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IN THE HIGH COURT OF DELHI AT NEW DELHI
Manmohan, Saurabh Banerjee, JJ.
Intex Technologies (india) Ltd. – Appellant
Versus
Telefonaktiebolaget L M Ericsson (Publ) – Respondent
FAO(OS) (COMM) 296 of 2018, CM APPL. 5557 of 2015 & 46196 of 2019 & FAO(OS) (COMM) 297 of 2018
Decided On : 29-03-2023
Standard Essential Patents (SEPs) are patents that claim technology that is essential to an industry standard's use. The proprietor of an SEP which considers that that SEP is the subject of an infringement cannot, without infringing Article 102 TFEU, bring an action for a prohibitory injunction or for the recall of products against the alleged infringer without notice or prior consultation with the alleged infringer.
Fact of the Case:
Telefonaktiebolaget LM Ericsson (PUBL) (Ericsson) filed a suit for infringement of eight of its Standard Essential Patents (SEPs) against Intex Technologies (India) Ltd. (Intex). Ericsson moved an application under Order XXXIX Rules 1 & 2 CPC seeking a direction to Intex to pay royalty at the interim stage. The learned Single Judge, vide impugned order dated 13th March, 2015, held that Ericsson's eight suit patents were prima facie valid, essential and that Intex has prima facie infringed Ericsson's patents. Learned Single Judge further held that Ericsson demonstrated prima facie compliance with its Fair, Reasonable and Non-Discriminatory (FRAND) commitment and Intex's act of prolonging pre-suit negotiations and thereafter initiating proceedings against Ericsson before the Competition Commission of India (CCI) and Intellectual Property Appellate Board (IPAB) in the midst of licensing negotiations prima facie showed its unwillingness to execute a FRAND licence. Learned Single Judge also held that chipset basis for calculation of royalty cannot be accepted and the practice of royalty calculation on the end-device price is non-discriminatory. Ericsson was directed to pay 50% royalty at the interim stage and balance 50% by way of a bank guarantee.
Finding of the Court:
The Court held that the proprietor of an SEP which considers that that SEP is the subject of an infringement cannot, without infringing Article 102 TFEU, bring an action for a prohibitory injunction or for the recall of products against the alleged infringer without notice or prior consultation with the alleged infringer. Prior to such proceedings, it is thus for the proprietor of the SEP in question, first, to alert the alleged infringer of the infringement complained about by designating that SEP and specifying the way in which it has been infringed. Secondly, after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, it is for the proprietor of the SEP to present to that alleged infringer a specific, written offer for a licence on FRAND terms, in accordance with the undertaking given to the standardisation body, specifying, in particular, the amount of the royalty and the way in which that royalty is to be calculated. As the Advocate General has observed in point 86 of his Opinion, where the proprietor of an SEP has given an undertaking to the standardisation body to grant licences on FRAND terms, it can be expected that it will make such an offer. Furthermore, in the absence of a public standard licensing agreement, and where licensing agreements already concluded with other competitors are not made public, the proprietor of the SEP is better placed to check whether its offer complies with the condition of non-discrimination than is the alleged infringer. By contrast, it is for the alleged infringer diligently to respond to that offer, in accordance with recognised commercial practices in the field and in good faith, a point which must be established on the basis of objective factors and which implies, in particular, that there are no delaying tactics.
Issues: Whether a Standard Essential Patent owner, who had made a FRAND commitment, was required to offer individual single-patent FRAND licences (i.e. licences limited to a particular patent in a particular territory), or whether he could comply with his FRAND obligations by offering a portfolio/ cluster licence.
Ratio Decidendi: The Court held that a global portfolio licence between a Standard Essential Patent owner and an implementer may be FRAND. Whether it is or not, in any given case, will depend on all the relevant circumstances. The Court also held that the approach taken by the lower courts in that case was not out of step with the approach of the courts in most significant jurisdictions.
Final Decision: The appeal of Intex being FAO(OS)(COMM) 296/2018 is dismissed while the appeal filed by Ericsson being FAO(OS)(COMM) 297/2018 is allowed and Intex is directed to pay the entire royalty amount to Ericsson within four weeks. The interim orders passed by this Court stand vacated. However, there shall no order as to costs.
JUDGMENT
TABLE OF CONTENTS
Para Nos.
THE CROSS-APPEALS
2-4
ARGUMENTS ON BEHALF OF INTEX
5-12
ARGUMENTS ON BEHALF OF ERICSSON
13-31
REJOINDER ARGUMENTS ON BEHALF OF INTEX
32-33
REJOINDER ARGUMENTS ON BEHALF OF ERICSSON
34
COURT'S REASONING
35-151
Impact of rapid developments in technology on Intellectual Property laws
35-38
Categories of Standards and their importance
39-59
What is a Standard Essential Patent and what are the obligations of holders of such patent
60-62
FRAND imposes obligations on both the Standard Essential Patent holders and implementers
63-73
Concept of Standard Essential Patents is not unknown to Indian Law
74-75
Standard Essential Patent owners can seek injunctive relief if an infringer/implementer is an unwilling licensee
76-91
What is the test of infringement in a Standard Essential Patent matter?
92-98
Injunction can be granted even if infringement of one patent is prima facie established
99-104
Whether a Standard Essential Patentee can offer a portfolio licence including a licence involving disputed or potentially disputed foreign Patents
105-111
The four-fold test in Nokia Vs. Oppo (supra) is contrary to law
112-117
Ericsson's claims of essentiality of its patents and infringement by Intex are admitted facts
118-128
Just because a revocation petition had been filed by Intex, there is no presumption that Ericsson's patents are prima facie invalid
129-138
Challenge under Sections 3 and 8 of the Act are not made out
139-148
Intex has failed to satisfy the principle of law laid down in Wander Ltd. & Anr. v. Antox India Pvt. Ltd., but Ericsson satisfies the said test
149-150
RELIEF
151
JUDGMENT
MANMOHAN, J.:
1. Rapid developments in technology have posed unprecedented challenges to intellectual property laws. The case at hand illustrates the universally acknowledged truism that `law always lags behind technology'. Sans a Uniform International Law, Courts all over the world have been applying national laws, national policies as well as international standards and foreign judgments (to the extent that they are not contrary to the national laws and are suited to national realities) to achieve harmonisation of basic principles of law. In the present judgment, the Court endeavours to do the same.
THE CROSS-APPEALS
2. Present cross-appeals have been filed challenging the judgment and order dated 13th March, 2015, hereinafter referred to as the `impugned order', passed by the learned Single Judge in CS(OS) No.1045/2014.
3. Intex Technologies (India) Ltd. (in short `Intex') has filed FAO(OS)(COMM) No.296/2018 challenging the impugned order passed in I.A.No. 6735/2014 [an application filed by Telefonaktiebolaget LM Ericsson (PUBL) (in short `Ericsson') under Order XXXIX Rules 1 & 2, CPC] in CS(OS) No.1045/2014 whereby the learned Single Judge has held that Ericsson's eight suit patents were prima facie valid, essential and that Intex has prima facie infringed Ericsson's patents. Learned Single Judge has further held that Ericsson demonstrated prima facie compliance with its Fair, Reasonable and Non-Discriminatory (in short `FRAND') commitment and Intex's act of prolonging pre-suit negotiations and thereafter initiating proceedings against Ericsson before the Competition Commission of India (in short `CCI') and Intellectual Property Appellate Board (in short `IPAB') in the midst of licensing negotiations prima facie showed its unwillingness to execute a FRAND licence. Learned Single Judge has also held that chipset basis for calculation of royalty cannot be accepted and the practice of royalty calculation on the end-device price is non-discriminatory.
4. Ericsson has filed FAO(OS)(COMM) No.297/2018 seeking modification of the impugned order dated 13th March, 2015 and subsequent modification order dated 26th March, 2015 passed in the said suit whereby the learned Single Judge has directed Intex to pay 50% royalty at the interim stage and balance 50% by way of a bank guarantee. Ericsson prays that Intex be directed to pay the entire royalty amount.
ARGUMENTS ON
Only the registered owner of a patent can initiate infringement proceedings; the burden of proof lies on the plaintiff to establish infringement, which they failed to do.
A clear and unequivocal admission of liability is required for interim deposits under Order XXXIX Rule 10, which was not established in this case.
Interrogatories under Order XI of CPC can expedite trials, emphasizing that relevance and necessity for dispute resolution are judicially analyzed to ensure fair adjudication without roving inquiries....
The court emphasized that parties may only request documents directly relevant to their case, while discovery cannot be based merely on allegations of relevance without supporting evidence.
The central legal point established in the judgment is the significance of the settlement agreement in resolving patent infringement disputes and the determination of a Global FRAND rate.
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