This is an application filed by the petitioner invoking Section 9 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') seeking an interim measure before commencement of the arbitral proceedings. Initially, the registry has noted a defect with respect to the request made by the petitioner before this Court to secure an interim measure under Section 9 of the Act, 1996, especially as per the agreement, the place of arbitration is designated in Singapore. The said question was considered by this Court and passed an order dated 20.2.2017, after hearing rival parties, whereby it is held that, as provided under sub section (2) of Section 2 of the Act it is evident that, subject to an agreement to the contrary the provisions contained in Section 9 shall apply to international commercial arbitration, even if the place of arbitration is outside India, if an arbitral award made/to be made in such place is enforceable and recognized under provisions of Part II of Act, 1996. It is also found that the agreement specifically provides, the agreement shall be construed and interpreted in accordance with the laws of India and shall be subject to the courts of Thiruvananthapuram, Kerala State and therefore, the application is maintainable before this Court under Section 9 of the Act, 1996, which has become final.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP(ICA) No. 1 of 2017
Decided On: 07.07.2017
Female Health Company UK Plc.Vs. Hll Lifecare Limited
Hon'ble Judges/Coram:
S.P. Chaly, J.
Citation:AIR 2017 Kerala 149
1. This is an application filed by the petitioner invoking Section 9 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') seeking an interim measure before commencement of the arbitral proceedings. Initially, the registry has noted a defect with respect to the request made by the petitioner before this Court to secure an interim measure under Section 9 of the Act, 1996, especially as per the agreement, the place of arbitration is designated in Singapore. The said question was considered by this Court and passed an order dated 20.2.2017, after hearing rival parties, whereby it is held that, as provided under sub section (2) of Section 2 of the Act it is evident that, subject to an agreement to the contrary the provisions contained in Section 9 shall apply to international commercial arbitration, even if the place of arbitration is outside India, if an arbitral award made/to be made in such place is enforceable and recognized under provisions of Part II of Act, 1996. It is also found that the agreement specifically provides, the agreement shall be construed and interpreted in accordance with the laws of India and shall be subject to the courts of Thiruvananthapuram, Kerala State and therefore, the application is maintainable before this Court under Section 9 of the Act, 1996, which has become final.
2. Material facts for the disposal of ICA are as follows:-On 27.11.2001 a memorandum of understanding is entered into by and between the petitioner and the respondent for the marketing, sale and distribution, and possible manufacturing of Female condom (hereinafter referred to as FC1), in India in four distinct phases. At the outset it is stated that, the petitioner is a company incorporated in the United Kingdom. While so, on 23.8.2003 a Distribution Agreement was signed between the petitioner and the respondent. As per the said agreement, petitioner appointed the respondent as its exclusive independent marketer and distributor in the prescribed territory for FC1. As per the Marketing Agreement all the confidential information and other Intellectual property was owned solely and exclusively by the petitioner and would remain the exclusive property of the petitioner, and the respondent have no right, title or interest in or to any of the confidential information.
3. On 3.3.2006 the petitioner and the respondent entered into another memorandum of understanding noting that the petitioner had developed a nitrile based female condom (hereinafter referred to as FC2), having similar features to the FC1 and the parties agreed to promptly enter into discussion and subject to the result of the same, negotiate a formal agreement to include a non-disclosure of confidential information clause. The manufacture of FC2 in India was to be conducted in two phases - Phase 1 related to the part, manufacturing of FC2 in India, which included inspection, lubrication and packaging and Phase 2 related to the respondent undertaking manufacturing of FC2 in India as per the requirement of local and global demand for regions and countries agreed on.
4. On 10.10.2006 parties again entered into an interim agreement, whereby petitioner agreed to provide the required machinery/equipment on loan basis as well as to provide necessary training at the petitioner's facilities to employees of respondent and right to sell the product manufactured during the training period in advance to the parties concluding a mutually acceptable Interim Agreement.
5. On 29.5.2008, to bring into effect the 2006 MOU and the interim agreement, petitioner and respondent executed the manufacturing agreement. As per the manufacturing agreement, respondent had decided to set up a manufacturing unit at Plot No. 16/A1 possessed by the respondent at Cochin Special Economic Zone, Kochi for manufacturing FC2. For the purpose of setting up the manufacturing unit at Economic Zone, petitioner agreed to provide the required machinery/equipment and necessary training to the employees of the respondent. According to the petitioner, by virtue of the manufacturing agreement, petitioner granted the exclusive right and license to use its Intellectual property to the respondent. Petitioner was the sole owner of the Intellectual property licensed to the respondent. Such Intellectual Property included the know-how, technical data and processes including inter alia blue prints, specifications, formulae, descriptions of processes, designs, and other forms of recorded information and other tangible things relating to such data. That apart it is stated, the respondent was barred under the Manufacturing Agreement, to assign, transfer, sublicense, pledge, hypothecate or otherwise permit, authorise, dispose of or encumber the right to use or any use or any part of the Intellectual Property including the trade mark, drawings, copy right or the technical know-how owned by the petitioner.
6. On 6.10.2009, E-mails were sent by and between parties discussing the possibility of a further licensing agreement to increase the reach of the product to other markets and exchanged draft agreement. On 2.9.2010, the respondent issued to the petitioner a notice of an intention to terminate the marketing Agreement as well as the manufacturing agreement on various grounds. On 16.9.2010 petitioner replied to the respondent's intention to terminate denying the grounds stated therein. According to the petitioner, respondent thereafter has not acted further on the course of termination. On 10th and 11th October, 2010, parties convened a meeting and the respondent indicated the need to have a new agreement for the distribution and manufacturing of the Female Condom. Further, the parties jointly discussed the development of a new generation - latex based version of FC2 in India. On 21.10.2010, the petitioner addressed an e-mail to the respondent providing further information on the specifications inter alia including information regarding material, bio-compatibility and stability of the natural rubber latex version of FC2 proposed to be developed. On 25.2.2011, the respondent informed the petitioner of its intention to independently work on the natural latex based FC. On 28.4.2011, according to the petitioner, an e-mail was forwarded by the respondent containing a draft of the new manufacturing agreement. On 12.5.2011 a reply was issued to the petitioner asserting that if any proprietary contributions made by the petitioner and used by the respondent, the same would be retained by the petitioner. Accordingly, a clause in the draft New manufacturing Agreement, provided by the respondent, contradicting the above understanding pointed out in the e-mail. Thereafter, on 25.9.2014, an e-mail was forwarded by the respondent to the petitioner requesting clarifications on the way in relation to the collaboration of the parties for the development of the Natural Rubber Latex version of FC2. On 5.5.2015, a reply was sent by the petitioner conveying its intension to resume the discussion for creating a new collaboration by and between the parties, that would resolve any issues and create a successful future for both the companies. Thereafter, various correspondence were made by and between the parties. However, on 6.4.2016 petitioner became aware of the respondent's manufacture of the Natural Rubber Latex version of FC2 by way of a news article under the brand name of "Velvet". It further became aware that, the product title "Velvet" had been pre-qualified by the WHO and UNFPA in March 2016 and that the respondent had filed an Indian Patent for the product in Brazil, South Africa and African Regional Intellectual Property Organization (ARIPO). On 31.8.2016, petitioner was informed that, respondent was awarded an international tender and respondent's export of 1.3 million units of latex based FC2 to the African countries Gambia and Burkina Faso and Dominican Republic in the Caribbean.
7. According to the petitioner, on 9.1.2017 petitioner issued a letter to the respondent as required by Article 30.1 of the manufacturing agreement informing the respondent that a dispute has arisen between the parties and attempting to amicably resolve the same. On 17.1.2017 the respondent replied to the letter, purporting to defence its actions based on false and frivolous grounds. These are the facts projected by the petitioner to secure the reliefs sought for under Section 9 of the Act, 1996, which are as follows:-
"a) Pass an order granting interim measure of protection by an order of injunction restraining the Respondent, whether by itself, its officers, directors, servants, agents or otherwise howsoever from using the confidential information or any part thereof owned and provided by the Petitioner to the Respondent for any purpose other than as provided under the Manufacturing Agreement;
b) Pass an order granting interim measure of protection by an order of injunction restraining the Respondent, whether by itself, its officers, directors, servants, agents or otherwise howsoever, from manufacturing and sale of the Natural Rubber Latex version of FC2 within India;
c) Pass an order granting interim measure of protection by an order of injunction restraining the Respondent, whether by itself, its officers, directors, servants, agents or otherwise howsoever, from the sale of the Natural Rubber Latex version of FC2 outside India;
d) Pass an order granting interim measure of protection by an order of injunction restraining the Respondent, whether by itself, its officers, directors, servants, agents or otherwise howsoever, from using the equipment and material owned and supplied by the Petitioner to the Respondent in pursuance of the Manufacturing Agreement;
e) Pass an order granting interim measure of protection by directing the Respondent to return all information, property, including but not limited to equipment, intellectual property, technical file, and any other information provided by the Petitioner to the Respondent."
8. A counter affidavit as well as an additional counter affidavit is filed by the respondent refuting the allegations, claims and demands raised by the petitioner. That apart it is contended that, an application under Section 9 of the Act, 1996 is not maintainable before this Court since the seat of arbitration as per the manufacturing agreement entered into by and between the parties, shall be Singapore or such other place/s parties shall subsequently agree upon. Therefore in view of the provisions of Article 30 of the agreement, Part I of the Arbitration and Conciliation Act, 1996 is not applicable, and this Court is not vested with jurisdiction to entertain and adjudicate upon the petitioner under Section 9 of the Act. However, as pointed out earlier, a learned single Judge of this Court has considered the said question and has held that the application is maintainable under Section 9 before this Court, and therefore, the said finding rendered by the learned single Judge has become final in that regard. It is also contended that, the petitioner has no grievance and cause of action against the respondent, and therefore, the petitioner is not entitled to secure the reliefs sought for in the application. That apart it is contended that, the alleged grievance and cause of action of the petitioner is under manufacturing agreement dated 29.5.2008. However, as per a notice issued by the respondent dated 2.9.2010 in terms of Article 21 of the agreement, the manufacturing agreement dated 29.5.2008 stands terminated, and therefore, the arbitration clause contained thereunder cannot be invoked by the petitioner to seek any relief under Section 9 of the Act, 1996. It is also contended that, the dispute or claims alleged by the petitioner on the basis of agreement dated 29.5.2008 is barred by limitation. That apart it is submitted, the respondent is a Government of India Enterprises incorporated under the Companies Act, 1956 having its registered office at Thiruvananthapuram. It is a multi-product, multi-unit organization engaged in the business of manufacturing of condom and other related products, pharmaceutical and medicinal preparations, and other healthcare products and distributing them throughout the country as well as exporting them presently to over 115 countries across the world. Respondent has vast array of innovative products, services and social programs to meet country's healthcare needs. It is based on the said extensive experience, innovative technologies and ample resources reaching across the globe, respondent's service and products are part of the global healthcare package of International agencies such as United Nations Population Fund (UNPFA), United Nations Office for Project Services (UNOPS), World Health Organizations(WHO), Population Services International (PSI) and International Dispensary Association (IDA). It is also submitted that, the respondent is one of the largest manufacturer of the product mentioned above in the world. The respondent manufactures and markets vide range of contraceptives for male and female and intra-uterine devices, oral contraceptive etc., etc. It is also submitted that, the respondent have the state of the art research and development facilities that enable it to provide highest quality of healthcare products. Respondent has been in existence and was engaged in the manufacture of natural latex based condoms for the past almost 50 years and is well versed with the technology to make any latex based products. Further the R & D Department of the respondent has developed novel products like low-protein condoms, EMILY-hormone releasing intrauterine systems, etc., etc.
9. It is submitted that, the respondent had executed an exclusive marketing and distribution agreement and manufacturing agreement dated 23.8.2003 and 29.5.2008, respectively. The agreement dated 23.8.2003 relates to appointment of the respondent as an exclusive independent marketer and distributor solely in the territory i.e., India for the product viz., petitioner's tubular prophylactic plastic barrier device for protection against transfer of infectious diseases and against pregnancy during sexual activities. The manufacturing agreement relates to grant, to the respondent an exclusive right and license to use the Intellectual Property of the petitioner detailed in schedule B to the agreement including identified patents, trademarks, drawings, technical information solely in the testing, packaging and sale of the product i.e., nitrile version of the FC2 as set forth in Schedule A in the territory ie., India or any other countries mutually added to the agreement.
10. It is submitted that, respondent by notice dated 2.9.2010 terminated both the agreements ie., agreements dated 23.8.2003 and 29.5.2008. After the termination of the two agreements, admittedly, no new agreements were executed and signed between the petitioner and the respondent, which thus means the aforesaid agreements ceased to be valid and inforce after termination by notice dated 2.9.2010. It is also submitted that, the petitioner and the respondent has accepted this fact in the subsequent meetings held between them. That apart it is contended that, as a manufacturer of natural latex products for the past 50 years and well versed with the technology to make any latex based products, respondent has developed and started manufacturing natural rubber latex female condom using its own know-how and technology. That apart it is stated, the design of the said product is based on Dr. Lesse Hessel's Patent No. 4,735,621 filed in 1987, which has now expired and is in public domain. The overall design of the product is generic in nature as in the case of the male product. The product is produced by a new improved process for manufacturing the female version of the product which comprises the tubular sheath and exterior bead and the retention device. The tubular sheath is manufactured by two stage dipping process and the exterior bead is formed by rolling the tubular sheath, itself. No adhesive is applied for rolling and beading the exterior bead. Therefore, according to the respondent, these facts would show that respondent's product is entirely different in material formulation and process. That apart it is stated that, the rubber latex female product manufactured and marketed by the respondent is not identical to the female product manufactured by the petitioner. Yet another contention advanced is that, the product manufactured by the respondent is made from natural rubber latex, whereas, the product manufactured by the petitioner is nitrile based version. Respondent's product is manufactured using a special formulation which provides desired modulus to the product and increases the stiffness of the exterior bead, and the same is free from any coagulant material and no adhesive is used in the exterior bead as in the case of petitioner's product FC2.
11. That apart it is submitted that, there is also considerable reduction in the protein level in the final product minimising allergy associated with the use of natural rubber latex. It is also stated that, the natural rubber latex female product was launched in the international market in the year 2015 and have been continuously and extensively manufacturing and marketing the said product ever since then. That part it is contended that, the respondent has conducted a Freedom to Operate Search before launching product and after ensuring that the product does not infringe any third party patents including that of the petitioner's product, FC2, adequate steps were taken to market and sell it. Further respondent has applied for patent for natural rubber latex female product in many countries and has been granted patent in African Regional Intellectual Property Organization countries ie., Kenya, Rwanda, Sudan, Tanzania, Uganda etc. etc., evident from Exts R1 and R1(b). Therefore, according to the respondent the grant of patents are indication of the uniqueness, differentiation of Natural Rubber Latex female product and non- infringement of patent held by any party including the petitioner. That part it is stated, respondent has also filed a patent in India under the title "An improved female condom and the process of manufacturing the same using Natural Rubber Latex", which is under examination stage. Therefore, according to the respondent, the contentions with respect to the breach of the Intellectual Property and confidentiality clause in the agreement executed with the petitioner are all incorrect and cannot be sustained for the purpose of considering the application under Section 9.
12. Therefore, according to the respondent, the contention raised by the petitioner that respondent used the confidential information as a spring board to jump into same field for respondent's unjust enrichment and to the detriment of petitioner are all incorrect. That part all the allegations and other issues with respect to the breach of the confidentiality provisions of the manufacturing agreement etc., are all denied by the petitioner. That part, a predominant contention is advanced to the effect that, petitioner had provided machinery for testing and packing of FC2 and not for manufacturing of FC2. Petitioner had only supplied components and materials for assembling, testing and packing of the product FC2. So also the statement that, the technical file were handed over to the respondent containing confidential and technical information, is denied, and it is submitted that, technical file contained only data/information for marketing of assembled product as well as information necessary, to obtain certification from the appropriate agencies. Other allegations and contentions with respect to violation of agreements are all denied by the respondent. Various certificates are produced to controvert the allegations made in the petition that the product manufactured by the respondent is much cheaper and an inferior version of the petitioner's product. Other contentions with respect to the use of petitioner's valuable commercial information including list of petitioner's clients in the international market are all denied. That apart it is submitted that, respondent is participating in the international tenders in accordance with the norms prescribed by such authorities. The resemblance of the product, identity and other aspects are all denied by the respondent. The contention with respect to the equipment used by the respondent copied by it on the basis of the equipment provided by the petitioner under the manufacturing agreement is also denied. The petitioner has produced Ext. R12 to belie the contention that the machineries supplied by the petitioner are used by the respondent, and that apart it is contended that, the machinery for manufacturing was secured by the petitioner through tender process. It is also stated that, the respondent is issued with a product registration certificate by Brazilian National Health Surveillance Agency on the basis of good manufacturing practice approved by the said organization, which enables the respondent to participate in the Brazilian tender for the product in the year, 2017. Therefore, it is contended that, if the respondent is restrained from manufacturing and selling the latex version of the female product it would adversely affect its business right and interest, which will cause irreparable injury, hardship and substantial loss to the respondent. It is also stated that, if the respondent is restrained by an order in participating in the tender it would result in huge loss to the respondent, which cannot be compensated in a later phase as international tender for female product are usually released within the time frame of three years.
13. Yet another contention advanced by the respondent is that, after termination of the agreement in the year, 2010 it has ceased to test and package the product FC2 and is not using the equipments and material supplied by the petitioner to the respondent under the manufacturing agreement. It is also stated, the respondent had duly informed this fact to the petitioner. Further Article 23 of the manufacturing agreement deals with right of the petitioner for dispossession of machinery and equipment and in view of this fact that, the relief prayed for by the petitioner as clause 'd" is unsustainable and the petitioner is not entitled to get the same.
14. An additional counter affidavit is filed and has produced various documents to substantiate that petitioner has received royalty from various other organizations abroad during the year 2011, and therefore, it is contended that the petitioner has no manner of claim over the same. Therefore, respondent seeks dismissal of the application.
15. During the pendency of the above application various documents are produced by the petitioner along with I.A. No. 2/2017 with respect to the purchase order and long term agreements entered into by the respondent with various international organizations.
16. A reply affidavit is filed by the petitioner refuting the allegations, claims and demands raised by the respondent. That apart it is stated that, the documents produced by the respondent would show that the royalties were received in the year 2012, which evinces the fact that the manufacturing agreement was not terminated. That apart the petitioner was providing material to the respondent even after the purported termination of the manufacturing agreement which clearly reflects that the manufacturing agreement was not terminated Additionally, the supply of the product in 2012, technical file, information and supply of sheaths by the petitioner in 2012-2013, contradicts the contention of the respondent that, the manufacturing agreement was terminated and a copy of the invoice dated 7.3.2012 is produced as Ext. P28. Other contentions are also raised refuting the contentions raised by the petitioner in the counter affidavit as well as in the additional counter affidavit.
17. Heard Sri. Suhail Dutt, senior advocate along with Adv. Sri. Sunil Sankar for the petitioner and Adv. Sri. E.K. Madhavan on behalf of the respondent.
18. The detailed facts discussion made above would make it clear that, the subject matter of the dispute revolves around Ext. P4 manufacturing agreement entered into by and between the parties, apart from other agreements entered into by and between the parties as a prelude to the manufacturing agreement. On a reading of Ext. P4 it opens with a word WHERE AS (a) the parties have entered into a Memorandum of Understanding dated 3rd March 2006 recording their intention to manufacture FC2 Nitrile version of Female condom in India in two phases. (b) the parties have subsequently held discussions regarding implementation of the 1st Phase mentioned in the MOU dated 3rd March 2006 i.e., setting up a facility for manufacture of FC2 Nitrile version in India. All other clauses recited to therein would show that, the agreement Ext. P4 was entered into by and between the parties for the purpose of manufacture of FC2 Nitrile version of the product in India. That apart, it was agreed by and between the parties that pending formulation and setting up of a joint venture company as mentioned in the MOU dated 3.3.2006, HLL has decided to set up a manufacturing facility in a plot at Cochin Special Economic Zone, which would be transferred to the JVC upon its establishment. That apart, the "product" is defined under Article 1.2 to mean a Nitrile version of the female condom referred to as FC2 as listed in schedule 'A'. Intellectual property is defined under Article 1.3 to mean any and all intellectual property owned by, licensed to or otherwise controlled by the petitioner or its Affiliates relating to the products or used or useful in, developed for use in or necessary to the conduct of FHCs business or the business of its affiliates in any part of the world relating to the Products including without limitation, patents, trademarks, patent applications, copyrights, drawings, designs etc. etc., and product specifications and as identified in Schedule B and includes know-how where relevant. Article 1.4 deals with "KNOW-HOW", shall mean the technical data and processes owned by the petitioner or its affiliates (including but not limited to blue prints, specifications, formulae, descriptions of processes, designs, computer software, specifications, drawings, sketches, photographs, documents, all other forms of recorded information and other tangible things relating to such data); relating to (i) the products, (ii) the design, manufacture and packaging of products, (iii) the machinery, equipment and processes used in the manufacture and packaging of the products and (iv) the use and packaging of the products. As per Article 2.1 the petitioner granted to the respondent during the term of the agreement an exclusive right and license to use the intellectual property of the petitioner identified in Schedule B, including identified patents, trademarks, drawings and know-how solely in connection with the manufacture, lubrication, packaging and sale of the product in the Territory, in accordance with the terms and conditions of the said agreement. Article 5.1 deals with the obligations of the respondent. As per Article 5.1.1 the respondent undertakes to use the intellectual property including the Patents, Trade Marks, Drawings Copyright and the Know-how without any unauthorized modifications solely to manufacture, lubrication and packaging of the products within the Territory. Territory is defined as per Article 1.5 to mean India and any other countries mutually added to the agreement. Article 5.1.2 imbibes an obligation on the respondent not to do or permit to be done anything which may be or become an abuse of the rights of the petitioner in the intellectual property and the Know-how. Article 5.1.3 creates an obligation on the respondent to inform the petitioner of any engineering developments, inventions or improvements generated by the respondent and provide the petitioner with any drawings, manuals, memorandum and any other materials necessary to effect the vesting of all right, title and interest in and to such engineering developments, inventions or improvements in the petitioner. Article 5.1.11 obligates the respondent not to sell the product or any component thereof outside the Territory or to any person or to any person or entity except as provided in this Agreement or consented to by the petitioner in writing.
19. Article 7 deals with supply of equipment. As per Article 7.1 petitioner shall at its own cost and at the request of the respondent assist and advise the respondent on the purchase, installation and the operation of any machinery and equipment that may be required to be purchased by HLL for the purpose of the manufacture, lubrication and packaging of the Product. Article 7.2 obligates the petitioner to provide the machinery/equipment required for the manufacture of FC2 Nitrile version of the female product, which are more fully mentioned in Schedule C to this agreement on loan basis and to assist in installation of the said machinery/equipment in the facility at Cochin Special Zone. Article 8 deals with supply of components and packaging materials, and accordingly, Article 8.1 and Article 8.2 enables the petitioner to supply the specified components and raw materials for the purpose of manufacturer. Article 8.3 obligates the petitioner to inform the respondent in case of change in composition of nitrile condom. Article 11.2 dealing with brands and packaging enables the respondent to sell the products authorized to be sold in India, which shall be marketed and sold under the brand name of the respondent alone. Article 14 deals with confidentiality, which read thus:-
ARTICLE 14
CONFIDENTIALITY
"14.1 All the intellectual Properties including Know-how and all other confidential information disclosed to HLL by FHC or any other person, firm or corporation designated by FHC pursuant to this agreement, both during and after the term of this agreement, shall, remain at all times the exclusive property of FHC or of the person, firm or corporation disclosing it and in receiving disclosure HLL shall not acquire any proprietary interest whatsoever therein.
14.2 HLL shall not allow anyone other than FHC or those authorized by FHC to have access to or use any Know-how or other confidential information at any time, shall make use thereof only during the term of any solely to carryout the purposes and intent of this agreement, and, upon the expiration or termination of this agreement however occurring shall surrender to FHC all Drawings, Plans, Blue prints, specifications, formulae, descriptions of process, designs, computer software, documents and other tangible things relating to Know-how and other confidential information. Upon FHC's request, any or all employees of HLL or any shareholder or affiliates of HLL may be required to sign a confidentiality agreement in form and substance satisfactory to FHC."
20. Article 21.1 deals with the term of the agreement which shall be for a period of 30 (Thirty)months from the execution of the agreement or until the establishment of the joint venture whichever is the earlier. It is stipulated thereunder that, the agreement will be automatically renewed for further periods of 12 (twelve) months each, till such time the agreement is terminated by either party by giving 6 months written notice of termination to the other to this effect or as provided in Article 21.2. As per clause (iv) of Article 21.2, upon 30 days notice by either party in the event of the parties not being able to reach an agreement on any issue where a provision of a mutual agreement is present in the agreement, to terminate the agreement. The apart, parties are at liberty to terminate the agreement in accordance with Clauses (i) to (iii) thereto. Article 23 deals with dispossession of machinery and equipment. Article 28 deals with the governing law and jurisdiction and the parties have agreed that the agreement shall be construed and interpreted in accordance with the laws of India and shall be subject to the courts of Thiruvananthapuram, State of Kerala, India. Article 30 deals with settlement of disputes; injunctive relief, which read thus:-
Article 30
SETTLEMENT OF DISPUTES; INJUNCTIVE RELIEF
30.1 Any disputes or controversy arising in connection with this agreement shall be first referred to the Chief Executives of the Parties and any disputes which cannot be so settlement by agreement between the parties shall be referred and finally settled by Arbitration in accordance with Rules of the International Chamber of Commerce. Unless otherwise agreed by the parties, the place of arbitration shall be Singapore. The Arbitration shall be conducted in English.
30.2 The decision and award resulting from arbitration shall be final and binding on the parties. Judgment upon an arbitration award may be rendered by any court of competent jurisdiction or application may be made to such court for a judicial acceptance of the award and an order enforcement. In so far as permissible under applicable law, the parties hereby waive all rights to object to any action for judgment or execution which may be brought before a court of competent jurisdiction on an arbitration award or on a judgment rendered thereon.
30.3 Each party hereto agrees that any violation or breach of the provisions of this agreement will result in irreparable injury to the other party, as the case may be for which a remedy at law would be inadequate and that in addition to any relief at law which may be available to such party shall have the right to obtain injunctive relief in connection with any breach."
21. Article 32 deals with severability; survival. Article 32.2 states that, notwithstanding any provision thereof to the contrary, the provisions relating to royalty, confidentiality, title to intellectual property, warranties, indemnity, sale of equipment to JV, Settlement of Dispute and severability and the obligations thereunder shall not conclude upon termination or expiration of the agreement and shall survive termination or expiration of the agreement and any winding up of the respondent.
22. So also the product is described under Schedule A, as " a Nitrile based version of FHC's (petitioner) tubular prophylactic known as FC2". The full specification is attached thereto as Annexure 1. Schedule B deals with copyrights in all FHC supplied written procedures, test methods, quality materials. Schedule C deals with list of machinery and equipment to be supplied and monthly rent payable by the respondent to the petitioner, which reads as follows:--
23. Annexure 1 of Ext. P4 deals with 'product specification'. Apart from all these aspects, various datas are provided by the petitioner of Nitrile version of FC2 and the latex version of FC2 to demonstrate that the product manufactured by the respondent i.e., latex version of FC2 is absolutely resembling the Nitrile version of FC2.
24. Based on the covenants contained under Ext. P4, the predominant arguments advanced by learned senior counsel for the petitioner is that, the respondent was never in the manufacturing field of female condom and so far as the technological know-how, technical and physical features, the manufacturing process, and the details with respect to the machineries for manufacturing are all provided by the petitioner. It is also submitted that, as per the terms and conditions of Ext. P4 manufacturing agreement the respondent was expected to protect the interest of the petitioner, especially, in terms of the confidentiality clause agreed by and between the parties. It is also contended that, even though the respondent was in the manufacturing of male latex product, the respondent never manufactured the female condom, and therefore, the idea of manufacturing such a product was provided by the petitioner and therefore, the respondent has adopted a spring board jump to capture the business in the manufacture of female product by using Latex. It is also contended that, various discussions and negotiations were made by and between the petitioner and the respondent in respect of manufacture of latex version of FC2. It is also contended that, even though it is alleged that the respondent has terminated the manufacturing agreement as per Ext. P15 dated 2.9.2010, the same did not constitute a termination of the agreement, but, by that notice the respondent expressed his intention to terminate the manufacturing agreement alone, and therefore, the contention advanced by the respondent that there is termination of the agreement in year 2010, cannot be sustained under law.
25. Per contra, learned counsel for the respondent submitted that, Ext. P4 agreement strictly confines to the manufacture of FC2 Nitrile version in India and it has got nothing to do with the respondent manufacturing latex version of female condom. It is also contended that, there is no patent or trademark for the petitioner as a sole player in the world market for manufacturing, marketing and selling the FC2, Nitrile version. It is also argued that, various manufacturers are available internationally, manufacturing the very same product. That apart it is contended that, petitioner has not produced any evidence before this Court, in order to establish that the product manufactured by the respondent using latex is resembling the product manufactured by the petitioner except a photograph as an attempt to establish that, there is glaring similarity by and between the products manufactured by both parties. It is also submitted that, the products manufactured by the petitioner as well as respondent are all internationally acclaimed products, which have got standard designs and measurements nationally and internationally. That apart it is contended that, apart from the covenants contained in Ext. P4, the schedules provided thereto deals with the nature of machineries as well as the products supplied by the petitioner. On a reading of Schedule A it is clear that, the machineries and equipments provided in Schedule C is nothing, but, equipments used for assembling and packaging of the products. Therefore according to learned counsel for the respondent, the respondent was engaged actually in assembling the products supplied by the petitioner and the technical know-how with respect to the manufacture of the said products were never furnished to the respondent. It is also contended that, the term manufacturing employed in Ext. P4 confines only to the nature of the manufacturing process carried out by the respondent by using the machineries contained under Schedule C. That apart it is contended that, since the respondent was also a player in the field of manufacturing of the products in question for the past more than 50 years, they are seasoned and they have got established technical know-how to manufacture latex version of the female condom. It is also submitted that, the standard specifications are accepted in the international market for these products and also submitted that, the technical know-how was secured by the petitioner from Dr. Lesse Hessel.
26. Apart from the factual circumstances put forth by learned senior counsel for the petitioner, learned senior counsel has relied on various judgments (1) Delhi High Court in John Richard Brady v. Chemical Process Equipment P. Ltd. (MANU/DE/0586/1987 : AIR 1987 Del. 372 and Anil Gupta and Anr. v. Kunal Gupta and Ors (MANU/DE/0790/2002 : ILR (2002) 1 Delhi 250) and the judgment of the Bombay High Court in Urmi Juvekar Chiang v. Global Broadcast News and Anr. (MANU/MH/0315/2007) ZEE TELEFILMS LTD. v. SUNDIAL COMMUNICATIONS PVT. LTD & ORS. [MANU/MH/0243/2003 : 2003 Vol. 105 (3) Bom.L.R.678] to canvass the confidentiality proposition put forth by the petitioner. The first among the decision cited (supra) John Richard Brady, dealt with a case in respect of permanent injunction to restrain the defendants from infringing copyright of the plaintiffs, from passing off defendants products as those of the plaintiffs for rendition of accounts etc., etc. True, after ascertaining the facts circumstances involved in the said case has held in paragraph 37 as follows:-
"in these circumstances no opinion can be finally expressed at this stage on the question of infringement of copyright claimed by the plaintiffs in drawings of Brady by the production of the machines in question by the defendants, but, the plaintiffs have made out a strong prima facie case of infringement of their copyright and of strict confidentiality under which specifications, drawings and other technical information about the FPU were supplied to the defendants, which the defendants will have to meet at the trial of the suit".
Therefore, it was held that the balance of convenience is clearly in favour of the plaintiffs in granting an injunction.
27. In Anil Gupta (supra) was also dealing with a media consultant conceiving an idea of a reality Television program, containing process of actual spouse selection registered under a copyright and disclosed to the defendants in confidentiality. Having regard to the facts and circumstances the court held as follows in paragraph 38:-
"The concept developed and evolved by the plaintiff is the result of the work done by the plaintiff upon material which may be available for the use of anybody but what makes it confidential is the fact that the plaintiff has used his brain and thus produced a result in the shape of a concept and if defendants are allowed to show their own reality show based on the concept originally conceived by the plaintiff, it will be allowing the defendant to use that concept and to reap the fruit of the labour of the plaintiff. In such kind of cases the defendant must be placed under special disability in the filed to competition to ensure that he does not get an unfair start."
28. In Urmi Juvekar Chiang referred to supra, the Bombay High Court was dealing with the ad interim relief claimed by the plaintiff, who was a reputed script writer having scripted various films and various Television serials. On the basis of breach of confidentiality by the defendants an infringement of copyright of the plaintiff occurred and held in paragraph 14 that "the essence of law on breach of confidentially is that whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a spring board for activities detrimental to the person who made the confidential communication, and spring board it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public". Having regard to the facts therein, it was held that, the plaintiff has made out more than seriously arguable case in relation to the ground of breach of confidentiality and would therefore be entitled for the ad interim relief.
29. The judgment in ZEE TELEFILMS LTD. is also in respect of original concept developed by plaintiffs which has a striking similarity to the serial made by the defendant. Therein also the confidentiality passed on by the plaintiffs to the defendant was violated, which was causing serious prejudice to the plaintiffs. There upon, after referring to the facts and circumstances it was found that, there is interference of unlawful exploitation of plaintiff's original concept in defendant's TV serial and is more consonant with the materials placed on record and all probabilities of the situation therein disclosed that the plaintiffs business prospects and their goodwill would seriously suffer if the confidential information of the case was allowed to be used against them in competition with them. Thereupon, it was held that, the plaintiffs were entitled to get ad interim relief for violating confidentiality.
30. Therefore, the discussion made above would significantly indicate that, the paramount contention based on the principles of laid down by the learned senior counsel for the petitioner is that as per Ext. P4 manufacturing agreement confidential informations were provided to the respondents which was grossly misused by the respondent to manufacture a product resembling FC2 manufactured by the petitioner. Therefore, on the sole ground of violation of confidentiality, petitioner is entitled to get an ad interim injunction as is sought for in the application restraining the respondent from manufacturing the latex version of FC2 and marketing and selling them within India and outside India and a further injunction restraining the respondent and their men and agents from using the confidential information or any part thereof for any purpose other than as provided under the manufacturing agreement.
31. On the other hand learned counsel for the respondent submitted that, Ext. P4 manufacturing agreement is confining to the agreement entered into by and between the parties for manufacture of FC2 nitrile version, and there is no agreement entered into by and between the parties with respect to manufacture of latex version of FC2. As I have pointed out earlier, during the course of the argument, learned counsel for the respective parties have taken me through various provisions of Ext. P4 manufacturing agreement and the schedule and annexures attached thereto. Learned counsel for the respondent has invited my attention to Schedule C of Ext. P4 to contend and canvass for the proposition that, the confidentiality supplied by the petitioner confines to the assembling and packaging of the products supplied by the petitioner. According to the petitioner, no manner of documents or informations were passed on to the respondent with respect to the confidentiality in respect of the manufacturing of nitrile version of FC2, and therefore, there was no occasion at all for the respondent to a manufacture similar product. That apart it is strenuously contended that, the respondent is also in the filed of manufacture of the products in question for the past 50 years, and therefore, it cannot be said that the respondent is an alien or stranger to the products in question.
32. Evaluating the facts situations and submissions made across the Bar, the issue remains to be considered is whether the petitioner is entitled to the relief sought for i.e., the injunction restraining respondent from manufacturing the latex version of FC2 and its consequential marketing within India and outside India. The summary of the facts discussed would show that the covenants contained under Ext. P4 agreement is nothing but, with respect to manufacture of nitrile version of FC2. In the earlier part of this judgment I have discussed with the important covenants of Ext. P4 agreement, whereby, one thing is clear that the agreement confined to the manufacture of nitrile version of FC2. The annexure as well schedule appended to Ext. P4 shows that, the manufacture referred to therein is only with respect to nitrile version of FC2.
33. Learned counsel for the petitioner however invited my attention to Annexure (1) attached to Ext. P4, which is quoted above and submitted that, the product specification is mentioned thereunder with respect to FC2 nitrile version, and Ext. P26 series photographs produced clearly demonstrates that FC2 latex version is absolutely resembling the product manufactured by the petitioner, FC2 nitrile version. Learned counsel has also invited my attention to Ext. P25, wherein the product specification of the respondent is recited. However, in my considered opinion these are all readymade products manufactured in accordance with standard specifications to cater the needs of the people within the country, and on the basis of international standard specification to cater the needs of the people globally. There is no case for the petitioner that these are products manufactured to carter the needs of each and every individual, but, it can only be manufactured by making standard specifications, nationally and universally. To site an example, a readymade shirt manufactured by a garment manufacturer is on the basis of certain standard specifications in accordance with the shoulder or neck measurement. True, it may not be fitting some persons exactly in accordance with shoulder measurement vis-à-vis the neck size. But, at the same time, it is convincingly clear that, the shirt is manufactured in accordance with the standard sizes nationally as well internationally. Therefore, merely by demonstrating certain physical measurements provided under Annexure 1 of Ext. P4, it cannot be said that there is infringement of the product manufactured by the petitioner. Therefore, in my considered opinion it cannot be said that, petitioner has made out a case to injunct the respondent from manufacturing the latex version of FC2 in the brand name 'FC2'. Moreover, so far as the consideration left with the court for the purpose of granting injunction is on the basis of prima facie case established and balance of convenience. Here is a case where, even though notice was issued, evident from Ext. P24 asking the petitioner to stop the manufacture and sale of natural rubber latex version of FC2, the petitioner has not taken any steps to resolve the disputes by and between the parties as is threatened in Ext. P24 notice. True, that will not prohibit the petitioner from approaching a court of law invoking Section 9 of the Arbitration Conciliation Act, because, even prior to the initiation of the dispute resolution mechanism a party is entitled to invoke Section 9 in order to meet any specific contingencies. However in the peculiar fact scenario vis-à-vis the nature of reliefs sought for, petitioner ought to have shown bonafides by proceeding against the respondent, especially due to the reason of delay ever since the issuance of Ext. P15 notice in the year 2010. That apart, respondent is also a stake holder in the manufacture of similar products, admittedly for the past several decades. Moreover, presently there is no proof before me at least to prima facie establish violation of confidentiality in respect of manufacture of latex version of FC2, using similar raw materials and machineries. On the contrary facts discussed show that, issues can be unravelled by a fact finding authority in a properly constituted proceedings. That part, I find force in the contention advanced by learned counsel for the respondent that, as per Ext. P15, a notice was issued by the respondent dated 2.9.2010 intending to terminate the manufacturing agreement dated 29.5.2008. Even though a contention is raised to the effect that there is no actual termination since the term employed therein is only intention to terminate, I cannot agree with such a contention advanced by learned senior counsel for the petitioner for the reason that, the business transactions by and between the parties came to a halt, even though Ext. P28 documents produced by the petitioner along with the reply affidavit allegedly shows certain invoices with respect to the supply of raw material in 2012. However, for the past more than 4 years, petitioner has kept quiet and the respondent was selling his product within India and outside also. Moreover, there is no convincing and significant evidence before me to contain the proposition put forth by the petitioner that the physical appearance as per the photographs produced, the rival products resemble similar. As I have stated earlier, these are all readymade products on the basis of national and international standards. Therefore, the said photographs produced can never be termed to be an established evidence in order to convince this Court even prima facie that the petitioner is entitled to get an injunction against respondent.
34. Taking into account the totality of the facts and circumstances of the case and the principles of law laid down by various courts discussed above regarding infringement of confidentiality, the facts remaining in this case are not at all helpful to the petitioner to secure the relief sought for, there being no prima facie case. Moreover, for the foregoing reason balance of convenience is also not in favour of the petitioner to secure an ad interim injunction as is sought for. However, I make it clear that, the findings made above are intended to arrive at a conclusion with respect to the contentions advanced by the parties and the same shall not be construed as any expression of opinion on merits of the matter or rights and interests of the rival parties. All the questions of facts and law are left open, leaving the liberty of the parties to agitate in any properly constituted legal proceedings.
Application fails, accordingly, it is dismissed.
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