TVS gets relief in spat with Bajaj Auto

TVS gets relief in spat with Bajaj Auto
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First Published: Wed, Sep 16 2009. 10 40 PM IST

Updated: Wed, Sep 16 2009. 10 40 PM IST
New Delhi: The Supreme Court on Wednesday temporarily allowed TVS Motor Co. Ltd to sell its “Flame” brand of motor bikes that compete with vehicles manufactured by its arch-rival Bajaj Auto Ltd, but also signalled its intent to fast track the trial of such cases of alleged intellectual property violation.
Accordingly, in its order, the Supreme Court directed a single judge bench of the Madras high court to finish hearing the case of patent violation by 30 November, without granting adjournments to either side in the nearly two-year-old dispute. Analysts have welcomed the move, arguing that frequent injunctions are used as a means of conducting a proxy corporate battle.
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The court’s decision, delivered by justices Markandey Katju and Ashok Kumar Ganguly, has cleared the decks for TVS to potentially exploit the usual surge in demand witnessed during the festive season. In the minutes after the order was read out, the TVS stock rose sharply by 14.1% to Rs61.30. It closed the day up 9.99% at Rs58.90. Meanwhile, Bajaj’s stock stayed steady, but the company still managed to close up 1.19% at Rs1,380.85. This is its highest close ever.
The two companies have been locked in a patent dispute over the use of twin spark plug engine technologies, with Bajaj Auto claiming that it had a patent on it. These spark plugs result in the fuel burning more efficiently, which leads to greater mileage.
In the interim, a court receiver appointed by the chief justice of the Madras high court would keep records of sales of the Flame bike across India. TVS’ accounts would be inspected every fortnight.
This way the courts would be able to compensate Bajaj Auto if its claims for infringement are upheld.
“If Bajaj ends up winning the case finally, this interim order will hardly matter as courts have in the past compensated the winning party adequately,” said Prathiba Singh, a New Delhi-based patent attorney.
Bajaj’s bikes such as the Pulsar and the Discover, which make use of the twin spark technology and the increased fuel efficiency, has allowed the company to capture a little over half the market share for this category of motorcycles.
Bajaj Auto had received its patent for the twin spark technology two years after applying for it in 2002 with the Indian Patent Office.
However, Honda Motor Co. Ltd had applied for and received a global patent for its twin spark plug technology in 1985. Patent rights are granted for 20 years.
TVS, a few months before launching its Flame model in 2007, filed a suit for revocation of Bajaj’s patent at the Intellectual Property Appellate Tribunal. It argued that Bajaj’s patent should never have been granted as Honda held it for a similar invention.
The suit is still pending and will be decided separately.
At the same time, TVS claims its technology has been licensed from M/s AVL GmbH and is different as it makes use of an extra valve. As a result, it claims that the technology is known as “twin spark three valve”.
However, Bajaj approached the Madras high court to prevent TVS from selling its motorcycles in 2007.
In February 2008, a single-judge bench of the Madras high court had restricted TVS from producing the Flame. TVS appealed and on 18 May 2009, a two-judge bench of the same court allowed TVS to manufacture and sell vehicles with twin spark plug and triple valve engines.
Bajaj moved the Supreme Court, which passed an order on 8 June allowing TVS Motor to manufacture the Flame but prohibited it from selling the bike. On Wednesday, the Supreme Court allowed TVS to start selling the Flame.
In a press release, TVS said, “After being successful in its appeals before the Madras high court, today TVS was again vindicated in its stance before the Supreme Court.”
Bajaj Auto, in a press statement, said, “In the interim though TVS has been allowed to sell Flame with twin spark plugs, the Supreme Court has ordered appointment of a Court Receiver. This would facilitate the Courts to determine the amount of damage that would become payable to Bajaj, should the court decide the matter in favour of Bajaj after the trials.”
A TVS spokesperson declined to say anything beyond the press release. The Bajaj spokesperson could not be reached.
Analysts point out that the Supreme Court order is trendsetting as it will now pressure lower courts to expedite trials of such intellectual property violations.
Justice Katju, during the course of the hearing on the matter, lamented that adjudication on IPR matters take a long time and said that the trial should be completed in a time bound manner.
“It is a very positive move as it would help high courts to devise ways to settle IPR disputes quickly,” said Singh.
Shamnad Basheer, professor in intellectual property law at National University of Juridical Science, Kolkata, agreed: “In IPR matters, once a temporary injunction is granted, the fate of the case is sealed because the adjudication takes a long time. Given the culture of adjournments in our country, it remains to be seen whether the 30 November deadline would be met. But it is an excellent policy move to refer the matter to the trial court for a detailed hearing and settle the matter in a time-bound manner.”
Graphics by Ahmed Raza Khan / Mint
manish.r@livemint.com
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First Published: Wed, Sep 16 2009. 10 40 PM IST
More Topics: Supreme Court | TVS | Motorbike | Flame | Bajaj |