Section 12A Mediation Not Mandatory in Ongoing IP Infringement: SC

Novenco Building & Industry A/S Vs Xero Energy Engineering Solutions Pvt. Ltd. & Anr (Supreme Court of India)

Urgency Lies in Continuing Wrong, Not in Passage of Time – Section 12A Mediation Not Mandatory in Ongoing IP Infringement: SC

Issue

Interpretation of the phrase “contemplates any urgent interim relief” u/s 12A of the Commercial Courts Act, 2015, particularly in the context of intellectual property infringement suits.

Facts in Brief

• The appellant, a Danish company, manufactures patented industrial fans under the brand Novenco ZerAx.
• A dealership agreement (01.09.2017) was entered with respondent Xero Energy, which later incorporated Aeronaut Fans to sell identical fans with similar design and name.
• After discovering the infringement in July 2022, the appellant issued cease-and-desist notices and terminated the dealership in October 2022.
• Following inspection and expert confirmation of infringement in December 2023–February 2024, Novenco filed a commercial suit in June 2024 seeking injunction & damages, along with a plea for exemption from pre-institution mediation under Section 12A.
• The Single Judge rejected the plaint for non-compliance with Section 12A; the Division Bench affirmed, holding that the delay of six months negated urgency.

Supreme Court’s Analysis

Object of Section 12A:

• Mandates pre-institution mediation for all commercial suits unless urgent interim relief is contemplated.
• Aimed at promoting early settlement and reducing court congestion.

Earlier precedents examined:

• Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd. (2022) 10 SCC 1 – Section 12A is mandatory.
• Yamini Manohar v. T.K.D. Keerthi (2024) 5 SCC 815 – Urgency must be genuine & apparent from plaint and documents.
• Dhanbad Fuels Pvt. Ltd. v. UOI (2025 SCC OnLine SC 1129) – Test is from the plaintiff’s standpoint, not the eventual success of relief.

Legal tests summarised:

• Non-compliance with Section 12A renders a plaint defective unless urgency is clearly demonstrated.
• Courts must assess immediacy of peril, irreparable harm, risk of loss, or perishable subject-matter.
• A sham or pro-forma injunction plea cannot bypass mediation.
• Urgency should be evaluated holistically from plaintiff’s perspective.

Application to Present Case:

• The infringement was continuing—each act of manufacture or sale created a fresh cause of action.
• Delay in filing suit does not defeat urgency when the wrong continues daily.
• The infringement caused recurring injury to goodwill & reputation; thus urgency was inherent.
• Insisting on mediation in such cases would shield infringers and defeat the remedial purpose of IP protection.
• The High Court erred by assessing the merits instead of the plaintiff’s perspective of urgency.

Held

• Continuing infringement of intellectual property inherently constitutes urgency.
• Delay alone cannot negate urgency when the infringement persists.
• Public interest in preventing deception & consumer confusion adds weight to urgency.
• The orders of the Single Judge (28.08.2024) and Division Bench (13.11.2024) are set aside.
• The Commercial Suit No.13/2024 is restored to the High Court for adjudication on merits.

Key Takeaways

• Section 12A’s mediation mandate does not apply where the plaint genuinely seeks urgent interim protection from a continuing wrong.
• Courts must look beyond the time gap and assess urgency based on ongoing injury & public interest.
• This decision reinforces that intellectual property infringement actions often inherently qualify as urgent under Section 12A.

In essence: