Telefonaktiebolaget LM Ericsson v Lava International (2024)

Summary

“SEPs” (“Standard Essential Patents”) “are patents that are essential to a standard in a particular industry. The owners of SEPs are required to license these patents on FRAND” (“fair, reasonable and non-discriminatory”) “terms on the basis of their contractual obligations to the SSOs” (“Standard Setting Organizations”) (para 634). Ericsson “asserted its rights in respect of the aforesaid patents and its portfolio of SEPs for the first time in its email dated 1st November, 2011.” (para 818) “Ericsson did not press the aforesaid issue in view of the interim orders passed in the suits and the fact that the term of the suit patents expired during the pendency of the present suit” (para 46).

The Court held that “the patent protection granted to IN 203034 is liable to be revoked, as the Claims of the said patent pertain to non-patentable subject matter and also lack novelty in light of the prior art cited.” (para 154) It found that “Ericsson has successfully established the essentiality of its suit patents by way of the claim charts” (para 591) and that “Lava has infringed Ericsson’s suit patents.” (para 633) “Lava can aptly be described as an ‘unwilling licensee’ in respect of Ericsson’s SEPs.” (para 678) “Since Lava has not filed separate data for 2G and 3G devices, I have applied the average of the aforesaid rates, in terms of which, the final royalty rate would be 1.05%” (para 820), and “A decree is accordingly passed in favour of Ericsson and against Lava” for “Recovery of sum of Rs. 244,07,63,990/-” (para 837).

What the court decided

1. Procedure. Permanent injunction. “Ericsson did not press the aforesaid issue in view of the interim orders passed in the suits and the fact that the term of the suit patents expired during the pendency of the present suit, particularly when the matter was taken up at the stage of final arguments. Consequently, it is held that the Issue no.6 has become infructuous and need not be decided.” (para 46)
2. Computer programmes per se. “I am of the view that the inventions that are solely directed towards algorithms, mathematical methods, business methods or are computer programmes per se, would not satisfy the test of patentability and would consequently, not be inventions. However, an invention that merely incorporates algorithms, sets of instructions, mathematical or business methods within a method or system, and satisfies all the criteria for patentability, is not inherently non-patentable.” (para 69) “Furthermore, if the subject matter is implemented on a general-purpose computer, but results in a further technical effect that improves the computer system’s functionality and effectiveness, the claimed invention cannot be rejected as non-patentable for being a ‘computer programme per se’.” (paras 69–70)
3. The invalidity of IN 203034. Recording that “in OpenTV (supra), a Coordinate Bench of this Court, has clarified that in India, due to the unique nature of Section 3(k) of the Patents Act, the bar on grant of patents on mathematical or business methods and also algorithms have to be read as an absolute bar”, the Court held that “the technical advancement of the invention relies on algorithms at the heart of the solution. Therefore, there is merit in the counter-claim of the Lava that IN'034 is liable to be revoked as it conforms to non-patentable subject matter in terms of Section 3(k) of the Patents Act.” (para 146) “Consequently, I hold that the novelty of IN 203034 is compromised as the core components, techniques and objectives of IN'034 closely mirror those already disclosed in the prior art” (paras 146, 153–154)
4. The Seven Stambhas approach. “Another important aspect of the test for assessment of novelty in an invention is to maintain a distinction between the test of novelty and test for inventive step or lack of obviousness. I am of the view that the following steps, which may be referred to as the ‘Seven Stambhas” “Approach’ serve as guiding principles and provide a clear framework for assessing novelty”: “(i) Understanding of the Claims of the Invention”, “(ii) Identify Relevant Prior Art”, “(iii) Analyse the Prior Art”, “(iv) Determine Explicit and Implicit Disclosures”, “(v) Assessment material differences while considering the entire scope of the Claims”, “(vi) Verifying Novelty in light of Comprehensive Scope and Specific Combination of Claimed Elements” and “(vi) Documentation of the Analysis and Novelty Determination”. “The invention is novel only if the combination of claimed elements as a whole has not been previously disclosed.” (paras 87–88)
5. Sufficiency of disclosure. “I am of the considered view that the patent claims of Ericsson read with the complete specifications fairly and sufficiently describe the invention to enable the person skilled in the art to work the invention.” “Consequently, the ground for revocation taken by Lava under Section 64(1)(h) and Section 64(1)(i) of the Patents Act is devoid of merits.” (para 113)
6. Fraud and misrepresentation. “to successfully pursue the revocation of a patent on account of fraud or misrepresentation, it is essential to conclusively prove with cogent evidence that there has been deliberate or intentional misrepresentation(s) made by the patentee to the Indian Patents Office.” “Mere allegations are not sufficient to revoke a patent; there must be a clear demonstration of intentional deceit.” The claim under “Sections 64(1)(j) and 64(1)(m) of the Patents Act” was “found to be unsubstantiated and is therefore, rejected.” (para 123)
7. Declarations of essentiality. “I am of the view that the declarations can be made either in respect of a project or a standard or technical specification. There is no mandatory requirement to make a declaration in relation to a specific ETSI” (“European Telecommunication Standards Institute”) “standard or a technical specification or for all applicable standards.” (para 554) “It is important to note that the issues pertaining to the timing of filing the declarations or the details regarding technical specifications in the declarations, primarily concerns the relationship between Ericsson and ETSI, which is contractual in nature. As such, the locus of Lava to object to these aspects of the declarations is very limited at best.” (paras 554, 558)
8. Essentiality. “Therefore, when Ericsson’s suit patents admittedly provide a mechanism for implementing a standard or a portion of it, the burden falls on Lava to demonstrate with cogent evidence, the existence of alternative methods of implementing the same standard. Lava has failed to discharge the aforesaid burden.” (para 590) “In conclusion, given the above analysis, Ericsson has successfully established the essentiality of its suit patents by way of the claim charts, which are demonstrating the alignment of the suit patents with the relevant standard. The said claim charts have been filed on record and have not been rebutted by any of the witnesses of Lava.” (paras 590–591)
9. Exhaustion. “Lava has admitted that neither was any due diligence conducted in relation to the agreements of the chipset suppliers with third parties, nor had Lava obtained any indemnity from the said chipset suppliers.” (para 604) “In light of the above analysis, Lava’s preliminary defence invoking ‘Doctrine of Exhaustion’ is untenable against Ericsson’s claim of infringement of the suit patents. Consequently, in terms of Section 48 of the Patents Act, Ericsson cannot be precluded from proceeding against Lava seeking infringement of its patents.” (paras 604, 612)
10. The two-step test. “The two-step test for establishing infringement of SEPs” (“Standard Essential Patents”) “has been laid down by the US Court of Appeals in Fujitsu (supra) and has been approved by the Division Bench of this Court in Intex (supra).” (para 617) “Given the standard compliance, and considering the established principles of patent law as applied to SEPs and taking into account the two-step test as approved by the Division Bench in Intex v. Ericsson (supra), it logically follows that the infringement of Ericsson’s SEPs is an inevitable outcome.” “the onus fell on Lava to not just claim the use of alternate technology, but also demonstrate the same, which it has failed to do.” (paras 617, 632–633)
11. The meaning of the commitment. “In summary, a FRAND” (“fair, reasonable and non-discriminatory”) “license should be fair in its treatment of both parties, reasonable in its economic demands and non-discriminatory in its application across different licensees.” (para 639) “FRAND is a voluntary commitment by an SEP owner to an SSO” (“Standard Setting Organizations”) “like ETSI to comply with its Intellectual Property Rights (IPR) policy, creating a contractual obligation between the two parties.” (paras 639, 642)
12. The unwilling licensee. “Lava’s actions, including the failure to respond to queries, the strategic filing of a lawsuit just before a scheduled meeting, the insistence on third-party confidential information and the lack of responsiveness to Ericsson’s offers and even the Court queries, collectively demonstrate a pattern of behaviour that is inconsistent with the principles of fair and constructive negotiation.” (para 678) “Lava’s approach in this negotiation can be characterised as a deliberate strategy of hold-out, which is a tactic adopted by the implementors to delay or avoid reaching an agreement.” (paras 678, 776)
13. Royalty as the measure of damages. “it is clear that the damages have to be awarded to Ericsson based on royalties payable at FRAND rates, as the damages are in the nature of compensation quantified in terms of the royalty that the patent owner would have earned from the licensee.” (para 689) “It has already been concluded in the infringement analysis in Issue no.2 that the devices of Lava are compliant with the ETSI standards as also the optional standards. Therefore, there is no merit in the submission of Lava that the damages should only be granted in respect of the tested devices.” (paras 689, 696)
14. The royalty base. “In light of the settled legal position as well as the evidence on record, it is clear that the calculation of royalty on the basis of a SSPPU” (“Smallest Saleable Patent Practising Unit”) “is inconsistent with the licensing practices in the telecommunication industry. Therefore, in my considered view, the royalty in the present case has to be calculated on the basis of the net selling price of the end-device.” (para 712)
15. Portfolio licensing. “The case set up by Lava for licensing individual patents from a portfolio is not workable as this could cause substantial administrative burdens and inefficiencies for both licensors and implementers.” (para 727) “Considering these factors, it is concluded that requiring implementers to license the entire SEP portfolio is a justifiable and balanced approach.” (paras 727–728)
16. Comparable licences and the rate. “comparable licenses provide for FRAND rates that have been negotiated between parties in similar circumstances, which makes the comparable licensing agreements highly reliable for determination of royalties for a prospective licensee.” (para 741) “Based on the outcome of my analysis, it is held that the rates offered by Ericsson to Lava are within the FRAND range.” (para 812) “Given that one out of the eight suit patents, which serve as a representative sample of the entire portfolio, has been invalidated, it can be reasonably inferred that proportionately 1/8th or 12.5% of the patents in the portfolio of patents are likely to be invalid” (paras 741, 812, 819–820)
17. Limitation and section 111. “Therefore, the position that emerges is that a suit for infringement can only be filed after the grant of the patent. However, the damages can be claimed from the date of publication of the patent application.” “Thus, the period of limitation as prescribed under Article 88 of the Schedule of Limitation Act, 1963 will not be applicable in the present case.” (para 816) Of section 111, “I do not find merit in the aforesaid submission of Lava as Ericsson had duly provided details of its patents and had informed Lava of its infringing activities on 1 st November, 2011.” (para 817) “For the entire period from 1st November, 2011 till 8th May, 2020, when the last suit patent expired, I propose to apply the same royalty rate.” (paras 816–818, 821)
18. Relief. “Recovery of sum of Rs. 244,07,63,990/-” ... “towards damages, along with interest @ 5% per annum from the date of this judgment till the realization of the said amount.” “The counter claim filed on behalf of Lava is allowed to the limited extent of revocation of the suit patent, being IN 203034” and “Ericsson shall also be entitled to taxed costs in respect of both the suits.” (para 837) “As seven out of eight suit patents have been found to be valid in accordance with Section 113 of the Patents Act, 1970 in the present suits, the Registry is directed to issue a Certificate of Validity” (paras 837, 839)

Subsequent treatment

No later judicial treatment and no further appeal traced as of 16 October 2026.