Delhi High Court Directs to Auction “Fortis” Trademark in the Daiichi-Ranbaxy Dispute

Delhi High Court Directs to Auction “Fortis” Trademark in the Daiichi-Ranbaxy Dispute

This development in the Daiichi-Ranbaxy saga highlights an evolving approach toward leveraging intellectual property (IP) for debt recovery in India. Here’s a quick breakdown:

1. Background of the Case:
   • The Daiichi-Ranbaxy dispute stems from Daiichi Sankyo’s purchase of Ranbaxy shares in 2008 from the Singh Brothers, who allegedly concealed ongoing investigations by the US FDA and DOJ.
   • An arbitral tribunal in 2016 awarded Daiichi INR 3500 crore (later increasing to INR 4900 crore) due to fraudulent misrepresentation.
2. Delhi High Court’s Decision:
   • The court ordered the auctioning of the “Fortis” trademark—an asset tied to the Singh Brothers—to recover part of the dues.
   • Estimated value: INR 191.5 crore.
   • Denied pre-auction valuation, favoring auction-based determination of value but allowed the judgment debtor to conduct their valuation.
3. Significance of the Ruling:
   • Precedent-setting: Demonstrates how IP assets like trademarks can be monetized for debt recovery.
   • Shift in judicial approach: Moves away from conservative stances, such as the Supreme Court’s 2018 Canara Bank decision, which hesitated to treat IP as a realizable asset for debt enforcement.
   • Encourages broader recognition of IP’s financial value in insolvency and debt cases.
4. Further Reading:
   • Works by Prof. Basheer, Prashant, and Katherine Eban (author of Bottle of Lies) provide insights into the case and related issues.
   • Comparisons with other cases like Canara Bank add depth to the discussion.

This case highlights the increasing importance of IP valuation in legal and financial contexts, reflecting a more progressive approach in Indian jurisprudence. Previously, the auction of the Fortis trademark faced obstacles due to objections from Fortis Hospitals Ltd. However, during these proceedings, counsel for Fortis Hospitals Ltd. clarified that there is no current objection to the auction and requested the Court to proceed with the decree-holder’s request without being hindered by past objections under Order XXI Rule 58 or any other grounds. This statement was duly recorded. Additionally, the judgment debtors failed to establish any legal requirement for conducting a detailed valuation exercise, which would only delay the degree-holder’s realization of the dues. Since the asset sale—specifically, the Fortis trademark—will be conducted via public auction, the process inherently ensures the discovery of an optimal price.

Reference:

Judgment