Telefonaktiebolaget LM Ericsson v Intex Technologies (India) Ltd (2015)

Summary

“The plaintiff has filed the present suit for permanent injunction restraining infringement of rights in eight patents registered in India alongwith damages/rendition of accounts and delivery up etc.” (para 1) “The suit patents relate to three technologies in the field of telecommunications pertaining inter alia to 2G and 3G devices (mobile handsets, tablets etc)” (para 4). “It was the plaintiff who in view of its FRAND” (“fair reasonable and non-discriminatory terms”) “commitment approached the defendant about its portfolio of Standard Essential Patents and offered a FRAND license in December, 2008.” (para 136) The defendant “initiated proceedings before the IPAB” (“Intellectual Property Appellate Board”) “and CCI” (“Competition Commission of India”) “against plaintiff during the months of August and September 2013, i.e., while the licensing negotiation were still going on between the parties.” (para 139) “Alongwith the plaint the plaintiff has filed the interim application being I.A. No.6735/2014 under Order XXXIX Rule 1 and 2 read with Section 151 CPC.” (para 2)

The Court held that “all claims of 8 subject matter of suit patents cannot be examined minutely or be interpreted in microscopically manner at the interim stage in a suit for infringement of patent” and that “prima facie the suit patents appear to be valid and Court does not find any plausible case of a credible defence raised by the defendant.” (para 127) “The suit patents are ‘Standard Essential Patents’ even as per the admissions of the defendant who had been corresponding with the plaintiff for many years.” (para 146) It found that “the defendant has prima facie acted in bad faith during the negotiations with plaintiff” (para 148) and that “the argument that defendant to pay the royalty on the chipset value cannot be accepted” (para 158). “The aforesaid same royalty amount is fixed in the present matter also” as in “Suit No.442/2013” (para 161), and “the finding arrived by this Court are tentative in nature and shall have no bearing when the main suit would be decided finally after the trial.” (para 165)

What the court decided

1. Disclosure under section 8. “The purpose and object of Section 8 is that there should be full and true disclosure and that the Indian Patent Office should be fully assisted in the examination process by the proceedings in other Patent Offices. But, it does not mean that the claims granted in every country have to be exactly the same” ... “So long as Indian Patent Office informed of all the major jurisdictions in which patents have been granted and substantial details are placed on record, the obligation of complying with Section 8 stands satisfied unless the Controller of Patents seeks some more detail(s)” ... “The said Section should not be interpreted in the manner that every shred of paper filed in every foreign country has to be filed in the Indian Patent Office.” (para 103) “Thus, even it is insufficient for defendant to contend that Section 8 has been violated without indicating the effect of alleged non-compliance or without showing lack of bonafide on part of plaintiff.” (para 104) “The obligation of Section 8 cannot be so stressed in an action for infringement of patent is concerned” (para 105), and “prima facie, this Court is not inclined to refuse the injunction on this sole ground” (paras 103–106)
2. Computer programs per se. “Thus, it is appears to me prima facie that any invention which has a technical contribution or has a technical effect and is not merely a computer program per se as alleged by the defendant and the same is patentable.” “At this interim stage, this court is not impress with the argument of the defendant that the injunction be refused on this ground.” (para 120)
3. Validity at the interim stage. “The issue of validity of patent cannot be finally determined at this stage in view of pending revocation petitions before the Tribunal. At present, only the prima facie view of the matter is to be examined as to whether grounds taken in the revocation petition are tenable or not.” “After having gone through the objections raised by the defendant and reply given by the plaintiff, prima facie the suit patents appear to be valid and Court does not find any plausible case of a credible defence raised by the defendant.” (para 127)
4. Admissions in the competition complaint. Of the defendant’s complaint before the CCI (“Competition Commission of India”), the Court held: “Before the CCI, defendant’s complaint is based on the premise that plaintiff is the owner of an essential patents” ... “Before this Court in the present suit, it is alleged by defendant that the suit patents are invalid and are not essential in nature” (para 141). “Even otherwise, filing of complaint before CCI on the grounds of dominance position of the plaintiff amounting to admission that the plaintiff’s suit patents are essential and valid, otherwise, there was no occasion to file the complaint.” (paras 141–142)
5. Admissions in other proceedings. “It is a well settled principle of law that an admission made by a party in a pleading, even in a different proceeding, can be used as evidence against such party in another proceeding.” (para 143) “It is equally well-settled that the party cannot be allowed to approbate or reprobate at the same time so as to take one position, when the matter is going to his advantage and another when it is operating to his detriment” (para 144). Applying Dwijendra Narain Roy vs. Joges Chandra De, AIR 1924 Cal 600, the Court held: “The plea is thus barred by way of principle of approbate or reprobate which is a facet of estoppels” (paras 143–145)
6. Proof of essentiality and infringement. “Apart from the various admissions made by defendant, the plaintiff has also placed on record sufficient material in order to establish infringement, proof of essentiality of the suit patents in the form of claim chart mapping supported by an Expert Affidavit.” “On the other hand no technical/scientific material or expert affidavit has been filed on behalf of defendant to show even a prima facie case of invalidity of the Suit Patents or non-infringement of the suit patents.” (para 135) “The plaintiff in order to establish infringement, has filed an affidavit of an expert, Mr. Vijay Ghate. As a result, the plaintiff has discharged its onus.” “In the absence of even an iota of proof to the contrary, plaintiff’s case of infringement is made out.” (paras 135, 154)
7. Prima facie valid, essential and infringed. “In view of explanation given by plaintiff coupled with the conduct of the defendant for the last five years, an inference can easily be drawn in favour of the plaintiff that the suit patents are prima facie valid and there is no credible defence raised by the defendant who is guilty of infringement of patents.” (para 146) “Unless the suit patents are declared as invalid in revocation petitions filed by the defendant, the same cannot be allowed to be infringed by the defendant who is also unwilling to execute a FRAND” (“fair reasonable and non-discriminatory terms”) “licence.” (paras 146–147)
8. The unwilling licensee. “The defendant despite of many meetings and negotiation for the purpose of execution of a FRAND license, the defendant was evidently avoiding the same and became unwilling licensee as per its overall conduct.” (para 136) “The said conduct of the defendant would show that there was no bonafide intention on part of defendant.” (para 140) “For the aforesaid reasons, the Court is of the considered opinion that the defendant has prima facie acted in bad faith during the negotiations with plaintiff, it has even approached various fora and has made contrary statements in order to get monetary benefit.” (paras 136, 140, 148)
9. Credible defence and injunction. Agreeing with “F. Hoffmann-La Roche (supra) wherein the Division Bench of this Court has observed that the court has to see the tenability and the credible nature of defence while deciding the grant or non-grant of injunction”, the Court held: “But the facts in the present case are different.” (para 150) “And in case, the case of infringement is made and there is no valid defence, normally in an action for infringement of patent, an injunction is not to be refused.” (para 152) “The statutory and monopoly rights cannot be reduced to a nullity till the term of validity of the suit patents.” (paras 150, 152–153)
10. The royalty base. “In view of the above, the argument that defendant to pay the royalty on the chipset value cannot be accepted in view of plaintiff’s practice of charging Royalty on the device price is Non-Discriminatory” (para 158)
11. Balance of convenience and irreparable loss. “The balance of convenience lies in favour of the plaintiff and against the defendant. As regard irreparable loss and injury is concerned, in case the FRAND agreement is not signed by the defendant or royalty is not paid, it would have impact of other 100 licensors who are well known companies in the world who are paying the royalty.” (para 159)
12. The interim arrangement. “The facts in the present case are similar so as the defence, rather the case of the plaintiff is on better footing in view of admissions made by the defendant before various authorities.” “The aforesaid same royalty amount is fixed in the present matter also, but the same be paid in the following manner” ... “That 50% amount of royalty in the same manner as per details mentioned in Suit No.442/2013 from the date of filing of suit till 1st March, 2015 shall be paid to the plaintiff directly by way of bank draft within four weeks from today. For the remaining 50% amount, the defendant shall furnish the bank guarantee” (para 161). Failing an affidavit of compliance, “it would be presumed that they are not interested to use the technology of suit patents and to pay the royalty amount fixed by the Court. Under these circumstances, the interim orders shall operate against the defendant” (paras 161–162)
13. Procedure. Findings tentative. “It is clarified that the finding arrived by this Court are tentative in nature and shall have no bearing when the main suit would be decided finally after the trial.” (para 165)

Subsequent treatment

• Appealed — Intex’s appeal against this order was dismissed by the Division Bench of the Delhi High Court in Intex Technologies (India) Ltd. v. TLM Ericsson, 2023 SCC OnLine Del 1845 (29 March 2023), which directed Intex to pay the entire royalty to Ericsson within four weeks.
• Followed — In Telefonaktiebolaget LM Ericsson v Lava International (2024) the Delhi High Court recorded that in this case “a Coordinate Bench of this Court held that the chipset basis for royalty calculation cannot be accepted and emphasised that the practise of royalty calculation on the end-user device is non-discriminatory”, a judgment “also upheld by the Division Bench of this Court in Intex v. Ericsson (supra)” (para 699).