Author : SARAH GARIMA TIGGA (5th year B.A. LLB Symbiosis Law School, Pune)
Ericsson (SEP Holder)
…………….. Plaintiff
Versus
Intex Technologies (Implementer)
…………….. Defendant
Facts
Ericsson, the owner of several Standard Essential Patents (SEPs), accused Intex Technologies of infringing its patents by using technology essential to telecommunications standards without entering into a licensing agreement. Ericsson offered to license its SEPs on Fair, Reasonable, and Non-Discriminatory (FRAND) terms, but negotiations failed as Intex disputed the terms and did not make counteroffers. Consequently, Ericsson sought an injunction and interim royalty payments.
Intex contested Ericsson’s SEPs’ validity, the compliance of its licensing offer with FRAND obligations, and argued against granting any interim relief.
Issues
- Does an SEP owner have the right to seek injunctive relief and/or interim royalty payments while a licensing dispute is pending?
- What obligations arise under a FRAND commitment for both SEP owners and prospective licensees?
- Is the four-factor test from Nokia v. Oppo applicable for determining preliminary injunctive relief in SEP disputes?
- Can an SEP owner insist on portfolio licenses instead of individual patent licenses under FRAND obligations?
- What is the burden of proof for challenging the validity of SEPs during preliminary injunction proceedings?
Rules
- Injunctions and Interim Royalties: Courts may grant interim royalties or injunctive relief if the SEP owner makes a prima facie case of infringement and essentiality (Unwired Planet v. Huawei).
- FRAND Obligations: SEP owners must negotiate in good faith by providing licensing information. Prospective licensees must respond reasonably and provide security during negotiations (Huawei v. ZTE).
- Four-Factor Test: Validity, infringement, FRAND compliance, and implementer unwillingness are factors for injunctions (Nokia v. Oppo).
- Portfolio Licensing: Offering portfolio licenses is permissible when collective technology value supersedes individual patents (Unwired Planet).
- Burden of Proof: Validity challenges require credible evidence due to the presumption of patent validity (Ericsson v. Intex).
Arguments
Plaintiff (Ericsson):
- Asserted SEPs were valid, infringed, and essential.
- Offered licensing terms that complied with FRAND obligations.
- Claimed Intex was an unwilling licensee by refusing to negotiate or provide security.
- Advocated portfolio licensing as industry practice and FRAND-compliant.
Defendant (Intex):
- Argued Ericsson’s SEPs were invalid and licensing terms were non-compliant with FRAND.
- Opposed interim royalty payments, citing insufficient evidence of infringement and essentiality.
- Sought individual patent licenses instead of portfolio agreements.
- Criticized the absence of a structured test for granting injunctive relief.
Analysis
In the case between Ericsson (Plaintiff) and Intex (Defendant), the Delhi High Court upheld the lower court’s order, affirming several key aspects of the dispute. Ericsson argued that its Standard Essential Patents (SEPs) were valid, infringed, and essential to industry standards. Ericsson also contended that it had offered licensing terms compliant with FRAND (Fair, Reasonable, and Non-Discriminatory) obligations, but Intex had acted as an unwilling licensee by refusing to negotiate or provide the necessary security for the license. Ericsson further defended its approach of portfolio licensing, asserting that it was both an industry practice and in line with FRAND standards.
In contrast, Intex disputed the validity of Ericsson’s SEPs and argued that the licensing terms were non-compliant with FRAND principles. The defendant also opposed the payment of interim royalties, citing insufficient evidence of infringement and essentiality. Intex sought to license individual patents rather than enter into a portfolio agreement with Ericsson. Additionally, Intex criticized the absence of a structured test for granting injunctive relief in SEP cases.
The court’s analysis carefully considered the arguments of both parties, emphasizing the need for balance between the rights of SEP holders and implementers. Ericsson’s claim for interim royalties was upheld, as the court found sufficient evidence of both infringement and essentiality. It ruled that Ericsson had met its FRAND obligations by providing detailed licensing terms, while Intex’s refusal to engage in negotiations or offer security was seen as bad faith conduct. The court also rejected Intex’s attempt to apply the four-factor test from the Nokia v. Oppo case, deeming it inconsistent with Indian jurisprudence. Instead, the court aligned with global precedents regarding SEP licensing practices. The approach of portfolio licensing was recognized as a FRAND-compliant practice, supported by its widespread industry acceptance.
Regarding Intex’s challenges to the validity of Ericsson’s patents, the court found these claims lacked substantial evidence and dismissed them, reinforcing the presumption of patent validity. The court’s judgment underscored the importance of fair and equitable measures to ensure compliance with SEP obligations and to prevent unnecessary delays in resolving such disputes.
Judgment
The Delhi High Court upheld the lower court’s order, directing Intex to pay 100% of the interim royalties. It affirmed Ericsson’s compliance with FRAND (Fair, Reasonable, and Non-Discriminatory) obligations, rejecting Intex’s claims. The court also dismissed Intex’s application of the four-factor test, validating Ericsson’s portfolio licensing approach. Furthermore, the court dismissed Intex’s challenges regarding the validity of Ericsson’s patents.
Conclusion
The decision reinforces the importance of good faith negotiations in SEP disputes. It emphasizes mutual obligations under FRAND commitments, supports interim remedies to prevent unfair delays, and aligns Indian jurisprudence with global SEP licensing practices.
