Concept of Standard Essential Patents not unknown to Indian law; patent owners can seek injunctive relief: Delhi High Court

The Delhi High Court has held that the concept of Standard Essential Patents (SEPs) is not unknown to Indian law and such patent owners can seek injunctive relief if the infringer is an unwilling licensee [Intex Technologies (India) Ltd v. Telefonaktiebolaget LM Ericsson (PUBL)]..A Division Bench of Justices Manmohan and Saurabh Banerjee said that even though Standard Essential Patents are not spoken of in the Patents Act, 1970, the Delhi High Court has long recognized this concept, and has adjudicated claims for infringement, security and damages.“The Delhi High Court’s Rules Governing Patent Suits 2022 have formally recognized Standard Essential Patents and the different legal tests that are involved in their adjudication,” the order stated.It defined the SEP to mean “a patent claiming technology that is essential to an industry standard’s use” and said that the test of infringement of such a patent would have to be satisfied at the prima facie stage to avoid misleading blanket declarations..The Bench further said that injunction in such cases can be granted even if the infringement of one patent is established either prima facie or at the final stage.“This Court is of the view that if the patentee shows that even if one of the patents in a product has been infringed, then the implementer’s product cannot be sold and all the thousands of patents therein will be of no use to the implementer. Accordingly, if a case for infringement, even with regard to one patent, is made out, it is like a ‘silver bullet’. Consequently, to restrain an infringing device, a Standard Essential Patent holder does not have to sue based on each of the thousands of patents that it claims to own in the product; it can do so by showing that one, or a handful of representative patents are infringed.”.The Court was dealing with cross-appeals filed by Intex Technologies (India) Limited and Telefonaktiebolaget LM Ericsson against a single-judge’s order of March 2015.Intex challenged the single-judge’s order that had held that Ericsson’s eight suit patents were prima facie valid, essential and that Intex has prima facie infringed Ericsson’s patents.The single-judge had also held that Ericsson demonstrated prima facie compliance with its Fair, Reasonable and Non-Discriminatory (FRAND) commitment. Further, 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 showed its unwillingness to execute a FRAND licence..On the other hand, Ericsson sought modification of the order by which the single-judge directed Intex to pay 50% royalty at the interim stage and the balance 50% through bank guarantee. Ericsson demanded that Intex be directed to pay the entire royalty amount..The Court at the outset noted that technology is developing at a very fast pace,is getting diffused to the public at large and has given a big boost to both international trade as well as infringement.Highlighting the challenges related to enforcement of patent rights and court orders, the Bench said,"Indian Courts have been applying foreign judgments where necessary and have, on multiple occasions, relied on principles defined in foreign judgments while shaping jurisprudence on a subject...referring to foreign Court decisions is an effective and practical way of facilitating harmonization of basic principles of laws, especially when there is nothing contrary in the national laws.".After considering the case, the Division Bench held that a Standard Essential Patentee is not required to offer individual patent licences or country-specific licences and that global portfolio licences were capable of being FRAND commitments.“It may be wholly impractical for a Standard Essential Patent owner to seek or negotiate a licence of its patent rights country by country, just as it may be prohibitively expensive for it to seek to enforce those rights by litigating in each country in which they subsist.”.The Court further ruled that the four-fold test to be satisfied before directing an entity alleged to be infringing an SEP to make payment of royalty devised in Nokia Technologies OY v. Guangdong Oppo Mobile Telecommunications Corp Ltd & Ors is contrary to law.The Division Bench said that the single-judge had set an impossibly high bar for admission in a case of SEP FRAND infringement which is completely alien to the patent jurisdiction and does not apply even in normal patent suits.“Moreover, if the four-fold test stipulated in paragraph 77 of the Nokia Vs. Oppo (supra) is applied, then effectively there will be no interim order like a temporary injunction or conditional order of deposit in the Standard Essential Patent suits. Such a view, in the Court’s opinion, would be contrary to Section 48 of Patents Act, Code of Civil Procedure as well as Standard Essential Patent regime which is aimed at achieving a uniform standard in technologies. If the four-fold test is accepted, there will be no incentive to innovate and it will have a ‘Domino Effect’ as pointed out hereinabove.”.Finally, on the issue of the two appeals, the Court ruled that Ericsson’s claims of essentiality of its patents and infringement by Intex are admitted facts and that Intex was very well aware that it was infringing the patents.It added that Intex has failed to raise a credible challenge to the validity of the suit patents and, therefore, its appeal deserves to be dismissed.The Court thus admitted Ericsson’s appeal and directed Intex to pay the entire royalty amount to Ericsson within four weeks..Advocates J Sai Deepak, G Nataraj, Avinash K Sharma and R Abhishek appeared for Intex.Senior Advocates CS Vaidyanathan and Sandeep Sethi along with Advocates Saya Choudhary Kapur, Ashutosh Kumar, Vinod Chauhan, Vrinda Bagaria, Radhika Pareva, Vinayak Goel and Vikram Singh appeared for Ericsson. .[Read Judgment]