Bajaj Auto-TVS patent tussle: Who will emerge winner?

RELATED NEWS Patent row: Bajaj-TVS spat may end up in court Bajaj Auto to defend IPR violation: Rahul Bajaj 'In the mind of the consumer, Bajaj will stay ahead' Bajaj calm ahead of Exceed rollout Will Enfield add fuel to Bajaj-TVS patent row fire? ALSO READ See latest News about Bajaj Holdings See previous management interviews See what other Experts & Brokerages are saying about Bajaj Holdings Bajaj Holdings BSE | NSE 25/05/12 Are Mutual Funds betting on Bajaj Holdings? Other Stocks in this news TVS Motor Company |

It's been one-week since the Bajaj Auto - TVS Motor patent issue first came into the limelight. At the heart of the matter lie a booming and untapped 125 cc market and a technology, which can change the fortunes of these companies.

 

The 125 cc motorcycle segment is all set to become the largest category in the 7.8-million-unit domestic two-wheeler market. This segment accounts for 55% of all bikes sold in India.

 

Bajaj Auto was the first to offer twin spark plug technology in two-wheeler engines in India, which they have branded as DTSi , or Digital Twin spark-ignition, technology. It was granted the patent for the Indian market in July 2005. This is a major selling point for its product. It started with the Pulsar then went to Discover and has also gone into its first new age scooter called the Crystal. Hence, the company wants to protect that exclusivity that it has in the market place, which again is a major selling point for its products.

 

It plans to make the 125 cc segment its entry level as it is facing a dwindling 100 cc segment. It is betting big on its soon to be launched 125 cc Exceed based on DTSi technology and so is TVS with its 125 cc Flame. So, it is no wonder then that neither company is willing to take this lying down.

 

The stakes are also high for TVS because according to some experts, for TVS, "it is a major come back in the two-wheeler market", and they have unveiled four products and the fresh offensive will be led by the Flame 125 cc, which is the bike in question with that twin spark plug technology. "This product is coming in a segment where we did not have a bike for the time being. Hence, we are putting up a good 125 cc bike in that particular segment and we will have about 35,000-40,000 numbers coming up in the next three-six months' time for this particular bike," said H S Goindi , Senior Vice President, TVS Motors.

 

On August 1, Bajaj Auto fired the first salvo by accusing TVS of infringing on its technology. The company is preparing its legal defense on three counts: using the same technology on a bike engine, using it for the same engine size and with the same construction. TVS says the Flame is based on its controlled combustion variable timing intelligent, or CCVTi, and does not infringe Bajaj's patent. It is asking for the patent to be revoked. The very fact that TVS is asking for a patent revocation in itself acknowledges that they know that this patent is valid and does exist, Bajaj Auto claims.

 

But TVS has a version of its own. It claims that it had filed a revocation petition in the week starting August 20. And, this matter was made public after Bajaj Auto raised the issue. According to a company release, the technology being used is a new offering called Flame, which is a combination of its in-house R&D effort VTi and AVL's patented three-valve engine technology. This is not similar to the patent that Bajaj is claiming.

 

What makes this case stronger for Bajaj here is the fact that Sri Lankan High Court had upheld Bajaj's DTSi patent, when a Chinese manufacturer Taian Chiran Machinery and a Sri Lankan distributor together put out their version of Pulsar on the same technology front. They are confident of winning if at all this whole battle swings out.

 

Despite Bajaj Auto's claim that it is readying its legal salvo against TVS Motors, they have given no timeline as to when will they go to the court? They are waiting for a response from TVS on how they will use the technology on the bike and what will be the final product. There are hints that both parties may go in for an agreement.

 

But can this dispute be settled out of the courts? May be? Rajiv Bajaj , MD, Bajaj Auto, has categorically stated that he would like the matter not to reach the courts. "We have no overwhelming desire or fondness for the courts, all we want to do is to protect our intellectual property," he said.

 

But Bajaj Auto woes don't end with TVS Motor alone. The latest to join this bandwagon is none other than the oldest bike maker in India, Royal Enfield . This 350 cc engine has already been developed and readied for the Thunderbird, which will be out over the next 8-weeks, that's according to a company official.

 

Royal Enfield CEO R L Ravichandran confirmed this move. "Even though it is a twin spark technology engine, as far as the architecture of the engine is concerned it's a totally different from any existing engine of similar technology in the market," he added.

 

The engine's highlight is the integrated gearbox. Honda also has twin spark plug engines abroad. So far, Royal Enfield is the only motorcycle, which has an engine and gearbox as two separate units. This will be the first time that Royal Enfield will have an engine, which has an integrated gearbox.

 

If Royal Enfield too for some reason infringes upon Bajaj's technology, any action would only be taken after the launch of the product, which will be in the next 6-8 weeks.