Tag Archives: patent infringement

GROUNDLESS THREAT OF PATENT INFRINGEMENT

Introduction

Infringement proceedings involve high costs of litigation in defending the same with the possibility that any temporary injunction granted in the due course thereof would lead to revenue loss, loss of employment and several other impediments to the business. Moreover, embroilment in infringement proceedings or the mere possibility thereof leads to disrepute of the business. Thus, keeping in mind the serious effects and consequences associated with infringement proceedings for which no person should unnecessarily be subjected to baseless threats of infringement, groundless threats of Infringement has been kept as a civil wrong or offence.

Groundless Threat of Infringement

Groundless threat, also connoted to as unjustified/wrongful threat is a threat whereby the owner or any person (depending on the statute) threatens another with legal proceedings without basing the threat on any reasonable basis. IP laws provide protection to the victims of unjustified threats, by preventing the person(s) making the threats from doing the same. Examples of such provisions in IP statutes include Section 60 of the Copyright Act, 1957, Section 142 of the Trademark Act, 1999 and Section 106 of the Indian Patents Act, 1970.

Relief under Patents Act, 1970: –

The Court has the power to grant relief in cases of groundless threat of patent infringement under Section 106 of the Indian Patents Act, 1970. The scope of this provision includes a threat given by any person (who is entitled to or interested in a patent or not)  to any other person by circulars or advertisements or by communication, oral or in writing with proceedings for infringement of a patent. It is important to note that a mere notification of the existence of a patent does not constitute a threat of proceeding within the meaning of this section. The person aggrieved thereby may bring the suit praying for the following reliefs:

  • a declaration to the effect that the threats are unjustifiable;
  • an injunction against the continuance of the threats; and
  • such damages, if any, as he has sustained thereby.

 

LG Electronics India Pvt. Ltd. v. Bharat Bhogilal Patel & Others[1]

 

In this case the plaintiff approached the Hon’ble Delhi High Court on the premise that complaint preferred by Defendant No. 1, Bharat Bhogilal Patel, against the Plaintiff before Defendant No.2, Customs Office, on the basis of which said Customs department is acting upon and interdicting the goods imported by the plaintiff without approaching the Court in accordance with Patents Act, 1970 amounts to groundless threats. The defendant claimed to have obtained a patent in respect of “Process of manufacturing engraved design articles on metals or non-metals”.

Upon receiving show cause notice from defendant no. 2 Customs department, the plaintiff requested for the documents pertaining to the impugned patent and on perusing the same, found that the claims of CS(OS) No.2982/2011 Page No.3 of 10 the impugned patent allegedly lacked novelty as well as any inventive step. Accordingly, plaintiff filed revocation petition before the Intellectual Property Appellate Board (IPAB) challenging validity of the impugned patent. The Customs department continued interdicting the consignments of the plaintiff despite having been informed of the pendency of revocation proceedings. Subsequently, the case came up for hearing and the Court passed interim order in favour of plaintiff, staying the operation of complaint of Defendant No. 2 the Customs office.

Clause 4 of IPR (Imported Goods) Enforcement Rules, 2007: –

“It is pertinent to mention that while the mandatory obligations under Articles 51 to 60 of the TRIPS dealing with border measures are restricted to Copyright and Trade Marks infringement only, the said Rules deal with Patents, Designs and Geographical Indications violations as well, in conformity with the practice prevailing in some other countries, notably EU countries. While it is not difficult for Customs officers to determine Copyright and Trade Marks infringements at the border based on available data/inputs, it may not be so in the case of the other three violations, unless the offences have already been established by a judicial pronouncement in India and the Customs is called upon or required to merely implement such order. In other words, extreme caution needs to be exercised at the time of determination of infringement of these three intellectual property rights”.

Order passed by the Court: –

The Court explained the role of Customs officer in view of clause 4 of IPR rules and under para 95 of the judgement, “I do not agree with the statement made in the written statement by the Defendant No.2 Custom department that unless the stay orders are passed in the Revocation petition, they can proceed with the complaint filed by the owner of patent despite of any merit or demerit in the Revocation proceedings”.

The Court further explained the aspects of groundless threat and stated that “the custom shall act on the notice of the court, therefore if any proprietor or the right holder issues a notice to the custom officials and the custom officials act upon the same by causing restricting the imports of consignments of any party without the determination (prima facie or otherwise) of the factum of infringement of patent by the appropriated designated authority which is civil court under the governing law, then such notice by the right holder to the third party which is customs and the actions thereof by the customs either in the form of notice to that party or otherwise calling upon the party to explain its stand which no such position exists in law are all unnecessary illegal threats to that party”.

Conclusion

From the above discussion, it is clear that complaint to Customs and show cause notice sent by Customs Authority without adjudication of quantum of infringement by Civil Court amounts to groundless threat of patent infringement in light of clause 4 of aforesaid IPR (Imported Goods) Enforcement Rules, 2007.

Authors: Avadhi Joshi and Pratik Das, Legal Interns, Khurana & Khurana, Advocates and IP Attorneys and can be reached at info@khuranaandkhurana.com

References :

[1] 2012 (51) PTC 513 (Del) available at https://indiankanoon.org/doc/48055807/

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BLACKBERRY SUES NOKIA FOR PATENT INFRINGEMENT: AN OVERVIEW

The once powerful mobile phone companies BlackBerry and Nokia are in the headlines again, not for their new technological developments but because of their legal battle.

The Valentine’s Day card for Nokia was in the form of complaint entailing 11 items that Blackberry did not like about it. The complaint listed out the 11 patents of Blackberry infringed by Nokia. The company has not commanded an injunctive relief, i.e. asking Nokia to stop using the patents; instead it has asked for compensation for the unauthorized usage of the said patents. Let’s have a brief overview of the case.

Blackberry:

Headquartered in Waterloo, Ontario, Canada, Blackberry Limited, formerly known as Research In Motion (RIM), was founded by two engineering students, Mike Lazaridis and Douglas Fregin in 1984. It is a multi-national wireless telecommunications software and mobile hardware company, currently chaired by John S. Chen. It had taken over the smart phone market with its flagship QWERTY keypad range of mobile phones. Blackberry uses its own operating system, and had recently entered the Android arena of smart phones. It had ruled the gadget market with its classy, easy and appealing technology and applications for over two decades until its plunge with the launch of Apple iPhone and other Android phones. It had also developed key innovations that underlie 3G and 4G mobile communication technologies, such as Long-Term Evolution (LTE), including LTE Advanced and Universal Terrestrial Radio Access Network (UTRAN) technologies, and Universal Mobile Telecommunication Systems (UMTS). Blackberry’s contribution to innovation, including investment in research and development has exceeded a total of $ 5.5 billion, and has protected the technical innovations by seeking patents from the US office.

Nokia:

In a paper mill in 1865, Nokia was created by Fredrik Idestam and Leo Mechelin in South-west Finland. It is a multinational communications and information technology company, considered to be one of the most important Fortune 500 organizations. Nokia launched Mobira Cityman in 1987, the world’s first handheld phone. The most famous Nokia’s first GSM handset, Nokia 1101, was a swift hit in the market when it was launched in 1992. The partnership of Nokia with Microsoft It is presently chaired by Rajeev Suri. With the ingression of new companies, Nokia has tumbled down.

Connecting the dots:

Rockstar Consortium Inc. (also Rockstar Bidco) was formed in 2012 to settle and negotiate patent licensing acquired from the bankrupt multinational telecommunications and data networking equipment manufacturer Nortel. It comprises of five members: Apple Inc. Blackberry, Ericsson, Microsoft and Sony.

Rockstar Consortium bought Nortel’s IP in 2011 for $ 4.5 Billion, and created a special-purpose-patent-assertion company to use them. The IP consisted of over 6000 patents covering 4G wireless innovations and a range of technologies. Nokia had also made an attempt to buy Nortel’s IP in 2009, but was unable to obtain them due to the latter’s bankruptcy proceedings. In 2012, Rockstar Consortium was also listed, by the Business Insider, as the 3rd most fearsome (out of 8) “patent trolls” in the industry.

Rockstar initiated a lawsuit against 8 companies in 2013, including Google, Smasung, and other Android phone makers. When the IP was purchased by it, Google anticipated this scenario. The complaint encompassed 6 patents, all from the same patent family. The case was settled on confidential terms.

untitled

Blackberry sues Nokia: Case name:

Blackberry Limited   [Plaintiff]

Vs.

Nokia Corporation, Nokia Solutions and Networks Oy, Nokia Solutions and Network Holdings USA Inc., and Nokia Solutions and Networks US LLC                 [Defendants]

Case number and Court:

17- 155, United States District Court for the District of Delware (Wilmington). This Court has personal jurisdiction over each of the defendants under the Delware Long-Arm Statue, 10 Del. Code § 3014, and the U.S. Constitution. The Court has jurisdiction over this controversy under 28 U.S.C. §§ 1331 and 1338(a). The action for patent infringement has arisen under the patent laws of the United States, 35 U.S.C. § 1 et seq., including but not limited to 35 U.S.C. § 271.

Allegations:

Blackberry has filed this complaint against Nokia due to the latter’s unauthorized usage of the former’s contributions to innovation technologies. Blackberry holds the following 11 patents, known as “Asserted Patents” (enforcement of patent by the owner who believes that his patent has been infringed) which are the subject matter of the case:

  1. ‘418 Patent: United States Patent No. 6,996,418 is entitled “Apparatus and Method for PFDM Data Communications” and was issued on February 6, 2006.
  2. ‘246 Patent: United States Patent No. 8,254,246 is entitled “Scattered Pilot Pattern and Channel Estimation Method for MIMO-OFDM Systems and was issued on August 28, 2012.
  3. ‘090 Patent: United States Patent No. 8,494,090 is entitled “Detecting the Number of Transmit Antennas in a Base Station” and was issued on July 23, 2013.
  4. ‘305 Patent: United States Patent No. 7,529,305 is entitled “Combination of Space-Time Coding and Spatial Multiplexing, and the Use of Orthogonal Transformation in Space-Time Coding” and was issued on May 5, 2009.
  5. ‘433 Patent: United States Patent No. 8,861,433 is entitled “Method for Accessing a Service Unavailable through and Network Cell” and was issued on October 14, 2014.
  6. ‘697 Patent: United States Patent No. 9,426,697 is entitled “Method for Accessing a Service Unavailable through and Network Cell” and was issued on August 23, 2016.
  7. ‘772 Patent: United States Patent No. 9,253,772 is entitled “System and Method for Multi-Carrier Network Operation” and was issued on February 2, 2016.
  8. ‘192 Patent: United States Patent No. 8,897,192 is entitled “System and Method for Discontinuous Reception Control Start Time” and was issued on November 25, 2014.
  9. ‘202 Patent: United States Patent No. 9,125,202 is entitled “Multi-Beam Cellular Communication System” and was issued on September 1, 2015.
  10. ‘683 Patent: United States Patent No. 8,243,683 is entitled “Method and Apparatus for State/Mode Transitioning” and was issued on August 14, 2012.
  11. ‘829 Patent: United States Patent No. 8, 644,829 is entitled “Method and Apparatus for Signaling Release Cause Indication in a UMTS Network” and was issued on February 4, 2014.

Blackberry is the owner of all rights, title and interest in the aforementioned patents, with the full and exclusive right to bring suit to enforce them, including the right to recover for past infringement. Blackberry and RIM have publicly declared to the European Telecommunications Standards Institute (ETSI), an industry organization that promulgates wireless telecommunication standards specified by 3GPP (3rd Generation Partnership Project), that the Asserted Patents may be or may become essential to LTE Standards and/or UMTS/UTRAN Standards [practising wireless telecommunication standards], and the declaration is in public domain, accessible on a search engine provided and maintained by ETSI (https://ipr.etsi.org/).

Nokia has taken action intending to cause others to directly infringe the patents, including by selling or offering for sale the Infringing Products to third parties in the United States while expressly promoting these products’ capability to practice the LTE Standards, knowing that using these products to practice the LTE Standards would constitute direct infringement of the ’418 patent.

Infringing Products:

The 3GPP specifications that enumerate LTE and UMTS/UTRAN Standards are and have been implemented in Nokia’s products like Nokia’s Flexi line of products, alone or in combination with Nokia software such as the Nokia Liquid Radio Software Suite (collectively, the “Infringing Products”).  The Infringing Products include, without limitation, the following products, alone or in combination:  Nokia’s Flexi Multiradio and Multiradio 10 base stations, the Flexi Zone (small cell) Micro and Pico base stations, Femtocell base stations, Flexi Network Server, the Flexi Radio Antenna System, Nokia radio network controllers, and Nokia Liquid Radio Software Suite.

Knowledge:

Blackberry alleges that Nokia had knowledge of the existence of the applications for or the family members of the Asserted Patents as it had used the same in various patent prosecutions of its own.

  • The family members of the ‘246 patent were cited in an international search report and were also cited by Nokia and by an examiner during prosecution of a number of patent applications assigned to Nokia. Hence, it had notice of this patent before the filing of this action.
  • The publication of parent application of the ‘090 patent was cited in an international search report, and was also cited by Nokia during prosecution of a number of patent applications assigned to it. Hence, it had notice of this patent before the filing of this action.
  • The publication of parent application of the ‘772 patent was cited by examiners during prosecution of a number of patent applications assigned to it. Hence, it had notice of this patent long before the filing of this action.
  • The publication of parent application of the ‘192 patent was cited by the examiner during prosecution of at least one patent application that was assigned to Alcatel-Lucent, which was acquired by Nokia. Hence, Nokia had notice of this patent long before the filing of this action.
  • The publication of the priority application of the ‘202 patent was cited by examiners during prosecution of a number of applications that were assigned to Alcatel entities, which were acquired by Nokia. Hence, it had notice of this patent long before the filing of this action.
  • Long before the filing of this action, Nokia knew or should have known from the prosecution of its own patent applications and those of Alcatel-Lucent that the asserted ’246, ’090, ’772, ’192, and ’202 patents covered LTE features used by their Infringing Products.
  • The publication of the application that resulted in the issuance of the ‘683 patent was cited by the examiner during prosecution of a Nokia patent application. Hence, Nokia had notice of this patent long before the filing of this action.
  • The publication of the application that resulted in the issuance of the ‘829 patent was cited by Nokia during prosecution of a Nokia patent application. Hence, Nokia had notice of this patent long before the filing of this action.
  • Long before the filing of this action, Nokia knew or should have known from the prosecution of its own patent applications that the asserted ‘683 and ‘829 patents covered UMTS/UTRAN features used by their Infringing Products.
  • By April 10, 2012, RIM had acquired the ’418, ’246, and ’305 patents and had caused to be recorded at the USPTO the assignments of ownership of these patents to RIM. Currently, the assignment of these patents to Blackberry has been recorded in the USPTO. Nokia has knowledge of the same through its due diligence of Nortel U.S. patents.

Infringement Claims:

Nokia knowingly and intentionally encourages and aids at least its end-users to directly infringe the asserted patents. Nokia has been, and currently is, an active inducer of infringement of these patents under 35 U.S.C. § 271(b) and a contributory infringer under 35 U.S.C. § 271(c). It has been willfully blind to the existence of the patents. Nokia’s infringement has been, and continues to be, willful and deliberate, and has caused substantial damage to BlackBerry. Nokia developed, commercialized, demonstrated, and/or tested the Infringing Products despite its evaluation and knowledge of the Nortel patent portfolio, including the application that led to the issuance of some patents, and its knowledge of family members of a few of the 11 patents from prosecution of its own patent applications. In spite of Nokia’s knowledge of the patents, Nokia has continued making, using, offering for sale/lease, and/or selling or leasing in the United States, and/or importing into the United States, the Infringing Products that are compliant with the LTE Standards, without a license from BlackBerry.  Nokia’s egregious infringement behavior warrants an award of enhanced damages.

Prayer for relief:

Blackberry prays that the Court:

  • Render judgment declaring that Nokia directly infringed, induced others to infringe, and/or contributed to the infringement of the asserted patents.
  • Award BlackBerry damages adequate to compensate it for Nokia’s infringement of the asserted patents.
  • Award an ongoing royalty for Nokia’s ongoing infringement of the asserted patents.
  • Render judgment declaring Nokia’s infringement of the asserted patents willful and deliberate, and award BlackBerry enhanced damages pursuant to 35 U.S.C. § 284.
  • Award BlackBerry pre-judgment and post-judgment interest to the full extent allowed under the law, as well as BlackBerry’s costs and disbursements.
  • Enter an order finding that this is an exceptional case and awarding Blackberry its reasonable attorneys’ fees pursuant to 35 U.S.C. § 285.
  • Award any other relief as the Court deems fit.

Conclusion:

Both the companies are having a downfall in their sales. Blackberry has stopped making smart phones, and Nokia has had a huge decrease in sales of its one-of-a-kind Lumia phones, manufactured in collaboration with Microsoft. Blackberry has started licensing its software and brand assets to others so that its name in the market continues. Also, it pledged to license these patents as they form essential elements for mobile telecommunication standard.  As is evident from the prayer of the complaint, no injunction has been claimed for. Instead, Blackberry has claimed damages and royalty for the unauthorized use of its patents. This is a smart move by the smart phone maker to commercialize on its leftover assets. Nokia has not responded to this complaint as of now, and is looking into the matter, as per a news article. Nokia’s counter is acutely awaited.

About the Author :

Ms. Aditi Tiwari, intern at Khurana and Khurana, Advocates and IP Attorneys. Views expressed in this article are solely of the intern and do not reflect the views of either of any of the employees or employers.Queries regarding this may be directed to swapnils@khuranaandkhurana.com

 

FRAND-ING PATENT LICENSES AND ITS IMPLICATION IN LANDMARK CASES IN INDIA

Everyday, a number of products are being invented all over the world, some cascading over the improvement of existing inventions, and the others, portraying a unique set of methods and products unknown to man at large. Simultaneously, there is an eruption of infringements that remain unnoticed or noticed following an incredulous load of proceedings and exorbitant costs. It is essential to protect the rightful rights of these owners against such infringements and unlawful interference to avoid any possible losses or damages in their peaceful functioning of their entities. In the field of protection of inventions, the adoption of Agreement of Trade Related aspects of Intellectual Property Rights (TRIPS) and the Patent Act, 1970 and related amendments aim to let these owners benefit from their inventions without any unnecessary disturbance.

1. DEFINING STANDARDS

In our day-to-day activities, we try to sculpt our needs as per certain benchmarks to achieve our desired results. Similarly in the field of patents, every invention requires certain targets to abide by in order to facilitate an irreplaceable position in the market. To put it technically, standards are technical specifications that seek to provide a common design for a product or process[1]. Ensuring that the products conform to standards facilities almost definite reliability, quality, stability when purchasing the products and subsequently, an increase in their demand. To lay it down simply, a standard is a document that exhibits certain requisites for a particular product, element, system or service or elaborately describes a specific method. Formal standards are declared by Standard Setting Organizations (SSOs) and include establishments such as the European Telecommunications Standards Institute (ETSI), Institute for Electrical and Electronics Engineers (IEEE) and various other ad hoc informal organizations[2].   Standards can also be of two different kinds- those with are mandatory or those that are up to one’s discretion[3].

2. STANDARD ESSENTIAL PATENTS

The concept of Standard Essential Patents (SEPs) cropped up when controversies between smartphone giants came about. Standard Essential Patents are basically, patents that inform the users or anyone else that the particular invention conforms to a particular standard denoted by that patent. SEP was also defined by the Washington District Court in Microsoft Corp. v Motorola Mobility, Inc.[4], as “A given patent is essential to a standard if use of the standard required infringement of the patent, even if acceptable alternatives of that patent could have been written into the standard”. It is a universal truth that consumers prefer standard compliant products as they deliver an incorrigible quality. Thus, in order to save a spot in the demand market, the inventors are forced to adopt technologies conferred by Standard Essential Patents. In turn, these SEP holders gain a huge competitive edge in the market and do not face any competition until they expire and move into the public domain.

3. FAIR, REASONABLE AND NON-DISCRIMINATORY TERMS (FRAND)

Due to the ubiquitous yearning for snowballing sale of one’s products, the market players are in a constant struggle to find the most desirable, the most profitable, and the most economically efficient techniques to garner demand for their brands. For this reason, SEPs play an unparalleled role to fulfill such wishes of the inventors. However, this also means that they have unbridled power in the market. Creating a monopoly of such SEP holders would be detrimental to the inventors, as they will have no say in the unfair and discriminatory terms brought before them. They will be forced to succumb to such terms for meeting the primary objective of every company in the market. There are a number of issues that rise during the event of licensing SEPs to other companies that inevitably cause a disruption in the unadulterated functioning of licenses in the country. A commonly occurring issue is patent holdup when an SEP holder realizes his irreplaceability in the market and consequently, causes a rise in the royalty rates to order to unjustly profit from his dominance, thereby burdening the licensee companies. Another frequent issue is royalty stacking where the companies are forced to pay for all the patents held by the SEP holder, patents that are not even incorporated by them in their products, purely under the coercion by the SEP holders of revoking the license

Hence, in order to evade such prejudiced demands of the SEP holders, the concept of FRAND was incorporated. The SSOs stress the requisite for such holders to enter into a promise to not cultivate any unwanted competitive strategies and misuse of the power granted to them. This promise is to coincide with the FRAND terms. Following the licensing strategies stated under the FRAND terms forms the basis of the standard development process. Conformance to FRAND terms guarantee that the SEP holders do not abuse their dominant position in the market and they license SEPs to desiring companies in a ‘fair, reasonable and non-discriminatory’ manner.

4. THE ERICSSON AND MICROMAX CASE

On the 4th of March, 2013, Ericsson filed a case of patent infringement against Micromax for eight of its SEPs which related to its 2G, 3G and EDGE devices, in the Delhi High Court. In response, on the 19th of March 2013, the Court passed an order stating that both the companies would enter into a contract under FRAND terms for the next month purely under an ad-interim arrangement, with prescribed royalties given in the table below.

A mediator was appointed to resolve the disputes between the two companies, but it was in vain. As a result, on the 24th of June 2013, Micromax filed information under Section 19(1)(a) of the Competition Act, 2002, alleging Ericsson to have inculcated an abusive and unfair mode of setting royalties. On the 12th of November 2014, the Court agreed to a new set of interim arrangement for the parties wherein Micromax was asked to pay the royalty on different terms given in the table below.

 

Phones/devices Capable of GSM Capable of GPRS + GSM Capable of EDGE+ GRPS+GSM WCDMA/HSPA, calling tablets
From 19/03/2013(earlier interim order) 1.25% of sale price 1.75% of sale price 2% of sale price 2% of sale price Dongles or data cards- USD 2.50
From date of filing till 12/11/2015 (later interim order) 0.8% of net selling price 0.8% of net selling price 1% of net selling price 1% of net selling price
From 13/11/2015 to 12/11/2016 0.8% of net selling price 0.8% of net selling price 1.1% of net selling price 1.1% of net selling price
From 13/11/2016 to 12/11/2020 0.8% of net selling price 1% of net selling price 1.3% of net selling price 1.3% of net selling price

 

With regard to the complaint filed by Micromax, it was stated that Ericsson was allegedly demanding an unfair royalty for its SEPs relating to the GSM Technology. It contended that the royalty should be based on the patents relating to the chipset technology and not arbitrarily calculate the royalty as a percentage of the sales price of the licensed downstream product[7]. It also stated that Ericsson was confident that there was no alternate technology for its patents in the market and hence, Ericsson believed that it had the right to charge such royalty for its patents. Moreover, Ericsson also wanted Micromax to sign a Non-Disclosure Agreement, which was restrictive and was not in conformance with the FRAND terms. On the 12th of November 2013, under Section 26(1) of the Competition Act, 2002, in pursuance to the complaint filed by Micromax, the CCI laid down the following:

  1. Ericsson was the largest holder of SEPs in the country with regard to 2G, 3G and 4G patents used for smart phones, tablets, etc. Due to this, it undoubtedly held a dominant position in the market for devices that use the GSM and CDMA standards.
  2. While FRAND licenses were primarily meant to prevent patent hold-up and royalty stacking, the competitive endurance showcased by such SEP holders might prove detrimental to their integrity.
  3. Ericsson’s royalty rates were excessive and absurd, and these royalties had not linkage to the patented products. Thus, it was clear that there were discriminatory and contrary to the FRAND terms.

Due to these inferences, CCI ordered for an investigation on the same matter by the Director General, which was challenged by Ericsson in the court. What happened to the case from this point shall be discussed in detail in combination with two other cases with Ericsson.

 5. ERICSSON AND INTEX CASE

In 2013, Intex had filed a suit against Ericsson on the same terms as in the case of Micromax, about setting discriminatory and unreasonable royalties for the SEPs. The CCI, on its account, ordered for an investigation along with the complaint filed in the previous case. Ericsson filed a writ petition against this move for an investigation. Alongside, it filed a suit against Intex for the alleged patent infringement of the same eight patents and demanded damages of Rs. 56 crores.

6. ERICSSON AND BEST IT WORLD (INDIA)

In November 2011, Ericsson had sent a letter to Best IT World that it had infringed the same eight patents as in the previous cases due to its GSM and WCDMA related products. Ericsson suggested both the companies get into a Global Patent Licensing Agreement (GPLA) for all the infringed patents. Best IT stated that it was interested in entering the said agreement only under the condition that Ericsson discloses the alleged infringed patents in order to find out whether the allegations were valid and enforceable in the country. Ericsson intentionally refused to respond to that request and went ahead to impose the need to draft an NDA with ten years confidentiality agreement wherein all the confidential information would be shared only with the company affiliated to it, and any disputes arising out of the same would be settled in Stockholm, Ericsson’s location of its headquarters, which was evidently onerous and one-sided.  It further stated that the license agreement to be entered into would have to apply to the previous and future sale of the company. In September 2015, Best IT filed a suit under Section 4 of the Competition Act, 2002 against Ericsson for an abuse of dominant position.

Thus, as occurred in the cases above, the CCI ordered for an investigation to take place. Ericsson challenged the order of CCI and claimed that the order was ‘arbitrary in nature and without jurisdiction’. It was noticed by the Delhi High Court that the plea by Best IT ought to be disregarded as it had not entered into the licensing agreement with Ericsson and that it was evident that it used Ericsson’s SEPs.

ANALYSIS OF THE ABOVE ERICSSON CASES

Extracting the detail from the Micromax v Ericsson case, Intex v Ericsson case and Best IT World (India) v Ericsson case about Ericsson filing writ petition against the order of CCI for investigations, as per the judgment laid down by the Delhi High Court on the 30th of March 2016, the CCI had the authority to direct the investigations as in the event of an abuse of dominance, jurisdiction lies within the scope of Competition Act. The court agreed to use the net sales prices of the downstream product as the royalty base, and ordered that the royalty for licenses based on FRAND must be derived from sound economic reasoning.

In the Micromax case, the court ordered Micromax to pay the royalties as per the rates stated in the later interim order, rates mentioned in the table.

By the judgment delivered on the 13th of March, 2015, the Delhi High Court ordered that the royalties which were stated in the case of Ericsson v Micromax shall be applicable in this case too. The only difference that lies is that the court ordered Intex to pay 50% of the royalty as per total selling price per device and not chipset, from the date of filing of the suit till 1st of March, 2015, shall be paid directly to Ericsson by way of a bank draft within four weeks from the date of the judgement. The balance shall be secured with a bank guarantee within the said four weeks with the Registrar General, who would invest the same in an FDR for twelve months.

As per the order passed on the 2nd of September, 2015, the court declared that Best IT World must restrict importing mobiles, handsets, devices, tablets, etc. all articles that infringe the patents of Ericsson, which would be operative from the 9th of September, 2015.

7. ERICSSON AND XIAOMI TECHNOLOGY

Ericsson had filed a patent infringement suit for eight of its patents essential to 2G and 3G standards registered in India, against Xiaomi in December 2014. Ericsson had requested to obtain license from it before it sold the infringing products in India, but Xiaomi had entered into an agreement with Flipkart Internet Private Limited to sell the products under Xiaomi’s name. It had begun launching such products from the month of July 2014. Subsequently, the court had issued an injunction order against Xiaomi to restrain the import or sale of its infringing device. Xiaomi appealed to the injunction stating that it had entered into a ‘Multi Product License Agreement’ with Qualcomm Incorporated and used the chipset, which in turn was licensed to Qualcomm by Ericsson. Thus, it argued that it had not infringed any of Ericsson’s patents. As an interim measure, on the 16th of December 2014, the court allowed Xiaomi to sell only those devices that contained the chipsets, which were licensed by Qualcomm and had to deposit Rs.100 per device with the Registrar General of the Delhi High Court.

On the 22nd of April, 2016, the Court revoked the interim injunction on Xiaomi on account of concealment of significant information regarding the alleged infringing patents, by Ericsson. It laid down that Xiaomi was using the 3G patents licensed by Qualcomm, which in turn was licensed to it by Ericsson. The amount of royalty paid by Xiaomi to Qualcomm was provided to Ericsson as royalty and hence, there lay no requirement of paying royalty directly to Ericsson.

8. ERICSSON AND LAVA INTERNATIONAL PRIVATE LIMITED

Ericsson challenged Lava in a suit for patent infringement related to its AMR, GSM and EDGE technologies. On an order passed by the Delhi High Court in March 2015, both the companies tried to negotiate an agreement on FRAND terms but it was in vain. An interim order was passed by the Delhi High Court, operative from the 21st of June, 2016, ordering an injunction to prevent the import, export, manufacture and sale of mobile phones that use the concerned patents of Ericsson. The final order on the case is still pending before the Court.

With the judiciary at the brim of delivering justice to the deserving, the SSOs and various organization striving to protect the rights and inventions of the lawful owners, the Intellectual Property Appellate Board to discuss matters of concern of the distressed, and the laws on various aspects merging to bridge the gap between the people and justice, it is almost impossible to fathom a situation wherein the aggrieved parties could not be redressed. The only aspect which have to be looked into by these mechanisms is its clear and untainted practice. The salvo of the dominance and power of multi-national companies being fired at domestic companies who strive to maintain a position in the market have to be adjudicated in a fair manner, without any involvement of duress and coercion. The elixir of righteousness lies in the hands of these deciding authorities. The real question here is ‘Would the adjudicators choose impartiality and morality, or would they surrender to dominance?’

About the Author : Ms. Anjana Mohan, Symbiosis Law School, Pune, intern at Khurana and Khurana, Advocates and IP Attorneys. Views expressed in this article are solely of the intern and do not reflect the views of either of any of the employees or employers. Queries regarding this may be directed to swapnil@khuranaandkhurana.com or swapnils@khuranaandkhurana.com.

9. REFERENCES

1. ONLINE NEWSPAPER/ MAGAZINE/BLOG ARTICLES

a. Narula, Ranjan. “Standard Essential Patents.” Rouse The Magazine, 2015. Available On Http://Www.Rouse.Com/Magazine/News/Standard-Essential-Patents/?Tag=India

b. Rao D And Shabana N, Standard Essential Patents, Singhania & Partners, Available On Http://Www.Singhania.In/Wp-Content/Uploads/2016/04/Standard-Essential-Patents.Pdf

c. Lakshane R, “Compilation of Mobile Phone Patent Litigation Cases in India”, The Centre for Internet & Society, Available on http://cis-india.org/a2k/blogs/compilation-of-mobile-phone-patent-litigation-cases-in-india

d. Chawla K, “Ericsson v. Intex, Part 1- SEPs, Injunctions, and gathering clouds for Software Patenting?”, SpicyIP, available on http://spicyip.com/2015/03/ericsson-v-intex-part-1-seps-and-injunctions-and-a-new-era-of-software-patenting.html

2. ONLINE JOURNALS AND OTHER GUIDELINES

a. Sidak G, Frand In India: The Delhi High Court’s Emerging Jurisprudence On Royalties For Standard-Essential Patents, Journel Of Intellectual Property Law & Practise, 2015, Vol. 100, No.8, Available On Https://Www.Criterioneconomics.Com/Docs/Frand-In-India-Royalties-For-Standard-Essential-Patents.Pdf

b. Meniere Y, ‘Fair, Reasonable And Non-Discriminatory (Frand) Licensing Terms’, Jrc Science And Policy Report, 2015, Available On Http://Is.Jrc.Ec.Europa.Eu/Pages/Isg/Euripidis/Documents/05.Frandreport.Pdf

c. Department Of Industrial Policy And Promotion, Ministry Of Commerce & Industry, Government Of India, Discussion Paper On Standard Essential Patents And Their Availability On Frand Terms, Available On Http://Www.Ipindia.Nic.In/Whats_New/Standardessentialpaper_01march2016.Pdf

d. Agreement On Technical Barriers To Trade, Annexure I, Available At Https://Www.Wto.Org/English/Docs_E/Legal_E/17-Tbt.Pdf

e. Delhi High Court Cases, available on http://delhihighcourt.nic.in/

f. Indiankanoon, available on http://indiankanoon.com/

Bose Vs Beats- The Headphone War

There has been great buzz in patent world with the reported news on 25 Jul 2014 of suits filed by Bose Corps against Beats Electronics in US International Trade Commission (ITC) to block US imports of noise cancelling headphones made by Beats Electronics and a mirror suit in Federal District Court in Delaware, USA over the alleged patent infringement of its noise-cancelling technology used in Beats headphones. The patent infringement suit is being viewed by different entities in different perspectives. Is it just a fight by Bose Corporation to protect its IP rights? Or is it a proverbial  David versus Goliath fight– wherein a fifty year old giant Bose Corporation is using its financial might to subdue an eight year old start up company? The timing of this is also raising many eyebrows as this patent infringement suit is being linked to the news about acquisition of Beats Electronics by Apple in May 2014.

Bose and Beats are two of the leading players in the headphone industry and this suit can simply be about Bose Corporation’s desire and right to protect its intellectual property rights. The suit essentially is about noise reduction technology used for noise reduction methods in headphones. Bose contends that Beats Adaptive Noise Cancellation (ANC) technology being used in their headphones Beats Studio ® and Studio ® Wireless Headphones infringes on the Automatic Noise Reduction (ANR) technology which is protected by their following five patents:

  1. US 6717537
  2. US 8073150
  3. US 8073151
  4. US 8054992
  5. US 8345088

Bose in these suits have also informed about their huge investment over an extended period of time in research and development. Bose has further contended that for the last 50 years they have been investing extensively in research, development, engineering, and design of proprietary technologies and their implementations can be seen in their line of products such as noise cancelling headphones. Bose has further sought to be compensated for losses suffered and profit lost because of Beats using their patented technology.

High end Headphone market in 2013 has been valued at $ 1 billion with Beats reported having 60 % of this market share. Bose law suit therefore could be genuine desire to protect its market share especially in US and European markets.

In another perspective, this could be viewed as a fight between Bose and Apple where Bose by targeting Beats Electronics is actually targeting Apple. But this can be actually counter productive since Beats Electronic now with Apple’s financial backing can engage in a long drawn legal battle and take this fight to a legal and logical conclusion. Apple as reported in various news items has just acquired Beats Electronics for $ 3 billion and Apple can be expected to fight hard to protect its interests.

Bose Corporation’s first suit filed with International Trade Commission against Beats Electronics is to stop Beat Electronics from importing its headphones with noise cancelling technology to the United States from China. This action has been taken to prevent Beat Electronics from taking over the market and also to reduce the competition from Beat. Bose Corporation’s second suit against Beat Electronics is to stop them from infringing on their patented technologies.

Further, Bose is not leaving any stone unturned and is taking legal actions against Chinese companies also to make them stop from infringing on the patents held by Bose Corporation. One of the Bose representatives has said in a statement “We are committed to protecting our investment and our customers and defending the patent we own”.

As Apple is already involved in a number of big patent battles especially with Samsung and is one of the top companies with most Patent infringement cases in USA, it will be interesting to see how Apple / Beats are going to react to this and how they are going to defend themselves against this law suit. We have to wait for the decision from the court to see if Beat will be able to defend themselves or if they will prefer the case to get the law suits settled outside the court as was done recently between Apple and Samsung.

Ultimately only legal merits will be considered for outcome of this suit but it will be interesting and fruitful to watch how these big companies defend themselves as the precedent set with these suits could help in formulating future business strategies not only for business entities involved in these law suits but also other business houses.

About the Author: Mr Paras Khurana, Patent Associate at Khurana & Khurana and can be reached at: paras@khuranaandkhurana.com