Patent Case Law Summary: Claudio De Simone v. Actial Farmaceutica SRL

IMPORTANT ISSUES

• Whether the defendant is passing off the plaintiff’s chemical formula based product as their own?

SUMMARY

FACTUAL MATRIX

1. Plaintiff No. 1 in the suit (Professor Dr. Claudio De Simone, a resident of Switzerland) is the inventor of a formulation known as the De Simone Formulation (“Formulation”). The Formulation was protected by a patent in the US. The US patent expired in 2015. The plaintiffs never filed a patent in India for protection of the Formulation.
2. For the US market:
   1. Plaintiff No. 1 entered into a patent license agreement with Defendant No.3 (VSL Pharmaceuticals, Inc.) for commercialization of De Simone formulation till the expiry of the patent.
   2. Plaintiff No. 1 and Defendant No. 3 also entered into a know-how agreement allowing Defendant No. 3 to continue to market the Formulation in the US even after expiry of the patent (“Know-how Agreement”).
3. For the Indian territory, Plaintiff no.1 granted a license to Defendant No.2 (CD Pharma India Private Limited) for a period of ten years starting from December 2004 to import the Formulation and market it in India. This agreement expired in December 2014.
4. Defendant No. 3 owns the trademark VSL#3. This mark was used to market the Formulation in the past. After the agreements mentioned above expired, the Formulation was marketed under different brand names in Europe and USA by the plaintiffs. In India, the Formulation was marketed as “Visbiome” by the plaintiffs.
5. The plaintiffs approached the Court contending that the defendants are now publicising their own formulation under the trademark VSL#3 and claiming it to be similar to the Formulation.
6. The suit was filed seeking a permanent injunction restraining the defendants from a) manufacturing and selling a formulation without getting approval from DCGI; b) selling their formulation under the brand VSL#3 or under any other brand identical or deceptively similar thereto, and; c) linking / relating their new product to the Formulation.

SUBMISSION BY PLAINTIFFS

1. If the know-how in which a trade secret is claimed is not disclosed in the patent, as in this case and the subject matter of patent and subject matter of know-how are distinct, then notwithstanding the lapse of the patent, the rights in the know-how to prevent others from making the patented product can be asserted.
2. Though such others may not include those who have learnt the know-how by reverse engineering, but would certainly include to the persons to whom the plaintiffs had disclosed the know-how under a contract and such persons cannot take undue advantage of the disclosure and confidentiality and the liabilities thereunder have to continue notwithstanding the expiry of patent and expiry of the agreement.
3. There can be an intellectual property in a trade secret; though such intellectual property is not recognized by any statute relating to intellectual property in India but is recognized under Section 6 of the Income Tax Act, 1961.

HELD

• The plaintiffs’ claim De Simone Formulation, passing off whereof by the defendants is alleged, to be a patented product. However, the patent pleaded with respect to De Simone Formulation is under the laws of USA and it is not the case of the plaintiffs that De Simone Formulation had any patent in India.
• Unlike the intellectual property in trade marks, where the common law tort of passing off is statutorily recognized vide Section 27(2) of the Trade Marks Act, there is no common law right in an invention, as the plaintiffs claim De Simone Formulation to be. It is only by statute i.e. the Patents Act, 1970, that to give impetus to research and innovation, rights in an invention are conferred but again unlike trade marks, for a limited period of time. It is only when a patent has been obtained with respect to an invention in accordance with the Patents Act that the inventor or the patentee entitled to prevent others, who do not have his consent, from the act of making, using, offering for sale, selling or importing the patented product or from using the patented process. Save as conferred by Section 48 of the Patents Act, there is no right in common law in any inventor to restrain others from commercially exploiting the invention. Information claimed to be confidential can be protected as trade secret only if such information is not available in the public domain and is hence unknown to others. Since the plaintiffs have no subsisting patent protection in India, and since the patent based in US has expired, the innovation, as noted above, is in public domain. Hence, the claim for trade secret protection falls and the defendants cannot be restrained from manufacturing the product, in spite of the Know-How Agreement, as otherwise it would amount to judicial creation of an extra-statutory monopoly for perpetuity in the invention, in contrast to the scheme of Patent Act, 1970 that seeks to bring an invention to public domain after the expiry of the term of the patent, and which is opposed to public interest as well as to judicial discipline.

Copy of judgement