Interim relief is crucial in patent cases, as trials can be lengthy. Without temporary protection, patentees risk losing the value of their patents due to unauthorized use. Measures like security deposits help enforce damages awards. In a recent case before the Delhi High Court, Communication Components Antenna Inc. v. Ace Technologies Corp., the court ordered a bank guarantee or fixed deposit receipt of ₹290 crore (approximately USD 34.94 million), amounting to 25% of the claimed damages, as a pro tem deposit. This is possibly the highest amount ordered early in an Indian patent suit, highlighting the importance of strong interim protection, especially in high-value disputes.

Facts of the case:

1. The plaintiff (Communication Components Antenna Inc) has instituted the present suit seeking permanent injunction restraining the defendants from infringing upon its Indian Patent No.240893.
2. Communication Components Antenna Inc. is a private company based in Ottawa, Canada, at 11 Hines Road. It makes products for cellular base stations, helping mobile service providers get the best performance from their equipment.
3. The main defendant, Ace Technology Corporation, is a South Korean company that manufactures and sells antennas for the telecom industry. Other defendants include a Hong Kong-based company (Shin Ah Ltd.) and two Indian subsidiaries of Ace.
4. In 2019, Communication Components Antenna Inc. sued Ace Technology Corp. for infringing its Indian Patent No. 240893.
5. The Delhi High Court found a prima facie case of infringement and, on 12 July 2019, ordered the defendants foreign companies with no assets in India to furnish a ₹40 crore (approximately USD 4.616 million), bank guarantee and deposit ₹14.5 crore (approximately USD 4.616 million) for ongoing sales.
6. The defendants filed an appeal before the Division Bench of the Delhi High Court and later before the Supreme Court of India, challenging the deposition of bank guarantee and money deposition, however, both were dismissed and the original order passed by the Single Judge, was upheld.
7. The plaintiff filed the present application under Section 151 of the Civil Procedure Code (CPC), seeking directions for the defendants to deposit a bank guarantee amounting to 25% of the claimed damages (approximately Rs. 290 Crores i.e. USD 33.47 million), due to the deteriorating financial condition of defendant No.1 and the risk of non-payment of any future decree.

Submissions on behalf of the plaintiff:

1. The plaintiff argued that since South Korea lacks a reciprocal arrangement with India under Section 44A CPC, any Indian court decree would not be automatically enforceable there, citing Article 217 of the Korean Civil Procedure Act.
2. Evidence shows damages claimed are about Rs. 1160 Crores (USD 140 million), but defendants have limited assets in India (cash, depreciating machinery, land) insufficient to satisfy such claims.
3. The plaintiff contended that the defendants have been found to be prima facie infringing the patent, and asserted that this application is required to protect the plaintiff’s interests throughout the ongoing proceedings.
4. The plaintiff referred to a previous case involving the same patent, where a damages decree of ₹217 crores (USD 25.04 million) was granted against a Chinese company. However, since China is also not a reciprocating territory, that decree could not be enforced, leaving the plaintiff without any remedy.

Submissions on behalf of the Defendants:

1. Defendants contended that South Korea’s domestic law recognizes and enforces foreign judgments under Article 217, so lack of notification as a reciprocating territory under Section 44A CPC does not bar relief.
2. Defendants argued that technical infringement has been conclusively proven yet, and that they have already deposited about Rs. 70 Crores (USD 8.078 million) pursuant to earlier court orders. The 2019 order was made before evidence was submitted, and both the High Court and Supreme Court later said that expert review is needed before deciding on patent infringement.
3. Defendants emphasized the need for expert evidence before final infringement findings and submitted that the plaintiff’s damages claim is unproven.
4. The defendants argued that they are financially sound, have no intent to escape liability, and their ₹70 crore (USD 8.078 million) deposit shows good faith. The Mobi Antenna case doesn’t apply here because the facts are different.
5. They asked the court to dismiss the plaintiff’s request for further security or bank guarantees.

Court’s observation and order:

1. The Court acknowledged the wide discretionary powers under Section 151 CPC to pass necessary orders to meet ends of justice and prevent abuse of process, however, emphasized such powers must be exercised sparingly and based on strong prima facie case, balance of convenience, and risk of irreparable harm.
2. It noted that in cases where withholding interim relief would render final relief ineffective, courts may grant interim relief even if it approximates final relief, citing Supreme Court precedents. The Court emphasized the importance of protecting patent holders’ rights and ensuring that any eventual decree is enforceable and meaningful.
3. Considering the defendant No.1’s significant decline in share value (65%), limited assets in India, and the lack of reciprocity for enforcement in South Korea, the Court found it just and practical to order a bank guarantee deposit. The court observed that the defendants have deposited Rs. 70 Crores (USD 8.078 million) so far, but the current financial position and non-compliance raise concerns about satisfying a future decree.
4. The Court concluded that a prima facie case exists in favour of the plaintiff, with balance of convenience and risk of irreparable harm tilting in its favour.

Our comments

The ruling sets an important precedent for pro tem arrangements in patent cases. The court balanced interim protections for patent holders against challenges posed by foreign defendants with limited Indian assets and non-reciprocal enforcement jurisdictions, emphasizing the protection of patent holders’ rights and ensuring enforceable and meaningful decrees.