The Delhi High Court has clarified that in an SEP infringement action, the Court may direct pro tem security as a temporary equitable arrangement pending adjudication, and such an order is not the same as a final FRAND determination or an interim injunction. The scrutiny at this stage is lighter and does not require a detailed merits trial. For deciding pro tem security, comparable third-party licence agreements are not a precondition, because the Court is not fixing FRAND finally at that stage.
The Court explained that where the plaintiffs show a prima facie case on validity, essentiality and infringement, and the defendants continue implementing the standard without furnishing security, the Court can require deposit of security to balance equities and protect the eventual decree. Further, a defendant implementer’s failure to disclose alternate technology despite claiming non-infringement, coupled with its own declarations of standard compliance, is a relevant basis for a prima facie inference of infringement at the pro tem stage.
Accordingly, the Court held that a foreign FRAND rate-setting action filed by the implementer may be treated as relevant material at the pro tem stage in assessing prima facie essentiality / the need for licensing, even if raised by the defendant as territorially limited. The Court therefore directed the defendants to deposit Rs. 272 crores with the Registrar General within 6 weeks, or alternatively furnish an unconditional bank guarantee from an Indian bank for that amount. At the same time, the Court clarified that the order does not amount to a final finding on infringement or liability, and does not make the plaintiffs’ licensing rate binding.
A Single Judge Bench of Justice Tejas Karia observed that in SEP matters, courts may pass a pro tem order as a temporary arrangement to balance equities between the parties without a detailed examination on merits. The Bench accepted that non-furnishing of comparable third-party PLAs is irrelevant at the pro tem stage, because the Court is not determining the FRAND rate finally at that stage.
The Bench further noted that an implementer can use its own licence agreements with other SEP licensors to assess or frame a counteroffer, and therefore has no right of silence or inaction merely because it does not have access to the patentee’s third-party agreements. On maintainability, the Bench recorded the plaintiffs’ position that the suit patents had been assigned to Plaintiff No. 1 and therefore the suit could proceed without impleading BlackBerry as patentee.
On validity, the Bench recorded the publication and subsistence periods of the three patents and held that, at this stage, a detailed inquiry into validity was not necessary and the patents were prima facie valid. On essentiality, the Bench relied on the plaintiffs’ ETSI declarations, the filed claim charts, and importantly the defendants’ Shenzhen FRAND action, and held that the plaintiffs had prima facie established essentiality of the suit patents for the purpose of pro tem security.
The Bench also rejected the defendants’ submission that the Chinese action was relevant only to Chinese patents and China-wide terms, and treated the filing of that action as supporting a prima facie case on essentiality in the present proceedings. On infringement, the Bench relied on the defendants’ own website / product packaging showing 4G and 5G conformance, the plaintiffs’ claim charts and test reports, and the defendants’ failure to disclose any alternate technology as required under Rule 3B(vi) of the Delhi High Court Rules Governing Patent Suits, 2022. It therefore held that the plaintiffs had prima facie proved infringement.
Briefly, an application filed by the plaintiffs under Section 151 CPC seeking deposit of pro tem security on the basis of the plaintiffs’ licensing offer for alleged unlicensed manufacture, import and sale of 4G and 5G compliant devices by Xiaomi entities. The plaintiffs sought to license a portfolio of cellular SEPs comprising patents acquired from BlackBerry and patents still owned by BlackBerry but licensable by Plaintiff No. 1.
The suit concerned three Indian patents: IN 283303, IN 317530, and IN 335982. The judgment records that these were published under Section 11A of the Patents Act and that no pre-grant or post-grant oppositions had been filed against them. The plaintiffs’ case was that they had approached the defendants from October 2023 for a FRAND licence, but the defendants did not engage in good faith and adopted delay / hold-out tactics. The plaintiffs also relied on the defendants’ continued sale of devices said to implement 4G and 5G standards, their market position, their website disclosures of standard compliance, claim charts, and test reports.
The defendants objected, among other things, that BlackBerry had not been impleaded, that the plaintiffs had not produced valuation material or third-party licences, and that pro tem relief could not be granted without prima facie findings on validity, essentiality and infringement. During the pendency of the application, it was brought to the Court’s notice that Defendant No. 3 had filed a FRAND rate-setting suit before the Shenzhen Court concerning the plaintiffs’ 3G/4G/5G SEPs in relation to devices sold in China.
Appearances:
Pravin Anand, Vaishali Mittal, Siddhant Chamola, Gitanjali Sharma, Prachi Sharma, Gursimran Singh Narula and Jitesh Prakash Gupta, Advocates, for the Plaintiff
Saikrishna Rajagopal, Julien George, Arjun Gadhoke, Dr. Victor Vaibhav Tandon, Ayush Saxena and Christo Sabu, Advocates, for the Defendant
