Ericsson v. Lava, CS (OS) 764/2015 - SEP, Section 3(k)

INTRODUCTION

This is one of landmark cases in the Indian Intellectual Property Rights area, which involves the principle for validating the ’ Novelty’ condition for patent applications in India, in scope of the computer-related inventions specifically relating to ’Algorithms’. In the present suit, patent infringement allegations were raised by Telefonaktiebolaget LM Ericsson (‘the Plaintiff’) against Lava International Ltd. (‘the Defendant’) at the Hon’ble High Court of Delhi. The Plaintiff claimed for a permanent injunction restraining the Defendant from infringing its Standard Essential Patents (‘SEPs’) related to telecommunication technologies, specifically 2G, EDGE, and 3G standards, which were owned by the Plaintiff.

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FACTS OF THE CASE

The Plaintiff, who is a well-known Global Leader in the telecommunications field, is the proprietor of number of granted SEPs under his portfolio, for example Patent Numbers 203034, 203036, 234157, 203686, 213723, 229632, 240471, and 241747 granted in India. These patents are a crucial piece of technology for enabling mobile devices to work with the network equipment in accordance with international telecommunication standards which are also adopted by the regulatory authority under Government of India - Department of Telecommunications (‘DoT’).

The Plaintiff had reached to the Defendant with offer for a license agreement on the FRAND (‘Fair, Reasonable, and Non-Discriminatory’) terms for SEPs. Both parties had extensive discussion, the Defendant failed to conclude to execute the proposed licence. instated, the Defendant filed a declarative suit in the District Court at Noida.

Consequently, the present suit for patent infringement was brought before the Hon’ble High Court of Delhi. Consequently, earlier suit of the Defendant from District Court of Noida was also transferred to the Delhi High Court. In the Written Statement, the Defendant filed a counter-claim on the validity and essentiality of the Plaintiff’s Indian patents with references to the provisions of the Patents Act, 1970  (’ACT’), and further raised the questions on failure on the administrative part for the pre-requisite compliance with the regulatory framework of the European Telecommunications Standards Institute (‘ETSI’).

PETITIONER CONTENTION

The Petitioner submitted his contention before the Hon’ble Court on basis of below grounds;

1. The Plaintiff claimed ownership of eight SEPs without which the functioning of mobile communication devices working was not possible to use the technologies like 2G, 3G, and EDGE. The Plaintiff also contested these patents have been duly declared to the  ETSI for licensing requirements and the Plaintiff have rights to enjoy those global in line with the territorial patent right granted in specific country.

2. The Plaintiff contended that the Defendant devices and methods, infringing upon the Plaintiff’s SEPs, given reliance that these devices are compliant with ETSI Standards and necessarily utilize the Plaintiff’s valid patents without which the Defendants devices and methods cannot work.

3. The Plaintiff further submitted that it, they had offered to assign licenses for its SEPs to the Defendant on the FRAND terms. But the Defendant did not proceed with negotiate and further delayed the licensing discussion.

4. The Plaintiff placed following evidences on record during the court proceeding:

• (i) Claim Mapping Charts;
• (ii) Test Reports; and
• (iii) Expert Affidavits.

These documents sufficiently establish both the essentiality of the patents and the infringement thereof by the Defendant’s devices, as tested in the Plaintiff’s laboratories.

5. The Plaintiff further claimed that the Defendant’s rejection to obtain a license constitutes a breach of ETSI’s Intellectual Property Rights (IPR) policy which neglects well established international norms governing SEPs.

6. The Plaintiff also showcased ‘Industry Practice’ and ‘Royalty Arrangements’ which other mobile manufacturing entities in the telecommunications industry have recognized and adopted the Plaintiff’s patented inventions, and are paying royalties under licensing arrangements. This demonstrates both the essentiality of the patents and the reasonableness of the licensing framework was offered to the Defendant.

RESPONDENT CONTENTION

The Defendant submitted below details in counter to the Plaintiff’s allegations;

1. The Defendant, challenged two aspects, validity and essentiality of the involved patents, specifically claimed inventions are computer-related and are just ‘Algorithms’. Under Section 3(k) of the ACT, algorithms are expressly excluded from patentability in India.
2. The Defendant, further alleged that the Plaintiff failed to adhere to the prescribed international procedures of the ETSI, particularly with respect to making appropriate and timely declarations regarding the essentiality of its patents. Its non-compliance with ETSI mandatory procedural part.
3. The Defendant also claimed that the claim charts submitted by the Plaintiff were false and insufficient to establish essentiality for SPEs. He further argued that this insufficiency violates prerequisite statutory requirement of a full disclosure for patents under Section 10(4)(a) & Section 10(4)(b) of the ACT.
4. The Defendant claimed that the disputed patents lack the prerequisite criteria of the ’Novelty’ under Section 2(1)(j) and ‘Inventive Step’ under Section 2(1)(ja) of the ACT. The Defendant claimed that the Plaintiff’s patent/s were obtained by falsification in the Indian Patent Office during patent prosecution process.
5. The Defendant denied the alleged patent/s infringement claim of the patent/s and argued that the Plaintiff has failed to produce satisfactory and reliable evidence to prove its infringement accusations.

ANALYSIS OF CASE

In this case, below issues were raised;

1. The Plaintiff is lawful owner of said patents in this suit?

• The Court checked for the validity of the patents involved, and those were duly registered in the Indian Patent Register, following the prescribed procedure at the Indian Intellectual Property Office – which concluded no open question on the plaintiff’s ownership.

2. The Patents are valid and in force as per the ACT ?

• The Court found that the Plaintiff’s patents are prima facie valid and enforceable too.
• They are not barred under Section 3(k) of the ACT, as they underwent patent prosecution at the Patent Office.
• The Court further referred, the expert reports which substantiated the Plaintiff’s patent/s validity.

3. Are there any violation with respect to International Standards ETSI Compliance under International compliance framework?

• The Plaintiff had made proper declarations to the ETIS in reference to involved SEP/s.
• To establish the essentiality of the patents the Plaintiff placed sufficient evidence on record

4. The Defendant conduct was bona fide ?

• The Court observed that delay and refusal by the Defendant to negotiate a FRAND license Terms & Condition was not bona fide.
• The Court specifically also extended its remarks in relation to Section 53 of the ACT, the term of a patent which is 20 years i.e. exclusivity rights available with patentee. Any interruption in licensing discussions negatively effects on the rights of patentees available under Section 48 of the ACT.

5. The Defendant act confirms infringement ?

• The Plaintiff successfully proved the infringement by Defendant through ’ Claim Mapping Charts’, ‘Test Reports’, and ‘Expert Affidavits’. As these patents are must to be used in mobile devices for its working.
• Testing of the Defendants devices also confirmed ongoing direct infringement of the Plaintiff’s patents.

JUDGEMENT

The Hon’ble Delhi High Court heard both sides and relying upon the evidences placed on record in line with the provisions of the ACT, ruled decision in favour of the Plaintiff and ordered as below;

1. The Injunction was granted by the Court, the Defendant was restrained from manufacturing, importing, selling, or offering for sale devices infringing the Plaintiff’s SEPs.
2. The Defendant was directed to deposit ₹50 Crores with the ‘Registrar General of the High Court’ by 20^th June 2016 to stay the operation of the interim order.
3. The Defendant was ordered to file ‘Statements of Accounts’ for the period from 2011 until 31^st May 2016. Also additionally ordered to submit Quarterly statements were to be filed until the final adjudication.

CONCLUSION

The Hon’ble Court established a principle, the non-patentability criteria for computer-related inventions under Section 3(k) of the ACT is not absolute. If the established process followed at Patent Office, and successfully got the patent rights allocated.