InterDigital Technology Corp v Xiaomi Corp (2020)

Summary

“Interdigital Technology Corporation has sued Xiaomi Corporation” ... “alleging infringement, by Xiaomi, of Indian Patents Nos 262910, 295912, 298719, 313036 and 320182. It is alleged that Xiaomi is, without obtaining any license from InterDigital, using the technology, contained in these Standard Essential Patents (SEPs), held by InterDigital.” (para 1) InterDigital filed “IA 6441/2020, under Chapter VII Rule 17 of the Delhi High Court (Original Side) Rules, 2018” (para 2) and “seeks, in its application, setting up of a ’two-tier’ Confidentiality Club, comprising an ‘outer tier’ and an ‘inner tier’.” “More simply expressed, the parties, as well as their officials and employees, would have no access to the ‘inner tier’ documents.” (para 5) “Tier 2 will include confidential, comparable patent license agreements on FRAND” (“Fair, Reasonable and Non-Discriminatory”) “terms, as executed by the parties in the suit” (para 13).

The Court held that “there can be no question of allowing the request, of InterDigital, for a ’two-tier’ Confidentiality Club.” (para 15) “To me, the very suggestion is completely antithetical to, and destructive of, the most fundamental notions of natural justice and fair play.” (para 27) “Himalayan Coop. Group Housing Society” “binds me, under Article 141 of the Constitution of India.” (para 61) “The prayer, of InterDigital, for setting up of a ’two-tier’ confidentiality club, with ‘inner tier’ documents being shown only to advocates (who are not in-house counsel) and external experts nominated by Xiaomi is, therefore, rejected.” (para 64) “Instead, a single tier Confidentiality club is constituted” (para 65), and “all observations in this judgement are intended only for the purpose of disposing of the application, of InterDigital, for constitution of a Confidentiality Club.” (para 67)

What the court decided

1. Foreign two-tier clubs. “Beyond providing, to this Court, information that such Confidentiality Clubs do exist in foreign regimes, I am unwilling to accord, to decisions passed by Courts abroad, any greater significance, in a case such as this. The jurisprudence of natural justice, due opportunity and fair play has, in this country, its own distinct contour and complexion.” (para 11)
2. Rule 17 and the Code. “Rule 17 in Chapter VII of the Original Side Rules, undoubtedly, marks such a departure from the regime of complete transparency, envisaged by the CPC” (“Code of Civil Procedure”). “The moot question that arises is whether such ’limited access’ could be so limited as to deny access to the opposite party, as well as its employees and officials, and limit access only to its nominated ’ex-house’ counsel and experts.” (para 22) “Whether either of the parties, to a litigation, needs, or does not need, to see a particular document, would be a decision which essentially rests with the party itself.” (paras 22–23)
3. Comparable licences. “The mechanics of FRAND” (“Fair, Reasonable and Non-Discriminatory”) “rate fixation litigation necessarily involve reliance, by the patent holder, on the royalty rates at which it has licensed its SEPs” (“Standard Essential Patents”) “to other licensees.” “For this, a holistic appreciation of the license agreements, between the plaintiff and other licensees, is absolutely essential.” (para 26) “Without knowing the identity of the licensee, the particulars of the license agreement, or its covenants, it defeats comprehension as to how the defendants can be expected to make any submission, regarding whether the rate, at which such license has been granted, is, or is not, FRAND.” (paras 26–28)
4. Natural justice. “To me, the very suggestion is completely antithetical to, and destructive of, the most fundamental notions of natural justice and fair play.” (para 27) “The damage that would ensue, to the fundamental principles of natural justice, fair play and due process, were the defendant to be excluded access from such allegedly ‘comparable’ license agreements, is serious and irreparable. Any procedural arrangement, which is fraught with the possibility of such damage has, in my view, to be unequivocally jettisoned.” (paras 27–28)
5. Counsel acts on instructions. “In my view, SEP infringement litigation cannot be treated as a category sui generis, to which the principles enunciated in these decisions, as well as the Bar Council of India Rules, would not apply.” (para 40) “Himalayan Coop. Group Housing Society” “has neither been distinguished by any larger bench, or even by any coordinate bench, in facts analogous to those before me. The judgement binds me, under Article 141 of the Constitution of India. It is clearly held, by the Supreme Court, in the said decision, that a counsel has to act on instructions from the client, and not at his own sweet will.” (paras 40, 61)
6. Annexure F and consent. “Annexure F is only in the nature of the suggested protocol for the Confidentiality Club, and its covenants cannot be treated as declaratory of the statutory position. Constitution of the Confidentiality Club, in the manner conceptualised by Annexure F may not be inconceivable, provided the parties agree to such constitution.” (para 36) “I am concerned only with the issue of whether such an arrangement can, against its wishes, be imposed on Xiaomi.” (paras 34, 36)
7. Confidentiality clauses in licences. “No confidentiality clause, which may be contained in third-party license agreements, entered into between the plaintiffs and third-party licensees, can justify denial of fair opportunity, to the defendants, to meet the case set up by the plaintiffs.” “The business interests of InterDigital, howsoever legitimate, cannot prevail over the paramount consideration of grant of fair opportunity, and natural justice, to Xiaomi, to meet the case set up by InterDigital.” (para 53)
8. A regime for the interim stage. “Once an interlocutory injunction is obtained, without grant of due opportunity to the defendants, it is a matter of common knowledge that, in such litigations, the damage, to the defendants, is permanent and irreversible.” (para 53)
9. No adverse inference. Of the submission that Xiaomi’s insistence on access “would justify an adverse inference against Xiaomi”, the Court held: “The submission, in my view, deserves to be summarily rejected. It flies in the face of the most elementary canons of natural justice and fair play.” (para 57)
10. Procedure. Earlier clubs sub silentio. “In all but these two cases, therefore, the issues raised by Mr. Sai Krishna Rajagopal in the present case, and which have impressed the mind of this Court, have passed sub silentio. These decisions cannot, therefore, be regarded as valuable precedents, to decide the issue in controversy before me.” (para 59) “I am of the opinion that the matter need not be referred to a larger bench.” (paras 59, 62)
11. Redaction. “InterDigital is, therefore, at liberty to redact, from the documents being treated as confidential, any such detail which, according to it, cannot be disclosed to any third party, including the representatives of Xiaomi. InterDigital cannot, however, be permitted, in such an event, to rely on such redacted material.” “In such an eventuality, it would be for the court to take a decision on the competing claims, regarding such redacted material.” (para 63)
12. The single-tier club. “Each party shall nominate four advocates, six representatives and two experts, who would constitute the confidentiality club.” “Neither party would be permitted to rely on any material which is not disclosed to the nominated representatives (as opposed to advocates and experts) of the opposite party.” “In such a case, the court would decide, on a document-to-document basis, whether redacting of the ‘confidential’ details, in the document, should, or should not, be allowed.” (para 65) “Should, however, Xiaomi be agreeable to constitution of the Confidentiality Club in the manner suggested by InterDigital, this order would not stand in the way of any such agreement” (paras 65–66)

Subsequent treatment

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