Sparks Fly in the Bajaj-TVS Spark Plug Controversy

Based on the following case study answer the question that follows
Sparks Fly in the Bajaj-TVS Spark Plug Controversy
On September 3, 2007, the verbal feud between India's two-wheeler manufacturing giants Bajaj
Auto Ltd. (Bajaj) and TVS Motor Company Ltd. (TVS) took a turn for the worse when TVS
accused Bajaj of making malicious allegation against it in an effort to tarnish its reputation.
TVS threatened to sue Bajaj for Rs 250 crore (US$ 61 million) if it did not withdraw its
allegations and express regret. The controversy had started with Bajaj accusing TVS of using its
patented twin spark technology. Bajaj contended that the CC-VTi technology (Controlled
Combustion Variable Intelligent) used in TVS new 125 cc motorbike 'Flame' infringed on its
digital twin spark ignition (DTSi) patent. Most of the two-wheelers of Bajaj including the high
volume Pulsar, Discover and Avenger were largely based on the DTSi platform.
Bajaj had filed a final claim for patent of its DTSi technology on July 3, 2003, describing it as
"An improved internal combustion engine for efficient burning of lean air fuel mixture used in
engines working in four stroke principle, characterized in that said IC Engine.
On October 30, 2003 Bajaj filed application for approval of the patent in various countries.
However, Bajaj amended its final claim on November 5, 2004, describing its patent as "An
improved internal combustion engine for efficient burning of lean air fuel mixture used in
engines working in four stroke principles, having two valves, characterized in that said IC
Engine comprising of ..."
Bajaj was finally granted the DTSi patent for the Indian market on July 7, 2005. TVS contended
that its CC-VTi technology did not infringe on Bajaj's patent. Moreover, it argued that the patent
claimed by Bajaj was not for 'twin spark plug but for two spark plugs in a two-valve internal
combustion engine with a detachable fixed sleeve, whereas TVS's internal combustion engine
had three valves. TVS further amplified its argument saying that its technology included its inhouse developed technology 'VTi'and the Austria-based global engine research institute AVL's
patented '3 valve engine technology.
While Bajaj was busy gearing up for the September 9 launch of its new 125 cc motorbike
'Exceed', on August 24, 2007 TVS filed a revocation petition in the Intellectual Property
Appellate Board (IPAB) at the Chennai Patent Office seeking the cancellation of the patent
granted to Bajaj.

TVS contended that the twin spark technology was a known 'prior art.The company claimed that
it had sent an advance copy of the patent revocation petition to Bajaj but made it public only
after Bajaj's allegation of patent infringement against it.
According to TVS, DTSi was a commonly used engine technology and shouldn't have exclusive
rights. On September 5, 2007, the patent attorney of TVS further stated that the technology was
already patented in the US by Honda Motor Company, and as such, the patent was wrongly
awarded to Bajaj. Bajaj seemed to be unperturbed by TVS's threat of libel suit.It contended that it
had a strong case against TVS, and was preparing its legal defense on three counts
"using the same technology for the same purpose (on a bike engine), using it for the same engine
size and with the same construction."3 It also said that, the very fact that TVS had appealed for
revocation of the DTSi patent implied that TVS was aware that its technology infringed on
Bajaj's patent.
Bajaj further claimed that it would aggressively protect its IPR as the DTSi technology was
central to its strategy for the future. Analysts felt that the new technology was important for both
the companies as the 125 cc motorbikes were expected to take a major share of the estimated 7.8
million units market for two-wheelers in India.
Q 1 Technological changes had created a battle between two companies. TVS threat to sue Bajaj
for Rs 250 crore (US$ 61 million) if it did not withdraw its allegations and express regret. Is
the allegation imposed was right and what was the decision taken on this issue?