Standard Essential Patent Owners Can Pray For Interim And Final Injunctive Relief If Infringer Deemed To Be An ‘Unwilling Licensee’: Delhi High Court
Case: Intex Technologies (India) Ltd Versus Telefonaktiebolaget L M Ericsson (Publ)
Coram: Justice Manmohan and Justice Saurabh Banerjee
Case No.: FAO(OS) (COMM) 296/2018
Court Observation: “The case at hand illustrates the universally acknowledged truism that ‘law always lags behind technology,”
“One also cannot lose sight of the fact that legal regimes that do not preserve a reasonable expectation of injunctive relief against infringers in Standard Essential Patent litigations will have a counterproductive “domino effect” that shifts bargaining leverage to implementers in all Standard Essential Patent licensing negotiations, devaluing existing patent-protected technologies and disincentivizing firms from developing new technologies”.
“The Delhi High Court’s Rules Governing Patent Suits 2022 have formally recognized Standard Essential Patents and the different legal tests that are involved in their adjudication,”
“In contrast, either an injunction or a direction to pay royalty in the interim is likely to be a more effective remedy, as it does not merely result in a small increment to the cost of products which infringe the patents, but prohibits infringement altogether,”
“In Huawei v. ZTE, the CJEU has held that a Standard Essential Patent owner may seek an injunction against ongoing infringement by an implementer unless the implementer responds to the Standard Essential Patent owner’s royalty offer by submitting a specified FRAND-compliant counter-offer and provides appropriate security pending resolution of the dispute,”
“Dutch and German national courts have also issued injunctions to Standard Essential Patent owners based on a finding that the infringer had engaged in “hold out” behavior,”
“According to the said paper, if Standard Essential Patent owners are flatly precluded from seeking injunctions, then infringers would have little reason ever to agree to, or negotiate in good faith, a licence with a Standard Essential Patent owner. A well-resourced infringer would rationally reject any licence offer and compel the Standard Essential Patent owner to enter into litigation that typically requires millions of dollars in legal expenses in multiple venues around the world. In the worst-case scenario, the infringer would be compelled to pay monetary damages that are typically calculated using a methodology designed to mimic the rate in a negotiated licensing transaction,”
“This asymmetry is likely to lead to settlement amounts or, absent litigation, negotiated royalties that undervalue the innovator’s technology. This effectively transfers wealth from firms that specialize in developing technologies to firms (including some of the world’s most valuable companies) that specialize in using and integrating those technologies in branded devices/products sold to consumers,”
“Accordingly, if a case for infringement, even with regard to one patent, is made out, it is like a ‘silver bullet’. Consequently, to restrain an infringing device, a Standard Essential Patent holder does not have to sue based on each of the thousands of patents that it claims to own in the product; it can do so by showing that one, or a handful of representative patents are infringed,”
“A perusal of the complaint filed by Intex before CCI shows that Intex therein admitted that Ericsson’s suit patents had been accepted as Industry Standard and declared as essential to ETSI. Intex also admitted in its CCI complaint that Department of Telecommunication, Government of India had formally accepted the Technology Standard formulated by ETSI and the only way for an Indian telecom player to comply with an ETSI/3GPP GSM standards in India was to obtain a licence from Ericsson. Intex admitted in its CCI complaint that every player in Indian GSM market has to obtain licence from Ericsson as there were no non-infringing alternatives available and that Ericsson owns a large number of Standard Essential Patents relevant to the standards,”
“Moreover, if Intex was of the view that it was not infringing Ericsson’s patents and the same were non-essential, Intex instead of approaching CCI alleging abuse of dominant position, should have sought a declaration of non- infringement or of groundless threat under Sections 105 and 106 of the Act,”
“This Court is further of the view that it is counter-intuitive for a party alleging abuse of dominance to claim that the patents are invalid as there cannot be dominance let alone abuse thereof qua patents which are invalid,”
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