Delhi High Court says no FRAND trial needed to obtain SEP injunction in Intex v Ericsson

At the time of writing this post, this Kat was currently halfway through Mr Justice Mellor’s Interdigital v Lenovo FRAND decision (see here) this Kat is made aware of an appellant judgment from the High Court of Delhi in the same area: Intex v Ericsson 2023:DHC:2243-DB. This appeal is against the Judgement of 13 March 2015 by Mr Justice Singh (a text of this Judgment under appeal appears to be available here; the official website of the court appears offline) where he held that Ericsson’s eight patents were prima facie valid and essential, and that Intex has prima facie infringed them. He also held that Ericsson has prima facie complied with its FRAND commitment, and that Intex was prima facie unwilling to execute a FRAND licence ([3]).

The court decided that injunction against infringement of a standard essential patent (SEP) is available as soon as it is prima facie infringed. In doing so the Delhi court diverted from the UK approach where such injunction may only be granted after a FRAND trial ([85]) (although this Kat flags the nuance in the UK whereby injunctive relief may also be granted after an infringement finding following one technical trial if the potential licensee does not commit to the court-determined license, a point which is subject to appeal).   For the reasoning, the court mentioned that Mr Justice Mellor’s Interdigital v Lenovo FRAND decision was delivered after five technical trials and not at an interim stage (which was the case in Delhi) ([87]). It also considered that the poor judge-population ratio in India meant that lack of injunction could shift bargaining leverage to implementers ([90]).

The court considered that an injunction can be ordered even if infringement of one patent is established either prima facie or at the final stage ([99]). The court also held that the four-fold test to be satisfied before directing an alleged SEP infringer to make payment of royalty at a particular rate, as specified in Nokia v Oppo (2022 SCC OnLine Del 4014), shown below, is contrary to law:

(i) the asserted suit patents are in fact Standard Essential Patents,

(ii) the technology used by the implementer infringes the Standard Essential Patents,

(iii) the royalty rate at which patentee is willing to license its Standard Essential Patents are FRAND, and

(iv) implementer is unwilling to take the licence at the said FRAND rate.

This test does not follow the reasoning of Unwired Planet v Huawei [2020] UKSC 37, relied upon in Nokia v Oppo as support ([113]). This test would also mean that there would effectively be no interim order ([117]).

The court agreed with the first instance Judge that no credible challenge against the validity of the patents in suit had been raised by Intex: just because a revocation petition had been filed before the Intellectual Property Appellate Board did not mean that a credible challenge has been raised ([133] – [134]).

The court finally noted that the fact that more than 100 licences have been executed by Ericsson and similar implementers were paying royalty under the terms suggested by Ericsson meant that those licence terms are prima facie FRAND. To ensure parity with other implementers, Intex must pay in full for the past use of the Standard Essential Patents ([150]). Intex was therefore directed to pay the entire royalty mount to Ericsson within four weeks ([151]).

Comments

         patentee v implementer...

When explaining why an injunction against an SEP implementer could be obtained even without a FRAND trial, the judgment did not seem to distinguish the lack of injunction, which looks like the focus of the reasoning, from deciding whether to grant injunction only after a FRAND trial. In doing so, the Delhi court appears to have ignored the harm caused by potential hold-up by the patentee. This would harm technological advancements especially in a developing country like India.

This Kat also thinks that the mere existence of more than 100 licences in force hardly means that their terms are FRAND. As mentioned, in the UK Interdigital v Lenovo FRAND decision, smaller implementers with little negotiation power may accept whatever the patentee proposes.

Finally, [89] mentioned a paper submitted to the European Commission on SEPs. Recently several blogs have reported on the leaked draft EU Regulation on SEPs. Opinions on it are divided, but having a panel of conciliators to assist the parties to decide the aggregate royalty, as proposed in the draft, is in one’s opinion a step in the right direction: this can prevent the courts from being the one and only place to resolve arguments on FRAND rates and forces parties into a period of offer exchange and analysis before rushing off to court, for injunctive relief or otherwise.