Defendant. The provision reads thus:

Application for restitution:-- (1) where and in so far as a decree (or an order) is varied or reversed in any appeal, revision or other proceeding or is set aside or modified in any suit instituted for the purpose, the Court which passed the decree or order shall, on the application of any party entitled to any benefit by way of restitution or otherwise, cause such restitution to be made as well, so far as may be, place the parties in the position which they would have occupied but for such decree (or order) or such part thereof as has been varied, reversed, set aside or modified and, for this purpose, the Court may make any orders, including orders for the refund of costs and for the payment of interest, damages, compensation and mesne profits, which are properly consequential on such variation, reversal, setting aside or modification of the decree or order.

Explanation:-- For the purposes of sub-s. (1), the expression "Court which passed the decree or order" shall be deemed to include -
(a) where the decree or order has been varied or reversed in exercise of appellate or revisional jurisdiction, the Court of first instance;

(b) where the decree or order has been set aside by a separate suit, the Court of first instance which passed such decree or order;

(c) where the Court of first instance has ceased to exist or has ceased to have jurisdiction to execute it, the Court which, if the suit wherein the decree or order was passed were instituted at the time of making the application for restitution under this section, would have jurisdiction to try such suit"

Sub-section 1 of Section 144 essentially envisages restitution when a decree or order undergoes variation or reversal in an appeal or revision or “any other proceeding”. The sub-section also envisages restitution upon setting aside or modification of the decree or the order passed in the first suit in a counter-claim/counter-suit instituted for the purpose of setting aside or modifying the decree or the order in the first suit. However, there is no express mention of whether or not such restitution is available in the event of withdrawal of the suit.

That said, the provision is broad enough to accommodate such an eventuality since it refers to variation or reversal in....”other proceeding”. This captures the spirit of the provision which is to provide for a remedy to a Defendant who has suffered losses as a consequence of the Plaintiff’s suit.

When can an application for Section 144 be filed? And who can it be filed before? Sub-section 1 answers both these questions- The Court which passed the decree or the order which was subsequently varied or reversed shall be the Court before which an application under Section 144 may be filed.

Also, such an application must be naturally filed after such variation or reversal of the decree or the order. This also means that once the decree has been varied or reversed by an appellate Court and rendered final, a stand-alone application under Section 144 may be moved before the Court of first instance which passed the original decree or order. This application would stand independent of the Suit and the Court shall be seized of such an application by virtue of being the Court that passed the decree or the order.

A Calcutta High Court decision in Dilip Kumar Dey v. Vishwamitra Ram Kumar throws light on the Section as follows:

50. Under Order 8, Rule 6D a counter claim is permitted to survive a suit where the suit is discontinued, stayed or dismissed. Similarly, a cross-objection is to survive an appeal in certain circumstances under Order 41, Rule 22(4). In either of these the cross-objection -- or the counter-claim is heard in the very proceedings of the appeal or the suit and unless there was a provision to the contrary once the appeal or the suit stand terminated, there would be no proceeding in which the cross-objection or counter-claim could be adjudicated. They, however, being independent claims of the respondents or the defendant cannot be permitted to become infructuous on the appellant or the plaintiff withdrawing the suit on appeal.

51. In contra-distinction to the aforesaid proceedings, proceedings under Section 144 are not heard in the suit and, therefore, termination of the suit would not ipso facto result in conclusion of the proceedings under Section 144, C.P.C. These proceedings are not proceedings in the suit and they are not heard as a part of the proceedings in the suit and cannot be interlocutory proceedings in the sense implied above. These proceedings are taken distinctly from the suit and as pointed out above may not necessarily be even contemporaneous with the suit. They, therefore, do not need any separate provision to save them after a suit ends.”

Instead of an application under Section 144, can a counter-claim for damages/costs be instituted by the Defendant? Sub-section 2 of Section 144 bars such a counter-suit:

(2) No suit shall be instituted for the purpose of obtaining any restitution or other relief which could be obtained by application under sub-section(1).

1. Although the Plaintiff may withdraw the suit at will, the Defendant is not without remedy to seek restitution, courtesy Section 144 of the CPC which may be filed as an independent application, notwithstanding the withdrawal of the suit.
2. A remedy which may be sought under Section 144 cannot be sought by way of or as part of a counter-claim or a counter-suit.

I thank Ms.Sneha Jain for her discussions with me on the provision. 

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