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Essential Patent LLC Intellectual Property Law Current Page: Home About Sub-Menu The Law Firm This Blog The Editor Resources Sub-Menu Academic Papers & Articles Government Activities & Statements Corporate & Interest Group Statements Glossary Contact RSS Twitter Search… Search Essential Patent Blog The Source for Standard-Essential & Other Patent Litigation Issues India’s High Court of Delhi issues guidance on SEP licensing that seeks to harmonize decisions in other countries (Intex v. Ericsson) By David Long on April 3, 2023 Posted in Uncategorized Last week, India’s High Court of Delhi issued a 64-page decision in the standard essential patent (SEP) dispute between mobile phone importer Intex Technologies and Ericsson who owns telecommunication patents subject to commitments to license on fair, reasonable and non-discriminatory (FRAND) terms under intellectual property rights (IPR) policies of standard development organizations (SDOs), such as the European Telecommunication Standards Institute (ETSI). The High Court affirmed an interim (or preliminary) injunction by a lower court (referred to in the decision as the challenged or impugned order”) entered over eight years ago in March 2015 that required Intex to pay 50% of the expected royalty while the case was pending because Ericsson had shown it was likely to prevail in the case: e.g. , Ericsson established prima facie” that Ericsson will prevail at end of case on the issues of whether the eight patents in suit were valid and infringed and that Ericsson complied with FRAND commitment. The Court here ruled that Ericsson had made a prima facie case it will prevail, and further ordered that Intex must pay 100% of the royalty while the case was pending (not just 50%). This is an important decision to review in understanding licensing and litigation of international SEP portfolios. This decision endeavour[ed]” to achieve harmonisation of basic principles of law” with other international standards and foreign decisions while taking into account differences among the national laws of different countries. The decision generally may be viewed as favorable to SEP owners. For example, the Court ruled that an injunction may be entered against an standard-compliant product if even a single SEP is found to infringe. This decision addresses many hot topics in licensing SEPs and attempts to harmonize existing decisions in reaching its rulings here.The Court here, for example, discussed the following topics: There is some dispute about whether a FRAND commitment imposes obligations on someone wanting to license an SEP. This decision indicates that a FRAND commitment is not a one-way street, but imposes obligations on both the SEP owner and someone seeking to license the SEP. There is some dispute about whether an SEP owner must provide details of its licensing agreement with others to a prospective licensee (often termed transparency”). This decision indicates that an SEP owner sometimes might need to provide information to a prospective licensee (under a confidentiality agreement), although that may not be necessary for an experienced licensee who can consult existing patent licenses they have entered with others. There is some dispute about whether an implementer must make any royalty payments while negotiating to license an SEP. This decision indicates they should. There is some dispute about whether an injunction may be entered on an SEP with a FRAND commitment. This decision indicates that injunctive relief, including preliminary injunctive relief, should be granted against unwilling licensees (e.g., those who stall licensing negotiations). A reasonable expectation of injunctive relief must be maintained in order to spur implementers to negotiate a license. There is some dispute whether an SEP owner is required to negotiate license to individual patents, rather than licensing an entire SEP portfolio. This decision indicates that licensing an entire SEP portfolio may be permissible. Finally, we provide our usual caveat that you should read the decision for yourself and understand that we are not familiar with the nuances of India law and procedure that can impact the decision. For example, this decision’s background discussion of SEPs and IPR policies indicates that an SEP owner must grant a license on FRAND terms to anyone who asks for a license. This touches on the issue of whether an SEP owner must offer a license to a component supplier if asked, rather than licensing the end product (e.g., license the manufacture of a chip used in a phone, rather than the phone manufacturer). This case, however, concerned an implementer who imported and sold end product devices (mobile phones) and did not involve someone in the supply chain– e.g. , chip manufacturer–requesting a license. This case did involve a dispute of whether the royalty base should be the chip or end product (the lower court ruled the end product can be the royalty base), but this case did not present the issue of whether to license the chip manufacturer. So this case may not be relevant to the issue of to whom in a supply chain licenses must be granted. We saw a similar problem in U.S. jurisprudence where the Ninth Circuit had a single sentence statement in the background section of its Microsoft v. Motorola decision indicating that a FRAND commitment requires licensing anyone who seeks a license. ut licensing anyone (e.g., chip manufacturers) was not an issue in that case and therefore that background statement was not an actual, binding ruling under U.S. common law. Nonetheless, some argued that the background statement in the Ninth Circuit’s decision was a binding ruling that SEP owners with a FRAND commitment must license anyone who asks, including chip manufacturers. In a later decision in which whether to license a chip manufacturer actually was at issue, however, the Ninth Circuit in FTC v. Qualcomm ruled that an SEP owner reasonably could refuse to license chip manufacturers and, instead, decide to license manufacturers of the end product mobile phones that use the chips (which would covering the chips used therein). Background Intex Arguments On Appeal Intex challenged the preliminary injunction order that required Intex to deposit 50% of Ericsson’s requested royalty during pendency of the case. Intex argued that an SEP owner is not entitled to injunctive relief (even against an unwilling licensee) and an implementer could not be ordered to pay any royalty until the end of the case where infringement, etc. are finally de4termined. Intex relied on a decision by another lower court in India, Nokia vs. Oppo , that ruled a court could not require payment of a royalty unless the following four factors have been shown: (i) the asserted patent is an SEP, (ii) the defendant infringes the patent (iii) the patent owner’s requested royalty rate is FRAND and (iv) the infringer is not willing to take a license at that FRAND rate. While negotiating with Ericsson, Intex had filed a complaint with the Competition Commission of India (CCI) and also had challenged patent validity in the Intellectual Property Appellate Board (IPAB). Intex argued that, contrary to the lower court’s decision, Intex’s CCI complaint did not admit that the patents were essential or valid. Intex argued that only eight India patents were at issue in the lower court, which should not impact the entire portfolio. Even if those eight patents were essential, Ericsson’s entire portfolio of over 33,000 patents (including foreign patents) should not be presumed essential. Nor should Intex pay a royalty on the entire portfolio based on the handful of eight patents at issue. Intex argued that the patents should not be presumed valid; rather, Ericsson must prove their validity. Intex pointed to U.S. Patent Office proceedings on U.S. patents, for example, as indicating that a related India patent was vulnerable to being revoked. Ericsson’s Arguments On Cross-Appeal Ericsson filed a...